ALJDEC decisions subject to certification as final

2017A-1415-CHC-ROC · Registrar of Contractors · 2017-10-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Pritam and Neela Bhavnani,

COMPLAINANTS,

v.

Carefree Home Care Plus LLC,

License No. B.261990-R,

RESPONDENT.

No. 2017A-1415-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 13, 2017, at 1:00 p.m.

APPEARANCES: Pritam and Neela Bhavnani (“Complainants”) appeared through Pritam Bhavnani; Carefree Home Care Plus LLC (“Respondent”) was represented by David W. Degnan, Esq., Degnan Law PLLC.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about January 15, 2010, the Arizona Registrar of Contractors (“the Registrar”) issued License No. B.261990-R for general residential contracting to Respondent.

On or about March 13, 2017, Complainants filed a complaint with the Registrar against Respondent alleging eighteen specific items plus subparts of allegedly poor or unfinished workmanship in Respondent’s performance of its contract to substantially remodel Complainants’ house at 11825 E. Desert Trail Rd., Scottsdale, Arizona 85259. According to the complaint, although the contract amount for the remodeling project was $310,536.00, Complainants had paid Respondent $407,689.94.

On March 21, 2017, the Registrar sent a letter to Respondent informing it of Complainants’ complaint.

On or about April 11, 2017, Complainants filed an addendum to their complaint that alleged additional poor or unfinished workmanship.

The Registrar assigned the complaint to its Investigator, Beau Cruz, for investigation. Investigator Cruz performed a jobsite inspection on April 14, 2017, and on April 17, 2017, issued a directive to Respondent to repair 18 items on Complainants’ complaint and addendum on or before 5:00 p.m. on May 1, 2017.

After Complainants informed Investigator Cruz that Respondent had not performed corrective work to comply with the April 17, 2017 directive, the complaint was referred to the Registrar’s Legal Department. On June 8, 2017, the Registrar issued a Citation against Respondent’s contractor’s license, charging cause to revoke or suspend the license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

Respondent’s qualifying party/managing partner, J. David Camp, filed a timely written answer to the Citation, denying that it had committed any misconduct that could support suspension or revocation of its license. Mr. Camp requested that the Registrar dismiss the complaint because Complainants allegedly had not made the payments required by the parties’ contract, had interfered with Respondent’s subcontractors, and some of the corrective work was not required by the parties’ contract.

On July 6, 2017, the Registrar denied Respondent’s motion to dismiss. Instead, the Registrar referred the complaint to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

An evidentiary hearing was held on October 13, 2017. Complainant Mr. Bhavnani submitted five exhibits and testified on his own and his wife’s behalf. Respondent submitted seven exhibits and presented the testimony of two witnesses: (1) Kyle Huffaker, the owner of Click Electric, Respondent’s electrical subcontractor on the project, and (2) Mr. Camp. Investigator Cruz also testified

Hearing Evidence

Alleged Workmanship Deficiencies

Investigator Cruz testified that he performed a prehearing inspection on October 12, 2017. Investigator Cruz testified that on October 12, 2017, certain items still had not been corrected to comply with the Registrar’s standards. The evidence on each of these items is summarized below.

Complainants did not challenge any of Investigator Cruz’s determinations in the April 17, 2017 directive that certain complaint items did not require correction. By the time of the October 12, 2017 prehearing inspection, Complainants had corrected three items of complaint (Complaint Items 21, 27, and 28) and did not seek to hold Respondent responsible for these corrected items. In addition, Respondent had corrected one item (Complaint Item 20) to Complainants’ satisfaction.

Dented Window Frame in Study (Complaint Item 2)

Respondent’s subcontractor caused the window pane to break. Although Respondent replaced the window pane, it did not replace the window frame, which was dented either when the window pane initially was broken or when the pane was replaced.

Investigator Cruz testified that at the prehearing inspection, he saw numerous dents on the outer bottom rail of the fixed window frame. In his opinion, Respondent had not complied with the directive.

Investigator Cruz acknowledged that he knew the insurer had settled the claim for the broken window, but stated that he believed that the claim for the dented bottom rail had not been settled. Investigator Cruz also acknowledged that Complainants could not make a claim to the Registrar for an item that had been settled.

Respondent submitted an excerpt from the document that Complainants signed on November 3, 2016, to accept Respondent’s insurer’s settlement for the broken window, which provided in relevant part as follows:

That the Undersigned, being of lawful age, for sole consideration of Three Thousand Four Hundred Fifty-Nine Dollars and 96/100 ($3,459.96) to be paid to [Complainants] do/does hereby . . . release, acquit and forever discharge [Respondent]. . . from any and all claims, actions, causes of actions, demands, rights, damages, costs, loss of service, expenses and compensation whatsoever, which the undersigned now has/have or which may hereafter accrue on account of or in any way growing out of any and all known and unknown, foreseen and unforeseen property damage and the consequences thereof resulting or to result from the occurrence on or about the 20th day of October, 2016, at or near 11825 E Desert Trail Rd in Scottsdale, AZ 85259.

Mr. Bhavnani testified that he was required to sign the release to obtain any money from the insurance company for the broken window and that the insurance proceeds were paid directly to Respondent’s subcontractor to replace the window pane. He did not immediately notice that Respondent’s subcontractor damaged the window frame during its replacement of the pane.

Stucco Issues (Complaint Item 7)

Investigator Cruz testified that Respondent corrected the weep screed opening on the east pillar of the front entry so that it was no longer crooked and the jagged half-moon cracking below the fixed windows of the master bathroom. Investigator Cruz testified that because the stucco repairs had not been painted at the time of the October 12, 2017 prehearing inspection, he could not tell whether the repairs matched the sandpaper texture of the stucco and complied with the Registrar’s and industry standards.

Complainants showed Investigator Cruz a recent photograph of the stucco repairs. Investigator Cruz testified that he did not see the area shown in photograph at the same time of day, but because the patching could definitely be seen in the photograph, it did not meet the Registrar’s workmanship and industry standards.

Mr. Camp testified that Respondent had repaired all the stucco issues, although there might be some minor touch up and painting that needed to be done.

Incorrect Installation of Window in Third Bedroom (Complaint Item 8)

At the initial jobsite inspection, Investigator Cruz opined that the window in the third bedroom was difficult to open and close and did not fully engage in the interlock because the opening of the window from had not been properly squared. Investigator Cruz testified that although Respondent had performed some repairs to the window, opening and closing was still problematic at the October 12, 2017 prehearing inspection. In his opinion, Respondent had not fully complied with the directive.

Mr. Camp stated that the window manufacturer, IWC, had accepted responsibility for the window as a warranty item and that, on March 23, 2017, the manufacturer’s representative had informed Complainants that it would need two visits to address the warranty issues and that a complaint to the Registrar would be premature. According to the manufacturer’s representative, there was no issue with Respondent’s installation of the window and the scratches occurred after installation.

Mr. Camp testified that the scratches on the window frame were minor and could be repaired with a nail polish-like substance 90% of the time. Mr. Camp stated that there was no way of knowing which subcontractors had caused the scratches.

Scratches in Sliding Glass Doors and Windows on West Side of Family Room (Complaint Item 9)

Inspector Cruz testified that although Respondent had complied with the directive with respect to the stationary pane of the dual sliding OOX patio door on the west side of the family room, at the prehearing inspection, he noted numerous scratches on the stiles and frames of both dual sliding OOX sets of patio doors. Respondent had not fully complied with the directive because minor touchup was still needed.

Investigator Cruz acknowledged that he did not know who had caused the scratches on the stiles and frames and that Complainants had hired some of their own contractors to install tile. Inspector Cruz stated that he believed that the window frames had been scratched when Respondent’s subcontractor installed the windows.

Mr. Bhavnani acknowledged that he and his wife were not always on site to supervise the subcontractors that they hired directly. Mr. Bhavnani testified that he first raised the issue of the windows in November 2016, and that he and his wife did not hire other subcontractors until much later.

Installation of Sliding Glass Doors on West Side Patio (Complaint Item 10)

At the initial jobsite inspection, Investigator Cruz noted that the slider patio door on the west side had collapsed bead. Investigator Cruz testified that by the time of the prehearing inspection, Respondent had corrected the bad seals, but that Respondent had secured the frames with only one screw, rather than the four that Investigator Cruz thought were needed. Unless Respondent produced information from the window manufacturer that one screw was sufficient to secure the frame, Respondent had not fully complied with the directive.

Scratches on Stiles and Frames of Patio Doors (Complaint Item 11)

At the initial jobsite inspection, Investigator Cruz noted numerous scratches on the stiles and frames of both dual sliding OOX sets of patio doors. Investigator Cruz testified that by the time of the prehearing inspection, Respondent had addressed the bottom rails but had failed to address scratches on the stiles and frames. Respondent had not fully complied with the directive.

As noted above, Investigator Cruz acknowledged that he did not know who had caused the scratches on the stiles and frames and that Complainants had hired some of their own contractors. Inspector Cruz stated that he believed that the window frames had been scratched when Respondent’s subcontractor installed the windows.

Color of Stain on the West Linen Closet Door

(Complaint Item 13)

At the initial jobsite inspection, Investigator Cruz noted that the color of the stain on the bottom right corner on the hinge side of the west linen closet was distinctly different from the rest of the door and that was a scribe mark to the left of the recessed handle mark on the bathroom side of the barn door for the second bathroom. Investigator Cruz testified that at the time of the prehearing inspection, no repairs had been done. Respondent had not complied with the directive.

Mr. Camp testified that if the difference in color were not due to variation in the wood, it could be corrected with light sanding and stain touchup.

Glass Chips outside Study Window from Falling Glass (Complaint Item 14)

When the window was broken that was referenced in Complainant Item 2 above, glass chips ended up outside the study window. Investigator Cruz testified that although some of the chips may have been removed, on October 12, 2017, there was still glass residue and big glass chips. Respondent had not complied with the directive.

Mr. Camp testified that he had spent hours picking up glass, trying to clean up the area.

Adhesive Residue on Front Door Threshold (Complaint Item 15)

Investigator Cruz testified that at the prehearing inspection, there was still adhesive residue on the threshold of the front door. Respondent had not complied with the directive.

Mr. Camp testified that the adhesive residue was the result of tape that Respondent had put over the threshold to protect it from subcontractors bringing materials over the threshold into the house. It was a cleanup issue, not a workmanship issue. It could have been easily remedied if Complainants had provided a punch list.

The LED Lights under the Hearth (Complaint Item 18)

At the initial jobsite inspection, Investigator Cruz noted that the doorbell chimes had been removed and needed to be reinstalled, that there was a live wire under the powder room vanity, and that no LED lighting had been installed under the hearth.

Investigator Cruz testified that at the prehearing inspection, the doorbell and live wire had been corrected. Investigator Cruz testified that at the time of the prehearing inspection, no LED lights had been installed.

Investigator Cruz testified that after the initial jobsite inspection, he found out that Respondent could not install the switch for the LED lights because the city code required switches to be installed at least 6’ from the hearth opening. Investigator Cruz testified that although Mr. Bhavnani said that there were outlets in the niche next to the hearth, Investigator Cruz did not know whether this alleged power source would pass the city’s inspection because it could be exposed to heat. Investigator Cruz testified that unless Complainant produced a printed copy of the plans that at the City had approved or redlined plans that showed the LED lights under the hearth, he would not require Respondent to install the lights.

In addition, Investigator Cruz’s prehearing notes indicated that Respondent’s electrical contractor had sent an email stating that Mrs. Bhavnani had approved the electrical work.

Mr. Huffaker testified that Complainants agreed when he first walked the job that the lights would not be included in the scope of work.

Mr. Camp testified that the under-hearth lighting had been deleted from the blue prints. The electrician had made clear that he would work off the blue prints, not the scope of work or job specifications.

Mr. Camp acknowledged that general notes attached to the parties’ contract provided that, “[i]n case of conflict between these nots and the plan drawings, these notes shall have precedence” and that § 8.10 of the general notes required Respondent to “[a]dd LED light strip under fireplace hearth.”

Granite Work Not Finished Properly in Kids’ Room (Complaint Item 23)

and Kitchen (Complaint Item 24)

Investigator Cruz noted that there was an uneven joint (lippage) in the granite countertop in the kids’ room and that there was a chip in the edge of the kitchen granite countertop located above the right upper corner of the dishwasher door. Investigator Cruz testified that Respondent had not complied with the directive with respect to these two items.

Mr. Camp testified that the chip above the dishwasher was not visible and could only be discerned by touching it. The chip just needed to be filled and polished. He had no way of knowing who had caused the chip.

Missing Pop-out in Stucco above Static Window for Great Room on West Side of

Patio (Complaint Item 25)

Investigator Cruz noted that a pop-out was missing above the static window for the great room at the initial jobsite inspection and that it was still missing at the prehearing inspection. Inspector Cruz testified that all the windows on the house had a pop-out above them but this window. Respondent did not comply with the directive.

Investigator Cruz noted that he had not been provided the approved blueprints for the exterior of the house. If the pop-out was not on the approved blueprints, Respondent would not have violated the Registrar’s and industry standards by failing to construct the pop-out.

Neither party submitted blueprints. Complainant submitted photographs of the surrounding area and missing pop-out.

Mr. Camp testified that the pop-out was not on the blue prints. He did not know why. There were pop-outs over the windows and doors on the back of the house, but none on the sides. Mr. Camp testified that Respondent would need a change order to construct the pop-out.

/ / / /

Paint Splatter on Fixed Window above Living Room/Dining Room

(Complaint Item 29)

Investigator Cruz noted that at the initial jobsite inspection, there was paint residue on the fixed window located in the interior of the living room/dining room area and that the paint residue was still present at the prehearing inspection. Respondent had not complied with the directive.

Other Matters

Mr. Camp testified that he asked Complainants for a punch list before they moved into the house, but that they had never provided one. Mr. Camp acknowledged that Complainants had sent emails about various complaints, but Mr. Camp explained that he cannot distribute numerous emails to Respondent’s subcontractors. Mr. Camp testified that Respondent made a good-faith effort to resolve Complainants’ complaints, even though they did not provide a punch list.

Mr. Bhavnani acknowledged that he did not perform a walk-through with Respondent before he and his family moved into the house. Mr. Bhavnani explained that he did not perform a work-through or provide a punch list to Respondent before he and his family moved into the house because Respondent had not responded to numerous emails about deficiencies in its and its subcontractors’ work. Mr. Bhavnani testified that, instead, he and his wife filed the complaint with the Registrar.

With respect to the issue of whether Complainants provided access for inspections, Investigator Cruz acknowledged that his compliance inspection notes stated in relevant part as follows:

This investigator was unable to perform compliance inspection due to difficulty with scheduling such due to complainants schedules and that would be out of town on vacation etc. I informed complainant that in the interim of such if respondent satisfactorily complies while complaint is in legal that we would need an instrument from complainant stating such and to initial every item done and, if not done, this investigator would perform a pre-hearing jobsite inspection and would alert parties as to what date and time such will be scheduled. . . .

Investigator Cruz testified that he had no problem scheduling the initial jobsite inspection and the prehearing inspection with Complainants.

Complainants submitted evidence of their ultimately unsuccessful efforts to schedule Respondent’s granite subcontractor Gino after Investigator Cruz issued the April 17, 2017 directive.

Mr. Camp testified that numerous subcontractors, including Gino and the window subcontractor, told him that they had problems with Complainants providing access for repairs. Mr. Camp testified that the parties’ contract required Complainants to allow “unimpeded access” to Respondent’s subcontractors.

Complainants’ complaint requested that the Registrar require Respondent to pay the cost of repairs; Investigator Cruz’s jobsite inspection notes stated numerous times that the Registrar “does not have the authority to assign monetary damages or to direct respondent to pay such.” Although Mr. Bhavnani included in his exhibits estimates to repair claimed workmanship deficiencies, he did not submit such exhibits after the Administrative Law Judge informed him that the Registrar cannot award money damages in a workmanship complaint.

Mr. Camp testified that Complainants requested that Respondent’s subcontractors perform substantial additional work and that Complainants still owed substantial monies to Respondent and its subcontractors for the job.

Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s prior disciplinary history as shown on the Registrar’s public website. On this date, Respondent’s license was current and in good standing, although between March 30, 2017, and April 4, 2017, Respondent’s license was administratively suspended for insufficient bond.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainants bear the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish factors in mitigation of the penalty and 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.”

A party making a legal motion bears the burden to establish its merits. Respondent did not cite any legal authority to support its argument that a consumer is required to conduct a walk-through inspection with a contractor or to prepare a punch list before the consumer can file a complaint with the Registrar.

Although A.R.S. § 32-1155(C)(1) provides that the Registrar shall not issue a citation if the contractor is not provided an opportunity to inspect the work within fifteen days after receiving a written notice from the Registrar, Respondent does not allege and offered no evidence that Complainants refused to allow it to inspect its work after the Registrar notified Respondent on March 21, 2017, that Complainants had filed the complaint. Both parties attended Investigator Cruz’s April 14, 2017 initial jobsite inspection.

The Registrar’s Workmanship Standards for Licensed Contractors includes the general statement that a “[c]ontractor’s responsibility on all manufactured surfaces is valid only if the damaged surface is indicated to the contractor . . . within 10 days after move-in.” Manufactured surfaces include materials like cultured marble countertops, which are easily damaged. Respondent did not produce any evidence that any of the items of workmanship in Complainants’ complaint involved a manufactured surface as that term is understood in the Registrar’s workmanship standards or in the construction industry.

A walk-through inspection or punch list may have resolved the workmanship at issue in this matter, but a walk-through inspection or punch list outside the Registrar’s regulatory process was not needed after Complainants filed the complaint with the Registrar. The complaint itself informed Respondent of Complainants’ concerns. Investigator Cruz’s April 17, 2017 directive informed Respondent which items of complaint required correction.

Respondent also did not establish that anyone other than the subcontractor that installed the windows damaged the frames and stiles of the windows (Complaint Items 8, 9, and 11).

Although a manufacturer may accept an item of complaint as a warranty issue, if Respondent supplied the manufactured good and has the relationship with the manufacturer, Respondent is still responsible for making the repair. Respondent did not establish that Complainants purchased the window in the third bedroom or that they should be responsible for enforcing the manufacturer’s warranty on the window (Complaint item 8).

Respondent established that Complainants settled all claims relating to the window in the study (Complaint item 2). They cannot revive the claims by filing a complaint with the Registrar.

Respondent established that because the LED lights underneath the hearth cannot be installed under applicable city code, the parties agreed to delete the lights from their contract (Complaint item 18).

Complainants did not establish that the permitted plans or specifications required Respondent to install a pop-out above the static window for the great room on the west side of the patio (Complaint item 25).

Complainants established that Respondent’s workmanship did not comply with the Registrar’s or industry standards in the ways that Investigator Cruz identified on his prehearing inspection report and hearing testimony: (1) Stucco issues (Complaint item 7); (2) Installation of window in third bedroom (Complaint Item 8); (3) Scratches in sliding glass doors and windows on west side of family room (Complaint item 9); (4) Installation of the sliding glass doors on the west side of the patio (Complaint item 10); (5) Scratches on the stiles and frames of the patio doors (Complaint item 11); (6) Color of stain on the west linen closet door (Complaint item 13); (7) Glass chips outside the study window (Complaint item 14); (8) The granite in the kids’ room and in the kitchen (Complaint items 24 and 25); and (9) The paint splatter on the fixed window above the living room/dining room (Complaint item 29). Complainants have therefore established cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.

Construction is not a perfect art and, generally, contractors must be afforded an opportunity to correct their workmanship before their licenses may be suspended or revoked. Respondent did not establish that Complainants failed to provide reasonable access to Respondent or its subcontractors to comply with the April 17, 2017 directive. Therefore, Complainants established cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22).

The legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages. Although many of the remaining workmanship deficiencies are minor, Respondent did not establish any excuse for its failure to comply with the directive. The issues of the cost to repair the remaining deficiencies and whether Respondent is owed any additional monies under the parties’ contract may be resolved a judicial forum or in Complainants’ claim to the Residential Contractors’ Recovery Fund, if the Registrar determines that they are otherwise eligible to make such a claim.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the final order in this matter, License No. B.261990-R of Respondent Carefree Home Care Plus LLC shall be suspended for a period of three (3) business days.

It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(E).

It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s Order, the Registrar revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty.

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, October 18, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors