ALJDEC decisions subject to certification as final

2015A-1022-ROC · Registrar of Contractors · 2016-03-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 28, 2015 and March 8, 2016 APPEARANCES: David Brnilovich, Esq. for Complainant; Randal L. Stowell, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ FINDINGS OF FACT 1. On October 30, 2015, the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for hearing on December 28, 2015, at the Office of Administrative Hearings in Phoenix, Arizona. 2. Respondent R Riggs Construction, Inc. (“R Riggs”), holds license numbers B.110047-R and B-2.154180-C issued by ROC.[1] Rockford Ray Riggs III is R Riggs’s qualifying party. 3. The Notice of Hearing shows that the hearing was set to consider the charges made in the Citation and Complaint.[2] 4. Through the Citation, ROC alleges that R Riggs may have violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22). The Citation shows that if the Administrative Law Judge finds that either subsection has been violated, ROC may suspend or revoke R Riggs’s license.[3] 5. Complainant Ariel Carlos Villa owns a house located at 10538 West Villa Del Sol in Peoria Arizona. During the time at issue, Mr. Villa did not live in the house, but was using it as a rental property. The house sustained fire damage and Mr. Villa hired R Riggs to make repairs. 6. The parties entered at least two contracts or agreements, the first for demolition activities and the second for reconstruction work. The second agreement was dated November 24, 2014. 7. The house was insured by State Farm Insurance. 8. The scope of the reconstruction work was determined by State Farm’s claims adjuster. The second agreement shows that R Riggs would contact State Farm if it found additional damage while conducting it work. 9. On March 16, 2015, while the reconstruction work was ongoing, Mr. Villa filed a complaint with ROC alleging deficiencies on R Riggs’s part. In a letter dated March 24, 2015, R Riggs informed ROC that it had informed Mr. Villa (before he filed his complaint) that it was willing to fix any items listed in his complaint. 10. In response to Mr. Villa’s complaint, ROC Investigator Timothy Pennington conducted a job-site inspection on March 30, 2015. 11. Mr. Villa’s complaint item 5 was that were walls out of plumb. Mr. Pennington substantiated this item. As of March 30, 2015, drywall had not been installed at the house. 12. R Riggs’s position was that with the exception of one interior wall, it had not worked on the walls, which were part of the original construction. Mr. Pennington’s opinion was that this did not matter, that R Riggs should have contacted State Farm and had repair of the walls added to the scope of the project, and that R Riggs’s failure to do so constituted a violation of the workmanship standards.[4] 13. Mr. Villa testified to the effect that State Farm was unwilling to change the scope of work to add repair of the walls. Justin Riggs, an estimator employed by R Riggs, testified that State Farm’s adjuster had informed R Riggs that State Farm would not include the walls in the scope of work. Mr. J. Riggs also testified that R Riggs did not consider the out-of-plumb walls to be “damage” within the meaning of the second agreement. 14. Leonard Pililaau, a licensed contractor who Mr. Villa hired to complete the reconstruction of the house, testified that removing the trusses from a house can cause the walls to go out- of-plumb. As part of its demolition work, R Riggs did remove the roof and trusses from the house, but there was no substantial evidence adduced showing that this work caused the walls to go out of plumb.[5] 15. On March 30, 2015, Mr. Pennington issued ROC’s first Directive, in which ROC directed R Riggs to remedy by appropriate means “multiple walls out of plumb, loose, not straight.” The first Directive, by its terms required R Riggs to remedy this item no later than April 15, 2015. Mr. J. Riggs testified that given the short time ROC allowed for it to make the corrections, it had several members of a framing crew conduct the repairs. 16. On April 23, 2015, Mr. Pennington conducted a compliance inspection. Mr. Pennington did not invite R Riggs to appear at that inspection because it was being conducted only to see if R Riggs was in compliance. 17. Mr. Pennington’s Compliance Inspection Jobsite Notes show that the corrective work had been completed with the exception of “new wall framed closet left side out of plumb.” Mr. J. Riggs testified that to the effect that R Riggs was not informed that it had not properly corrected the walls as directed (i.e., that ROC never informed R Riggs that the work ROC ordered it to complete was not properly done). 18. The first Directive shows that ROC did not substantiate any of the other allegations in Mr. Villa’s complaint. At the hearing, City of Peoria inspector Erik McMorrow testified that on March 6, 2015, he had issued a Correction Notice covering what appear to be some of the same items about which Mr. Villa complained to ROC. Mr. McMorrow acknowledged however that another City inspector had previously approved the work for which he issued the Correction Notice. 19. On May 20, 2015, Mr. Pennington conducted a second jobsite inspection. At the second inspection, Mr. Pennington found that nine items required correction. 20. On May 20, 2015, Mr. Pennington issued ROC’s second Directive, in which ROC directed R Riggs to remedy by appropriate means: framing gaps larger than 3/8 inches; large gaps around windows; burnt 2 x 4 in truss not sealed; clean up broken tiles; clean up garbage scattered by trades; fascia on roof not cut evenly; poor cut on fascia; corners of fascia are not cut even; and 1 x 3 L- mold trim missing.[6] 21. The second Directive, by its terms required R Riggs to remedy these issues no later than June 8, 2015. 22. R Riggs informed Mr. Pennington that it had completed repairs required by the second Directive. 23. On June 29, 2015, Mr. Pennington conducted a compliance inspection at the house. Mr. Pennington did not invite R Riggs to appear at that inspection because it was being conducted only to see if R Riggs was in compliance. 24. Mr. Pennington’s Compliance Inspection Jobsite Notes for the June 29th inspection show that there were two gaps that were not properly corrected and that the closet was not properly plumb. At the hearing, Mr. Pennington agreed that this work could be completed in about thirty minutes or so. 25. Mr. J. Riggs testified to the effect that R Riggs had intended to make all the required repairs, but had conducted some repair work in the wrong location. 26. R Riggs argued that ROC’s second Directive was too general and did not provide the information necessary to insure that all corrections were made. R Riggs asserts that had it been allowed to attend the second compliance inspection, this could have been addressed. 27. Mr. Pennington testified to the effect that the areas to be corrected were pointed out during the second jobsite inspection, and as such, the second Directive was sufficiently clear. 28. After the second compliance inspection, R Riggs, through counsel, obtained from ROC photographs of the three areas that Mr. Pennington found had not been properly corrected. R Riggs then went to the house to make these corrections. 29. In a Request for Compliance Inspection dated August 3, 2015, R Riggs informed ROC that on July 31, 2015, it had repaired the three remaining items. The Request noted however, that Mr. Villa did not agree that these repairs had been made, that Mr. Villa was not willing to drop the complaint, and that Mr. Villa had hired another contractor to finish the work at the house. 30. ROC did not conduct R Riggs’s requested compliance inspection. 31. Mr. Villa testified as to his opinion that R Riggs had not properly repaired the out of plumb walls. This testimony is not consistent with Mr. Pennington’s April 23, 2015 Compliance Jobsite Inspection Notes that show the walls were corrected with the exception of the closet. 32. Mr. Pililaau testified that for the interior walls, his company added shims as required to insure that the drywall would look straight. He also testified that because the walls were already attached to the roof, his company was unwilling to put itself in a position of accepting liability and that they did not contact State Farm to see if it would approve any additional work. 33. It is not unusual for construction work to require correction or remediation as work progresses on a project. CONCLUSIONS OF LAW 1. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 2. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3). 4. A preponderance of the evidence is: The 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.

Black’s Law Dictionary 1373 (10th ed. 2014). 5. Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 6. “Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B). 7. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 8. Ariz. Rev. Stat. section 32-1154(A) provides that The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: ***** 3. Violation of any rule adopted by the registrar. ***** 22. Failure 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. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held. (Underscore added.)

9. Ariz. Admin. Code section R4-9-108(A) provides that “A contractor shall perform all work in a professional manner.” 10. With the exception of the closet wall, the preponderance of the evidence does not show that the out of plumb walls represent a workmanship violation on R Riggs’s part, because R Riggs did not do any work on those other walls. Although Mr. Pennington provided his opinion that R Riggs was nevertheless responsible for the workmanship of these walls, there was no legal authority presented to show that R Riggs committed a workmanship violation by its failure to convince State Farm to pay for any required repairs to the walls.[7] 11. The preponderance of the evidence does show that R Riggs committed workmanship violations related to the closet wall being out of plumb and with regard to the items listed in ROC’s second Directive. The preponderance of the evidence also shows that R Riggs did not comply with ROC’s Directives because it did not complete all the required repair work in the time ROC allotted. 12. Because R Riggs has violated Ariz. Rev. Stat. sections 32- 1154(A)(3) and (A)(22), its license is subject to discipline. Several factors in mitigation weigh against a severe penalty: R Riggs showed a willingness to complete all the repairs ROC ordered it to complete, including the out of plumb walls that it did not believe were its responsibility; the items that were not timely repaired were minor items that would have required only about thirty minutes to fix; and the reconstruction of the house was ongoing when the complaints were filed and R Riggs had informed Mr. Villa that it was willing to make the repairs he believed were necessary prior to Mr. Villa filing his initial complaint. 13. Based on the facts and circumstances of this matter, a $100.00 civil penalty is appropriate. See Ariz. Rev. Stat. § 32-1154(E).

RECOMMENDED ORDER IT IS RECOMMENDED that on or before the effective date of the final Order in this matter R Riggs Construction, Inc. must pay to the Registrar of Contractors a civil penalty of $100.00 in certified funds. 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 is forty days after the date of that certification.

Done this day, March 24, 2016.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] ROC’s website shows R Riggs’s license numbers as 110047 and 154180. Consistent with existing policy, in this Decision the numbers set out in the caption are used. [2] The Notice of Hearing does not provide the date the Citation was issued or when the Complaint was issued or filed. There appears to be no dispute that the Citation was issued on July 10, 2015, or that the Complaint was filed on March 16, 2015, with a second or supplemental filing made on May 1, 2015. [3] The Citation shows that ROC could not determine whether any violations had actually occurred, which is why the matter was set for hearing. [4] Mr. Pennington’s Jobsite Inspection Notes for the March 30, 2015 inspection show that there was a representative of State Farm present at the inspection. [5] Mr. J. Riggs testified that he was not sure if the walls were braced, but that there would be no need to do so if the walls were “red-headed.” [6] Although not explicitly noted in the second Directive, the items ROC ordered R Riggs to repair were items listed in Mr. Villa’s second or supplemental complaint, filed on May 1, 2015. The second Directive did not include the closet in the list of items ROC ordered R Riggs to repair. [7] Mr. Pennington made reference to the concept that a contractor may be responsible for work completed on top of a defective surface. In this case however, R Riggs had done no work on the walls at issue and had not “accepted” the walls by, for example, covering them with drywall.

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826