ALJDEC decisions subject to certification as final

2017A-3346-CHC-ROC · Registrar of Contractors · 2017-11-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Ann De Jong,

COMPLAINANT,

v.

Outdoor X Scapes Inc dba,

Tree Pros Services,

License Nos. KA-5.296570-D

CR21.253883-D,

RESPONDENT.

No. 2017A-3346-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 31, 2017, at 8:30 a.m.

APPEARANCES: Ann De Jong (“Complainant”) was represented by John D. Parker, II, Esq., Parker Law Firm, P.L.C.; Outdoor X Scapes Inc. dba, Tree Pros Services (“Respondent”) was represented by Jill J. Ormond, Esq., Lewis Roca Rothgerber Christie, L.L.P.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about May 6, 2009, the Arizona Registrar of Contractors (“the Registrar”) issued License No. CR21.253883-D for dual landscaping and irrigation systems to Respondent. On or about March 12, 2015, the Registrar issued License No. KA-5.296570-D for dual swimming pool contracting to Respondent.

On or about June 28, 2017, Complainant filed a complaint with the Registrar against Respondent alleging 20 specific complaints about Respondent’s performance of its contract to substantially remodel the pool at Complainant’s house at 1132 E. Kent Place, Chandler, Arizona 85225. According to the complaint, Respondent had started work on June 16, 2017, and had stopped work on June 23, 2017.

The Registrar assigned the complaint to its Investigator, Steve Nelsen, for investigation. Investigator Nelsen performed a jobsite inspection and on July 17, 2017, issued a directive to Respondent to repair three items of workmanship on or before 5:00 p.m. on August 4, 2017. On July 28, 2017, Investigator Nelsen amended the directive to omit one item, to add another item, and to require Respondent to comply with the directive on or before 5:00 p.m. on August 11, 2017.

After both parties informed Investigator Nelsen that Respondent had not performed corrective work to comply with the July 28, 2017 directive, the complaint was referred to the Registrar’s Legal Department. On August 10, 2017, the Registrar issued a Citation against Respondent’s contractor’s licenses, charging cause to suspend or revoke the licenses 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 attorney filed a timely written answer to the Citation, stating that Respondent’s license should not be suspended because it did not violate workmanship standards, Complainant cancelled a significant portion of the contracted work and then terminated the parties’ contract, and Complainant failed to provide reasonable access to Respondent so that it could make repairs to comply with the directive.

An evidentiary hearing was held on October 31, 2017. Complainant submitted five exhibits and testified on her own behalf. Respondent submitted five exhibits and presented the testimony of Roland Martinez, its officer/owner. Investigator Nelsen also testified.

Hearing Evidence

Respondent’s salesman, Steve Marr, provided at least two proposals to Complainant to remodel her pool. On or about May 26, 2017, Complainant signed Respondent’s proposal that had a total contract price of $34,369.70. Payment terms were set forth in relevant part as follows:

* ($ 50% ) deposit upon accepting contract to schedule/begin project and progress payments (draws) as requested during project.

* Draws to be commensurate with work completed and materials on site at the time of draw request.

* Draws for projects lasting longer than one work week will be requested on Friday on each work week during the course of the project.

The proposal that became the parties’ contract did not include an estimated date of completion.

The scope of work in the contract included demo and installation. The demo included the following:

(963 sq. ft.) Existing Burnt Adobe paver pool deck does not include demo of concrete under Adobe pavers if required.

(150’) Existing Burnt Adobe paver coping on pool perimeter bond beam

(62’L x 6” H) Burnt Adobe pavers on step faces.

The installation included 159’ of tumbled travertine bullnose coping on the pool perimeter.

Complainant works nights as a physician and sleeps during the day. She also owns four Labrador retrievers. The contract provided that Respondent would provide temporary fencing that would be closed when the dogs were out. Complainant’s yard also has gate that must be accessed with a code.

On May 26, 2017, Complainant wrote a check payable to Respondent in the amount of 50% of the contract price, $17,184.85.

Respondent had delivered to Complainant’s house pallets of travertine paver coping and pool decking. Respondent also installed a temporary fence made out of netting, which it subsequently upgraded to chain link at Complainant’s request to contain her dogs.

On June 12, 2017, Mr. Marr responded to Complainant’s inquiry about the estimated length of time that the project would take by stating that “[f]or a project the size of yours, we usually allocate 2 weeks.” Mr. Marr also informed Complainant that Respondent’s crew would start the project on Monday, June 19, 2017.

Complainant was out of town between Friday, June 16, 2017, and Tuesday, June 20, 2017, returning sometime on Wednesday, June 21, 2017.

On Friday, June 16, 2017, one of Respondent’s employees went to Complainant’s house to deliver a bobcat. Although Complainant provided the access code for the gate, she became upset when Respondent’s employee asked if he could begin demolition on the job using a jackhammer.

Mr. Martinez testified that at that point, he became involved in the job. He told Complainant that Respondent would pull off the job. Mr. Martinez testified that Complainant said that Respondent could start the job and work over the weekend if it meant that the job would be done sooner.

On Monday, June 19, 2017, Respondent’s employee either lost or forgot the access code. When Mr. Martinez asked Complainant for the access code, she became upset and demanded that Respondent return the deposit. Mr. Martinez said that Respondent would not return the deposit, but that it would continue with demolition on the project.

Complainant also owns a house in Las Vegas, Nevada. Mr. Martinez testified that by Tuesday, June 20, 2017, or Wednesday, June 21, 2017, Complainant had hired Nevada attorney Jude Nazareth of the firm Montez Nazareth. Attorney Nazareth insisted that all of Respondent’s communications with Complainant be in writing and go through him, even though Mr. Martinez said he needed input from Complainant for the job to be completed.

Mr. Martinez testified that on or about Tuesday, June 20, 2017, Complainant hired a home inspector to render an opinion on Respondent’s work and oversee the job. Mr. Martinez testified that he told Complainant that the home inspector could inspect the job, but that he could not oversee the job. Mr. Martinez explained that a home inspector is not a licensed contractor.

Mr. Martinez testified that on or about Wednesday, June 21, 2017, Attorney Nazareth cancelled most of the installation under the contract, with the exception of installation of the travertine pool coping and decking up to the patio, without any overlay. Complainant did not dispute Mr. Martinez’s testimony regarding the modification of the parties’ contract.

By Friday, June 23, 2017, Respondent had completed most of the demolition and had installed approximately 75% of the travertine paver coping around the pool. Pursuant to the contract, Respondent requested that Complainant pay a draw. Complainant refused. Although the record does not contain the amount of Respondent’s draw request, over the weekend, Complainant offered to pay Respondent $1,000.00, which Mr. Martinez testified was not sufficient.

Mr. Martinez testified that Respondent had six to eight employees working on the job, as well as a portable toilet on site. He explained that the 50% down payment is for materials and the draws are to pay employees wages for the time they worked on the project to date.

By this time, Respondent had hired Attorney Jill J. Ormond of the Phoenix firm of Lewis Roca Rothgerber Christie LLP. On June 23, 2017, or June 24, 2017, Attorney Ormond sent a letter via email to Attorney Nazareth terminating the parties’ contract due to Complainant’s alleged breach of the contract by her refusal to pay Respondent’s draw request.

On Monday, June 26, 2017, Attorney Nazareth responded to Attorney Ormond’s email, agreeing that “[d]ue to the strained relationship and other issues, it is in the best interest of the parties to discontinue working together under the contract, and the termination is effectively mutual.”

As noted above, on June 28, 2017, Complainant filed the complaint with the Registrar. On July 17, 2017, Investigator Nelsen performed a jobsite inspection. Neither Mr. Martinez nor anyone else appeared at the inspection on behalf of Respondent because Mr. Martinez was in Viet Nam.

On July 17, 2017, Investigator Nelsen issued a directive to Respondent based on his observations and what Complainant told him at the jobsite. The directive required Respondent to take three corrective actions on or before 5:00 p.m. on August 4, 2017, in relevant part as follows:

1. Contractor installed broken coping pieces.

a. There were pieces of the coping with chips missing on the cut edges. The area where the new decking will be placed against the coping is rough and will not allow a seamless transition to the new decking.

2. Contractor made coping base too high to meet patio tiles and coping has to be completely removed and redone.

a. The Respondent placed a 2" mortar bed above the waterline tile below the coping which is porous in nature, crushing the skimmer and not aestetically pleasing. There are numerous ares in the mortar bed that have voids and the aggregate is exposed. It appears the mortar bed was placed in anticipation of placement of the travertine tile, but the travertine would have not allowed the 2" exposure below the weep screed on the home and would not be code compliant. In addition, coping is not completed around pool.

3. Contractor broke/damaged numerous items without fixing/replacing: pool tiles, solar lights, home gate, autofiller.

a. There were numerous water line tiles and tiles below the diving board that were damaged by the Respondent, some repairs were started, but not finished. Respondent should repair tiles that were damaged during demolition. I could not substantiate damage to the solar lights or home gate. I did notice cracks in the covers of the autofiller and autofiller neck that should be corrected.

After the July 17, 2017 directive was issued, Attorney Ormond contacted Investigator Nelsen to inform him that Respondent had not installed or contracted to modify the 2” mortar bed that was the subject of item #2 on the directive. Attorney Ormond provided photographs of the mortar bed that had been taken before Respondent started demolition.

Investigator Nelsen testified that on July 28, 2017, he called Complainant and specifically asked her if Respondent had installed the 2” mortar bed, and she said it had. Investigator Nelsen testified that in light of Respondent’s photographic evidence, he considered Complainant’s statement to be a misrepresentation.

Investigator Nelsen informed Complainant that in light of Respondent’s evidence, he would issue an amended directive with a later compliance date. Investigator Nelsen testified that Complainant was not happy that Respondent would have a longer time to comply with the directive. On July 28, 2017, Investigator Nelsen issued an amended directive that required Respondent to complete three corrective actions on or before 5:00 p.m. on August 11, 2017, in relevant part as follows:

Contractor installed broken coping pieces.

There were pieces of the coping with chips missing on the cut edges. The area where the new decking will be placed against the coping is rough and will not allow a seamless transition to the new decking.

Contractor broke/damaged numerous items without fixing/replacing: pool tiles, solar lights, home gate, autofiller.

There were numerous water line tiles and tiles below the diving board that were damaged by the Respondent, some repairs were started, but not finished. Respondent should repair tiles that were damaged during demolition. I could not substantiate damage to the solar lights or home gate. I did notice cracks in the covers of the autofiller and autofiller neck that should be corrected.

Complete contracted items prior to alteration/deletion of items by Complainant.

Investigator Nelsen testified that he included item #3 on the amended directive at Complainant’s request.

Investigator Nelsen acknowledged that repairs of the rough pavers and broken tiles were a relatively minor “punch list” repairs that would usually be performed at the end of the job when all other work was complete.

On August 4, 2017, Attorney Nazareth demanded that Respondent pay Complainant $13,000.00 in exchange for withdrawing the complaint that she had filed with the Registrar.

On August 9, 2017, at 6:23 a.m., Attorney Nazareth sent an email to Attorney Ormond, stating that “[d]espite [Respondent’s] repeated failure to provide a proposed schedule and time estimate regarding the Directive’s corrective work orders, [Respondent] may access the property from 7:30 a.m. – 5:00 p.m.”

Mr. Martinez testified that he believes that Respondent could have performed repairs to comply with the amended directive in less than a day. He also testified that because Complainant was such a difficult client and had retained an attorney, he felt that unless she provided a specific date and time on which she would allow access, he did not think he could schedule a crew to perform repairs to comply with the amended directive without risking being charged with criminal trespass. On August 9, 2017, at 8:18 a.m., Attorney Ormond sent an email to Mr. Nazareth, in relevant part as follows:

I will once again request a date and time [Respondent] can access the property. Considering your client’s objections to the days and times [Respondent] previously worked we will need a specific date and time [Complainant] is authorizing [Respondent] to access the property and the access code that is required for the gate. . . .

On August 9, 2017, Attorney Ormond sent a letter to Investigator Nelsen, requesting him to schedule a hearing because “[a]s of this date, we have made several attempts to coordinate a time to perform the work identified in the July 28, 2017 Directive and are unable to effectively communicate with the property owner or her agents concerning the work to be done and a time for it to be performed.” Investigator Nelsen testified that the Registrar does not schedule hearings pursuant to respondents’ requests.

Complainant denied that she ever denied reasonable access to allow Respondent to comply with the amended directive. She testified that she was present at the property and ready, willing, and able to provide access, but Respondent never scheduled repairs or appeared on August 9, 10, or 11, 2017, to perform repairs, after Attorney Nazareth had indicated she would provide access.

On August 14, 2017, Complainant entered into a contract with Michael Conley of Boundary Waters Pools and Spas LLC (“Boundary Waters”) in the amount of $41,207.84 to finish renovation of her pool. The project took seven weeks, during which Boundary Waters remodeled Complainant’s pool, using a different design that Respondent had proposed, and removed and replaced travertine paver coping that Respondent had installed.

Mr. Martinez testified that he believed that Complainant was using the Registrar’s complaint process to force a financial settlement and that she had no intention of allowing Respondent access to comply with the amended directive. Mr. Martinez noted that it takes a lot of preparation to prepare a contract for a substantial remodel of a pool like Complainant’s project, including taking measurements, preparing designs, purchasing materials, and obtaining permits. Mr. Martinez testified that he believed Complainant must have committed to hiring Boundary Waters before August 9, 2017, when she stated she would allow access to Respondent to comply with the amended directive.

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, the website showed that both of Respondent’s licenses are current and in good standing. Between September 18, 2012, and January 16, 2013, Respondent’s License No. CR21.253883-D was placed on disciplinary probation and was revoked between August 1, 2012, and September 18, 2012, as a result of other complaint(s). License No. CR21.253883-D was administratively suspended between June 1, 2017, and June 15, 2017, for non-renewal. Complainant’s apparently is the only complaint pending against either license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish cause to suspend or revoke Respondent’s licenses 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.”

The legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages. Moreover, although the parties’ subjective motivation may be relevant to a common-law breach-of-contract action, their motivation is not relevant to the issue of whether cause exists to suspend or revoke a contractor’s license under the statutes charged in the Registrar’s Citation. The only matters at issue in this administrative proceeding are whether Respondent’s work complied with the Registrar’s standards, if not, whether Respondent corrected the work to comply with the Registrar’s directive, and if not, whether Complainant allowed reasonable access for Respondent to perform repairs.

Complainant established that Respondent’s workmanship did not comply with the Registrar’s or industry standards with respect to the broken coping pieces, damaged water line tiles, and cracks on the autofiller and autofiller neck noted in the August 11, 2017 amended directive. Although these items were relatively minor “punch list” items that would normally be addressed at the end of the project, the Registrar requires that if a contractor performs contracting work, the contractor comply with the Registrar’s standards. The parties’ mutual termination of their contract does not excuse Respondent’s failure to comply with the Registrar’s standards. Complainant therefore has established potential cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. The early stage of the project at which Complainant filed the complaint and Complainant’s early termination of the contract are considered as factors in mitigation of the recommended discipline.

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. The record establishes that from the beginning of the project, the parties were unable to work together to resolve their differences, which led to the early mutual termination of the contract. Nonetheless, Respondent failed to comply with the August 11, 2017 directive. Respondent did not submit any evidence that it ever provided to Complainant a specific date and time on which it intended to perform repairs. The homeowner is not responsible for providing a date and time when she will allow repairs. Although if Respondent had provided a specific date and time on which it intended to perform repairs, Complainant may have refused to provide access or may have called law enforcement when Respondent appeared to perform repairs, on this record, Mr. Martinez’ stated concern is based on nothing more than speculation. Therefore, because Respondent did not establish that Complainant denied reasonable access to allow Respondent to comply with the directive, Complainant established cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the final order in this matter, License Nos. KA-5.296570-D and CR21.253883-D of Respondent Outdoor X Scapes Inc. dba, Tree Pros Services shall be suspended for a period of one (1) calendar day.

It is further recommended that the Registrar require Respondent to pay the sum of $100.00 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, November 3, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors