FINACT2018A-04994-CHC-ROC.pdf

2018A-04994-ROC · Registrar of Contractors · 2019-06-19

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Sharp Construction LLC, Case No. 2018-04994 COMPLAINANT, Docket No. 2018A-04994-CHC-ROC v. FINAL ADMINISTRATIVE DECISION AND ORDER Imperial Tile Imports Ltd, License No. ROC 103531,

RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an

administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the

Registrar must provide written justification setting forth the reasons for the modification or rejection.

REGISTRAR’S ACCEPTANCE

In this case, a hearing was held, and the administrative law judge issued a written decision. See

Administrative Law Judge Decision, attached. The Registrar reviewed that decision and hereby accepts it.

CONCLUSION

Because the Registrar has accepted the administrative law judge’s decision, that decision is the final

administrative decision in this case and becomes effective on July 29, 2019.

FINAL NOTE

On page four, paragraph eight, line six, “21” should be “22.” Throughout, replace “Sparks” with “Sharp.”

Dated June 17, 2019. Registrar of Contractors

/s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Copy mailed via USPS First Class mail June 17, 2019 to: Respondent Imperial Tile Imports Ltd 1846 E McDowell Rd Phoenix, AZ 85006 David A. Grieme, Esq. Keery McCue 6803 E Main St, Ste 1116 Scottsdale, AZ 85251 Complainant Sharp Construction LLC 2415 E Camelback Rd, Ste 700 Phoenix, AZ 85016 AND copy electronically mailed this same date to: Respondent at email address on record with the Registrar Respondent’s Attorney at email address of record with Registrar Complainant at email address on record with the Registrar Office of Administrative Hearings Randolph D. Wolfson, Administrative Law Judge

Case No. 2018-04994 / KR

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 5.28.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Sharp Construction LLC, No. 2018A-04994-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION v.

Imperial Tile Imports Ltd, ROC License: ROC 103531, 101877,

RESPONDENT

HEARING: May 8, 2019. APPEARANCES: Tiffany Sharp, for Complainant; Alexander Cohen, Respondent; Steve Lawton, ROC Inspector ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson

FINDINGS OF FACT

1. On April 21, 1994, the Arizona Registrar of Contractors (“the Registrar”)

first issued License Number ROC 103531, a Specialty Dual CR-5 As Restricted by the

Registrar - MARBLE & GRANITE SLABS to Imperial Tile Imports Ltd [hereinafter, “

ITI”]. Also on April 21, 1994, the Registrar first issued to ITI License Number ROC

101877, a Specialty Dual CR-48 Ceramic, Plastic and Metal Tile classification.1 Since

January 2, 2019 and currently, both license 103531 and 101877 are administratively

suspended for lack of bond.2

2. On February 21, 2018, Complainant Sharp Construction, LLC [hereinafter,

“Sharp], acting as General Contractor for its customer’s project located at 38300 N.

102nd St. referred to as the “Rollo Residence,” entered into a Master Sub-Contractor

Agreement with ITI, as sub-contractor, to:

Administrative Judicial Notice is taken of the entirety of the Registrar’s physical and electronic records in this matter, including, but not limited to information displayed on the Registrar’s Public Access Website Per information posted at the Registrar’s Public Access Website on May 25, 2019.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 5.28.2019 ROC LEGAL

Remove existing granite tops in the kitchen and wet bar. Fabricate and install the 4 slabs of Giotto Quartzite with a 1 1/4 mitered edge. Install the under mount. Sinks supplied by owner.3 Subsequently, on August 31, 2018, pursuant to Changer Order #0001, the scope of work for the project was amended to substitute the original 4 slabs ordered with 5 different stone slabs selected by the Sparks’ customer to be fabricated and installed as custom kitchen counters.4 3. In Mid-September, according to Tiffany Sparks’ testimony at hearing in this matter, Sparks’ project supervisor reported to Ms. Sparks that the installation was poor and that the client was irate about it. Ms. Sparks testified that the slabs that were fabricated by ITI exposed a “sugary” surface that did not meet industry standards; that after installation there existed reveals between the slabs and the cabinets; that the stone is chipped and filled with epoxy that is noticeable. Ms. Sparks testified that ITI engaged a sub-contractor to remedy the problems that Sparks noted. The sub- contractor for ITI was Kings World of Marble [hereinafter, KW]. Sparks requires contractors to place Sparks on their insurance policies as a named insured in order to work on their sites. Sparks testified that KW refused to place Sparks on their insurance as a named insured. Tiffany Sparks admitted in her testimony that Sparks refused to allow KW access to the work site to perform any repairs unless and until they provided proof of Sparks as a named insured on KW’s insurance policy. 4. On October 22, 2018, Sparks filed its Complaint against ITI’s contractor licenses alleging poor workmanship. ROC Investigator Steve Lawton notified that parties of the date and time for his Job Site Inspection in follow-up to the Complaint. On November 15, 2018, a job site inspection was conducted with all parties representatives present. At hearing, Mr. Lawton testified consistently with his Job Site Inspection Notes5 as follows: Jobsite General Notes:

3 Exhibit C-1. Exhibit C-3. See, Agency Record, pages 68-71.

RECEIVED 5.28.2019 ROC LEGAL

A job site inspection was performed with all parties present. Complainant alleges that the Respondent performed poor workmanship during installation of counter tops during remodel. Complaint Item 2: …It was observed that there was a chip out of the top beveled edge of the island counter top. Governing Rule: Workmanship Rule: ARS 32-1154 (A) (3); Namely R4-9-108 Complaint Item 5: … It was observed that there was a difference in thickness between both slabs of the stone counter top. Governing Rule: Workmanship Rule: ARS 32-1154 (A) (3); Namely R4-9-108.

5. On January 8, 2019, Mr. Lawton issued his Directive to ITI stating: 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 January 25, 2019. [emphasis in original]. You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 2: Top and center of water fall on island has large chip out of it. The fill is not a good color or texture. Investigator’s Observation: It was observed that there was a chip out of the top beveled edge of the island counter top.

Complaint Item 5: Issue is when it was ground on the underside to make the two pieces the same thickness, it was over ground on one side and is visible from across the room-again not up to standards. Investigator’s Observation: It was observed that there was a difference in thickness between both slabs of the stone counter top.

6. On January 21, 2019, Tiffany Sparks wrote Mr. Lawton stating:6

Please find enclosed a letter from my customer's attorney, Laura Bramnick, requesting that Sharp Construction LLC and Imperial Tile Imports Ltd open an insurance claim for the damaged tops at the Rollo Residence. I have initiated an insurance claim and bond claim at this

Exhibit C-7.

RECEIVED 5.28.2019 ROC LEGAL

time. Per this direction, we are unable to proceed with any possible repairs until after the insurance investigation is final. 7. On January 23, 2019, ITI wrote to Mr. Lawton7 stating that ITI was ready, willing and able to make the repairs listed in the Directive. But, ITI stated that Sparks that no access was permitted to make repairs because KW, ITI’s sub-contractor for the repairs, has refused to list Sparks as a named insured on its company policy. 8. On February 21, 2019, the Registrar issued a Citation against ITI alleging a violation of ARS 32-1154 (A) (3); Namely R4-9-108 and A.R.S. §32-1154(A)(22). On May 8, 2019, a hearing was conducted by the Office of Administrative Hearings to determine whether the Complaint was supported by credible evidence and whether discipline should be imposed. 9. Mr. Alexander Cohen testified at hearing on behalf of ITI. Mr. Cohen is ITI’s Qualifying Party. He testified that he has been in business as a licensed Arizona contractor for over 20 years with over 5,000 completed jobs. He said during that time he has never been disciplined and no other Complaints have been filed. He stated that every effort was made to comply with the Directive. ITI contracted with KW for the specific purpose of doing whatever work that was required by the Directive. However, ITI was denied access to the job site by Sparks during the period of time that the Directive stated repairs had to be made. He admits that ITI did not comply with the Directive on or before the Directives deadline for compliance. But, he testified, the only reason for ITI’s failure to comply with the Directive was not in his control…Sparks denied access to ITI and KW, he said, because KW would not submit to Sparks’ demand that Sparks be named on KW’s insurance as a named insured. CONCLUSIONS OF LAW 1. 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.

ROC Exhibit 1.

RECEIVED 5.28.2019 ROC LEGAL

2. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” ARIZ. REV. STAT. § 41-1092.07(G)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” A.R.S. § 41-1092.07(G)(3). 4. 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). 5. 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."). 6. “Statutes shall be liberally construed to effect their objects and to promote justice.” ARIZ. REV. STAT. § 1-211(B). 7. 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). 8. 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. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days RECEIVED 5.28.2019 ROC LEGAL

from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held.

9. Ariz. Admin. Code R4-9-108(A) provides that “A contractor shall perform all work in a professional manner.” 10. ITI should have been afforded a reasonable opportunity to cure any infraction before discipline is imposed: 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 non-breaching 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. Philip L. Bruner and Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law,

§ 18:15 (West Group 2002). See also, Registrar of Contractor’s Substantive Policy

Statement 2017.01.

11. By a preponderance of the evidence, Sparks denied ITI access to

comply with the written Directive. Where a contractor is denied access to comply

with the written Directive, there is no violation of A.R.S. § 32-1154(A)(3). Complainants are not prevented from refusing access because of their right to exclude others from their homes and it would not be appropriate to require contractors to trespass. [But 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. 8 American jurisprudence implies in all contracts the obligation to cooperate in the performance of the contract and not to delay, hinder, or interfere with the performance of other parties. Over the years, owners have been found on numerous occasions to have breached their implied duty of cooperation in the context of construction contracts. Such instances have included failure to provide timely site access, failure to inspect the work or

Source: BB Ewing Property Management v. Khart Management LLC No. 2015-1168(ALJ Dec. 15:19– 25), See also, Registrar of Contractor’s Substantive Policy Statement 2017.01 RECEIVED 5.28.2019 ROC LEGAL

complete other work necessary to allow the contractor to proceed, and failure to reasonably schedule and coordinate owner-controlled work. Philip L. Bruner and Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law, § 12:55 (West Group 2002) (citing inter alia Restatement (Second) of Contracts §§ 212 to 223); id. § 9:99 (noting subsidiary duties, including “an ‘implied duty’ to make timely decisions” and “an ‘implied duty’ to exercise inspection and approval rights reason- ably”). 12. The preponderance of the evidence does not show that ITI violated A.R.S. §32-1154(A)(22) by failing to comply with the Directive because Sparks refused access of ITI’s sub-contractor access to remedy the violations identified in the Directive. RECOMMENDED ORDER

Based on the foregoing, IT IS RECOMMENDED that the Registrar dismiss the Complaint and Citation of Sharp Construction LLC against the Respondent Imperial Tile Imports Ltd, ROC Licenses ROC 103531and 101877.

Done this day, May 25, 2019.

/s/Randolph D. Wolfson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors