ALJDEC decisions subject to certification as final

2018A-2126-ROC · Registrar of Contractors · 2019-01-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 08, 2019 at 1:30 PM. APPEARANCES: Valerie Kemper (“Complainant”) appeared on her own behalf with Dennis Bierma as a witness. Michael Dulberg, Esq. appeared on behalf of Happy Dog Builders, LLC (“Respondent”) with Stuart Price as a witness. Maryann Clark observed. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Order to the Director of the Registrar of Contractors (“ROC”). FINDINGS OF FACT Background and Procedure 1. According to the ROC’s public website, on or about August 02, 2017, the ROC issued License No. 314980, B general residential contracting license, to Respondent.[1] On or about March 05, 2018, the ROC issued License No. 318602, B-2 general small commercial contracting license, to Respondent.[2] Mr. Stuart Walter Price (“Mr. Price”) is the Qualifying Party/Member on both licenses. Respondent’s address of record on each license is P.O. Box 97723 Phoenix, AZ 85060-7723. 2. Administrative notice is taken that no discipline has been issued against either license. There is one open case against License No. 318602 which is presumed to be Complainant’s. License No. 318602 has an active $5,000.00 surety bond issued by Travelers Casualty and Surety Company of America. License No. 314980 has an active $9,000.00 surety bond issued by Merchants Bonding Company. 3. Complainant is a neuropsychological service provider with her own practice located at 13575W. Indian School Rd, Ste. 500, Litchfield Park, AZ 85340. 4. On February 01, 2018, the parties entered into a contractual agreement whereby Respondent agreed to perform commercial remodeling for Complainant, at the above-captioned business address, for $44,628.00. The scope of the project included blowing insulation in west and south- facing walls, installing new cabinetry and flooring, wall framing and window installation, sprinkler and light installation, plumbing, and paint. 5. Respondent began the commercial remodeling project on February 16, 2018. The project was completed on or about April 13, 2018. 6. On May 04, 2018, Complainant filed a complaint with the ROC alleging that Respondent abandoned her commercial remodeling project, and further alleged that the work Respondent had performed on the project was subpar. Complainant attached a copy of the parties’ contract and four check stubs. 7. The ROC received Complainant’s complaint on May 10, 2018. The ROC assigned Case 2018-2126 to Dennis Bierma (“Investigator Bierma”) for investigation. 8. On May 14, 2018, the ROC issued a Jobsite Inspection Notification letter to both parties advising receipt of Complainant’s complaint.[3] The parties were advised that a jobsite inspection would take place on June 01, 2018, at 2:00 p.m.[4] 9. On June 01, 2018, Investigator Bierma conducted a review of the contract executed between the parties and inspected the work that had been done on the project to date. Investigator Bierma also took photographs of the property. When he was finished Investigator Bierma drafted inspection notes.[5] 10. On June 07, 2018, Investigator Bierma issued a Directive from the Registrar to Respondent because he substantiated Complainant’s allegation that Respondent’s work failed to meet minimum workmanship standards.[6] Respondent was put on notice that it had until June 27, 2018, to notify the ROC of its compliance with the corrective order or face discipline pursuant to Ariz. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1154(E).[7] 11. On October 04, 2018, the ROC issued a Citation to Respondent under Ariz. Admin. Code R4-9-108 and Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32- 1154(A)(22).[8] Respondent was given until October 19, 2018, to respond with its Answer.[9] 12. On October 09, 2018, Respondent, through its attorney, submitted its Answer to the ROC.[10] Respondent denied all Complaint allegations and argued that all corrective work required by the ROC’s Directive were either completed to Complainant’s satisfaction or payment was provided to Complainant as negotiated remediation. 13. On November 23, 2018, the ROC referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on January 08, 2019. Per the Notice of Hearing the issue to be determined is whether the ROC has cause to discipline Respondent’s license based on the following charges: Charge 1: A violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3). Charge 2: A violation of 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. 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 from the date of issuance of the directive.”).[11] Hearing Evidence 14. Complainant appeared on her own behalf with Investigator Bierma as a witness, and submitted Exhibit A into the evidentiary record. Respondent appeared with counsel, called Mr. Price as a witness, and submitted Exhibits 1-24 into the evidentiary record. The ROC’s electronic hearing file was also admitted into the record as its own exhibit. Complainant’s testimony 15. Complainant testified that she hired Respondent to remodel her office, noting specifically that her main point of concern was the insulation of patient suites to ensure patient privacy and compliance with the Health Insurance Portability and Accountability Act of 1996. Per Complainant, she paid Respondent $44,506.67 prior to the commencement of the project. 16. Complainant testified that she filed her complaint with the ROC for four reasons: (1) because she believed Respondent intentionally deceived her regarding insulation she paid extra for; as she believed no insulation had been blown and the subcontractor invoice she had received was fraudulent, (2) because she was unsatisfied with Respondent’s workmanship as outlined in her complaint, (3) because she believed her dissatisfaction with Respondent’s workmanship equated abandonment of the project as Respondent’s remediations were not to her satisfaction, and (4) because she was dissatisfied with what she perceived to be Respondent’s “disrespectful” conduct towards her and her staff. 17. Per Complainant, she moved into her renovated facility in March of 2018 and realized shortly thereafter that she could hear patients and their providers through the walls. It was at this time Complainant took her workmanship concerns to Respondent. Complainant admitted that although Respondent engaged in remediation efforts, she restricted project access due to behaviors she perceived to be “disrespectful” and “harassing” by Respondent and his trades. 18. Complainant testified that she also wanted more oversight over the remediation work because she had a lack of confidence that Respondent would perform the work completely and/or correctly. Investigator Bierma’s testimony 19. Investigator Bierma testified that he conducted a jobsite inspection on or about June 01, 2018. Per Investigator Bierma, the most prevalent issue was that a building permit had not been obtained from the city of Litchfield Park, Arizona. According to Investigator Bierma, it was Complainant’s responsibility to obtain all necessary permits prior to the commencement of the project, but that once the project started that responsibility shifted to Respondent. Investigator Bierma testified that he substantiated complaint items 1-5, 7, and 9-14 regarding Respondent’s failure to meet ROC minimum workmanship standards. 20. At the expiration of the Directive compliance deadline Investigator Bierma asked Complainant if Respondent had sufficiently remediated the action items. Because Complainant informed him that not all of the items had been properly remediated, Investigator Bierma issued a Citation to Respondent on October 04, 2018. 21. Investigator Bierma further testified that he conducted a prehearing inspection on January 07, 2019, whereby he determined that Respondent had sufficiently addressed and completed remediation of all complaint items identified on the Directive. Investigator Bierma noted that although Complainant was not satisfied with all of Respondent’s remediation work, that her dissatisfaction with Respondent’s quality did not prohibit Investigator Bierma from finding that Respondent’s work satisfied the ROC’s minimum workmanship requirements and adherence to the Directive. Investigator Bierma also testified that the only outstanding issues on the project was complaint items 2. 22. Regarding complaint item 2, Investigator Bierma testified that the flooring had lippage issues, including gapping, and unsymmetrical grout lines. Investigator Bierma acknowledged that the flooring issue was not explicitly identified in complaint item 2, and that Respondent unlikely had a reasonable opportunity to remedy the issue prior to the Directive deadline or hearing. 23. Addressing Complainant’s concern regarding complaint item 3, Investigator Bierma testified that while Respondent’s work satisfied the ROC’s Directive, there may be an issue if a city building inspector determines Respondent’s work on the embedded lighting requires “red tagging” as it does not satisfy one or more city codes. Mr. Price’s testimony 24. Mr. Price testified that he attended Investigator Bierma’s jobsite inspection and that he complied with the Directive that was issued as a result; including performing remediation work that was not included in the Directive. 25. Mr. Price testified that he was unaware there were any issues with the flooring on the project until he was notified by Investigator Bierma during the prehearing inspection. According to Mr. Price, he did not deduce a workmanship issue of the flooring during his review of complaint item 2 from the Directive. 26. Per Mr. Price, although he completed Complainant’s commercial remodeling project on or about April 13, 2018, a few items remained on the “punch list” per his walkthrough with Complainant. He was unable to address the punch list, however, because Complainant filed her complaint with the ROC shortly thereafter. 27. Mr. Price testified that he had constructed a wall for Complainant and completed the flooring on each side of the wall separately, but that Complainant asked for the placement of the wall to be modified and in doing so the newly joined flooring was not symmetrical. 28. Mr. Price further testified that the embedded lights that had been installed had been inspected by an electrician and approved. 29. Mr. Price also testified that had hired a subcontractor and believed that the insulation of Complainant’s walls had been properly blown, as scheduled. Mr. Price denied lying to Complainant about the status of the insulation. 30. Mr. Price denied participating in or having knowledge of any harassment by his trades towards Complainant or her staff during the project. CONCLUSIONS OF LAW 1. The ROC has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A).

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.[12]

3. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[13] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[14]

4. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[15] A preponderance of the evidence is “[t]he 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.”[16]

5. Ariz. Admin. Code R4-9-108 holds, in pertinent part, that a contractor shall perform all work in a professional and workmanlike manner and that a contractor shall perform all work in accordance with any applicable building codes and professional industry standards. Ariz. Rev. Stat. § 32-1154(A)(1) holds, in pertinent part, that the holder of a license shall not abandon a contract or refuse to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

6. Ariz. Rev. Stat. § 32-1154(A)(3) holds that a holder of a license may not violate a rule adopted by the ROC.

7. Ariz. Rev. Stat. § 32-1154(A)(22) holds, in pertinent part, that a holder of a license may not fail to take appropriate corrective action to comply with this chapter or 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 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. The ROC has the authority to issue license discipline under this provision, including summary suspension, revocation, or imposing a civil penalty or recovery fund award.

8. Ariz. Rev. Stat. § 32-1154(E) holds, in pertinent parts, that the ROC may impose a civil penalty not to exceed five hundred dollars on a contractor for each violation. The failure by the licensee to pay any civil penalty imposed results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty. It also holds that no future license may be issued to an entity consisting of a person who is associated with the contractor, unless payment of any outstanding civil penalty is tendered.

9. It is undisputed that the ROC issued its Directive to Respondent on June 07, 2018, and required Respondent’s full compliance by June 27, 2018. A review of the credible evidence in the record establishes that Respondent complied with the ROC’s Directive. 10. Here, Complainant initially alleged fourteen complaint items regarding Respondent’s workmanship. In his Directive, Investigator Bierma substantiated twelve complaint items. At the hearing, both Investigator Bierma and Mr. Price testified that corrective work was completed by Respondent. To that end, Complainant testified that she was not satisfied with Respondent’s remediation work, but did not deny that Respondent made attempts to correct deficiencies as outlined by the Directive. 11. During her testimony, Complainant identified three things she took issue with regarding the project: her belief that Respondent was dishonest about the insulation of the west and south walls, her dissatisfaction with the workmanship of the embedded light fixture, and her displeasure with what she perceived to be Respondent’s disrespect of her and her staff. Because Complainant’s last issue is outside the purview of the ROC’s jurisdiction it shall not be addressed by this tribunal. Regarding Complainant’s other two contentions, the evidence of record is insufficient to sustain her burden of proof. Here, Complainant did not provide any evidence to substantiate her allegation that Respondent did not blow insulation as contracted, or that Respondent knowingly falsified an insulation invoice. As for the embedded light issue, Investigator Bierma testified that Respondent’s work on the fixture passed the ROC’s minimum workmanship standards. In fact, Investigator Bierma testified that Respondent had remediated all of the complaint items identified for remediation in the Directive. 12. Because Complainant has not shown that Respondent did not complete the job per their agreement she has failed to sustain her burden of proof pursuant to Ariz. Admin. Code R4-9-108, and thereby Ariz. Rev. Stat. § 32-1154(A)(3). 13. Furthermore, because Complainant has not established by a preponderance of the evidence that Respondent failed to take appropriate corrective action to comply with the Directive that was issued in this matter, Complainant has also failed to established cause for the ROC to suspend or revoke Respondent’s contractor’s license under Ariz. Admin. Stat. § 32-1154(A)(22). RECOMMENDED ORDER Based on the foregoing findings of fact and conclusions of law, IT IS RECOMMENDED that that on the effective date of the Final Order in this matter, that this case shall be dismissed. 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, January 24, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACWIvEAP. [2] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACWEgEAP. [3] See Hearing File, page 86. [4] Id. [5] See Hearing File, pages 89-92. [6] See Hearing File, page 82. [7] Id. [8] Hearing File, pages 17-23. [9] Id. [10] See Hearing File, pages 11-13. [11] See Hearing File, pages 17-23. [12] 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). [13] Ariz. Rev. Stat. § 41-1092.07(G)(2); Ariz. Admin. Code R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [14] See Ariz. Admin. Code R2-19-119(B)(2). [15] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [16] Black’s Law Dictionary at page 1220 (8th ed. 1999).

-----------------------

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