ALJDEC decisions subject to certification as final
2017A-5038-CHC-ROC · Registrar of Contractors · 2018-06-20
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
John Cipolla,
COMPLAINANT,
v.
Floor Store, Inc. ,
License No: 233001
RESPONDENT.
No. 2017A-5038-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: May 10, 2018, with the record held open until May 31, 2018 to allow for post-hearing briefs.
APPEARANCES: Thomas Swift, Esq. appeared on behalf of Complainant John Cipolla. Nat Clarkson, Esq. appeared on behalf of Respondent Floor Store, Inc.
ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson
_____________________________________________________________________
FINDINGS OF FACT
On March 22, 2018, the Registrar of Contractors, (“Registrar”), issued a Notice of Hearing setting the above-captioned matter for hearing on May 10, 2018, by the Office of Administrative Hearings in Phoenix, Arizona.
Respondent Floor Store, Inc. (“Floor Store”) holds license 233001 issued by the Registrar.
Robert Galvan is Floor Store’s qualifying party.
The Notice of Hearing shows that the hearing was set to consider the charges made in the Citation and Complaint.
Through the Citation, the Registrar alleges that Floor Store may have violated A.A.C. Rule 4-9-108 and Ariz. Rev. Stat. sections 32-1154(A)(3), (A)(9), and (A)(12). The Citation shows that if the Administrative Law Judge finds that any of the alleged charges are valid, the Registrar may suspend or revoke Floor Store’s license.
On or about June 10, 2017, Complainant John Cipolla and Floor Store entered into a contract wherein Floor Store would install new tile in Mr. Cipolla’s home.
Floor Store did not provide Mr. Cipolla with a contract which advised him
of his right to file a complaint with the Registrar against Floor Store for an alleged violation of Ariz. Rev. Stat. section 32-1154(A) within the time allowed by Ariz. Rev. Stat. section 32-1155(B). Floor Store did not provide Mr. Cipolla with a contract which provided the Registrar’s telephone number or website address.
On or about July 5, 2017, Floor Store began work under the contract.
Floor Store installed tile in Mr. Cippolla’s home.
On July 21, 2017, Mr. Cipolla executed two separate work orders stating that Floor Store’s work was completed to his satisfaction. See Exhibit 4.
Mr. Cipolla subsequently informed Floor Store that he was not satisfied with the work that Floor Store performed in his home.
Therefore, Floor Store demolished the work.
On September 8, 2017, Mr. Cipolla told Floor Store that the tile removal was going “smoothly and was done quickly and efficiently.” See Exhibit R-7.
Floor Store installed new tile after demolishing the previous installation.
Mr. Cipolla expressed dissatisfaction with the second demolition and Floor Store demolished the second installation.
On or about October 4, 2017, the Registrar received a Complaint from Mr. Cippola alleging that Floor Store performed poor work pursuant to a home remodeling contract.
On November 6, 2017, Registrar Investigator Beau Cruz, (“Investigator Cruz”), conducted a job-site inspection in response to the Complaint. Investigator Cruz’s job-site inspection notes provide, in relevant part, as follows:
Participating at jobsite inspection are: Thomas Swift (Attorney for the Complainants), Stephen Banta (Attorney for the Respondent) and, Marla Dutton (Director of Operations/Floor Store Inc.).
It should be noted that tile was removed from floor since second floor demolition performed by of residence prior to jobsite inspection by ReTile (licensed subcontractor).
It should be noted that research by this investigator has shown that [Respondent] also subcontracted work to a Mr. Harold Dickerson and Mr. Charles Winter (both unlicensed entities). Informed [Respondent] that if my research into these individual shows that they are unlicensed, he would be cited for [aiding] and [abetting] unlicensed individuals.
Respondent and counsel presented willingness to resolve complaint and, several options presented at the jobsite inspection. Complainants [sic] counsel stated he would prefer to discuss such with his clients (complainants), prior to making determination. This investigator requested from counsels that if such is achieved, this investigator would require copy of properly executed settlement agreement is provided for the record.
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On November 7, 2017, Investigator Cruz issued a Directive to Floor Store. However, Investigator Cruz did not require that Floor Store install new tile under the Directive. The November 7, 2017 Directive provided, in relevant part, as follows:
After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a Citation, discipline of your license and a civil penalty pursuant to A.R.S. § 32-1154(E) of up to $500.00. Failure to comply with this Directive may also be treated as an aggravating factor should the Registrar pursue discipline of your license You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on November 24, 2017.
You are hereby directed to remedy the following violations by the appropriate means:
Complainant 6: Tear out #3- is not final yet
Respondent is to ensure that all tiles have been removed, and substrate is level so as to ensure proper surface to install new tile.
Complaint Item 7: All 3 total house tile tear outs with Jackhammers is causing additional damage to our home
Damage (scratches/nicks/loose trim pieces) noted to outer skin of Kitchen Island and missing baseboards, toe kicks for kitchen cabinets scratched due to tear-outs, damaged/loose baseboards noted throughout the house due to tear-outs, damage to movable/unsecured kitchen/breakfast area cabinet structure that also has countertop dislodged from cabinet structure, damage to wall south (S) wall of guest bathroom as well as loose/damaged base tiles noted in the bathroom area, cracked toilet tank in Master Bathroom, damaged trim casing on latch jamb side of Master Bedroom/Bathroom closet door and, damaged wall and base tile in Master Bathroom toilet room on the inside by higher jamb side of door. There was also damage to walls and doors throughout house due to two complete tile tear-outs in the structure. Damage noted was consistent with tile removal and, respondent did admit at the jobsite inspection that all baseboards would be replaced and that such was damaged with the tear-outs.
The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.
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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.
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19. The Registrar extended the deadline for compliance under the Directive to December 8, 2017.
20. Mr. Cipolla informed Floor Store that it would provide Floor Store with bids from other contractors so that Floor Store could pay for another contractor to install the tile. See Exhibit R12.
21. On November 17, 2017, Mr. Cipolla provided bids but also requested that Floor Store pay $55,835 as a settlement.
22. On November 28, 2017, Floor Store offered to perform the work in the Directive and pay for another contractor to install tile. See Exhibit R-15.
23. On November 29, 2017, Mr. Cipolla rejected Floor Store’s November 28, 2017 offer stating that the offer only addressed those items listed in the Directive. See Exhibit R-16. Mr. Cipolla stated that if Floor Store only wanted to address the Directive, it would need to identify other parties who were jointly liable. See id.
24. On November 30, 2017, Floor Store informed Mr. Cipolla that wanted to make the corrections listed in the Directive. Floor Store informed Mr. Cipolla that it intended to start work on December 3, 2017 and that Mr. Cipolla needed to specify a specific brand, color and sheen of paint for touch up work. See Exhibit R-19.
25. On December 4, 2017, Mr. Cipolla rejected Floor Store’s offer because he insisted that the baseboards be installed after the tile. However, tile installation was not a part of the Directive. Mr. Cipolla requested that Floor Store offer a monetary settlement.
26. On December 4, 2017, Floor Store offered a monetary settlement.
27. On December 8, 2017, Mr. Cipolla informed Floor Store that it was rejecting the offer made in the December 4, 2017 e-mail because it was limited to the items listed in the Directive.
28. On December 8, 2017, Mr. Cipolla informed Floor Store that it was rejecting its offer because it only addressed the items listed in the Directive. The December 8, 2017, provided, in relevant part, as follows:
Mr. and Mrs. Cipolla have given serious consideration to the offer in your December 4, 2017 email, but in the end they have decided to reject the piecemeal approach to settlement underlying that offer. The offer only addresses matters in the [Directive]. By its nature, the [Directive] is limited in scope. ...............
The Cipollas continue to believe that the way to resolve this is as Inspector Cruz suggested: a global settlement of all damage claims. To enter into a partial settlement does not make since to them. It does not bring mattes to a conclusion. They (along with the Floor Store) will continue to incur costs in order to resolve the balance of the dispute and will continue to have to deal the the frustration of not having all their damages addressed.”
29. On December 26, 2017, Investigator Cruz completed a compliance
inspection and determined that Floor Store had not complied with the Directive.
30. Floor Store filed a timely appeal to the Citation.
31. The matter was referred to the Office of Administrative Hearings for an
evidentiary hearing.
32. A hearing was held on May 10, 2018.
33. At hearing, Mr. Galvan testified on behalf of Floor Store. Mr. Galvan has 30 years of experience in installing flooring. Mr. Galvan worked with others professionals to help write the Registrar’s Workmanship Standards Registrar’s prior Director. Mr. Galvan was aware that the independent contractors that he hired unlicensed independent contractors to work on Mr. Cipolla’s home. However, Mr. Galvan did believe that it was a violation of the Registrar’s rule to hire unlicensed independent contractors because the contractors were working for him and Floor Store is licensed.
34. Mr. Cipolla testified at hearing that he never denied Floor Store or its independent contractors access to his home.
35. Harold Dickerson was a ceramic tiler and is now retired. Mr. Dickerson was not licensed. Mr. Dickerson was hired by Floor Store to tear out ceramic tile in Mr. Cipolla’s home. Mr. Dickerson wore a Floor Store shirt when he worked at Mr. Cipolla’s home. Mr. Dickerson did not believe that he had to be licensed to perform the work. No one ever told Mr. Dickerson anything about an attempt to “trick” the system. Mr. Dickerson believed that he performed good work in Mr. Cipolla’s home.
36. Charles William Winters II is an installer and has never been licensed.
Mr. Winters believed that he was employed by Floor Store and was told to wear a Floor Store shirt. Mr. Winters did not believe that he was doing anything wrong.
Mr. Winters testified that he was not attempting to “get around” the system.
37. Mr. Cipolla contended in his post hearing brief that Floor Store was provided an opportunity to correct its work. Mr. Cipolla contended in his written closing argument, “As addressed below, Homeowner disputes that there was a denial of access. However, access is treated differently when the issue is a workmanship violation as opposed to the failure to comply with a directive. Denial of access after the issuance of a directive is a defense to a charge under ARS §32- 1154(A)(22). Access is more nuanced in the context of a charge under ARS §32-I l 54(A)(3). In the context of a workmanship violation, a contractor (1) must be given an opportunity to inspect the work and (2) be provided at least one opportunity to correct the workmanship defect. The words "without valid justification" are not included in ARS §32-l l 54(A)(3). Instead, ARS §33-1155(C) provides:
The registrar shall not issue a citation for failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards if either:. I. The contractor is not provided an opportunity to inspect the work within fifteen days after receiving a written notice from the registrar. 2. The contractor's work has been subject to neglect, modification or abnormal use.
For a workmanship violation, the "access" afforded a contractor is the opportunity to inspect the work. Here, the Contractor was afforded that opportunity. Contractor's qualifying party, attorney, and director of operations all attended the job site inspection”.
38. Floor Store argued in its post-hearing brief, “Arizona law supports the proposition that The Floor Store had a right to try to perform the work set forth in the Directive. Because Cipolla denied The Floor Store the right to perform that work, the Registrar cannot find that The Floor Store committed workmanship violations that require any discipline of its contractor’s license”.
39. Floor Store contended in its post-hearing brief, “The Directive’s language clearly expects The Floor Store to act after receiving the Directive, regardless of any actions that The Floor Store took before receiving the Directive. The Directive states: “You are hereby directed to remedy the following violations by the appropriate means.” The Directive then directed The Floor Store to complete the tear out of the tile (complaint item #6) and to repair damage that had resulted from the tile tear out (complaint item #7).5 In the Directive, the Registrar then makes an authoritative (and final) statement regarding all other workmanship violations: “The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.”
40. Floor Store argued in its post hearing brief, “In its Substantive Policy Statement 2017.017 (the “Policy”), the Registrar supports The Floor Store’s position, while entirely rejecting Cipolla’s. The Policy shows that the Registrar recognizes that a general duty of notice and opportunity to cure applies in matters that come before it:
A breach cannot be said to be material if it is curable, notice to cure is given, and prompt steps are taken to cure or to offer assurances of cure. The right of a breaching party to be given an opportunity to cure its own material breach is an ancient equitable principle.... Cure is relevant to materiality by virtue of its focus on elimination of the breach and its implied assurance of intent to tender adequate future performance.... Providing a cure notice of curable breaches deemed by the nonbreaching party to be sufficiently material to warrant termination for cause is a fundamental prerequisite to termination.... Unless expressly waived, the right to cure is implied in every contract as a matter of law.” Based in part on that principle, the Registrar reiterates its policy regarding a homeowner’s denial of access: “[It] is recognized that lack of access impinges on one party’s ability to defend itself and utilizing the benefits of the Registrar of Contractors is a privilege. Therefore, it is recommended that the Registrar dismiss complaints in which access is denied.”
41. Floor Store contended in its post-hearing brief, “The Directive’s language, as well as these (and many other) cases, establishes that: i) the only workmanship violations at issue in a citation are those which the Registrar included in a work directive; and ii) those alleged violations cannot form the basis for disciplining a contractor’s license unless the contractor was afforded the opportunity to comply with the directive.”
42. Administrative notice is taken of Floor Store’s prior License record on
June 20, 2018. Such prior License record reflects that Floor Store’s License No. 233001 was first issued on May 6, 2007, and is current and that Floor Store has had no prior discipline. Such prior License record shows that there is one open complaint against Floor Store’s license. Floor Store’s lack of prior discipline is considered a mitigating factor in imposing discipline.
CONCLUSIONS OF LAW
This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-
1154(A).
The burden of proof at an administrative hearing falls to the party
asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119.
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).
4. The preponderance of the evidence does not show that Floor Store violated Ariz. Rev. Stat. section 32-1154(A)(9) because there was insufficient evidence presented to show that Floor Store hired and worked with the unlicensed contractors to evade Ariz. Rev. Stat. section 32, chapter 10.
5. The preponderance of the evidence shows that Floor Store violated
Ariz. Rev. Stat. section 32-1158(B) by failing to provide Mr. Cipolla with a written contract which advised him of his right to file a complaint with the Registrar against Floor Store for an alleged violation of Ariz. Rev. Stat. section 32-1154(A) within the time allowed by Ariz. Rev. Stat. section 32-1155(B). Furthermore, Floor Store did not provide Mr. Cipolla with a written contract that advised him of the Registrar’s telephone number or website address.
6. The preponderance of the evidence shows that Mr. Cipolla would not
accept Floor Store’s compliance with the Directive or a financial settlement limited to the problems listed in the Directive. Although Floor Store continuously informed Mr. Cipolla that it wanted to make repairs to his home, the evidence shows that Floor Store’s attempts were rejected because Mr. Cipolla was interested in reaching a settlement that was not limited to the Directive.
7. Floor Store was not given an opportunity to correct its work after the Directive was issued. The Registrar may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation cannot be remedied by corrective work. However, because construction is not a perfect art, generally, a contractor must be afforded an opportunity to correct its work before its license may be suspended as a result of the poor work.
8. The Directive’s language, as well as these (and many other) cases, establishes that: i) the only workmanship violations at issue in a citation are those which the Registrar included in a work directive; and ii) those alleged violations cannot form the basis for disciplining a contractor’s license unless the contractor was afforded the opportunity to comply with the Directive Ariz. Rev. Stat. section 32-1154(A)(3), namely A.A.C. R4-9-108. This recommendation is without prejudice to Mr. Cipolla’s right to establish a civil claim against Floor Store for monetary damages in a court having competent jurisdiction.
RECOMMENDed order
Based on the foregoing, it is recommended that within thirty days of the effective date of the final order, Respondent shall provide to the Registrar copies of its form contract that has been revised to comply with the requirements of Ariz. Rev. Stat. § 32-1158(B). If Respondent fails to provide proof that it has so revised its form contracts, it is recommended that Respondent’s license be suspended for three days.
Done this day, June 20, 2018
/s/ Velva Moses-Thompson
Administrative Law Judge
Transmitted electronically to:
Jeffrey Fleetham, Director
Registrar of Contractors