ALJDEC decisions subject to certification as final

2019A-00956-CHC-ROC-RES · Registrar of Contractors · 2020-11-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Storage at Anthem LLC,

COMPLAINANT

CO Johnson General Contractors, Inc.,

License No. 070504, 120568, 086064,

RESPONDENT

No. 2019A-00956-CHC-ROC-RES

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 29, 2020

APPEARANCES: George H. Bell, III, appeared via Google Meet on behalf of Complainant Storage at Anthem LLC. Respondent CO Johnson General Contractors, Inc. was represented by Rina Rai, Esq. appearing via Google Meet. Investigator David Fagerburg appeared via Google Meet on behalf of the Registrar of Contractors. Witnesses Curt Peterson, Thomas Krendl and Jeff Eells all appeared via Google Meet.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

_____________________________________________________________________

FINDINGS OF FACT

On November 18, 1987, the Registrar of Contractors (ROC) issued License No. 070504 for General Commercial B-1 General Commercial Contractor to CO Johnson General Contractors, Inc. (Respondent). Respondent’s address of record for the license is 738 South 52nd Street, Tempe, AZ 85281-7211. Christopher Lee Johnson is listed on the license as Qualifying Party.

Administrative notice is taken of Respondent’s prior License record, for License No. 070504, as reflected on the ROC’s public website on November 3, 2020. Such prior License record reflects that Respondent’s license is currently active. The record also reflects that there is one open complaint against Respondent’s license, which is presumed to be related to this matter. Respondent has an active $90,000.00 surety bond issued through Travelers Casualty & Surety Co. effective June 7, 1991.

Furthermore, the ROC website indicated that Respondent was also issued License nos. 120568 and 086064. Both licenses were expired.

On or about January 23, 2017, Storage at Anthem LLC (Complainant) contracted with Respondent to construct a storage facility. The project commenced in May 2017 and ended in August 2018. Complainant paid Respondent a total of $6,051,677.00. According to the Complainant, the work was not completed per the plans and the poor work resulted in flooding, among other issues.

On or about February 25, 2019, the ROC received a complaint from Complainant.

On or about April 16, 2019, ROC Investigator David Fagerburg, issued a Directive from the Registrar (Directive) for completion of Complaint items 1 and 7 as follows:

After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a Citation, discipline of your license, and a civil penalty pursuant to A.R.S. § 32-1154(E) of up to $500.00. Failure to comply with this Directive may also be treated as an aggravating factor should the Registrar pursue discipline of your license, You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on May 3rd, 2019.

You are hereby directed to comply with all construction drawings, elevations and specifications to remedy the following violations by the appropriate means:

Complaint Item 1: Incorrect Grading, Drainage, Paving yielding water intrusion in majority of exterior units (180+).

Complaint Item 7: Incorrect concrete at track installation for rolling vehicle entry gates. The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.

(All errors contained in the original)

On or about May 10, 2019, the ROC issued a Citation to Respondent for a violation of A.R.S. § 32-1154(A)(3) and A.R.S. § 32-1154(A)(22).

At the outset of hearing, all of the Exhibits filed by the parties were admitted into evidence.

Investigator Fagerburg testified as to the ROC’s involvement in this matter. Mr. Fagerburg testified generally that there was no compliance with the Directive.

Mr. Fagerburg testified that on April 29, 2019, he received correspondence from Respondent stating that it was prepared to take the corrective actions by May 1, 2019, and that the work would take approximately 3 weeks.

Mr. Fagerburg further testified that if the work had started as Respondent planned, he would have contacted Complainant to inquire as to whether the deadline could be extended.

Mr. Fagerburg testified that at the time of the jobsite inspection on April 2, 2019, he was not aware of the parties’ arbitration proceedings and the orders reached therein to perform the corrective work. Mr. Fagerburg testified that he was unaware that Respondent was prepared to make repairs in early March, nor was he aware that Complainant had requested that Respondent not make the previously ordered repairs in March.

Mr. Fagerburg also testified that the work that needed to be performed would have taken longer than the 17 days provided in the Directive. He testified that he counseled with his supervisor and they recommended that timeline.

George H. Bell, III, testified on behalf of Complainant.

Mr. Bell testified that he filed the Complaint with the ROC because Judge Lawrence H. Fleischman, the Arbitrator, was not doing anything to enforce the timelines which were ordered in December 2018. He further testified that he already gave Respondent four and a half months to make the repairs and it was delaying in completing the same. He also testified that he always wanted Respondent to make the repairs.

Mr. Bell testified that there was no permit obtained originally or at the commencement of the repairs, and that sent Complainant into default with its bank along with the delays in repairs.

Mr. Bell also testified that he agreed that the repairs would not take seventeen days as required by the Directive.

Mr. Bell testified that he received an e-mail from Respondent on May 7, 2019, stating that the survey would be completed on May 8th, demolition would start May 9th, and concrete would start May 13th, but that he did not consider this a properly detailed schedule which he could make work with his business clients.

Mr. Bell also testified that a few hours later on May 7, 2019, he sent an e-mail to Respondent ordering them the stand down as the Complaint was now at the legal department of the ROC.

Mr. Bell testified that it was his belief that the original plans needed to be used to comply with the Directive.

Next, Curt Peterson testified for Complainant. Mr. Peterson was a civil engineer and was hired by Complainant to review the plans which were going to be used to make the repairs.

Mr. Peterson testified that he reviewed the plans that were drafted by Gervasio (a firm that was hired to draft the repair plans), and found significant errors which would still cause water flow issues.

Mr. Peterson also testified that even if the original plans were followed and used to make the repairs, there still would have been flooding.

Thomas Krendl testified as a witness for Complainant. Mr. Krendl testified that he was Complainant’s project manager and testified that there was no contact from Respondent about performing the corrective work within the timeline provided by the Directive.

Jeff Eells, Senior Project Manager, testified for Respondent. Mr. Eells testified that when he sent the correspondence in Exhibit 16 to Mr. Fagerburg, he never received a response thereto.

Mr. Eells testified that he was not ignoring the Directive, and presented multiple communications to prove that Respondent was attempting to move forward with the repairs.

Mr. Eells further testified that Respondent was ready to commence work on May 8, 2019, however was told to stand down by Mr. Bell.

In addition, Mr. Eells testified that he never knew that Mr. Bell was seeking a more concrete schedule than the one which was provided in Exhibit 23.

Mr. Eells acknowledged that the surveying in the original plans were faulty which caused the issues in this case. However, he testified that Respondent acted promptly to make repairs and that he was prepared to make the repairs twice prior to the Directive.

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 violations 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).

The history in this case is long and somewhat complex. The parties had agreed to mediation/arbitration under the terms of the contract. Judge Fleischman was retained by the parties to resolve the dispute and issued orders in December 2018 for Respondent to make the repairs. Respondent hired a firm, Gervasio, to prepare plans for the same. However, this process apparently took too long for Mr. Bell, and instead of formally addressing the issues with Judge Fleischman, he involved the ROC.

The evidence established, and Respondent stipulated, that work was not in conformity with the Registrar’s standards. While the issues were primarily with the surveyor Respondent hired, Respondent is still nonetheless responsible for the workmanship issues. Complainant sustained damages and incurred expenses as a result of Respondent’s work. Therefore, Complainant established that Respondent failed to complete the project in a workmanlike manner in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.

A.R.S. § 32-1154(A)(22) holds in pertinent part, “[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. The written directive must set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance may not be less than fifteen days from the date of issuance of the directive. A license may not be revoked or suspended nor may any other penalty be imposed for a violation of this paragraph until after a hearing has been held.”

The Administrative Law Judge infers that the statue only requires not less than fifteen days for compliance. Thus, the time for compliance can and should be more depending on the scope of work which needs to be completed if it is reasonable as the statute requires. Upon the ROC’s involvement, it was seemingly clear by all parties that there was no way for Respondent to complete the repairs on time. Here, given the scope of the repair project, the Directive was set up for Respondent to fail. Mr. Bell testified that he was not satisfied that the work had not commenced after the December 2018 arbitration order, and perhaps justifiably so. However, his remedy was with Judge Fleischman, not to file an action with the ROC knowing that it was impossible for Respondent to comply with its regulations.

Both parties’ actions are suspect in this case. Respondent could have been intentionally delaying the repairs set forth in Judge Fleischman’s December 2018 order. It is clear that the communication between the parties could have been better. While this may be because both parties switched legal counsel throughout this matter, Mr. Bell deserved the opportunity to know from December 2018 through March 2019, the status of the repairs. Further, Respondent should have also informed Mr. Bell of its timeline to complete the repairs or at a minimum, at least copied him on the April 29, 2019 correspondence to Mr. Fagerburg.

Further, Mr. Bell’s testimony was not persuasive that he wanted Respondent to complete the project. During his testimony he was adamant that Respondent follow the original plans as the Directive required. However, this is disingenuous, as his own witness testified that even the original plans were faulty and would not have prevented the flooding. Further why would Gervasio be involved if Mr. Bell wanted the original plans followed?

The Registrar of Contractors allows contractors the opportunity to perform corrective work within a reasonable time. Respondent established by a preponderance of the evidence that it was complying with the December 2018 orders from Judge Fleischman and had Gervasio working on the plans. Further, as mentioned above, the Administrative Law Judge believes that Respondent was not given a reasonable amount of time to comply with the Directive. In addition, given the extensive work needed, Mr. Bell could have requested additional time for Respondent to make the repairs, but instead he chose to hold Respondent to the strict timeline in the Directive. Therefore, the Administrative Law Judges finds that Respondent cannot properly be disciplined for the violation of A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar close as dismissed Complainant Storage at Anthem LLC’s, complaint in Case No. 2019A-00956 against Respondent CO Johnson General Contractors, Inc. License No. 070504.

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.

-54864001

001

-137160-45720000Done this day, November 6, 2020.

/s/ Adam D. Stone Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

-54864001

001

-137160-45720000