ALJDEC decisions subject to certification as final

2017A-783-CHC-ROC · Registrar of Contractors · 2017-06-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Dr Allison M Pritchard,

COMPLAINANT,

v.

Environmental Strategies Inc ,

License No: 083930, 084002, 084001

RESPONDENT.

No. 2017A-783-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 6, 2017

APPEARANCES: Allison M. Pritchard, Chris Pritchard, Complainants, James

Frisch, Esq. attorney for the Complainants; Ken Goodman, Respondent and Qualifying Party, Evan Thompson, Esq., attorney for the Respondent; Arlo Houston, ROC Investigator

ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson

_____________________________________________________________________

An evidentiary hearing having been set in the above-captioned matter, evidence and testimony having been presented, based on the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT

On, April 10, 2017 the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for an evidentiary hearing on May 25, 2017. The matter was continued upon Motion of the Respondent to June 6, 2017 at the Office of Administrative Hearings whereupon hearing was conducted.

Respondent Environmental Strategies, Inc., [hereinafter “ESI”] holds license numbers 083930, 084002, 084001 issued by ROC. Ken Goodman is ESI’s Qualifying Party.

Complainants are the owners of residential real estate located at 4204 North Soldier Trail, Tucson, Arizona [hereinafter “The Home”]. The Home sustained extensive damage from a May 24, 2013 fire. State Farm Insurance Company [hereinafter “State Farm”] covered the fire loss to The Home and its contents,

ESI entered into a written agreement on July 29, 2013 to abate asbestos, demolish fire damaged areas and undertake other action to restore The Home from the fire damage sustained. [See Exhibits C-1 and C-2].

ESI completed the asbestos abatement and other services called for by the July 29, 2013 agreement.

On April 1, 2015, ESI entered into another written agreement with Dr Allison M. Pritchard wherein “...reconstruction of the house on the subject property, substantially destroyed by fire on May 24, 2013” was the stated scope of work [See Complainant’s Exhibit 12].

Combining payments for both the July 29, 2013 and April 1, 2015 agreements, ESI was paid a total of $141,195.00. ESI invoiced Dr. Pritchard a total of $86,551.00 for services, materials and costs. [See, Exhibits C-11 and C-14].

At the hearing Mr. Ken Goodman, Qualifying Party herein, testified that ESI provided no services to Dr. Pritchard under the April 1, 2015 agreement.

Mr. Goodman testified that the excess payment over invoiced charges in the amount of $54,844.00 received by ESI belonged to ESI. The $54,844.00 is attributed by Mr. Goodman to the value of the excessive time and expertise Mr. Goodman expended on this project. Neither the July 29, 2013 nor the April 1, 2015 agreements make provision for charging Dr. Prichard for Mr. Goodman’s time or expertise.

Mr. Goodman has no accounting available for his time expended on this project.

The Notice of Hearing in this matter shows that the hearing was set to consider the Complainant’s February 9, 2017 complaint. and the charge made in the March 21, 2017 citation

In response to the complaint, ROC Inspector Arlo Houston scheduled and conducted a jobsite inspection on March 1, 2017. The Complainant was present for the formal inspection. No representative from ESI was present for the formal inspection. Mr. Houston testified that although some of the specified allegations were unsubstantiated, it was his opinion that the project had been abandoned by ESI.

On, March 24, 2017, the ROC issued a citation against the ESI.

The citation alleges that ESI may have violated A.R.S. §32-1154(A)(1). The citation shows that if the Administrative Law Judge finds that any of the alleged charges are valid, ROC may suspend or revoke ESI.’s license.

ESI timely filed its written Answer on April 5, 2017 which asserted a general denial of the ROC allegations in the citation.

State Farm Insurance steadfastly refused to approve ESI’s proposed restoration work under the April 1, 2015 agreement.

Although ESI made repeated effort to move State Farm forward for approval, State Farm never did approve ESI’s proposed work under the April 1, 2015 agreement.

ESI was

...tremendously delayed and we were not able to start any work because the contents were still in the house....The first Restoration Company was let go after several months and I believe another company began inventory of the contents for removal, however, this did not occur until I believe December of 2013 or January of 2014.... Finally, this past May of 2014, we mobilized and began demolition activities after the last of the contents were removed from the house....I had to hire a structural engineer to evaluate and document the structural .... It took several weeks to get the reports from the Structural Engineer and then interpret the changes and put costs together to complete the work. There were claims by Roger Whalen, State Farm's Representative, as to the validity of the structural reports and whether the work needed to be done at all, even though it was clearly evident that the structural framing members exhibited signs of fire damage. These problems ...took six weeks to resolve.

Inasmuch as State Farm had not approved payment for ESI to move forward on construction, on March 11, 2015 ESI forwarded to Dr. Pritchard a proposed amendment to the April 1, 2015 agreement which provided:

Should the Insurance Company declare that the monetary limits on your policy does not cover the added costs as detailed in our Contract dated March 10th, 2015, then by signing this Supplemental contract, you are not liable or obligated to pay for nor will we perform the additional work.

The Prichards did not sign or return the March 11, 2015 proposed amendment.

On June 2, 2015, Mr. Goodman received notice of the approval of the building permit on this project from Pima County, Arizona.

On August 18, 2015, ESI learned that another contractor had taken over the Complainant’s project.

ESI was unable to get responses from Dr. Pritchard when ESI enquired whether it had been replaced by another contractor.

Dr. Pritchard testified that the Complainant did hire another contractor to handle the work contracted for by ESI.

CONCLUSIONS OF LAW

The Registrar of Contractors has jurisdiction over Complaint No. 2017A-783-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). Environmental Strategies, Inc. is a licensee.

The burden of persuasion generally at an administrative Hearing falls to the party asserting a claim, right or entitlement, or an Agency seeking to impose a penalty. Further, the standard of proof is that of the “preponderance of the evidence.” Proof by a preponderance means that the evidence is sufficient to persuade the finder of fact that the proposition is “. . . more likely true than not.” The evidence taken as a whole must convince the decision maker that the party who bears the overall burden of persuasion, in this case Dr. Prichard, is more probably correct on the issue(s) in dispute.

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).

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: .... 1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

ESI abandoned the April 1, 2015 project bid to Dr. Prichard.

ESI was unable to start or complete the work it bid under its April 1, 2013 agreement for a combination of causes, none of which are caused by ESI:

State Farm engaged two businesses to inventory, remove and store the contents of Dr. Pritchard’s home that contributed approximately six months of delay because ESI could not initiate work while the owner’s contents were still in the home.

State Farm failed and refused to authorize payment for the work bid by ESI.

Inasmuch as State Farm refused to authorize payment and Dr. Prichard refused or failed to sign the March 11, 2015 proposed amendment modification binding Dr. Prichard to pay for contracted work if State Farm does not pay, then ESI was unable to establish a scope of work for the project.

Dr. Pritchard hired another contractor to take over ESI’s contract.

ESI reasonably relied upon the events set forth in paragraph 8 of these Conclusions of Law to conclude:

it was denied access,

it was not assured payment for work to be undertaken under the April 1, 2015 agreement.

Since State Farm failed or refused to approve payment to ESI and since Dr. Pritchard failed or refused to agree to pay ESI for work it performs if State Farm does not pay, neither the scope of work could be established nor could ESI be assured of payment for performance of the April 1, 2015 agreement.

Dr. Pritchard, without notice, terminated the April 1, 2015 agreement with ESI by hiring another contractor to perform ESI’s work on the project.

ESI’s abandonment is not a violation of Ariz. Rev. Stat section 32-1154(A)(1) because Respondent ESI has established justifiable legal excuse.

Notwithstanding ESI’s legal justification for abandonment, the excess payment over invoiced charges in the amount of $54,844.00 was received but unearned by ESI.

ESI is unjustly enriched in the amount of $54,844.00.

There is no legal or equitable basis upon which ESI has shown that it is entitled to retain the overpayment of $54,844.00.

Equity demands $54,844.00 be returned by ESI to Dr. Pritchard.

RECOMMENDED ORDER

In view of the foregoing Findings and Conclusions, IT IS RECOMMENDED that the Registrar of Contractors suspend License Numbers 083930, 084002 and 084001 on the effective date of the Registrar’s Order unless the parties jointly provide written proof before the effective date of that Order that Environmental Strategies Inc. has paid the sum of Fifty Four Thousand Eight Hundred Forty-four Dollars [$54,844.00] in certified funds to Complainant Dr. Dr Allison M Pritchard reflecting a refund of funds paid to ESI in excess of charges invoiced to Dr. Pritchard.

Done this day, June 20, 2017.

/s/ Randolph D. Wolfson

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors