ALJDEC decisions subject to certification as final

2016A-3439-ROC · Registrar of Contractors · 2017-03-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Ali Forootan,

COMPLAINANT,

v.

MJR Builders Inc ,

License Nos. B.100742-R,

B-2.247236-C,

CR42.276252-D,

RESPONDENT.

No. 2016A-3439-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 9, 2017, at 8:30 a.m.

APPEARANCES: Ali Forootan (“Complainant”) appeared telephonically on his own behalf; MJR Builders Inc. (“Respondent”) was represented by Adam L. Stafford, Esq.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

According to the Registrar’s public website, on or about February 7, 1994, the Arizona Registrar of Contractors (“the Registrar”) issued License No. B.100742-R for general residential contracting to Respondent. On or about July 11, 2008, the Registrar issued License No. B-2.247236-C for general small commercial contracting to Respondent. On or about March 6, 2012, the Registrar issued License No. CR42.276252-D for dual roofing to Respondent. Respondent’s qualifying party/officer on all three licenses is Michael Jeffrey Smith.

On or about September 7, 2016, Complainant filed a complaint with the Registrar against Respondent alleging that Respondent’s poor workmanship caused the doors to leak at Complainant’s property at 7349 N. Clearwater Pkwy., Paradise Valley, Arizona 85253.

According to the complaint, Respondent had completed its work on June 17, 2014, but that, after initially denying liability for the leaking doors, Respondent “agreed to repair their defective work by installing thresholds at each door to prevent continued water intrusion into the home. This work was completed on or about March 1, 2016 thereby renewing the warranty on this issue.” Complainant did not state that he or Respondent had hired any other contractors to work on the doors.

The complaint was assigned to Investigator Matt Gunstra for investigation. Investigator Gunstra performed a jobsite inspection with advance notice to both parties on September 20, 2016. Mr. Smith and Respondent’s attorney attended the inspection. Complainant did not attend, although he arranged for Investigator Gunstra to have access to the gated community and property. Investigator Gunstra’s jobsite inspection notes state in relevant part as follows:

[Respondent] explained that [Complainant] hired a company called True View that inspected the doors and gave a suggested repair. Respondent then agreed to pay for these repairs that were eventually performed by True View. This issue may not be [Respondent’s] responsibility at this point for two reasons. One, the door has been modified by others so I am unable to determine the original cause of leaks. Two, it is possible that [Complainant] chose the contractor that performed the subsequent repairs and [Respondent] did not contract them [to] perform the repairs. At this time I am unclear if [Complainant] or [Respondent] hired the contractor that made the threshold repairs and/or if they currently leak. Without further evidence I am closing this complaint as unsubstantiated.

On or about September 20, 2016, Investigator Gunstra sent a letter to both parties, informing them that because the Registrar had determined that “Respondent’s work was subject to modification by a contractor chosen by the Complainant,” under A.R.S. § 32-1155(C), the Registrar would not issue a citation but would dismiss the complaint.

On or about September 27, 2016, Complainant responded to Investigator Gunstra’s September 20, 2016 letter, stating that Respondent “retained, contracted and paid” True View and that Mr. Smith “met with the owner of True View and devised a plan to install thresholds on the doors to stop the water intrusion.” Complainant also denied that he was involved with design of the doors and that he “simply approved the aesthetics.” Complainant attached to his letter an email from his sister to Mr. Smith dated January 18, 2016, as follows:

[Complainant] has been more than reasonable and patient in providing you ample time to repair this matter. Unfortunately to date, your company has failed to repair said problems.

[Complainant] has lost one buyer as a result of your poor workmanship. There is currently an interested buyer standing by to see if this problem is resolved. Loss of this sale will lead to an extremely high amount of damages.

As such, please be advised that notice is hereby provided that repairs to remedy the continuous water intrusion into this home must begin immediately and [be] completed [in] no later than 10 business days. Failure to do so will leave my client no choice but to retain the services of another contractor to repair your defective workmanship and seek immediate reimbursement for all costs and expenses associated with the collection and reimbursement of this debt, including attorney’s fees and potential loss of sale of the property.

Mr. Smith forwarded Complainant’s sister’s email to True View with the request, “Please take a minute and review this correspondence from my client’s sister . . . regarding the status of the repairs I have contracted with you to do as well as having paid you 50% of the total as a deposit.

Investigator Gunstra reopened Complainant’s complaint. On October 19, 2016, Investigator Gunstra performed a second jobsite inspection. Mr. Smith and Respondent’s attorney were present. Complainant was not present, but arranged for access to the gated subdivision and house and for a friend to represent him at the inspection. Investigator Gunstra’s jobsite inspection notes state in relevant part as follows:

[The friend had Complainant’s permission] for me to conduct a water test. Also in attendance was a rep from Tru View [sic] Glass, the Contractor that made the threshold repairs to the doors in the house.

I sprayed the front entry door for approximately 2 minutes while the door was closed. I used a garden hose and sprayer attachment. I entered the house from another door and observed a large puddle of water at the inside base of the door. I have confirmed that at least one door has a significant water leak. Not wanting to introduce more water into the interior of the home I did not test the other doors. [Respondent] has confirmed with his own observations that at least 2 or more also leak. . . .

I informed all parties that I will issue a Directive for repairs. I consider [Respondent] responsible for the work as it appears he hired True View to make the repairs that are substandard. If [Respondent] refuses to make corrections and this case goes to hearing [Respondent] will argue his responsibility. If successful and he convinces a judge that [Complainant] hired Tru View [then] [Complainant] may file a complaint against them for the same thing and they will have to make repairs. Of note, [Respondent] and the rep from Tru View spent some time inspecting the doors and discussing appropriate repair method options so I feel [Respondent] may comply with the Directive.

On October 21, 2016, Investigator Gunstra on behalf of the Registrar issued a Directive that required Respondent to correct by appropriate means the several exterior doors that still leaked after True View had made repairs to the thresholds on or before November 4, 2016, at 5:00 p.m. The October 21, 2016 Directive provided in relevant part as follows:

If your license 100742 is suspended for administrative reasons or is revoked, expired, or cancelled, you may not contract in any manner and may remedy the workmanship violations listed above only by paying a properly licensed contractor hired by Complainant to remedy your deficient workmanship or by reaching a financial settlement with Complainant.

After no further repairs were performed by Respondent or True View, Investigator Gunstra forwarded Complainant’s complaint to the Registrar’s Legal Department.

On December 16, 2016, the Registrar issued a Citation against Respondent’s licenses, charging cause to revoke, suspend, or otherwise discipline the licenses under 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 asserting certain defenses, including the following: (1) Complainant lacked standing to prosecute the complaint under A.R.S. § 32-1154(B)(2) because he no longer owned the house, in that Dominque Dady closed escrow to purchase the house on November 1, 2016; (2) The complaint was untimely under A.R.S. 32-1155(A) because Complainant filed the complaint more than two years after Respondent completed work on the project; (3) Because Respondent’s subcontractor, Sierra Glass, had installed the doors per plans and manufacturer’s specifications, the water intrusion was caused by a design defect, rather than a workmanship deficiency; and (4) Respondent was not responsible for repairs because Complainant, not Respondent, hired True View to repair the doors.

An evidentiary hearing was held on March 9, 2017. Complainant testified on his own behalf. Respondent submitted eight exhibits and presented Mr. Smith’s testimony. Investigator Gunstra also testified.

Hearing Evidence

Complainant hired Respondent to be the general contractor for construction of the house on Clearwater Parkway because Respondent had previously built another house that Complainant later purchased from Daniel Howell (“the Persepolis”). Sierra Glass had been Respondent’s window and door subcontractor on the Persepolis house. Mr. Smith testified that the Persepolis house had a contemporary design with large glass windows and doors, like the house that Complainant constructed on Clearwater Parkway.

Complainant testified that he was a physician and had never built a house before, so he relied on Respondent to build the house correctly.

Mr. Smith testified that Michael Daley prepared the plans for Complainant’s house on Clearwater Parkway and that Complainant was active in the design of the house. Mr. Smith testified that although he initially looked at residential windows and doors manufactured by Jeld-wen, Complainant chose commercial storefront windows and doors because he wanted a more contemporary look. The commercial storefront doors lack weatherstripping, sweeps, and other features that make residential doors leak resistant.

Mr. Smith testified that because Complainant wanted the indoors to flow to the outdoors, the elevation of the indoors and the patio outside the doors was the same, even though Mr. Smith advised that the indoors should be higher. Although the exterior doors originally were going to be 7’10” high, the same height as the doors at the Persepolis, Complainant wanted 10’ high doors. Mr. Smith testified that, in addition to the windows and doors being much larger at the Clearwater Parkway house than at the Persepolis, the doors and windows at the Clearwater Parkway house were not protected by much of a roof overhang because the county’s lot coverage requirements limited the size of the overhang, which could not be any bigger unless the house was built smaller.

Investigator Gunstra testified consistently with his jobsite inspection notes and Directive. Investigator Gunstra testified that True View’s principal told said that he believed that Respondent had contracted with True View to repair the leaking doors.

Investigator Gunstra acknowledged that weatherstripping and thresholds are owner maintenance issues after the first year of occupancy. Investigator Gunstra testified that since the doors leaked from early on, he could not determine whether the leak was caused by a design or workmanship issue. As far as Inspector Gunstra could tell, Respondent had installed the doors according to plans and specifications. However, Inspector Gunstra testified that, if Respondent hired True View, it was responsible for its repairs.

Investigator Gunstra acknowledged that he had not been successful in contacting the current owner of the house on Clearwater Parkway and that he was not certain whether the issues had been resolved to the current owner’s satisfaction.

Respondent submitted an email dated October 27, 2015, from Complainant’s sister to Respondent’s former attorney that stated in relevant part as follows:

As you recall we spoke a few weeks ago regarding your client [Respondent] and construction defects evident at the property located at 7349 Clearwater Pkwy. As you may recall an independent third party inspected the defect and did in fact confirm that there exists certain defect caused by poor workmanship and improper installation of tiles and door thresholds. As per their report they indicate that they . . . will remove existing installation of tiles and door thresholds. Also install Mill Finish Thresholds where needed to raise the bottom 1⁄4” to prevent water intrusion. Also install new sweeps on bottom of door for further sealing of doors.

I have attached their recommended repairs to eliminate the water intrusion into the home.

. . . .

Please advise me as to when your client will address and repair these issues.

In the alternative if your client prefers we can request True View complete the recommended repairs at your client’s expense. However, their repair will not release your client of future repairs should additional repairs be required.

Complainant’s sister attached to the email a quote from True View to Complainant dated September 28, 2015, in the amount of $2,820.00 to install new thresholds and sweeps on the exterior doors.

Mr. Smith testified that he last used True View as a subcontractor in 2010 on another job and did not know about True View’s role as an “independent third party” on Complainant’s project until he saw Complainant’s sister’s email. Mr. Smith testified that, initially, he offered to split the cost of True View’s repairs with Complainant because Mr. Smith believed that the cause of the leak was a design defect, but that Complainant’s sister had declined his offer. Mr. Smith testified that Complainant found True View and obtained the September 28, 2015 quote. Mr. Smith testified that although Respondent paid True View for the work described on its September 28, 2015 quote to resolve Complainant’s complaint, Respondent did not hire True View or supervise its work.

On or about November 1, 2016, Complainant sold the property at 7349 N. Clearwater Parkway to Dominique Dady, a real estate investor. Respondent submitted Ms. Dady’s declaration that “[a]s the Owner of the residence, I did not and do not authorize Complainant to pursue any claims against Respondent. I am happy with Respondent’s efforts and response, and do not wish to pursue a complaint with the Registrar at this time.”

Complainant acknowledged that he never lived in the house because he accepted a job in Las Vegas, Nevada. Complainant testified that he originally was asking $3.25 million for the house, but had to reduce the price $10,000.00 during escrow due to the leaks at the doors. Complainant testified that he would like to recover his damages.

CONCLUSIONS OF LAW

The Registrar has jurisdiction over complaints that involve workmanship that are filed within two years of when the contractor performed the work.

Complainant bears 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.”

The legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages. Such relief is beyond the Registrar’s jurisdiction.

A.R.S. § 32-1101(A)(3) defines “contractor” in relevant part as follows:

[A]ny person, firm, partnership, corporation, association or other organization, or a combination of any of them, that, for compensation, undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid or responds to a request for qualification or a request for proposals for construction services to, does himself or by or through others, or directly or indirectly supervises others to . . . Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or any other structure or work in connection with the construction.

The legislature did not include in the definitions of contractor someone who pays a contractor hired by the homeowner to perform contracting work in an attempt to resolve the homeowner’s complaint to the Registrar.

Complainant’s complaint does not mention that Respondent allegedly hired True View to perform corrective action to comply with the Registrar’s Directive. Complainant’s sister’s October 27, 2015 email makes clear that she obtained the quote from True View and that Respondent did not have any input into the method or scope of True View’s proposed repairs. Complainant did not provide to Investigator Gunstra his sister’s October 27, 2015 email, but when her January 18, 2016 email is read with the earlier email, it is clear that on the later date she was demanding that Respondent pay True View for repairs that it had determined were needed after consulting with Complainant, not anyone at Respondent. Mr. Smith’s testimony that Respondent did not hire True View or supervise its work was consistent and credible.

Although Respondent complied with Complainant’s sister’s demand that it pay for True View’s repairs described in its bid to Complainant, Mr. Smith’s reference to his “contract” with True View does not change the fact that True View submitted to Complainant the September 28, 2015 quote that described the scope of the repairs that it later performed to Complainant at his sister’s request. Although Mr. Smith may have discussed possible additional repairs with True View’s representative at the October 19, 2016 jobsite inspection, there is no evidence that True View performed any subsequent repairs or that the repairs that True View performed before Complainant filed the complaint were performed under Respondent’s supervision.

Investigator Gunstra’s testimony about what True View’s principal stated is hearsay. Although hearsay may be admitted in an administrative hearing, it should not be relied upon if it is unreliable or not the kind of evidence that reasonable persons would rely upon in serious matters. It is not clear on this record that True View’s representative had any understanding of the legislature’s definition of “contractor” or the significance of his statements to Investigator Gunstra. Under the circumstances, Respondent established that it did not hire True View.

Because Complainant filed the complaint with the Registrar more than two years after Respondent completed its work on June 17, 2014, the complaint is time-barred under A.R.S. § 32-1155(A) and the Registrar lacks jurisdiction to consider its merits.

In addition, since True View modified Respondent’s work, the Citation should dismiss the Citation under A.R.S. § 32-1155(C)(2).

Therefore, Complainant did not establish cause to discipline Respondent’s contractor’s licenses under A.R.S. § 32-1154(A) (3), namely A.A.C. R4-9-108, or A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the order in this matter, Complainant Ali Forootan’s complaint against Respondent MJR Builders Inc.’s License Nos. B.100742-R, B-2.247236-C, and CR42.276252-D shall be dismissed.

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, March 20, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors