ALJDEC decisions subject to certification as final

2016A-4979-NPC-ROC · Registrar of Contractors · 2017-05-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Noah's Plumbing LLC,

COMPLAINANT,

v.

Burbank Construction, Inc.,

License Nos. B-1.260016-C and B.260015-R,

RESPONDENT.

No. 2016A-4979-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 8, 2017, at 1:00 p.m.

APPEARANCES: Noah’s Plumbing LLC (“Complainant”) appeared through Ryan Trader, its qualify party/member; Burbank Construction, Inc. (“Respondent”) appeared through Kevin E. Burbank, its qualifying party/officer.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about November 2, 2009, the Arizona Registrar of Contractors (“the Registrar”) issued License Nos. B-1.260015-C for general commercial contracting and B.260016-R for general residential contracting to Respondent.

On or about December 14, 2009, the Registrar issued License No. R37R.261131-R for residential plumbing to Complainant.

On or about December 12, 2016, Complainant filed two complaints with the Registrar alleging that Respondent owed Complainant $2,235.00 pursuant to an oral agreement for work that it had performed at a jobsite at 313 E. Carol Ave., Phoenix, Arizona (“the Carol Ave. project”), and that Respondent owed Complainant $2,213.00 pursuant to an oral agreement for work that it had performed at a jobsite at 4545 N. 12th Drive, Phoenix, Arizona (“the 12th Drive project”).

On March 9, 2017, the Registrar issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10) against Respondent.

Respondent filed a timely written answer to the Citation, acknowledging that Complainant had performed work on the two projects, stating it had no problem paying $800.00 on the Carol Ave. project, but that Complainant failed to complete work on the project, and denying that it owed any money for the 12th Drive project because the gas lines that Complainant had installed did not pass inspection, held up the sale of the house, and cost Respondent $2,865.00 to repair.

The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

A hearing was held on May 8, 2017. Complainant submitted three exhibits and presented the testimony of its qualifying party/member, Ryan Trader, and its member, Sandy Trader. Respondent submitted one exhibit and presented the testimony of its qualifying party/officer, Kevin Burbank.

Additional Hearing Evidence

Both jobs involved Respondent’s contracts with property owners to fix up houses so that they could be “flipped.” Mr. Burbank testified that the parties’ oral agreements for the jobs were that after Complainant’s work passed inspection and a green tag was issued, Respondent’s payment would be due.

The Carol Ave. Project

Complainant submitted an invoice dated June 1, 2016, in the amount of $1,342.00 for installing new rough-in and top-out for the master bath and installing a new gas line to the water heater at the Carol Ave. project.

Complainant also submitted an invoice dated June 1, 2016, in the amount of $893.00 for installing a toilet, lavatory sink, shower, and washer at the Carol Ave. project.

Mr. Burbank testified that he had no problem with paying $893.00 for the toilet, lavatory sink, shower, and washer installation because a green tag had been issued for this work.

Mr. Burbank testified that Southwest Gas would not install the meter until all the plumbing was done for natural gas appliances, including the water heater. Both Southwest Gas and the City of Phoenix had informed Mr. Burbank that Respondent as a general contractor could not install the gas water heater; a licensed plumber such as Complainant needed to install it. Mr. Burbank testified that installation of the water heater was part of the rough-in.

Mr. Trader testified that he had never heard that Complainant was supposed to install the gas water heater.

Mr. Burbank testified that in January 2017, he sent texts and emails to Complainant asking it to install the water heater. Mr. Burbank testified that when he submitted the written answer on Respondent’s behalf, he thought that he could hire another licensed plumber to install the water heater. Mr. Burbank testified that, finally, the customer hired a plumber to install the water heater and that, as a result of Complainant’s failure, he lost the customer.

Complainant submitted texts from Mr. Burbank indicating that he thought that Respondent could “settle up” on the invoices for the Carol Ave. project on or before the first of August or September 2016.

The 12th Drive Project

Complainant attached to its complaint for payment on the 12th Drive Project an invoice dated June 1, 2016, in the amount of $2,213.00 for installing certain plumbing fixtures and a gas main.

Mr. Burbank testified that the gas main did not pass inspection because there was a leak. Although Mr. Trader promised to repair the gas leak, Mr. Burbank did not know whether Complainant ever made any attempt at repair. Respondent lost one sale in December 2016, as a result of the gas leak.

Mr. Trader acknowledged that Complainant had been informed on the gas leak. However, he did not feel that it was Complainant’s responsibility because six months had passed since it issued the June 1, 2016 invoice and it had not received any payment for the 12th Drive project.

Respondent submitted an invoice dated February 20, 2017, from Diamondback Plumbing Srv., Inc. (“Diamondback”) in the amount of $2,336.13 for the following scope of work at the 12th Drive project:

Gas leak after gas test found [multiple] leaks in gas lines in attic and in wall, after a few repairs from cutting out drywall [ceiling] in master bedroom and bathroom to repair and still had leaks. Per customer we decided to replace all gas lines from gas meter to all locations (water heater, future gas dryer, fireplace, stove, and furnace), after replacing relocated gas line and put on a 15 psi gauge to put on test for city inspection. . . .

Mr. Burbank testified that when Respondent inspected the gas line and attic before it hired Diamondback, it discovered that two flex ducts in the attic for the air conditioning system had been damaged. Mr. Burbank testified that Respondent attributed the damage to Complainant’s attempts to repair the gas line. Respondent submitted an invoice for $350.00 dated April 17, 2017, to repair the two flex ducts.

Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s license histories on the Registrar’s public website on this date. The licenses are current and in good standing and show no previous discipline. Each license has been administratively suspended two times for non-renewal.

CONCLUSIONS OF LAW

These disputes lie within the Registrar’s jurisdiction to resolve.

Complainant bears the burden of proof to establish cause to discipline Respondent’s contractor’s licenses by a preponderance of the evidence. Respondent bears the burden of proof 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.”

The Carol Ave. Project

Respondent acknowledged that it owed Complainant $893.00 for installing the fixtures at the Carol Ave. project.

With respect to Complainant’s failure to install the gas water heater, Respondent did not establish that the installation was part of the parties’ agreement or that Respondent suffered any compensable loss as a result of Complainant’s failure to install the water heater. Therefore, Complainant established that Respondent owes Complainant an additional $1,342.00 for the Carol Ave. project, for a total of $2,235.00.

The 12th Drive Project

Respondent established that it had to hire another contractor to repair the leak in the gas line that Complainant installed at the 12th Drive project at a cost of $2,336.13.

Complainant was required to provide a warranty for its work and to repair all workmanship deficiencies within two years of when it completed its work, especially a deficiency that presented a public health and safety issue like a leaking gas line. Respondent’s failure to pay Complainant’s invoice does not excuse it from honoring its statutorily required warranty.

Respondent did not establish that Complainant damaged the flex ducts for the air conditioner at the 12th Drive project. Therefore, it is not entitled to any additional offset against the amount otherwise owed to Complainant for the repair of the flex ducts.

Respondent is entitled to an offset in the amount that it paid another contractor to repair the gas line on the 12th Drive project. Because the $2,336.13 cost of repair exceeds the Complainant’s June 1, 2016 invoice in the amount of $2,213.00 by $123.13, Complainant is not entitled to any additional payment for the 12th Drive project.

A.R.S. § 32-1154(A)(10) includes among the grounds for suspension or revocation of a contractor’s license the following:

Failure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.

Because A.R.S. § 32-1154(A)(10) is written in terms of monies owed for specific projects, general contractors are not entitled to offset monies spent on one project to repair a subcontractor’s work against monies that would otherwise be owed on another project. Otherwise, a general contractor could hire a subcontractor with no intention of paying the subcontractor because the general contractor felt that monies were owed on a different project.

Therefore, Complainant established cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(10) based on its failure to pay Complainant a total of $2,235.00 for the Carol Ave. project.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the final order in this matter, Respondent Burbank Construction, Inc.’s License Nos. B-1.260015-C and B.260016-R shall be suspended until Respondent provides written proof to the Registrar that Respondent has paid Complainant Noah’s Plumbing LLC $2,235.00 by certified or cashier’s check.

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, May 12, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors