ALJDEC decisions subject to certification as final

2019A-00199-CHC-ROC · Registrar of Contractors · 2019-08-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 8, 2019 APPEARANCES: Roberto Chavez for Complainant; Robert Corl, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden FINDINGS OF FACT 1. On May 15, 2019, the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for hearing on July 8, 2019 at the Office of Administrative Hearing. 2. The matter was continued and the hearing was conducted on August 8, 2019. 3. The Notice of Hearing shows that the hearing was set to consider the charges made in the Citation and complaint. 4. Respondent Arizona Valley Home Builders LLC holds license No. 302555 issued by ROC. Robert Michael Ellis is a member of the LLC. 5. Complainant Del Sol Property Inspection LLC holds license ROC 322430. Roberto Chavez is Del Sol’s qualifying party and a member of that LLC. 6. Respondent entered a contract with Complainant through which Respondent agreed to perform excavating work for a house that Mr. Chavez and Jennifer Chavez planned to build. Mr. Chavez was acting as the general contractor for that project. 7. Mr. Chavez appeared and testified for Complainant, which also presented the testimony of Allan Blaker and ROC investigator Jim Dimond. Mr. Ellis testified for Respondent, which also presented the testimony of Michael Alexander Walker and Sidney Allen Walker. 8. Mr. Blaker has construction and inspection experience going back to the 1980s. Mr. Chavez hired Mr. Blaker to determine whether the excavation was incorrect, improper or not to plan. Mr. Blaker had read the contract, looked at the plans, and walked the site with Mr. Chavez on June 21, 2019. 9. Michael Walker and Sidney Walker were employed by Respondent to operate construction equipment at the project. 10. During November and December 2018, Respondent performed work on the project, with its work having stopped on or about December 21, 2018. 11. Mr. Ellis acknowledges that Respondent had not yet completed its scope of work at that time, but Respondent takes the position that it could not finish its work until another trade (the block layer) completed its work. Mr. Ellis estimated that Respondent had completed 98% of its work and that its remaining work could be completed in one day. 12. In January 2019, Mr. Ellis and Mr. Chavez exchanged a number of text messages about the project. In those messages, Mr. Ellis acknowledged that Mr. Chavez was dissatisfied with Respondent, but he wrote that he did not know why, and he repeatedly requested the opportunity to meet with Mr. Chavez to discuss and potentially resolve any issues. Mr. Ellis also reminded Mr. Chavez that the parties’ contract called for arbitration of any disputes. 13. Mr. Chavez declined Mr. Ellis’s offers to meet and discuss the project, and on January 11, 2019, Complainant filed with ROC a complaint against Respondent in which it alleged that Respondent had abandoned the project. 14. The text messages between Mr. Ellis and Mr. Chavez also included comments about whether Respondent had the plans for its work. Mr. Ellis took the position that Complainant had not provided Respondent with a set of plans and that Respondent had copied the set that was posted at the site. Mr. Ellis also was of the opinion that this was immaterial because Respondent had done its excavation work in conformity with the markings left by Complainant’s surveyors. 15. ROC investigator Jim Dimond conducted a jobsite inspection on February 19, 2019. 16. On March 12, 2019, ROC issued to Respondent a Directive that provides in part: You are hereby directed to remedy the following violations by the appropriate means: Complaint Item 8: Contractor did not complete the driveway per plans The respondent is to correct the condition in an appropriate manner. Complaint Item 9: Contractor did not complete the utility line cuts per plan. The respondent is to correct the condition in an appropriate manner. Complaint Item 11: Contractor overcut grading on S side of basement, removing the driveway The respondent is to correct the condition in an appropriate manner. This would include backfill and any required new engineering. Complaint Item 12: There is loose fill on bottom of basement floor and unfinished cut behind garage The respondent is to complete the excavation at the garage in an appropriate manner. Complaint Item 13: There are safety issues on the east side of cut. Large boulders on edge of wall The respondent’s operators left an unsafe condition. The respondent is to correct the condition in an appropriate manner. Complaint Item 14: Project was supposed to be completed 30 days after work started The respondent is to complete the contract in an appropriate manner in accordance with proper construction sequencing. Complaint Item 20: Contractor will not allow us to consult with his QP QP contact information is available on the ROC website. The respondent response to the complaint however admits that his QP “has never been to the jobsite and knows very little of this particular project” ARS 32-1127 mandates that a Qualifying Party be actively engaged in the activities of the licensee. The respondent is to ensure that his QP performs in the manner prescribed by statute in an appropriate manner.

17. The Directive shows that ROC had determined that any other workmanship violations alleged in Del Sol’s complaint were unsubstantiated. 18. The Directive required Respondent to provide ROC with written proof that it had made the required corrections by no later than 5:00 p.m. April 1, 2019. 19. Respondent did not complete the work ROC ordered it to complete by the deadline imposed by ROC. 20. ROC issued to Respondent a Citation dated April 18, 2019. Through that Citation ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(2), (A)(3) and (A)(22). 21. The administrative record shows that of the complaint items listed in the Directive, only #13 is an allegation that Respondent committed a workmanship violation. Complaint items #8, #9, #11, #12 and #14 are allegations that Respondent did not follow the plans in violation of subsection 32-1154(A)(2), and #20 is an allegation that Respondent violated section 32-1127. Complaint item #8 (“Contractor did not complete the driveway per plans”). 22. Mr. Ellis testified that the driveways had been excavated in accordance with the markings that Complainant’s surveyor had laid out and that the excavations were right on the mark. He acknowledged however that ABC was not placed on the driveways as required by the parties’ contract. 23. Mr. Dimond testified as to his opinion that there was a lot of material on the lower or north driveway and that the south driveway was not complete, but his jobsite inspection notes show that he did not know what set of plans were used for the excavation work. 24. Mr. Blaker’s opinion was that the driveways had not been graded.

Complaint item # 9 (“Contractor did not complete the utility line cuts per plan.”) 25. Mr. Ellis acknowledged that the trenches for the utility lines had not been excavated, but he also testified that it was not possible for Respondent to do so because there was too much material being stored on the site, which is small in relation to the work being conducted. Excavating for the utility lines is work that Respondent planned to do after the block layer had completed its work. 26. Mr. Ellis’s position is that after Complainant made clear that it did not want Respondent to return to the site, Respondent gave Complainant a credit of $1600 for the utility line work that was not completed. This credit appeared in an invoice dated February 1, 2019, in which Respondent billed Complainant for work that is at issue in complaint item #11. Mr. Chavez testified to the effect that he had never approved the work included in that invoice, and as such, Complainant had not actually received any credit. 27. The parties dispute whether installation of a waterline to the well site is within Respondent’s scope of work, with Respondent taking the position that the utilities it was required to excavate for included only APS/QWEST. Mr. Ellis also testified to the effect that a well-driller had asked to rent equipment from Respondent so the driller could install that line because it was within his scope of work. Complaint item #11 (“Contractor overcut grading on S side of basement, removing the driveway”). 28. Respondent acknowledges that the area behind the garage was cut back further than called for in the plans. But Messrs. Ellis, S. Walker and M. Walker all testified as to being present when Mr. Ellis and Mr. Chavez had a discussion in which Mr. Chavez instructed Respondent to remove additional material to accommodate a request from Complainant’s block layer. 29. According to Mr. Ellis, he tried to dissuade Mr. Chavez from having this work done, but Mr. Chavez had insisted that the additional excavation be undertaken. Mr. Ellis informed Mr. Chavez that it would be three days of hard digging at a cost of $400 per hour. 30. Respondent subsequently submitted to Complainant an invoice for $9200 for this additional work, from which Respondent deducted $1600 for the uncompleted utility line work. Mr. Chavez does not agree that Complainant owes Respondent for the additional excavation work and as of the hearing date the invoice had not been paid. Complaint item #12 (“There is loose fill on bottom of basement floor and unfinished cut behind garage”). 31. Mr. Ellis asserts that excavating for the garage is not within Respondent’s scope of work because the Respondent was to excavate for building pads, whereas the garage does not have a pad and instead will require fill material. He also noted that the garage is on footers which are not part of Respondent’s contract. 32. Mr. Ellis acknowledged that after Mr. Chavez had Respondent complete the additional excavation at the garage, Respondent did remove some overburden from that area at the request of the block installer, but Respondent did not charge Complainant for that work. Mr. Ellis also acknowledged that there was material left from that work, but testified that prior to excavating the overburden, the floor was at the level specified by Complainant’s surveyor. 33. Mr. Dimond’s opinion was that Respondent was required to excavate down to the top of the proposed footings and the block installer was to excavate for the footers. Complaint item #13 (“There are safety issues on the east side of cut. Large boulders on edge of wall”). 34. The boulders at issue are near the edge of the excavation for the garage, but were placed there before Complainant had Respondent expand the excavation in that area. 35. Mr. Dimond’s opinion was that these could be a safety hazard especially if any rain occurred. Mr. Ellis acknowledged that these could be of some concern, but he was of the opinion that there was not really an issue because the boulders are on solid rock and not dirt. 36. Mr. M. Walker testified that Mr. Chavez told Respondent to leave the boulders were they were located. Complaint item #14 (“Project was supposed to be completed days after work started”). 37. Mr. Ellis’s position is that Respondent had completed 98% of its work and that it could not complete the remainder until the block layer completed its work. Respondent’s position is that after it learned that Complainant would not allow it back on the site, Respondent provided Complainant with a credit for the uncompleted work. 38. Mr. Blaker’s opinion was that the excavation work was only 70 to 75% complete, and that the site was not ready for the block layer to perform its work. But this opinion appears to have been predicated on the presumption that Respondent was responsible for excavating at the garage, which Respondent disputes, and on the fact that the area behind the garage was excavated to beyond that which the plans called for, which was work that Mr. Chavez directed Respondent to perform. Complaint item #20 (“Contractor will not allow us to consult with his QP”). 39. Respondent’s qualifying party is John Arthur Grabow, who is an employee of the LLC. CONCLUSIONS OF LAW 1. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 2. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3). 4. A preponderance of the evidence is: The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

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

10. Ariz. Admin. Code section R4-9-108(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.” 11. During the time that Respondent was working on Complainant’s project, Ariz. Rev. Stat. section 32-1127 provided: Responsible managing employee and qualifying party; definitions The terms "responsible managing employee" and "qualifying party" shall, for the purpose of administering this chapter, be synonymous, and shall mean an employee who is regularly employed by the licensee and is actively engaged in the classification of work for which such responsible managing employee qualifies in behalf of the licensee. While engaged as a qualifying party for a licensee, the qualifying party shall not take other employment that would conflict with his duties as qualifying party or conflict with his ability to adequately supervise the work performed by the licensee. Such person may act in the capacity of the qualifying party for one additional licensee if one of the following conditions exists: 1. There is a common ownership of at least twenty-five per cent of each licensed entity for which the person acts in a qualifying capacity. 2. One licensee is a subsidiary of another licensee for which the same person acts in a qualifying capacity. "Subsidiary" as used in this section means a corporation of which at least twenty-five per cent is owned by the other licensee.

12. 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). 13. It has not been proven by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(2). 14. The preponderance of the evidence shows that Mr. Chavez ordered Respondent to perform the additional excavation work that is at issue in complaint item # 11. As such, Respondent did not violate subsection 32-1154(A)(2) when performing this work. 15. Respondent acknowledged that it did not complete the excavation for the utility line, but it presented credible evidence showing that it was unable to do so until other work was completed at the site. Respondent also acknowledged that it had not provided ABC for the driveways. But the preponderance of the evidence shows that Respondent intended to complete its scope of work after the block layer performed its work and that Respondent issued a credit to Complainant for the utility work. 16. It has not been shown by a preponderance of the evidence that Respondent otherwise disregarded the plans or specifications in any material respect that was prejudicial to Complainant. Instead, the evidence shows that the parties have a dispute as to the scope of Respondent’s contract and as to whether that work has been completed or whether Respondent abandoned the project as Complainant alleged in its complaint. But Mr. Chavez refused to meet with Mr. Ellis in January 2019, which shows that Respondent did not abandon the project, and if Complainant did suffer any prejudice as a result of the contract dispute, that prejudice was a result of Mr. Chavez’s unwillingness to try to resolve the issues he now complains of. 17. The preponderance of the evidence shows that the boulders are located at the edge of the excavation because Mr. Chavez ordered Respondent to extend that excavation, and Mr. M. Walker provided unrebutted testimony showing that Mr. Chavez did not want those boulders moved. In addition, these boulders are on rock, not dirt. It has not been shown by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(3). 18. It has not been shown by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1127. 19. Although Respondent did not comply with ROC’s Directive within the time ordered, its failure to do so is justified and not a violation of Ariz. Rev. Stat. section 32-1154(A)(22). 20. Consequently, this matter should be dismissed. RECOMMENDED ORDER IT IS ORDERED that on the effective date of the final Order in this matter case number 2019-00199 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.

Done this day, August 28, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

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