ALJDEC decisions subject to certification as final

2015A-2460-ROC · Registrar of Contractors · 2016-03-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 25, 2016, at 8:00 a.m. APPEARANCES: River Breeze R V LLC (hereinafter “Complainant” or “River Breeze”) was represented by its attorney, John Churchill, Esq. D T Construction LLC (hereinafter “Respondent” or “DT”) was represented by its attorney, Emillie Bell, Esq. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

The hearing was convened to determine whether Respondent violated the charged provisions A.R.S. §§ 32-1154(A)(2), 32-1154(A)(3), and 32- 1154(A)(22) as alleged by Complainant and as cited by the Registrar of Contractors (hereinafter “Registrar”). Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT Background and Procedure Respondent is the holder of License No. KB-2.185746-D issued by the Registrar. Respondent’s License was current on March 11, 2016. River Breeze is an RV park which operates its own onsite sewage treatment plant. The onsite sewage treatment plant was renovated and Respondent contracted to fabricate the replaced steel tanks, baffles, walks, etc. The eroded portions of the system were replaced and Respondent welded and/or fabricated the reconstruction of the entire sewage treatment plant assembly. After cleaning and sand blasting the system the Respondent painted the system with a special epoxy coating that was supplied by the Complainant. The special epoxy coating failed and Complainant requested that the Respondent properly correct the failed epoxy coating. When the Respondent failed to comply with the Complainant’s request the Complainant filed a Complaint against Respondent with the Registrar. Pursuant to the filing of the formal Complaint, an assigned agency Investigator conducted an onsite inspection at the sewage facility. On August 4, 2015, a written Directive was issued by the Registrar. The written Directive provided, 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:

1. The Respondent has been determined to have been operating as an independent contractor and not an employee of River Breeze RV LLC for the re-construction of the onsite sewage plant. Respondent has been determined to be responsible for his workmanship which would include the proper surface preparation and the proper preparation and application of the “special epoxy coating”. 2. That coating is failing in numerous places. Independent laboratory testing appear to indicate that the metal surfaces were not properly prepared per manufacturers specifications, that the coating was not mixed, nor applied per manufacturers specifications. 3. RESPONDENT SHOULD, AT HIS SOLE EXPENSE, DETERMINE THE CAUSE AND CORRECT BY APPROPRIATE METHODS, THE FAILING “EPOXY COATING” ON ALL OF THE REFURBISHED SEWAGE TREATMENT PLANT.

Respondent failed to comply with the written Directive. After Respondent failed to comply with the Registrar’s written Directive, Complainant requested the Registrar to issue a Citation against Respondent’s license. On September 29, 2015, the Registrar issued a Citation for Alleged Violations of A.R.S. § 32-1154 and rules adopted by the Registrar. That Citation contained three charges: Charge 1: A violation of A.R.S. § 32-1154(A)(2).[1]

Charge 2: A violation of Rule 4-9-108, titled ‘Minimum construction Standards,’ in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3).[2]

Charge 3: A violation of A.R.S. § 32-1154(A)(22).[3]

Hearing Evidence The assigned Registrar Investigator, Cliff Corlett (hereinafter “Investigator Corlett”), testified that he had performed the initial onsite inspection and that he had prepared the written Directive. Investigator Corlett stated that there was no dispute that the epoxy coating that the Respondent had applied to the sewage system had failed. Investigator Corlett said that no corrective work had taken place. Investigator Corlett said that he determined that the Respondent was operating as an independent contractor and not an employee at the construction project.[4] Investigator Corlett acknowledged that he had not inspected that portion of the sewage facility that was below the water line. Investigator Corlett’s testimony is found to be credible. Dennis W. Neal (hereinafter “Mr. Neal”) testified that he is the managing member for the Complainant. Mr. Neal stated that Complainant contracted with the Respondent to perform the renovation of the Complainant’s sewage system on a time and materials basis. Mr. Neal said that Respondent was a contractor on the construction project. Mr. Neal said that Complainant paid the Respondent $400.00 per hour for welding and $250.00 per hour for labor. Mr. Neal denied that he had given any instructions to the Respondent on how to perform proportion for the coating product or how to mix and apply the coating product. Mr. Neal said that the coating product failed within two months of its application. Joseph L. Keilbey (hereinafter “Mr. Keilbey”) testified that he owns SW Coating Consultants. Mr. Keilbey stated that he is the manufacturer’s representative for Tnemec which manufactures the coating that Respondent applied to the sewage system. Mr. Keilbey said that he met with a representative from the Respondent before the coating was applied and explained the necessary surface preparation, product mixture, and product application prior to the coating material being applied to the sewage system. Mr. Keilbey reviewed the written report prepared by KTA-Tator, Inc.[5] Mr. Keilbey said that Respondent failed to prepare the surface correctly, that Respondent failed to mix the product correctly and that Respondent failed to apply the product correctly. Mr. Keilbey opined that the entire coating application needs to be removed and reapplied in a correct manner. Mr. Keilbey’s testimony is found to be credible. James Grimes (hereinafter “Mr. Grimes”) testified that he is the sewer system manager for the Complainant. Mr. Grimes denied that he had ever instructed the Respondent on how to perform preparation, mixing or application of the coating product. Mr. Grimes acknowledged that he had expressed concern about the amount of time that Respondent was taking to complete the construction project. Doyle Thompson (hereinafter “Mr. Thompson”) testified that he is the qualifying party for the Respondent. Mr. Thompson stated that the majority of Respondent’s construction work has to do with the installation of manufactured residences. Mr. Thompson said that he prepared the bid for the construction project.[6] Mr. Thompson said that the plans originally called for the application of a cold tar epoxy to the sewage system. Mr. Thompson said that the Complainant chose to use the Tnemec coating material instead. Mr. Thompson said that he was working as an employee on the construction project rather than an employee. Mr. Thompson said that he thought that Mr. Grimes was his supervisor. Mr. Thompson said that Mr. Grimes gave him instructions on how to mix and apply the coating product. Mr. Thompson said that the Complainant failed to provide a color chart so that he could determine the color of the surface preparation required for the product. Mr. Thompson acknowledged that the application of the Tnemec product had failed and that the coating product requires removal and replacement. Mr. Thompson acknowledged that there were no change orders on the construction project. Troy L. Scott (hereinafter “Mr. Scott”) testified that he was helping Mr. Thompson with the construction project at River Breeze. Mr. Scott said that he was working as an employee at the construction site. Mr. Scott said that he thought that Mr. Grimes was his supervisor on the construction project. Mr. Scott said that he thought that the Complainant “strong armed” Mr. Thompson into completing the project early. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32- 1154(A). The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). Investigator Corlett credibly testified that the epoxy coating that the Respondent had applied to the sewage system had failed. Investigator Corlett stated that he determined that the Respondent was operating as an independent contractor and not an employee at the construction project. Mr. Keilbey credibly testified that Respondent failed to prepare the surface correctly, that Respondent failed to mix the product correctly and that Respondent failed to apply the product correctly. The preponderance of the evidence established that Respondent failed to apply the Tnemec product in accordance with the manufacturer’s recommendations and applicable workmanship standards. Complainant established that Respondent failed to comply with the Registrar’s written Directive. This Tribunal concludes that Respondent violated the charged provisions of A.R.S. §§ 32- 1154(A)(2), 32-1154(A)(3), namely, A.A.C. R4-9-108, and A.R.S. 32- 1154(A)(22). RECOMMENDed order In view of the foregoing, it is recommended that License No. KB- 2.185746-D of Respondent shall be suspended commencing on the effective date of the Registrar’s Order, until the Registrar receives and accepts written proof that Respondent has fully complied with the terms of the written Directive issued in this matter. It is further recommended that Respondent pay the sum of $500.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. § 32-1154(E). The failure by Respondent to pay the entire amount of the aforesaid civil penalty, on or before 30 days following the effective date of the Order entered in this matter, shall result in the automatic revocation of Respondent’s contractor’s licenses effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless payment of any outstanding prior civil penalty is tendered. In the event of certification of this 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 the certification Done this day, March 11, 2016.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] A.R.S. § 32-1154(A)(2) provides, in relevant part, as follows:

A. 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: . . . . 2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect that is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code. [2] A.R.S. § 32-1154(A)(3) includes among the grounds for disciplinary action against a contractor’s license, violation of any rule adopted by the registrar. A.A.C. R4-9-108 provides, in pertinent part, as follows:

A. A contractor shall perform all work in a professional and workmanlike manner.

B. A contractor shall perform all work in accordance with any applicable building codes and professional industry standards.

C. All work performed by a contractor in a county, city, or town that has not adopted building codes or where any adopted building codes do not contain specific provisions applicable to that aspect of construction work shall be performed in accordance with professional industry standards.

[3] A.R.S. § 32-1154(A)(22) provides as follows:

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. [4] See Exhibit 1 (Employee/Independent Contractor Evaluation Factors/Attachments). [5] See Exhibit E (KTA-Tator Report). [6] See Exhibit A (DT Construction Bid/Estimate).

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