ALJDEC decisions subject to certification as final

2017A-4282-CHC-ROC · Registrar of Contractors · 2018-03-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Paul Craig Ysteboe,

COMPLAINANT,

v.

S I C Industries LLC,

License No. C-11.272987-C,

RESPONDENT.

No. 2017A-4282-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 28, 2017, at 8:30 a.m. and February 22, 2018, at 8:30 a.m.

APPEARANCES: Paul Craig Ysteboe (“Complainant”) appeared on his own behalf; S I C Industries LLC LLC (“Respondent”) appeared through Toni Lynn Sharp, its qualifying party/employee.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about May 12, 2011, the Arizona Registrar of Contractors (“the Registrar”) issued License No. C-11.272987-C for residential electrical contracting to Respondent. Toni Lynn Sharp is listed as Respondent’s qualifying party/ employee and J. Paul Sharp is listed as a member on the license.

On or about August 22, 2017, Complainant filed a complaint with the Registrar stating that Respondent had abandoned its contract to perform tenant improvements at the new location of Complainant’s business, Glendale Powder Coating, at 5262 N. 57th Avenue, Glendale, Arizona 85301. Complainant alleged that Respondent had failed to complete its contract in seven specific respects, as follows:

1. Remodel office to accommodate powder room and reception area. Not complete.

2. Provide sleeving ditch, test system, set meter. – Not complete.

3. Provide cement pads/covers for Air Compressors – Not started

4. Provide Motion Sensing LED lighting throughout office/shop – Not started

5. Set Media Blasting Dust Collector on pad outside with venting to new Blast Cabinet. – Not started

6. Plant move from 6051 N 56th AVE to 6262 N 57th AVE – Not started

7. Install lighting in new media blast cabinet – Not started

According to the complaint, Complainant had paid Respondent $30,850 of the $33,700 contract price.

Complainant attached to the complaint a “Plant Move Contract” that provided for the following scope of work:

This contract is for a general scope of work for [Respondent] to move the Glendale Powder Coating facility from their current address to their new building/facility.

Relocate and install existing dust collector, 2 air compressors and covers, 2 spray booths, and 2 ovens, including all electrical circuitry. At new building, replace existing lighting fixtures with motion sensing LED fixtures in the warehouse area and standard LED fixtures in the office/reception area. Install circuitry for lighting at new sandblast area. Re-run air lines in warehouse area.

Remove existing reception counter, including all electrical. Remove divider wall in existing office, including all electrical, to create new powder storage room, fill in existing doorways per owner to combine rooms. Install new reception area by front door.

The parties agree that they subsequently entered into a change order for Respondent to work with Southwest Gas Company to install a sleeve for a gas line at the new plant location.

Complainant also attached to the complaint Paul Sharp’s July 21, 2017 email, stating that “[a]t this point SIC Industries has decided to respectfully remove itself from this project and is exercising its right to stop work.”

The Registrar assigned the complaint to its Investigator, Jack Grimm, for investigation. On or about September 19, 2017, Investigator Grimm performed a jobsite inspection. Respondent did not attend the jobsite inspection.

On September 19, 2017, Investigator Grimm sent Respondent a letter, stating in relevant part as follows:

It appears that you may have operated beyond the scope of your C-11 license. I reviewed evidence which suggested that you bid on, contracted for, or performed work that would require a B-2 General Small Commercial Contractor and a C-37 Plumbing license.

Respondent did not respond to the September 19, 2017 letter. Investigator Grimm also sent a letter to Respondent, informing it that its contract did not contain all the elements required by A.R.S. § 32-1158(B).

On September 21, 2017, Investigator Grimm issued a Directive, which required Respondent to “[c]omplete work per contract and Change order #1 at 6262 N 57th Ave Glendale Az. 85301. All work needs to be permitted and inspected by the local building authority.” The Directive included the following admonition:

You may not perform or hire other contractors to perform work that is outside the scope of your license If any workmanship violations listed above are designated as outside the scope of your license then you may remedy those violations only by paying a properly licensed contractor hired by Complainant to correct your deficient workmanship or by reaching a financial settlement with Complainant.

The deadline in the Directive for Respondent to correct its work was on or before 5:00 p.m. on October 10, 2017.

Respondent did not comply with the Directive. Investigator Grimm sent the complaint to the Registrar’s Legal Department.

On October 17, 2017, the Registrar issued a Citation that charged cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32-1154(A)(16), and A.R.S. § 32-1154(A)(22).

Respondent filed a timely written answer to the Citation, denying any statutory violations and affirmatively alleging that all of Respondent’s interactions were with Complainant’s wife, Debbie, and that Complainant was not involved in the project.

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 December 28, 2017, and February 22, 2018. Complainant testified, presented the testimony of Sean Lapp, who had helped him on the project, and submitted one exhibit, which consisted mostly of Mr. Lapp’s emails to Mr. Sharp about Respondent’s unsatisfactory progress on the project. Respondent’s qualifying party/employee, Mrs. Sharp, testified. Investigator Grimm also testified.

Additional Hearing Evidence

Investigator Grimm testified that Complainant informed him at the September 19, 2017 jobsite inspection that he had hired a new contractor to complete the project and that the new contractor had obtained all necessary permits.

Investigator Grimm testified that Respondent had performed little electrical work on the project and that complaint item 1, remodeling the office by installing drywall and performing painting, which appeared to be complete, was beyond the scope of Respondent’s C-11 license.

Investigator Grimm testified that Complainant informed him that complaint item 2, the sleeving ditch, test system, and meter, was a non-issue because the utility did a direct bury of the gas line.

Investigator Grimm testified that the new contractor completed complaint item 3, the cement pads/covers for the air compressors.

Investigator Grimm testified that at the jobsite inspection, no motion-sensing LED lighting had been installed (complaint item 4), the set-blasting dust collector had not been started (complaint item 5), and no lighting had been installed in the new media blast cabinet (complaint item 7).

Investigator Grimm testified that moving Complainant’s equipment (complaint item 6) was not part of Respondent’s scope of work under the contract.

Mr. Lapp testified that he helped Complainant on the project and that Respondent only showed up to perform work when it wanted money. Mr. Lapp did not see $30,000 worth of work on the project. Mr. Lapp acknowledged, however, that he was not a contractor and that he had no experience in construction.

Mrs. Sharp testified that Southwest Gas Company’s inspector told her that Respondent did not need a plumbing license to install a sleeve for the gas line, only that Southwest had to inspect the gas line sleeve.

Mrs. Sharp testified that on or about July 10, 2017, after Mr. Lapp became involved in the project, relationships deteriorated between the parties. Mrs. Sharp testified that she had been dealing with Complainant’s wife, Debbie, but that Debbie started manifesting symptoms of psychological instability and was no longer available to help complete the project or resolve construction issues.

Mrs. Sharp testified that when Respondent terminated its contract, the only thing left was electrical.

Complainant disputed Mrs. Sharp’s account of the work that Respondent had completed on the project.

Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s prior record as shown on the Registrar’s public website on this date. Respondent’s license is current and in good standing. The Registrar has never disciplined or administratively suspended Respondent’s 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 contractor’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.R.S. § 32-1158(B)(8) requires contractors to include in their contracts with property owners or lessees “[t]he 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.” Because Respondent’s contract with Complainant did not include this term, Respondent was not entitled to terminate its performance under the contract and walk off the job after being paid $30,850 because Mr. Sharp did not feel that he could work with Mr. Lapp and/or Mrs. Sharp did not feel that she could work with Mrs. Ysteboe.

Investigator Grimm testified and Mrs. Sharp did not dispute that little electrical work had been performed on the project. Complaint items 4, 5, and 7 all involved electrical work, Respondent performed no work after July 21, 2017, when Mr. Sharp terminated the parties’ contract, but Respondent’s contract did not contain any term that would allow it to unilaterally terminate the contract. Therefore, Complainant established that Respondent abandoned its performance under the contract, thereby furnishing cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(1). However, because the legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages, Complainant must resolve his claim for damages caused by the abandonment in a court of competent civil jurisdiction.

Complainant did not present any evidence to establish that any of Respondent’s work did not comply with the Registrar’s or industry standards. Therefore, Complainant did not establish 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.

A.R.S. § 32-1101(A)(2) defines the term, commercial contractor, in relevant part as follows:

“Commercial contractor” is synonymous with the terms "commercial builder", "industrial builder" and "public works builder" and means any person, firm, partnership, corporation, association or other organization, or any combination, that, for compensation, undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid to, does himself or by or through others, or directly or indirectly supervises others, except within residential property lines, to [perform construction.]

(Emphasis added.) Respondent contracted and actually performed drywall work in the office and contracted to install a sleeve for the gas line.

Respondent’s C-11 commercial contractor’s license allows it to perform the following scope of work:

This classification allows the licensee to install, alter, and repair any wiring, related electrical material and equipment used in the generating, transmitting, or utilization of electrical energy less than 600 volts, including all overhead electrical wiring on public right-of-ways for signs and street decorations, and all underground electrical distribution systems of less than 600 volts serving private properties.

This classification also allows the licensee to in-stall, alter, and repair all outside, overhead, and underground electrical construction and all wiring in or on any building of less than 600 volts, but does not permit work in public right-of-ways.

Installing drywall in the office and installing a sleeve for the gas line were beyond the scope of Respondent’s C-11 license.

“‘Knowingly’ imports only a knowledge that the facts exist which bring the act or omission within the provisions of the statute using such word. It does not require any knowledge of the unlawfulness of the act or omission.” “‘Knowingly’ means, with respect conduct or circumstance described by a statute defining an offense, that a person is aware or believes that his or her conduct is of that nature or that the circumstance exists. It does not require any knowledge of the unlawfulness of the act or omission.” It has long been the law in Arizona and elsewhere, however, that “’[n]otice of facts and circumstances which would put a man of ordinary prudence and intelligence on inquiry is . . . equivalent to knowledge of all the facts a reasonably diligent inquiry would disclose.’”

Because Respondent should have known that installing drywall and installing a sleeve for the gas line were beyond the scope of its C-11 license, Complainant established grounds to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(16).

Complainant also established that Respondent did not comply with the Registrar’s September 21, 2017 Directive. Therefore, 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 ordered that on the effective date of the final order in this matter, Respondent S I C Industries LLC’s License No. C-11.272987-C shall be suspended for five 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 licenses, 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, March 7, 2018.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors