ALJDEC decisions subject to certification as final

2014A-4234-ROC · Registrar of Contractors · 2016-08-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING DATES: January 21, 2016, at 8:00 a.m. and August 1, 2016, at 8:30 a.m. APPEARANCES: Thomas Allen Pfeifer (“Complainant”) was represented by S. Gregory Jones, Esq., Lane & Nach PC; A M C Construction and Design Inc. (“Respondent”) was represented by Trevor J. Fish, Esq., Evans, Dove & Nelson, PLC. ADMINISTRATIVE LAW JUDGE: M. Douglas conducted the January 21, 2016 hearing; after Judge Douglas’s retirement, Diane Mihalsky listened to the audio record of the January 21, 2016 hearing and conducted the August 1, 2016 hearing. _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On or about January 26, 2003, the Arizona Registrar of Contractors (“the Registrar”) issued License No. KB-2.181941-D for dual residential and small commercial contracting to Respondent. 2. On or about October 18, 2013, Respondent contracted with Complainant to build a house at 22611 N. 89th Ave., Peoria, Arizona 85383 for $234,698.36. Respondent started building the house on or about December 5, 2013. 3. On or about September 30, 2014, Respondent stopped work when Complainant changed the locks after the house passed the county’s final building inspection. At that time, the parties had not yet conducted a final walk-through inspection and Complainant had not prepared a punch list of repairs for Respondent to perform. Complainant moved into the residence without Respondent performing any punch-list repairs. 4. On or about October 16, 2014, Complainant filed a complaint with the Registrar against Respondent alleging approximately eighteen items of deficient workmanship in Respondent’s construction of Complainant’s house. 5. The Registrar assigned the complaint to Investigator Timothy Pennington for investigation. On or about November 26, 2014, Investigator Pennington performed a jobsite inspection. Inspector Pennington found that Respondent’s work on eight complaint items did not meet workmanship standards and that it should have installed the microwave in the kitchen. 6. Investigator Pennington did not find that Respondent was responsible for alleged deficiencies in the kitchen cabinets, including the opening for the refrigerator, because Complainant had purchased the cabinets from IKEA, IKEA had designed the cabinets, and the cabinets were assembled by both Complainant and Respondent. 7. Investigator Pennington’s checklist noted that “[t]he complainant and the respondent are not able to work together and have a money issue, so I am not sending out a directive to correct due to the circumstances” and that “[d]uring the inspection the complainant admitted that some upgrades such as carpet and flooring did exceed the amounts figured in the bid.”[1] 8. On or about January 14, 2015, Respondent filed a lawsuit against Complainant in Maricopa County Superior Court Case No. CV2015- 090044 for breach of contract and other common-law claims based on Complainant’s failure to pay amounts due under the parties’ contract. The civil action was pending while the complaint that Complainant had filed with the Registrar was investigated and proceeded through the hearing process. 9. On July 1, 2015, the Registrar issued a Citation against Respondent’s license, charging cause to revoke, suspend, or otherwise discipline Respondent’s license under A.R.S. § 32- 1154(A)(1) and A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 10. Respondent filed a timely written answer to the Citation, denying that it had abandoned the project in violation of A.R.S. § 32- 1154(A)(1) because Complainant had changed the locks and denying any workmanship deficiencies under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, because Complainant had not prepared a punch list or allowed it to perform repairs. 11. The Registrar referred the matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing. 12. An evidentiary hearing was held on January 21, 2016, before Administrative Law Judge M. Douglas. The parties’ attorneys presented evidence and made argument. After approximately four hours, the parties agreed to settle their dispute. Respondent agreed to remedy certain items, as follows: 1) The metal tub that squeaked when it was stepped into;

2) The wall-mounted doorbell offset;

3) The garage door that was not self-closing properly;

4) The lock that was not set correctly and not hitting the striker plate.

5) The shower door in the garage that was not closing correctly;

6) The cracks in the concrete floor in the garage;

7) The rear sliding door that was hard to open and close;

8) The window in the kitchen that was hard to open and close;

9) The microwave that was not installed.

Respondent also agreed to modify the IKEA cabinets to increase the space for the refrigerator at least two inches in width and two inches height, which would include altering the soffit above the refrigerator. Respondent agreed to complete the repairs within 60 days and Complainant agreed to cooperate in providing access to Respondent to perform repairs. Although the settlement specified to some extent the way that Respondent would modify the IKEA cabinets to make space for the refrigerator, it did not specify the means by which Respondent would perform any of the other repairs. The parties agreed that contract issues would be resolved in the pending superior court action.[2] 13. Ultimately, the parties were unsuccessful in settling their dispute regarding the complaint that Complainant had filed with the Registrar regarding Respondent’s workmanship. After several continuances, on August 1, 2016, the parties returned for a further hearing in OAH on whether Respondent had breached the settlement agreement and whether the Registrar should suspend or revoke its license as a result. Because Judge Douglas had retired in the interval, the undersigned Administrative Law Judge conducted the August 1, 2016 hearing. Investigator Pennington, Complainant, Respondent’s qualifying party/officer, Marc Allan (“Mr. Allan”), and Respondent’s officer, Lisa Allan (“Mrs. Allan”) testified at the August 1, 2016 further hearing. Hearing Evidence 14. Judge Douglas issued an order requesting that Investigator Pennington perform an inspection to see whether Respondent had complied with the parties’ settlement. On April 28, 2016, Investigator Pennington performed an inspection. Pursuant to Judge Douglas’ order, Investigator Pennington faxed a copy of his inspection report to both parties’ attorneys and to OAH. Investigator Pennington provided to the Administrative Law Judge and to the parties’ attorneys his report his April 28, 2016 prehearing inspection and thirteen photographs that he took at the prehearing inspection.[3] 15. Respondent did not dispute Investigator Pennington’s opinion that six of the ten items in the parties’ settlement had not been completely corrected to comply with the Registrar’s standards, but disputed whether Complainant had provided reasonable access for Respondent to perform repairs. 16. After Investigator Pennington testified and after Complainant’s attorney agreed that Investigator Pennington could be released, Complainant disputed whether Respondent had properly repaired the shower in the garage, which was not included among Investigator Pennington’s reported outstanding deficiencies. 17. The parties agreed that Complainant delayed signing the settlement agreement. Complainant testified that Respondent came out to repair or inspect various items. He was willing to extend the 60 days allowed by the settlement. Complainant testified that he needed at least two days’ notice, information about who would make repairs, and information about how repairs would be attempted to allow access. 18. Mr. Allan acknowledged that Respondent was able to go to Complainant’s house nine times to perform repairs. Remaining Complaint Items Squeaking Bathtub 19. Investigator Pennington testified that the bathtub no longer squeaked. However, the right corner of the backing for panel of the tub surround was loose along the caulking line.[4] In addition, he was able to push the panel in ¼” with light pressure, which indicated that Respondent had not installed backing behind the panel, and he could see inside the wall when he pushed the panel in.[5] 20. Complainant acknowledged that the settlement agreement did not require Respondent to install backing for the panel in the tub surround. 21. Mr. Allan testified that Respondent had to remove the tub and surround to remove a screw under the tub to resolve the squeak. Mr. Allan testified that because Complainant had selected a freestanding stainless steel tub, Respondent had no choice but to install a thin plastic panel over the ¼” to 1/8” lip of the tub. Mr. Allan testified that he caulked the tub after the repair and that it is an easy fix to reinstall the caulking. Because the tub is freestanding, it does not need to be attached to the wall and there will always be an approximately ¼” gap between the tub and the wall. 22. Mr. Allan testified that the vinyl panel was installed over a DensGlass substrate, which is water resistant. Mr. Allan testified that the DensGlass does not have play and that Investigator Pennington was pushing on the vinyl panel. Mr. Allan testified that backing is required only if the tub is not free-standing, for example, an acrylic tub, and that the lack of a rigid backing below the edge of the tub complied with industry standards. Latch on Door Not Hitting Striker Plate 23. Investigator Pennington testified that Respondent had corrected the striker plate and the latch was operating correctly. However, the area around the latch needed touchup paint.[6] Cracked Concrete Floor in Garage 24. Investigator Pennington testified that the cracked concrete floor in the garage was unchanged at the prehearing jobsite inspection. Investigator Pennington testified that the cracks radiated from the control joints and were excessive in length. Investigator Pennington acknowledged that the cracks were barely visible in the photograph he took at the prehearing jobsite inspection.[7] 25. During Complainant’s attorney’s examination, Investigator Pennington acknowledged that the cracks may have resulted from poor soil compaction. Investigator Pennington also testified that the Registrar does not dictate how licensed contractors must perform repairs. 26. Complainant testified that the concrete cracks were structural and that the concrete has sunk in the area of the cracks. Complainant testified that the cosmetic repair that Respondent proposed to perform would not correct the cracks. 27. Complainant acknowledged that because he wanted to install a car lift machine in the garage that would allow him to work on vehicles, Respondent’s concrete subcontractor had added two spread footings where the lift would be installed and that the footings were not on the plans for the garage.[8] 28. Respondent submitted its concrete subcontractor’s letter that one of the footings had settled but was still in place with minimal cracks and settling and that he could repair the crack with an epoxy or a concrete patching materials.[9] 29. Complainant acknowledged that on March 1, 2016, Respondent’s subcontractor came to his house to repair the cracks and that he had requested a bid to upgrade the concrete to make it thicker so that it would provide better support for the lift. Complainant acknowledged that he did not allow the subcontractor to perform the proposed repair because he believed that the cracks were structural and that the concrete needed to be removed and replaced. 30. Respondent submitted photographs that showed the cracks clearly.[10] Mr. Allan testified that the photos show the concrete subcontractor holding a dime that he could not fit the crack and that because a dime is 1/16” wide and the Registrar’s workmanship standards allow cracks in garage floors to be up to 3/32” wide, the cracks were within standards. Mr. Allan testified that the standards also allow up to 1/8” of vertical displacement. Mr. Allan testified that when he put a straight edge over the cracks, the vertical displacement was 1/16”. 31. Mr. Allan testified that the cracks in Complainant’s garage were surface cracks that had occurred near the control joints when the surface of the concrete over the footings had dried faster than the deeper concrete. Mr. Allan testified that surface cracks near a control joint over a footing are common occurrences. 32. Mr. Allan testified that Respondent over-excavates every house that Respondent builds and then fills in the excavation until 98% compaction is achieved. Respondent submitted a compaction test dated April 7, 2014, for Complainant’s house.[11] 33. Respondent also submitted photographs of the footings for the car lift.[12] Mr. Allan testified that because the footings are so deep, the surface area will always dry out quicker and crack. 34. Mr. Allan testified that epoxy strengthens concrete slightly, but that the repairs that Respondent wanted to perform would probably be adequate because the cracks were not deep. Mr. Allan testified that Respondent’s subcontractor used 3,000 psi concrete for the garage slab,[13] which is more than building codes require. 35. Mr. Allan testified that Respondent had highly recommended to Complainant that additional soils compaction testing be performed due to the area where the house would be built, but that Complainant had declined the testing and had agreed to sign a waiver.[14] Kitchen Door that Is Hard to Open and Shut 36. Investigator Pennington testified that the kitchen door was still hard to open and shut and that he believed that the upper track on the door was binding.[15] 37. Complainant testified that Respondent had adjusted the door, but nothing had changed in the operation of the door. Complainant acknowledged that Respondent had met with the salesperson and factory technician of the door’s manufacturer onsite to inspect the door and determine proper repairs. 38. Respondent submitted an email from the subcontractor who had installed the door, which noted that the only issue with the door was the bottom track that was bent, but that the subcontractor did not know when the track had been damaged since no walk-through inspection had been performed. The subcontractor proposed that a third party installation company that was approved by the manufacturer remove and replace the bottom track. 39. Complainant testified that he asked Respondent what it was going to do to repair the door and that Respondent only suggested replacing the bottom portion of the door, not the whole door, and Complainant did not think replacing the bottom part of the door would solve the problem. Complainant acknowledged that he would not allow the proposed repair because he did not think it was sufficient. 40. Respondent submitted photographs of the door during construction that did not show the bent bottom track.[16] Mr. Allan testified that he believed that the track had been bent after Complainant changed the locks and moved into the house. Mr. Allan testified that if replacing the bottom track and bottom part of the door did not fully resolve the problem, Respondent could use a special track- spreading tool to tweak the upper track to make the door easier to open and shut. Window in Kitchen that Is Hard to Open and Close 41. Investigator Pennington testified that the kitchen window was still hard to open and close.[17] 42. Complainant testified that Respondent never attempted to remedy the kitchen window. 43. Mr. Allan testified that Respondent did attempt to remedy the kitchen window, but that Complainant was not satisfied with the repair. Drywall Repairs to Allow Refrigerator to Be Installed in Kitchen 44. Investigator Pennington testified that the opening in the kitchen cabinetry had been enlarged to allow the refrigerator to be installed. 45. Investigator Pennington testified that the drywall above the cabinets had not been painted. 46. Complainant testified that painting should not be performed until after the out-of-plumb drywall was repaired. Complainant acknowledged that he required notice of exactly what area an identified painter would be working on before he provided access. 47. Mrs. Allan testified that she attempted to schedule Respondent’s painting subcontractor to perform touchup on March 22, 2016.[18] Respondent submitted an email from Respondent’s painting subcontractor that stated that Complainant had “literally stood in front of [the subcontractor] and blocked me from touching up the soffit . . . .”[19] Mrs. Allan testified that the painting subcontractor subsequently refused to go out again to Complainant’s house. 48. Mr. Allan testified that drywall can be repaired after it is painted and then later touched up after repairs are done. 49. Investigator Pennington testified that the drywall on the soffit above the refrigerator was out of plumb 5/16” within a few feet. Investigator Pennington explained that the Registrar’s Workmanship Standards for Licensed Contractors allowed walls to be only ¼” out of plumb between the floor and ceiling. 50. Mr. Allan testified that because bead is on drywall corners, any corner will be pushed out. Mr. Allan testified that he offered to repair the drywall as soon as he heard about the issue of it being out of plumb. Shower Door in Garage 51. Investigator Pennington’s report did not note any deficiencies in Respondent’s repair of the shower door in the garage that before the settlement, had not been closing correctly. 52. Complainant’s attorney did not ask Investigator Pennington about the shower door, but agreed that he could leave before Complainant testified that although Respondent repaired the door so that it closed correctly, the shower was now leaking in shower door enclosure. 53. Administrative notice is taken of the Registrar’s public website pursuant to A.A.C. R4-9-117. On August 1, 2016, Respondent’s license was current and in good standing. There is no record of prior discipline against the license and Complainant’s complaint appears to be the only complaint pending against the license. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[20] 2. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[21] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[22] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[23] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[24] 4. Complainant did not establish that Respondent ever abandoned the settlement agreement in violation of A.R.S. § 32-1154(A)(1).[25] Respondent established that it repeatedly attempted to perform the repairs that the settlement agreement required. 5. Because construction is not a perfect art, contractors should be afforded an opportunity to correct their work before their licenses are disciplined.[26] By virtue of holding a contractor’s license that is in good standing, Respondent is presumed to have the expertise to decide the proper method to perform repairs that are within the scope of its license. The Registrar does not dictate to licensed contractors the proper method of repair; instead, a contractor’s license may only be suspended for poor work if it has been allowed to attempt repair and the Registrar later determines that the repair is inadequate. 6. Respondent established that Complainant refused to allow Respondent to attempt to repair as it saw fit the cracked concrete in the garage and the door in the kitchen. Because Complainant refused to allow Respondent to attempt to perform repairs to the cracked concrete in the garage and the kitchen door, the administrative record does not reveal whether Respondent’s proposed methods of repair would have been successful. Therefore, Respondent’s failures to repair the cracked concrete in the garage or the hard-to-open door in the kitchen do not provide cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3),[27] namely A.A.C. R4-9-108.[28] 7. Respondent also established that Complainant did not allow Respondent to perform touchup painting around the striker plate or to finish painting the soffit in the kitchen because he felt that Respondent should perform its repairs in a different order. Therefore, Respondent’s failures to complete touchup painting to the striker plate or to paint the soffit in the kitchen do not provide cause to discipline Respondent’s license Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 8. Complainant did not initially complain that the shower enclosure in the garage was leaking. Because Complainant apparently did not call the new alleged leak to Investigator Pennington’s attention at the April 28, 2016 prehearing inspection, he could not verify the new deficiency or render an opinion that the leak was caused by Respondent’s repair of the shower door. “Procedural due process requires notice and an opportunity to be heard in a meaningful manner and at a meaningful time.”[29] Therefore, Respondent’s alleged repair of the shower door to cause a leak in the enclosure does not provide cause to discipline Respondent’s license Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 9. Complainant established that Respondent failed to fully caulk the panel around the stainless steel bathtub. Respondent’s failure to caulk the panel provides cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 10. Complainant did not initially complain about the lack of backing behind the vinyl panel around the stainless steel tub. Respondent established that neither the Registrar’s nor industry standards required it to install additional backing behind the panel surrounding the stainless steel tub. Therefore, Respondent’s failure to install additional backing does not provide cause to discipline its contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9- 108. 11. Complainant established that the kitchen window that is hard to open and close does not comply with the Registrar’s and industry standards and that Respondent failed to correct the window to comply with the settlement agreement. Therefore, Respondent’s failure to repair the kitchen window provides cause to discipline Respondent’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 12. Complainant established that the soffit above the refrigerator does not comply with the Registrar’s or with industry standards because it is out of plumb. Therefore, Respondent’s failure to properly construct the soffit provides cause to discipline its contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 13. Complainant did not establish any cause to discipline Respondent’s contractor’s license other than the caulking around the panel around the stainless steel bathtub, the hard-to-open-and-close kitchen window, and the out-of-plumb soffit above the refrigerator. The parties may resolve any remaining issues in their pending superior court action. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the order in this matter, License No. KB-2.181941-D of Respondent A M C Construction and Design Inc. shall be suspended for a period of one calendar day. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five days from the date of that certification. Done this day, August 11, 2016.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] The Registrar’s electronic file at Rcc032 Odr1.rtf at 3. [2] See Respondent’s Exhibit 11. [3] See Respondent’s Exhibit 27. [4] See Respondent’s Exhibit 27 (photo #7). [5] See Respondent’s Exhibit 27 (photo #8). [6] See Respondent’s Exhibit 27 (photo # 9). [7] See Respondent’s Exhibit 27 (photo #10). [8] See Respondent’s Exhibit 13. [9] See id. [10] See Respondent’s Exhibit 13 at 2-3. [11] See Respondent’s Exhibit 28. [12] See Respondent’s Exhibit 29. [13] See Respondent’s Exhibit 31. [14] See Respondent’s Exhibit 30. [15] See Respondent’s Exhibit 27 (photo #11). [16] See Respondent’s Exhibit 33. [17] See Respondent’s Exhibit 27 (photo #12). [18] See Respondent’s Exhibit 16. [19] Respondent’s Exhibit 18. [20] See A.R.S. § 32-1154(A). [21] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [22] See A.A.C. R2-19-119(B)(2). [23] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [24] Black’s Law Dictionary at page 1220 (8th ed. 1999). [25] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [26] See A.R.S. § 32-1154(A)(22), which includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.” [27] A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” [28] A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [29] Webb v. Arizona Board of Medical Examiners, 202 Ariz. 555, 558, ¶ 9, P.3d 505, 508 (App. 2002) (citing Comeau v. Arizona State Board of Dental Examiners, 196 Ariz. 102, 106, ¶ 18, 993 P.2d 1066, 1070 (App. 1999)).

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