ALJDEC decisions subject to certification as final

2017A-5924-CHC-ROC · Registrar of Contractors · 2018-10-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 28, 2018 APPEARANCES: Mark Hartman, Complainant, Matthew W. Harrison, Esq., Counsel for the Complainant; Steve Lawton, Sr. Investigator, ROC; Samuel Lamke, Respondent and Qualifying Party; Keith Lalliss, Esq., counsel for the Respondent; Lori Forte and Juli Forte.

ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson _____________________________________________________________________ FINDINGS OF FACT

In response to an initial Complainant[1] filed on July 14, 2017[2] by Mark Ernest Hartman [hereinafter “Hartman”], on July 9, 2017 the Registrar’s Inspector Matt Gunstra mailed a notice to the Respondent of a Job Site Inspection to be conducted on August 11, 2017 at the Complainant’s residence. The Jobsite Inspection Notice was mailed by regular mail to the Respondent at its then listed address for the Respondent that was entered of record with the Registrar, to wit: Lion General Contractors LLC, 431 S Stapley Drive, Suite 27, Mesa, AZ 85204-2652.[3] The Respondent did not appear for the Job Site Inspection. On September 21, 2017, Registrar issued the Respondent a Directive along with a Corrective Work Order [CWO] contained therein.[4] The Registrar mailed copies of the Directive along with a Corrective Work Order to the Respondent at its then listed address for the Respondent that was entered of record with the Registrar. Of Lion General Contractors LLC, 431 S Stapley Drive, Suite 27, Mesa, AZ 85204-2652. On August 18, 2017, Mr. Gunstra mailed notice to both parties that the previously set date for the JSI was continued to September 14, 2017 to accommodate a conflict in Mr. Gunstra’s schedule. This August 18, 2017 notice was mailed to the Respondent at its address of record at Lion General Contractors LLC, 431 S Stapley Drive, Suite 27, Mesa, AZ 85204-2652.[5] The September 21, 2017 CWO in 2017A-3611-CHC-ROC stated: 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 provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on 10/6/17. [emphasis in original]. You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 13: flooring: not level, uneven cuts/edges at thresholds, exposed subfloor at corners and around fireplace Investigator’s Observation: See manufacturer installation instructions in case documents. I observed several issues with the wood flooring installation. The largest issue is that the flooring in the kitchen on both sides of the island is wavy or out of level by up to 1" in some areas. I used my 8' straight edge and the floor has humps over short distances that are out of minimum tolerance. The entire floor system in question is new construction that ties into existing framing. The MFR installation instructions provided by C state that all subfloor is to be level within 3/16" inside a 10' radius and is to be "level and flat". The current floor does not meet this standard. I observed 1/4" gaps at all of the exterior doors that need to be covered in some manner. The subfloor is visible which is not an acceptable finish condition. The MFR installation instructions suggest either an end cap or quarter round at all vertical surfaces such as doors. In addition at the front and rear exterior doors the planks are cut at different lengths and do not line up properly. It is unsightly. Several of the wall corners have wood planks that are over cut and the saw cut can be seen protruding [sic] from the baseboard. Finally, the wood flooring at the fireplace hearth is not cut to fit properly. The plank tongue should have been trimmed off the end and is still visible. The cut at the fireplace wall to hearth transition doesn't have a tight fit. The hearth is pre-existing and has an unusual grout line on the outside edge which causes a gap at the wood flooring. This may be outside the contractor's control but the wood flooring could have been trimmed to fit better.

Complaint Item 15: Addendum: poor quality drywall finish in den. Investigator’s Observation: I observed a few areas where the drywall is a little rough or a tape seam is visible.

Complaint Item 17: Addendum: Exterior and interior doors rub. Investigator’s Observation: I found that the side exterior door rubs quite a bit when closed and has scraped the adjacent door edge. This is not normal and the door should be adjusted. I cannot tell if it is a door issue or installation issue but it is below standard as it is not operating properly. Several interior doors rub the jamb as well. This is poor work.

Complaint Item 18: Addendum: Bathroom outlets and switches at different heights. Investigator’s Observation: The two outlets in the bath are almost 1/2" different in height. This is excessive and considered poor work. The outlets are at different heights than the light switch which I do not consider a violation.

Complaint Item 20: Addendum: inadequate insulation around attic access.

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 Respondent timely filed an Answer to the Complaint in case number in 2017A-3611-CHC-ROC on October 13, 2017. The Answer asserted that the CWO was never received by the Respondent. The answer admits the citation was mailed to the Respondent at its address of record but Respondent explained that the business address of the Respondent was not a good mailing address at the time of the Complaint because Respondent had been evicted from its address and mail was not being forwarded.[6] Eventually, after the Citation in 2017A-3611-CHC-ROC was sent, the Respondent filed a Notice of Change of Business Address with the Registrar. On October 10, 2017, the Registrar issued its Citation against the Respondent in case number 2017A-3611-CHC-ROC charging two alleged violations: A violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32- 1154(A)(3) and a violation of A.R.S. § 32-1154(A)(22).[7] On November 22, 2017, a second Compliant was filed by Hartman against Lion General Contractors LLC in case number 2017A-5924-CHC-ROC.[8] This Complaint, alleging poor work, involved the same project and the same parties as the Complaint in 2017-3611, but includes items alleged to have been discovered after the filing of the initial Complaint in 2017-3611.[9] On January 7, 2018, an Answer was filed for this Complaint by Respondent in 2017A-5924-CHC-ROC.[10] On December 1, 2017, Mr. Gunstra mailed notice to the parties of a Job Site Inspection in to be conducted in case number 2017A-5924-CHC-ROC on December 5, 2017. This notice was mailed to the Respondent at its new Registrar’s address of record at Lion General Contractors LLC, 730 S Horne, Mesa, AZ 85204-3324.[11] Mr. Gunstra’s findings from the JSI were: Respondent indicated that his license is currently suspended[12] for non-renewal (which it is) and that he cannot afford to settle financially with Complainant. I advised him that in order to be in compliance he will need to do so (or bring license current) or be cited and subject to a hearing to determine action against his license. He understood.[13]

Complaint Item 1: Hot water tank condensation drain not hooked up. Failed final inspection. Investigator’s Observation: I observed that the on demand water heater installed has a condensation drain with a temporary plastic tube running to a bowl. This was installed by Complainant after they found the drain was dripping on their floor and causing damage. I did note some water damage at the floor and baseboard. Photos provided by Complainant in their complaint documents show no drain attached to the water heater. I also noted that there is no drain present in the room for the condensate to be run to. It appears that Respondent installed the water heater without the MFR required pipe (see MFR instructions provided by Complainant) and no place to drain condensate to. The city failed this work as it does not meet code. Condensate must discharge to an approved location. I have substantiated poor work by Respondent. . . .

Complaint Item 6: Wall between family room and kitchen is not at an 90 degree angle. Investigator’s Observation: I observed that the short wall in the kitchen is out of square by over 1/4" in 10' which is the ROC standard for framing. Poor work substantiated. Governing Rule: Workmanship Rule: ROC Standard for Carpentry-Framing #4

On December 7, 2018, Mr. Gunstra issued a Directive along with a CWO in case number 2017A-5924-CHC-ROC with a compliance deadline of 5:00 p.m. on December 21, 2017.[14] The Directive indicated 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 December 21, 2017. [emphasis in original]. You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 1: Hot water tank condensation drain not hooked up. Failed final inspection. Directive: Water heater condensate drain pipe shall be installed per manufacturer instructions and discharge to an approved location per applicable building code.

Complaint Item 4: Brace on outside beams is buckling. Directive: Straps should be installed in a manner consistent with their design and per manufacturer requirements. Some settlement cracking is present at wood trim.

Complaint Item 6: Wall between family room and kitchen is not at an 90 degree angle. Directive: Framed walls shall be square with each other within ¼” in 10’.

On December 22, 2017, the Registrar issued its Citation against the Respondent in case number 2017A-5924-CHC-ROC charging two alleged violations: A violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32- 1154(A)(3) and a violation of A.R.S. § 32-1154(A)(22).[15] On January 11, 2018, the Registrar issued a Notice of Hearing setting a hearing on February 28, 2018. The hearing was, by motion, continued until November 28, 2018. Case Numbers 2017A-5924-CHC-ROC and 2017A-3611-CHC-ROC were consolidated and at hearing they were heard together. At the hearing, Chief Investigator Steve Lawton testified that a former Registrar’s Investigator, Matt Gunstra conducted most of the investigation in this case and filed detailed notes of his findings. Mr. Gunstra is no longer employed by the Registrar and, for that reason, Mr. Lawton testified regarding Mr. Gunstra’s findings.[16] Mr. Lawton testified that he had reviewed Mr. Gunstra’s files and notes in this case and that Mr. Lawton also conducted a pre-hearing inspection at the Complainant’s home. He stated, therefore, he was familiar with the facts and circumstances of this case. Mr. Lawton testified that a Complaint was received from the Complainant on or about November 27, 2017 and was referred to Matt Gunstra for investigation. Mr. Gunstra provided notice to the parties by mail that a Job Site Inspection [JSI] was to be conducted at the Complainant’s home on December 5, 2017.[17] Respondent did not appear. Mr. Lawton testified consistently with Mr. Gunstra’s findings contained in Mr. Gunstra’s JSI notes[18] and the CWOs in both Case Numbers 2017A-5924-CHC-ROC and 2017A-3611-CHC-ROC. Mr. Lawton indicated that each of the items listed in the September 21, 2017 CWO and the December 7, 2018 CWO involved Respondent’s work that failed to meet minimum workmanship standards contrary to A.A.C. R4-9-108. He testified that at the August 11, 2017 JSI the Respondent did not participate and at the December 5, 2017 JSI, both the Complainant and Respondent were present. Mr. Lawton stated that on September 25, 2018, he conducted a Pre-Hearing Inspection of the job site, He found some of the items had been corrected but that Complaint item #13[19] from the September 21, 2017 CWO and Complaint item #6 from the December 7, 2018 CWO remained out of compliance.[20] Complainant Hartman testified that he had engaged Respondent to build out an extension on his existing home to increase it from 1,200 square feet to 2,200 square feet. The job involved everything from concrete pour for the improvement slab to some interior work on both the existing home and the new extension. With regard to Mr. Hartman’s 1st Complainant, Mr. Hartman said that virtually no effort whatsoever was made to comply with any of the CWO of September 21, 2017 in 2017A-3611-CHC-ROC before the deadline date. As to his 2nd Complaint, Mr. Hartman, explained that when he moved back into his home after filing the 1st Complainant, new issues were discovered with Respondent’s work and, upon finding these new issues, the 2nd Complaint was filed. Mr. Hartman advised that just as before, Respondent did no repairs in compliance with the December 7, 2018 CWO in case number 2017A-5924-CHC-ROC before its deadline of December 21, 2018 ran. Mr. Hartman discussed Respondent’s contention that it was denied opportunity to perform compliance repairs because the Historical Society had placed a stop work red tag on the job because of certain compliance issues that were raised by the Historical Society. Mr. Hartman admits there was issue taken by the Historical Society and that a stop work tag was placed on the project. However, he noted that the stop work tag did not occur until December 22, 2018, a day after the deadline for compliance on the last CWO of December 21, 2018 in case number 2017A-5924-CHC-ROC. Thus, he indicated, there is no evidence whatsoever of either Mr. Hartman denying access for Respondent to do the repairs ordered by the September 21, 2017 CWO in 2017A-3611-CHC-ROC nor was there a denial of access occasioned by the stop work tag issued by the Historical Society a day after the CWO deadline ran in CWO of December 7, 2018 in case number 2017A-5924-CHC-ROC.

Samuel Lamke, Respondent and Qualifying Party, testified for the Respondent. Mr. Lamke discussed in his testimony that he did not receive notice of the July 14, 2017[21] Complaint, the July 9, 2017 notice of the August 11, 2017 Job Site Inspection or of the September 21, 2017 CWO because the business was evicted from its 431 S Stapley Drive, Suite 27, Mesa, AZ business address and not all of his mail was being forwarded.[22] Mr. Lamke stated that first learned of the Complaint, the JSI and the CWO in case number 2017A-3611-CHC-ROC when he received the Citation in 2017A- 3611-CHC-ROC on October 10, 2017. Thereafter, Respondent filed a Notice of Change of Address with the Registrar. Mr. Lamke admitted in Direct and Cross-Examination that Respondent did not comply with either the September 21, 2017 CWO deadline for compliance or the deadline for compliance in the December 7, 2018 CWO. As to its failure of compliance with the December 7, 2018 CWO, Mr. Lamke claimed access was not permitted to do the CWO repairs because the Historical Society had placed a stop work order on the site for Historical Society regulation violations. Mr. Lamke admitted that the Respondent received actual notice of the job site being “red tagged” by the Historical Society on December 22, 2017, the day after the December 21, 2018 CWO deadline. Mr. Lemke admits that item #6 of the September 21, 2017 CWO and item #13 of the December 7, 2018 CWO are not and still remain unrepaired and out of compliance with the CWOs.

CONCLUSIONS OF LAW

The Registrar of Contractors has jurisdiction over Complaint Nos. 2017A- 5924-CHC-ROC and 2017A-3611-CHC-ROC under the authority of A.R.S. § 32- 1101, et seq., a section that enables the Registrar to impose disciplinary sanctions against licensees for the violations noted at A.R.S. § 32- 1154(A). Respondent Lion General Contractors LLC is a licensee. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3). A preponderance of the evidence is: The 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 . Black’s Law Dictionary 1373 (10th ed. 2014). Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). “Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B). The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). The preponderance of the evidence does not show that Respondent is unscrupulous, unqualified, or financially irresponsible. Ariz. Rev. Stat. section 32-1154(A) provides that The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:…

3. Violation of any rule adopted by the registrar….

22. Failure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.

Ariz. Admin. Code section R4-9-108(A) provides that “A contractor shall perform all work in a professional manner.” The copies of corrective work order and the Notice of Hearing that the registrar mailed to the Respondent at its address of record and at the address on its written contract[23]were reasonable. In accordance with A.R.S. §41-1092.04 and §41-1092.05(D), Respondent is deemed to have received notice of the July 14, 2017[24] Complaint, the July 9, 2017 notice of the August 11, 2017 Job Site Inspection or of the September 21, 2017 CWO. Respondent did violate A.R.S. 32-1154(A)(3) on this job by violating the workmanship standards as specified in A.A.C. R4-9-108. Respondent did violate A.R.S 32-1154.(A)(22) by failing to comply, without valid justification, with the September 21, 2017 CWO and the December 7, 2018 CWO before their indicated deadlines, which deadlines are determined to be a reasonable amount of time for compliance. Review of the Respondent’s license history[25] is found to be neither aggravating nor mitigating. Pursuant to A.R.S. §32-1154(D), the Registrar may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of A.R.S. §32-1154(A)(22). By its failure to comply with the ROC’s September 21, 2017 CWO and December 7, 2018 CWO, the ROC should impose a civil penalty of $500.00.[26]

RECOMMENDED ORDER IT IS RECOMMENDED it be ordered that on the effective date of this order, the license of Lion General Contractors LLC, License No: 300010, shall be suspended for two (2) days. FURTHER IT IS RECOMMENDED it be Ordered that in accordance with A.R.S. §32-1154(D), a civil penalty in the amount of $500.00 is imposed against Lion General Contractors LLC , License No: 300010. FURTHER IT IS 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 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 40 days from the date of that certification.

Done this day, October 18, 2018. /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 files in these consolidated cases 2017A-5924-CHC-ROC and 2017A- 3611-CHC-ROC... [2] Agency Record in 2017-3611, “Intake Complaint Submittal1.pdf” in 2017A- 3611-CHC-ROC. [3] Agency Record in 2017-3611, “Rcc012 Formal Inspection Jobsite.rft” in 2017A-3611-CHC-ROC. [4] Agency Record in 2017-3611, “Rcc14 Corrective Work Order.rtf.” [5] Agency Record in 2017-3611 “Rcc063 Re Schedule of Job Site Inspection.rtf.” [6] See, Agency Record in 2017-3611, “Lg Citation1.rtf.” “I am part owner in the property to which address is on file with the ROC. My co-owner with the help of the Hartman’s sales person illegally locked me out of my offices and changed the lock on the mailbox. I did not change my address with the ROC since it was my intentions to continue my work from the address on file with the ROC upon settling these legal problems. Had I known they were going to file a complaint I would have called the ROC with a temporary alternate address.” [7] Agency Record in 2017-3611,Rch424 Citation Multiple Charges Workmanship W221.rtf,” [8] Agency Record in 2017A-5924-CHC-ROC, “Intake Complaint Submittal1.pdf.” [9] Cases 2017A-5924-CHC-ROC and 2017A-3611-CHC-ROC.were consolidated by the Registrar and were heard together before the Office of Administrative Hearings. [10] Agency Record in 2017A-5924-CHC-ROC Lg Citation1.pdf.” [11]Agency Record in 2017A-5924-CHC-ROC, Rcc012 Formal Inspection Jobsite1.rtf.” [12] Respondent’s Answer, page 1 in 2017-3611 notes that it renewed its Contractors License on December 19, 2018 [13] [14] Agency Record in 2017A-5924-CHC-ROC, Rcc14 Corrective Work Order1.rtf.” [15] Agency Record in 2017A-5924-CHC-ROC, “Rch424 Citation Multiple Charges Workmanship W221.rtf,” [16] Mr. Lawton was the direct supervisor of Matt Gunstra at the time of Mr. Gunstra’s investigation in this case. [17] The Notice of Job Site Inspection was sent to the Respondent’s address of record of “Lion General Contractors LLC, 730 S Horne, Mesa, AZ 85204- 3324” See, Agency Record, “Rcc12 Formal Inspection Jobsite1.rtf.” [18] Agency Record in 2017A-5924-CHC-ROC, “Rcc Job Site Inspection Notes1.rtf.” [19] Complaint item #13: I observed several issues with the wood flooring installation. The largest issue is that the flooring in the kitchen on both sides of the island is wavy or out of level by up to 1" in some areas. …The entire floor system in question is new construction that ties into existing framing. The MFR installation instructions provided by C state that all subfloor is to be level within 3/16" inside a 10' radius and is to be "level and flat". The current floor does not meet this standard. I observed 1/4" gaps at all of the exterior doors that need to be covered in some manner. The subfloor is visible which is not an acceptable finish condition. The MFR installation instructions suggest either an end cap or quarter round at all vertical surfaces such as doors. In addition at the front and rear exterior doors the planks are cut at different lengths and do not line up properly. It is unsightly. Several of the wall corners have wood planks that are over cut and the saw cut can be seen protruding (sic) from the baseboard. Finally, the wood flooring at the fireplace hearth is not cut to fit properly. The plank tongue should have been trimmed off the end and is still visible. The cut at the fireplace wall to hearth transition doesn't have a tight fit. The hearth is pre-existing and has an unusual grout line on the outside edge which causes a gap at the wood flooring…. [20] Complaint Item #6: Wall between family room and kitchen is not at an degree angle. Directive: Framed walls shall be square with each other within ¼” in 10’.(sic) [21] Agency Record in 2017-3611, “Intake Complaint Submittal1.pdf” in 2017A- 3611-CHC-ROC. [22] No evidence corroborating these evens was introduced. [23] “Intake Submittal1.pdf”, attachment page 3. [24] Agency Record in 2017-3611, “Intake Complaint Submittal1.pdf” in 2017A- 3611-CHC-ROC. [25] Information regarding Respondent’s License History was determined by review of the Registrar’s Public Website. [26] R4-9-131. Assessment of Civil Penalties: In assessing a civil penalty as provided for under A.R.S. § 32-1166(A), the Registrar shall give due consideration to whether the person cited or any individual acting on that person's behalf has committed one or more of the following acts in determining the gravity of the cited violation: . . . 8. Performed work that failed to meet minimum acceptable trade or industry standards or practices or was not performed in a good and workmanlike manner.

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