ALJDEC decisions subject to certification as final

2016A-532-ROC · Registrar of Contractors · 2017-06-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Betty Lou Nelson,

COMPLAINANT,

v.

Desert Living General Contracting, LLC,

License No: 178030

RESPONDENT

No. 2016A-532-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 1, 2017

APPEARANCES: Leroy and Betty Nelson, Complainants; Michael Callahan,

Qualifying Party and Member of Respondent’s LLC, James Rector, Member of

Respondent’s LLC, D. Cody Huffaker, Esq., Attorney for the Respondent; Jack

Grimm, ROC Investigator.

ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson

_____________________________________________________________________

Evidence and testimony were presented and, based on the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order Desert Living made:

FINDINGS OF FACT

Hearing is this matter convened at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated May 31, 2016 as continued by the March 24, 2017 order of Administrative Law Judge Suzanne Marwil...

Respondent, Desert Living General Contracting, LLC d/b/a Dry Guys Restoration [hereinafter “Desert Living”] is an Arizona Limited Liability Company which holds Arizona Contractor’s License number 178030, [a KB-2 DUAL LLC license] first Issued on September 9, 2002 by the Arizona Registrar of Contractors (hereinafter “ROC”).

Appearing at this hearing was Michael Joseph Callahan, a member of Desert Living and the Qualifying Party. Also appearing was Mr. James David Rector, a member of Desert Living’s LLC.

At all times material to this matter, Complainant Betty Lou Nelson and her husband, Leroy Nelson, [hereinafter “Nelson”], rented and occupied a residence located at 3926 West Sunrise Drive in Laveen, Arizona.

The Nelson residence was flooded and sustained water damage throughout the home. Nelson held a homeowner’s insurance policy with Mercury Casualty Company [hereinafter “Mercury”] against which Nelson submitted a claim to cover losses caused by the water damage. The Nelson policy claim included emergency dry-out services; packing, removal and storage of contents, back-pack of contents; furniture restoration; temporary housing costs and residence repairs.

By an Invoice dated November 25, 2015, and signed by Complainant Leroy Nelson, Desert Living agreed with Nelson to undertake performance of the scope of work authorized by Mercury [hereinafter the “Insurance Scope of Work] to the extent of the funds allowable by Mercury of $63,026.62 [Exhibit R-3]. Therein the Invoice also provided that Desert Living would continue to work directly with Mercury to expand and increase the amount of payment allowed for the approved Insurance Scope of Work to cover the extras and additions desired by Nelson. [Exhibit R-2].

As of November 25, 2015, the entire scope of work to be provided by Desert Living was not yet determined since Desert Living was still working with Mercury to expand the Insurance Scope of Work to include extras and additional items desired by Nelson.

Inasmuch as Nelson required Desert Living to provide items not included in the Mercury Insurance Scope of Work, Desert Living asked for and received an advance of $5,000.00 to cover Desert Living payment for the extra items from Nelson and to commence work. [See Exhibit R-3].

Desert Living began making repairs to the Nelson residence pursuant to the items listed by Mercury in the Insurance Scope of Work

Desert Living conducted work for which building permits were required when neither it nor Nelson had procured such permits

Respondent Desert Living made a good faith effort to obtain proper permitting, but the permitting agency would not issue the permit to the Respondent without signatures of Nelson.

Nelson failed and refused to assist Desert Living in obtaining permits for the construction. Subsequently, Nelson made permit application without the assistance or participation of Desert Living.

By January 14, 2017, Desert Living notified Nelson [Exhibit R-5] that Mercury would not authorize any additional funds or expand the Insurance Scope of Work. [See Exhibit R-5]. Desert Living informed Nelson that Desert Living would not be able to provide Nelson with the upgrades desired to be added to the Insurance Scope of Work by Nelson because the funds provided by Mercury would not cover the expense of Nelson’s requested upgrades [e.g. new cabinets, stair repairs, raising the kitchen ceiling]. eThe cabinet upgrade alone was estimated by Desert Living to cost roughly $20,000.00. [Ibid.]

Desert Living recommended Nelson engage the services of separate contractors to provide the items Nelson desired in excess of the Insurance Scope of Work. Jim Rector, a member of Desert Living, e-mailed Nelson to advise: “Me [Desert Living] getting out of the way is the only way I see you being able to do this job the way you want and not come out of pocket money. Let me know what you would like to do.” [Id.]. Mr. Rector offered to provide Nelson with the contact information of his sub-contractors so that Nelson could negotiate directly with individual contractors for a better price to get the work Nelson wanted done within Nelson’s budget. [Id.].

By text messaging exchanges on February 1, 2016 and February 4, 2016, [Exhibit R-6], Nelson and Jim Rector of Desert Living communicated. Mr. Nelson first asked: “Jim [Rector] give me a call I have to meet with you tomorrow if you were going to go with this house.” [punctuation in the original]. Mr. Rector replied: “Leroy I thought we were on the same page with this. I cannot finish your house with the upgrades that you want for the $60,000 at [sic] the insurance company is going to pay. I’ve already done close to $9,000 worth of work of which you only paid me $5,000 for. . .I told you let me know whatever you need I’ll send my subs out there. . .What you’re asking for is unrealistic if I’m involved. If you deal with the subs yourself then I think you can probably get it done....”

On February 12, 2016, Mr. Nelson texted Jim Rector stating: “Jim could you text me the electrical contractor so I can get the lights hooked up.” Desert Living texted back to Mr. Nelson contact information for an electrical contractor. No further communication from any party herein occurred before the filing with the ROC of the Nelson complaint on February 16, 2016.

After February 4, 2016, Nelson retained the services of private public adjuster Jim O’Toole. The Nelsons were advised by Mr. O’Toole to speak to no one other than himself regarding the Mercury claim. Following Mr. O’Toole’s directive, Nelson failed and refused to engage in any communications with Desert Living. [See Exhibit R-10].

Complainant filed a complaint with the ROC on February 16, 2016 wherein Nelson alleged poor work and abandonment by Desert Living.

On for April 4, 2016, the Construction Investigator for ROC assigned to this case, Mr. Jack Grimm, conducted an on-site formal inspection of the Nelson property. Desert Living and Nelson were both present.

On April 14, 2016, the Registrar issued Desert Living General Contracting, LLC a written directive to take appropriate corrective action.

On May 17, 2016, the Registrar issued a citation and complaint in Case No. 2016A-532 charging Respondent with a possible violation of A.R.S. § 32-1154(A)(2) ;[a possible violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby a violation of A.R.S. § 32-1154(A)(3); and A.R.S. § 32-1154(A)(23).

The Respondent timely filed its answer on or about May 27, 2016 wherein it asserted a general denial of all allegations, asserted that Nelson had essentially denied access through Nelson’s consistent failure to communicate with Desert Living about getting back on the jobsite to comply with the ROC directive, that Nelson had undertaken to replace Desert Living as the negotiator with Mercury, that Nelson had contracted with others to provide services and materials for items outside of or in addition to the Insurance Scope of Work, that the parties never had a meeting of the minds to establish exactly what the project scope of work was.

Desert Living’s answer to the citation stated, among other things, that :

“We did not abandon the job. We informed the customers that in order to complete the work we would need additional funds which they were not willing to pay. We did over $8,000 worth of work which we were only paid $5,000 for. Mr. Nelson told me that he had the money from the insurance company and he was going to hire people to finish the job.

An evidentiary hearing was conducted on May 1, 2017 before Administrative Law Judge Randolph D. Wolfson of the Arizona Office of Administrative Hearings in Phoenix, Arizona.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq.

Complainant Nelson bears the burden of proof on all issues in this matter.

The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

A preponderance of the evidence is:

The 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.

Black’s Law Dictionary 1373 (10th ed. 2014).

The preponderance of the evidence shows that Respondent Desert Living and Complainant Nelson had never settled upon a clear scope of work for this project. Specifically, the parties did not have a sufficient meeting of the minds regarding performance or payment regarding materials and service for upgrades, extras or other items not specified by the written Insurance Scope of Work reflected by Exhibit R-2.

Desert Living did perform work for Nelson for items which the parties did have a meeting of the minds, to wit: Mercury’s authorized Insurance Scope of Work. The preponderance of the evidence indicates Desert Living made repairs to the Nelson residence worth approximately $18,394.55. [Respondent answer, page3].

The preponderance of the evidence shows that Respondent Desert Living conducted work for which building permits were required when neither it nor Nelson had procured such permits, which is a violation of Ariz. Rev. Stat. section 32-1154(A)(2). However, Respondent Desert Living made a good faith effort to obtain proper permitting, but the permitting agency would not issue the permit to the Respondent without signatures of Nelson.

The preponderance of the evidence shows that Nelson failed and refused to assist Desert Living in obtaining permits for the construction. Subsequently, Nelson made permit application without the assistance or participation of Desert Living. Therefore, although a violation of Ariz. Rev. Stat. section 32-1154(A)(2), Desert Living’s failure to obtain the required permits and clearance is legally justified.

The preponderance of the evidence shows that Desert Living did not comply with the ROC’s Directive.

Desert Living’s failure to comply with the ROC’s directive was justified by Nelson’s refusal and failure to communicate with Desert Living to schedule any repairs after Respondent received the directive thereby essentially denying the Respondent access to the jobsite and by Nelson’s failure or refusal to cooperate with Desert Living to obtain proper permits and clearances for the job.

In light of the facts and circumstances of this matter, it is not appropriate to issue an Order requiring Desert Living to make the appropriate corrections, nor is it appropriate to suspend or revoke Desert Living’s license.

RECOMMENDED ORDER

IT IS RECOMMENDED that that the citation in Case No. 2016A-532-ROC 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 40 days from the date of that certification.

Done this day, June 14, 2017

Randolph D. Wolfson

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors