ALJDEC decisions subject to certification as final

2016A-3657-ROC · Registrar of Contractors · 2017-01-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Yogi Chinnam and Ratna Korepella,

COMPLAINANTS,

v.

Webster Tile Installation Company,

License No. CR48.299858-D,

RESPONDENT.

No. 2016A-3657-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 9, 2017, at 1:00 p.m.

APPEARANCES: Yogi Chinnam and Ratna Korepella (“Complainants”) appeared through Yogi Chinnam; Webster Tile Installation Company (“Respondent”) appeared through James Boyd Webster, its qualifying party/officer.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

On or about July 8, 2015, the Arizona Registrar of Contractors (“the Registrar”) issued License No. CR48.299858-D for dual ceramic, plastic, and metal tile to Respondent.

On or about September 19, 2016, Complainants filed a complaint with the Registrar stating that Respondent had overcharged for and failed to complete its contract to perform work at Complainants’ residence at 9690 E. Yucca St., Scottsdale, Arizona 85260. The complaint alleged that on September 7, 2016, Respondent had demanded an extra $1,000.00 payment and that when Complainants refused to pay any more money, Respondent had stated that it would not perform any more work.

The Registrar assigned the complaint to its Investigator, Matt Gunstra (“Investigator Gunstra”) for investigation. On October 5, 2016, Investigator Gunstra performed a jobsite inspection. Investigator Gunstra’s jobsite inspection notes state that he verified that Respondent’s contract did not provide for progress payments or allow it to submit invoices for partial payments. Investigator Gunstra also noted that the parties agreed that they had made several oral change orders to the scope of work. Investigator Gunstra finally stated that Complainants had hired others to complete some work that they deemed to be a safety hazard, but that “I don’t necessarily agree it was hazardous . . . .”

On October 5, 2016, Investigator Gunstra on behalf of the Registrar issued a Directive. The Directive required Respondent to correct by appropriate means certain deficiencies, in relevant part as follows:

Complaint Item #1: The contractor did not complete project by September 7th, 2016 as per the initial agreement

-Respondent shall complete project per original contract agreement, properly executed change orders, verbal agreements, local building codes and manufacturers installation instructions.

Complaint Item #5: Contractor gave us some dates and times when he would come do the work. He did not show nor communicate that he had no plans of showing up.

-Respondent shall complete project per original contract agreement, properly executed change orders, verbal agreements, local building codes and manufacturers installation instructions.

NOTE: Respondent shall schedule and pass all required city inspections related to his work

The deadline in the Directive for Respondent to complete its work was on or before 5:00 p.m. on October 19, 2016.

On or about October 12, 2016, the Registrar received Complainants’ letter stating that they would not allow Respondent back on their property because they felt that he had threatened them in order to obtain more money than was due.

Complainants attached to their October 12, 2016 letter a copy of the permit that they had obtained for the job from the City of Scottsdale.

At that point, Investigator Gunstra sent the complaint to the Registrar’s Legal Department. On October 24, 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)(2), and A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158(B).

Respondent’s qualifying party/officer James Webster filed a timely written answer to the Citation on Respondent’s behalf. Mr. Webster denied any statutory violation and affirmatively alleged that at the beginning of the work, he had issued “an invoice covering the scope of work and price per item.” Mr. Webster also stated that before Respondent started Complainants’ project, he had informed them that Respondent had a large job at the Marriott scheduled and that Respondent would have completed Complainants’ project if they had allowed it to return to the jobsite.

The Registrar referred Complainants’ complaint to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. An evidentiary hearing was held on January 9, 2017. Complainants, Mr. Webster, and Investigator Gunstra testified. Complainants submitted numerous photographs of Respondent’s incomplete work and Respondent submitted three exhibits, including the invoice referenced in Respondent’s written answer and a photograph of its employee’s tools at the jobsite.

Hearing Evidence

Investigator Gunstra testified that at the jobsite inspection, the parties argued about whether any more money was due to Respondent.

Investigator Gunstra testified that he advised Mr. Webster at the jobsite inspection that Respondent could avoid a Citation if it completed the project. He also advised Complainants that if they refused to allow access to Respondent to complete the project, it could affect the outcome of their complaint.

Investigator Gunstra testified that a permit was needed for the project. Investigator Gunstra stated that even if Respondent was not contractually obligated to obtain the permit, it should have verified that a permit had been obtained before beginning the project.

Mr. Webster pointed out that Complainants had acknowledged in an email that Respondent’s employee had worked on the project on September 12, 2016, which contradicted their statement in their complaint that Respondent had abandoned the project on September 7, 2016, when they refused to pay any more money. Mr. Webster testified that the scope of work that remained to be performed under the parties’ contract was small and that if Complainants had allowed Respondent to return to the jobsite, it could have completed the project in a day.

Respondent submitted its emailed invoice that became the parties’ contract. The email did not provide for progress payments or an estimated date of completion.

Complainants testified that they felt unsafe and would not allow Respondent to return to their home to complete the project. Complainants testified that they both grew up in India, where construction was performed differently, and that they relied on Respondent to inform them that they needed a permit.

Administrative notice is taken of Respondent’s prior record pursuant to A.A.C. R4-9-117. As of this date, Respondent’s license was current. No prior discipline has been imposed on the license.

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.”

The parties’ financial dispute appeared to be driving Complainants’ claim of abandonment and related workmanship concerns. Because the legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages, the parties will need to resolve their financial dispute in a judicial forum.

Respondent started construction on the project even though Complainants had not obtained a permit. Although Complainants did not establish that Respondent’s contract required it to obtain a permit, as Investigator Gunstra testified, Respondent should not have started the project without a permit. Therefore, Complainants established potential cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(2). Because Complainants obtained a permit shortly after the Directive was issued, it does not appear that Complainants were harmed by this potential violation.

Respondent’s invoice did not provide for progress payments or an estimated date of completion and the parties’ subsequent change orders were not in writing. Therefore, Complainants also established potential cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(12), namely, A.R.S. § 32-1158(B). A mutual understanding between the parties regarding the scope of work under change orders, progress payments, and an estimated date of completion may have avoided this dispute.

Because construction is not a perfect art, contractors generally must be afforded at least one opportunity to correct their deficient work or complete projects before their licenses may be suspended or revoked. Complainants acknowledged that they refused to provide access for Respondent to complete the project to comply with the Registrar’s October 5, 2016 Directive. Therefore, Complainants did not establish that Respondent abandoned the project. Therefore, 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 thirty calendar days after the effective date of the final order in this matter, Respondent Webster Tile Installation Company’s License No. CR48.299858-D shall be suspended until it provides written proof that is satisfactory to the Registrar that it has revised its contract form to include the terms required by A.R.S. § 32-1158(B).

It is further recommended that if within 30 calendar days after the effective date of the final order, Respondent has provided written proof that is satisfactory to the Registrar that it has brought is contract form into compliance with the requirements of A.R.S. § 32-1158(B), Respondent’s License No. CR48.299858-D shall not be suspended but, instead, Complainants Yogi Chinnam and Ratna Korepella’s complaint in Case No. 2016-3657 against Respondent’s license 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, January 17, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors