ALJDEC decisions subject to certification as final

2017A-1136-NPC-ROC · Registrar of Contractors · 2017-07-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Bunkers Glass Of Phoenix, Inc.,

COMPLAINANT,

-v-

The Edwards Design Group, Inc.,

License Nos. 097630, 210491,

RESPONDENT

No. 2017A-1136-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 13, 2017

APPEARANCES: Ken Dooley and Kevin Dooley on behalf of Complainant; Michael P. Fiflus, Esq., on behalf of Respondent

ADMINISTRATIVE LAW JUDGE: Roger A. Geddes

_____________________________________________________________________

FINDINGS OF FACT

1. The Edwards Design Group, Inc. (Respondent), is the holder of License Numbers 097630 and 210491 issued by the Registrar of Contractors (Registrar).

2. On or about February 28, 2017, Bunkers Glass of Phoenix, Inc. (Complainant), filed a Complaint against Respondent with the Registrar. Complainant alleged that Respondent owed Complainant the sum of $10,731.49. This represented unpaid amounts on and relating to certain subcontracts entered into between Respondent, the general contractor, and Complainant, the subcontractor, for the installation of windows and doors by Complainant in connection with the construction of a residence.

3. On March 28, 2017, the Registrar then issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10) for the alleged failure by Respondent to pay monies in excess of $750.00 when due for materials or services rendered in connection with Respondent’s operations as a contractor. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. The Registrar issued a Notice of Hearing setting a hearing for June 13, 2017, at 1:00 P.M.

4. According to the Complainant, Complainant and Respondent entered into two “Subcontract Agreements” (“subcontracts”); the first dated May 2, 2016, for Complainant’s installation of all windows and exterior doors at the residence supplied by others for the subcontract sum of $12,515.00 (“window contract”) (Complainant’s Exhibit C); the second dated March 8, 2016, for the supply and installation by Complainant of a front entry door at the residence for the subcontract sum of $6,991.00 (“entry door contract”) (Complainant’s Exhibit C).

5. With regard to the window contract, Complainant alleges that Respondent paid Complainant the sum of $7,821.88 leaving an unpaid balance of $4,693.12. On the entry door contract, Complainant alleges that Respondent, through the owners of the residence, paid Complainant the sum of $3,495.50 leaving an unpaid balance of $3,495.50.

6. In addition to the unpaid amount under the entry door contract, Complainant also alleges the unpaid amount of $2,542.87 from Respondent for Complainant’s modification and rework of the entry door. Thus, Complainant claims unpaid amounts from Respondent of $4,693.12 on the windows contract, $3,495.50 on the entry door contract, and $2,542.87 for rework of the entry door for the total sum of $10,731.49.

7. Respondent does not dispute the amounts it paid to Complainant on the subcontracts; the dispute centers around the amounts unpaid on the subcontracts and whether Complainant was in default under the subcontracts. Further at issue is whether Respondent was warranted under paragraph “Second” of the respective subcontracts in deducting the cost of any labor and materials allegedly provided by Respondent to complete the job. (Complainant’s Exhibit C). The unpaid amounts and the appropriateness of the deductions or offsets center around three components of the project; the waterproofing of the windows, the installation of a pocket door, and the rework and completion of the entry door.

8. With respect to the window contract, Respondent admits that it did not pay the remaining balance due in the amount of $4,693.12. However, Respondent contends that Complainant was in default and did not fully perform its obligations under the window contract and as a result, Respondent was compelled to complete the work on its own and by hiring another contractor. Specifically, Respondent submits that it incurred a cost of $1,884.59 to have Respondent’s employees complete the waterproofing of the windows that was to have been performed by Complainant under the window contract. Respondent further submits that it paid the additional sum of $1,440.00 to another contractor, Arizona Custom Glass, Inc., to repair and re-install the pocket door that was installed by Complainant under the windows contract. (Respondent’s Exhibit 16). Respondent maintains that these offsets it claims totaling $3,324.59 leave an unpaid balance of only $1,368.53 due from Respondent to Complainant on the window contract.

9. With respect to the entry door contract, Respondent admits that it did not pay the remaining balance due on the entry door contract in the amount of $3,490.50. However, Respondent claims that Complainant was in default and did not fully perform its obligations under the entry door contract and as a result, Respondent was compelled to complete the work on its own by hiring another contractor to supply and install the entry door at a cost of $4,912.00. Respondent submits that this offset in the amount of $4,912.00 leaves no balance due from Respondent to Complainant on the entry door contract, and instead leaves a balance due from Complainant to Respondent in the amount of $1,416.50.

10. Respondent contends that with respect to amounts due collectively with regard to the window contract and the entry door contract, Respondent does not owe any amount to Complainant. Rather, Respondent submits that netting the unpaid balance owed by Respondent to Complainant ($1,368.53) after offsets on the window contract, and the balance due from Complainant to Respondent ($1,416.50) after offsets on the door entry contract in fact leaves a net balance due from Complainant to Respondent in the amount of $47.97. Accordingly, Respondent maintains that it has not violated A.R.S. § 32-1154(A)(10).

11. A hearing was held on June 13, 2017, at 1:00 P.M. Complainant presented the testimony of principals Ken Dooley and Kevin Dooley, and employee Logan Muller. Respondent presented the testimony of owner Kevin Edwards and Austin Edwards.

12. Waterproofing. The parties dispute whether the waterproofing of the windows and exterior doors was completed by Complainant as required under the window contract. Complainant argues there is no offset warranted for the waterproofing of the windows. Both Ken Dooley and Kevin Dooley on behalf of Complainant testified that they observed that all windows and exterior doors were waterproofed. Logan Muller, an employee of Complainant who was on the project site the most for Complainant, testified that he sealed or observed the sealing of all the windows and doors except for those done during the time period when he was on vacation.

13. Respondent counters by submitting that it was required to complete the waterproofing of the windows that Complainant failed to complete. Respondent offered into evidence a series of communications to support its position. On October 13, 2016, Kevin Edwards on behalf of Respondent emailed Kevin Dooley to inform him, among other things, that the waterproofing needed to be completed because the lather portion of the project was ready to be commenced. (Respondent’s Exhibit 4). Further, in another email dated that same day, Kevin Edwards advised Kevin Dooley that if there was any further delay on the part of Complainant, Respondent would have to proceed with the waterproofing on its own. (Respondent’s Exhibit 4). Thereafter, on October 18, 2016, Kevin Edwards referenced in two emails to Complainant that Respondent was proceeding to caulk the windows that Complainant had been requested to do. (Respondent’s Exhibit 7). There was no evidence presented of any response by Complainant to Respondent’s emails relating to the waterproofing. Further evidence presented by Respondent reflects that on October 17, 2016, and October 19, 2016, employees of Respondent were at the residence to complete the sealing of the windows. (Respondent’s Exhibit 5). Evidence submitted by Respondent reflected that Respondent’s employees expended 36 hours in sealing and caulking the windows which was valued at $1,800.00 by Respondent (36 hours @ $50.00 per hour) with a material cost of $84.59. (Respondent’s Exhibit 6). Complainant did not dispute this hourly rate or material cost if in fact the work was performed.

14. Pocket Door. The parties dispute whether the pocket door was properly completed by Complainant as required under the window contract. On October 25, 2016, Kevin Edwards emailed Complainant to advise it that there were issues with the pocket door including missing items and one of the panels appearing to be inside out. (Respondent’s Exhibit 7). Kevin Edwards also testified that he had safety concerns with the regard to Complainant’s installation of the pocket door. On January 13, 2017, Austin Edwards on behalf of Complainant informed Complainant by email that Respondent desired the threshold to be lowered. (Respondent’s Exhibit 11). Complainant advised Respondent by email that to lower the threshold, the concrete which was bowed would have to be leveled. (Respondent’s Exhibit 11). Thereafter, on January 16, 2017, Austin Edwards by email asked Complainant for a bid on the removal and re-install of the pocket door once Respondent undertook to level the concrete. (Respondent’s Exhibit 11). Complainant submitted a bid in that regard for the amount of $1,500.00, dated January 17, 2017. (Respondent’s Exhibit 12). However, Respondent contracted with another contractor, Arizona Custom Glass, Inc., to reinstall the pocket door at a cost of $1,440.00 (Respondent’s Exhibit 15). An email from a representative of Arizona Custom Glass, Inc., dated April 24, 2017, indicates that the pocket door was removed in order to lower the concrete to accommodate the flooring. (Complainant’s Exhibit K).

15. Kevin Dooley testified that one of the panels installed on the pocket door was glazed backwards by the manufacturer. Logan Muller on behalf of Complainant testified that the concrete under the pocket door dipped and as a result the threshold was not perfectly level. He further testified that there was never a safety issue with the regard to the pocket door.

16. Entry Door. The parties dispute whether the Complainant completed its performance under the entry door contract and whether Respondent is responsible for the rework of the entry door. The dispute revolves around the elevation of the threshold installed by Complainant that necessitated the modification and rework of the already fabricated entry door.

17. On April 6, 2016, Kevin Dooley met with the owners of the residence to discuss the selection and purchase of an entry door. (Complainant’s Exhibit E). Measurements for the entry door were taken that day or soon thereafter and according to Kevin Dooley, the threshold for the entry door was installed on April 24, 2016. Thereafter, the owners of the residence on May 23, 2016, paid for 50 per cent of the entry door contract in the amount of $3,495.00. (Complainant’s Exhibit F).

18. Logan Muller testified that he took measurements for the door at a time when the adjacent floors were unfinished. There was no evidence presented by either party that there was any discussion between the parties regarding the flooring that was ultimately to be installed by other contractors leading to and out of the front entry door. Further, there was no evidence presented that prior to any measurements being taken of the door opening, anyone on behalf of Complainant inquired as to the type of flooring that would be installed. There was no evidence presented that anyone on behalf of Respondent disclosed the type of flooring that would ultimately be installed.

19. On November 3, 2016, Kevin Edwards advised Complainant by email that tile would be installed inside and outside the entry door and that the threshold already installed by Respondent would need to be elevated one-half inch. (Respondent’s Exhibit 7). Mr. Edwards testified that he was concerned that without raising the threshold and placing the tile under the threshold, a lip would be created at the transition point where the tile met the threshold. Mr. Edwards further testified that he believed the entry door would not open if the threshold was not elevated. Kevin Dooley testified that the entry door had already been ordered based on the measurements taken of the doorway with the threshold as installed.

20. Logan Muller testified that he had a conversation with Kevin Edwards at which time Mr. Edwards advised him that the entry door threshold needed to be elevated and placed upon the tile leading into and out of the entry door. Mr. Muller testified that he advised Mr. Edwards that it was common to have flooring lead up to a doorway threshold. Further, Mr. Muller testified that he advised Mr. Edwards that Complainant performed many other jobs in which tile was installed adjacent to the door threshold as opposed to being installed underneath the threshold. He offered to show Mr. Edwards photographs of the doorways on these other jobs. Mr. Muller testified Mr. Edwards declined to look at such photographs and insisted that the threshold be raised.

21. Mr. Muller testified that by raising the threshold, the entry door that already been fabricated would no longer fit the doorway and the door would need to be reworked. The door, which had been at the residence awaiting installation, was taken by Complainant on December 21, 2016, to be reworked. (Respondent’s Exhibit 21). There was no evidence presented as whether the rework of the door would require a change order or as to who was to bear the cost of reworking the door at that time.

22. The evidence presented by Complainant reflected that the cost of reworking the entry door was $2,542,87. (Respondent’s Exhibit 24). Thereafter, Complainant submitted a proposed change order to Respondent for that amount which Respondent rejected. Complainant refused to install the entry door without a signed change order or payment in advance and thus the reworked entry door was never installed by Complainant. Respondent instead purchased a different entry door from a another contractor, Frameless Glass, LLC, and had it installed by that contractor at a cost of $4,693.12. (Respondent’s Exhibit 18).

23. Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due.

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. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by preponderance of the evidence. See Arizona Administrative Code Rule 2-19-119.

3. To warrant such sanctions by the Registrar, Complainant must demonstrate by a preponderance of the evidence that Respondent violated the statutory section 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).

4. A.R.S. § 32-1154(A)(10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license,

[f]ailure by a licensee or agent or official of 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.

5. With respect to the window contract, there is no dispute that Respondent did not pay the unpaid balance of $4,693.12. The $1,884.59 offset against that amount claimed by Respondent for the completion of the waterproofing was warranted. The $1,440.00 offset against that amount claimed by Respondent for the re-installation of the pocket door was not warranted. Thus, the amount of $2,808.53 is due from Respondent to Complainant under the window contract.

6. Complainant has not met its burden to demonstrate that it completed the waterproofing of the windows required under the window contract; therefore, the offset in the amount of $1,884.59 claimed by Respondent is warranted. Complainant merely presented testimony that it completed all waterproofing. However, Respondent presented documents reflecting that its workers were required to complete the waterproofing. Further, there were numerous communications to Complainant reflecting that Complainant had not completed the waterproofing and that Respondent was going to move forward with the completion. There was no evidence presented of any responses from Complainant at that time to counter those assertions. Accordingly, the amount of $1,884.59 claimed by Respondent for the completion of the waterproofing is a proper offset to any unpaid amount owed by Respondent.

7. Complainant has met its burden to demonstrate that it was not responsible for the re-installation of the pocket door; therefore the offset in the amount of $1,440.00 claimed by Respondent for re-installation of the pocket door was not warranted. The evidence presented suggests that the removal of the pocket door was done for the purpose of leveling the concrete under it and to accommodate the adjacent flooring. The evidence would further support that it was not removed because of the panel that appeared backwards, a condition created by the manufacturer, or because of any work performed by Complainant. This is supported by the communication from Arizona Custom Glass, Inc., the company that re-installed the pocket door, that makes no mention of any deficiencies in the installation of the pocket door. Further, Respondent asked Complainant to submit a bid for the removal and re-install of the pocket door. This request for a bid is inconsistent with Respondent’s position that Complainant installed the pocket door incorrectly or that Complainant was responsible for remedying any deficiencies of the pocket door under the window contract. Lastly, there was no competent evidence presented that the pocket door as originally installed by Complainant was a safety hazard.

8. With respect to the entry door contract, there is no dispute that Respondent did not pay the unpaid balance of $3,490.50. The $4,912.00 offset against that amount claimed by Respondent to complete the door installation is not warranted. Further, Complainant’s claim for an additional amount of $2,542.67 for rework of the entry door is not warranted. Thus, the amount of $3,490.50 is due from Respondent to Complainant under the entry door contract.

9. Complainant has met its burden to demonstrate that it could have fully performed under the entry door contract and would have done so but for Respondent’s directive to elevate the threshold. Therefore, the offset of $4,912.00 claimed by Respondent or any other amount against the unpaid balance on the entry door contract is unwarranted. No evidence was presented to counter Complainant’s position that the threshold did not have to be elevated and that a transition from tile to the threshold would have been safe. Respondent’s position that the threshold needed to sit atop the tile for other than cosmetic reasons was not persuasive. Further, Complainant presented no competent evidence to support the notion that the lower threshold would have affected the functionality of the entry door.

10. Complainant has not met its burden to demonstrate that it was entitled to the additional cost of $2,542.87, the amount incurred in connection with the rework of the entry door that was necessitated by the elevation of the threshold. Such a cost was over and above the amount due under the entry door contract and would have required a signed change order. Complainant did not present a change order to Respondent until after the door was reworked and the additional cost had been incurred. While Complainant indicated it did not know what the cost of the rework would be, it was unreasonable for Complainant to not even obtain a cost estimate of the rework in advance for Respondent. Moreover, there was no evidence presented that Complainant ever informed Respondent that it expected Respondent to pay for the rework or that Respondent was even aware of the extent of the rework. Respondent was not permitted to make an informed decision regarding the cost consequences of its directive to Complainant to elevate the threshold and therefore should not bear that cost. Accordingly, the amount of $2,542.87 claimed by Complainant for the rework of the entry door is not an unpaid amount owed by Respondent.

11. It is acknowledged that the parties submitted evidence regarding allegations of delay on the project, discrepancies on the shop drawings, failures to provide materials, deficiencies in the work other than that previously discussed, change orders on matters other than previously discussed, directives from the Registrar, and timeliness of payments on the subcontracts. Such evidence does not directly bear on the issue as to the specific items of nonpayment on the part of Respondent.

12. In this matter, Respondent failed to pay the amount of $6,299.03 to Complainant for materials or services rendered in connection with Respondent’s operations as a contractor. Complainant has established that Respondent’s licenses should be disciplined for a violation of A.R.S. § 32-1154(A)(10).

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of this Order, the Edwards Design Group, Inc., License Numbers 097630 and 210491 are suspended until the Registrar receives and accepts written verification that the Edwards Design Group, Inc.,, has paid $6,299.03 to Bunkers Glass of Phoenix, Inc., in certified funds.

It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $6,299.03 in certified funds, the Registrar may close the Complaint in Case No. 2017A-1136-NPC-ROC.

In the event of certification of this Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty days from the date of the certification.

Done this day, July 3, 2017.

/s/ Roger Geddes

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors