FINACT2018A-05494-CHC-ROC-FinalAgencyAction-6593.pdf

2018A-05494-CHC-ROC · Registrar of Contractors · 2019-11-05

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Tak Kwan, Case No. 2018-05494

COMPLAINANT, Docket No. 2018A-05494-CHC-ROC v.

C P R & R LLC, FINAL ADMINISTRATIVE DECISION AND License No. ROC 290082, ORDER 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 of each finding of

fact or conclusion of law.

MODIFICATION AND WRITTEN JUSTIFICATION

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 modifies it as set forth

below.

Under Conclusions of Law, the administrative law judge found that Respondent “abandoned the

contract or refused to perform after submitting a bid on work without legal excuse for the abandonment or

refusal in violation of A.R.S. § 32-1154(A)(1). ALJ Dec. 7:4-6. In this case, however, the Registrar did not cite

Respondent for a violation of A.R.S. § 32-1154(A)(1). Instead, the Registrar issued a Citation to Respondent

for violations of A.R.S. §§ 32-1154(A)(2), (3), (8), and (22). ALJ Dec. 4:3-9. The Citation did not include a

charge of A.R.S. § 32-1154(A)(1). Therefore, Respondent may not be cited under that subsection.

However, based on the administrative law judge’s findings, a preponderance of the evidence shows

that Respondent violated A.R.S. § 32-1154(A)(8) by failing to complete the project for the price stated in the

contract. Because the Citation included this charge, this finding is appropriate.

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 Additionally, the Administrative Law Judge Decision refers to a civil penalty that may be imposed under A.R.S. § 32-1166(A). ALJ Dec. 7-8 ¶ 8. That statute, however, relates to unlicensed contracting and may not be used to issue a fine to a licensed contractor. In this case however, Respondent, a properly licensed contractor, violated A.R.S. § 32-1154(A)(22) by failing to comply with the Registrar’s Written Directive. ALJ Dec. 7 ¶ 7. Therefore, a civil penalty may be assessed under A.R.S. § 32-1154(E). CONCLUSION AND ORDER The Registrar modifies the Administrative Law Judge Decision by: • On page 7, lines 4-6, replace “abandoned the contract … in violation of A.R.S. § 32- 1154(A)(1)” with “failed in a material respect to complete the project for the price stated in the contract in violation of A.R.S. § 32-1154(A)(8).” • On pages 7-8, delete paragraph 8. • On page 8, line 12, after “… a Civil Penalty of $500.00 be imposed,” add “pursuant to A.R.S. § 32-1154(E).” The Registrar accepts the remainder of the Administrative Law Judge Decision, which becomes effective on December 8, 2019. Payment of the civil penalty may be hand-delivered to the Registrar’s physical address or mailed to: Registrar of Contractors P.O. Box 6748 Phoenix, Arizona 85505-6748 FINAL NOTES On page 1, line 17 replace “April 8, 2019” with “April 11, 2019”. On page 1, line 27 add “(A)(2)”. On page 2, line 2 replace “April 24, 2018” with “April 21, 2018”. On page 8, line 17 replace “(A)(5)” with “(A)(7)”. Dated October 29, 2019.

By: /s/ Joseph Citelli Joseph Citelli, Chief Counsel Chief of Legal Department and Recovery Fund Arizona Registrar of Contractors

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 Copy mailed via USPS First Class mail October 29, 2019 to: Respondent C P R & R LLC 111 E Dunlap Ave Ste 1-192 Phoenix, AZ 85020 Complainant Tak Kwan 16618 S 35th St Phoenix, AZ 85048 Copy sent electronically this same date to: Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar

Office of Administrative Hearings Randolph D. Wolfson, Administrative Law Judge Case No. 2018-05494/tw

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 RECEIVED 10.8.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Tak Kwan, No. 2018A-05494-CHC-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION v.

C P R & R LLC, ROC License: ROC 290082

RESPONDENT

HEARING: May 31, 2019 and September 17, 2019. APPEARANCES: Tak Kwan, Complainant, Chad Preece, Respondent and Qualifying Party, Jack Grimm, ROC Investigator ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson _____________________________________________________________________ FINDINGS OF FACT 1. On April 8, 2019, the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for hearing on May 31, 2019, at the Office of Administrative Hearings in Phoenix, Arizona. At the hearing, the matter was continued for further hearing on September 17, 2019. Notice of Hearing was sent to the Respondent at its address of record with the ROC of 111 E Dunlap Ave Suite 1- 192, Phoenix, AZ 85020. 2. Respondent C P R & R, LLC [hereinafter, “C P R & R holds license number 290082 issued by ROC. 1 3. The Notice of Hearing shows that the hearing was set to consider the charges made in the Citation and Complaint. 4. The Citation alleges that C P R & R may have violated A.R.S. §32-1154; A.R.S. §32-1154(A)(3); A.R.S. §32-1154 (A (8); and A.R.S. §32-1154 (A)(22). The

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 Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 10.8.2019 ROC LEGAL

Citation shows that if the Administrative Law Judge finds that any of the alleged charges are valid, ROC may suspend or revoke C P R & R’s license. 5. On or about April 24, 2018, C P R & R tendered a written bid to Mr. Kwan to, among other things, remodel three bathrooms and install a water heater in Mr. Kwan’s home located at 16618 South 35th Street in Phoenix, Arizona for the total sum of $21,000.00. The agreement was for C P R & R to provide only labor services for the remodel and that Mr. Kwan was to provide all materials for the project. It is not disputed that Mr. Kwan paid C P R & R a deposit of $7,000.00 when the bid was tendered. It is also undisputed that Mr. Kwan paid C P R & R an additional $13,450.00 between July and December of 2018 for the work C P R & R had agreed to perform. 2 6. On or about November 16, 2018, Complainant Tak Kwan filed a written Complaint with the ROC against C P R & R alleging C P R & R performed poor work along with factual allegations in the Complaint’s Narrative describing abandonment. 7. The Registrar assigned the complaint to Investigator Jack Grimm. On or about February 6, 2019, Mr. Grimm conducted a Jobsite Inspection [the “JSI”] on the subject project site. Written Notice of the JSI was provided by Investigator Grimm to C P R & R at its address of record with the ROC. Mr. Grimm reported his findings in his written jobsite inspection notes as follows: 3 Jobsite General Notes: No one present from C P R & R LLC Homeowner does not believe that a permit is in place for this project. It appears work regarding structure work, plumbing, electrical and shower membrane work has been performed. Poor contract – sending warning letter for elements of a contract and no permit. Complaint Item 1: CPR & R LLC (Chad N Preece) bid on a 3-bethroom renovation project plus bid other improvements – water heater change. A contract was presented in April 2018. On 4-21-2018 CPR & R’s owner, Chad, collected $7,000 from us as a deposit. Chad collected another $13,450 from … from July to Dec. As of now the contractor hasn’t completed a single bathroom due to various non work related issues including funding shortage. The other two bathrooms haven’t even been started for remodeling yet. Investigator’s Observation: The project appears to include the remodeling of the 3 bathrooms in the home and the replacement of the water heater. 2 Copies of Mr. Kwan’s checks delivered to and negotiated by C P R & R are located in Complainant’s Disclosure Statement, pages 16 through 21. Agency Record, Jobsite Inspection, page 31.

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Contract is very poor. The issue stated above regarding funding is that the contractor was trying to get more money out of the homeowners before he would continue work. They refused to give him more money. To date the contractor has $20,450 and has not even completed the small master bath work. No work has been performed in the hall upstairs bath or downstairs bath. The water heater has not been replaced. The master bathroom has had structure work regarding reconfiguring the shower to a walk in shower. The shower is mostly complete but has poor and incomplete grout work between the tiles. The floor tiles in the bathroom floor have discolored grout that is inconsistent. Vanity is installed in the master bath but the room is incomplete and not being used. This work would require a permit and inspections from the city governing authority. Governing Rule: 32-1154(A)(1, 2,3,8) Abandonment, no permit, poor work, failure to complete work per contract. 8. On February 13, 2019, Mr. Grimm issued a Written Directive to C P R & R that provided as follows: 4 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 March 4, 2019. You are hereby directed to remedy the following violations by the appropriate means: 1. Obtain building permit from local building authority and get necessary inspections and approved final inspection. 2. Complete 3-bathroom remodel and water heater replacement per contract. 3. Correct incomplete and inconsistent grout at master shower walls and floor. 4. Correct inconsistent color of grout at master bathroom floor. The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action. [emphasis in the original]. Agency Record, pages 21 and 22.

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9. Following the issuance of the Written Directive, C P R & R did not comply with any of the terms of the Written Directive’s Corrective Work Order. 10. On March 13, 2019 The Registrar issued a Citation against C P R & R, charging possible violations of: i. A.R.S. § 32-1154(A)(2)5 ii. A.R.S. § 32-1154(A)(3) - R4-9-108; 6

iii. A.R.S. § 32-1154,(A)(8): 7 iv. A.R.S. § 32-1154(A)(22)8 11. A hearing was held on September 17, 2019 before the Office of Administrative Hearings, an independent agency. 12. At the September 17, 2019 hearing, Investigator Grimm testified consistent with his Job Site Inspection notes of February 6, 2019. 9 His testimony was that each of the items listed on his Written Directive to C P R & R of February 13, 2019 constituted workmanship below industry standards. Further he testified that having discussed the factual background of the case with Mr. Kwan, Mr. Grimm learned that no one prevented C P R & R’s access to the job site during the compliance period indicated in the Written Directive. More to the point, he indicated that although access to the job site was available from Mr. Kwan, C P R & R made no effort to enter onto the jobsite after the Written Directive was issued. Mr. Grimm indicated that little to no work was performed by C P R & R for over eight months. He said little to no work had been supplied by C P R &

A.R.S. § 32-1154(A)(2): Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code. A.R.S. § 32-1154(A)(3) - R4-9-108: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9- 108 – i.e., below industry standard workmanship. A.R.S. § 32-1154, (A)(8): Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract. A.R.S. § 32-1154(A)(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…. See footnote 3 and page two, supra.

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R for the $20,460.00 Mr. Kwan paid for labor services. Mr. Grimm confirmed that no permitting was attempted or obtained by C P R & R. 13. Complainant Tak Kwan testified that at the time of the 2018 bid from C P R & R, Mr. Kwan indicated to C P R & R that time was of the essence for performance since he was expecting the birth of the family’s baby in December and wanted the job done before then so as to avoid the newborn infants exposer to construction dust, debris and other issues. On August 22, 2018, C P R & R represented to Mr. Kwan that hat the job would be completed within “4 to 5 weeks.”10 Rather than the project being completed within four to five weeks, the Kwan’s endured over 8 months of stalling by C P R & R without them having completed any of the bathroom remodeling, So, Mr. Kwan determined there was no other course but to file his Complaint with the ROC. Mr. Kwan related that although he had paid C P R & R $20,450.00 in advance for its labor services, Mr. Kwan related that C P R & R kept pressing to be paid more money even though no work had been completed. Mr. Kwan said that C P R & R repeatedly claimed it has funding short falls that needed to be covered in order to complete the project. At one point, Mr. Kwan even gave C P R & R’s qualifying party several hundred dollars to cover C P R & R’s gasoline expenses so it could get to the job site. Mr. Kwan confirmed that no permit had been pulled and no inspections conducted for this job. Finally, Mr. Kwan testified that work by C P R & R stopped December 24, 2018. After the Directive’s deadline of March 4, 2019, Mr. Preece approached Mr. Kwan [in May of 2019] to request he be given a chance to complete the bathroom remodel and install the hot water heater. The water heater was installed, but not completely and the bathrooms are still yet to be completed. 14. Mr. Chad Preece, the Qualifying Party for C P R & R, testified that at the time of this undertaking for Mr. Kwan, he was experiencing a difficult divorce proceeding which both distracted him from being able to fulfill his duties in this project, but also place great strain upon his finances. He indicated that the address he has provided and still provides to the ROC for C P R & R was only a post office box. He said he neglected to regularly check his company’s post office box. He asserts that he did not receive actual

Kwan Disclosure Statement, page 10, August 22, 2018 Text Message between the parties,

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notice of the Written Directive and its Corrective Work Order until after the deadline for the Directive had run. He also complains that he was put off the job by Mr. Kwan in December of 2018 and thus, denied access. However, in May 2019, [after the Directive’s March 4, 2019 compliance deadline] he asked Mr. Kwan if he could come back to the job to install the hot water heater and continue work on the bathroom. He did admit that he had returned to the job on Jun 23, 2019 and did install the hot water heater and did additional work on the bathrooms’ remodeling. He admits that during the period between the date of the Written Directive of February 13, 2019 and the date of the Directives’ compliance deadline on March 4, 2019, nothing and no one prevented C P R & R’s access to this job site to complete the repairs ordered by the Directive. 15. Administrative notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website on October 7, 2019. Such prior License record reflects that C P R & R’s License- first issued on February 2, 2014 - has never been the subject of ROC discipline and, other than the instant Compliant, there are no outstanding Complaints against this licensee. The license status is current. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq. 2. Complainant bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “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). 3. The credible evidence presented at hearing established that at the time of the Complaint there were items of Complainant’s project that needed to be completed. Specifically, no building permit from local building authority had been pulled and none of the necessary inspections or approved final inspection have been obtained; the 3- bathroom remodel and water heater replacement per contract were not complete; the grout at the master shower walls and floor were uneven and incomplete; and, the color

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of grout at the master bathroom floor was inconsistent. To date, it has been more than ten months since the promised end of October, 2018 promised date of completion of this project – yet none of the work promised has been completed. Complainant has proven by a preponderance of the evidence that Respondent abandoned the contract or refused to perform after submitting a bid on work without legal excuse for the abandonment or refusal in violation of A.R.S. § 32-1154(A)(1). 11 4. It is proven, by a preponderance of the evidence that C P R & R failed or refused to obtain the required and necessary permits and inspection for this project. Therefore it is proven by a preponderance of the credible evidence that C P R & R, violated A.R.S. § 32-1154(A)(2) 5. As to the issue of poor workmanship, the evidence established that Respondent did not perform the work in a professional and workmanlike manner in violation of A.A.C. R4-9-108, and thereby of A.R.S. § 32-1154(A)(3). 12 6. The copies of the Written Directive and its 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 answer were reasonable. Respondent is deemed to have received notice of the hearing. A.R.S. §41-1092.04 and §41-1092.05(D). 7. Complainant has proven by a preponderance of the evidence to establish that C P R & R failed or refused to comply with the Written Directive on or before its stated deadline for compliance thereby proving C P R & R violated A.R.S. § 32- 1154(A)(22). 13 8. Pursuant to A.R.S. § 32-1166(A), a Civil Penalty may be assessed against a licensee where “…the person cited or any individual acting on that person's behalf has committed one or more of the following acts….2. Failed to perform any work for

A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” 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.” 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.” 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.” RECEIVED 10.8.2019 ROC LEGAL

which money was received….7. Performed work that deliberately was in violation of building codes, safety laws, labor laws, workers' compensation laws, or unemployment insurance laws … 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. Giving due consideration to the foregoing A.R.S. § 32-1166(A) paragraphs 2,7 and 8, it is determined that C P R & R’s conduct in this matter requires a Civil Penalty of $500.00 be imposed. RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that on the effective date of the Order, the Registrar shall suspend C P R & R license number 290082 for two (2) days. FURTHER IT IS RECOMMENDED that a Civil Penalty of $500.00 be imposed IT IS FURTHER 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 days from the date of that certification.

Done this day, October 7, 2019.

/s/ Randolph D. Wolfson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors