ALJDEC decisions subject to certification as final

2018A-2441-CHC-ROC · Registrar of Contractors · 2018-11-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 19, 2018 APPEARANCES: Teresa L. Martinez on her own behalf; Tony S. Cullum, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden FINDINGS OF FACT 1. On August 30, 2018, the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for hearing on October 19, 2018 at the Office of Administrative Hearing. 2. Respondent G Good and Sons LLC holds license No. 196952 issued by ROC. In January 2017, Complainant Teresa L. Martinez and her husband Christian Martinez entered an agreement to have Respondent conduct remodeling work at their house in Sedona. 3. The Notice of Hearing shows that the hearing was set to consider the charges made in the Citation and complaint.[1] 4. Through the Citation, ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(8) and (A)(22). The Citation shows that if the Administrative Law Judge finds that any of the alleged charges are valid, ROC may suspend or revoke Respondent’ license. The Citation shows that ROC could not determine whether Respondent has actually committed any of the alleged violations, which is why the matter was set for hearing. The Citation also shows that the Citation itself is not evidence that Respondent has violated any statute or rule. 5. At the hearing, the parties agreed that the allegation that Respondent had violated Ariz. Rev. Stat. section 32-1154(A)(22) was no longer at issue and no substantial evidence was taken related to that allegation. 6. On May 30, 2018, Ms. Martinez filed with ROC her complaint against Respondent. 7. In her complaint, Ms. Martinez made allegations including that she had made repeated attempts to get written change orders from Respondent and to the effect that the final cost of the project was 66% over the original bid price. 8. ROC assigned Investigator Steve Philpott to investigate Ms. Martinez’s complaint. 9. On July 6, 2018, ROC issued to Respondent a Warning Letter showing that it may have violated Ariz. Rev. Stat. section 32- 1158(A) by failing to include in its contract with the Martinezes all the statutorily required elements. 10. On July 13, 2018, ROC issued to Respondent a Directive ordering it to make certain repairs at the Martinez’s house. 11. On August 7, 2018, ROC issued to Respondent the Citation. 12. The parties consider an Invoice dated January 10, 2017, to be their initial contract. That document shows a proposed bid price of $126,200 for work that was based on plans the Martinezes provided to Respondent. Exhibit R1. 13. Through an email dated January 13, 2017, Ms. Martinez provided Respondent with a list of four items that were not listed on the “estimate” Respondent provided on January 10, 2017. Ms. Martinez requested that the four items be added to that “estimate.” Greg Good responded to that email on January 16, 2017, stating that he could get the items priced out and that they could talk about it their preconstruction meeting. Exhibit R4. 14. As the project progressed, Ms. Martinez worked collaboratively with Respondent’s project manager Greg Jones as the two would discuss her ideas and whether those ideas could be carried out considering the layout of the house. 15. After Ms. Martinez and Mr. Jones reached agreement about how various items were to be completed, Mr. Jones would contact Mr. Good and discuss the proposed changes. Mr. Good would then contact Mr. Martinez to obtain clarification about the proposed changes and if Mr. Martinez was in agreement with the proposed course of action Respondent would move forward with the additional work. To Mr. Good’s recollection, Mr. Martinez approved all requested changes. 16. Mr. Good and Mr. Martinez did not routinely discuss the cost of any changes to the scope of work. Mr. Martinez testified that there were only two discussions in which the pricing for changes was discussed, with the total being about $4000. 17. Ms. Martinez acknowledged that the Martinez’s did owe Respondent more than the original estimated price, and she testified that she did not know what the right price should be. 18. On March 31, 2018, Ms. Martinez sent Mr. Good an email expressing her frustration at how slowly work was progressing and providing a detailed list of work that the Martinezes believed had not yet been completed. Some of this work was not included in the original estimate prepared by Respondent. 19. On May 25, 2018, Mr. Martinez and Mr. Good each signed a “cost breakdown on items over budget also items that were not budgeted,” which brought the total for the project to $209,944. Exhibit R2. At that time, the Martinezes made a payment of $59,944, which was payment in full. 20. Respondent argues to the effect that by signing the May 25, 2018 document and making the final payment, the Martinezes were agreeing to the pricing set forth in that document. 21. Mr. Martinez testified however that he was not agreeing to that pricing and that he was still considering the options open to the Martinezes regarding the project. According to Mr. Martinez, he signed Exhibit R2 and paid the $59,944 to avoid having a lien placed on the house. 22. Although Mr. Martinez testified to the effect that he had informed Mr. Philpott of his intentions, there was no evidence that he informed Mr. Good of the same, and Mr. Good testified to the effect that he was not aware that Mr. Martinez’s intention was to reserve any rights. Mr. Good acknowledged however that Mr. Martinez was unhappy about the total cost of the project. 23. Respondent had admitted into evidence a handwritten document purporting to be an accounting of additional costs that had been accrued as of December 10, 2017. Exhibit R14. According to Mr. Good, he had shown R14 to Ms. and Mr. Martinez on or about December 10th, and that Mr. Martinez had been pleased that the cost overages were so low. For their part, the Martinezes each testified to the effect that Respondent had not shown them Exhibit R14 before the complaint was filed. 24. Mr. Philpott testified to the effect that could not recall having seen Exhibit R14 during his investigation, despite the fact that he was looking for documents to show that the original contract had been modified by the parties. Mr. Philpott also testified that he did not see Exhibit R2 as part of the complaint. 25. Ms. Martinez testified to the effect that she had repeatedly asked Respondent for revised cost information and she had admitted into evidence a timeline she had prepared in which she also wrote of her efforts to get revised cost information. But the emails provided by Ms. Martinez show only two requests for pricing information: the January 13, 2017 request for four changes to the scope of work (Exhibit R4) and a September 3, 2017 email in which she requested “a written estimation a punch list deadline for the big projects” (Exhibit C16). CONCLUSIONS OF LAW 1. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 2. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3). 4. A preponderance of the evidence is: The 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.

Black’s Law Dictionary 1373 (10th ed. 2014). 5. Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 6. “Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B). 7. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 8. The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118. 9. Ariz. Rev. Stat. section 32-1154(A) provides that The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: ***** 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. ***** 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….

10. Ariz. Rev. Stat. section 32-1154(E) provides that ROC may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of Ariz. Rev. Stat. section 32- 1154(A)(22). 11. The preponderance of the evidence shows that the Martinezes and Respondent agreed to modify their original contract but they did not memorialize their changes. The preponderance of the evidence also shows that the parties did not have any agreement as to the price of those modifications. Because there was no agreement between the parties as to the price for the revised scope of work, there is no violation of Ariz. Rev. Stat. section 32- 1154(A)(8). 12. It has not been proven by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(8). 13. It has not been proven by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(22). RECOMMENDED ORDER IT IS RECOMMENDED that Case Number 2018-2441 be dismissed on the effective date of the final Order in this matter. 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 is forty days after the date of that certification.

Done this day, November 6, 2018. /s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] The Notice of Hearing does not provide the date the Citation was issued or when the complaint was issued or filed. There appears to be no dispute that the Citation was issued on August 7, 2018 or that the complaint was filed on May 30, 2018.

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

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