ALJDEC decisions subject to certification as final

2017A-3331-CHC-ROC · Registrar of Contractors · 2018-01-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Arizona Hydro Pro Carpet Clean LLC,

COMPLAINANT,

v.

Ron's Home Repairs and Construction,

License No: 284920

RESPONDENTS.

No. 2017A-3331-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 12, 2017, at 1:00 pm

APPEARANCES: Ron Morgan (“Mr. Morgan”, representative for Respondent Ron’s Home Repairs and Construction); Daniel Byer, (“Mr. Byer”, qualifying party for Ron’s Home Repairs and Construction); Ray Odom (“Mr. Odom” representative for Complainant Arizona Hydro Pro Carpet Clean LLC): Lori Klauber (“Ms. Klauber” witness for Complainant); Steven Klein (“Investigator Klein” Investigator for Registrar of Contractor’s (“ROC” or “Registrar”); and Justin Berg (“Mr. Berg” observer for Respondent).

ADMINISTRATIVE LAW JUDGE: Linda Marie Brown

_____________________________________________________________________

After filing an unlicensed contractor complaint against Daniel Byer, Complainant could not meet its burden of proof because the greater weight of the evidence established that the complainant, a general contractor, failed to simply ensure that its subcontractors are qualified to avoid statutory violations such as aiding and abetting an unlicensed contractor. The Registrar of Contractors (“ROC” or “Registrar”) relies on complaints to carry out some of the mandates of the office. When anyone attempts to use the complaint process inappropriately, it undermines the Registrar’s ability to perform the duties that the citizens of Arizona depend on to ensure that the buildings in which they live, work, and play are safe and work performed is done so by competent, qualified contractors. When that process is compromised, it is appropriate to dismiss the complaint in its entirety.

FINDINGS OF FACT

On or about April 28, 2017, Arizona Hydro Pro Carpet Clean LLC (“Complainant”) filed its Unlicensed Complaint against Daniel Byer. According to the Registrar’s Public website, Complainant is a licensed contractor operating under license no. 164639. Complainant was first issued a KB.2 dual residence and small commercial license on May 3, 2005, and is current.

In its Unlicensed Complaint Form, Complainant alleged abandonment. Complainant stated that he contracted with Mr. Byer on February 16, 2017, for a contract amount of $25,000 on a rehab remodel to be performed at 14832 North 35th, Phoenix, Arizona 85032. Complainant asserts in its complaint that it paid Daniel Byer $12,500 and that the work started on February 20, 2017. No date work stopped was provided. Complainant attached a narrative to its complaint setting forth its attempts to get Mr. Byer to complete the work.

Complainant included in its Unlicensed Complaint Form a copy of a handwritten document titled “Contractors Invoice”. This handwritten document listed various items under description of work performed with the total price of $25,000. The document failed to provide name of the party responsible for drafting this Contractors Invoice. Complainant also included a copy of canceled check no. 6176 dated 02/16/2017, made payable to Daniel Byer in the amount of $12,500 with a note: 14832 N 35 Pl. This check was endorsed by Daniel Byer.

Items listed on the Contractors Invoice were as follows: Demo – complete demo of kitchen and 2 bathrooms; remove dividing wall in living room; remove all doors & jams (leaving front door & door to carport); install owner provided appliances; remove & install new windows & sliding arcadia door; install lights and fans (owner responsible for any electrical); install 8 interior doors & jams & 4 bypass doors; install casing and baseboards throughout; complete interior paint & exterior paint; replace TIII siding around laundry room; replace post on patio & install elevated post base and all hardware; install facia on back of house; scrape ceilings & patch drywall texture using orange peel; remove swamp cooler return & patch roof; white cabinets in kitchen & bathrooms with granite tops; under mount sinks with new faucets; new master shower & toilets; new tub & tile surround in hall bath; 2 mirrors one in each bathroom; new shower valves; laminate flooring throughout/carpet bedrooms/tile bathrooms; front & backyard clean up & add more rock to front.

On June 30, 2017, an allegations letter was sent to Ron’s Home Repairs and Construction at its address of record. On July 6, 2017, Ron Morgan, responded on behalf of Respondent acknowledging notification of the complaint stating he is the owner of Ron’s Home Repairs and Construction, and that Daniel Byer is listed on the license. Mr. Morgan stated he is responsible for payment of all the licenses, bonding and insurances and not Mr. Byer and that Mr. Byer is not an employee. Respondent further stated in its letter that it is unaware of what transpired and that Mr. Byer did not have its permission to use the business information for any purpose. Mr. Morgan acknowledged the severity of the situation and extended its services to see if it can meet at the jobsite to see whether there is a possible fix or to complete the job. Included in this letter was a copy of Respondent’s Proposals used when bidding on a job. This proposal form clearly included the full name of the business, address, phone and fax numbers, ROC number, along with a signature line as well as an acceptance of proposal signature lines to be signed by all parties to the proposal.

Steve Klein, a Registrar of Contractors Investigator, testified in narrative format as to his involvement in this matter. He stated he received the complaint on June 29, 2017, and conducted a jobsite inspection on July 26, 2017. Photographs were taken by Investigator Klein during this jobsite inspection. Complainant’s qualifying party, Ray Odem was present at the inspection. Investigator Klein stated the work was incomplete. Investigator Klein also noted that Respondent holds a R-62 license which cannot exceed work greater than $5,000.

On July 27, 2017, Investigator Klein issued a Directive for Respondent to remedy by the appropriate means: “. . . complete project per original agreement, properly executed change orders, verbal agreements, local building codes and manufacturers installation instructions.” Respondent was given until August 15, 2017 to provide satisfactory written proof of compliance. He noted during his testimony that Respondent would not be permitted to correct any work that was outside the scope of the license.

On August 16, 2017, Investigator Klein issued a Directive Compliance letter noting that complainant emailed stating, “I reached out to Ron Morgan, he is unable to make good on restitution, I have no choice and am going after his bond.” Investigator Klein referred the matter to Legal.

On August 18, 2017, the Registrar of Contractors issued a Citation against Respondent citing Charge 1, a violation of A.R.S. § 32-1154(A)(1) “Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for abandonment or refusal”; Charge 2, 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); and Charge 3, A violation of A.R.S. § 32-1154(A)(22) “Failure 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”.

At hearing, Respondent testified that this was the first time he met Complainant and that he received no monetary benefit from this transaction and did not have any knowledge or dealings with Complainant. Respondent also referenced its contract in which it requires dual signatures as paled to the Contractors Invoice that Complainant attached to its unlicensed contractor’s complaint which list no name, ROC number, or signatures. He stated he understands that Daniel Byer is listed as the qualifying party to his company and plans to work to having Mr. Byer removed to avoid any future challenges.

Mr. Byer testified that he has known Respondent for about 5 or 6 years. His tasks as a qualifying party was to, at times, help Respondent with jobs. The last time Mr. Byer helped Respondent on a job was two years ago. He testified that he worked for other companies during this time, and that at the time he was going to perform work for Complainant he never represented himself as partnered with or acting on behalf of Respondent. This is evidenced by the Worker’s Compensation form he signed for Arizona Hydro-Pro on February 15, 2017, wherein he list Daniel Byer as the name of sole proprietor/subcontractor, and leaves blank “I am doing business as _______________.”

Testimony was taken from Mr. Byer who verified work performed as paled to the Contractors Invoice that Complainant provided and testified that he was responsible for completing the following items: demo-complete demo of kitchen and 2 bathrooms; remove dividing wall in living room; remove all doors and jams (leaving front door and door to carport); he was in the process of installing 8 interior doors and jams & 4 bypass doors (no doors); tear but did not replace the TIII siding around laundry room (some repair); some of the scrape of the ceilings was done but no texture; and the backyard clean up but not the front or adding rock.

Lori Klauber (“Ms. Klauber”) testified that she met with Mr. Byer sometime in February 2017 to have him sign paperwork required by their workman’s comp and W9 required by their accountant and the IRS and that Mr. Byer told her he didn’t have his license with him, he was licensed and that he was saving his money to go out on his own.

Complainant testified he has been in business for 32 years. Complainant stated that after about six (6) weeks of working with Mr. Byer, it began to grow concerned because its bookkeeper advised she was not getting job receipts from Mr. Byer.

Complainant testified that they require receipts on a weekly basis to build a spreadsheet for job costing as its bookkeeper stated earlier. When asked about its best practices in 32 years to verifying that its subcontractors are qualified for hire, Complainant stated sometimes he takes their word on it.

CONCLUSIONS OF LAW

This matter is within the jurisdiction of the Registrar of Contractors pursuant to A.R.S. § 41-1092.07(G)(2).

The Citation issued by the Registrar of Contractors in this matter alleged potential violations of A.R.S. § 32-1154(A)(1) Abandonment; A.R.S. § 32-1154(A)(3) (concerning A.A.C. R4-9-108) minimum construction standards; and A.R.S. § 32-1154(A)(22) failure to take appropriate corrective work action.

Complainant bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

A.R.S. § 32-1154(A)(1) sets forth “abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” Here, Complainant failed to meet its burden, even though it submitted several illegible text messages exchanged between Complainant and Mr. Byer in its attempt to evidence its procurement to have the job complete. Mr. Byer testified that the communications were leading to harassment in which Complainant came to his home. Based on Respondent’s letter of July 6, 2017, and testimony received from Mr. Byer who testified he performed several of the tasks listed on the Contractors Invoice including, but not limited to removing and clearing extensive overgrowth and backyard clean up, that communications began to breakdown when Complainant was requesting work that he did not feel qualified to perform (e.g., electrical). The Contractors Invoice stated, “owner responsible for any electrical”.

Mr. Byer further testified regarding this communication breakdown and concern over requests to perform electrical tasks. He stated money was spent on supplies, to pay his brother in law to help him, and that he skimmed coated the entire house and waited 3 or 4 days for an electrician to arrive so he could continue to perform work but that efforts were frustrated. Therefore, this Tribunal finds Complainant failed to meet it burden that Mr. Byer or Respondent abandoned or refused to perform the bid on work without legal excuse.

A.R.S. § 32-1154(A)(3) provides grounds for suspension or revocation of a contractor’s license for “[v]iolation of any rule adopted by the registrar”. One such rule in the Arizona Administrative Code requires contractors to meet workmanship standards in the projects they undertake. A.A.C. R4-9-108. Complainant failed to meet its burden of proof that the items listed on the jobsite inspection report of 07/26/2017 where in fact caused by Mr. Byer or Respondent. This Tribunal finds it challenging to determine where Daniel Byer may have left off and where other hired laborers may have been involved given Complainant provided a cost sheet beginning from 02/07/2017 to 12/8/2017, that listed several other names of persons who conducted work prior to Investigator Klein’s jobsite inspection of 07/26/2017. Namely, as Sam Clark-lawn maint; Lenny Ruckstuhl-framed bathroom wall and closet move door in master; conduit for kitchen, smoke alarms, j box wires in kitchen, wire masterbath; Gotcha Covered Roof-rem flande added for evap and fix roof; Reliable Rooter-rem concrete for toilet and shower sink drain, hot and cold lines; Discount Door and Trim-14 doors and bypass trac, rollers; New River Enterprises-labor drywall and general labor, drywall tape patch cour concrete plumbing m install windows; Reliable Rooter-install laundry box & gas lines, fix leak in kitchen, bath move water closet; New River Enterprises-Drywall master/kitchen windo demo tile floor, install post & beamstec, labor laundry room siding doors drywall, tile kitchen back splash lighting ceiling fans etc labor, labor paint drywall flooring cabinet install. Therefore, Complainant failed to meet its burden that Respondent is in violation of the workmanship rule.

A.R.S. § 32-1154(A)(22) provides grounds for suspension or revocation of a contractor’s license for failure to take appropriate corrective action on a Directive from the Registrar without valid justification and within a reasonable period of time. This Tribunal finds that Respondent in its letter of July 6, 2017, made a good faith attempt to work with Complainant to reach some remedy but based on Complainant’s email to Investigator Klein, it was seeking restitution and did not provide any reasonable opportunity to Respondent to remedy for the bad actions of which he was unaware of its qualifying party. Therefore, Complainants could not establish a violation because their evidence was not shown to be reliable.

Complainant’s bookkeeper, Ms. Klauber, testified that she has been working for Complainant for at least 19 years. That said, a general contractor is in a greater position to verify that the persons they contract with are qualified to perform the work contracted to do. Failure to establish that the subcontractors hired are qualified to perform the work hired to do not only serves to protect the public from unqualified workman but is required by law in order to keep the hiring contractor from violating various statutory provisions.

Complainant, by way of its filing of an Unlicensed Contractor complaint form in and of itself, admits to this Tribunal that it was doing business with an unlicensed contractor and exposes itself to various violations. Specifically, A.R.S. § 32-1154(A)(9) Aiding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one’s license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.

Additionally, A.R.S. § 1154(A)(13) Knowingly entering into a contract with a contractor for work to be performed for which a license is required with a person not duly licensed in the required classification. Testimony was received that even if Complainant hired Respondent, that the Respondent was only qualified to contract for no greater than $5,000.00. In this instance, the contract Complainant provides to this tribunal is $25,000.00.

And lastly, A.R.S. § 32-1154(A)(12) provides grounds for suspension or revocation of a contractor’s license for failure to comply with provisions of that chapter. A.R.S. § 32-1158(B) requires contractors to utilize contracts with certain information on them. This Tribunal finds there is a presumption that Complainant should have known or knew of these requirements but yet attempted to enter into a contract that lacked several of the required elements of a contract, including but not limited to an ROC License Number.

This Tribunal acknowledges Complainant’s testimony when questioned that it relies on its contractors to be truthful. However, this Tribunal finds that a business model as such is a sure design for failure because the purpose of the regulatory statutes is to protect the public from unqualified tradesman to perform work on property in which they live, work or play. Therefore, failure of a contractor to ensure its workers or subcontractors are qualified places Complainant in an unreliable position to its claims.

In addition to determining the weight of the evidence, an Arizona Administrative Law Judge is required to apply equitable principles in making her decisions. One such equitable principle is the “doctrine of unclean hands,” which prohibits a party from benefitting from a situation in which they themselves have acted wrongly while accusing another.

Unfortunately, such actions not only go against the common law, they also undermine the ability of the Registrar to regulate the contracting industry properly and fairly because they wrongfully attempt to shift responsibility onto an innocent party and leave the Registrar vulnerable to criticism. In order to discourage abuse of the Registrar’s complaint process, it is important to dismiss complaints such as this in a manner that takes care not to have any negative effects on the victim’s license or business so long as the contractor is otherwise not at risk of harming the public.

It does not appear that Respondent requires disciplinary action on this complaint in order to bring his practices within the regulations of the Registrar. By dismissing this complaint, the Registrar still has all of its alternative enforcement powers, such as warning letters and orders to cease and desist, should the Registrar find it appropriate to use them.

Based on considerations of the weight and reliability of the evidence and the equities of the situation, it appears that the best practice in this instance is to dismiss the complaint altogether and decline to impose any discipline against Respondent.

RECOMMENDED DECISION

Based upon the foregoing considerations, the undersigned Administrative Law Judge hereby recommends that the complaint in this matter be dismissed in its entirety.

If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be forty (40) days from the date of certification.

Done this day, January 2, 2018.

s/ Linda Marie Brown

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors