ALJDEC decisions subject to certification as final

2015A-3924-ROC · Registrar of Contractors · 2016-08-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 12, 2016 APPEARANCES: Complainants Juli and Phil Haws were represented by Dennis G. Bassi. Respondent Lamont Construction and Development LLC, doing business as Love Enterprises was represented by Lubomyr B. Jeans- Berezowsky. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT Respondent Lamont Construction and Development LLC doing business as Love Enterprises (Respondent) is the holder of License No. 156860 issued by the Arizona Registrar of Contractors (Registrar). On or about March 26, 2015, Complainants Juli and Phil Haws (Complainants) entered into a contract with Respondent to remodel a residential unit. The contract between Complainants and Respondent indicated that Respondent would “furnish the materials and perform the work shown on the drawings as it pertains to the work to be performed on property located at: 1212 Laguna Ave Parker AZ 85344” and included “construction material, labor and allowances” under the “Estimated Contract sum of $60,000.00.” Attachment A to the contract included the estimated budget that indicated an estimated bid amount of $60,100.00 and estimated taxes of $3,545.90, for a total contract amount of $63,645.90. On or about September 15, 2015, the Registrar received a Complaint against Respondent from Complainants alleging, among other things, Respondent had failed to complete various aspects of the project, had failed to start various aspects of the project, had not had had anyone working on the project for one month, refused to provide an itemized list of charges, and had initially quoted $60,000.00, but was now requesting additional charges. The Registrar assigned the complaint to Investigator Cliff Corlett. On or about October 21, 2015, Complainants withdrew the Complaint. On or about January 19, 2016, Complainants requested that the Complaint be reopened. On or about February 8, 2016, Investigator Corlett performed a jobsite inspection. On or about February 25, 2016, Investigator Corlett prepared a written directive to be issued, but the written directive was not mailed on that date. Investigator Corlett then issued the written directive at a later date with a new date for compliance. The written directive to Respondent provided as follows: After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a Citation, discipline of your license and a civil penalty pursuant to A.R.S. § 32- 1154(E) of up to $500.00. Failure to comply with this Directive may also be treated as an aggravating factor should the Registrar pursue discipline of your license[.] You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on March 14, 2016. (New compliance date March 28, 2016)

You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 1: Framing is not complete. Investigator’s Observation: Completed prior to inspection. Governing Rule: No violation could be substantiated.

Complaint Item 2: Wiring is not complete. Investigator’s Observation: Rough wiring completed prior to inspection. Respondent still needs to do the top out finish work, i.e. plug & switch, lights, fans, etc. Governing Rule: A.R.S. §32-1154-A. (3)(namely A.A.C. R4-9-108 Workmanship Standards for Licensed Contractors.

Complaint Item 3: Drywall is not complete. Investigator’s Observation: Completed prior to inspection. Governing Rule: No violation could be substantiated.

Complaint Item 4: Respondent has not had anyone on project for a month. It’s just sitting. Investigator’s Observation: Not a workmanship issue the ROC can assist with. Governing Rule: No violation could be substantiated.

Complaint Item 5: Respondents drawings are off and he blames it on his laborers. Investigator’s Observation: Not a workmanship issue the ROC can assist with. Governing Rule: No violation could be substantiated.

Complaint Item 6: Complainant asked for itemized cost breakdown. Investigator’s Observation: A.R.S. 32-1158-B “Minimum Elements of a Contract”, outlines all the areas that are required by Arizona law regarding construction contracts over $1,000.00. One of the requirements is a description of the work to be performed. A complete copy of the “Minimum Elements of a Contract” requirements is available at the ROC website, www.azroc.gov. Still, this is a contract/money dispute best settled between the parties or another legal forum. Governing Rule: A.R.S. 32-1158-B Minimum Elements of a construction contract.

Complaint Item 7: Initial quote $60,000.00, now Respondent telling Complainant to pay additional fee for permit(s). Investigator’s Observation: The March 26, 2015 contract appears to list $60,000.00 as the "Estimated Contract Sum", any additions and or subtractions to this amount should be in writing, and if not, would be subject to being a contract / money dispute outside the jurisdiction of the ROC. The contract also calls for "Arbitration" regarding any disputes. Again this is not a function of the ROC. As to the permit(s) fees. It is a violation of A.R.S. 32-1154-A,(2) for a license contractor to start any construction project that requires a permit regardless of who is supposed to provide that permit without that permit being in place. In this case the contract calls for the Complainant to obtain the permit, (pay for). However if there are/were any penalties or additional permit fees the Respondent would be responsible to pay those fees at his sole expense. Governing Rule: A.R.S. 32-1154-A,(2) Grounds for suspension and or revocation of a contractor’s license.

Complaint Item 8: Doors are not installed. Investigator’s Observation: RESPONDENT SHOULD PROPERLY COMPLETE ALL WORK ASSOCIATED WITH THIS PROJECT. Governing Rule: A.R.S. §32-1154-A. (3)(namely A.A.C. R4-9-108 Workmanship Standards for Licensed Contractors.

Complaint Item 9: Windows are not installed. Investigator’s Observation: RESPONDENT SHOULD PROPERLY COMPLETE ALL WORK ASSOCIATED WITH THIS PROJECT. Governing Rule: A.R.S. §32-1154-A. (3)(namely A.A.C. R4-9-108 Workmanship Standards for Licensed Contractors.

Complaint Item 10: Outside painting is not done. Investigator’s Observation: RESPONDENT SHOULD PROPERLY COMPLETE ALL WORK ASSOCIATED WITH THIS PROJECT. Governing Rule: A.R.S. §32-1154-A. (3)(namely A.A.C. R4-9-108 Workmanship Standards for Licensed Contractors.

Complaint Item 11: Complainant asked to have small closet moved and Respondent wanted $545.00 to do it when there is no mention in his contract of any money involved with a change. Investigator’s Observation: Changes to a building layout after the project starts generally involve additional costs to the builder being passed on to the owner. The Respondents contract states that all changes shall be in writing and signed by both parties. Since no one has submitted a signed change order I would have to say that this is again a contract/money dispute and not a function of the ROC. Governing Rule: No violation could be substantiated.

Complaint Item 12: Complainant is losing money as this 1200s.f. rental property is not complete. Investigator’s Observation: Money dispute. Not a function of the ROC. Governing Rule: No violation could be substantiated.

Complaint Item 13: Air Conditioning is incomplete. Investigator’s Observation: RESPONDENT SHOULD PROPERLY COMPLETE ALL WORK ASSOCIATED WITH THIS PROJECT. Governing Rule: A.R.S. §32-1154-A. (3)(namely A.A.C. R4-9-108 Workmanship Standards for Licensed Contractors.

Complaint Item 14: Refuse left on site not cleaned up. Investigator’s Observation: RESPONDENT SHOULD PROPERLY COMPLETE ALL WORK ASSOCIATED WITH THIS PROJECT. Governing Rule: A.R.S. §32-1154-A. (3)(namely A.A.C. R4-9-108 Workmanship Standards for Licensed Contractors.

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.

Following the issuance of the written directive, Respondent did not perform any work. The Registrar issued a Citation against Respondent, charging possible violations of A.R.S. § 32-1154(A)(1);[1] A.R.S. § 32-1154(A)(2);[2] A.A.C. R4-9-108, and thereby A.R.S. § 32-1154(A)(3);[3] A.R.S. § 32-1154(A)(8);[4] A.R.S. § 32-1154(A)(9);[5] A.R.S. § 32-1154(A)(10);[6] A.R.S. § 32- 1154(A)(12),[7] namely A.R.S. § 32-1158(B);[8] and A.R.S. § 32-1154(22).[9] A hearing was held on July 12, 2016. Investigator Cliff Corlett testified as to those items identified in Directive. As to the charges that were ultimately raised in the Citation, Investigator Corlett found support for those allegations in that Respondent refused to complete the project; the project was redflagged by the city because a permit had not be pulled on the project; Respondent was asking for additional monies to be paid to complete the project as set for in the contract; Respondent had hired unlicensed contractors to work on the project, namely Timothy and Carissa Slater of Handy Hubby; Complainants had to pay $2,000.00 to Havasu Doors for materials supplied on the project for which Respondent did not pay to avoid a lien being placed on the property; and the contract did not meet the minimum elements of a contract as required by Arizona statute. Mr. Slater testified that he was hired by Respondent to work on the project. Mr. Slater stated that he is the sole proprietor of Handy Hubby, which does not hold a contractors license from the Registrar, and that he never represented to Respondent that he held such a license. Mr. Slater testified that he was initially hired to do demolition on the project, but the scope then expanded to framing and concrete. Mr. Slater indicated he was paid by checks issued from Respondent. Mr. Slater testified that the framing came in on budget and the concrete came in under budget. Mr. Slater stated that the project was red tagged by the City of Parker on the second or third day because no permit had been pulled. Mr. Slater testified that the drawings were not done properly and were off by nine to ten feet, which caused problems on the site. Mr. Slater stated that his work on the project was stalled by a chimney that was to be removed, but could not be taken out. Mr. Slater stated that nothing was done on the project for weeks on end. Ms. Slater testified that Gerald Clark, Owner of Respondent, contacted her and Mr. Slater with a project he believed would be perfect for them. Ms. Slater stated that she assisted Respondent in formulating a spreadsheet to bid the project. Ms. Slater testified that as the project proceeded, Complainants requested a copy of the budget and spreadsheet showing how the project was going, but Respondent told Ms. Slater not to provide any information to Complainants. Ms. Slater also indicated that the drawings were off by seven to nine feet and that the error caused problems on the project. Mr. Haws testified that Respondent told them they would go forward with the project without securing a permit if they were able to because the city “would never catch [them].” Mr. Haws stated that after Mr. and Ms. Slater left the project, Respondent hired Herb Higgens, who was also unlicensed, to oversee the project. Mr. Haws testified that at the point in the project when he realized they had paid $50,000.00 of the approximately $63,000.00 total contract price and substantial work remained to be done, he decided he was not going to give Respondent any more money until he did some work on the project. Mr. Haws denied that Complainants ever expelled Respondent from the project. Mr. Haws testified that after Respondent stopped working on the project, Complainants spent $12,000.00 to $13,000.00 to other contractors to complete the windows, stucco, and doors and to haul off the trash left on the site. Ms. Haws testified that Respondent wanted to start the project without a permit. Ms. Haws stated that Respondent would not provide her with any spreadsheets or budgets as to the project so she could monitor how the project was proceeding. Ms. Haws testified that she wanted to pick out certain features of the project, but understood that if what she picked was more than Respondent had built into the contract, she was willing to pay more to get what she wanted. Ms. Haws stated that at one point in the project, Mr. Haws told her not to pay Respondent any more until more work had been done. Shortly thereafter, Respondent requested an additional payment, which she made, but Respondent did not perform any more work after she made the final payment. Ms. Haws also testified that she had to pay Havasu Doors $2,050.85 for materials it provided for the project that Respondent failed to pay for to avoid a lien being placed on the property. Mr. Clark testified that he initially did not secure any permits, because obtaining permits take time. Mr. Clark stated that once he realized a permit was necessary, he started getting the permit, including a business license to operate in the City of Parker. Mr. Clark also pointed out that under the contract Complainants were responsible for obtaining the permits. Mr. Clark testified that unexpected issues came up during the project, including plumbing issues that necessitated three different plumbers working on the job. Mr. Clark acknowledged that he did not obtain bids from subcontractors before putting together Respondent’s bid because he could not get subcontractors to come to Parker to look at the project to bid it for $2,000.00. Mr. Clark stated that he would have ensured this was done if this was a “real job,” but this project was more of a “hobby” for him. Mr. Clark said he made sure the contract included that the contract was for an “estimated” cost, although nothing else in the contract indicated it was a time and materials contract. Mr. Clark admitted that he had knowingly hired unlicensed contractors to oversee the project because he was trying to save Complainants money. Mr. Clark asserted that if he had hired licensed contractors, the project would have cost at least $100,000.00. Mr. Clark acknowledged that Ms. Haws was constantly asking for the budget, but he withheld the budget because he wanted to ensure he had not make any mistakes. After the complaint was filed, Respondent offered Complainants a new contract to complete the project for $39,264.49. Administrative notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website on August 19, 2016. Such prior License record reflects that Respondent’s License No. 156860 was first issued on July 8, 2000, and was suspended for non-renewal. The Registrar’s public website does not indicate any previous discipline or any additional open cases. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32- 1101 et seq. 2. Complainant bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “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). 3. The credible evidence presented at hearing established that Respondent refused to complete the work outlined in the contract without any legal justification. Thus, Complainants established that Respondent abandoned the contract in violation of A.R.S. § 32-1154(A)(1). 4. The credible evidence presented at hearing established that Respondent began working on the project without obtaining or ensuring that Complainants obtained the proper permits from the City of Parker. While it may have been Complainants’ responsibility under the contract to obtain the permit, Respondent disregarded the building codes of the City of Parker by performing any work on the project without the permit being obtained. Thus, Complainants established that Respondent disregarded the building codes of a political subdivision of the state in violation of A.R.S. § 32-1154(A)(2). 5. The credible evidence presented at hearing established that Respondent was unable to complete the project for the price stated in the contract. Respondent offered to complete the original contract for $39,264.49. Even if one considers the $10,000.00 still owing on the original contract, the $12,000.00 to $13,000.00 Complainants paid to other contractors results in a total cost for the project of more than $100,000.00, or approximately $40,000.00 more than the original bid. Thus, Complainants established that Respondent failed in a material respect to complete the construction project for the price stated in the contract in violation of A.R.S. § 32-1154(A)(8). 6. The credible evidence presented at hearing established that Respondent knowingly hired Mr. and Ms. Slater, unlicensed contractors, to do the demolition, framing, and concrete and to oversee the project, and then hired Mr. Higgens, an unlicensed contractor, to oversee the project when Mr. and Ms. Slater were removed. Thus, Complainants established that Respondent aided and abetted an unlicensed person to evade the Registrar’s statutes and rules in violation of A.R.S. § 32-1154(A)(9). 7. The credible evidence presented at hearing established that Complainants paid Havasu Doors $2,050.85 for supplies provided to Respondent for the project that Respondent did not pay for to avoid a lien being placed on the property. Thus, Complainants established that Respondent failed to pay monies in excess of $750.00 for materials rendered in connection with Respondent’s operations as a contractor in violation of A.R.S. § 32-1154(A)(10). 8. The credible evidence presented at hearing established that the contract in this matter did not include the estimated date of completion of all work to be performed under the contract, the dollar amount of any progress payment and the stage of construction at which the contractor would be entitled to collect progress payments during the course of construction under the contract, or a statement that the property owner had the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A in violation of A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158(B). 9. The credible evidence presented at hearing established that Respondent did not comply with the written directive issued by the Registrar in violation of A.R.S. § 32-1154(22). 10. The credible evidence presented at hearing established that Respondent did not consider Complainant’s project a “real job,” began the project without obtaining or ensuring Complainants obtained the proper permits, failed to complete the project, knowingly hired unlicensed contractors, failed to pay for materials supplied for the project. Thus, Complainants established that Respondent did not perform the work in a professional and workmanlike manner in violation of A.A.C. R4-9-108, and thereby A.R.S. § 32-1154(A)(3). RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall revoke Respondent Lamont Construction and Development LLC doing business as Love Enterprises’ License No: 156860. It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(E). It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s final order, the Registrar revoke Respondent’s license, 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 Respondent tenders payment of any outstanding prior civil penalty. 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, August 22, 2016.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [2] 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 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. [3] 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.” 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.” [4] A.R.S. § 32-1154(A)(8) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” [5] A.R.S. § 32-1154(A)(9) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]iding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.” [6] A.R.S. § 32-1154(A)(10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee's operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.” [7] A.R.S. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” [8] A.R.S. § 32-1158(B) sets forth the minimum elements of a contract as follows: B. From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. ()1236ÐÑÙÚÛÝ' - 4 7 F Q T ":;•¦Ó ó øìåÚìÔÇ´¦’´Ç„Çt„Çt„Çt„ÇbSCh/»hãÀ5?@ˆþÿCJ^J[9]aJh/»hãÀ@ˆþÿCJ^J[10]aJ"h /»hãÀ5?>*[pic]@ˆþÿCJ^J[11]aJ2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32- 1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365. [12] 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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