ALJDEC decisions subject to certification as final

2018A-142-CHC-ROC · Registrar of Contractors · 2018-06-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kathleen Nannette Amator,

COMPLAINANT,

v.

Restoration Pointe LLC,

License No: 256841

RESPONDENT.

No. 2018A-142-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 8, 2018, 1:00 P.M.

APPEARANCES: Elena Cottam,, Esq., appeared on behalf of Complainant; Brent Bryson, Esq., appeared on behalf of Respondent

ADMINISTRATIVE LAW JUDGE: Roger A. Geddes

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

1. Restoration Pointe, LLC (Respondent), is the holder of License Number 256841 issued by the Registrar of Contractors (Registrar).

2. On or about January 11, 2018, Kathleen Amator (Complainant) filed a Complaint against Respondent with the Registrar alleging abandonment and poor work in connection with repair of water damage work and remodeling performed by Respondent at Complainant’s residence in Vernon, Arizona.

3. After an inspection of the job site on January 25, 2018, the Registrar issued a Directive dated February 6, 2018, requiring Respondent to remedy various alleged violations by February 23, 2018, as follows:

1. The contact has not been completed per signed agreement. Correct by appropriate means.

4. When the Registrar was informed that no further work was performed by Respondent, the Registrar then issued a Citation to Respondent, dated March 6, 2018, for the alleged violation of the following:

a. A.R.S. § 32-1154(A)(2) (departure from or disregard of plans or specifications or any building code standards);

b. A.R.S. § 32-1154(A)(22) (failure to perform corrective action without valid justification).

5. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. The Registrar issued a Notice of Hearing setting a hearing for June 8, 2018, at 1:00 P.M. At the hearing, Complainant Kathleen Amator testified on her own behalf and presented the testimony of Rick Luszczyk, Tim Nation, and Kirt Boylan; Respondent presented the testimony of Preston Webb, Willie Mangum, Bryan Blair, and Jaymeson Wilcock. Chris Allison, the Registrar Investigator (Investigator), testified on behalf of the Registrar. The Tribunal received and admitted Complainant’s exhibit numbers 1 -`18 and Respondent’s exhibit numbers 1 - 33.

6. The Investigator on behalf of the Registrar testified as to his communications with Complainant and Respondent, his inspections of the job site, and the Directive issued by the Registrar as a result of his observations from his inspection. Specifically, he testified that he estimated that 75 per cent of the job was completed. He stated that from his observations, it appeared that Complainant’s total payments made to Respondent were less than the cost or value of Respondent’s work. He stated that he did not address any workmanship issues in the Citation because it was not his practice to do so when the job had yet to be completed.

7. Complainant Kathy Amator testified that Respondent’s work came about due to a leak under her bathroom sink that caused damage to her flooring in both of her bathrooms, the master bedroom, and the living room. She stated the original contract with Respondent (Complainant’s Exhibit 1), was for repair of water damage approved by her insurer for which she initially paid $4,929.48 (Complainant’s Exhibit 2), but that she asked Respondent to do further renovations. She testified that Respondent started the work on October 4, 2017, and that the work was to be completed by December 4, 2017, although it was not completed at that time. She further testified that she received an invoice in November 2017 for approximately $11,000.00, but did not pay it because the job was not close to being completed and she did not believe she had received credits for all of the building materials she supplied for the job. She stated that on November 28, 2017, she was given a new contract to sign, but that she did not sign it, and Respondent thereafter terminated the contract with her. She stated she paid $15,112.40 in total. (Complainant Exhibit 2).

8. Ms. Amator further testified that Respondent never contacted her after the Directive was issued and that she never told Respondent it could not come back to the property to do further work.

9. Tim Nation, a neighbor of Complainant, testified on behalf of Complainant that he estimated that only 25 per cent of the job was completed. He stated he was once a general contractor in California. He further testified that nothing was finished, there was no functioning toilet or shower in master bathroom, no finished flooring, and that one bathroom had not even been started. He acknowledged that Respondent did work that was not in contract, such as the installation of a fireplace.

10. Kirt Boylan, an associate of Complainant’s exterminator contractor, testified on behalf of Complainant that he did an inspection under the home. He stated he found plastic under the master bathroom and found construction debris and cracks in the flooring into the bathroom.. He further testified he saw no evidence of mold.

11. Rick Luszczyk, Complainant’s boyfriend, testified on behalf of Complainant that the work is far from complete. He stated there is one set of pipes missing from vanity. He further testified that he never told Respondent it could not come back to do work and that he never asked Respondent to do work or change any work.

12. Willie Mangum, estimator of Respondent, testified on behalf of Respondent that the scope of the job was originally just water mitigation due to leaking. (Respondent’s Exhibit 3). He stated that he and Complainant’s insurance adjustor did inspections to arrive at a scope of work and that they both used Xactivate software to arrive at estimates and pricing. He stated that the insurance adjustor estimated a net cash value payment of $9,920.29. (Respondent’s Exhibit 4). He further testified that Respondent submitted a bid, dated August 31, 2018, for $13,996.34 for water remediation that was to be paid by Complainant’s insurer. (Respondent’s Exhibit 5). He further testified that Respondent provided Complainant with a bid before work started, dated September 28, 2017, for water mitigation, remediation, and the additional remodeling requested by Complainant in the total amount of $33,565.10 which he stated accounted for materials Complainant supplied. (Respondent’s Exhibit 6). He further stated he prepared a reconciliation of the cost of additional items requested by Complainant and materials supplied by Complainant to arrive at a net credit to Complainant of $198.42. (Respondent’s Exhibit 10). He stated he also prepared an analysis of the total actual work performed by Respondent prior to termination of the contract showing an amount of $20,794.99. (Respondent’s Exhibit 9). Mr. Mangum further testified that he met with Complainant to discuss all items and the costs of the remodeling items requested by Complainant, such as the installation of a gas fireplace, reconfiguration of the master bath shower, and the modification of a hall closet.

13. Bryan Blair, Project Manager of Respondent, testified on behalf of Respondent that he became involved after the emergency water mitigation. He testified he signed the original time and materials contract on behalf of Respondent, dated August 17, 2017. (Respondent’s Exhibit 2). He further testified that he met with Complainant on November 28, 2017, to discuss the costs and new scope of work. He stated he asked her to sign a new scope of work because of the extent of the changes she had made.

14. Jaymeson Wilcock, who did administrative work for Respondent, testified on behalf of Respondent that he would periodically go over the status of Complainant’s project. He stated Complainant had paid the initial 30 per cent of the contract amount as was required under the contract when she paid the amount of $9,932.92 on September 28, 2017. (Complainant Exhibit 2). He further testified that he called Complainant on December 20, 2017, to discuss the project, but that she refused to sign an updated contract.

15. Preston Webb, President and CEO of Respondent, testified on behalf of Respondent that Respondent’s contracts are typically on a time and materials basis because with insurance involved, it is a constantly changing process. He further testified that a revised Invoice No. 2665 was sent to Complainant for $10,868.64, dated November 15, 2017 (Respondent’s Exhibit 20), which was adjusted to $11,813.92. (Respondent’s Exhibit 18). He stated he knew Respondent had completed at least 50 per cent of the job. He further stated that when Complainant did not pay the invoice, he sent a termination letter on February 20, 2018. (Respondent’s Exhibit 28, 29).

CONCLUSIONS OF LAW

1. The Registrar has jurisdiction over this matter, pursuant to A.R.S. § 32-1101, et seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154.

2. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by preponderance of the evidence. See Arizona Administrative Code Rule 2-19-119.

3. To warrant such sanctions by the Registrar, a Complainant must demonstrate by a preponderance of the evidence that Respondent violated the statutory section cited. Proof by a “preponderance” means that “the evidence is sufficient to persuade the finder of fact that the proposition is more likely true than not.” In re: Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994); see also Culpepper v. State of Arizona, 187 Ariz. 431, 930 P.2d 508 (App. 1996). It is “evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” BLACK’S LAW DICTIONARY 1182 (Rev. 6th ed. 1990).

4. A.R.S. § 32-1154(A) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license,

...

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 that 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.

...

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.

5. It should be noted at the outset that even though Respondent did not complete the contract, the Citation in this matter did not allege abandonment of the project without legal excuse, a violation of A.R.S. § 32-1154(A)(1). Rather, the Investigator testified that Respondent’s failure to complete the contract could be a violation of A.R.S. § 32-1154(A)(2), namely, a departure from or disregard of plans or specifications or any building codes.

6. If in fact a contractor’s failure to complete a contract alone could constitute a departure from or disregard of plans or specifications or building codes, Complainant nevertheless has not presented sufficient evidence to establish cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(2). There was no dispute that Respondent did not complete the work. However, Respondent contended it did not complete the contract because it had a right to terminate the contract when Complainant failed to make a progress payment. Section 12 of the contract provides that a 50 per cent progress payment is due upon a majority completion of the project. (Complainant’s Exhibit 1). The evidence, most significantly the testimony of the Investigator, demonstrated Respondent had completed a large majority of the project. The only testimony supporting the position that less than a majority of the job had been completed was that of Complainant’s neighbor, who testified that only 25 per cent was completed. However, he did not provide a foundation for his opinion. Therefore, as the Tribunal finds that a majority of the work had been completed, Respondent was entitled to a progress payment under the contract.

7. As Complainant failed to make any part of the progress payment requested by Respondent, Respondent had a right to terminate the contract. Section 14 of the contract between the parties provides that “Should the Owner fail to pay timely any amount owing under this contract, immediately after notification that compensation is due, Contractor, in addition to any other legal remedies to processes available, may stop work and/or terminate the contract....” (Complainant’s Exhibit 1). The evidence reflects that Respondent sent Complainant a progress payment request, Invoice No. 2665, for the amount of $10,868.64, dated November 15, 2017 (Respondent’s Exhibit 20), which was later adjusted to $11,813.92. (Respondent’s Exhibit 18). When Complainant made no payment at all in response thereto, Respondent stopped work and terminated the contract as it had a right to do under the contract. (Respondent’s Exhibit 28, 29).

8. Complainant argued that one of the reasons she did not make the progress payment was because there were various workmanship issues with Respondent’s work. Neither the Directive nor the Citation included workmanship issues, although Complainant alluded to a forthcoming complaint from Complainant based on such. The Investigator testified that he typically does not raise workmanship issues, if any, if a job has yet to be completed. This practice is understandable considering that a contractor could conceivably remedy workmanship issues during the course of completing the contract. Respondent in fact maintained that whatever workmanship issues there may have been would have been corrected by Respondent during the course of completing the work. Although workmanship was not directly at issue in this proceeding, there was some evidence presented of alleged deficiencies in Respondent’s work. However, the evidence presented was insufficient to show that the cost solely to correct the alleged workmanship issues (as opposed to the cost to correct the issues and complete the job) would even approach the progress payment amount requested by Respondent. Therefore, the Tribunal finds this excuse for nonpayment to be unsupported.

9. Further, the Tribunal is unpersuaded by Complainant’s contention that she was justified in not making a progress payment because she believed she had not received monetary credit for all the materials she had supplied for the job. Respondent stated that it had accounted for all materials supplied by Complainant (which Respondent netted against additional items requested by Complainant) to arrive at a credit to Complainant of $198.42. (Respondent’s Exhibit 10). Complainant presented no evidence to refute Respondent’s calculation.

10. Complainant has also failed to present sufficient evidence to establish cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22) for failure to perform corrective action. Respondent’s proper termination of the contract constitutes a valid justification for its failure to perform corrective action, namely, to complete the contract.

11. Accordingly, Complainant has not established that Respondent’s license should be disciplined for a violation of A.R.S. § 32-1154(A)(2) and A.R.S. § 32-1154 (A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the final order in this matter, that the Citation and Complaint in Case No. 2018A-142 shall be dismissed.

In the event of certification of this 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 the certification.

Done this day, June 28, 2018.

/s/ Roger Geddes

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors