ALJDEC decisions subject to certification as final

2017A-3431-CHC-ROC · Registrar of Contractors · 2018-01-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

David and Stacy Streen,

COMPLAINANTS,

v.

SOS Builders LLC,

License No. KB-1.280784-D,

RESPONDENT.

No. 2017A-3431-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 19, 2017, at 8:30 a.m.

APPEARANCES: David and Stacy Streen (“Complainants”) appeared on their own behalf; SOS Builders LLC (“Respondent”) appeared through Brent Ghelfi, its qualifying party.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

According to the Registrar of Contractors’ (“the Registrar’s”) public website, on or about October 3, 2012, the Registrar issued License No. KB-1.280784-D for dual building contracting to Respondent.

On or about July 5, 2017, Complainants filed a complaint with the Registrar alleging 20 specific complaints against Respondent based on its repair of water damage at their home at 742 E. Riviera Dr., Chandler, Arizona 85249.

According to the complaint, Respondent had been paid $16,400.00 of the $30,777.98 + $13,128.98 contract price.

The Registrar assigned the complaint to its Investigator Steve Nelsen for investigation. On July 18, 2017, Investigator Nelsen performed a jobsite inspection.

On July 20, 2017, on behalf of the Registrar, Investigator Nelsen issued a Directive that required Respondent to correct six of Complainants’ items of complaint, in relevant part as follows:

1. Vanity installed backwards in Master bath.

2. Repairs were made poorly to the walls and base boards unacceptable quality.

3. Proper clean up not completed after tiling the floors landscaping damage (outside landscaping rocks).

4. Return and assemble appropriately cleaned vanity drawers and parts.

5. New carpet damaged in 3rd bedroom (under closet doors).

6. There are rocks under new installed carpet (Guest bedroom in front of bed).

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.

The deadline for Respondent to comply with the Directive was August 9, 2017, at 5:00 p.m.

Complainants requested a compliance inspection. On August 10, 2017, Investigator Nelsen sent the parties a letter, scheduling a jobsite inspection on August 15, 2017, at 10:00 a.m.

On August 15, 2017, Investigator Nelsen performed a compliance inspection. Investigator Nelsen’s compliance inspection report opined that Respondent had corrected all but three complaint items and that the remaining deficiencies were minor, in relevant part as follows:

Compliance Jobsite General Notes: Both parties met at site. The R and C appear to have a verbal agreement to install tile in one of the bedrooms instead of completing item CWO item #5. The R has made numerous attempts to schedule a time to install the tile. Those emails are uploaded to the document file. I have not rec'd any responses to those requests from the Complainant. The Complainant stated that he wanted to move forward with the citation process even though the Respondent appeared to be willing to complete the work. I recommended that the Complainant allow the Respondent to complete the work, but he did not agree. The Complainant has stated that he has lost a business during this process and wants other [resolution].

The work that remains is very minor and could be completed in a short period of time. The Complainant showed me new areas that he states were damaged, but these were not shown to me at the original jobsite inspection, see pics4 and 5. At this time I am forwarding this for citation to allow an ALJ to make a determination.

Compliance Findings:

#1- Vanity was not installed backwards, R moved the center section back as requested and needs to finish caulking and paint. The leak that was shown at the JSI has not been corrected. This appears to be at the drains of the sink and were due to an improper drain pipe provided by the Complainant. The complainant has provided new drain pipes and the R agreed to have a licensed plumber install them. See pics 11-13.

#2- I was shown a few minor areas that need paint touch up and completion. It appears the Respondent was attempting repairs and was trying to [schedule] a time to do finish painting. The Complainant did not show me the garage or anything in the room filed with boxes. See pics 1-3, 6-9 and 14.

#3- Completed

#4- Completed- Drawers were returned and installed. The Complainant wants the vanity replaced, this is not part of the quote and it would be appropriate to resolve through the homeowner insurance adjuster. The C feels there was additional damage to the vanity from the initial flooding. See pic 10.

#5- Both parties appear to have agreed to [install] tile in the 3rd bedroom because the carpet was not available. The Respondent has rec'd the tile and has been trying to schedule installation. See case documents for [correspondence].

#6- Not complete. Respondent has stated that he would complete this when he install the tile.

Investigator Nelsen sent the complaint to the Registrar’s Legal Department. On August 17, 2017, the Registrar issued a Citation that charged 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, and A.R.S. § 32-1154(A)(22).

Respondent filed a timely written answer to the Citation, denying any statutory violation.

The Registrar referred Complainants’ complaint to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on January 18, 2018. Complainants submitted four exhibits, including one exhibit that consisted of twelve photographs, and testified on their own behalf. Respondent submitted three exhibits and presented the testimony of its qualifying party, Brent Ghelfi, and Respondent’s general manager/operations manager, David Kiesgen. Investigator Nelsen also testified.

Additional Hearing Evidence

Complainants’ house was substantially damaged by a water leak in the guest bathroom. Complainants made a claim to their homeowner’s insurer to repair the damage.

Because Respondent had performed work in the past for other insureds of Complainants’ homeowner’s insurer, it recommended that Complainants hire Respondent to perform repairs at their house.

After the Directive was issued, on August 1, 2017, Mr. Kiesgen sent an email to Complainant Mr. Streen, stating that Respondent’s flooring vendor had the tile available for the bedroom and requested that Mr. Streen let Mr. Kiesgen know if Mr. Streen wanted to proceed. Mr. Kiesgen estimated that it would take a day to demo the carpet and prep the floor, a day to install the tile, and a day to install grout. On August 1, 2017, Mr. Streen responded, “Sounds good. Sooner the better.” On August 1, 2017, Mr. Kiesgen responded, “Great. I will see what he has available and see if it will work for you and your family.”

On Friday, August 4, 2017, at 1:13 p.m., Mr. Kiesgen sent an email to Mr. Streen, in relevant part as follows:

The tile for the bedroom was ordered and should be to my flooring vendor by Thursday of next week. As soon as I know when it is here we can schedule for the install. When the tile is installed we will check under the carpet in the spare bedroom for any debris and retack.

I also need to make sure you notify the ROC of the repairs we completed.

On August 4, 2017, at 1:40 p.m., Mr. Streen responded, “Sounds good. Thanks for the update. Have a great weekend!”

On Saturday, August 5, 2017, at 1:14 p.m., Mr. Streen sent another email to Mr. Kiesgen, expressing a concern that if Respondent started repairs on Thursday, it might inconvenience Complainants, in relevant part as follows:

Just checking.

You said this was going to be a 3 day project and so starting it on a Thursday isn’t making much sense to me.

If they remove the carpet Thursday and lay the tile Friday, we will need our cleaning lady to come Saturday to clean everything and then if they grout on Monday, she will need to come back Tuesday.

Wouldn’t it be better to do this Wed, Thurs, Fri and be done with my daughter’s room. We are eager to get her out of ours. LOL

This would allow for only one cleaning to keep the air breathable.

On August 5, 2017, at 1:41 p.m., Mr. Kiesgen responded to Mr. Streen’s email: “Yes. He said he can do it in two days with fast set. Remember it depends on when the tile arrives. I will work with you on this schedule.” On August 5, 2017, at 1:51 p.m., Mr. Streen responded, “Cool. Thanks!!”

On Monday, August 7, 2017, at 11:09 a.m., Mr. Kiesgen sent an email to Investigator Nelsen, in relevant part as follows:

I am concerned that Mr. Streen has not acknowledged our completion of the repairs . . . except for the carpet. He has decided to run tile in that back bedroom which we have ordered. It is scheduled for arrival on Thursday of this week and then we can schedule. We will clean under the carpet when we do the tile. I am attaching pictures of our in progress repairs and completion. I guess you may have to reinspect. I just want to make sure we stay in compliance and you are notified.

On Wednesday, August 9, 2017, at 2:21 p.m., Mr. Kiesgen sent an email to Mr. Streen, informing him that Respondent’s flooring vendor could install the tile floor on Tuesday August 15, 2017, and finish up on August 16, 2017. Mr. Kiesgen stated that he would come out on Monday, August 14, 2017, to remove the existing carpet and tack strip. Mr. Kiesgen asked Mr. Streen to confirm that this schedule would work for him and his family.

On August 9, 2017, at 5:29 p.m., Mr. Streen responded, “I thought we were schedule[d] for tomorrow. I cleared my schedule for tomorrow and Friday based on our last correspondence.”

On August 9, 2017, at 5:47 p.m., Mr. Kiesgen responded, “David, please read the email I sent you on August 4 advising you that the tile would be in this Thursday at that time I would set up a schedule with you for the install give me a call back so we can discuss.”

On August 9, 2017, at 6:00 p.m., Mr. Streen responded, “After that on the 5th we discussed Wed, Thurs Fri and you said it only needed two days because it was quick set.”

On August 9, 2017, at 7:27 p.m., Mr. Kiesgen responded, with a copy to Investigator Nelsen, as follows:

The tile comes in sometime tomorrow. The first available install is Tuesday and finish on Wednesday. If that will not work I can try for a different day of your choosing. We just want to install quickly to minimize any problems. Remember the tile we ordered is coming in tomorrow.

On August 9, 2017, at 7:29 p.m., Mr. Streen responded as follows:

This is a bit of a nightmare. I moved all of my stuff from Thursday and Friday to next week to clear my schedule. Now I have to try to clear those days as well.

I guess schedule for whenever you want and put the dates and times in a new email string so there is zero confusion this time.

Complainant Mrs. Streen testified that Respondent knew that her daughter was at cheer camp between July 26 and 28, 2017, and that she and her husband could not provide access for repairs on those dates. Mrs. Streen testified that although the deadline on the Directive was August 9, 2017, at 5:00 p.m., Complainants were willing to allow access to their house between August 1, 2017, and August 15, 2017.

Mr. Ghelfi testified that some lead time is required to select and order tile, for delivery, and for scheduling subcontractors to install the tile.

Mr. Kiesgen testified that Respondent tried to finish the job before Complainants filed the complaint with the Registrar, but that they were on vacation, which prevented Respondent from doing any work. After Complainants filed the complaint, they refused to allow Respondent access until after Complainants had met with Investigator Nelsen.

Mr. Kiesgen testified that Respondent ordered and paid for tile to install in the third bedroom and planned to go out on August 14, 2017, to start the work, but that Complainants refused to schedule the work because they said that they preferred to have someone else finish the project. As noted above, instead of allowing Respondent to complete the work, on or before August 10, 2017, Complainants instead requested a compliance inspection.

Investigator Nelsen testified that at the compliance inspection, Complainants tried to show him new items that were not on the original complaint or that were not shown to him at the initial jobsite inspection, including new baseboards and areas that were full of boxes. Investigator Nelsen testified that he believed Complainants had requested that Respondent perform work that was in addition to what their insurer had authorized. Investigator Nelsen testified that Respondent did not install the vanity backwards, amending the first item on the Directive. Investigator Nelsen testified because the original workmanship deficiency did not exist, Respondent was not responsible for performing any additional repairs to the vanity.

Investigator Nelsen testified that most of the items that in his opinion did not meet the Registrar’s standards were minor. Investigator Nelsen testified that because the carpet that the insurer had authorized to be replaced was no longer available, the parties had agreed that Respondent would instead lay tile that matched the hallway.

Investigator Nelsen testified that the only outstanding repairs were minor paint touchup, installing the tile in the third bedroom, and removing the rocks from underneath the new carpet that had been installed in the guest bedroom. Investigator Nelsen testified that because most of the remaining repairs were minor and Respondent had scheduled the repairs, at the compliance inspection, he recommended that Complainants allow Respondent to complete the repairs, but they refused.

Complainant Mr. Streen testified that Respondent took too long to repair Complainants’ house. Mr. Streen testified that after Respondent’s painters “destroyed” Complainants’ house, they were not allowed back. Mr. Streen testified that although the Registrar’s investigator advised Complainants to allow Respondent more time to complete repairs, Complainants did not want Respondent back and wanted to hire someone else to complete the repairs.

Complainant Mrs. Streen testified that she had counted 1193 areas of the house with paint drips. Complainants submitted a document that stated the locations of the drips and twelve photographs of some of the areas of painting with which they remained dissatisfied.

Mr. Ghelfi testified that he has been licensed as a contractor since 2003, and has performed approximately 2,000 jobs a year, for a total of approximately 30,000 jobs since he was issued a license.

Mr. Ghelfi explained that after an insured loss, an insurance adjustor walks the loss with an estimator. The insurance company will not repair preexisting conditions; it will only pay to repair the property to the condition that it was in before the loss. Mr. Ghelfi testified that the insurance scope of work defines the scope of Respondent’s contract to perform repairs.

Complainants submitted an estimate from Holtzman Home Improvement to repaint the entire interior of Complainants’ house, patch drywall, clean tile, replace, paint or stain all baseboards, paint or stain all the doors, disconnect and re-install the faucets and master vanity in the guest bathroom, and remove and replace the carpet in three bedrooms, for a total price of $26,177.34.

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.”

Complainants established that some areas paint require minor touchup (item 2 on the Directive), tile has not yet been installed in the third bedroom in lieu of replacing carpet (item 5 on the directive), and rocks or debris is still present under the carpet in the guest bedroom (item 6 on the directive). Complainants thereby potentially established 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.

Investigator Nelsen testified that the remaining workmanships deficiencies are minor and that Complainants should have allowed Respondent to complete the project. The complaint that Complainants filed with the Registrar shows that they are still holding insurance monies that they will owe to Respondent if it is allowed to complete the job. The bid that Complainants submitted, ostensibly to repair Respondent’s workmanship deficiencies, included numerous items that were not at issue in this matter, grossly overstated remaining deficiencies, and inflated any damages caused by Respondent’s failure to complete repairs. Complainants both stated candidly at the hearing that since May 2017, before they filed the complaint, they did not want Respondent to complete the job but instead preferred to hire someone else.

Because construction is not a perfect art, contractors generally must be afforded a meaningful opportunity to correct their deficient work before their licenses may be suspended or revoked. Investigator Nelsen sent the letter scheduling the compliance inspection on August 10, 2017, the day after Mr. Streen told Mr. Kiesgen that he thought Respondent would perform repairs on the next day. Respondent established that Complainants initially consented to Respondent having additional time to comply with the Directive and then, after Respondent had actually obtained the tile and scheduled repairs, Complainants withdrew their consent and requested a compliance inspection. Under the circumstances, the workmanship complaint should be dismissed. Because it does not appear that Complainants can work with Respondent to get the minor deficiencies appropriately repaired, they may seek their claimed damages in a judicial forum.

RECOMMENDED ORDER

Based on the foregoing, it is ordered that on the effective date of the final order in this matter, Complainants David and Stacy Streen’s complaint in Case No. 2017-34431 against Respondent SOS Builders LLC’s License No. KB-1.280784-D shall be dismissed based on Complainants’ denial of reasonable access to perform repairs to comply with the Registrar’s Directive.

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, January 31, 2018.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors