ALJDEC decisions subject to certification as final

2018A-3651-ROC · Registrar of Contractors · 2019-05-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 30, 2019, at 1:00 p.m. APPEARANCES: Kathleen Muratore (“Complainant”) appeared on her own behalf; American Royalty Construction LLC (“Respondent”) was represented by Sandra K. Sanders, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website, on or about September 1, 2015, the Registrar issued License No. ROC 300983 for Specialty Dual CR-61 Carpentry, Remodeling and Repairs to Respondent. 2. Complainant is a naturopathic medical doctor. On or about August 8, 2018, Complainant filed a complaint with the Registrar that alleged that Respondent had performed poor work on its contract for tenant improvements at her medical office at 7331 East Osborn Dr., Suite 430, Scottsdale, Arizona 85251. Complainant alleged approximately 17 deficiencies.[1] 3. Complainant alleged on the complaint that she had paid Respondent $2,365.96. For the contract amount, she stated “see addendum.” The addendum that Complainant attached to her complaint stated that its change orders and invoices “had mathematical errors and were so confusing that they still do not make sense.”[2] 4. The Registrar assigned the complaint to its Investigator, Randy Morris, for investigation. Investigator Morris sent a copy of the complaint to Respondent for its attention. 5. On August 27, 2018, Respondent’s qualifying party/member, Jimmy Stewart, sent an email to Investigator Morris, stating that after Respondent had submitted a bid to Complainant, she inquired about reducing the cost through a barter, in relevant part as follows: [Complainant] sent me a text that she would accept my bid. [Complainant] then stated “how much of this job can we barter?” I expressed no interest in bartering services for myself however, My employee Cindi Redden did voice interest in a barter for female hormone testing and consultation of results. [Complainant], Cindi and myself agreed to a $500.00 barter. [Complainant] assured $500.00 would cover the services requested by Cindi.[3]

Mr. Stewart stated that Complainant had made the final monetary payment for the project in early 2018, and did not provide a punch list or request that Respondent repair any work. When Ms. Redden attempted to obtain Complainant’s medical services pursuant to the barter agreement, Complainant refused to perform. Ms. Redden and Mr. Stewart eventually filed a small claims court complaint against Complainant in McDowell Mountain Justice Court for $500.00. Complainant filed a counterclaim. On July 31, 2018, the case proceeded to trial, after which the judge dismissed both parties’ claims without prejudice.[4] 6. Investigator Morris performed a jobsite inspection, which both parties attended. On September 11, 2018, Investigator Morris issued a directive to Respondent to repair four items on Complainant’s complaint on or before 5:00 p.m. on September 27, 2018, in relevant part as follows: Complaint Item 6: “left plumbing exposed in bathroom sink wall”. Verified that no escutcheons were installed around the plumbing stub outs at the pedestal sink in the bathroom.

Complaint Item 7: “caulking was not done from base to tile”. Verified that caulking along the baseboard to the tile flooring was not completed per contract.

Complaint Item 9: “did not tape anything off – left paint around windows and on tile”. Verified paint drips/over application on window frames and tile flooring.

Complaint Item 11: “did not putty nails on baseboard and paint them”. Verified that nails in the baseboards were not puttied/filled in and in a couple of locations, the nails are loose and not fully seated in the baseboard.[5]

7. On December 5, 2018, Investigator Morris performed a Compliance Jobsite Inspection, which Respondent did not attend. Inspector Morris determined that Respondent had not fully complied with any of items on the September 11, 2018 directive. Investigator Morris referred the matter to the Registrar’s Legal Department. 8. On December 2, 2018, the Registrar issued a Citation against Respondent’s contractor’s license, charging cause to revoke or suspend the license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22). 9. After Mr. Stewart filed a timely written answer to the Citation on Respondent’s behalf, denying any cause to suspend or revoke Respondent’s license, the Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 10. A continued hearing was held on April 30, 2019. Complainant submitted four exhibits and presented the testimony of three witnesses: (1) Herself; (2) Her employee, Jessica Craig; and (3) Her patient, John Brunnell. Respondent presented the testimony of two witnesses: (1) Mr. Stewart; and (2) Ms. Redden. Investigator Morris also testified. / / / / Hearing Evidence 11. Investigator Morris testified that Respondent did perform some work to comply with the directive, but had failed to bring any of the four items up to the Registrar’s and industry workmanship standards. 12. Investigator Morris testified that 80 or 85% of the job was complete and performed up to the Registrar’s and industry workmanship standards. Investigator Morris acknowledged that, at the initial jobsite inspection, the parties’ relationship was tense. Investigator Morris testified that he informed Complainant at the initial jobsite inspection that she was required to allow Respondent and its employees on site to perform repairs. 13. Complainant testified that Mr. Stewart was the only person that she hired to perform work on the project. Complainant testified that the building was not new, but that Respondent agreed to refurbish six rooms in her suite, including three examination rooms, the entry/waiting room, a bathroom, and the office. 14. Ms. Redden is Mr. Stewart’s girlfriend/life partner and Respondent’s occasional employee. Ms. Redden testified that, when she told Complainant that she and Mr. Steward would take Complainant to court if Complainant did not perform the barter agreement, Complainant stated that she would ruin Respondent. 15. Mr. Stewart testified that Complainant did not allow Respondent access to perform the four repairs required by the directive until the last day allowed. Ms. Redden testified that she went to the jobsite to videotape Mr. Stewart performing repairs to protect Mr. Stewart and Respondent’s license. Ms. Redden testified that the atmosphere was extremely tense. 16. Complainant called the police on Ms. Redden while Mr. Stewart was attempting repairs on Respondent’s behalf. Officers from the Scottsdale Police Department arrived to escort Ms. Redden from the property. Ms. Redden testified that she left because others had arrived and Mr. Stewart would not be alone with Complainant. 17. Complainant acknowledged that, on June 15, 2011, her medical license had been revoked for providing false information on a renewal application. Complainant’s license was later reinstated. 18. Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s license history on the Registrar’s public website on this date. Respondent’s license is current and in good standing and has never before been disciplined. This appears to be the only complaint pending against the license. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[6] 2. Complainant bears the burden of proof to establish cause to suspend or revoke Respondent’s license by a preponderance of the evidence.[7] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[8] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[9] 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.”[10] 4. Complainant established potential cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(3),[11] namely A.A.C. R4-9-108,[12] in the four workmanship deficiencies noted on the directive. But construction is not a perfect art and, in most cases, a contractor’s license should not be suspended or revoked until it has had an opportunity to correct workmanship deficiencies. 5. A homeowner’s failure to provide reasonable access for the contractor to repair its work is an affirmative defense that the contractor bears the burden to establish. Although Complainant allowed Respondent one day of the sixteen days that the directive allowed Respondent to perform repairs, when Mr. Stewart arrived to perform repairs with his girlfriend Ms. Redden, who was also Respondent’s occasional employee, Complainant called the police and had Ms. Redden escorted from the jobsite. Because Respondent established that Complainant failed to provide reasonable access to Respondent to comply with the directive, Complainant did not establish cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(22).[13] 6. Complainant did not file the complaint with the Registrar until Mr. Stewart and Ms. Redden sued her in small claims court and the small claims court dismissed both parties’ financial claims against each other. The remaining deficiencies at Complainant’s project are minor and it appears that the parties’ dispute is primarily financial. The July 31, 2018 small claims court judgment probably does not prevent the parties from resolving their primary dispute in an appropriate judicial forum.[14] In any event, under the circumstances of this case it would be unfair to impose an administrative penalty against Respondent’s contractor’s license. RECOMMENDED ORDER Based on the foregoing, IT IS ORDERED that, on the effective date of the final order in this matter, Complainant Kathleen Muratore’s complaint in Case No. 2018-3651 against Respondent American Royalty Construction LLC’s License No. ROC 300983 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 five days from the date of that certification. Done this day, May 14, 2019.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See the Registrar’s electronic file at pdf pp. 47-48. [2] See id. at 49. [3] Id. at 140. [4] See id. at 175. [5] Complainant’s Exhibit C-7. [6] See A.R.S. § 32-1154(A). [7] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [8] See A.A.C. R2-19-119(B)(2). [9] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [10] Black’s Law Dictionary at page 1220 (8th ed. 1999). [11] A.R.S. § 32-1154(A)(3) includes among the grounds to suspend or revoke a contractor’s license, “[v]iolation of any rule adopted by the registrar.”

[12] 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.” [13] A.R.S. § 32-1154(A)(22) includes among the grounds to suspend or revoke a contractor’s license, “[f]ailure 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.” (Emphasis added.) [14] “In the absence of contrary authority Arizona courts follow the Restatement of the Law.”Bank of America v. J & S Auto Repairs, 143 Ariz. 416, 418, 694 P.2d 246, 248 (1985) (citing MacNeil v. Perkins, 84 Ariz. 74, 324 P.2d 211 (1958)). Applying the Restatement factors, most states that have decided the issue have held that the principle of collateral estoppel does not prevent a defendant against whom a small claims court judgment has been entered from relitigating that issue in a subsequent civil or administrative proceeding.See, e.g., Vandenberg v. Centennial Ins. Co., 88 Cal. Rptr 2d 366, 21 Cal. 4th 815, 829, 982 P.2d 229, 237 (1999) (plaintiff was not bound by result of his previous arbitration with tortfeasor in subsequent action against insurance company, citing Sanderson v. Niemann, Cal. 2d 563, 573-575, 110 P.2d 1025 (1941) (whose holding was described as “small claims judgments not entitled to collateral estoppel effect, given informality of proceedings, including limited right to judicial review); Salida School District R-32 v. Morrison, 732 P.2d 1160 (Colo. 1987) (School district not bound by unemployment compensation board’s determinations in teacher’s subsequent civil rights action); Isaac v. Truck Service, Inc., 253 Conn. 416, 423, 752 A.2d 509, 513-14 (2000) (personal injury plaintiff in superior court not bound by liability determination of small claims court in property damage claim); State Farm Mutual Automobile Ins. Co. v. Glasgow, 478 N.E.2d 918, 923 (Ind. App. 1985) (Insurer not bound by liability determination by small claims court in property damage claim between its insured and other person involved in automobile accident); Village Supply v. Iowa Fund, Inc., 312 N.W.2d 551, 554 (Iowa 1981) (issue preclusion by small claims judgment not warranted where differences exist in quality or extensiveness of procedures); State Farm Fire and Cas. Co. v. Emde, 706 S.W.2d 543 (Mo. App. 1986) (Insured’s bailee not bound by insured’s small claims court judgment against him in insurer’s later suit for indemnity); Henrickson v. Gleason, 263 Neb. 840, 845, 643 N.W.2d 652, 657 (2002) (No collateral effect to small claims court judgment on property damage claim in subsequent claim for personal injury in superior court); Cafferata v. Carter, 251 N.J. Super. 256, 263, 597 A.2d 1101 (App. Div. 1991) (Defendant in subsequent tort action in superior court not bound by proceeding on traffic citation in City Court); Rue v. K- Mart Corp., 552 Pa. 13, 20, 713 A.2d 82, 86 (1998) (Employee not bound by referee’s findings in unemployment compensation suit in subsequent wrongful termination action in superior court); Cold Springs Farm Dev., Inc. v. Ball, 163 Vt. 466, 470, 661 A.2d 89, 92 (1995) (No collateral estoppel effect of small claims court judgment); Asaad v. Res-Care, Inc., 197 W. Va. 684, 689, 478 S.E.2d 357, 362 (1996) (Plaintiff making tortious interference claim in superior court not bound by prior determination of employment grievance board); see also Clusiau v. Clusiau Enterprises, Inc., CA-CV 09-0300 (July 8, 2010) (memorandum decision from Division 1 of the Court of Appeals declining to afford collateral effect to small claims court judgment).

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