ALJDEC decisions subject to certification as final

2015A-3955-ROC · Registrar of Contractors · 2016-04-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 11, 2016, at 10:00 a.m. APPEARANCES: Bruce D. Schwartz (hereinafter “Complainant” or “Mr. Schwartz”) was represented by his attorney, Corey I. Richter, Esq. Canyon State Lifestyles LLC (hereinafter “Respondent” or “Canyon State”) appeared through its member/qualifying party, Mark Alan McHone (hereinafter “Mr. McHone”). ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

The hearing was convened to determine whether Respondent violated the charged provisions A.R.S. §§ 32-1154(A)(1), 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 Respondent is the holder of License Nos. B-1.241088-C and B.274589-R issued by the Registrar. Respondent’s License Nos B-1.241088-C and B.274589-R were both current on April 15, 2016. This is a commercial matter in which on or about December 29, 2014, Complainant contracted with Respondent for the remodeling of Complainant’s dental office located at 10850 N. 90th Street, Scottsdale, Arizona 85260 (hereinafter the “office”). The parties’ construction contract was a stipulated sum contract wherein Respondent agreed to complete the construction agreement for the total sum of $150,000.00. Respondent was unable to complete the construction project for the agreed upon sum and stopped paying subcontractors that were working on the construction project. When Complainant demanded that Respondent complete the agreed upon project for the agreed upon price Respondent stopped work on the construction project. On September 18, 2015, 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 of Complainant’s residence. On December 15, 2014, 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. Respondent shall complete project per original contract agreement, properly executed change orders, verbal agreements, local building codes and manufacturers installation instructions. This includes scheduling and passing all required city inspections. 2. Water supply lines in lower level are not supported as required by code and manufacturer. 3. Several electrical outlets are not functioning and/or have no device or cover installed. 4. Improperly installed/incomplete window is not weather tight and water intrusion has caused vinyl flooring to curl. 5. Wall cabinets have bracket holes that do not align and cause shelve to wobble. 6. Several door hinges are missing screws. 7. Base cabinet in exam room has damage to upper veneer.

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 licenses. On May 21, 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)(1).[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]

The assigned Registrar Investigator, Matt Gunstra (hereinafter “Investigator Gunstra”), testified that he had performed the initial onsite inspection and that he had prepared the written Directive. Investigator Gunstra stated that there was no compliance or prehearing inspection because Respondent did not respond to the written Directive. Investigator Gunstra said that the Respondent failed to perform any corrective or completion work in response to the written Directive. Investigator Gunstra opined that Respondent did not comply with the Registrar’s Directive. Investigator Gunstra’s testimony is found to be credible. Mr. Schwartz testified that Respondent abandoned or refused to perform the construction project without legal excuse leaving the Complainant with an unfinished construction project and an unusable office. Mr. Schwartz stated that he had to pay over sixty thousand dollars above the $150,000.00 contract price to complete the construction project to the point where he could obtain a certificate of occupancy from the local building official so that he could operate his dental office. Mr. Schwartz said that there were numerous areas of construction that were still unfinished and that there were numerous areas of construction that did not comply with the terms of the construction agreement. Mr. Schwartz said that Respondent failed to comply with the written Directive. Mr. Schwartz denied that he had never excluded the Respondent from the construction project. Mr. Schwartz’s testimony is found to be credible. Shawn Richter (hereinafter “Mr. Richter”) testified that he is the Complainant’s business lawyer. Mr. Richter stated that he was presented when the Respondent presented the Complainant with a change order for lighting work that was part of the parties’ construction agreement. Mr. Richter said that he told the Complainant not to pay the change order for lighting. Mr. McHone testified that the permit for the construction project was not issued until March 26, 2015, which was several months after the construction project started. Mr. McHone stated that the delay in obtaining the permit delayed the construction project. Mr. McHone stated that he was “effectively removed” from the jobsite and not allowed to complete the construction work. 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). Complainant established by a preponderance of the evidence that Respondent abandoned the construction project leaving the Complainant with an unfinished office that Complainant was required to complete at additional cost. Complainant established that the office is still not fully complete and much of the construction work completed by Respondent requires further corrective action in order to comply with the terms of the parties’ construction agreement. 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)(1), 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 on the effective date of the final Order in this matter, License Nos. B-1.241088-C and B.274589-R of Respondent shall be revoked. 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, April 15, 2016.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] A.R.S. § 32-1154(A)(1) 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: 1. Abandonment 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)(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.

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