FINACT2016A-4546-ROC.pdf

2016A-4546-ROC · Registrar of Contractors · 2019-02-21

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Cathy Byrd, Case No. 2016-4546 COMPLAINANT, Docket No. 2016A-4546-ROC v. FINAL ADMINISTRATIVE DECISION Landscape Images LLC, AND ORDER License No. ROC 207857, RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an

administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the

Registrar must provide written justification setting forth the reasons for the modification or rejection.

REGISTRAR’S ACCEPTANCE

In this case, a hearing was held, and the administrative law judge issued a written decision. See

Administrative Law Judge Decision, attached. The Registrar reviewed that decision and hereby accepts

it.

CONCLUSION

Because the Registrar has accepted the administrative law judge’s decision, that decision is the

final administrative decision in this case and becomes effective on April 1, 2019.

FINAL NOTE

On page 2, line 29 replace “October 18, 2018” with “October 19, 2018.”

Dated February 20, 2019.

Registrar of Contractors /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Copy mailed via USPS First Class mail February 20, 2019 to: Respondent Landscape Images LLC 2629 E Edgewood Cir Mesa, AZ 85204 Complainant Cathy Byrd 20289 E Sunset Ct Queen Creek, AZ 85142 AND copy electronically mailed this same date to: Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar Registrar’s Counsel Thomas Raine, Assistant Attorney General

Office of Administrative Hearings Diane Mihalsky, Administrative Law Judge Case No. 2016-4546 / AN

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 2.4.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Cathy Byrd, No. 2016A-4546-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION v.

Landscape Images LLC, License No. ROC 207857,

RESPONDENT

HEARING: January 7, 2019, at 9:00 a.m. and January 22, 2019, at 8:30 a.m. APPEARANCES: Cathy Byrd (“Complainant”) appeared on her own behalf at the January 7, 2019 hearing, but was excused for the January 22, 2019 hearing; Landscape Images LLC (“Respondent”) appeared at the January 7, 2019 hearing through its member/qualifying party, Sheree Skousen McNeil and member John Wayne McNeil, but failed to appear at the January 22, 2019 hearing; the Arizona Registrar of Contractors (“the Registrar”) was represented on both hearing dates by Thomas Raine, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT BACKGROUND AND PROCEDURE The Hearing in OAH Case No. 2016A-4546-RFA-ROC 1. According to the electronic docket of the Office of Administrative Hearings (“OAH”), an independent state agency, on July 23, 2018, the Registrar issued a Notice of Notice of Recovery Fund Eligibility/Payout hearing in Case NO. 2016a-4546-RFA- ROC on August 24, 2018, before Administrative Law Judge (“ALJ”) Randy Wolfson. 2. On August 17, 2018, Complainant submitted disclosure to OAH, with a copy to Respondent.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 2.4.2019 ROC LEGAL

3. According to the sign-in sheet for the August 24, 2018 hearing, Complainant appeared with her witness, Linda Bush. Mr. McNeil appeared along with Respondent’s attorney, Clint Dunaway, Esq. Thomas Raine, Esq., Assistant Attorney General,

appeared on behalf of the Registrar with its witness, Doug Ulmer.

4. Mr. Dunaway requested a continuance on behalf of Respondent, which was

unopposed. On August 24, 2018, ALJ Wolfson issued an order continuing the hearing

to September 7, 2018.

5. On August 30, 2018, the Registrar forwarded to OAH Respondent’s

disclosure of witnesses and exhibits, which Mr. Dunaway had filed with the Registrar.

The exhibits included photographs of Complainant’s backyard and tile work at her

house.

6. A further hearing was held on September 7, 2018. According to the sign-in

sheet, Complainant, Ms. Bush, Mr. Dunaway, Mr. and Mrs. McNeil, Mr. Raine, and Mr.

Ulmer attended the further hearing, along with witnesses Charles Warren and Bryce

Campo. The audio record of the hearing lasted 2 hours, 10 minutes. The undersigned

ALJ did not find a list of the exhibits that were admitted at the hearing.

7. On September 10, 2018, ALJ Wolfson set a further hearing on October 5, 2018, to allow the parties to complete presentation of their cases in chief. 8. On September 28, 2018, ALJ Wolfson issued an order continuing the further hearing to October 22, 2018, because a conflict had arisen in his schedule. 9. On October 18, 2018, the Registrar filed a motion to vacate the October 22, 2018 further hearing and to remand the matter to the Registrar because on that date “the Registrar [had] issued a Notice and Order quashing the previous payout order that formed the basis of this hearing.” OAH’s file does not include a copy of that order. 10. On October 18, 2018, ALJ Wolfson vacated the October 22, 2018 further hearing and remanded Case No. 2016a-4546-RFA-ROC to the Registrar for further action. Case No. 2016A-4546-ROC (the matter at issue) 11. On October 18, 2018, the Registrar issued a Notice of Claim for Administrative Payout in Complainant’s claim to the Residential Contractors’ Recovery RECEIVED 2.4.2019 ROC LEGAL

Fund (“the Fund”) Case No. 2016-4546 under A.R.S. § 32-1154(G) in the amount of $30,000.00.1 12. Respondent again requested a hearing on the amount of the payout. The

Registrar referred the matter back to OAH for an evidentiary hearing. On November

27, 2018, the Registrar issued a Notice of Hearing to be held on January 7, 2019.

13. On January 2, 2019, the Registrar submitted exhibits to be used in the

January 7, 2019 hearing.

14. On January 3, 2019, Respondent’s attorney Bradley D. Gardner, Esq. filed

a motion to continue the hearing because he had just been retained on January 2,

2019, he had a calendar conflict, and needed time to prepare for the hearing.

15. On January 3, 2019, the ALJ denied the motion to continue as untimely

under A.A.C. R2-19-106(C).

16. On January 4, 2019, Mr. Gardner filed a list of exhibits on Respondent’s

behalf, stating that Respondent would “utilize the same exhibits identified by

Complainant on her exhibit list.” Complainant had not filed any exhibits or exhibit list in

Case No. 2016A-4546-ROC.

17. A hearing on the merits of the amount of Complainant’s claim to the Fund was held on January 7, 2019, before the undersigned ALJ at OAH. The Registrar submitted eleven exhibits and presented the testimony of two witnesses: (1) Doug Ulmer, Legal Assistant II and a reviewer in the Registrar’s Recovery Fund Department; Michael Crow, the Registrar’s Assistant Chief of Investigations, who had investigated the underlying workmanship claim. THE EVIDENCE SUBMITTED IN CASE NO. 2016A-4546-ROC ON JANUARY 7, 2019 The Registrar’s Case-in-Chief Underlying Workmanship Complaint 18. This case involved Respondent’s contract with Complainant to perform an extensive backyard remodeling project. On November 14, 2016, Complainant filed a complaint with the Registrar against Respondent alleging that it had performed poor

1 See the Registrar’s Exhibit 11. RECEIVED 2.4.2019 ROC LEGAL

work on a $61,901.57 contract to remodel her backyard at her home at 20289 E. Sunset Court, Queen Creek, Arizona 85142. Complainant stated that she had paid Respondent $49,801.57 on the $61,901.57 contract.2

19. The complaint was assigned to Investigator Crow for investigation. On

December 15, 2016, Investigator Crow performed a jobsite inspection, which both

parties attended. According to Investigator Crow’s jobsite inspection notes, he

substantiated ten of Complainant’s fifteen items of specific complaint, including that the

waterline tile was bowed 1-1/8” over the length of a 4’ level in the spa, that the tile

“throughout the entire deck have large gaps, cracks, not properly secured and poor

work in cutting,” that the outside distance from pillar to pillar on the barbeque was 1”

wider on the east side than on the opposite side, that the pillars on the right side of the

barbeque were one inch wider than the pillar on the opposite side, that the stone on the

barbeque was not installed properly and was crooked, that the pavers around the

barbeque were 1-7/8” wider on the right side, that the steps at the deck were

incomplete and the under-step lighting not functional, and that the pool coping stones

were not consistent and had extra grooves. Complainant told Investigator Crow that

she did not want Respondent to complete the project, only to repair its deficient workmanship.3 20. On January 6, 2017, Investigator Crow issued a Directive that required Respondent to correct the items found to be deficient and to obtain a permit for the project on or before 5:00 p.m. on January 23, 2017.4 21. On January 25, 2017, the Registrar issued a Citation,5 charging charge to revoke or suspend Respondent’s contractor’s license under A.R.S. § 32-1154(A)(2),6

2 See the Registrar’s Exhibit 1. See the Registrar’s Exhibit 2. See the Registrar’s Exhibit 3. See the Registrar’s Exhibit 4. 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.” RECEIVED 2.4.2019 ROC LEGAL

A.R.S. § 32-1154(A)(3),7 namely, A.A.C. R4-9-108,8 A.R.S. § 32-1154(A)(16),9 and A.R.S. § 32-1154(A)(22).10 22. A hearing was held on the underlying workmanship complaint on May 15,

2017. As a result of the evidence offered at the hearing, the assigned ALJ found cause

to revoke or suspend Respondent’s license under all four charged statutes and

recommended that the Registrar to suspend Respondent’s license for three business

days and to require Respondent to pay a $250.00 civil penalty pursuant to A.R.S. § 32-

1154(E). On June 7, 2017, the Registrar accepted the Recommendation.11 Respondent

did not request rehearing or appeal the Registrar’s final order.

Complainant’s Claim to the Fund

23. On May 21, 2018, Complainant submitted a Claim to the Fund. According

to the claim, Complainant owed $16,252.37 on her contract with Respondent and the

lowest bid was $51,053.16 to repair Respondent’s workmanship on the project.

Complainant request a payout from the Fund in the amount of $30,000.00.12 This was the claim the Registrar had referred for an evidentiary hearing in Case No. 2018A- 4546-RFA-ROC. 24. The Registrar submitted Complainant’s September 26, 2018 email to Mr. Ulmer, while the hearing in Case No. 2018A-4546-RFA was ongoing, to which she attached an $64,843.09 bid dated June 29, 2018 from Outdoorscapes Design and Install (“Outdoorscapes”). According to Complainant, the revised bid more accurately reflected her damages because the initial bid did not include the pool chip out, the cost

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.” 8 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.” A.R.S. § 32-1154(A)(16) includes among the grounds for suspension, revocation, and other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.” A.R.S. § 32-1154(A)(22) includes 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.” See the Registrar’s Exhibit 5. 12 See the Registrar’s Exhibit 6. RECEIVED 2.4.2019 ROC LEGAL

of removing and replacing the inconsistent base material from the bottom deck, the fact that some of the tile could not be reused and had to be replaced, the cost of reinstalling lighting, more square footage of coping, repairing the deck to provide a correct slope,

and replacing the cultured stone on the pillars and bar because the cultured stone

could not be reused.13

25. The Registrar also submitted another licensed contractor’s proposal to

perform necessary repairs, which set forth a detailed scope of work, in the amount of

$82,209.21, higher than Outdoorscapes’ $64,843.09 proposal14

26. The Registrar also submitted a $4,250 bond payment that Complainant had

received from Respondent’s bond on July 26, 2017.15

27. Mr. Ulmer testified that after the August 2018 hearing in Case No. 2018A-

4546-RFA-ROC, Complainant provided a new bid that included the cost of additional

repairs. The Registrar decided to ask that the hearing be vacated so that it could go

forward with Complainant’s new bid.

28. Mr. Ulmer testified that the Registrar felt it was more appropriate for

Complainant to receive a payout in the amount needed to repair Respondent’s

workmanship deficiencies rather than an amount to complete the project. Mr. Ulmer testified that he reviewed the Complainant’s contract with Respondent to determine the scope of work and reviewed Complainant’s checks to determine that amount of payment. 29. Mr. Ulmer testified that he reviewed Outdoorscapes’ bid with Investigator Crow and disallowed $2,500.00 for a spa chipout, because Investigator Crow’s Directive in the underlying workmanship case did not require this work. He prepared a spreadsheet, which subtracted Complainant’s unpaid balance of $17,549.57 and the bond payment of $4,250.00 from Outdoorscapes’ low bid to calculate Complainant’s loss as $40,543.52.16 Because the maximum payout from the Fund is $30,000.00, he issued a notice of payout in this amount. See the Registrar’s Exhibit 7. See the Registrar’s Exhibit 8. See the Registrar’s Exhibit 9. 16 See the Registrar’s Exhibit 10. RECEIVED 2.4.2019 ROC LEGAL

Respondent’s Cross-Examination of the Registrar’s Witnesses and the Start of Respondent’s Case-in-Chief

30. Mrs. McNeil cross-examined the Registrar’s witnesses on behalf of

Respondent.

31. Respondent submitted a bid from Outdoorscapes dated June 29, 2018, in

the amount of $35,146.40, which the Registrar had allegedly used to calculate the

payout in Case No. 2018A- 4546-RFA-ROC.17 Respondent also submitted a bid from

Outdoorscapes dated June 29, 2018, in the amount of $64,843.09, which the Registrar

had used to calculate the payout in this matter.18 Respondent also provided but did not

have time to submit three more exhibits.

32. Mr. Ulmer acknowledged the project may have been completed in August

2018, but that he did not remember with certainty. He recalled that certain photographs may have been submitted during the hearing in Case No. 2018A-4546-RFA-ROC. 33. Mr. Crow testified that photographs that Mrs. McNeil referred to were not taken by him because they did not have a date stamp. Mr. Crow did not recall his conversations with Mr. and Mrs. McNeil. 34. Mrs. McNeil attempted to refer to exhibits that had been submitted in Case No. 2016A-4546-RFA-ROC at the hearings during the summer of 2018. The ALJ had difficulty locating these exhibits or determining what foundation supported their admission. Mrs. McNeil implied that Complainant had completed all repairs to the project by August 2018, and that the new bid that caused the Registrar to quash the original Notice of Claim for Administrative Payout had been fraudulently obtained. 35. Because Respondent did not complete presentation of its case in chief and to allow Respondent additional time to retain an attorney, obtain records from OAH and the Registrar through a public records request, and to have subpoenas issued for witnesses and or documents, the ALJ set a further hearing on January 22, 2019, at 8:30 a.m. OAH Staff sent the January 7, 2019 order to Respondent’s address of record

See Respondent’s Exhibit A. 18 See Respondent’s Exhibit B; the Registrar’s Exhibit 7 at 2. RECEIVED 2.4.2019 ROC LEGAL

and to Mr. Gardner, the attorney who had filed an untimely motion to continue the January 7, 2019 hearing. 36. On January 8, 2019, Mr. Gardner filed a Notice of Appearance on

Respondent’s behalf. On January 16, 2019, Mr. Gardner filed a Notice of Withdrawal

from Respondent’s representation.

37. Respondent did not request to appear telephonically at the further hearing

and did not request that the hearing be continued. Although the start of the duly

noticed further hearing was delayed eighteen minutes to allow Respondent additional

travel time, Respondent did not appear, through an authorized member, employee, or

attorney, and did not contact the OAH to request that the start of the further hearing be

further delayed. Consequently, Respondent did not present any additional evidence to

show that the amount of the proposed Fund payout was inflated or improper.

CONCLUSIONS OF LAW

1. The order setting a further hearing that OAH mailed to Respondent to its address of record and to its attorney was reasonable and Respondent is deemed to have received notice of the further hearing.19 2. This matter lies within the Registrar’s jurisdiction.20 3. Respondent bears the burden of proof to establish that the Registrar’s calculations on the proper amount of the payout were erroneous or not supported by a preponderance of the evidence.21 4. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”22 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

See A.R.S. §§ 41-1092.04; 41-1092.05(D). See 32-1101 et seq. See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, Ariz. 369, 372, 249 P.2d 837 (1952). 22 MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). RECEIVED 2.4.2019 ROC LEGAL

all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”23 5. A.R.S. § 32-1154(G) provides in relevant as follows:

Notwithstanding any other provisions in this chapter, if a contractor's license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter, the registrar may order payment from the residential contractors' recovery fund to remedy the violation. The registrar shall serve the contractor with a notice setting forth the amount claimed or to be awarded. If the contractor contests the amount or propriety of the payment, the contractor shall respond within ten days of the date of service by requesting a hearing to determine the amount or propriety of the payment. . . . An applicant to the residential contractors' recovery fund pursuant to this subsection must show that the applicant has proceeded against any existing bond covering the residential contractor and has not collected on the bond in an amount of thirty thousand dollars or more.

A.R.S. § 32-1132(A) provides that a person injured by a licensed contractor by an act in violation of the Registrar’s statutes may recover an amount not to exceed thirty thousand dollars, but limits payouts from the Fund to “the actual damages suffered by the claimant as a direct result of the contractor's violation but shall not exceed an amount necessary to . . . repair a residential structure . . . .” For the purposes of A.R.S. § 32-1132(A), “actual damages” are the reasonable cost of repairing the contractor’s defective work, minus any portion of the contract price still unpaid to the original contractor.24 6. This is an unusual case and there may have been some irregularity in Complainant’s submission of the second Outdoorscapes’ bid. Mr. Ulmer and Investigator Crow testified credibly that they compared the bid to the Directive and disallowed one repair item that was not on the Directive. Respondent was given an opportunity to present additional evidence to bear its burden, but failed to submit additional evidence to establish that the $30,000.00 payout that the Registrar

23 BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999). RECEIVED 2.4.2019 ROC LEGAL

calculated to compensate Complainant for repairs of Respondent’s numerous and extensive items of poor workmanship was excessive, not supported by the evidence, not authorized by statute, or otherwise improper.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that on the effective date of the final

order in this matter, the Residential Contractors’ Recovery Fund shall pay $30,000.00

to Complainant Cathy Byrd.

It is further recommended that under A.R.S. § 32-1139(B), the Registrar shall

charge $30,000.00, plus interest at a rate of ten percent a year, to Landscape Images

LLC’s License No. ROC 207857.

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, February 4, 2019. /s/ Diane Mihalsky Administrative Law Judge Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors

24 See Ramsey v. Arizona Registrar of Contractors, 241 Ariz. 102, 106, 384 P.3d 316, 320 (App. 2016).