FINACT2015A-4107-RFA-ROC.pdf

2015A-4107-RFA-ROC · Registrar of Contractors · 2017-12-21

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Mary A. Nassief, Case No. 2015-4107 COMPLAINANT, Docket No. 2015A-4107-RFA-ROC v.

Apartment Painters LLC FINAL ADMINISTRATIVE DECISION AND DBA: APX Painting Company, ORDER License No. 191737,

RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the Registrar must provide written justification setting forth the reasons for the modification or rejection. REGISTRAR’S ACCEPTANCE In this case, a hearing was held, and the administrative law judge issued a written decision. See Administrative Law Judge Decision, attached. The Registrar reviewed that decision and hereby accepts it. CONCLUSION Because the Registrar has accepted the administrative law judge’s decision, that decision is the final administrative decision in this case and becomes effective on January 30, 2018.

Dated this 21st day of December 2017.

Registrar of Contractors

/s/ Nicole Sornsin ----------------------------------------------------------- Nicole Sornsin Assistant Director, Legal and Recovery Fund

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Copy mailed via USPS First Class mail and this 21st day of December 2017 to: Respondent Apartment Painters LLC DBA: APX Painting Company PO Box 741 Scottsdale, AZ 85252-0741 Complainant Mary A. Nassief 2401 W Calavar Rd Phoenix, AZ 85023-5938 Copy sent electronically this same date to: Office of Administrative Hearings Thomas Shedden, Administrative Law Judge Office of the Attorney General John Tellier, Assistant Attorney General Copy sent electronically this same date to: Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar Case No. 2015-4107/mm

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Received IN THE OFFICE OF ADMINISTRATIVE HEARINGS 12/7/2017 ROC Legal

Mary A. Nassief, No. 2015A-4107-RFA-ROC COMPLAINANT -v- ADMINISTRATIVE LAW JUDGE Apartment Painters, LLC DECISION DBA: K and E Painting Solutions, License No. 191737, RESPONDENT

HEARING: November 21, 2017

APPEARANCES: Mary Nassief on her own behalf; Christopher John Kotol for

Respondent; John R. Tellier, Esq. for the Registrar of Contractors

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

_____________________________________________________________________ FINDINGS OF FACT 1. On August 11, 2017 the Registrar of Contractors (“ROC”) issued a NOTICE OF RECOVERY FUND ELIGIBILITY/PAYOUT HEARING setting the above captioned matter for hearing at the Office of Administrative Hearings on October 4, 2017. The issue is whether an award and payout from the Contractors’ Recovery Fund pursuant to ARIZ. REV. STAT. section 32-1154([G]) is justified by the evidence. 2. Underling this matter is ROC’s July 6, 2016 FINAL ADMINISTRATIVE DECISION AND ORDER in which it determined that Respondent had abandoned its contract to paint Complainant’s house in violation of ARIZ. REV. STAT. section 32-1154(A)(1) and ordered that Respondent’s license was to be suspended for one day. 3. On September 26, 2017, ROC issued an AMENDED NOTICE OF CLAIM FOR ADMINISTRATIVE PAYOUT in which it informed the parties that it was amending its initial NOTICE OF CLAM and requesting that the hearing be continued. 4. The matter was continued and the hearing was conducted on November 21, 2017.

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826 Received 12/7/2017 5. ROC Respondent Apartment Painters LLC holds license number 191737 issued byLegal ROC.1 Christopher John Kotol is Respondent’s qualifying party. 6. Complainant in this matter is Mary A. Nassief.2 7. On or about August 13, 2015, Ms. Nassief and Respondent entered a contract in which Respondent agreed to paint the Nassiefs’ house. There is no signed contract in evidence and during the course of their dealings the parties agreed to undocumented change orders. 8. The contract called for Ms. Nassief to pay to Respondent $2775 after the job was completed. Ms. Nassief acknowledges that she has made no payments to Respondent. 9. In this hearing, the scope of the contract is at issue in that Ms. Nassief asserts that Respondent was to paint only three windows and no doors, Respondent’s position is that all windows and doors were to be painted. 10. On September 28, 2015, ROC received from Ms. Nassief a complaint against Respondent alleging abandonment and poor workmanship by Respondent. In her complaint, Ms. Nassief listed nine specific complaint items, but paint on the windows and doors was not on her list. 11. With her complaint, Ms. Nassief submitted an unsigned proposal dated August 13, 2015, in which the “Project Scope” is given only as “Exterior Paint.” Ms. Nassief also included however, an email to Respondent dated August 15, 2015, that shows the “porch ceilings, interior window trim, and door trim” would be painted in Swiss Coffee. 12. Mr. Kotol’s testimony was to the effect that Ms. Nassief’s August 13th email is proof that she wanted the windows and doors painted. As to the word “interior,” Mr. Kotol explained that there was no work inside the house and that this was a reference to the window and door trim at issue.3 13. Mr. Kotol also testified that the taping/masking of the windows shows that these were to be painted.

Although the NOTICE OF RECOVERY FUND ELIGIBILITY/PAYOUT HEARING shows that Respondent operates under the d.b.a. K and E Painting Solutions, ROC’s website does not show that d.b.a., but does show a d.b.a. of APX Painting Company. Mr. Nassief also signed the Recovery Fund Claim Form at issue. However, Mr. Nassief was not a party to the underlying Complaint and was not a party to the underlying contract. One could read “interior” as meaning that the edges and tracks are not to be painted. Received 12/7/2017 14. ROCof With her complaint in the underlying matter, Ms. Nassief included transcripts Legal text messages between the parties including: a. A September 1, 2015 message from Ms. Nassief to Mr. Kotol showing that the trim around the front doors is “Swiss Coffee, enamel, like windows.” b. An exchange of text messages on September 9, 2015, in which Mr. Kotol states that “[w]e never paint window frames a different color than the body.” Ms. Nassif responded that on July 26th she had informed Mr. Kotol that she wanted “the interior of the window frames painted.” c. In other texts, the parties discussed workmanship issues (e.g. poor prep work; wrong primer; diluted paint) but Ms. Nassief did not raise any concerns that paint on the window or door frames was a workmanship issue. 15. On January 7, 2016 ROC investigator Steve Klein conducted a jobsite inspection related to the underlying complaint. 16. Mr. Klein’s jobsite inspection notes show that none of the items listed in Ms. Nassief’s complaint “implicate[d]” any workmanship rules for him to “observe” or “report on.” Mr. Klein concluded however that the job was incomplete, not abandoned, and that there appeared to be a money dispute over the contract and changes concerning upgrades. 17. On January 15, 2016, ROC issued to Respondent a DIRECTIVE ordering that: “Respondent shall complete project per original contract agreement, properly executed change orders, verbal agreements, local building codes and manufacturers[’] installation instructions.” 18. The DIRECTIVE shows that ROC found a workmanship violation, but this statement is not consistent with Mr. Klein’s jobsite notes or the import of his testimony in the underlying matter, and is in a part of the DIRECTIVE that appears to be preprinted boiler- plate language. In addition, ROC did not allege any workmanship violations in the CITATION issued in the underlying matter. 19. In an email from Ms. Nassief to ROC dated February 16, 2016, she stated that photographs show damage from overspray to all ten4 windows and three doors (trim and The evidence at hearing shows that there are eleven windows in the house; it is not clear why Ms. Nassief referenced only ten. Received 12/7/2017 tracks) and that a paint-removal specialist told her this paint cannot be removedROC Legal without damage to the windows.5 Other statements by Ms. Nassief in the record show however that the windows and doors can be repaired or completed by painting. 20. On March 1, 2016, ROC issued to Respondent a CITATION alleging that Respondent may have violated ARIZ. REV. STAT. section 32-1154(A)(1), but which did allege any deficient workmanship by Respondent in violation of subsection (A)(3). 21. Respondent, in its written answer to the CITATION,6 informed ROC that the parties had reached a settlement in principle but had been unable to reach a final agreement. At the hearing, Mr. Kotol provided testimony to the effect that this settlement did not include replacement of the windows or doors.7 22. On May 30, 2016, (the day before the underlying hearing), Ms. Nassief filed with ROC a “Response Respondent’s Answer.” Ms. Nassief’s Response: a. Shows that Ms. Nassief did not agree that there was a settlement in principle because Respondent did not accept her counter-offer, which she later withdrew. b. Included a February 1, 2016 email from Ms. Nassief to Mr. Kotol showing that Dunn Edwards had provided a recommendation to clean and properly repaint the windows and doors, the paint can be tinted, two types of paint can be used, and “either is acceptable.” c. Responding to Respondent’s request to try to resolve the matter, Ms. Nassif wrote to the effect that she had two estimates from licensed painters to complete the painting and who would clean the overspray on the windows and doors (where possible) and repaint these using the correct paint. d. Ms. Nassief further explained that lower of these estimates was $2720 more than the contract price and if Respondent would pay her that amount she would release him from their contract. Alternatively, Ms. Nassief was agreeable to Respondent complying with the contract.

5 This email was sent after ROC’s jobsite inspection; the record does not show whether Ms. Nassief had shown the alleged damage to Mr. Klein during that inspection. Received by ROC on March 10, 2016, but erroneously dated March 7, 2015. Adherence to the Rules of Evidence is not required and all relevant evidence is admissible. ARIZ. REV. STAT. § 41-1092.07. Received 12/7/2017 ROC Legal e. In an email to Respondent dated February 3, 2016, Ms. Nassief again explained that the project can be completed and the windows and doors properly painted for $2720 plus the original contract amount. Ms. Nassief then set a deadline by which her offer would expire if the $2720 payment had not been received. 23. Included with Ms. Nassief’s Response were the two estimates: one from Apache Discount Painters for $6498 and one from Crash of Rhinos for $5495. The Crash of Rhinos’ bid shows that the window and door frames would be painted. These two bids were included with Ms. Nassief’s recovery fund claim and admitted into evidence as part of ROC Exhibit 5.8 24. The underlying Administrative Hearing was conducted on May 31, 2016 and an ADMINISTRATIVE LAW JUDGE DECISION was issued on June 2016. Mr. Klein testified at that hearing and the DECISION shows that “Because the project was not completed, Investigator Klein did not make any findings regarding any workmanship issues raised in [Ms. Nassief’s] complaint.” 25. On July 6, 2016, ROC issued its FINAL ADMINISTRATIVE DECISION AND ORDER in which it accepted the ADMINISTRATIVE LAW JUDGE DECISION,9 it determined that Respondent had abandoned the project in violation of ARIZ. REV. STAT. section 32- 1154(A)(1), and it ordered that Respondent’s license was to be suspended for one day. 26. On July 7, 2017, Ms. Nassief submitted to ROC a Recovery Fund Claim in which she requested $4800 for repainting the house and $11,907.53 to replace all eleven windows and three sliding glass doors. Ms. Nassief submitted with her Claim three bids for painting and three bids for window and door replacement. 27. The lowest bid for painting was $4800 from AZBFP LLC, which bid also included the option of upgraded paint at an additional cost of $400 (for a total bid of $5200). The other two bids were those by Apache Discount Painting and Crash of Rhinos.

The Crash of Rhinos’ bid has handwriting (presumably by Ms. Nassief) showing that it did not include removing the existing overspray, which the writing shows is necessary for a proper fix. This handwriting is not consistent with Ms. Nassief’s texts/emails showing that Crash of Rhinos’ bid would effect a proper fix. ROC made one modification that is not determinative of any matters at issue in this hearing. Received 12/7/2017 28. ROC Legal Two of the three bids for window and door replacement were not from licensed contractors, with the only allowable bid being from Window World of Phoenix for $9804.90.10 29. On July 19, 2017, ROC issued a NOTICE OF CLAIM FOR ADMINISTRATIVE PAYOUT (and related spreadsheet) finding that Ms. Nassief should be awarded a payout to correct/complete the painting work that resulted from the abandonment, but that she should not be awarded a payout to have her windows and doors replaced based on the alleged workmanship violations (i.e., that there was paint/overspray on the windows and doors). 30. Using AZBFP’s bid of $4800 plus the $400 upgrade for a total of $5200, ROC then deducted the unpaid contact price of $2775, resulting in a determination that Ms. Nassief was eligible to be awarded $2425 from the Fund for the incomplete painting. 31. On July 21, 2017, Ms. Nassief requested an administrative hearing objecting to the initial NOTICE OF CLAIM FOR ADMINISTRATIVE PAYOUT, which led to this matter being noticed for hearing. 32. On September 26, 2017 ROC issued the AMENDED NOTICE OF CLAIM FOR ADMINISTRATIVE PAYOUT. 33. In the AMENDED NOTICE OF CLAIM, ROC referenced Ms. Nassief’s request for hearing contesting the initial NOTICE OF CLAIM FOR ADMINISTRATIVE PAYOUT, showing that she was contesting “the Fund’s decision to disallow damage to exterior doors and windows from being included in the claim as actual damages.” ROC determined that “Upon further review of the claim and an examination of the evidence provided by Complainants, the Fund determined that the workmanship damage to Complainants’ exterior windows and doors is covered under Respondent’s abandonment of the project, A.R.S. § 32-1154(A)(1).” 34. In the AMENDED NOTICE OF CLAIM, ROC determined that Ms. Nassief should be awarded a payout of $11,829.90, which is $4800 to repaint the house and $9804.90 to replace the eleven windows and three doors, less the unpaid contact balance of $2775.

The Window World bid has line entries for optional sun shield glass at $869 and for “Solarzone Elite” doors at $540, which may also be an optional upgrade. Received 12/7/2017 35. ROC Legal ROC’s Marlee McCormick, who processed Ms. Nassief’s recovery fund claim, testified to the effect when she processed Ms. Nassief’s claim, she did not believe that the windows and doors were covered because any workmanship damage was not within the scope of the DIRECTIVE (i.e., Respondent had not been ordered to repair the windows or doors). 36. Ms. McCormick had sent to Ms. Nassief an email dated July 27, 2017, confirming a prior conversation in which Ms. Nassief had been informed that she would either need to file a new complaint with ROC to address any poor workmanship by Respondent or she could raise the issue at this hearing. 37. Ms. Nassief did file with ROC a second complaint against Respondent, but that second complaint was assigned a different case number than her underlying complaint and is not part of the record in this matter. 38. Ms. McCormick testified that ROC staff attorneys made the decision that the workmanship damage to the windows and doors was covered under the proven violation of abandonment.11 Those attorneys directed her to draft the AMENDED NOTICE OF CLAIM, which she prepared for the Assistant Director’s signature. 39. Regarding Window World’s bid for window and door replacement that ROC accepted for purposes of awarding a payout to Ms. Nassief, Ms. McCormick acknowledged that she did not know what standard(s) had been used to determine which windows and doors should be replaced, and in fact she did not know how many windows or doors actually had paint/overspray on them. 40. At the hearing, Ms. Nassief asserted that Respondent caused damage to her pool such that it requires an acid wash, but she did not present substantial evidence to prove this claim, nor did she include this allegation in her recover fund claim. CONCLUSIONS OF LAW 1. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the

11 ROC has never made a finding (or even alleged in a CITATION) that any paint on the windows and doors was a workmanship violation. It is not clear on what basis the attorneys reached their conclusion and whether their reasoning should be considered attorney client work product or privileged communications. Received 12/7/2017 ROCinLegal burden of establishing the affirmative defense. The standard of proof on all issues this matter is that of a preponderance of the evidence. ARIZ. ADMIN. CODE § R2-19-119. 2. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” ARIZ. REV. STAT. § 41-1092.07(G)(2). 3. A preponderance of the evidence is: The 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. BLACK’S LAW DICTIONARY 1373 (10th ed. 2014). 4. At an administrative hearing, adherence to the Rules of Evidence is not required and all relevant evidence is admissible. ARIZ. REV. STAT. § 41-1092.07. 5. The Administrative Law Judge may consider ROC’s administrative record. See ARIZ. ADMIN. CODE § R4-9-118. 6. Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 7. “Statutes shall be liberally construed to effect their objects and to promote justice.” ARIZ. REV. STAT. § 1-211(B). 8. The purpose of the recovery fund is to provide improved protection for owners and lessees of property who contract for the construction or alteration of residential structures. McMurren v. JMC Builders, 204 Ariz. 345, 63 P.3d 1082 (App. 2003). 9. “The assessments received by the registrar for deposit in the fund shall be held in trust for carrying out the purposes of the fund.” ARIZ. REV. STAT. § 32-1135. 10. “‘Person injured’ means any owner of residential real property which is classified as class three property under section 42-12003 who is damaged by the contractor. ARIZ. REV. STAT. § 32-1131(3). Received 12/7/2017 11. ROC Legal “Notwithstanding any other provisions in this chapter, if a contractor's license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter, the registrar may order payment from the residential contractors' recovery fund to remedy the violation.” ARIZ. REV. STAT. § 32-1154(G). 12. Any “person injured” by a licensed residential contractor’s violation of ROC’s statutes or rules may be awarded up to $30,000 from the residential recovery fund. But an “award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation ….” ARIZ. REV. STAT. § 32-1132(A). 13. Ms. Nassief is a person injured within the meaning of the statutes and is eligible for a payout from the fund. The scope and extent of Ms. Nassief’s “actual damages … as a direct result of the [Respondent's] violation” is at issue. 14. Here Respondent’s statutory violation is abandonment of the painting job. 15. Ms. Nassief and ROC take the position that there is also damage to her windows and doors resulting from poor workmanship by Respondent and that this workmanship damage is “actual damage” under the proven charge of abandonment.12 16. ROC has never inspected the windows and doors, it has never alleged through a CITATION that Respondent committed workmanship violations, and it has never issued a DECISION showing that Respondent has committed any workmanship violations. Consequently, a workmanship violation cannot be the basis for any “actual damages … as a direct result of the [Respondent's] violation.” 17. Even if a workmanship violation could be the basis for actual damages, the documentation Ms. Nassief provided to ROC shows that the windows and doors were to be painted and the evidence at hearing does not establish that any paint on the windows and doors is a workmanship violation. 18. There is sufficient evidence to show that the work related to the windows and doors is incomplete, which does represent actual damage as a direct result of Respondent’s subsection (A)(1) abandonment violation.

ROC argued that the workmanship violation was Respondent’s failure to complete the work on the windows and doors. But this interpretation of the statutes would impermissibly render the abandonment statute superfluous because all abandonment violations would be workmanship violations. See e.g., Guzman v. Guzman, 175 Ariz. 183, 854 P.2d 1169 (App. 1993). Received 12/7/2017 19. ROC The documentation that Ms. Nassief submitted to ROC, which is in the Legal administrative record, shows that the work on the windows and doors can be completed through proper painting and that these do not require replacement.13 20. Ms. Nassief’s documentation shows that the cost to paint the house and the windows and doors would be $5495, which is less than the $14,604.90 that ROC determined would be needed to paint the house and replace the windows and doors. 21. Consequently, the evidence does not show that Ms. Nassief should be awarded a payout of $11,829.9014 as set out in the AMENDED NOTICE OF CLAIM FOR ADMINISTRATIVE PAYOUT. 22. Ms. Nassief has not proven that she should be awarded any payout for the alleged damage to her pool. 23. Considering the above, Ms. Nassief should be awarded a payout of $2720, which is the $5495 necessary to paint the house, including the windows and doors, less the unpaid contract amount of $2775. RECOMMENDED ORDER IT IS ORDERED that on the effective date of the final ORDER in this matter, ROC shall order the Fund to make a payout of $2720 to Mary A. Nassief. 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, December 7, 2017 /s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to: 13 Even if windows and doors did require replacement, Ms. Nassief provided only one bid meeting the requirement that the contractor be licensed, and that bid appears to include optional upgrades that may not be part of any actual damages. As such, if the windows and doors did need to be replaced, to protect the trust, the prudent course would be to require Ms. Nassief to submit additional bids. $14,604.90 less the unpaid contact balance of $2775. Received 12/7/2017 ROC Legal Jeffrey Fleetham, Director Registrar of Contractors