ALJDEC decisions subject to certification as final

2015A-3913-ROC · Registrar of Contractors · 2016-05-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 19, 2016, at 10:00 a.m. APPEARANCES: Samia Hanna (“Complainant”) appeared on her own behalf; Pep Aire LLC (“Respondent”) appeared through Jon Ian Feldman (“Mr. Feldman”), its qualifying party/employee. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On or about July 22, 2014, the Arizona Registrar of Contractors (“the Registrar”) issued License No. R39R.292284-R for residential air conditioning and refrigeration to Respondent. 2. On or about September 15, 2015, Complainant filed a complaint with the Registrar, alleging that Respondent had contracted to install a new air conditioning unit on a house that she owned at 9040 E. 35th Circle, Tucson, AZ 85710 for the price of $3,450.00, but that it had installed a unit that was not new, but that had been rejected by the manufacturer and that had the model and serial numbers removed from the unit. 3. The Registrar assigned the complaint to Investigator Mike Nieves for an investigation. Investigator Nieves performed a jobsite inspection and on October 5, 2015, issued a Directive to Respondent, requiring it to remedy the violation of the unit not having the model and serial numbers on it on or before 5:00 p.m. on October 21, 2015. 4. After Respondent did not return any money to Complainant, she requested a hearing. 5. On February 8, 2016, the Registrar issued a Citation against Respondent, charging cause to discipline its license under A.R.S. §§ 32-1154(A)(2) and 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32-1154(A)(6), and 32-1154(A)(22). 6. Respondent filed a timely written answer to the Citation, denying that any cause existed to discipline its license. Respondent affirmatively alleged Complainant was “flipping” the house and that Respondent had contracted to install a new reconditioned air conditioner condenser because it was cheaper and that the model and serial numbers had been removed to void the manufacturer’s warranty prior to Respondent’s purchase and that Complainant had consented to the installation of the reconditioned unit. Respondent further alleged that Complainant had sold the house and that Respondent had contacted the new owners to offer to provide the 2-year warranty on the unit that the Registrar requires. 7. A telephonic evidentiary hearing was held on April 19, 2016, at which the parties’ representatives appeared from the Registrar’s Tucson office. Complainant testified and submitted one exhibit. Respondent presented the testimony of Mr. Feldman, the employee who installed the condenser, and Bonnie Katz, Respondent’s member, and submitted two exhibits. Because Investigator Nieves had retired, the Registrar’s Investigator Arlo Houston testified about the Registrar’s procedures and workmanship standards. Hearing Evidence 8. Complainant attached to the complaint that she filed with the Registrar Respondent’s January 14, 2015 proposal to install a 5-ton York condenser on the house, including a 10-year manufacturer’s warranty, for $3,450.00. The proposal showed that on January 14, 2015, Complainant had paid in full for the unit on her American Express card. The proposal was not signed by Complainant or a representative of Respondent. 9. Investigator Houston testified that Investigator Nieves’ jobsite inspection notes indicated that the model and serial number had been filed off the exterior of the unit. The jobsite inspection notes that were included in the Registrar’s electronic file indicated that Respondent did not attend Investigator Nieves’ September 29, 2015 jobsite inspection. 10. Investigator Houston testified that all of the charged violations were based on Respondent’s alleged failure to install the new unit that Complainant said that it had contracted to install. Investigator Houston stated that if Complainant had consented to the installation of a refurbished unit that the manufacturer had sold to Respondent at a reduced price, Respondent would not have violated any of the charged statutes. 11. Complainant pointed out that the contract that she had attached to her complaint did not refer to a refurbished unit. Complainant denied that she ever consented to the installation of a refurbished unit. Complainant testified that she thought that Respondent was installing a new unit with a 10-year manufacturer’s warranty. 12. Ms. Katz testified that she had a lengthy conversation with Complainant’s partner in the sale of the house, her son, and that he agreed that Respondent would install a refurbished condenser at a lower cost. Ms. Katz testified that the cost of a new 5-ton 17- seer unit with a new condenser was $7,500.00 and that usually, Respondent replaced the furnace at the same time it replaced an air conditioner. Mr. Feldman testified that the cost of a new 5-ton air conditioning system, including the furnace, was approximately $10,000.00. Ms. Katz testified that to save money on the “flip,” Complainant agreed to the refurbished condenser and that Respondent would not replace the furnace. 13. Mr. Feldman testified that Respondent replaced the parts on the condenser that caused the manufacturer to reject the unit. 14. Ms. Katz testified that Respondent’s office staff is in Phoenix. Ms. Katz testified that the proposal that Complainant attached to her complaint was issued by the Phoenix staff in error based on a misunderstanding of Respondent’s scope of work. 15. Mr. Feldman testified that Respondent left the model number and serial number on the inside of the unit so that it would not be suspected of having been stolen. 16. Mr. Feldman testified that Complainant had agreed that Respondent would install a refurbished condenser to save money and that he had prepared a contract on a piece of cardboard to memorialize her understanding. Although Respondent had attached the handwritten document to its written answer, the document was completely illegible. Respondent submitted a scanned document at the hearing that was more legible[1] and Mr. Feldman read the terms of the handwritten document into the record.[2] 17. The handwritten document is dated January 14, 2015, and refers to a refurbished condenser with a new coil, no furnace, and a 10-year warranty on the coil, with a price of $3,450.00. 18. The signature on the handwritten document is very similar to the signature on the complaint that Complainant filed with the Registrar. 19. Complainant denied that she ever signed the handwritten document. 20. Complainant sold the house on September 30, 2015. 21. Mr. Feldman testified that he introduced himself to the new owners and informed them that Respondent would warranty the air conditioning condenser for two years. Mr. Feldman testified that the new owners told him that the air conditioning system was working well. 22. Respondent submitted a dispute summary from American Express that showed that on November 10, 2015, American Express had reversed the $3,450.00 charge for the air conditioner on Complainant’s American Express card.[3] Mr. Feldman testified that Complainant had not paid anything for Respondent’s work and that she wanted to profit from the complaint that she filed with the Registrar. 23. Complainant submitted an American Express statement for her account that showed on November 25, 2015, it had charged her account $3,450.00 for “Dispute – Pep Solar.”[4] CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[5] 2. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[6] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.”[7] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[8] 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.”[9] 4. Complainant established that the condenser that Respondent installed on the house that she was preparing to “flip” was refurbished and that the model and serial numbers had been removed from the exterior of the unit. 5. Respondent established that Complainant consented to the installation of a refurbished condenser to save money on the remodel in order to make a greater profit on the “flip.” 6. Therefore, Complainant did not establish cause to discipline Respondent’s contractor’s license under A.R.S. §§ 32-1154(A)(2)[10] and 32-1154(A)(3),[11] namely A.A.C. R4-9-108,[12] A.R.S. § 32- 1154(A)(6),[13] or 32-1154(A)(22).[14] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the order in this matter, Complainant Samia S. Hanna’s Complaint in Case No. 2015-3913 against Respondent Pep Aire LLC’s License No. R39R.292284-R shall 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 five days from the date of that certification. Done this day, May 2, 2016.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See Respondent’s Exhibit 1. [2] Mr. Feldman’s reading of the exhibit may be found on the audio record at approximately 1 H 26 M. [3] See Respondent’s Exhibit 2. [4] Complainant’s Exhibit A. [5] See A.R.S. § 32-1154(A). [6] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [7] See A.A.C. R2-19-119(B)(2). [8] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [9] Black’s Law Dictionary at page 1220 (8th ed. 1999). [10] A.R.S. § 32-1154(A)(2) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of plans or specifications or any building codes of any state or any political subdivision of the state in any material respect which 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.” [11] 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.” [12] 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.” [13] A.R.S. § 32-1154(A)(6) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[t]he doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” [14] A.R.S. § 32-1154(A)(22) 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. . . .”

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