ALJDEC decisions subject to certification as final

2016A-74-ROC · Registrar of Contractors · 2016-07-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 27, 2016 APPEARANCES: Robert Owen Whitetree (Complainant) appeared on his own behalf. Home Lift Now LLC (Respondent) did not appear. ADMINISTRATIVE LAW JUDGE: Suzanne Marwil _____________________________________________________________________ Hearing was convened to determine whether Respondent violated state law as alleged by Complainant and as cited by the Registrar of Contractors (Registrar). Evidence and testimony were presented, and based on the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Order are made: FINDINGS OF FACT 1. Complainant is the owner/occupant of a residence located at 2739 East Hermosa Vista Drive, Mesa, Arizona 85213-2307. 2. Respondent holds Arizona Contractor’s License No. 302446, which is currently summarily suspended and is scheduled to be revoked on September 4, 2016, absent an appeal by Respondent. 3. On January 6, 2016, Complainant filed a complaint with the Registrar alleging that Respondent had performed poor work in installing a shower in his home. 4. The Registrar assigned investigator Beau Cruz to investigate the complaint. Cruz testified that he arranged to perform an inspection on February 4, 2016, and notified Complainant and Respondent of the time and place of the inspection. Respondent did not attend that inspection. Cruz indicated that at the time of an inspection, he substantiated that the walk-in shower was left unfinished in that no shower head was installed and that glass panels and tile on the shower walls and floors had not been completed. Cruz also learned that Respondent had not obtained a permit for its work on the shower. 5. On February 8, 2016, Cruz sent Respondent a Directive from the Registrar. The Directive stated in pertinent part as follows: After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a Citation, discipline of your license, and a civil penalty pursuant to A.R.S. § 32-1154(E) of up to $500.00. Failure to comply with this Directive may also be treated as an aggravating factor should the Registrar pursue discipline of your license. You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on February 23, 2016.

You are hereby directed to remedy the following violations by the appropriate means and, by subcontractors properly licensed in their trades when is necessary:

1. Contractor is to complete the master bathroom project as per specifications, contract and plans and is to ensure that all necessary permit(s) have been obtained. Contractor is to comply with all inspections and corrections required by the City of Mesa and/or county of Maricopa.

6. On May 10, 2016, Cruz performed a compliance inspection at Complainant’s home. He found that the job was still ongoing and not complete. 7. Cruz then forwarded the matter to the Registrar’s legal department for review. 8. On May 13 2016, the Registrar issued Respondent a Citation. That Citation contained five charges. Charge 1 referenced “[a] violation of A.R.S. § 32-1154(A)(2) (“Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect that 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.”) Charge alleged "[a] violation of Rule 4-9-108, titled ‘Minimum Construction Standards,’ in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3).” Charge 3 specified “[a] violation of A.R.S. § 32-1154(A)(12)(“Failure in any material respect to comply with this chapter,”) in particular A.R.S. § 32- 1124(B), which requires the ROC license number to be displayed on all contracts and advertising and states that all licenses are none transferable. Charge 4 alleged “[a] violation of A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158(B) that lists certain required elements of a contract. Charge 5 specified a violation of A.R.S. § 32-1154(A)(22), in particular, “[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.” 9. On June 6, 2016, the Registrar issued an order summarily suspending Respondent’s license. That Order provided as follows: Pursuant to A.R.S. § 41-1092.11(B), and with good cause appearing, IT IS ORDERED that Respondent's License No. CR61.302446-D shall be summarily suspended on the date of this Order. The Registrar finds that the public health, safety, and welfare imperatively require emergency action on the part of the Registrar. Respondent knowingly perpetrated acts in violations of A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(2), and A.R.S. § 32- 1154(A)(6) which violations include, without limitation, abandoning homeowner contracts after payment, failing to obtain permits and inspections, failure to pay subcontractors and materialmen which damaged the homeowners and other acts that demonstrate that the licensee is an ongoing danger to the public health, safety, and welfare. At the time of this Order, the Respondent has eleven complaints which have been filed against it or its Qualifying Party with the most recent complaint filed on May 27, 2016.[1]

10. On the same date, the Registrar on its own motion issued a Citation and Complaint against Respondent’s license, charging thirty two (32) violations of various statutes as cause to discipline Respondent’s license. 11. Complainant testified in that case as did Brandon Lederer, a member of Respondent. 12. On July 12, 2016, the undersigned issued an Administrative Law Judge Decision that recommended revocation of Respondent’s license and contained Findings of Fact and Conclusions of Law that apply with equal force to the instant case. The pertinent portions of that Decision are as follows: 8. In addition, shortly after issuing the license, the Registrar received a number of complaints against Respondent, many of which contained contracts entered into before December 26, 2015 and constituted unlicensed contracting. See . . . Exhibit 6 (Whitetree complaint, contract date November 17, 2015);

9. Many of the contracts submitted with the complaints lacked required elements pursuant to A.R.S. §32-1158 such as an ROC number or notice to the homeowner of the right to file a complaint. See . . . Exhibit 6 (Whitetree complaint);

* * * 11. For two of the complaints, the Registrar’s investigator determined that building permits were not obtained as required. See Exhibit 6 (Whitetree complaint, February 8, 2016 letter from Beau Cruz to Mesa Building Official); Exhibit 10 (Joeng complaint, Directive referenced the need for a permit). Respondent maintained that no permits were needed because the jobs did not involve relocating any plumbing, but Robert Whitetree produced a letter showing that the City of Mesa fined Respondent for performing unpermitted work. In addition, the cities involved ultimately issued permits in both matters once Respondent applied for them. * * * 25. Robert Whitetree testified that he contracted with Respondent to install a bathroom by Thanksgiving, 2015. He and Respondent both agreed that the first subcontracted tile installer did poor work, leading Respondent to bring in another tile installer to completely redo the shower. Both parties agree that the second installer stopped working before completing the project. Whitetree indicated the installer told him he could not work without being paid; Lederer and Mark Belkhe, Respondent’s project manager, said that the installer went to work on another job and Whitetree elected to wait the two or three weeks it would take the installer to return. In light of the delay, Whitetree filed a complaint with the Registrar.

26. Whitetree also said that based on his background in construction, a permit was needed for the shower work, and was only obtained after he filed a complaint. Thereafter, Respondent hired the unlicensed Kaminski to redo the shower once again. Kaminski in turn subcontracted the job to Joseph Hoffee.

Joseph Hoffee testified that it took him over month to build a shower that should have taken a week and a half due to Lederer’s failure to order tile and other misdeeds. Lederer acknowledged he ordered the incorrect tile and injected further delay into this already drawn out process.

29. As of the time of the hearing, the Whitetree project was still unfinished as Respondent was still waiting for a faucet to arrive. Respondent argued that because the project was 98% complete, some seven months after the contract was entered into, a charge of abandonment was not warranted.

Conclusions of Law

4. The Registrar has established that Respondent engaged in unlicensed contracting on numerous occasions and hence lacks the moral character to hold a contractors’ license pursuant to A.R.S. § 32-1154(A)(19) and A.R.S .§ 32-1122(D). Respondent does not dispute engaging in these instances of unlicensed contracting, but indicates it is the Registrar’s practice to cure these sort of deficiencies by permitting the unlicensed contractor to become licensed. The Registrar took the position that allowing an unlicensed contractor to become licensed may be an option in certain limited circumstances where a contractor has a single instance of unlicensed contracting and can prove the contractor has made his victim whole. The record showed far more than one instance of unlicensed contracting and also clearly shows that Respondent has not made whole the homeowners it unlawfully contracted with between August and December 2015. Holt has a civil suit pending, Whitetree awaits completion of his project, and Joeng and Johnson have unfinished projects and their money has not been refunded. Each homeowner has been damaged by Respondent’s unlawful acts of unlicensed contracting, which precludes access to the Residential Contractors Recovery Fund.

5. The Registrar has established that Respondent entered into several contracts that did not display its ROC license number in violation of A.R.S. § 32-1154(A)(12) and that did not contain the required elements of a contract pursuant to A.R.S. § 32-1158.[2]

7. The Registrar has established that Respondent abandoned the Whitetree, Joeng and Johnson projects without legal excuse within the meaning of A.R.S. § 32-1154(A)(1). The record reflects that Respondent was responsible for significant delays in these projects that amount to a constructive abandonment. Joeng, and Johnson did not have an obligation to wait for an unlimited period for their products to be ordered and arrive. Similarly, Whitetree was entitled to a finished shower without waiting seven months and counting. Respondent cannot cure the abandonment inherent in the significant and material delays by professing the intent to come back at some point in the future...

8. The Registrar has established that Respondent failed to obtain a permit on both the Whitetree and Joeng jobs. The city of Mesa cited Respondent for unpermitted work regarding the Whitetree job, suggesting that it believed a permit was necessary for this shower work. Similarly, the city of Phoenix issued a permit for the Joeng job, demonstrating that such a permit was also required.

13. On July 26, 2016, the Registrar issued a Final Administrative Decision and Order that accepted the substance of the Administrative Judge Decision, made certain technical corrections to address typographical errors, and revoked Respondent’s license effective September 4, 2016. 14. Hearing in this matter was held on July 27, 2016. Respondent did not request to appear telephonically and did not request that the hearing be continued. Although the start of the hearing was delayed 20 minutes, Respondent did not appear, through an authorized member, employee, or attorney. Consequently, Respondent did not present any evidence to defend its license. 15. Complainant referred to an email he received from Lederer asserting that Complainant’s complaint and the summary suspension had forced it out of business, Lederer also said that Respondent did not intend to supply the last parts needed to complete Complainant’s shower. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over this matter, pursuant to A.R.S. § 32-1101, et seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. Respondent’s revoked license does not deprive Complainant of his right to prosecute his complaint or prevent the Registrar from determining the merits of the complaint. See A.R.S. § 32-1154(D). 3. The copies of the Notice of Hearing that the Registrar mailed to Respondent at its address of record was reasonable and Respondent is deemed to have received notice of the hearing. A.R.S. §§ 41- 1092.04 and 41-1092.05(D). 4. To warrant such sanctions by the Registrar, Complainant must demonstrate by a preponderance of the evidence that Respondent violated the statutory sections cited. Proof by a “preponderance” means that “the evidence is sufficient to persuade the finder of fact that the proposition is more likely true than not.” In re: Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994). See also Culpepper v. State of Arizona, 187 Ariz. 431, 930 P.2d 508 (App. 1996). It is “evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (Rev. 6th ed. 1990). 5. As noted above, the Tribunal previously found that Respondent violated A.R.S. § 32-1154(A)(2) by failing to secure a permit for the work done on Complainant’s shower. 6. Similarly, the Tribunal already determined that Respondent violated A.R.S. § 32-1154(A)(12) both by failing to include and display its license number pursuant to A.R.S. § 32-1124(B) and by failing to include required elements in its contract with Complainant pursuant to A.R.S. § 32-1158(B). 7. Both the testimony in the prior hearing and the additional testimony taken in the instant case establish that Respondent initially performed poor work in installing the tire for the shower and thereafter failed to complete the project per the parties’ contract. These actions constitute a violation of Rule 4-9-108, titled ‘Minimum Construction Standards,’ in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3). 8. Finally, although Respondent attempted corrective work it did not finish its work within the time period specified in the Directive and has still not finished the work needed to complete Complainant’s shower. Respondent’s actions constitute a violation of A.R.S. § 32-1154(A)(22). Given that Respondent’s license has already been summarily suspended and is scheduled to be revoked, assessing a monetary civil penalty is not necessary. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall revoke Home Lift Now LLC’s License No. 302446.

Done this day, July 29, 2016.

/s/ Suzanne Marwil Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] The Tribunal takes administrative notice of relevant documents filed in docket number 2016A-1713-ROC along with the Administrative Law Judge Decision and Final Administrative Decision and Order issued in that case against Respondent. [2] That section provides: From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32- 1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365.

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