ALJDEC decisions subject to certification as final

2018A-04405-ROC · Registrar of Contractors · 2019-03-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 12, 2019, at 1:30 p.m. APPEARANCES: Deborah R. Fesler (“Complainant”) appeared on her own behalf; Cory Lee Dufault DBA: Integrity Concepts (“Respondent”) appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website,[1] on December 3, 2015, the Registrar issued License No. ROC 302057, Class Specialty Dual CR-61 Carpentry, Remodeling and Repairs Contracting to Respondent. 2. On September 19, 2018, Complainant filed a complaint with the Registrar, alleging that Respondent had committed 20 instances or poor work performing its contract to remodel Complainant’s residence. According to the complaint, although Complainant had paid Respondent $11,200.00, the only written contract was for only $5,200.00. 3. Complainant attached to her complaint an undated Proposal from Respondent for remodeling the bathroom and removing the carpet, pad, and tack strips and installing new Saltillo tile on the bedroom floor. Complainant redacted her address and telephone number and other lines on all the documents that she submitted to the Registrar. It is not clear whether the proposal included Respondent’s license number. Although the proposal included a fairly detailed scope of work and provisions for payments, it did not include an estimated date of completion, apprise Complainant of her right to file a complaint with the Registrar for a violation of A.R.S. § 32-1154(A) within the time allowed by A.R.S. § 32-1155(A), or include the Registrar’s website address and telephone number. 4. The complaint was assigned to the Registrar’s Investigator Jim Dimond for investigation. On October 23, 2018, Investigator Dimond performed a jobsite inspection. 5. On December 11, 2018, Investigator Dimond on behalf of the Registrar issued a Directive that required Respondent to correct the four items for which Investigator Dimond had determined Respondent was responsible on or before December 28, 2018, at 5:00 p.m., in relevant part as follows: Complaint Item 5: Tiles in the master bedroom not straight, shower fixture not on straight The respondent is to correct the tile aligned at the left side of the shower so that the line continues at the left side of the bathroom window.

Complaint Item 10: Kitchen countertop not properly installed and backsplash is crooked The respondent is to correct the condition in an appropriate manner.

Complaint Item 17: Kitchen sink not set in counter correctly The respondent is to correct the condition in an appropriate manner.

Complaint Item 19: Upper kitchen cabinets are not evenly spaced by window The respondent is to correct the condition in an appropriate manner.[2]

6. On August 9, 2018, the Registrar issued a Citation against Respondent’s contractor’s license, charging cause to suspend or revoke the licenses under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32- 1154(A)(12), namely A.R.S. § 32-1158(A), and 32-1154(A)(22). 7. Respondent filed a timely written answer to the Citation, denying any statutory violation. Respondent stated that he was willing to repair the items on the Directive, but that Complainant told him that she would not permit him on her property. 8. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 9. A hearing was held on March 12, 2019. Complainant testified on her own behalf. Respondent testified on his own behalf. Investigator Dimond also testified. Additional Hearing Evidence 10. Complainant testified that Respondent contracted to perform substantial work at her house but refused to finish the work unless she paid him more money. When she refused, Complainant testified that Respondent took “everything that was not nailed down” from her house and that she called the police. Complainant testified that she has gotten estimates of $14,000.00 to finish the work and repairs on her property. 11. Respondent testified that Complainant had selected a butcher-block countertop that absorbed water and became warped and that Complainant asked Respondent to center the kitchen cabinets on the wall, not below the window. Respondent complied with her requests, which resulted in Complaint Item 10 and 19. 12. Respondent stated in his written answer that he met Complainant at an Ace Hardware in Wickenburg and that she complained that her last handyman had left her house a mess and that she needed someone to help her complete the work that the handyman started. Respondent stated that went out to Complainant’s house, even though it was some distance from his residence in Wickenburg,[3] and finished the work her handyman had started. Complainant then asked Respondent to perform work in her master bath and bedroom. Respondent wrote up a contract for that work. Complainant then asked Respondent to perform work in her laundry room and kitchen. After Respondent completed that work, he asked her to point out all the areas that she was not satisfied with. After Respondent completed repairs, Complainant handed him a check. After he left Complainant’s house, he looked at the check and realized that it was for only half the amount of the parties’ oral agreement. When Respondent returned to ask Complainant about payment, she called YCSO to have him removed from her property. 13. On January 4, 2018, YCSO responded to Complainant’s call that reported that Respondent was taking things that did not belong to him from her property. YCSO Deputy D. Moralez responded to the call and prepared a report that provided in relevant part as follows: I arrived on scene and spoke with [Respondent] who was there with several of his employees. [Respondent] stated that he was remodeling the residence for [Complainant] and today [Respondent] went to get paid from [Complainant] so she gave him a check. [Respondent] stated he and his employees left and when he got down the road he realized that the check was for $3300 and not $6700 like it was supposed to be. [Respondent] stated that he returned and asked [Complainant] what was going on and she told him to leave. He stated that he couldn’t because he needed a check and she needed to finish paying him.

I went and spoke to [Complainant] who stated that the contractor said he was leaving the job today and [Complainant] said he was not finished with the job. [Complainant] stated that [Respondent] gave her a bill for $3300 and she paid him. [Complainant] stated that [Respondent] then came back with a different bill and that he made an adding mistake. [Complainant] advised she told him to “get out.” [Complainant]stated that now [Respondent] had his employees loading the materials for the job into the truck that she paid for. [Complainant] stated that she paid for the materials for the job and [Respondent] was doing the labor. [Complainant] stated that she had all the receipts for the materials and that [Respondent] threatened her that he would take “everything in the house.” . . . .

I returned to [Respondent] and asked him if he brought in all the materials himself. [Respondent] stated he did. I advised him that [Complainant] claimed she paid for all the materials and that he was just doing the labor work. [Respondent] stated that was not correct and he stated he had the receipts. [Respondent] pulled out a stack of receipts. The receipts all said “Debbie” on them to indicate they were for this job. [Respondent] stated that [Complainant] bought some materials but that he bought most of them and that he had the receipts for all that he purchased and those were the items his guys were removing. [Respondent] stated that he had a signed contract for the job and the work that he had done that he had not been paid for.

Deputy Moralez had to leave Complainant’s house when he received an emergency call for service. He advised Respondent that “any lack of pay would have to through small claims court.”[4] 14. Respondent testified consistently with his written answer. Respondent acknowledged that he sued Complainant in small claims court for non- payment, but after she showed the judge old photographs that did not show all the work that Respondent had done, the judge ruled in her favor. Respondent testified that six months after the small claims court judgment, Complainant filed the complaint with the Registrar against his license. 15. Investigator Dimond’s jobsite inspection notes state in relevant part as follows: The relationship with the parties has deteriorated and the complainant told the respondent to leave when he came back for what he says is more owed money. The complainant called the YCSO who came out and took a report. No action was taken against either party.

The complainant also accused the respondent of taking a vanity from her Wickenburg house and she made a Wickenburg PD report. It was found in that report that the respondent had nothing to do with any theft and the other person accused was also let go as the complainant apparently misremembered the details of the event. Nobody was charged in either incident.

The respondent took the complainant to small claims court for the balance he felt was due. The complainant presented pictures at court and was able to convince the judge that she did not owe the money.

The pictures provided to the court don’t reflect the current condition at the house or some of the items listed in the complaint and it appears that somebody has been performing work on top of the respondent’s work.

Taking in the total information and reviewing the evidence, there is a credibility issue regarding the complainant and I will only be directing correction of items that I have some confidence that only the respondent touched.[5]

Investigator Dimond testified that, although both parties attended the jobsite inspection, Respondent and his wife were not permitted in Complainant’s house because she had previously called YCSO on Respondent to remove him from the property. Investigator Dimond conferred with Respondent about the jobsite inspection afterwards in Complainant’s driveway. 16. Investigator Dimond testified that he scheduled a prehearing jobsite inspection on March 8, 2019, but that Complainant did not appear to provide access because she had failed to calendar the inspection. 17. Complainant testified that she requested that Respondent send its subcontractors to comply with the Directive. 18. In response to Respondent’s question, Investigator Dimond testified that if a homeowner refuses to allow a contractor on her property, the contractor is not required to hire subcontractors that the homeowner is willing to work with, unless repairs are beyond the scope of the contractor’s license. 19. Respondent testified that he would not go back to the jobsite because Complainant owed him $3,400.00 and lied in court. He sent his employee Craig to go back and look at the work, not to perform repairs. The status of the job was different than the photographs that Complainant submitted in justice court. 20. Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s prior disciplinary history on the Registrar’s public website. On this date, Respondent’s License No. ROC 302057 was current and in good standing. No prior discipline has been taken against the license and Complainant’s appears to be the only complaint pending against the license. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[6] 2. Complainant bears the burden of proof to establish cause to suspend or revoke Respondent’s license by a preponderance of the evidence.[7] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[8] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[9] 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.”[10] 4. Because Respondent’s undated proposal does not include the total scope of the work, the total price of the work, an estimated date of completion, or information about filing a complaint with the Registrar for violations of A.R.S. § 32-1154(A) within the time allowed by A.R.S. § 32-1155(A), the evidence established grounds to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(12),[11] specifically A.R.S. § 32-1158(A).[12] As a factor in aggravation of the penalty, resolution of the issues in this matter would have been simplified if Respondent’s contract had complied with A.R.S. § 32- 1158(A) and the parties had been made aware of their respective contractual obligations from the outset. As a factor in mitigation, it appears that Complainant took advantage of Respondent’s failure to provide a comprehensive contract that included all the work Complainant asked Respondent to perform and all the monies that she agreed to pay him to obtain work on her house that she did not pay for.[13] 5. Although it appears that Complainant did not pay Respondent for all the work that he performed on her project, if a licensed contractor undertakes to perform construction work, he must comply with the Registrar’s standards, even if the contractor subsequently is not paid for the work.[14] Based on Investigator Dimond’s December 11, 2018 Directive and hearing testimony, Complainant established that Respondent’s construction of the four items on the Directive potentially furnish grounds to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3),[15] namely A.A.C. R4-9-108.[16] 6. Construction is not a perfect art and, generally, contractors must be afforded an opportunity to correct their workmanship before their licenses may be suspended or revoked. A property owner’s failure to provide reasonable access to allow a contractor to comply with a directive is an affirmative defense that the contractor bears the burden to establish. It does not appear that Complainant would have provided reasonable access to Respondent to perform repairs after she called YCSO to remove Respondent from the property when he demanded payment some nine months before she filed the complaint with the Registrar and Complainant stated at the hearing that she wanted a subcontractor, not Respondent, to perform repairs. Respondent candidly acknowledged at the hearing, however, that he did not attempt to perform repairs because Complainant still owed him money. Therefore, Complainant established cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22).[17] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the final order in this matter, License No. ROC 302057 of Respondent Cory Lee Dufault DBA: Integrity Concepts shall be suspended for a period of one (1) business day. It is further recommended that, in light of the fact that Respondent has already incurred a financial loss as a result of his work for Complainant, Respondent shall not be required to pay any civil penalty pursuant to A.R.S. § 32-1154(E). It is further recommended that within thirty (30) days off the effective date of the final order, Respondent shall provide acceptable written proof to the Registrar that Respondent has modified his form contracts to include all of A.R.S. § 32-1158(A)’s nine required terms. If Respondent fails to provide such acceptable written proof, Respondent’s contractor’s license shall be suspended until he does so. 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 27, 2019.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See A.A.C. R4-9-117 (“In any disciplinary proceeding conducted by the registrar, the licensee’s entire license file including the record of prior citations and decisions may be considered by the registrar in making a decision and order in the case.”). [2] The Registrar’s electronic file at pdf pages 25-26. [3] Complainant apparently lives in Congress, although as noted above, she blacked out her address on all the documents that she submitted to the Registrar. She has a P.O. Box in Congress. [4] The Registrar’s electronic file at pdf page 31. [5] The Registrar’s electronic file at pdf page 35. [6] See A.R.S. § 32-1154(A). [7] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [8] See A.A.C. R2-19-119(B)(2). [9] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [10] Black’s Law Dictionary at page 1220 (8th ed. 1999). [11] A.R.S. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” [12] A.R.S. § 32-1158(A) provides that 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 after December 31, 2007 must be in writing and must include the following minimum terms: 1. The name of the contractor and the contractor’s business address and the 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 ten point bold type. . . . [13] The small claims court judgment that Complainant obtained does not overcome the evidence in this case that Complainant failed to pay Respondent for his work. “In the absence of contrary authority Arizona courts follow the Restatement of the Law.” Bank of America v. J & S Auto Repairs, 143 Ariz. 416, 418, 694 P.2d 246, 248 (1985) (citing MacNeil v. Perkins, 84 Ariz. 74, 324 P.2d 211 (1958)). Applying the factors set forth in Restatement of the Law (Second) of Judgments § 28 (1982), most states that have decided the issue have held that the principle of collateral estoppel does not apply to a small claims court judgment in a subsequent civil or administrative proceeding. See, e.g., Vandenberg v. Centennial Ins. Co., 88 Cal. Rptr 2d 366, 21 Cal. 4th 815, 829, 982 P.2d 229, 237 (1999) (plaintiff was not bound by result of his previous arbitration with tortfeasor in subsequent action against insurance company, citing Sanderson v. Niemann, 17 Cal. 2d 563, 573-575, 110 P.2d 1025 (1941) (whose holding was described as “small claims judgments not entitled to collateral estoppel effect, given informality of proceedings, including limited right to judicial review); Isaac v. Truck Service, Inc., 253 Conn. 416, 423, 752 A.2d 509, 513-14 (2000) (personal injury plaintiff in superior court not bound by liability determination of small claims court in property damage claim); State Farm Mutual Automobile Ins. Co. v. Glasgow, 478 N.E.2d 918, 923 (Ind. App. 1985) (Insurer not bound by liability determination by small claims court in property damage claim between its insured and other person involved in automobile accident); Village Supply v. Iowa Fund, Inc., 312 N.W.2d 551, 554 (Iowa 1981) (issue preclusion by small claims judgment not warranted where differences exist in quality or extensiveness of procedures); State Farm Fire and Cas. Co. v. Emde, 706 S.W.2d 543 (Mo. App. 1986) (Insured’s bailee not bound by insured’s small claims court judgment against him in insurer’s later suit for indemnity); Henrickson v. Gleason, 263 Neb. 840, 845, 643 N.W.2d 652, 657 (2002) (No collateral effect to small claims court judgment on property damage claim in subsequent claim for personal injury in superior court); Cold Springs Farm Dev., Inc. v. Ball, 163 Vt. 466, 470, 661 A.2d 89, 92 (1995) (No collateral estoppel effect of small claims court judgment); cf. Pitzen v. Garcia, 120 Cal. App. 4th 1374, 1385, 16 Cal. Rptr. 3d 628, 637 (App. 2004) (According collateral estoppel effect against plaintiff’s action in superior court of issues decided in defendant’s favor in small claims court because plaintiffs in small claims court actions, unlike defendants, “have already chosen to forfeit their right to appellate review by bringing a small claims action.”); see also Clusiau v. Clusiau Enterprises, Inc., 1 CA-CV 09-0300 (July 8, 2010 memorandum decision). [14] If Complainant makes a claim to the Residential Contractors’ Recovery Fund and is found to be an “injured person” as defined by A.R.S. § 32- 1131(3), A.R.S. § 32-1132(A) limits payouts from the Fund to “the actual damages suffered by the claimant as a direct result of the contractor's violation but . . . not [to] exceed an amount necessary to complete or repair a residential structure . . . .” For the purposes of A.R.S. § 32- 1132(A), “actual damages” are the reasonable cost of repairing the contractor’s defective work and completing the project, minus any portion of the contract price still unpaid to the original contractor. See Ramsey v. Arizona Registrar of Contractors, 241 Ariz. 102, 106, 384 P.3d 316, 320 (App. 2016). [15] 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.” [16] 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.” [17] A.R.S. § 32-1154(A)(22) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure 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.” (Emphasis added.)

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