ALJDEC decisions subject to certification as final

2016A-2818-ROC · Registrar of Contractors · 2017-01-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Frances M Dominguez and Robert Dominguez,

COMPLAINANT,

v.

T M Building Damage Restoration Inc.,

License Nos. KB-1.196164-D

CR42.256230-D,

RESPONDENT.

No. 2016A-2818-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 21, 2016, at 1:00 p.m.

APPEARANCES: Robert Dominguez appeared on behalf of himself and his wife (“Complainants”); T M Building Damage Restoration Inc. (“Respondent”) was represented by Evan L. Thompson, Esq., Thompson Krone, PLC.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about May 28, 2004, the Arizona Registrar of Contractors (“the Registrar”) issued License Nos. KB-1.196164-D for dual building contracting to Respondent. On or about June 11, 2009, the Registrar issued License No. CR42.256230-D for dual roofing to Respondent.

On or about August 2, 2016, Complainants filed a complaint with the Registrar stating that Respondent had performed poor work on and had failed to complete its contract to repair Complainants’ house at 922 W. Oahu Pl., Tucson, Arizona 85756. According to the complaint, Respondent had been paid $104,448.88 on a $128,774.00 contract and last performed work on the project on May 3, 2016.

The Registrar assigned the complaint to its Investigator, John Smith (“Investigator Smith”) for investigation. On or about August 23, 2016, and September 1, 2016, Investigator Smith performed jobsite inspections.

On September 1, 2016, Investigator Smith issued a Directive, which required Respondent to correct by appropriate means certain workmanship deficiencies, in relevant part as follows:

1. Work not completed. All work to be completed per contract

2. Poor work on back door

3. Siding is coming off, not secure

4. Shingle nails protruding through sheathing at overhangs

5. Paint flaking and pealing from metal roof edge

6. South side of house, towards west corner, there is rotten roof sheathing that was shingled over.

The deadline in the Directive for Respondent to correct its work was on or before 5:00 p.m. on October 3, 2016.

On October 7, 2016, Investigator Smith performed a compliance jobsite inspection. Although Respondent had fully corrected the flaking paint and roof sheathing (Item Nos. 5 and 6 on the Directive) and had attempted to repair the back door, siding, and “shiners” on the roof sheathing, Respondent had not attempted to complete its work under the contract. Investigator Smith sent the complaint to the Registrar’s Legal Department.

On October 11, 2016, the Registrar issued a Citation that charged cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

Respondent filed a timely written answer to the Citation, denying any statutory violations and affirmatively alleging that Complainants had terminated the contract by refusing to pay Respondent any more for additional work.

The Registrar referred the complaint to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. An evidentiary hearing was held on December 21, 2016. Complainants testified. Respondent submitted three exhibits and presented the testimony of Janet Lynne Prikosovits, Respondent’s qualifying party/officer.

Additional Hearing Evidence

At the end of December 2014, Complainants’ house was severely damaged by a fire. Complainants submitted a claim to their homeowner’s insurer, Allstate Insurance Company (“Allstate”).

After Allstate’s inspector performed an inspection, it issued an adjusted fire loss, agreeing to pay to have Complainants’ house substantially rebuilt. The replacement cost value was $128,774.69, less $25,661.92 for depreciation, for a net insurance payout of $103.112.77.

Complainants and Respondent entered into an agreement for repair of the house based on Allstate’s adjusted fire loss. Respondent started work on the project in January 2015.

Complainant Ms. Dominguez testified that Respondent had received the full $103,112.77 insurance payout allocated for the project to begin work. Ms. Dominguez testified that Complainants had also paid Respondent an additional $1,336.11, for a total of $104,448.88.

Investigator Smith testified that the Directive required Respondent to complete the project because under the parties’ contract, Respondent was not due any additional payments until repairs were complete.

Ms. Prikosovits testified that the local building authority did not immediately issue permits for the project and that Respondent had to hire an architect to obtain a permit, which occasioned some delay and additional expense to Respondent. Respondent submitted an invoice that charged a $3,772.40 for the architect’s fee and $1,116.46 for additional costs for the permit.

In addition, in mid-2015, Complainants agreed to certain upgrades to their house that were not included in the work described in Allstate’s adjusted fire loss, as follows:

To drill the existing slab for new anchor bolts, epoxy set the anchor bolts, and coordinate a special inspection with the architect, to pour a new slab over the existing slab in the northeast and southeast corners to be level with the living room and kitchen areas, for a total additional cost of $1,875.00;

To install 4” aluminum siding instead of the existing T1-11 siding on the south and east ends of the house, at an additional cost of $1,649.00; and

To upgrade the electric service to 200 amp with arc fault breakers and to move the service panel as required by the City of Tucson and Tucson Electric Power Company, for an additional cost off $2,930.00.

Complainant Mrs. Dominguez testified that she and her husband were staying with family members because the house was not ready to move into. Mrs. Dominguez testified that she believed that Respondent had been paid enough to complete repairs and that she did not intend to pay Respondent any more to complete the project.

Respondent submitted Ms. Prikosovits’ letter dated May 3, 2016, to the Allstate insurance adjuster who at that time was assigned to the project, in relevant part as follows:

My most recent meeting with the Dominguez family took place this afternoon, and we are at a cross roads with them as clients. We have completed all the work that we can for the initial payment issued by the previous adjuster, James Masterson, and cannot complete the project without additional funds. There are a number of factors contributing to this situation, but the Dominguez family has lost faith in us as their contractor; I agreed that from this point forward it will be best for them to work with someone else. In order to engage another contractor, they will need the additional funds owed by Allstate to begin. . . .

Respondent requested that Allstate issue a check in the amount of $38,206.21 to Complainants for recoverable depreciation, supplemental permit fees, supplemental plans/drawings, and additional HVAC work.

Mrs. Dominguez testified that on August 17, 2016, Allstate informed Complainants that it would not issue any additional payments because the insurance policy required repairs to be completed within 180 days.

Ms. Prikosovits testified that she had been in contact with the adjuster assigned to the case while Respondent was working on the project and that the adjuster had approved the unavoidable delays due to the permitting and other issues. Ms. Prikosovits testified that when the adjuster left Allstate, issues with Complainants had arisen which prevented her from communicating with the new adjuster assigned to the project.

Pursuant to A.A.C. R4-9-117, administrative notice is taken of the Registrar’s public website. Respondent’s licenses are current and in good standing. The Registrar has never disciplined either of Respondent’s licenses, although License No. C42.256230-D has been administratively suspended twice for non-renewal.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainants bear the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

Complainants established that Respondent’s work on Item Nos. 2-6 on the September 1, 2016 Directive did not comply with the Registrar’s or industry standards. Complainant thereby potentially established cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.

Complainants also established that Respondent did not fully correct the back door, the insecure siding, and the shiners on the roof sheathing (Item Nos. 2, 3, and 4 on the Directive). Complainants therefore established cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22).

Respondent established that Complainants agreed to pay for certain work that was beyond the scope of Allstate’s adjusted fire loss, but that after Respondent performed the work, Complainants refused to pay any more money and demanded that Respondent complete the project for the monies already paid. In addition, it appears that Allstate has refused to pay either Respondent or Complainants monies contemplated by Allstate’s adjusted fire loss calculations. Because the Registrar lacks jurisdiction over Allstate, the issues of whether Respondent abandoned the contract, whether Complainants repudiated the contract, or whether Allstate breached its contract with Complainants, effectively preventing Respondent from completing its contract, can only be resolved in a court of competent jurisdiction. Because the Registrar does not require contractor to perform work for free and Respondent established that even if it satisfactorily completes the project, it will not receive the monies contemplated by the parties’ contract, Complainants did not establish cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(1).

RECOMMENDED ORDER

Based on the foregoing, it is ordered that on the effective date of the final order in this matter, Respondent T M Building Damage Restoration Inc.’s License Nos. KB-1.196164-D and CR42.256230-D shall each be suspended for three business days.

It is further recommended that the Registrar require Respondent to pay the sum of $250.00 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 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 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, January 4, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors