ALJDEC decisions subject to certification as final

2017A-3981-CHC-ROC · Registrar of Contractors · 2019-01-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 19, 2018 and December 19, 2018. Record held open for filing of parties’ closing memoranda until January 4, 2019. APPEARANCES: Nancy McEachern, D.V.M., Complainant; Buster Bray, Complainant Witness, David K. Monahan, Esq. attorney for Compliant; Tim Pennington, ROC Sr. Investigator; Mike Hohn, Respondent, Time Buerkle, Respondent witness, Louis Rodriquez, Respondent witness, , Richard Guellette, Esq., attorney for the Respondent, Thayer DePaz, Interpreter. ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson _____________________________________________________________________ FINDINGS OF FACT Respondent Honcor Building and Development LLC, [hereinafter “Honcor”] is the holder of License Number 167106 issued by the Arizona Registrar of Contractors (Registrar).[1] On or about January 12, 2017, Nancy Ann McEachern [Complainant] entered into a contract with Honcor[2] to, among other things: Design plans and permits for: 50 X 22’ addition of garage to match existing construction. (sic) To be converted to 2 one bedroom apts…To be paid as follows: 25% deposit, 25% upon completion of framing, 25% upon completion of Drywall, balance upon completion of apartments.[3]

On or about August 3, 2017, the Registrar received a Complaint against Honcor from Complainant alleging Honcor abandoned the contracted project, performed poor work, obtained an incorrect permit for the project and departed from project plans and building codes.[4] The Registrar assigned the Complaint to ROC Investigator Timothy Pennington. On or about August 28. 2017, Mr. Pennington conducted a job site inspection [“JSI”] at the Complaint’s residence. The Complainant was present. Respondent did not participate in the inspection. Pursuant to Mr. Pennington’s inspection notes[5], he recorded, among other things: I recorded with my digital voice recorder DS-30. Issued by the Registrar of Contractors. The recording has been loaded in to evidence locker and also uploaded into case docs. I took Pictures with Canon Power shot A2600 Issued by the Registrar of Contractors. All pictures taken loaded in to evidence locker and also uploaded in to case docs…. Picture 2 – Approved set of plans are for a garage with a half bath. Not what the contract states… Picture 4 – Electrical line run around home, I’m not sure at this time if it was inspected… Picture 6 – Sub panel for garage Apt, no green tag posted. Picture 7 - Sub panel for garage Apt, no green tag posted. Not completed. Picture 8 – No light fixture installed. Picture 9 – No door on side where it shows on plans. Picture 10 - No receptacle installed. Picture 11 – Plumbing in wall looks to be for future kitchen not permitted for. Picture 12 – Screws in wall marking where receptacles are to be installed not per plan. Picture 13 – No bath sink installed. Picture 14 – Plumbed for tub but no tub installed or listed on permit. Picture 15 - Plumbed for toilet but no toilet installed or listed on permit. Picture 16 – No garage door installed. Picture 17 – No water main installed to building for bathroom and or kitchen. Picture 18 – Cleanouts for building not sure if they have been inspected. Picture 19 – Screws in ceiling marking pre-run duct work return. Not inspected or properly permitted. Picture 20 – Vents on roof but nothing installed inside yet for them. Picture 21 – Wire is marked in Spanish (Catenton de auga) Heat the water, English Water heater. This is a 12 gage wire not rated for a 30 amp water heater.

Complaint Item 1: Abandonment Investigator’s Observation: Work is not completed per contract.

Governing Rule: Workmanship Rule: §32-1154 (A) (3) R4-9-108; §32- 1154 (A) (1) Abandonment of a contract [and] §32-1154 (A) (2) Departure from or disregard of plans or specifications or any building codes.

On August 39, 2017, Investigator Pennington issued a Written Directive [containing a Corrective Work Order (“CWO”)] to Honcor that provided as follows: After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108)…You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on September 18, 2017. You are hereby directed to remedy the following violations by the appropriate means:

1. Permit was obtained for garage with half bath. Did not obtain the proper permit for what was contracted for: Design plans and permits for: 50' x 22' addition of garage to match existing construction. To be converted to 2 one bedroom apts. 2. Work is not completed per contract.

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

On August 29, 2017, Mr. Pennington issued a letter of warning to Honcor stating: The Registrar believes that necessary building permits were not obtained for a project located at 4609 W Banff Ln, Glendale AZ 85306. The International Residential Code and the International Building Code Chapter 1, Sections R105 and 105, state: Any owner or authorized agent who intends to construct, enlarge, alter, repair, move, demolish or change the occupancy of a building or structure, or to erect, install, enlarge, alter, repair, remove, convert or replace any electrical, gas, mechanical or plumbing system, the installation of which is regulated by this code, or to cause any such work to be done, shall first make application to the building official and obtain the required permit.

Additionally, A.R.S. § 32-1154(A)(2) includes grounds for suspension or revocation of a contractor’s license: Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect that is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.[6]

Also on August 29, 2017, Mr. Pennington issued a separate letter of warning[7] to Honcor stating: It appears that you may have violated A.R.S. § 32-1158(A). Under that statute, any contract for more than $1,000.00 between a contractor and a property owner must contain nine specific elements. Your contract is missing at least one of the required elements.

Following the issuance of the CWO, Honcor did not correct the items listed in the Written Directive before the CWO’s September 18, 2017 deadline. On September 26, 2017, The Registrar issued a Citation against Honcor, charging possible violations of : Charge 1: 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 the abandonment or refusal.”). Charge 2: A.R.S. § 32-1154(A)(2)[8] Charge 3: Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32- 1154(A)(3). Charge 4: A.R.S. § 32-1154(A)(12), Failure in any material respect to comply with this chapter. Specifically, violation of A.R.S. § 32- 1158(B)[9] Hearing was held on September 19, 2018 and December 19, 2018.[10] Complainant’s counsel in its opening statement asserted Complainant had contracted with Honcor to build an unattached garage building with a two bedroom and bath. Instead, she asserts Honcor incorrectly pulled a permit for an unattached garage only and never disclosed to the City of Glendale Permitting that a casita-type construction was underway. Moreover, it is asserted that only portions of the construction were roughed-out and started for the two-bedroom interior when Honcor demanded payment for trenching from the house to the new construction for electrical lines. Complainant refused to make the extra payment and Honcor abandoned the project. Honcor admits in its opening statement that its contract with Complainant did not meet the standards and language required by A.R.S. § 32- 1158(B), but that Honcor has amended its current contracts to comply with statute. Honcor contends that it initially contracted to build a detached garage with two bedrooms and bath. However, Honcor contends that the scope of work changed such that it was contracted to build a detached garage only and that the two bedrooms and bath would be later undertaken. Honcor asserts that it presented a bill for payment during construction for electrical line trenching to the Complainant - which bill Complainant refused to pay. Honcor contends that Complainant then threw Honcor off the job. Investigator Pennington testified at hearing that at the August 28. 2017 JSI, he conferred with the Complainant, reviewed drawings provided by the Complainant for the project. The Respondent did not appear for the JSI. Mr. Pennington testified that Complainant is a veterinarian who said she was suffering from early stages of Alzheimer’s. He stated that Complainant advised she desired to construct a two bedroom unit with a kitchen and bath in a garage structure that matched her existing construction so that, if in the future her condition worsened, she could accommodate hiring an on-site, hour, care taker for herself. Mr. Pennington testified consistent with his Job Site Inspection Notes[11] that dozens of items were observed that were below workmanship standards.[12] Mr. Pennington stated that he reviewed two of sets of drawn plans for the project. He said the preliminary set of plans[13] were rejected by Complainant and a revised set of drawings[14] [hereinafter the “Plans”] were accepted by the Complainant. Mr. Pennington testified that the scope of work described by the parties’ written contract[15] and Plans contracted for Honcor to build a 50’ by 22’ garage addition with two one bedroom apartments, kitchen and bath. However, he said, Honcor “pulled a permit” for a detached garage only. Mr. Pennington said the permit did not describe or list construction of a kitchen, bath and two bedrooms inside the garage and did not disclose electrical, plumbing or other items being constructed under the agreement for Complainant’s two bedroom apartment.[16] Mr. Pennington determined that pulling the incorrect permit combined with his observations of the construction constituted a clear material departure from or disregard of plans or specifications and building codes that is prejudicial to the Compliant without her consent. Mr. Pennington also testified that the project had been abandoned by Honcor at some point prior to the JSI. He stated that the Complainant had paid Honcor for three of its four draws on this $85,850.00[17] contract and she was current in her payments when Honcor presented her with a demand for additional payment of $1,900.00 to cover trenching for an electrical to run from the house structure’s power box to the new construction. Complainant indicated that she refused the additional payment demanded by Honcor. At that point Honcor left the project in a huff, never to return. Mr. Pennington thus determined Honcor had abandoned the project. From his review of the Plans and the construction that had been done, Mr. Pennington stated that the project, per Plans, was approximately 60% unfinished as of the JSI and the Pre- Hearing Inspection. Mr. Buster Bray was called by the Complainant. Mr. Bray testified that he is a certified home inspector and that in June of 2018 he had performed an inspection of the Honcor construction at Complaint’s residence to determine whether the construction was built per plans[18] and to look for compliance with the CWO. He stated he had reviewed Plans for an apartment building/casita[19] and reviewed a building permit[20] for a new detached garage, both of which documents were provided to Mr. Bray by the Complainant. He testified that his inspection revealed there were 21 electrical outlets installed that were not spaced properly. He found #8 wire that came out of the wall, but that were not connected to the electrical panel. He found hidden lengths of wire in the wall and attic area. He stated that #8 wire is permitted for a detached garage, but if increased power were needed, a different permit was required. He stated that he viewed the attic area and observed duct work present. His opinion was that duct work would be unusual for a mere garage structure, but that it would be expected to be seen for air-conditioning and heating in an apartment/casita. Two doors were noted as installed but the Plan[21] did not call for the install of these doors. Hose bibs specified in the Plans were absent. The sink, toilet and shower differ from that directed in the Plans. The electrical sub-panel for a “livable structure” is a 100 amp breaker. This panel has undersized #8 wiring used which does not meet required electrical code standards. He noted a trench was dug to connect power line from the residence electrical panel to the sub-panel power box of the garage. He testified that he observed duct work in the gables of the “garage”, but there was no supply or return ducting noted. He observed no HVAC unit at the new construction. He stated that the duct work was not proper for the permit that was pulled. He stated that this project was a build-out for a two bedroom casita with a kitchen and baths. He said that high amp wires were stubbed-out inside the designated kitchen area for a cook-top oven or range. He said that this area was roughed out for a kitchen or kitchenette. Such use would require a different permit than the one that was obtained. Finally, he testified that he had never seen duct work in a garage unless an install of an HVAC unit was planned and a permit for an HVAC was not obtained in this case. The Complainant, Nancy Ann McEachern, D.V.M., testified that she is suffering from the early stages of Alzheimer’s. It was her plan and intention to build a “Mother-in-Law” Quarters at her home so that she could have a care taker stay at her residence with her instead of being housed in a nursing home should her symptoms progress. I never asked for two stand- alone apartments, she said. I contracted for and planned for one living area with two bedrooms, bathrooms and a kitchenette, not two separate apartments. I did not contract for a garage to be built. She said, “I have only two cars and already have 9 parking spaces at my home. I do not need a garage.” She testified that it was Honcor’s idea to build a two bedroom guest house in my garage, not mine. I anticipated building a mother-in-law casita. Complainant said she paid Honcor three checks[22] and was slightly ahead in payment on the draws stated in the contract[23]when Honcor billed me $1,900.00 for trenching from my home to the new construction for electrical lines. I refused to pay anything but the last draw under the contract - which draw payment was not yet due. Mr. Hohn of Honcor “went ballistic and walked off the job,” she said. She testified that this project was never planned to be done in phases where a garage was to be built in one phase and bedrooms/baths and a kitchenette to be built in another phase. The project was to be build all at once. She said, “None of the wiring has been hooked up, none of the plumbing has been hooked up…a ½ bath is called for in the plans, but a full bath was constructed…the toilet is only partially installed.” The plans stamped by permitting show a garage door. However, the Plans I approved call for a large window with shutters. On the North end of the building there has been left an opening the size of a garage door that exposes the entire building to the monsoon weather and other extreme Arizona elements. I have had to cover the opening with a tarp to try to protect what is inside. She said there were no written change orders, only the written contract and final Plans. Complainant denies she kicked Honcor off this job. They walked off because I would not pay their extra billing for trenching electrical lines. Testifying for Honcor, Mr. Tim J. Buerkle, stated that for 32 years he has been in business as a draftsman and designer. He indicated that he prepared the Plans[24] in this contract. He said the Plans were a working set, not a final set, of drawings for this project. He stated he was hired by Honcor, specifically Mr. Hohn, to produce design plans, the scope of which was explained to Mr. Buerkle by Mr. Hohn as a “guest house.” Honcor was instructed to obtain the Complainant’s approval prior to submitting a permit for the project. Mr. Buerkle invoice to Honcor bills for a set of preliminary and design plans for a “livable structure.”[25] Mr. Buerkle met with Mr. Hohn and the Complainant to discuss the initial guest house plans.[26] Those plans were never submitted to the Complainant, they were only submitted to Mr. Hohn. At the direction of Mr. Hohn, he said he drafted revised Plans for a garage that would later be made into two apartments. These Plans were not submitted to the Complainant. Mr. Buerkle testified that it was this working set of Plans that were submitted to Permitting for approval. I made changes from a livable home to a garage at the direction of Mr. Hohn alone. Mr. Michael (Mike) Hohn testified for the Respondent. Mr. Hohn is Honcor’s Qualifying Party. He said he had spoken to the Complainant regarding this construction project. He indicated that he hired Mr. Bekele to draw plans for the project. He said originally, Complainant wanted a detached two bedroom apartment constructed at her residence. He stated that he had contact with the City of Glendale, Arizona who advised him that the City will not permit a livable structure larger than 900 square feet and will not allow two apartments on this site as proposed.[27] Mr. Hohn said he advised Complainant of the City’s position and we changed the construction to reflect only a garage construction which later would be converted to a two bedroom apartment. Mr. Hohn admits there are no change orders between the parties. He said that the scope of the agreement was ever evolving. He admits that the written agreement of the parties contains no “scope of work” written in it. He stated that he was “…only responsible for building a garage. The project was only for a garage.” He said that final Plans [Complainant Exhibit C-5] reflect the maximum that the City of Glendale would allow: a 1,500 square foot building. He stated that he then had plans drawn for the maximum square footage allowable and proceed construction. Mr. Hohn testified that he or his contractors installed plumbing for a bathtub and shower; plumbing for a sink in the kitchen area and installed plumbing for a toilet in the bathroom area; Mr. Hohn said that he was kicked off of the property over a disagreement over “charging stuff.” Mr. Hohn does not dispute that he was paid, in full, on three of his four contract draws and that the balance is not due under the agreement[28] as a final draw upon “…completion of apartments.[29]” Mr. Hohn states that none of the items listed in the CWO could be completed before the stated deadline because of access denial. No dates or statements about just how access was denied were testified to by Mr. Hohn. Mr. Hohn admits he has made no effort to re-permit this project. Mr. Hohn admits the contract in this case does not meet the required standard language requirements of A.R.S. § 32-1158(B) but states he has revised his contract for all future contracting [Exhibit R-13]. Mr. Hohn testified under oath that there has never been a complaint against him and he has never been disciplined.[30] Administrative notice is taken of Honcor’s prior License record as reflected on the Registrar’s public website on January 24, 2019. Such prior License record reflects that Honcor’s License No. 256686, a General Dual KB-2 Dual Residential and Small Commercial license[31], was first issued on October 10, 2001, was suspended arising out of a Complaint in 2017-6199. The license is now current.

CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq. Complainant bears the burden of proof to establish Honcor’s statutory violation by a preponderance of the evidence. See A.R.S. § 41- 1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). The credible evidence presented at hearing established that at the time of the Complaint and thereafter there were numerous items of Complainant’s project that needed to be completed.[32] By a preponderance of the evidence, Honcor has not proven that it was either denied access or that its contract had been terminated. Thus, Complainant has proven by a preponderance of the evidence that Honcor abandoned the contract or refused to perform after submitting a bid on work without legal excuse for the abandonment or refusal in violation of A.R.S. § 32-1154(A)(1).[33] As to the issue of poor workmanship, the evidence established at least 19 items identified by Investigator Pennington at his JSI that demonstrated below standard workmanship. Complainant has, by a preponderance of the evidence, established that Honcor did not perform the work in a professional and workmanlike manner in violation of A.A.C. R4-9-108, and thereby of A.R.S. § 32-1154(A)(3).[34] A.A.C. R4-9-108 requires that “…that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” Moreover, A.R.S. § 32-1154(A)(2) provides conduct which may subject a contractor’s license to discipline includes: Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect that is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications.

By a preponderance of the evidence it is proven that Honcor violated A.R.S. § 32-1154(A)(2) and A.A.C. R4-9-108 by Honcor’s build-out of a garage instead of a two bedroom, bath and kitchenette as provided by the agreed Plans. Moreover, Honcor obtained an incorrect permit for the project and, upon learning the permit was incorrect, failed or refused to amend, correct or re-permit the project in this case notwithstanding a written CWO to do so. Honcor has admitted that its contract in this case fails to meet the language standards and consumer warnings required by A.R.S. § 32-1158(B). Therefore, Honcor, by a preponderance of the evidence and its own admission, is shown to have violated A.R.S. § 32-1154(A)(12). Regarding aggravating or mitigating circumstances in this case, that Honcor has amended its contract form to comply with the language requirements of A.R.S. § 32-1158(B) is commendable and mitigating. That Honcor undertook to build-out a garage instead of the two bedroom, bath and kitchenette as provided by the agreed Plans; that Honcor obtained an incorrect permit for the project and, upon learning the permit was incorrect, failed or refused to amend, correct or re-permit the project in this case notwithstanding a written CWO to do so; that Honcor abandoned this contract or refused to perform after submitting a bid on work without legal excuse for the abandonment or refusal [adding insult to the injury of the Complainant] are each aggravating circumstances. The aggravating circumstances outweigh the mitigating circumstances in this case. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend Honcor’s License No: 167106 for two (2) days. 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 40 days from the date of that certification.

Done this day, January 24, 2019.

/s/ Randolph D. Wolfson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] Administrative Judicial Notice is taken of the entirety of the Registrar’s electronic and physical files in this matter. [2] Complainant’s Exhibit 1, “Agreement between Contractor and Owner.” [3] Ibid. [4] Id. [5] See, Registrar’s Record, “Rcc100 Jobsite Inspection Notes1.rtf.” [6] Agency Record, “Warning Letter Building Permit Contractor1.rtf.” [7] Agency Record, “Warning Letter Elements of Contract321158 B1.rtf.” [8] Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect that is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.. [9] A.R.S. § 32-1158(B): From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. . 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365. [10] Upon order of the ALJ, the record held open for filing of parties’ closing memoranda until January 4, 2019. [11] See, Registrar’s Record, “Rcc100 Jobsite Inspection Notes1.rtf,” supra. [12] See, ¶2 and ¶3, supra for a detailed listing of below workmanship standards items. [13] Complainant Exhibit 2. [14] Complainant Exhibit 3. [15] Complainant’s Exhibit 1. [16] It is noted that Complaint Exhibit 8 (line 602) is a record of a job meeting wherein the Permit Inspector directs Honcor: “Contractor will need to revise permit to include tub and shower. Permit has been approved for anew detached garage, not for dwelling use.” [17] Complainant’s Exhibit 1, “Agreement between Contractor and Owner,” supra. [18] See, Probe Specialists Home Inspections undated report, Complaint Exhibit 28. [19] See, Complainant Exhibit 3, supra. [20] Complainant Exhibit 7. [21] Complainant Exhibit 6. [22] Complainant Exhibit 9. [23] Complainant Exhibit 1, supra. [24] Complainant Exhibit 3, supra. [25] Complainant Exhibit 34. [26] See, Complainant Exhibit 2. [27] The square footage for the proposed two bedroom in the Plans is 1,300 sq. feet. [28] Complainant Exhibit 1, supra. [29] Ibid. The apartments have not been completed. [30] The Registrar’s public website reflects, contrary to Mr. Hohn’s testimony, that in Complaint number 2017-6199, a license suspension was imposed. [31] A KB-2 license includes contracting for projects of $2,000.00 or less, including materials and labor. By the terms of the, “Agreement between Contractor and Owner,” Complainant’s Exhibit 1, supra, the contract was for $85,600.00 – a sum far in excess of the KB-2 license authority. [32] See, Inspector Pennington’s JSI Notes, Registrar’s Record, “Rcc100 Jobsite Inspection Notes1.rtf.”, supra as set forth in full at ¶2, supra. [33] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [34] A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.”

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826