ALJDEC decisions subject to certification as final

2018A-2983-CHC-ROC · Registrar of Contractors · 2020-07-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Pamela S. Kelsey,

COMPLAINANT

J Co Contracting LLC,

ROC License: ROC 239181,

RESPONDENT

No. 2018A-2983-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: January 16, February 26 and 27, and March 11, 2020

APPEARANCES: Pamela S. Kelsey on her own behalf; Thomas P. Kack, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On October 10, 2019, the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for hearing on November 12, 2019 at the Office of Administrative Hearing. The matter was continued and the hearing was conducted on January 16, February 26 and 27, and March 11, 2020.

The Notice of Hearing shows that the hearing was set to consider the charges made in the complaint and citation that were served on Respondent J Co Contracting LLC, but the Notice does not include the date of service.

Respondent holds license No. 239181 issued by ROC. Jeremy Cluff is the qualifying party and a member of the LLC.

Complainant Pamela S. Kelsey appeared and testified on her own behalf; she also presented the testimony of Daniel J. Steele, P.E., of Apollo Structural Engineers LLC.

Respondent presented Mr. Cluff’s testimony and that of Anthony Heathman, Respondent’s lead project manager and on-site supervisor, and Yavapai County Inspector Lee Molster.

ROC’s investigator, Jim Dimond also testified.

Ms. Kelsey is acting as her own general contractor building a second home in Prescott. Ms. Kelsey did not show that she has the requisite knowledge to competently undertake that task. And although the general contractor is responsible for quality control at a project, rather than accepting that responsibility, her attitude was to the effect that she had hired contractors who are supposed to know what they are doing.

In September 2017, Ms. Kelsey hired Respondent to build footers, stem walls, a retaining wall, and a basement slab at the site. When Respondent arrived at the site, it found that the trenching was not acceptable and that a five foot cut into the hillside had not been made.

The parties agreed to a verbal change order, the scope of which is in dispute and is the central issue in this matter.

Ms. Kelsey asserts that for $1000, Respondent agreed to correctly excavate the trenches and make the five-foot cut into the hill.

Respondent asserts that it agreed to correct the trenches and to build taller stem walls than the plans called for. The taller stem walls would raise the house out of the dirt compensating for the unmade cut, which would no longer be required.

In November and December 2017, Respondent corrected the trenches, poured the footings, and built and solid grouted the stem walls.

As-built, the stem walls are 28.2 inches taller than called for in the plans.

Because the stem walls are 28.2 inches taller than called for in the plan, the finished-floor elevations are 28.2 inches above the elevations in the plans. (The finished floors are about 12 inches above the tops of the stem walls; it is a system that moves in unison.)

Through an invoice dated November 15, 2017, Respondent billed Ms. Kelsey the $1000 describing the work as “Re-dig footings due to excavator error Extra Concrete to compensate”. Through a check dated December 5, 2017, Ms. Kelsey paid that invoice and another one.

On June 28, 2018, Ms. Kelsey filed with ROC a complaint against Respondent.

The crux of Ms. Kelsey’s complaint was that she had not been informed that the finished floors would be at the higher elevation, and that Respondent should be required to pay for the compaction and testing of fill material made necessary by increased stem-wall height. It is fair to say however, that Ms. Kelsey’s position has changed over time and at some point she began asserting that Respondent had agreed to make the five-foot cut and that the solid-grouted stem walls have to be removed.

Respondent argues Ms. Kelsey’s actions in calling for an inspection, approving and allowing the grouting of the stem walls without stopping the project or objecting, and waterproofing the stem walls show that she knew the stem-wall heights were to be increased. Respondent also argues that even if she did not know or understand that the stem walls would be raised, equitable principles require that the matter be dismissed.

The weight of the evidence supports Respondent’s position that Ms. Kelsey knew that Respondent was going to raise the stem walls to compensate for the fact that the five-foot cut was not made. The weight of the evidence also shows that Ms. Kelsey had knowledge that the stem walls were taller than called for in the plans before she ordered that they be inspected and solid grouted.

Background

In September 2017, Respondent and Ms. Kelsey entered a contract in which, as pertinent to resolution of this matter, Respondent agreed to install footings and stem walls, an L-shaped retaining wall, and a basement slab. Ms. Kelsey requested that Respondent agree to complete the work by October 31, 2017, but Respondent could not, and did not, agree to that condition.

Ms. Kelsey hired Stidham Construction to dig the trenches for the required footings. The plans also call for a walk-out basement that required cutting about five feet out of the hillside, but Ms. Kelsey did not hire anyone to make that cut.

Stidham did not actually show up and it appears that the work was done by friend of Stidham’s principal.

On October 26, 2017 when Respondent arrived to perform its work, it found that the five foot cut had not been made and that the trenches were not suitable for use because there were cuts that were not square, crooked trenches, and the steps into the hill were not properly done.

Although Ms. Kelsey was on site for most of the day on which Stidham (or his friend) dug the trenches, she did not perceive, and presumably did not have the requisite knowledge to understand, that the trenches had been improperly dug.

Ms. Kelsey had already received two extensions from Yavapai County, and if she did not call for an inspection of the trenches and steel for the footings by November 2, 2017, her permit was subject to cancelation.

Stidham was unwilling to make the required corrections. Mr. Cluff and Ms. Kelsey had discussions about how the work could go forward.

The Change Orders

Ms. Kelsey entered two oral change orders with Respondent: (1) correcting Stidham’s deficient work and compensating for the lack of a cut; and (2) eliminating one leg of an L-shaped retaining wall that was no longer required because the stem walls were to be raised.

Ms. Kelsey and Respondent exchanged emails in which she apprised Respondent of her efforts to get Stidham to make the required corrections. Ms. Kelsey also talked to the person who actually did the excavation work. She informed Mr. Cluff that the excavator was not available to make the corrections in a timely manner and she asked Mr. Cluff “What are we going to do?”

Respondent offered to correct the deficient work, including making the five-foot cut, for $8000, but the work would not be completed in time for the November 2, 2017 inspection deadline.

Ms. Kelsey informed Respondent that she could not afford $8000 and that she was limited to $2000 to $2500.

Mr. Cluff offered to re-dig the trenches and raise the stem walls, which would compensate for the missing cut. The cost would be $1000, with Respondent providing the required CMU blocks and rebar for free. This solution could be implemented in time to call for the required inspection.

Mr. Cluff provided credible testimony that Ms. Kelsey was aware that Respondent intended to fix the trenches and to then install stem walls that were taller than the plans called for, which would compensate, and eliminate the need, for the five-foot cut.

At the hearing, Ms. Kelsey asserted that Mr. Cluff had agreed that for the $1000, Respondent would correct the deficient trenches and make the cut for the basement.

It was not realistic to expect a contractor to correct the trenches and make the five-foot cut for $1000. Ms. Kelsey refused to acknowledge that this was the case, even after ROC Investigator Mr. Dimond told her that the excavation work would cost much more than $1000.

Moreover, it was obvious as early as November 2017 that Respondent had not made the cut, and Ms. Kelsey never raised with Respondent the question of why. At the hearing, when asked about this, she responded that she thought that Respondent may have been planning to make the cut at some point in the future.

Standing alone, her position is not reasonable because as the general contractor, Ms. Kelsey should have asked Respondent when it planned to make the cut if she actually believed that it had agreed to do so. And in this case, her assertion is further undermined by the fact that one of the footings Respondent installed would collapse if the cut was made after the footings had been constructed.

As it stood when Respondent under took its work in October 2017, the house would not have passed inspection if the cut was not made or if the stem walls were not raised because the top of the stem walls would not have been eight inches above the dirt as required by code.

Regarding the oral change order eliminating the one leg of the L-shaped retaining wall, Mr. Heathman discussed that change with Ms. Kelsey. Ms. Kelsey understood that the stem walls were being raised and that one leg of the L-shaped wall and the steps at the corner of the house would not be required.

Mr. Heathman also testified that he had spoken to Ms. Kelsey about the plan to raise the stem walls before Respondent made the corrections to the trenches, but his testimony on when this occurred was ambiguous.

Mr. Molster’s footing inspections and the call to Mr. Steele

Respondent made corrections to the existing trenches and began to install the steel for the footings.

Ms. Kelsey called the county to schedule an inspection of the footers that took place on November 3, 2017.

Yavapai County Inspector Mr. Molster did not approve the footing work on November 3rd because the steel tie-ins were not complete and because he also wanted a special inspection that was called for in the plans to be performed.

The special inspection was performed and on November 14, 2017, Mr. Molster approved the footing work. He would not have approved that work if the footings were not deep enough.

Building the taller stem walls required using detail 9, rather than detail 1 from sheet SD 1 of the structural engineering plans.

Before Respondent built any footers using detail 9, Mr. Heathman contacted engineer Mr. Steele to ask his permission to put him on speaker phone with Mr. Molster during the inspection scheduled for November 3, 2017.

Mr. Heathman got Mr. Steele’s phone number from Ms. Kelsey and he testified to the effect that he told her that he was going to talk to Mr. Steele about raising the stem walls. His recollection was to the effect that he told Ms. Kelsey several times that he had conversations with Mr. Steele. In contrast, Ms. Kelsey testified that she did not learn that Respondent had contract Mr. Steele until a year later (about October 2018).

Mr. Heathman wanted to have both Mr. Molster and Mr. Steele on the call because he knew that Mr. Molster would not approve the change from detail 1 to detail 9 if it was not in writing or directly from Mr. Steele.

On November 3rd, Mr. Heathman and Mr. Molster made a call to Mr. Steele. Mr. Steele testified as to his belief that he had spoken to Mr. Heathman only once and that the call was on November 6th. Mr. Steele was in error as to the latter point because Mr. Molster participated in the call while he was on the site for the November 3rd inspection.

Messrs. Heathman and Molster had a different recollection of that call than did Mr. Steele.

Mr. Molster’s recollection was that Mr. Steele knew that the required cut had not been made and that detail 1 would not work unless excavation work was conducted at the site.

Mr. Molster provided credible testimony that Mr. Steele was made aware that there were two choices available, either the cut had to be made or the stem walls had to be raised. Mr. Steele approved the use of detail 9 rather than detail 1 for the stem walls.

Mr. Heathman testified that Mr. Steele was aware that the two choices were to have the cut made or to raise the stem walls, and that they discussed multiple scenarios and more than one wall. Mr. Heathman also testified that Mr. Steele was aware that the cut called for in the plans had not been made, because he (Mr. Heathman) told Mr. Steele.

Mr. Steele had a different recollection of the discussion.

Mr. Steele’s recollection was that at the time of the call, he did not know that the trenches were unusable and that the cut was not made, and he did not recall discussing those issues.

Mr. Steele’s recollection was that Respondent was asking to use detail 9 only for the south wall and as necessary to tie into the east and west walls. Under Mr. Steele’s recollection, although the south stem wall would be taller, it would still be at the plan elevation.

Mr. Steele testified that he did not understand that Respondent intended to raise all the stem walls.

The engineer does not deal with the elevations of the features, which is the concern of the architect.

Mr. Steele testified to the effect that the engineer’s concerns are only two: that the footings are sound, and that the stem walls are not taller than allowed in the plans at sheet SD 1. Respondent’s work meets both requirements.

Pouring footings and building wall

Between November 14 and 17, 2017, Ms. Kelsey and Mr. Heathman exchanged texts in which he informed her that the footings passed the inspection, the concrete would be poured on the 15th, and that the block (for the stem walls) would be delivered in the next few days. Ms. Kelsey sent a follow-up text asking about the status of the blocks.

Respondent had the footings poured, it placed the blocks for the stem walls, and added the required steel rebar. Detail 9 calls for vertical rebar on 8-inch centers, whereas detail 1 calls for rebar on 24-inch centers.

November 23, 2017, was Thanksgiving; on that weekend Ms. Kelsey was at the site. On November 27, 2017, she contacted Mr. Heathman asking whether the work was to be solid grouted, whether saw cuts for doors and windows were to be made, and what inspection she should call for.

Ms. Kelsey assets that she raised questions about the stem walls and Respondent provided various “excuses.” But Ms. Kelsey put nothing in writing and she did not stop the project as was her right as the general contractor and as the owner.

On December 1, 2017, she contacted Mr. Heathman asking which inspection to call for, and he responded that it was “grout lift 1.”

Ms. Kelsey requested that inspection and Mr. Molster conducted it on December 4, 2017. Ms. Kelsey was present for the inspection.

Respondent’s work passed inspection, and on December 5, 2017, Respondent solid-grouted the stem walls into one uniform body.

Soon after the stem walls were solid-grouted, the project was essentially put on hold, with the record showing that Ms. Kelsey was experiencing financial issues. Ms. Kelsey did however have other work completed, including waterproofing stem-wall blocks and adding fill in various locations.

Plans v. as built

The plans called for the five-foot cut that was never made.

The plans called for the stem walls to be built to a maximum height of 34 inches, which is about four courses of CMU blocks. Respondent built the stems walls using an additional three courses, making the stem walls 28.2 inches taller than the plan.

The top of the footers are built to the plan elevations; the tops of the stem walls are 28.2 inches above the plan elevation, which necessarily means that the finished floor elevations are 28.2 inches above the plan elevations.

If the extra blocks are removed, the house will not be code-compliant because there will not be an eight-inch block wall between the ground and the wood. Consequently, Ms. Kelsey would need to have grading done, which Mr. Cluff estimated would cost about $2500.

Because the stem walls were raised, the house no longer required steps at the northwest corner and one leg of the L-shaped retaining wall was not required,

The relative heights or distances between the floors has been maintained so there is very limited (or no) modification required on the building structure itself.

There are however, adjustments related to the grade that must be made. Mr. Molster explained that these adjustments are all a result of the fact that the five-foot cut was not made.

The plans called for a walk-out basement, construction of which required the five-foot cut into the hillside. As-built, because the stem walls are taller, compacted fill subject to engineering testing must be added to bring the basement floor up to the required elevation.

Respondent acknowledges that there are some minor issues that it needs to address, for example trimming one footer or stem wall. Respondent also has not poured the basement slab, but that work cannot be completed until the current dispute is resolved.

April/May 2018 Start-up

In April 2018, Ms. Kelsey and Mr. Cluff began communicating as she was resuming work on the project.

Included in their discussions were exchanges related to Ms. Kelsey’s attempts to find a contractor to add the fill required for the basement and her request for Mr. Kelsey to bid on the work.

Ms. Kelsey also requested that Respondent provide the material and labor for free, and that it pay for the required testing. Mr. Cluff was willing to perform the work for free if Ms. Kelsey would pay for the fill material and the testing, but she declined that offer.

Mr. Cluff estimated that Ms. Kelsey’s cost for the material and testing would be about $1500. He was of the opinion that Stidham Construction should then be required to reimburse her.

On June 11, 2018, Ms. Kelsey wrote that she had learned that it was not necessary for Respondent to raise the stem walls, and she had paid Respondent $1000 to fix Stidham’s mistakes, so either Respondent did not do so, or Respondent made mistakes of its own. She then stated that Respondent needed to address the backfill and compaction issue that was created.

Ms. Kelsey is correct in that it was not necessary to raise the stem walls; as was made clear in October 2017, the alternative was to excavate the five-foot cut into the side of the hill. But Ms. Kelsey had been unwilling to pay Respondent the $8000 to perform that work.

Ms. Kelsey’s statement that she was only made aware in June 2018 that there was an alternative to raising the walls is hard to believe, and if true, is evidence that she was not competent to act as the general contractor.

Ms. Kelsey’s Complaint

On June 28, 2018, Ms. Kelsey filed with ROC a complaint against Respondent alleging poor work and a failure to build according to the plans.

More specifically, she alleged that the stem walls were too tall resulting in the finished floor elevations being almost 30 inches higher than the plan elevations, and that she had not signed or approved any change orders; the north retaining wall (i.e., the former L-shaped wall), was not raised the same 30 inches; there are additional costs to fill and compact that Respondent will not pay; she paid $1000 to have Respondent correct Stidham’s errors; that Respondent had not poured the basement slab; and there are other workmanship deficiencies.

In her complaint, Ms. Kelsey wrote that the resolution she was seeking was for Respondent to have the fill, compaction, and testing done at its expense. Prior to the hearing, Ms. Kelsey changed her position and is requesting that the solid-grouted stem walls be torn out, which would cost an estimated $50,000.

In her complaint, consistent with her June 11, 2018 email to Respondent, Ms. Kelsey explained that it was not until June 2018 that she learned that it was not necessary for the stem walls to be raised.

ROC assigned investigator Jim Dimond to the matter and he conducted a jobsite inspection on August 3, 2018.

Mr. Dimond would also conduct an inspection on July 26, 2019; Mr. Dimond’s jobsite investigation notes for both inspections are in a single document.

After his August 2018 inspection, Mr. Dimond concluded that Ms. Kelsey could not prove that the floor elevations were not to plan because there was no elevation hub or other basis on which to determine elevations at the site. Mr. Dimond concluded that as the owner/builder, Ms. Kelsey needed to have a hub installed.

Through a notice dated February 2, 2019, ROC informed Ms. Kelsey that her complaint was being dismissed.

Ms. Kelsey arranged to have a survey conducted and produced a document showing the as-built elevations for the footings and stem walls. The footings are essentially at the elevations called for in the plans and the stem walls are 28.2 inches (three courses of block) above the plan.

Through a June 30, 2019 email to Mr. Dimond, Ms. Kelsey requested that her complaint be reopened on the basis of the survey results.

On July 8, 2019, Ms. Kelsey filed an addendum to her complaint alleging that the basement pad had not been built and was otherwise deficient.

ROC reopened the complaint and Mr. Dimond conducted his second inspection on July 26, 2019.

Based on the new survey, Mr. Dimond found that the as-built floor elevations were above the plan elevations.

Because there are no written change orders, Mr. Dimond did not consider Respondent’s position that it had been authorized to increase the stem-wall height in a verbal change order. Mr. Dimond explained that disputes such as that are considered to be appropriate for resolution at a hearing.

Mr. Dimond found Respondent to be at fault for the floor elevations being above plan, but his notes show that he did not have a full understanding of the facts at issue. In particular, there is no mention of the unperformed five-foot cut, compensating for which is why the stem walls were raised.

Mr. Dimond’s opinion was that there were four complaint items for which Respondent’s work did not comply with Ariz. Rev. Stat. section 32-1154(A)(2), but no instances in which subsection (A)(3) was violated.

On August 14, 2019, ROC issued to Respondent a Directive that provides in part:

.... You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on August 31, 2019.

You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 1: Contractor did not build stem walls to approved plans

The respondent did not confirm the existing bottom of footing elevation and placed the concrete footings and CMU stem walls.

As a result of accepting that existing surface, the lower floor stem walls and finished floor elevations are 28.2” higher than the plan elevation of 6413’.

The respondent is to correct the condition in an appropriate manner.

Complaint Item 7: They did not raise retaining wall equally with the raise of finish floor height

This is the north retaining wall at the back porch.

The respondent is to correct the condition in an appropriate manner.

Complaint Item 15: Support columns not completed- need to finish pouring concrete

The respondent is to correct the condition in an appropriate manner.

Complaint Item 19: Concrete pad missing

The respondent is to correct the condition in an appropriate manner.

ROC determined that Respondent was not required to take any action on Ms. Kelsey’s other allegations.

The Directive did not allow Respondent a reasonable amount of time to comply with ROC’s orders.

Respondent made contact with Ms. Kelsey before the Directive elapsed, but the parties could not agree on a solution with Respondent willing to resolve the matter but Ms. Kelsey insisting that the only acceptable solution was for the solid-grouted stem walls to be torn out.

Because Respondent did not complete the corrective work in the time ROC allowed, on September 6, 2019, ROC issued to Respondent a Citation through which ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(2), (A)(3) and (A)(22).

The Citation is ambiguous because it does not specify which items are alleged to be violations of subsection (A)(2) and which are alleged violations of subsection (A)(3), whereas Mr. Dimond’s notes show only alleged violations of (A)(2).

After the directive expired, Respondent continued to work to find a solution. On September 6, 2019, Mr. Cluff asked Ms. Kelsey for the gate-code, but she refused to allow him access because ROC’s deadline had passed.

The parties did engage in discussion and Respondent paid to have Mr. Steele make a site visit in October 2019. Ms. Kelsey again would not allow Mr. Cluff access to the site and Respondent’s attorney attended on Respondent’s behalf. Although there is evidence about the site visit and related work-product in the record, this information is considered to be information prepared in furtherance of settlement and is not addressed in this Decision.

Complaint Item 1 stem walls not to plan

The height of the stem walls

There is no dispute that the stem walls are taller than called for under detail 1 of the plan.

Ms. Kelsey approved the installation of taller stem walls when she entered the oral change order to have Respondent to re-dig the trenches and install extra block to compensate for the lack of the five-foot cut. Mr. Steele approved the use of detail 9 for the stem walls.

Ms. Kelsey accepted the higher stem walls as-built by calling for the grout 1 inspection and allowing the stem walls to be solid-grouted.

The Directive shows that the stem walls are too high because Respondent failed to confirm the bottom of footing elevation. This is not correct; the stem walls were raised to compensate for the lack of a five-foot cut.

There are advantages that accrued to Ms. Kelsey as a result of Respondent raising the stem walls by 28.2 inches including: the project was able to move forward in November 2017, and her permit was not canceled, there was no need to make the five-foot cut into the hillside at a cost of $8000, and the need for steps at the northwest corner of the house was eliminated.

If the three courses of blocks are removed lowering the stem wall by 28.2 inches, the house will not be code-compliant because the top of the stem wall will not be eight inches above the ground. Consequently, Ms. Kelsey would need to have grading done, which Mr. Cluff estimated would cost about $2500.

There is some additional work required because the stem walls were raised, including the fill, compaction and testing for the basement, but this additional work all resulted from Ms. Kelsey’s failure to have the five-foot cut made.

Not using an elevation hub

Ms. Kelsey asserts that Respondent’s failure to use an elevation hub while re-digging the trenches and setting the footers is a violation of the workmanship standards.

Although Mr. Dimond testified that he would never have built a project without knowing the elevation of its features, his experience was in commercial projects including bridges and drainage structures.

Mr. Cluff acknowledged that those types of projects, and projects where one is tying into a road, do require knowledge of the elevations. But he has years of experience building on steep slopes like those at Ms. Kelsey’s property, he has built hundreds of houses, and the standard practice does not call for the elevations to be marked and pinned. The important thing is to keep the relative heights of the components the same, which is what Respondent did in building the footings and stem walls at Ms. Kelsey’s house.

Consequently, even if there had been a hub present, it would not have mattered to Respondent’s work, and Ms. Kelsey’s survey shows that the top of the footers are at the plan elevations.

Respondent did use laser levels in its work; Ms. Kelsey mistakenly thought that they were using surveying equipment.

Complaint Item 7 the retaining wall is not at the same elevation as the finished floors

Ms. Kelsey asserted that the north retaining wall was not raised to the same height as the finished floors.

This is somewhat counter to Ms. Kelsey’s argument that the finished floors should not have been raised. Nevertheless, Respondent presented credible evidence that the wall is built in conformity with the plan as modified by the oral change order, and it is at the correct height. Understanding however, that the final height will be dependent on whether Ms. Kelsey chooses to install a deck or a patio in that area. If a deck is installed, the wall will require another course of block, for which the required rebar is present.

Since Respondent last conducted work at the site in December 2017, Ms. Kelsey has backfilled around the north retaining wall.

Complaint Items 15 and 19 support column and concrete pad not complete, and required adjustments to work

Respondent’s contract calls for it to install a support column and the concrete pad for the basement floor. Respondent cannot complete these items until the dispute about the height of the stem walls and finished floor elevations is resolved.

Respondent acknowledges that there are some minor corrections required to one stem wall and some work the completion of which will depend on the outcome of Ms. Kelsey’s complaint.

Compliance with 32-1154(A)(22)

The parties had a dispute about how to correct the issues ROC ordered Respondent to make. The only method of correction Ms. Kelsey was willing to allow Respondent to use was to tear out the solid-grouted stem walls.

ROC’s Directive did not provide Respondent with a reasonable amount of time to tear out the solid-grouted stem walls.

CONCLUSIONS OF LAW

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.

“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).

“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).

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).

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.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

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).

There was no substantial evidence to show that Respondent is unscrupulous, unqualified, or financially irresponsible. To the contrary, the evidence shows that Respondent went out of its way to assist Ms. Kelsey after discovering her failure to have the five-foot cut made and Stidham’s deficient work. Moreover, while the matter has been pending, Respondent has been willing to work to reach a reasonable resolution despite its position that it has not committed any violations of statute or rule.

There is substantial evidence showing that Ms. Kelsey did not possess the requisite knowledge to act as a general contractor and that this lack of knowledge manifested itself in a lack of understanding of the issues present at the site.

The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118.

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:

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2. Departure from or disregard of:

(a) Plans or specifications 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.

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3. Violation of any rule adopted by the registrar.

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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. 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.

Ariz. Admin. Code section R49108 provides that:

A. A contractor shall perform all work in a professional and workmanlike manner.

B. A contractor shall perform all work in accordance with any applicable building codes and professional industry standards. For work to be performed in accordance with professional industry standards, a contractor shall use such skills, prudence, and diligence in performing and completing tasks undertaken that the completed work meets the standards of a similarly licensed contractor possessing ordinary skill and capacity.

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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).

The preponderance of the evidence shows that Ms. Kelsey authorized Respondent to raise the stem walls, which resulted in the finished floor elevations being above that which the plans called for. Mr. Molster’s testimony shows that Mr. Steele approved Respondent’s use of detail 9 and subsequent construction of stem walls that were taller than originally called for in the plans, which testimony was confirmed by Mr. Heathman’s.

The preponderance of the evidence shows that the north retaining wall is in conformity with the plans as modified by the oral change order approved by Ms. Kelsey.

The preponderance of the evidence shows that the support column and the concrete pad for the basement floor cannot be completed until Ms. Kelsey adds the compacted fill required as a result of her authorizing the change in stem-wall heights.

It has not been shown that the changes to the stem-wall heights and resulting change in finished floor elevations were prejudicial to Ms. Kelsey.

It has not been shown that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(2).

The preponderance of the evidence shows that it was not necessary for Respondent to use an elevation hub when building the footings and stem walls. The preponderance of the evidence also shows that the top of the footing elevations are at the elevations set out in the plans.

It has not been shown that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(3).

Moreover, Ms. Kelsey accepted the raised stem walls and allowed that work to be modified when she called for the grout 1 inspection and then allowed the stem walls to be solid-grouted in place. Consequently, this work cannot be a basis on which ROC may cite Respondent for a violation of the workmanship standards. See Ariz. Rev. Stat. section 32-1155(D)(2).

Although Respondent did not complete the work ROC ordered it to complete in the time allowed in ROC’s Directive, that failure was justified because Respondent was not contractually or otherwise bound to perform that work and none of the work was deficient. In addition, ROC’s Directive did not provide the Respondent with a reasonable amount of time to make the corrections ROC ordered it to make.

Because Respondent has not violated Ariz. Rev. Stat. section 32-1154(A)(2), (A)(3) or (A)(22) as alleged by ROC, the complaint and citation should be dismissed.

RECOMMENDED ORDER

IT IS ORDERED that case number 2018-2983 is 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 is forty days after the date of that certification.

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-137160-45720000Done this day, July 27, 2020.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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