ALJDEC decisions subject to certification as final

2016A-4037-ROC · Registrar of Contractors · 2017-04-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Bongil Ho,

COMPLAINANT,

v.

Secon LLC,

License No. B-1.260035-C,

RESPONDENT.

No. 2016A-4037-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 3, 2017, at 8:30 a.m.

APPEARANCES: Bongil Ho (“Complainant”) was represented by Evan F. Hiller, Esq., Sacks Tierney, PA; Secon LLC (“Respondent”) was represented by Jason A. Clark, Esq., Lang & Klain, PC.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about November 17, 2009, the Arizona Registrar of Contractors (“the Registrar”) issued License No. B-1.260035-C for commercial contracting to Respondent.

On or about October 13, 2016, Complainant filed a complaint with the Registrar alleging that Respondent had performed poor work, had caused collateral damage, and had overcharged for its performance of its August 12, 2016 contract to perform certain work at Complainant’s property at 22005 N. 51st St., Phoenix, Arizona 85054. According to the complaint, Respondent had started work on the project on approximately August 14, 2016, and had stopped work on the project on September 12, 2016.

The contract documents and invoices that Complainant attached to its complaint were for fixed prices and did not refer to Respondent’s costs on the job. Complainant stated on the complaint that Respondent’s address was 70 S. Val Vista, Suite A-3426, Gilbert, Arizona 85296.

The Registrar assigned the complaint to its Investigator, Steve Klein, for investigation. Investigator Klein performed a jobsite inspection on November 9, 2016, which Respondent did not attend. On that same date, Investigator Klein on behalf of the Registrar issued a directive to Respondent to repair 10 complaint items, including creating a new pantry in the kitchen by combining two hallway closets, installing a master bathroom shower enclosure, and centering two openings in the entertainment center wall, on or before 5:00 p.m. on November 25, 2016.

On November 28, 2016, Complainant sent an email to Investigator Klein to inform him that Respondent had not done anything to comply with the November 9, 2016 Directive. On November 29, 2016, Investigator Klein referred the complaint to the Registrar’s Legal Department.

On November 30, 2016, the Registrar issued a Citation against Respondent’s license, charging cause to revoke or suspend Respondent’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

On October 17, 2016, October 18, 2016, November 9, 2016, and November 30, 2016, Investigator Klein or the Registrar’s staff sent letters to Respondent at 4518 N. 12th St. Ste. 210, Phoenix, Arizona 85014-4232 notifying it, respectively, of Complainant’s complaint, the November 9, 2016 jobsite inspection, the November 9, 2016 Directive, and the Citation. According to the Registrar’s public website, Respondent’s current address of record is 70 S. Val Vista Dr. #A3426, Gilbert, Arizona 85296-1374, the same address as Complainant put on the complaint.

Although the Citation required Respondent to file a written answer on or before December 15, 2016, after the Directive was returned as undeliverable, staff at the Registrar made a courtesy telephone call to Respondent to inform it of Complainant’s complaint, the Directive, and the Citation. On or about December 16, 2016, the Registrar accepted Respondent’s written answer to the Citation, which denied that cause existed to suspend or revoke its license and affirmatively alleged that Complainant had denied reasonable access for Respondent to perform repairs.

The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. On April 3, 2017, a hearing was held. The parties submitted 36 joint exhibits and Respondent submitted one additional exhibit. Respondent presented the testimony of Jerry Lee Ownby, its qualifying party/member, and Kahkuyan Brewer, its general manager and the jobsite superintendent on Complainant’s project. Complainant testified on his own behalf. Investigator Klein also testified.

Hearing Evidence

Mr. Ownby testified that Respondent did not receive notice of Complainant’s complaint or the directive until December 16, 2016, when the Registrar made a courtesy call.

Mr. Brewer testified than the original contract amount was $21,975.00. Mr. Brewer testified that within the next week or so, Complainant requested additional electrical and other work, raising the contract price to $37,320.00. Respondent later paid $3,413.93 for tile that Complainant initially had agreed to purchase, raising the contract price a third time.

Complainant testified that he was out of town when Respondent started the project on or about August 15, 2016. When he returned, he received an electric bill that was more than $500.00. Complainant testified that he learned that Respondent’s crews and subcontractors worked with the air conditioning running and the doors and windows open in the house. Complainant testified that, in addition, some personal items were missing from the garage when he returned. Complainant testified that he decided that he did not want Respondent doing any work unless he was present.

Mr. Brewer testified Complainant paid Respondent’s first invoice for the next progress payment that was due after the start of the job. Mr. Brewer testified that Respondent accepted a payment in an amount that was less than the amount of the invoice, after Complainant complained about the amount of the invoices and requested receipts to support Respondent’s charges.

Mr. Brewer testified that Respondent does not provide receipts to support invoices to customers because it usually performs work for a fixed price. Mr. Brewer testified that he has never before been asked to backup documents. Mr. Brewer testified that Complainant could look at the project to see what work had been done.

Mr. Brewer testified that sometime in early September 2016, Complainant asked Respondent to stop work because Complainant was going out of town and wanted to be present when any work was done. Complainant removed the key from the lockbox that had previously allowed Respondent to access the jobsite. On or about September 20, 2016, Complainant informed Respondent that he was traveling to Korea after his mother had died and that he was turning the matter over to his attorney, Michael Hepner.

Respondent then retained attorney Charles McTheny. On September 30, 2016, Mr. Hepner sent an email to Mr. McTheny demanding a full accounting of all of Respondent’s expenses on the job. Mr. McTheny responded that he was in the process of moving offices and had very limited access to email. On October 4, 2016, Mr. McTheny sent an email indicating that Respondent would complete work on the project and offering to set up an escrow account into which Complainant would place disputed payments. On October 4, 2016, Mr. Hepner sent an email saying that Respondent had one more chance to produce documentation to support its charges and that if the documentation was provided, Complainant would consider paying money into escrow and Respondent could resume work on the project.

On October 5, 2016, at 1:39:51 p.m., Mr. Hepner sent an email to Mr. McTheny, stating that Respondent had failed to provide documentation to support its charges and demanding that Respondent resume work on the project on October 6, 2016, at 1:00 p.m., after Complainant returned from Korea. On October 6, 2016, at 9:55:59 a.m., Mr. Hepner informed Mr. McTheny that since Respondent had not provided documentation to support its charges, Complainant “will be moving forward to have your client’s work inspected and will ultimately utilize other vendors to have your client’s work corrected as may be necessary and the remaining work completed.”

Mr. Brewer testified that Respondent never said that it would not correct and complete its work. Mr. Brewer testified that he understood Mr. Hepner’s October 6, 2016 email to mean that Complainant was firing Respondent from the job.

Complainant acknowledged that he no longer wished the two hallway closets to be combined to make a kitchen pantry. Respondent’s failure to perform this work was Item #1 on the November 9, 2016 Directive.

At some point between October 6, 2016, and October 13, 2016, when Complainant filed the complaint with the Registrar, through a miscommunication, one of Respondent’s subcontractors attempted to deliver a shower enclosure for the master bathroom to Complainant’s house. Complainant sent the subcontractor away. Complainant testified that he had been told by someone at the Registrar that Respondent should not be allowed to perform any work until the Registrar performed an inspection. The missing shower enclosure was Item #2 on the November 9, 2016 Directive.

Item #7 on the November 9, 2016 Directive was that the opening in the entertainment center wall was not centered or symmetrical. Mr. Brewer testified that because Complainant had requested that a safe be installed in the master bedroom on the opposite of the entertainment center wall, it was not possible to center the openings.

Respondent did not challenge any of the other items the items on the November 9, 2017 Directive. Mr. Brewer testified that the project was 75% complete, but that Complainant did not allow Respondent to complete the project or to perform repairs. Mr. Brewer opined that all the items on the November 9, 2016 Directive were either incomplete or routine punch-list items.

/ / / /

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish cause to suspend or revoke Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish 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.”

Respondent acknowledged that its work was incomplete and required repair. Respondent established that it did not complete or repair its work because Complainant refused to provide reasonable access to the jobsite after September 12, 2016, because Complainant wanted to be present when work was performed and, after Complainant returned from Korea, Complainant’s attorney refused to allow Respondent to complete the job or to repair the work unless it provided receipts to support its charges.

Complainant did not present any evidence that Respondent received notice of the complaint or Directive until December 16, 2016, when it filed its written answer to the Citation. Complainant did not produce any evidence or testimony that at after Respondent filed the written answer, he would have allowed Respondent to complete or repair its work. A homeowner’s refusal to provide reasonable access provides legal justification for a contractor’s failure to correct or repair its work.

Therefore, Complainant failed to establish cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A) (3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22). The parties may resolve their financial dispute, which led to Complainant’s refusal to provide reasonable access to Respondent, in a court of competent civil jurisdiction.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the order in this matter, Complainant Bongil Ho’s complaint in Case No. 2016-4037 against Respondent Secon LLC’s License No. 260035 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, April 10, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors