ALJDEC decisions subject to certification as final

2018A-329-CHC-ROC · Registrar of Contractors · 2018-11-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 25, 2018 and November 19, 2018 APPEARANCES: Monica A. Del Re, Complainant; John Reddell, Complainant’s Architect, Herb Thompson, Respondent and Qualifying Party, Maria Grist, Respondent’s daughter, Fidelis Garcia, Esq. Respondent’s attorney, ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson _____________________________________________________________________ FINDINGS OF FACT Respondent, North Forty Enterprises Inc., d/b/a, A C Zone, [“NFEInc] is the holder of license numbers 182531 [Specialty Commercial C-39 Air Conditioning, Refrigeration] and 182530 [C-39 Air Conditioning, Refrigeration] issued by the Arizona Registrar of Contractors (Registrar).[1] As of November 29, 2019, both licenses are listed by the Registrar as currently suspended. Herb Thompson is the Qualifying Party and Officer on both of these licenses. Complainant Monica Ann Del Re [“Del Re”] is the owner of the residence located at 5015 Calle De Los Flores in Cave Creek, Arizona [the “Residence”]. On or about June 20, 2017, Herb Thompson commenced site preparation and demo on the Del Re Residence for a re-model of Del Re Kitchen and living areas. There is no written contract between Del Re and NFEInc. There also is no written contract between Del Re and Herb Thompson. Del Re testified at hearing that she paid Herb Thompson the sum of $56,400.00 over the period of many months. Herb Thompson testified Both Del Re and Herb Thompson are widowed. Mr. Thompson and Del Re both agreed at hearing that Mr. Thompson was friends with Del Re’s late husband before his death. Mr. Thompson testified that was merely extending friendship and help to the recently widowed Del Re because, at the time of the events described in the Complaint, Del Re and Mr. Thompson were dating. Ms. Del Re does not dispute that she and Mr. Thompson [and his family] has been out together at local establishments and that she had traveled with Mr. Thompson to the Prescott, Arizona area where they both stayed with members of his family for a week. Mr. Thompson testified that Del Re had stayed over-night at his home many time. Ms. Del Re does not dispute that she was in a cordial, but not intimate, dating relationship with Mr. Thompson during the events described in the Complaint. Admitting that he was paid funds from Del Re, Mr. Thompson said that all payments were made in cash only. No evidence of bank records reflecting any payments to NFEInc, or Herb Thompson from Del Re. Del Re testified that she kept and maintained a hand written ledger of payments[2] made on this project, but she had no receipts or other payment records to establish the amounts paid. Mr. Thompson emphasized in testimony and in the Answer of NFEInc[3] that any and all payments provided to him from Del Ray were applied and paid to workers on the project not to him. He states that none of the work on the Residence was charged with any mark-up or profit to him. Mr. Thompson provided all materials and labor at cost to Del Re. Ms. Del Re does not dispute that charges were calculated on a cost basis. She simply paid for the sub-contractors for their jobs and the extra work she asked them to do. She also paid for the helpers to come in and help with demo and clean up. I personally did not charge her for any help I gave her as I was doing this as a boyfriend.[4]

Mr. Thompson asserts that Del Re was at all times acting as her own General Contractor [as an owner/builder] and thus, the Registrar lacks jurisdiction to impose sanctions since the job was exempt from licensure requirements under A.R.S. §32-1121(A)(5).[5] Del Re states in her Complaint’s narrative and in testimony denied she was acting as a builder owner, but instead, relied upon and trusted NFEInc to obtain and supervise necessary sub- contractors and to obtain proper permits. The A.R.S. §32-1121(A)(5) exemption “…does not apply in any case in which the performance of the work requires a local building permit. It clear from the testimony of Investigator Philpott and the Written Directive in this case that work on this project required code permits. Del Re is not, therefore, eligible for the owner/builder exemption. This job required the services of a licensed contractor. No written contract exits between the parties or between Mr. Thompson and Del Re. No evidence of any oral contract was presented for consideration. No evidence was offered to On or about January 24, 2018, the Registrar received a Complaint against Respondent from Complainant alleging Respondent performed poor work and abandoned the job. The Registrar assigned the complaint to its Investigator Steve Philpott. On or about February 7, 2018, after a jobsite inspection, Investigator Philpott issued a written directive to Respondent that provided as follows: You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on February 26, 2018. [emphasis in original].

You are hereby directed to remedy the following violations by the appropriate means: Prior to any work beginning all applicable permits shall be obtained by Respondent. Unpermitted work shall be inspected by the local building inspector and any building code deficiencies identified or code violations caused by the Respondent shall be corrected. Respondent shall complete project per plans and original contract agreement, properly executed change orders, local building codes, and manufactures installation instructions. Respondent shall not perform or hire other contractors to perform work that is outside the scope of the R39R.182531-R license. For workmanship violations outside the scope of your license, you may remedy those violations only by paying a properly licensed contractor hired by Complainant to correct your deficient workmanship or by reaching a financial settlement with Complainant.

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.[6]

Following the issuance of the written directive, Mr. Philpott testified that the Respondent did not comply with the Corrective Work Order contained in the Written Directive. On the 13th day of March 2018, the Registrar issued a Citation against Respondent, charging possible violations of the following Arizona statutes: 1: A violation of A.R.S. § 32-1154(A)(2).[7] 2: 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). 3: A violation of A.R.S. § 32-1154(A)(9). [8] 4: A violation of A.R.S. § 32-1154(A)(12)[9] 5: A violation of A.R.S. § 32-1154(A)(16) (“Knowingly contracting beyond the scope of the license or licenses of the licensee.”) and, 6: A violation of A.R.S. § 32-1154(A)(22).[10]

The Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, [“OAH”], for an evidentiary hearing regarding Del Re’s Complaint against NFEInc. Hearing on the matter commenced before the OAH on July 25, 2018, 2018. Del Re was unable to submit its entire case-in-chief during the time allotted for at the July 25, 2018 hearing. Therefore, the matter was continued until November 19, 2018 for Further Hearing. On November 19, 2018, further hearing on the matter was conducted and concluded. Administrative notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website. Such prior License record reflects that NFEInc As of November 29, 2019, both licenses are listed by the Registrar as currently suspended but the site indicates that no prior discipline has been imposed arising out of a Complaint. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq. Complainant bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. See A.R.S. § 41- 1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). Pursuant to A.R.S. § 32-1101(3) the term “Contractor” as it pertains to the Registrar’s licensing regulation is defined: “Contractor" is synonymous with the term "builder" and means any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that, for compensation,[11] undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid or responds to a request for qualification or a request for proposals for construction services to, does himself or by or through others, or directly or indirectly supervises others to:

a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or any other structure or work in connection with the construction.

b) Connect such a structure or improvements to utility service lines and metering devices and the sewer line.

c) Provide mechanical or structural service for any such structure or improvements.

The term “Compensation” is not defined in this statute. Merriam Webster’s Dictionary defines the term as “disbursement, giving, paying, payment, remitment, remittance, remuneration disbursement, giving, paying, payment, remitment, remittance or remuneration.[12] The McMillan Dictionary[13] puts it more simply as “money that someone receives for the work they do.” The evidence presented fails to prove, by a preponderance, that any “compensation” was received by NFEInc for work on this project. Del Re has testified and in her Complaint stated that repeatedly and throughout the demo and construction, she did not receive receipts or an accounting for the cash funds she states she paid to Mr. Thompson. Del Re thereby admits she has no knowledge of how funds were applied and or in whose hands the funds ended up. Mr. Thompson indicates and NFEInc’s Answer in this case states that all funds received were either paid directly from Del Re to the workers on sight or to Mr. Thompson who then paid the various trades for their work without taking any payment for himself or for NFEInc. There is no evidence of record to dispute this factual assertion. This is not to say that it is agreed that Mr. Thompson gratuitously assisted the widowed Del Re because they were dating or for any other reason. Rather, there is no written contract, no oral contract, no documentary evidence of payment [since payments were always made in cash] and no bank accounting from any party or witness in this case that will support a finding that Respondent was compensated. Del Re has failed to meet its burden to prove, by a preponderance, that either NFEInc or Mr. Thompson was “compensated” as contemplated by the clear language of A.R.S. § 32-1101(3). Thus, under these facts, neither NFEInc nor Mr. Thompson are Contractors. The Registrar lacks jurisdiction to impose sanctions over persons or entities who are not required to obtain or who possess the Registrar’s Contractor licensure.[14] NFEInc is not a “Contractor” under the facts of this case. Thus the duties of licensed contractors under A.R.S. § 32-1154(A)(2) do not apply. Thus, Del Re has not proven by a preponderance that NFEInc violated A.R.S. § 32- 1154(A)(2). NFEInc is not a “Contractor” under the facts of this case. Thus, the duties applying to licensed contractors pursuant to A.A.C. R4-9-108, and thereby by A.R.S. §32-1154(A)(3) do not apply. Therefore, Del Re FAILED to establish by a preponderance that NFEInc did not perform the work in a professional and workmanlike manner in violation of A.A.C. R4-9-108, and thereby of A.R.S. § 32-1154(A)(3).[15] By a preponderance it is shown that there is no contract between the parties and no bid submitted in this case. Complainant DID NOT prove by a preponderance of the evidence that NFEInc abandoned the contract or refused to perform after submitting a bid on work without legal excuse for the abandonment or refusal in violation of A.R.S. § 32-1154(A)(1).[16] NFEInc is not a “Contractor” under the facts of this case. Thus, the duties applying to licensed contractors pursuant to A.R.S. § 32-1154(A)(9) do not apply. Complainant DID NOT prove by a preponderance of the evidence that NFEInc aided or abetting a licensed or unlicensed person to evade this chapter [A.R.S. §32], knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter. NFEInc is not a “Contractor” under the facts of this case. Thus, the duties applying to licensed contractors pursuant to A.R.S. § 32-1154(A)(12) do not apply. Complainant DID NOT prove by a preponderance of the evidence that NFEInc violated A.R.S. § 32-1154(A)(12). NFEInc is not a “Contractor” under the facts of this case. Thus, the duties applying to licensed contractors pursuant to A.R.S. §32-1154(A)(16) (“Knowingly contracting beyond the scope of the license or licenses of the licensee). Complainant DID NOT prove by a preponderance of the evidence that NFEInc violated A.R.S. §32-1154(A)(16), NFEInc is not a “Contractor” under the facts of this case. Thus, the duties applying to licensed contractors pursuant to A.R.S. § 32-1154(A)(22) do not apply. Del Re failed to establish by a preponderance that Respondent violated A.R.S. § 32-1154(A)(22). RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that on the Registrar shall dismiss the complaint and Citation in this matter for lack of jurisdiction. FURTHER IT IS RECOMMENDED remanding this case to the Registrar for such further action as may be necessary and proper. 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, November 29, 2018.

/s/ Randolph D. Wolfson Administrative Law Judge Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Administrative Judicial Notice is taken of the entirety of the Registrar’s records related to this matter, including, but not limited to, information contained on the Registrar’s public website. [2] See, Exhibit C-X. [3] See, Agency Record, “Lg Citation1.pdf.” [4] Ibid. [5] A.R.S. §32-1121(A) et seq.: A. This chapter shall not be construed to apply to:….(5) Owners of property who improve such property or who build or improve structures or appurtenances on such property and who do the work themselves, with their own employees or with duly licensed contractors, if the structure, group of structures or appurtenances, including the improvements thereto, are intended for occupancy solely by the owner and are not intended for occupancy by members of the public as the owner's employees or business visitors and the structures or appurtenances are not intended for sale or for rent…. [6] See, Agency Record, “Rcc 014Correcive Work Order2.rtf.” [7] A.R.S. § 32-1154(A)(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 [8] A.R.S. § 32-1154(A)(9)(“Aiding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter. [9] A.R.S. § 32-1154(A)(12): Failure in any material respect to comply with this chapter, specifically in this case: 1158(A): A violation of A.R.S. § 32-1158(A)(“Any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32- 1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365.”). [10] 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] The word “Compensation” is not defined in A.R.S. § 32-1101, et seq. [12] https://www.merriam-webster.com/dictionary/compensation. [13] https://www.macmillandictionary.com/us/dictionary/american/compensation. [14] It is noted that Del Re was required to utilize licensed contractors on this project because she does not qualify for the owner/builder exemption since this job required local permitting. See, ¶5, Findings of Fact, supra. [15] 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.” 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.” [16] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

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