FINACT2018A-05954-ROC.pdf

2018A-05954-ROC · Registrar of Contractors · 2019-05-31



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OAH ALJ Recommendations - AZROC <[email redacted]>

New ALJ Decision transmitted for ROC (2018A-05954-ROC) message

OAH Electronic Decision Transmission System <[email redacted]> Wed, May 8, 2019 at 10:12 AM To: [email redacted]

This is a message from the Arizona Office of Administrative Hearings to inform you that a decision has been transmitted for Registrar of Contractors. The details are as follows:

Decision type: ALJ Decision Matter ID: 2018A-05954-ROC Filed by: OAH Filed on: 5/8/2019 Due Date for Final Agency Action (if applicable): 6/12/2019

You may access this decision at https://portal.azoah.com/aljdec/documents/ROC/2018A-05954-ROC-ALJDecision- 6224.pdf.

To view all available ALJ decisions, visit https://portal.azoah.com/aljdec/documents/ROC/.

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https://mail.google.com/mail/b/AH1rexSVE-j46R-IESedAsjcqb6Bd3760118QW2aTza2W8bVgyqz/u/0?ik=5d3b7d39d0&view=pt&search=all&permthid=… 1/1 RECEIVED 5.8.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Nathan Thomas Green, No. 2018A-05954-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE v. DECISION Dorado Development, LLC, DBA: Claim Worx, ROC License: ROC 223916,

RESPONDENT

HEARING: April 19, 2019

APPEARANCES: Nathan Green, Complainant, Brian Brewer, Respondent and

Qualifying Party, Mike Springer, ROC Investigator

ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson

_____________________________________________________________________

FINDINGS OF FACT

1. Respondent, Dorado Development, LLC, d/b/a Claim Worx, is the holder of

ROC License 223916 [hereinafter, “Dorado”] issued by the Arizona Registrar of

Contractors (Registrar).1

2. On or about May 13, 2018, Nathan Thomas Green [hereinafter, “Green”]

entered into a contract with Dorado2 to restore insured property damage suffered to the

Green’s home 3. On or about December 14,, 2018, the Registrar received a Complaint against Dorado from Green alleging Dorado poor work and abandonment.3 4. The Registrar assigned the complaint to Investigator Mike Springer. On or about January 4, 2019, Investigator Springer conducted a job site inspection [“JSI”] of the

1 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. See Agency Record, pages 30 through and including page 33. See, Agency Record, pages 28 and 29.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 5.8.2019 ROC LEGAL

work of Dorado at the Green’s home. At the JSI, the Complainant was present. The Respondent failed to appear for the JSI. Mr. Springer’s Job Site Notes4 reported: Jobsite General Notes: …The complainant and I went through each item of the Complaint. Complaint Item 1: After garage door was replaced bracket came loose and damaged drywall. Investigator’s Observation: Bracket has been repaired but wood is split. Drywall is damaged just above bracket. Governing Rule: 32 1154 (A) (3) R4-9-108 poor workmanship Complaint Item 2: Has not finished painting house. Drip edge of roof and exterior doors. Investigator’s Observation: New drip edge installed is white (Unpainted). Contract states painting of drip edge. Nothing in contract regarding painting of exterior doors, I believe this was a verbal agreement that I cannot verify. Governing Rule: 32 1154 (A) (3) R4-9-108 poor workmanship.

Complaint Item 3: After brand new roof was installed it leaked causing drywall damage. Investigator’s Observation: Drywall damage in living room and bedroom, staining. Governing Rule: 32 1154 (A) (3) R4-9-108 poor workmanship.

Complaint Item 4: Rain gutters have not been installed. 2 Gutters were reinstalled by Complainant to mitigate water damage to basement. The remaining gutters are not installed. Governing Rule: 32 1154 (A) (3) R4-9-108 poor workmanship. Complaint Item 5: We hired Bryan Brewer to handle our Hail damage insurance claim with State Farm. He was to do the adjusting of the claim to ensure enough funds were received to complete the repairs of our house. He was then to complete the construction repairs as our contractor. We signed contracts with him as both Public Adjuster and Contractor. Then after the adjusting of the claim was done he informed us there is just not enough money to complete all the repairs. We were advised that we should choose which items we wanted repaired. We reluctantly chose to have the roof repaired, new garage door installed, the house painted, and new gutters installed. Leaving several other items to not be repaired. Investigator’s Observation: This is a statement, not something I can report on. Governing Rule: N/A

See, Agency Record, pages 71 and 72.

RECEIVED 5.8.2019 ROC LEGAL

5. Following the JSI, Investigator Springer issued a written directive to Dorado containing a Corrective Work Order [“CWO”] which provided as follows: 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 29, 2019. [emphasis in original].

1. Complaint Item 1: After garage door was replaced bracket came loose and damaged drywall. 2. Complaint Item 2: Has not finished painting house. Drip edge of roof and exterior doors. • Drip Edge only. [emphasis in original] 3. Complaint Item 3: After brand new roof was installed it leaked causing drywall damage. 4. Complaint Item 4: Rain gutters have not been installed. 5. Reinstall chimney cap. [emphasis in original]

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action. 6. Following the issuance of the written directive and CWO, Mr. Green and Inspector Springer conferred by telephone on January 30, 2019. Mr. Green advised that Dorado had attempted no repairs of the items listed in the CWO. 7. On February 1, 2019, the Registrar issued a Citation against Dorado, charging possible violations of A.R.S. § 32-1154(A)(3) - R4-9-1085 and A.R.S. § 32- 1154(A)(22).6 8. A hearing was held on April 19, 2019. 9. Investigator Springer testified that he learned from the Complaint and from Mr. Green, that Mr. Green’s home had been severely damaged by a severe hail storm, that an insurance claim with Green’s insurance carrier was approved for repairs and that Dorado undertook to act as Green’s Public Adjuster agent with the insurance carrier to obtain the carrier’s authority and the carrier’s funding to commence repairs. Dorado contracted with Green to provide General Contractor services for the Green’s residence

5 Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108 (below standard workmanship] 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.

RECEIVED 5.8.2019 ROC LEGAL

repairs.7 Mr. Springer testified that at the compliance inspection on January 4, 2019, The Complainant was present. Notwithstanding prior written notice of the JSI, Dorado did not appear or participate in the JSI. Inspector Springer testified consistently with his Job Site Inspection notes regarding his findings at the JSI that Dorado’s construction was below standard workmanship in that after garage door was replaced by Dorado, one of the garage door brackets broke loose and damaged drywall in the garage, that Dorado had not finished painting Green’s house [the Drip edge of roof and exterior doors required paint]; after a brand new roof was installed by Dorado, the roof leaked causing drywall damage to the Green’s interior; Green’s rain gutters had not been installed; and, the Green’s chimney cap was not installed. He testified that each of the listed items in the CWO involved below standard workmanship. 10. Complainant Green testified that he believed Dorado’s project to remove and replace the roof commenced August 10, 2018 and was believed to have been completed on August 10, 2018. Prior to the roof, Dorado installed a replacement garage door and painted the house. A spring from the installed garage door snapped off after install and made a significant hole in the Garage sheet rock. The garage door has never operated correctly since Dorado’s reinstall attempt. Green testified that after a brand new roof was installed it leaked causing drywall damage. He testified that the gutters on the home were removed for painting and re-installed and the gutters are painted the wrong color different than installed siding. He said the chimney cap was not installed. 11. Testifying for Respondent Dorado was its qualifying party, Brian Brewer [“Brewer”] testified that he contracted with Green and negotiated with Green’s insurance carrier to provide repairs to Green’s home on Green’s insurance claims for damages to the home from significant storm damage. He testified that the garage door of the home was rendered unusable from the storm. He stated the Green’s roof was removed on August 9, 2018 and replaced a day later. He agreed that he did not paint the roof’s drip edges. He said that the product is received with the manufacturer’s white coating. He was of the opinion that painting of the drip edge was therefore not in the scope of work.

See Agency Record, pages 30 through and including page 33, supra.

RECEIVED 5.8.2019 ROC LEGAL

Notwithstanding, he admits on cross-examination that it is standard practice to paint drip edges a color matching the fascia, windows and the body of the house. The house was painted by Dorado in green and yellow.8 The drip edge delivered from the manufacture was a light cream in color. No evidence was introduced to demonstrate whether the manufacture’s product was actually paint, was a protective coating of some sort, whether the color was from an undercoat or primer.9 Brewer advised that Dorado replaced Green’s garage door that was damaged by storm. The garage door that was installed was from a manufacturer different from the door that was removed. He admits that the hole resulting from the garage door spring snapping and creating a hole in the sheet rock would prevent the garage door from opening and from operating correctly. Brewer testified as to installing a garage door from a different garage door vender. The door that was installed was not compatible with the hardware and design of the original door that was replaced. Brewer stated that “I had no idea the garage door would not work.” He said, “The door required proprietary parts that cost more. He admits he did not repair the damage done by the garage door spring snapping off and that he did not replace or repair the new garage to such that is could be opened as intended. Mr. Brewer admitted that he refused to install the Green’s rain gutters because, he asserted, he was not paid $457.50 that Dorado claims is past due and owing. Brewer claims that, since the amount was still owing and unpaid, he had a right to stop work – and indeed - he stated he did stop work for non-payment of the $457.50.10

8 See, See Agency Record, JSI photographs P11 and P13 at page 154 and page 156. What is clear, is that Brewer admits Dorado did not paint the drip edges as required by the Directive’s CWO. No evidence has been introduced that Dorado or Brewer provided any of the written notice required t is required by the “Prompt Pay Act’: A.R.S § 32-1129, et seq., specifically A.R.S § 32-1129.07. The Arizona Prompt Pay Act provides numerous benefits and protections for Contractors. These benefits include a right to timely payment, 1.5% interest per month on unpaid invoices, and the right to stop work for nonpayment (after notice). The Prompt Pay Act applies to commercial and residential work, but not to government work. The Act only applies to Owner-occupied dwellings if the Contractor includes certain language on the front page of all its estimates and invoices. No evidence is of record that the required notice was provided to Green. The statutory language required to appear in the contract is as follows: Notice to Owner of Applicability of Arizona Prompt Pay Act

(Notice required by Arizona Revised Statutes Section 32-1129.07). Your obligations to pay your Contractor are subject to the Arizona Prompt Pay Act. That Act is set forth in Section 32-1129, RECEIVED 5.8.2019 ROC LEGAL

Mr. Brewer admitted that the chimney cap was never installed on the Green’s home. He said that the storm that originally caused the damage that Dorado was contracted to repair, caused the chimney cap to be blown off-site by the storm and was never recovered. He said he did not replace the chimney cap because he did not have the part. A couple of weeks prior to hearing, Brewer said Green advised him where he could order the part. Mr. Brewer stated that he removed the Green's gutters to paint them, but never reinstalled the gutters because he asserts a right to stop work for the asserted non- payment of the $457.50. [See footnote 10, supra]. 12. Administrative notice is taken of Dorado’s prior License record as reflected on the Registrar’s public website on May 6, 2019. The Registrar’s prior License record for Dorado reflects that Dorado’s General Residential B General Residential Contractor License No. 256686 was first issued on August 26, 2006. There is no record that Dorado has ever been disciplined as a result of a Complaint and that its license is currently active. Dorado’s prior license history is a mitigating factor. 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 Dorado’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

Arizona Revised Statues, and Section 32-1129.01 through 32-1129.07, Arizona Revised Statutes. The full text of the Statues are available at your local public law library or the internet. Under the Act, you have the right to withhold all or a portion of a payment to a contractor for a variety of reasons, including defective construction work that has not been corrected. However, in order to do so, you must issue a written statement setting forth in reasonable detail your reasons for withholding payments within fourteen (14) days after the date you receive a billing or estimate. If you fail to issue the written statement within that period, the billing or estimate will be deemed approved. Once the billing or estimate is deemed approved, you must pay the billing or estimate within seven (7) days. Generally, you are limited by the Act to withholding only an amount that is sufficient to pay the direct costs and expenses you reasonably expect to incur to protect you from loss for which the Contractor is responsible. You are encouraged to read the Act in full to know your obligations and rights.

RECEIVED 5.8.2019 ROC LEGAL

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, garage sheet rock repair, garage door install repair, drip edge on roof is not painted, roof gutters were not restored to their location after removal for painting, and the chimney cap has never been installed. Brewer, the qualifying party for Dorado, admitted that work was stopped on this project because, Brewer said, $457.50 was due and unpaid. There is no evidence presented that Dorado’s contract, estimates or invoices carried the Right to Stop Work Act’s required disclaimer. Dorado is not entitled to assert rights to stop work. Therefore, Complainant DID prove by a preponderance of the evidence that Dorado 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. As to the issue of poor workmanship, the credible evidence established by a preponderance that x after the garage door was replaced the door’s bracket came loose and damaged drywall; x Has not finished painting Green’s house. The home’s drip edge of its roof and exterior doors still require paint; x After brand new roof was installed, it leaked causing drywall damage. x The home’s rain gutters have not been installed. x The home’s chimney cap hs not been installed. Therefore, Complainant DID establish by a preponderance of the evidence that Dorado 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

11 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.” RECEIVED 5.8.2019 ROC LEGAL

5. Green has established by preponderance of the evidence that Dorado violated A.R.S. § 32-1154(A)(22).13 6. Pursuant A.R.S. § A.R.S. § 32-1154(E), the Registrar may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of A.R.S. § 32-1154(A)(22). The failure by the licensee to pay any civil penalty imposed under this subsection results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty. A person who is or was named on a license of a contractor when an act or omission occurs that results in a civil penalty may not receive a new license under this chapter until the entire civil penalty is paid. 7. RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that on the effective date of the Order, the Registrar shall suspended Respondent, Dorado Development, LLC, d/b/a Claim Worx’s License Number 223916, for three (3) days. FURTHER IT IS RECOMMENDED that, in accordance with A.R.S. § A.R.S. § 32- 1154(E). a civil penalty in the amount of $500.00 be assessed against Dorado Development, LLC, d/b/a Claim Worx’s License Number 223916 FURTHER IT IS 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 shall revoke Dorado Development, LLC, d/b/a Claim Worx’s License Number 223916, 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.

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). RECEIVED 5.8.2019 ROC LEGAL

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 May 7, 2019.

/s/ Randolph D. Wolfson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors