ALJDEC decisions subject to certification as final

2015A-2494-ROC · Registrar of Contractors · 2016-07-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 13, 2016 APPEARANCES: Barbara Kay Butler, Complainant; Robert Kozak, Esq., Attorney for the Respondent; John T. Barenz, Respondent and Qualifying Party; Jim Dimond, Sr. Inspector, Arizona Registrar of Contractors ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson, Esq. _____________________________________________________________________ Complainant brings this action against Respondent alleging abandonment of the project, poor workmanship, failure to follow plans and specifications, and failure to comply with a Corrective Work Order with regard to construction of a portion of the existing home done by Respondent. Respondent timely filed its Response to the Complaint wherein it denied the allegations and affirmatively asserted the Complainant wrongfully terminated their contract and ailed to pay Respondent according to the terms of their agreement. This tribunal entered the Complaint file received from the Registrar of Contractors (Registrar) into the record. Notice of Hearing on the Complaint was properly given on May 19, 2016. At the hearing conducted on July 13, 2016, the parties presented evidence, including admitted Exhibits C1 and C2 offered by the Complainant and admitted without objection and considered. Respondent offered Exhibits R1 through 80, which were admitted without objection and considered. Testimony was also presented from the witnesses listed above. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding that Respondent did not did not abandon the project without legal excuse, did not fail to provide contracted services in a professional and workmanlike manner, did not fail to comply with Registrar of Contractor’s Directive to provide corrective action and did not materially deviate from the plans in a manner that prejudiced Complainants. FINDINGS OF FACT According to the public website of the Registrar of Contractors (“the Registrar”), Nos.179391 and 179392, a dual residential and small commercial contractor’s license was issued by the Registrar on October 22, 2002 and, as of the date of hearing, is still in force. The license authorizes Respondent to perform general residential and general small commercial construction. The Registrar’s record does not show any previous discipline regarding Respondent’s licenses. On or about June 10, 2015, Complainant filed a complaint with the Registrar against Respondent’s license based on Respondent’s alleged failure to provide contracted services in a professional and workmanlike manner, failure to follow plans and specifications and abandonment. The Complainant alleged that the date of the contract was September 25, 2014. The Registrar assigned the complaint to its Yavapai County Senior Investigator, Jim Dimond, to investigate. At hearing in this matter, Sr. Investigator Dimond testified that on July 28, 2015, he performed a jobsite inspection. At his inspection, Mr. Dimond noted several workmanship items needed the Respondent’s attention and action. On January 28, 2016, the Registrar issued a Corrective Work Order through its Directive to the Respondent requiring Respondent to remedy certain workmanship violations by appropriate means: a. Resolve oil stains on composite deck b. Resolve coating on metal trusses that do not comply with code or site drawings. c. Hot water circulation pump is not installed, pool does not sit properly on pony wall and door knobs & locks are not installed. Respondent was directed to resolve these issues on or before February 21, 2016. On or about April 28, 2016, the Registrar issued a Citation against the Respondent charging violations of : a. A.R.S. § 32-1154(A)(1) [Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal]; b. A violation of A.R.S. § 32-1154(A)(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.]; c. 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); d. A violation of A.R.S. § 32-1154(A)(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 Abandonment Claim 1. On September 25, 2014 Complainant, by written agreement, hired Respondent to build a structure around an outdoor pool addition[1] at Complainant’s house in accordance with architectural plans that Complainant had procured.[2] The written agreement called for the project to be “substantially complete” on or before February 23, 2015.”[3] The agreement was a fixed-price contract that called for progress payments to be made based on completion of six specified phased draw periods[4]. In addition, the agreement allowed for written change orders.[5] 2. Respondent obtained a permit that initially gave Respondent until late February, 2014 to complete the work described in the contract. However, the scope of work of the project increased as the work proceeded. After the project had commenced, Complainant changed the scope of work to provide that the previously contracted work for an exterior pool surrounding[6] should be changed to require Respondent to build an enclosed pool room.[7] These additions and changes necessarily extended the time for completion of the project. 3. The project began in late September, 2014 and progressed through October, November and December, 2014 and January to late February, 2015. 4. After previous progress payments had been paid by the Complainant, the Respondent presented its March 2, 2015 Invoice to the Complainant for labor and materials for work previously provided in the amount of $4,838.13.[8] 5. On March 2, 2015, the Complainant e-mailed Michael Taylor, her project’s architect, stating that the Respondent’s “…six month contract has expired…”[9] She related in this e-mail that Complainant held the architect’s delays responsible for Respondent’s work delays on the Project “The extended time to resolve the building problems are directly tied to the length of time to get out the revised plans and corrections.”[10] Complainant’s written contract with the Respondent provides : Contractor shall be excused for any delay in completion of this Contract caused by Acts of god, Owner, of Owners agents, or Owner's employee or independent contractor; stormy weather; labor trouble; acts of public bodies, or inspectors (but not related to possible defects in Contractor's performance); extra work; failure of Owner to make progress payments promptly; other contingencies unforeseen by Contractor and beyond its reasonable control. (emphasis added)[11]. . . .

7. On March 3, 2015, the Complainant e-mailed the Respondent advising that Respondent did not complete the project on time under the terms of the contract and that Complainant refused to make further payment.[12] Accordingly, Complainant failed and refused to make any payment on the March 2, 2015 invoice. Other than a March 1, 2015 check in the amount of $350.00 from the Complainant for what the check memo describes as “beam upgrade” in January, 2014,[13] the Complainant has made no other payments to the Respondent since the March 2, 2014 unpaid Invoice of the Respondent.

8. In testimony, John T. Barenz, the Respondent and Qualifying Party, testified he stopped work on the project on or about March 3, 2015 because Complainant refused payment of his March 2, 2015 invoice. [14] By the Complainant’s e-mail of March 3, 2016, Mr. Barenz considered the Complainant had terminated his contract[15] 9. Review of the relevant testimony and exhibits of the parties regarding termination demonstrates the Complainant terminated the Respondent’s contract effective March 3, 2016. 10. Numerous changes ordered by the Respondent in the course of the performance of the instant contract[16], including a huge modification to the scope of the contract, resulted in substantial delays. These delays were not caused by or the fault of the Respondent. The delays were at behest of and caused by the Complainant. 11. By the terms of the contract, the Respondent is excused for any delay in completion of this Contract “…caused by Acts of god, Owner, of Owners agents, or Owner's employee or independent contractor…extra work;…other contingencies unforeseen by Contractor and beyond its reasonable control. . . .[17] 12. Per the Respondent’s March 2, 2015 Invoice and the parties’ contract, Complainant was obligated to pay Respondent the undisputed amount of $4,838.13, but has not done so. 13. Under the Prompt Pay Act [and under the terms of the parties’ contract [See Section 11.1 of the contract], a contractor who legally suspends performance is not required to perform further work until payment is made.[18] Therefore, if Respondent’s position is correct, Respondent was not required to perform further work after March 3, 2016, unless and until Complainant paid the undisputed amount. The Workmanship Claim 14. At hearing, Complainant, Respondent and Investigator Dimond all agree that the oil stains on the composite deck have been removed and the coating on the metal trusses that did not comply with code or site drawings now comply with and have passed code inspection. 15. Complainant’s workmanship assertions regarding the fiberglass pool cracks, installation of the pool, install of the pool’s plumbing and drain, installation of the hot water recirculation pump and that the pool does not sit correctly on the constructed pony wall are all matters for which Respondent has no duty or responsibility. The Complainant admitted at hearing that she contracted with a third-party to install the pool and its related plumbing, pumps and drains. The written contract[19] and testimony at hearing demonstrated that Respondent did not undertake to contract any services related to the installation of the pool or its related plumbing, pumps or drains. 16. Regarding missing doorknobs and locks, unrebutted testimony from Investigator Dimond and the Respondent demonstrate the Respondent has installed all doorknobs and locks in response to Mr. Dimond’s work order of January 28, 2016. 17. Complainant asserts that a self-closing door that Respondent installed has its doorknobs on the wrong side of the door and that the door will not close by itself. Complainant testified that because the room constructed contains a pool, the project can not pass code inspection without the door to the pool room having a functioning, automatically closing door. This problem would normally raise workmanship concerns. However, inasmuch as the Complainant has failed and refused to pay the Respondent as contracted and inasmuch as the Complainant has terminated her agreement with the Respondent, the Respondent is absolved of any duty to provide any additional work or corrective action for the Complainant. 18. None of the other items for corrective action had been addressed because Respondent had suspended work. Many of them are “punch list” type items that are typically fixed at completion of the project.

CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[20] 2. The burden of proof at an administrative hearing is generally upon a Complainant.[21] Further, the standard of proof at hearing is by preponderance of the evidence.[22] Therefore, Complainants bear the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[23] The Complainant has not met that burden. 3. The Citation and Complaint alleges violations of A.R.S. § 32- 1154(A)(1)[abandonment of a contract without legal excuse], A.R.S. § 32- 1154(A)(2)[failure to follow plans, specifications or building codes], A.R.S. § 32-1154(A)(2)(A)(3) by way of Arizona Administrative Code (A.A.C.) R4-9-108 [failure to meet minimum workmanship standards], and A.R.S. § 32- 1154(A)(2)(A)(23) [failure to comply with a CWO]. The evidence does not show violation of those provisions. 4. As found above, the evidence does not show that Respondent abandoned the project without legal excuse. Respondent legally suspended performance under the Prompt Pay Act and is not required to further perform until Complainant pays Respondent the undisputed amount of $4,838.13. Moreover, the Complainant – rightly or wrongly - terminated Respondent’s Contract. Because Respondent has undertaken corrective action to remedy most of the items set forth in the CWO, did legally suspended work thereafter,and, because Complainant terminated Respondent’s contract, Respondent has not violated the other provisions cited. 5. This matter should be dismissed.

RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that Citation and Complaint 2015A-2494-ROC against Respondent John T Barenz Construction, Inc., License No: 179391 and 179392 be dismissed.

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, July 26, 2016.

/s/ Randolph D. Wolfson, Esq. Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Subsequently by Complainant’s Change Orders the project was changed to provide construction for an addition to her home to provide for a full pool enclosure to be constructed [2] Exhibit R-1 [3] Ibid. [4] Id. [5] Id. [6] Exhibit R3 [7] Exhibit R5 [8] Exhibit R63 [9] Exhibit R50 [10] Ibid. [11] Exhibit R1 at Section 11,1 [12] Exhibit R67 [13] Exhibit R62 [14] Under the Prompt Pay Act, Arizona Revised Statutes (A.R.S.) §§ 32-1129 through 32-1129.06, a contractor who legally suspends performance is not required to perform further work until payment is made.[15] Therefore, if Respondent’s position is correct, Respondent was not required to perform further work after March 3, 2015, until Complainants paid the invoice amount. Specifically, A.R.S. § 32-1129.04(E): provides : “A contractor or subcontractor that suspends performance as provided in this section is not required to furnish further labor, materials or services until the contractor or subcontractor is paid the amount that was certified and approved, together with any costs incurred for mobilization resulting from the shutdown or start-up of a project.” [16] Exhibit R67. [17] Changes noted were not minor. The Complainant shifted her entire building plan from construction of surfaces, plumbing and electric for an outdoor pool to ordering the construction of a fully sheltered pool room connect to her house. This major change necessitated the creation of an entirely new set of architectural plans and permitting. Moreover, there were delay issues surrounding the power rating required to install pool equipment that met code. Additionally, it was discovered that a notch was cut into one of the metal beams needed to erect a disabled chair for the pool that, according to testimony received at hearing, was caused by the Complainant. The bean required repairs from an expert in order to meet code. [18] Supra at footnote 11 [Exhibit R1 at Section 11,1]. [19]T A.R.S. § 32-1129.04(E): “A contractor or subcontractor that suspends performance as provided in this section is not required to furnish further labor, materials or services until the contractor or subcontractor is paid the amount that was certified and approved, together with any costs incurred for mobilization resulting from the shutdown or start-up of a project.” [20] Exhibit R1 [21] See A.R.S. § 32-1154(A). [22] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [23] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [24] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

-----------------------

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