ALJDEC decisions subject to certification as final

2018A-05950-ROC · Registrar of Contractors · 2019-08-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 9, 2019 APPEARANCES: Allison Preston, attorney, appeared on behalf of Complainant. David Turnbull, attorney, appeared on behalf of Respondent. ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera _____________________________________________________________________ FINDINGS OF FACT Background and Procedure 1. On May 1, 2006, the Registrar of Contractors (ROC) issued License No. 219198 for Specialty Dual CR-34 Painting and Wall Covering. Respondent’s address of record for the license is 1767 West Agrarian Hills Drive, Queen Creek, AZ 85142-6371. Warren Ray Barnhill is listed on the license as Qualifying Party and Member.[1] 2. Administrative Notice is taken of Respondent’s prior License record, for License No. 082898, as reflected on the ROC’s public website on August 28, 2019. Such prior License record reflects that Respondent’s license is currently active. The license has not been previously disciplined by the ROC. The record also reflects that there is one open complaint against Respondent’s license, presumed to be related to this matter. Respondent has an active $6,750.00 surety bond issued through R L I Insurance Company effective May 1, 2006.[2] 3. Complainant is a commercial property owners’ association. Members of the association own businesses in the Ray Ranch Professional Plaza Association located at 2310-2480 West Ray Road, Chandler, Arizona 85224. 4. On April 2, 2018, Complainant entered into a written contract with Custom Colors Contracting LLC (Respondent) whereby Respondent agreed to paint, wire brush, and prime, with rust block and top coat, Complainant’s exterior metal doors. The contract was for the completion of 337 doors for a sum total of $23,590.00. The project commenced on November 5, 2018 and completed on November 16, 2018. 5. On December 14, 2018, the ROC received a Licensed Complaint Form (Complaint) from Complainant alleging poor workmanship for incomplete work by Respondent. ROC Investigator Dennis Bierma (Investigator Bierma) was subsequently assigned to the case. 6. The Complainant indicated that “[t]he contractor was hired to prep and paint doors. The contractor left rust and holes in the door and simply painted over the rust and holes”. Complaint also indicated that this applied to some of the doors. 7. On or about February 6, 2019, Investigator Bierma inspected the work that had been done on the project to date, with Complainant and Respondent. 8. On or about February 11, 2019, Investigator Bierma issued a Directive From The Registrar (Directive) to Respondent because he substantiated Complainant’s allegation that Respondent’s work failed to meet minimum ROC workmanship standards. The directive to Respondent provided the following: 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 12, 2019. You are hereby directed to remedy the following violations by the appropriate means: Complaint Item #2: The Contractor left rust and holes in the doors and simply painted over the rust and the holes. Although it is not specifically stated on the contract to repair the doors, it is stated to wirebrush, prime with rust block and top coat with Aristoshield on exterior metal doors. The correlated work to complete that item should not result in bad appearance or doors rusting within a couple of months.

All errors in original.

9. On February 21, 2019, Respondent emailed Investigator Bierma in response to the Directive. In its response, Respondent indicated that the appearance on the doors, with pre-existing surface and rust, was beyond the scope of the contract between Complainant and Respondent. Additionally, Respondent stated that the type of work Complainant wanted was included the original contract, but not the second contract that was actually signed and agreed upon. Respondent, in summary, stated that compliance with the Directive would result in performance of work it was not contracted to perform and would result in Complainant being unjustly enriched. 10. On March 14, 2019, the ROC issued a Citation against Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), namely Ariz. Admin. Code R4-9-108. 11. On April 4, 2019, the ROC filed a Notice of Hearing and referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on May 22, 2019. A Joint Motion To Continue Hearing was filed by both parties on May 15, 2019. The hearing date was continued to July 24, 2019. Hearing Evidence 12. At hearing, Investigator Bierma testified that, during the jobsite inspection, he examined about six to seven of the worst doors. He testified that work did not meet the professional industry standards because the finished appearance did not match the scope of the work consistent with rust repair and paint. He stated that he observed rust holes and rust bubbles through the new paint. Investigator Bierma opined that work done on rust should last for at least two years and not immediately result in rust holes and rust bubbles. 13. Complainant’s attorney, Allison Preston (Ms. Preston) asked Investigator Bierma about workmanship standards regarding manufacturing specifications, set forth by Dunn-Edwards Paints©, for Aristoshield semi-gloss paint. She asked Investigator Bierma if Respondent adhered to the manufacturing standards. Investigator Bierma opined that based on his observations of the doors that had rust holes and rust bubbles, Respondent did not adhere to the specifications set forth by the paint manufacture because of the existence of those holes and bubbles. He stated that had Respondent followed the industry standards, according to the specifications, the doors would be rust free for a couple of years. 14. Ms. Preston asked Investigator Bierma about an email from Investigator Bierma to Warren Barnhill (Mr. Barnhill), Respondent’s owner. Investigator Bierma testified that, in the email, Mr. Barnhill explained that he gave Complainant two different proposals. Investigator Bierma stated that Mr. Barnhill further stated that Complainant chose the proposal with the lesser value and that was why the doors bubbled up. Investigator Bierma testified that, he informed Mr. Barnhill that unless Mr. Barnhill specifically told Complainant that bubbling was going to be the result, the guiding principle was the Acceptance of Surface policy. Investigator Bierma testified that the Acceptance of Surface policy generally stated that once a contractor began work on a project, the contractor is responsible for the work done. Thus, in this case, the rust bubbles were Respondent’s obligation and should have been done according to manufacture standards, absent a specific agreement or document evidencing such understanding. Investigator Bierma opined that he did not have any knowledge of a warranty disclaimer regarding rust holes and rust bubbles. 15. Respondent’s attorney, David Turnbull (Mr. Turnbull), asked Investigator Bierma whether either party requested clarification of the Directive. Investigator Bierma responded that while there was no disagreement about the work falling below the standard, there was an argument, by Respondent, as to why Respondent was responsible for fixing the work that was done according to the second proposal. Mr. Turnbull asked Investigator Bierma why he indicated, in his Directive, that the wire brushing and the rust protection was not performed in accordance with industry standards. Investigator Bierma stated that based on his observations, he believed Respondent’s work “was failing.” Investigator Bierma stated that his opinion pertained to the task of wire brushing, application of primer, and application of top coat. 16. Mr. Turnbull asked Investigator Bierma whether Complainant would know about the scope of work. Investigator Bierma opined that, in most circumstances, a homeowner who had work done by a contractor, would not know what the results of the work would be but would expect the results to be a “good one.” He reiterated that if the contractor knew that the work would not be good work, then the contractor was obligated to explain that to the homeowner. 17. Mr. Turnbull inquired about an estimate Complainant received from Unforgettable Coatings and Painting. In the estimate, Mr. Turnbull brought Investigator Bierma’s attention to a disclaimer that indicated that wire brushing would not remove all of the existing rust. Investigator Bierma agreed that the estimate did indicate as such and agreed that the disclaimer put Complainant on notice of that issue; albeit a blanket statement. 18. Mr. Turnbull next asked Investigator Bierma if the good doors that he observed were “like new doors.” Investigator Bierma agreed that the good doors were like new doors and stated that those doors were an example of what Complainant expected. 19. Mr. Turnbull asked Investigator Bierma about Respondent’s two proposals. Investigator Bierma reiterated that, during the course of his investigation, he learned that there were two proposals. Complainant chose the proposal which had the lesser value. Mr. Turnbull asked Investigator Bierma about Respondent’s email that contained a list entitled, Recommended Process to Paint Doors (Recommendation). Investigator Bierma stated that the Recommendation made Complainant aware that second proposal’s scope of work would not include removal of rust or filling in holes where rust existed. Investigator Bierma stated that Respondent indicated that the Recommendation included items that Respondent “would have done” under the original proposal. Investigator Bierma, however, opined that this was not a proper disclaimer. 20. At hearing, Dr. James Reade (Dr. Reade), a business owner and board member of Complainant, testified as to his observations. Dr. Reade testified that he observed the painters for one day. He stated that he observed them prep, tape, and paint the doors for his unit. Dr. Reade testified that he did not see them wire brush or use any cleaning tools at any time. Dr. Reade testified that he expected the doors to be free of rust holes and rust bubbles. He stated that the bad doors did not meet his expectations. 21. Ginniann Brown (Ms. Brown), also a business owner and board member of Complainant, testified as to her observations. Ms. Brown testified that she expected the doors to be wire brushed, the rust cleaned, the rust holes filled, the doors painted and treated with rust block, and the job site cleaned. She stated that the doors should have looked like new doors. Ms. Brown stated that Respondent left the rust on the doors and simply painted over the rust. She stated that Respondent left tape and stickers on the doors and left the Complainant’s property messy. When asked about the Recommendation, Ms. Brown stated that it was not a disclaimer because Respondent did not specifically set forth any expectations. She stated that the Recommendation were merely steps. 22. Ms. Brown also stated that the entire project was done much faster than she expected, especially for all the rust work that needed to be completed. She opined that there was no way a crew of three to four people could finish rust repair and paint of 337 doors in seven days. With Ms. Preston’s assistance, Ms. Brown mathematically calculated that each door was completed in approximately 11 ½ minutes. Ms. Brown admitted that Complainant agreed on the second proposal because it was cheaper. Ms. Brown testified that, overall, she was disappointed in the work that was done because the doors did not look like what Complainant contracted Respondent to do. 23. At hearing, Ms. Therrien, community manager for Complainant, testified that she obtained bids and gave the proposals to the Board of Directors (BOD) for review. Ms. Therrien stated that the BOD rejected the original proposal because of the amount. She stated that she requested Respondent to provide a revised proposal with a competitive amount. She stated that she did not request them to reduce the scope of the work. Ms. Therrien testified, however, that Complainant understood that Respondent’s Recommendation was the work that was to be done under the original proposal, not the second proposal. She stated that the Recommendation was not a list of disclaimers, in its entirety, because some of the items on the list were completed, as part of the second proposal. Ms. Therrien admitted that the BOD did not carefully review either of the proposals, in detail, because some of the members stated that they did not have time to read the lengthy proposals and explanations. 24. In the Respondent’s case, Rand Pratt, (Mr. Pratt), owner of Custom Colors by Rand, testified that he is the sole owner of his company and that he and Respondent were not in business together. He stated that it was a coincidence that their company names were similar. Mr. Pratt stated that he has been a licensed painter since 1988. Mr. Pratt stated that he went to Complainant’s address to view the doors. Mr. Pratt opined that Respondent’s work met the industry’s standards because Respondent properly brushed, spot primed, and painted Complainant’s doors. Mr. Pratt stated that if Respondent were to go back and re-brush, prime, and paint the doors, the doors would be damaged. He stated that additional work would cause the doors, with rust holes and rust bubbles, to have bigger holes. He explained that the rust hole was soft and any manipulation of the hole would cause the hole to break through the metal and into the wood. 25. At hearing, Carlos Vazquez (Mr. Vazquez) testified for Respondent. Mr. Vazquez worked on Respondent’s painting crew, for this project. Mr. Vazquez testified that he has been a painter for 10 years. He stated that he has worked on doors with rust. He testified that, in this case, he worked on the doors as follows: he cleaned the rough areas with a cloth, he lightly wire brushed the rusted areas, he primed the area, and then he painted the area once the primer dried. Mr. Vazquez stated that he did not press too hard on the rusted areas because he would have caused a big hole. Mr. Vazquez testified that if he were to go back and wire brush that area, there would be a big hole and it would damage the door completely. 26. At hearing, Mr. Barnhill testified regarding his role as owner of Respondent. Mr. Barnhill stated that his original proposal included full rust repair. He testified that there were some doors that needed more repair work than others and that he presented his proposal accordingly. Mr. Barnhill testified that his original proposal included detailed rust work with rust conversion products. Mr. Barnhill stated that after he submitted his proposal, Ms. Therrien indicated that the proposal was too expensive. Mr. Barnhill stated that he submitted a second proposal that did not address the rust issue. He stated that he sent the Recommendation to specify the work that would have been done, in the original proposal, but not in the second proposal. He even included photos of his past work that were a result of detailed rust repair, similar to his original proposal in this case. 27. Mr. Barnhill opined that Complainant did not fully understand the extent of the work or the cost of the work that needed to be done to properly repair the rust issue. Moreover, Mr. Barnhill stated that he did not believe Complainant fully understood the Recommendation because he was told that some of the members of the BOD did not read the proposals because they were too busy. Mr. Barnhill stated that his intent was to make the doors look like new but after Complainant rejected the original proposal, he was limited to making sure the doors were painted. He stated that that was the work that was expected of Respondent. Mr. Barnhill stated that the work proceeded faster than anticipated because they did not do the full rust repair per the second proposal. 28. Furthermore, Mr. Barnhill testified that he later offered to fix the doors under a new contract. He testified that he would have to use a different approach because if he wire brushed, primed, and painted, over the current job, those actions would damage the doors completely. He stated that Complainant refused to allow Respondent to enter into a new contract and refused to pay Respondent for the remaining balance of the work done. Mr. Barnhill stated that Respondent has been paid $7,784.70 to date. He stated that Complainant owes Respondent $15,805.30. CONCLUSIONS OF LAW 1. The ROC has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41- 1092 et seq. 2. The ROC may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation was not remedied by corrective action.[3] 3. The purpose of the ROC’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.[4] 4. Complainant bears the burden of proof to establish Respondent’s statutory violations 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). 5. Ariz. Rev. Stat. § 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.” 6. Ariz. Admin. Code 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.” 7. This matter lies within the ROC’s jurisdiction. See A.R.S. § 32-1101 et seq. 8. Complainant bears the burden of proof to establish Respondent’s statutory violations 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). 9. There was evidence that there were two proposals. Complainant chose the second proposal because it was less expensive. The second proposal did not have the same detail of work with respect to the rust issue. While a more clear disclaimer as to the scope of the work and the possible consequences of the reduced scope of work would have been more helpful, the history of the prior proposal and the fact that Complainant opted for a less expensive option makes clear the additional work was not part of the contract. Complainant may not regret that decision in light of the results, but that does not necessitate a finding that Respondent was at fault for the work performed. 10. Given that Respondent completed the work pursuant to the second proposal, as requested by Complainant, the resulting issues were not workmanship issues, but were the natural result of Complainant’s choice to not have all the work done that was recommended by Respondent. 11. Therefore, Complainant failed to establish that Respondent’s failed to complete its work in a professional and workmanlike manner in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. RECOMMENDED ORDER It is recommended that on the effective date of the ROC’s final order in this matter, ROC close as dismissed Complainant Ray Ranch Professional Plaza Association’s complaint in Case No. 2018A-05950 against Respondent Custom Colors Contracting LLC License No. 219198. 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, August 28, 2019.

/s/ Antara Nath Rivera Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACZLbEAP. [2] Id. [3] See Ariz. Rev. Stat. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990). [4] See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

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