ALJDEC decisions subject to certification as final

2014A-4777-RFA-ROC · Registrar of Contractors · 2017-05-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

James E Ory and Tammy Morse-Ory,

COMPLAINANTS,

Fosdick Enterprises Inc.,

DBA: K F Builders ,

License No: 093472

RESPONDENT.

No. 2014A-4777-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 26, 2017

APPEARANCES: Complainants appeared on behalf of themselves. Karl Fosdick appeared on behalf of Respondent Fosdick Enterprises Inc. DBA: K F Builders. Assistant Attorney General Thomas Raine appeared on behalf of the Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors, (hereinafter, “Registrar”), issued License No. 093472 to Respondent.

On or about November 21, 2014, the Registrar received a complaint against Respondent from Complainant James Ory, (hereinafter “Mr. Ory”), alleging poor workmanship in the construction of a new home. See Exhibit 1.

On or about March 16, 2015, the Registrar received an amended complaint from Mr. Ory.

On July 10, 2015, the Registrar issued a citation against Respondent charging possible violations of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

Respondent filed a timely answer to the July 10, 2015 citation.

6. On or about July 10, 2015, Complainant Tammy Morse Ory filed a second amendment to the complaint that was processed under a new case number.

7. On September 28, 2015, the Registrar issued a citation against Respondent charging possible violations of A.R.S. § 32-1154(A)(2), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22). See Exhibit 6.

8. On February 17, 2016, an administrative hearing was held. In her March 4, 2016 Decision, Administrative Law Judge Suzanne Marwil concluded:

Respondent conceded that its subcontractor installed a 3 ton air conditioning unit in Complainants’ guesthouse rather than the 3.5 ton unit the parties had agreed upon. Undisputed credible evidence in the file and confirmed by Pennington at hearing established that the unit installed was too small for the guesthouse and failed to adequately cool a room on the southwest side of the guesthouse. Accordingly, Complainants have met their burden to prove a violation of A.R.S. § 32-1154(A)(2). The Tribunal takes no position on whether the guesthouse required an air conditioning unit that was larger than the 3.5 ton unit proposed by Respondent’s subcontractor and agreed to by Complainants.

Undisputed credible evidence contained in the Registrar’s file established Respondent did work of questionable quality in Complainants’ home leading to the issuance of three separate Directives from the Registrar concerning poor workmanship. Thus, Complainants established Respondent’s work on the above items was not done in a professional and workmanlike manner in violation of A.A.C. R4-9-108, and thereby of A.R.S. § 32-1154(A)(3).

9. On March 30, 2016, the Registrar issued a Notice of Acceptance of Administrative Law Judge Decision.

10. On or about July 10, 2015, Complainant filed a claim with the Residential Contractors’ Recovery Fund, (hereinafter “the Fund”), to recover the cost of repairing the water damage to the ceiling and of replacing the air conditioning unit in the guest home. The claim form indicated that the lowest bid that Complainants had received to correct these items was $10,831.67, and that Complainants would not receive a payment from Respondent’s bond company. See Exhibit 8.

11. On March 20, 2017, the Registrar issued a Notice of Claim for Administrative Payout. The Registrar determined that Complainant would receive a payout of $10,029.58 from the recovery fund.

12. Respondent requested a hearing.

13. The Registrar referred the matter to the Office of Administrative Hearings, (hereinafter, “OAH”), for an evidentiary hearing.

14. A hearing was held on April 26, 2017.

Hearing Evidence

15. On January 28, 2015, Investigator Timothy Pennington, (hereinafter “Investigator Pennington”), sent Respondent a directive from the Registrar based upon the complaint received from Mr. Ory on November 21, 2014. The directive provides, in relevant part, as follows:

After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). You are hereby directed to remedy the following violations by the appropriate means:

Guest bathroom:

1 Peeling paint on top of door

2 Crack in grout that runs from the bathroom into the guest bed room.

Man [sic] room:

3 Crack above window that runs up to ceiling and on ceiling to bathroom

Living room ceiling:

4 Every drywall seam is visible.

5 Cracks in ceiling where ceiling was repaired from A/C water damage

Powder room:

6 Door frame gap between wall and door

7 Blue paint and scratches on white door frame

Living room:

8 Flooring – Areas throughout where grout is missing and/or cracks

Main garage:

9 Drywall crack in ceiling

10 Patio Cracks in ceiling

Guest house:

11 Two back doors stucco patch and paint looks unfinished[.] Stucco around door texture is different[.]

12 Driveway pavers have high and low spots causing lots of water to back up in the garage when water is on driveway.

13 Electrical-Paid $230 for electrical change orders (3 way & fan switches) and never received work[.]

One Switch operates nothing and there are no three way switches in Guest house[.]

14 Ceiling drywall damage from A/C leak was repaired and drywall cracked out

15 Living room base board separating from wall

Correct by the appropriate means

16. On April 7, 2015, Investigator Pennington issued a second directive to Respondent, based upon the amended complaint received from Mr. Ory on or about March 16, 2015 which provides, in relevant part, as follows:

Both items on Guest House

Paver driveway and garage floor foundation causing water to run In [sic] the garage. The last foot or two of the garage floor is higher than the inside floor, causing it to direct water into, instead of away from the garage. Entire garage floor needs to be pitched so that it directs all water away from the garage. This might also require the pavers to be lowered more so that they will also direct the water down the driveway and away from the garage.

Garage shop door does not work properly. The door is not square, there are uneven gaps, left side jam is deranged/broken near the upper hinge from previous attempts to fix door. It appears warped and in places you can’t even put a piece of paper between the door and the jam, which during rain and humidity cause it to swell and you can’t open it. On a normal day this door does not operate properly. The door is so tight that the hatch bolt beveled face cannot strike the striker properly. The only way to close the door is to turn the door handle.

Correct by the appropriate means

17. On July 30, 2015, Investigator Pennington issued a third directive from

the Registrar, based upon the complaint received from Mrs. Ory on or about July 10, 2015 which provides, in relevant part, as follows:

1. Guesthouse drain lines half in and half out of stucco

2. Guesthouse drain lines -Rusty water and stains in less than a year

3. Guesthouse seams on duct work and handler not properly sealed

4. The invoice stated 3.5 ton unit to be installed and the unit installed is a 3 ton. The room in the south west corner of the home appears to be substantially hotter than the rest of the home.

Correct by the appropriate means

18. At hearing, Mr. Fosdick testified on behalf of Fosdick Enterprises. The Registrar presented the testimony of the Supervisor of the Recovery Fund, Doug Ulmer, (hereinafter “Mr. Ulmer”), and submitted ten exhibits.

19. Mr. Ulmer testified that he is the Supervisor of the Recovery Fund. Mr. Ulmer stated that he had personally reviewed Complainants’ claim for payment from the Fund. Mr. Ulmer said that he determined that Complainants were eligible for payment from the Fund for their actual damages.

20. Mr. Ulmer testified that the Registrar must review all documentation that is necessary on a claim for a payout from the Fund before the Registrar makes a decision for a payout. Mr. Ulmer stated that he reviewed the entire file in this matter, including the 3 bids. Mr. Ulmer determined that a proper payout from the Fund for Complainants’ actual damages is the sum of $10,029.58.

21. Mr. Ulmer testified that he created a Recovery Fund Cost spread sheet in order to determine the final payout recommendation. Mr. Ulmer testified that chose the lowest bid to repair the drywall of Complainant’s living room ceiling in the amount of $2,295.20. Mr. Ulmer stated that he chose the lowest bid to paint Complainant’s living room ceiling in the amount of $747.71. Both bids were from TWD. Mr. Ulmer testified that he chose the lowest bid to change the air conditioning unit in Complainant’s guest house in the amount of $6,986.67. The bid selected to repair the air conditioning unit was from Archer Aire Mechanical. Mr. Ulmer determined that the total payout should be $10,029.58.

22. Mr. Ulmer’s testimony is found to be credible.

23. Respondent did not dispute the amount of the payout or how it was calculated. Respondent contended that it should not be liable for the payout because the substandard work was performed by its subcontractor and not Respondent.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132(A) provides that “[a]n award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines. . . .” Respondent bears the burden of proof to establish that the proposed payout from the Fund is incorrect by a preponderance of the evidence.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

After review of all the evidence, the Tribunal concludes that the award provided by the Fund is an accurate reflection of Complainant’s actual damages. The award appears to properly remedy the workmanship violations for which Respondent was responsible. Judge Marwil found that Respondent violated A.R.S. § 32-1154(A)(2) when its contractor installed an air conditioning unit other than that what was agreed upon between Complainaint and Respondent. Judge Marwil also found that Respondent violated A.R.S. A.R.S. § 32-1154(A)(3) by failing to correct to a minimum standard the visible stains/seams on the drywall of the living room ceiling and cracks it the ceiling from water damage and lack of a three-way electrical switch. Based upon the evidence provided, the Tribunal finds the scope of bids from TWD and Archer Aire Mechanical are appropriate Complainant is accordingly entitled to a payout from the Fund in the amount of $10,029.58.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, Complainant receive a payout from the Residential Contractors’ Recovery Fund in the amount of $10,029.58.

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 40 days from the date of that certification.

Done this day, May 9, 2017.

/s/ Velva Moses-Thompson

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors