ALJDEC decisions subject to certification as final

2015A-739-ROC · Registrar of Contractors · 2015-10-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 23, 2015, at 8:15 a.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by John Tellier, Esq., Assistant Attorney General; Southwest Green Building Inc. (“Respondent”) appeared through Brian Brecto (“Mr. Brecto”).[1] ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On June 21, 2010, the Registrar issued License No. B.265176-R for residential general contracting to Respondent. 2. The Registrar on its own motion issued a Citation and Complaint against Respondent’s License No. License No. B.265176-R, charging in nine counts various statutes as cause to discipline Respondent’s license, as follows: 1. Count One: A.R.S. § 32-1154(A)(1)[2] by abandoning its contract to perform work for Carolynn Brown (“Ms. Brown”). 2. Count Two: A.R.S. § 32-1154(A)(2)[3] by failing to obtain the necessary permits for Ms. Brown’s project or to comply with regulations promulgated by the Arizona Division of Occupational Safety and Health (“ADOSH”), a division of the Industrial Commission of Arizona that is responsible for regulating the construction of elevators in Arizona. 3. Count Three: A.R.S. § 32-1154(A)(3),[4] namely, A.A.C. R4-9- 108,[5] by failing to comply with the Registrar’s and industry workmanship standards in its construction work for Ms. Brown. 4. Count Four: A.R.S. § 32-1154(A)(11)[6] by failing to comply with ADOSH’s safety codes in its construction of Ms. Brown’s elevator. 5. Count Five: A.R.S. § 32-1154(A)(12)[7] by not including in its contract with Ms. Brown all of the elements that A.R.S. § 32- 1158(B) requires.[8] 6. Count Six: A.R.S. § 32-1154(A)(14)[9] by contracting with Ms. Brown under the name, SWGB, Inc., instead of the name on its license, Southwest Green Building Inc. 7. Count Seven: A.R.S. § 32-1154(A)(22)[10] by failing to comply with the directive that the Registrar issued after investigating Ms. Brown’s complaint. 8. Count Eight: A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, by failing to comply with the Registrar’s and industry workmanship standards in its performance of a contract with Michael J. O’Brien (“Mr. O’Brien”). 9. Count Nine: A.R.S. § 32-1154(A)(22) by failing to comply with the directive that the Registrar issued after investigating Mr. O’Brien’s complaint. 3. An evidentiary hearing was held on September 23, 2015. The Registrar submitted seventeen exhibits and presented the testimony of four witnesses: (1) Ms. Brown; (2) Mr. O’Brien; (3) Jim Dimond, the Registrar’s investigator who was assigned to investigate Ms. Brown’s and Mr. O’Brien’s complaints, and (4) Adam Stafford, the Registrar’s Assistant Chief Counsel at the Legal Department. Respondent submitted three exhibits and presented Mr. Brecto’s testimony. / / / / Hearing Evidence Ms. Brown’s Complaint (Case No. 2014-4897) 4. On or about December 4, 2014, Ms. Brown filed a complaint with the Registrar against Mr. Brecto and Don Miller,[11] alleging that they had failed to complete the elevator that they contracted to install at her home at 1601 Buttermilk West, Prescott, Arizona 85305, failed to comply with state regulations for elevator installation, failed to construct the elevator so that it operated smoothly and adjusted to floor levels, and failed to respond to her phone calls or to show up for scheduled appointments.[12] 5. Ms. Brown explained that she needed the elevator at her home because her husband was disabled, her paralyzed son was living at her house, and she has hip problems. 6. Ms. Brown attached to her complaint a copy of the Memorandum/Contract dated June 30, 2012, that Mr. Brecto had prepared on Respondent’s letterhead that included a Preliminary Cost Estimate under two names, Prescott Mobility Store Inc. and SWGB Inc., in the amount of $49,857.50 to install a three-story elevator shaft and elevator at Ms. Brown’s home.[13] Ms. Brown signed the Memorandum/Contract and Preliminary Cost Estimate to accept their terms. 7. The Memorandum/Contract and Preliminary Cost Estimate did not include Ms. Brown’s address or the jobsite address, an estimated date of completion, or notice to Ms. Brown that she had a right to file a complaint with the Registrar for an alleged violation of A.R.S. § 32-1154(A) within the time allowed by A.R.S. § 32-1155(A), or the Registrar’s telephone number or website address. 8. Mr. Brecto purchased the elevator from a Canadian manufacturer, which sent a technician to install the elevator in a shaft that Respondent had constructed. Ms. Brown wrote a check in the amount of $18,000.00 to The Mobility Store for the cost of the elevator.[14] Ms. Brown testified that including the cash payments that she made to Mr. Brecto for a promised discount, she had paid approximately $50,000.00 for the elevator project.[15] 9. Ms. Brown received a letter dated February 21, 2014, from Randall Pluimer, the Chief Building Official (“CBO”) for the City of Prescott Community Development Department, that informed her that the building permit that Mr. Brecto had obtained for her project on October 5, 2012, had expired. The CBO explained that the International Building Codes and the City of Prescott required that at a minimum, inspections must be requested and performed within 180 days of issuance of a permit, that a project must be completed within two years of the issuance of a permit, and that no inspections had yet been requested or performed for the permit that Mr. Brecto had obtained.[16] 10. Ms. Brown testified that she felt Respondent had abandoned the project. 11. Mr. Brecto testified that Respondent did not work on the project because he thought that he was installing a “handicapped lift,” not an elevator, and that he was scratching his head because he did not know how to proceed. 12. Inspector Cason performed a jobsite inspection on the elevator project. Neither Mr. Brecto nor anyone else appeared on Respondent’s behalf at the jobsite inspection. On January 28, 2015, Inspector Cason on behalf of the Registrar issued a Directive to Respondent, requiring it to confirm in writing that it had performed certain corrective work on or before February 12, 2015, in relevant part as follows: [Respondent] has partially completed a residential elevator installation that is operational and in an occupied structure. This elevator installation is not compliant with Arizona revised statutes (Title 23, Article 12) nor is the installation compliant with the state of Arizona Elevator Rules listed in the Arizona Administrative Code Title 20, Chapter 5, Article 5.

Additionally, the trusses at the top of the shaft have been modified to a point that they are not functioning as intended and the drywall work is incomplete.

The building permit with the city of Prescott has expired.

[Respondent] is to apply for and obtain the necessary permits from [ADOSH] and comply with all requirements of any inspections.

[Respondent] shall also apply for and obtain any new required permitting from the city of Prescott and comply with all requirements and any inspections.

Any corrections required by either or both government entities shall be performed in an appropriate manner, using appropriately licensed subcontractors for work that cannot be self-performed and shall not be at an additional expense to [Ms. Brown].[17]

13. Elevator Inspector Dave Whittaker of the Elevator Section of the Industrial Commission of Arizona performed a consultation at Ms. Brown’s residence and issued an information sheet, listing the following code violations and concerns for safety, followed by the codes found in A17.1 2007: 1) There is no car gate or door. 5.3.1.8.2 2) The car platform is too large. 5.3.1.10.1 3) Car sill and landing sill clearance is not enough. 5.3.1.4.2 4) Window in car cannot be opened. 5.3.1.8.1 (a) (c) 5) No capacity plate. 5.3.1.20.1 6) No emergency phone. 5.3.1.19 7) Hoistway windows. 5.3.1.1 8) Cartop clearance is not enough. 5.3.1.3 9) Emergency access holes in doors. 5.3.1.7.1 (2.12.6.2.2) 10) Terminal stopping devices are missing or not mounted. 5.3.1.17.1 11) Missing cartop data plate. 5.3.1.20.2 12) Removable ceiling panel. 5.3.1.16.2 (j) (2) 13) No cartop stop switch. 5.3.1.16.2 (j) (3)[18]

14. Mr. Brecto testified that Mr. Whittaker’s information list was helpful. He and his helper, Marcos Del Rio, are working on addressing the code violations on the information list and the workmanship deficiencies identified on the January 28, 2015 directive. 15. Ms. Brown testified that the only thing that Respondent had done to correct the deficiencies noted on the information list was to install a telephone line. 16. Investigator Cason testified that Respondent had not complied with the February 12, 2015 directive. Although according to the CBO for the City of Prescott, Respondent had obtained a permit, Respondent still had not obtained a permit from ADOSH or addressed most of the code violations identified on the information list. Mr. O’Brien’s Complaint (Case No. 2014-4732) 17. On or about November 19, 2014, Mr. O’Brien filed a complaint with the Registrar alleging poor work by Respondent in its contract to pour two slabs and to repair the scuppers for gravel area at the end of the driveway at Mr. O’Brien’s residence at 708 E. Date Street, Cottonwood, Arizona 85326.[19] 18. Mr. O’Brien attached to his complaint documents that showed that the contract was entered pursuant to a grant from the Arizona Department of Economic Services Rehabilitation Services Administration (“ADES”) at the end of November 2012, to improve Mr. O’Brien’s access at his home because he is disabled.[20] 19. Investigator Cason performed a jobsite inspection at Mr. O’Brien’s residence, which neither Mr. Brecto nor anyone else attended on Respondent’s behalf. On January 15, 2015, Investigator Cason on behalf of the Registrar issued a directive to Respondent, ordering it to provide written proof that it had performed the following corrective actions on or before January 30, 2015: 1-- The slab poured on the north-side of the gate has compound cracking and the square footage between control joints is beyond the ROC Workmanship Standard of 100 sq. ft. [Respondent] is to correct the condition in an appropriate manner.

2-- The small ramp slab on the south-side of the gate has a crack that is in excess of the ROC workmanship standards of 3/32”. [Respondent] is to correct the condition in an appropriate manner.

3-- The rounded ends of the entry aprons at Date street are not poured to 4” thickness as required and have cracked. [Respondent] is to correct the condition in an appropriate manner.[21]

20. Mr. O’Brien testified that Respondent had not yet completely finished correcting the problems in its construction at Mr. O’Brien’s residence. 21. Investigator Dimond testified that he re-inspected the project at Mr. O’Brien’s home and that the ramp and slab by the gate have been corrected, but splatter had been left on the stucco and there was a portion of the stucco that was discolored because it had been scrubbed. Investigator Dimond testified that Respondent’s repairs did not fully comply with the Registrar’s standards. 22. Mr. Brecto submitted emails between himself and Mr. O’Brien. On May 29, 2015, Mr. O’Brien informed Mr. Brecto that he was no longer welcome on the property.[22] Mr. Brecto testified that Respondent would complete the cleanup if it were allowed access to the property. Mr. Brecto testified that he did as much as he could for Mr. O’Brien until Mr. O’Brien “slammed the door” on Respondent. 23. Investigator Dimond testified that Respondent had remedied the crumbling concrete aprons by cutting back the circumference and that the concrete should have been re-poured. 24. Mr. Brecto testified that because the concrete aprons were in the right-of-way on land that Mr. O’Brien did not own, he could not complain about the crumbling concrete aprons. Mr. Brecto testified that his contact at ADES had told him not to get a permit and had approved the work at Mr. O’Brien’s home. Mr. Brecto testified that he does not have anything in writing from ADES regarding the permit, but that Respondent no longer does any work for ADES. 25. Investigator Dimond testified that if the concrete aprons were in the right-of-way, Respondent should have obtained a permit to comply with the Registrar’s standards. If ADES had instructed Respondent to proceed without a permit, both ADES and Respondent violated Arizona law. Mr. Brecto’s Licensing History with the Registrar 26. Respondent’s April 28, 2010 license application stated that Lindsay Jane Sherrard Brecto was the President, qualifying party, and 100% owner of Respondent.[23] No one else’s name appears on the license application. 27. According to a printout from the Arizona Corporation Commission for the corporation, Southwest Green Building Inc., Mr. Brecto is the corporation’s current statutory agent and co-president.[24] 28. A printout of the results of a search of Mr. Brecto’s name on the Registrar’s internal database reveals that his name was on a license application that Respondent previously submitted that the Registrar returned and did not grant.[25] 29. According to the Registrar’s ownership database, Mr. Brecto was terminated as an officer in Respondent corporation on January 21, 2010.[26] Mr. Stafford pointed out that the Registrar’s internal records regarding Respondent’s officers were not consistent with the Arizona Corporation Commission’s records. According to the Registrar’s public website, Lindsay Jan Sherrard Brecto is the only person listed on Respondent’s license.[27] 30. Mr. Brecto was the qualifying party and listed on License No. KB- 1.142982-D that the Registrar issued to Brecto Builders Inc. on March 3, 1999. According to the database, after License No. KB- 1.142982-D was revoked, four payouts in the total principal amount of $43,000.00 had been made from the Residential Contractors’ Recover Fund and had been charged against License No. KB-1.142982- D.[28] Mr. Stafford testified that none of this money had been paid back to the Registrar. 31. Mr. Brecto testified that the payouts had been made when he was going through a contentious divorce and that he was currently in the process of divorcing Lindsay Jane Sherrard Brecto. 32. Mr. Stafford testified that A.R.S. § 32-1122(B)(1)(d) requires all directors of a corporate applicant to be listed on the contractor’s license application and that A.R.S. § 32-1154(A)(20) provides as cause to suspend or revoke the license having a person named on the license who was named on any other license that had been revoked. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[29] 2. The Registrar bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[30] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[31] 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.”[32] 33. The Registrar established that Respondent violated A.R.S. §§ 32- 1154(A)(1), 32-1154(A)(2), 32-1154(A)(11), and 32-1154(A)(14) on Ms. Brown’s project, A.R.S. § 32-1154(A)(12), namely A.R.S. § 32- 1158(B) in its contract with Ms. Brown, A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108 the work that it did on Ms. Brown’s and Mr. O’Brien’s projects, and A.R.S. § 32-1154(A)(22) by failing to comply with the Registrar’s directives issued in the complaints that Ms. Brown and Mr. Brien filed with the Registrar. 3. Mr. Brecto is running Respondent’s construction operations. The evidence that was submitted at the hearing established that neither Mr. Brecto nor any construction company that he operates can be regulated. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the order in this matter, License No. B.265176-R of Respondent Southwest Green Building Inc. shall be revoked. It is further recommended that Respondent be required to pay the sum of $1,000.00 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 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 five days from the date of that certification. Done this day, October 1, 2015.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Mr. Brecto is the statutory agent and director listed on the Arizona Corporation Commission’s records for Respondent corporation. See the Registrar’s Exhibit 17. Although Mr. Brecto is not listed on the license that the Registrar issued to Respondent, the evidence at the hearing established that he is directing its contracting activities. Mr. Brecto stated that he is in the process of changing the spelling of his name to “Brekketo,” which is the original Norwegian spelling.

[2] 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.” [3] 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.” [4] 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.” [5] 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.” [6] A.R.S. § 32-1154(A)(11) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure of a contractor to comply with any safety or labor laws or codes of the federal government, state or political subdivisions of the state.” [7] A.R.S. § 32-1154(A)(12) included 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) provides that 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 after December 31, 2007 must be in writing and must include the following minimum terms: 1. The name of the contractor and the contractor’s business address and the license number. 2. 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 ten point bold type. . . .

[9] A.R.S. § 32-1154(A)(14) included among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]cting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth upon the license.” [10] A.R.S. § 32-1154(A)(22) included 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.” [11] Don Miller worked with Mr. Brecto to perform Respondent’s contract with Ms. Brown. According to the Registrar’s public website, Mr. Miller is listed on License Nos. B.107919-R, B-2.107934-C, B.107919-R, B-2.107934-C, and CR10.129951-D and all of these licenses are expired. [12] See the Registrar’s Exhibit 3. [13] See the Registrar’s Exhibit 5. [14] See the Registrar’s Exhibit 4. [15] See the Registrar’s Exhibit 6. [16] See the Registrar’s Exhibit 7. [17] The Registrar’s Exhibit 8. [18] The Registrar’s Exhibit 9. [19] See the Registrar’s Exhibit 10. [20] See the Registrar’s Exhibit 11. [21] The Registrar’s Exhibit 12. [22] See Respondent’s Exhibit A. [23] See the Registrar’s Exhibit 2. [24] See id. at 6; the Registrar’s Exhibit 17. [25] See the Registrar’s Exhibit 13, 14. [26] See the Registrar’s Exhibit 15. [27] See the Registrar’s Exhibit 16. [28] See the Registrar’s Exhibit 13, 14. [29] See A.R.S. § 32-1154(A). [30] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [31] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [32] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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