ALJDEC decisions subject to certification as final

2018A-2755-CHC-ROC · Registrar of Contractors · 2018-11-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 26, 2018, at 1:00 p.m. APPEARANCES: Eric Edward Stewart (“Mr. Stewart,” Complainant1); Jamie Heller (“Ms. Heller,” Complainant2); John Anderson (“Mr. Anderson,” representative for 180 Degrees Inc., “Respondent”); Tyler Sternberg (“Mr. Sternberg,” witness1 for Respondent): Kevin Lindsey (“Mr. Lindsey,” witness2 for Respondent); Will Bruder (“Mr. Bruder,” witness3 for Respondent); and Steve Klein (“Investigator Klein,” investigator for the Registrar of Contractors “ROC” or “Registrar”). ADMINISTRATIVE LAW JUDGE: Linda Marie Brown _____________________________________________________________________ The hearing was convened to determine whether Respondent violated the charged provisions Arizona Administrative Code R4-9-108, minimum construction standards, and thereby of A.R.S. § 32-1154(A)(3); and A.R.S. § 32-1154(A)(22) failure to take appropriate corrective action without valid justification, as alleged by Complainant and as cited by the Registrar. Findings of Fact, Conclusions of Law and Recommended Order are made based on the testimony and evidence presented at hearing. FINDINGS OF FACT 1. Complainant is the owner/occupant of a residence located at 66 W. State Avenue, Phoenix, Arizona 85021-8752. 2. 180 Degrees Inc (“Respondent”) located at 4955 North 7th Avenue, Phoenix, Arizona 85013-2405, is the holder of Arizona Contractor License No. B.164946-R,[1] listed as a General Residential B General Residential Contractor. John Trahan is named as both the qualifying party/member. Respondent’s license is current as of the date of this hearing. 3. Based on the Arizona Corporate Commission website, 180 Degrees, Inc. was formed in March 21, 2001, and is a registered domestic (for profit) business corporation. Respondent is an active entity listed in good standing and operating as a construction entity. John Anderson is listed as a Shareholder at formation, and Director as of July 17, 2008.[2] 4. On or about June 18, 2018, Complainant submitted a Complaint to the Registrar alleging ten (10) complained of issues against Respondent[3] to include poor workmanship. Complainants indicated in their Complaint that they contracted with Respondent on or about October 13, 2017, and work started on October 16, 2017. A copy of the parties AIA Document A103™ – 2007 Standard Form of Agreement Between Owner and Contractor Contract was submitted along with the Complaint. Additionally, Complainants indicated that the work stopped on March 26, 2018, and that the original contract amount was $318,181.47. However, they paid a total of $330,021.06. 5. The following payment receipts[4] were attached to Complainant’s Complaint made payable to 180 Degrees Inc, as follows: Date Check No. Amount a. 10/20/2017 wire transfer $65,708.46 b. 11/13/2017 105 $42,466.12 c. 12/18/2017 107 $86,550.04 d. 02/06/2018 108 $67,479.33 e. 05/15/2018 112 $67,817.11 6. Complainant provided in its Complaint various copies of invoices, estimates and proposals representing various subcontractors hired to perform work on the Heller-Stewart Remodel. Included in these documents were specifications regarding materials and labor for drywall work performed by Drywall Concepts, LLC. A document listed as Exhibit A – control estimate SOV dated October 16, 2017, listed line item #41, div. 9, under general requirements as drywall by contractor Drywall Concepts, in the amount of $10,620.00 per proposal dated July 5, 2107; and under line item #75, div. 9, under scope B garage, drywall, by contractor Drywall Concepts for $3,100.00 per proposal dated July 25, 2017.[5] 7. Investigator Steve Klein was assigned to investigate the Complaint. On June 19, 2017, Investigator Klein sent the parties notice that a Complaint was filed and that a jobsite inspection was scheduled to take place on July 26, 2018, at 2:30 pm.[6] The letter indicated that the Complainant is required to be present and that the Respondent’s presence is requested and encouraged. 8. Investigator Klein performed a Jobsite Inspection on July 26, 2018. Eric Stewart for Complainant and John Anderson for Respondent were present. Investigator Klein uploaded photos to case and evidence files. Of the alleged complained of items listed on the Complaint, Investigator Klein substantiated five (5) items, as follows: “Complaint Item 5[7]: Gauge of galvanized corrugated steel on garage not what was contracted. Galvanized corrugated steel on garage shows substantial dents at rivets. Investigator’s Observation: It appears I lighter gauge was used that was specified in the contract. • Respondent shall complete project per original contract agreement, properly executed changed orders and manufacturers installation instructions. Governing Rule: Violation of Any Rule Adopted by the Registrar 32-1154 A-3 Namely Rule R4-9-108. Complaint Item 6: Mud and tape lines show in garage ceiling when garage door is closed & light on Investigator’s Observations: Areas specified in contract to be level 5 smooth finish should be correct. Governing Rule: Violation of Any Rule Adopted by the Registrar 32-1154 A-3 Namely Rule R4-9-108. Complaint Item 7: Mud and tape lines show in family room ceiling when room is lit by tape lights. Investigator’s Observations: Areas specified in contract to be level 5 smooth finish should be correct. Governing Rule: Violation of Any Rule Adopted by the Registrar 32-1154 A-3 Namely Rule R4-9-108. Complaint Item 8: Space between master bath door and wall uneven top-bottom when door is closed. Investigator’s Observations: Verified revel issue next to door. Walls should be straight within ¼” measured from floor to ceiling at corners. Governing Rule: Violation of Any Rule Adopted by the Registrar 32-1154 A-3 Namely Rule R4-9-108. Complaint Item 9: HVAC vents in family room shelf left without vent covers, uneven openings Investigator’s Observations: Respondent shall complete project per original contract agreement. Governing Rule: Violation of Any Rule Adopted by the Registrar 32-1154 A-3 Namely Rule R4-9-108.”[8]

5. A Directive issued on July 31, 2018, requiring proof of compliance by Respondent no later than August 10, 2018, to remedy Complaint Items 5, 6, 7, 8 and 9 by appropriate means.[9] 6. On August 14, 2018, Investigator Klein issued a Directive Compliance letter stating “No compliance inspection, received email from Complainant stating directive wasn’t addressed by Respondent.”[10] 7. On August 16, 2018, a Citation was issued citing the following: 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); and 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 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] 8. The Registrar provided warning to Respondent that failure to answer the citation by August 31, 2018, will be deemed an admission. Respondent submitted its Written Answer to the Citation on August 27, 2018. In its reply, Respondent asserts that they “were not apprized that the owner had refused our request for a time extension to complete the work until we received the citation paperwork.”[12] Respondent further set forth a recap of the work they performed to date and the status on other scheduled work to be performed such as re-skimming of the drywall at the living room ceiling, garage ceiling, and wall that was out of plumb; drywall repairs will be performed by a plaster subcontractor; the metal siding is being sourced out of state and will be scheduled for replacement once material availability is known; and the architect is responsible for providing the registers at the living room per their onsite discussion with the inspector.[13] 9. A Notice of Hearing was sent to the parties on September 14, 2018, advising that a hearing is scheduled on the charges made in the Citation and Complaint to be held before an administrative law judge at the Office of Administrative Hearings. HEARING EVIDENCE 10. At hearing, the parties moved to admit the following list of exhibits: Complainants Exhibits 1 through 24; and Respondent’s Exhibits 1 through 8, with no objection. Complainant’s objection to Respondent’s Exhibits 9 and 10 was sustained as settlement or offers of settlement, and therefore Exhibits 9 and 10 were not admitted. 11. Jaime Heller (“Ms. Heller”) invoked Arizona Administrative Code (A.A.C.) R9-19-118 witnesses; exclusion from Hearing, and at the Administrative Law Judge’s discretion, witnesses who were not parties to the proceeding were excluded from the hearing room. 12. Ms. Heller stated in her Opening Statement that while work has been performed and complete as of October 23, 2018, the work is still bad workmanship. Additionally, performance in response to the Registrar’s Directive required a total of 84 days to complete even when access was never denied; and therefore, Respondent should be subject to discipline for violations as set forth in the Citation. 13. John Anderson for Respondent (“Mr. Anderson”) argued that Complainant denied it necessary extensions to complete the work. Mr. Anderson stated that the work was subcontracted and that suppliers were an issue and that rain caused further delay. 14. The parties appeared to be in agreement the Complaint Items Nos. 5 and 9 were complete; however, there appears to be disagreement on whether Complaint Items 6 and 7 were performed to workmanship standards; and whether the drywall was properly applied when repairing the space between the master bath door and wall as listed under Item 8. 15. Investigator Klein testified as to his involvement in the matter. He stated that he telephoned the Complainant on August 14, 2018, and was advised the work was not complete. He also testified that Respondent requested additional time through an email and that Complainant was okay with this request provided they had an estimate completion date. 16. Investigator Klein credibly testified that a prehearing inspection took place the morning of the day of the hearing. Eric Edward Stewart (“Complainant1) and Kevin Lindsey and Sheldon Lindsey, drywall subcontractors and representatives for Respondent were present. Investigator Klein testified that he found all items listed in the Directive to be complete. 17. Complainant questioned Investigator Klein on his familiarity of workmanship standards as it applies to drywall and levels of finish. Investigator Klein replied that Level 1 is a coarser finish and Level 5 is a smoother finish. He also testified that the corrective drywall work meets minimum workmanship standards. 18. Additional testimony was provided regarding the lighting reflection on the family room and garage ceiling and whether there were any notable imperfections to which Investigator Klein replied that he found at his prehearing inspection work listed on the Directive to be remedied and within workmanship standards. 19. Complainant in its testimony continued to assert its dissatisfaction with the workmanship, particularly, he argued that Respondent alleged he was not readily able to obtain the galvanized corrugated steel to remedy the garage when Mr. Stewart was able to locate it.[14] Complainant expressed reasonable discontent in the process of the remodel given the substantial costs involved and believed Respondent did not provide a prompt, professional response in addressing its’ concerns. 20. Complainant provide photographs in its Exhibit 18 of the existing drywall that was patched outside the door frame applied after repair to the space between the master bath door and wall uneven top-bottom when door is closed was complete.[15] 21. Respondent provided testimony and responded to various questions from Complainant. Respondent stated that they employed the most efficient methods to addressing the items listed on the Directive.

22. Will Bruder, the architect who drafted the remodel plans testified that any complained of light shadowing is the result of the change in light direction and light source such as nighttime and the use of LED lights. 23. Kevin Lindsey, drywall subcontractor for Respondent testified that he has 30 years in the trade and had experience in applying Level 5 drywall finish. He stated he applied the drywall for this project and explained the process in applying a Level 5 drywall finish which is what the specifications called for in the Heller-Stewart Remodel. He testified that he noticed some air bubbles but those have been retouched and corrected. Mr. Stewart questioned Mr. Lindsey’s knowledge on workmanship standards as set forth by the Drywall Finishing Council. Mr. Lindsey was unaware of this organization. 24. In closing, Complainant proposed severe discipline and requested Respondent’s contractor’s license be suspended for at least the number of days they believe the contractor delayed to remedying the work set forth in the Directive and/or its disregard of said Directive, in addition to civil penalties. 25. Respondent stated in its closing that it has meet its burden that no discipline should be imposed, and that any delays were due to factors beyond its control, and that they proved that any alleged deficiencies to its workmanship have been remedied.[16] CONCLUSIONS OF LAW 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. To warrant such sanctions by the Registrar, 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). Credible testimony established Respondent performed substandard work, specifically, the drywall application outside the master bath door as illustrated by Complainant’s photograph found in Exhibit 18 of its Disclosure Statement and Complainant’s Exhibits and as determined in the Directive under Complaint Item 8, as not complete in a professional workmanlike manner in violation of A.A.C. R4-9-108[17] and thereby of A.R.S. § 32-1154(A)(3).[18] This tribunal agrees with Respondent that the alleged lighting issues that purport to show imperfections is likely due to the lighting imposed upon the surface. An A.R.S. § 32-1154(A)(22)[19] violation is warranted. While Respondent did made good faith efforts to take corrective action to complete the items set forth in the Directive, it failed to timely complete the drywall application around the outside of the master bath door to a Level 5 finish as the photograph submitted in Complainant’s Exhibit 18 depicts an uneven, unblended coarse level finish. At hearing, Investigator Klein testified that all other items on the Directive were complete to workmanship standards. The preponderance of the evidence established that Respondent failed to timely remedy the drywall touch up to an even Level 5 appearance on the outside of the master bath door. This failure resulted in poor workmanship standards. While the Respondent attempted to take appropriate means to comply with the Directive, this Tribunal concludes that Respondent violated the charged provisions of A.R.S. § 32-1154(A)(3), namely, A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

RECOMMENDed order Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend Respondent 180 Degrees Inc License No. B-164946-R for a total of one (1) day. It is also recommended that Respondent pay the sum of $250.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. § 32- 1154(E). The failure by Respondent to pay the entire amount of the aforesaid civil penalty, on or before 30 days following the effective date of the Order entered in this matter, shall result in the automatic revocation of Respondent’s contractor’s licenses 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 payment of any outstanding prior civil penalty is tendered. 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, November 14, 2018.

/s/ Linda Marie Brown Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Registrar of Contractors: https://roc.az.gov/contractor- search?Id=a0Yt000000ACYoqEAH [2] Arizona Corporate Commission: https://ecorp.azcc.gov/BusinessSearch/BusinessInfo?entityNumber=09832079 [3] See ProLaw (09/05/2018 Conversion Document: Intake Complaint Submittal1.pdf). [4] See ProLaw (09/05/2018 Conversion Document: Intake Complaint Submittal2.pdf). [5] Supra. (pp. 23-25). [6] See ProLaw (09/05/2017 Conversion Document: Rcc012 Formal Inspection Jobsite1.rtf). [7] Note that Investigator combined items 5 and 6 listed on Complainants Complaint as Item no. 5. [8] See ProLaw (09/05/2018 Conversion Document: Rcc100 Jobsite Inspection Notes1.rtf). [9] See Pro Law (09/05/2018 Conversion Document: Corrective Work Order1.rtf). [10] See ProLaw (09/05/2018 Conversion Document: Rcc104 Compliance Jobsite Inspection Notes1.rtf [11] See Pro Law (09/05/2018 Conversion Document: Rch424 Citation Multiple Charges Workmanship w221.rtf). [12] See ProLaw (09/05/2018 Conversion Document: Lg Citation1.pdf). [13] Supra. [14] This Tribunal finds this issue to be moot as the parties agreed that corrective action has been complete to its satisfaction. [15] See ProLaw 10/23/2018 ELECTRONIC docrec (665536.pdf, Exhibit 18, p. 124 of 164); and 10/15/2018 Complainant’s Exhibits. [16] This Tribunal takes administrative notice that mitigating factors exist as Respondent has no prior discipline sanctions imposed on it since it was issued its ROC license in May 9, 2001. [17] 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.” [18] 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.” [19] A.R.S. § 32-1154(A)(22) provides as follows: 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. 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.

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