ALJDEC decisions subject to certification as final

2019A-00959-CHC-ROC · Registrar of Contractors · 2019-09-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 3, 2019 APPEARANCES: Nazir Alam, Owner, appeared on behalf of Complainant Dawn LLC, doing business as Mainstay Suites. Del Miller, Owner and Qualifying Party, appeared on behalf of Respondent Yukon Valley Corporation, doing business as Del Miller Construction. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT Yukon Valley Corporation, doing business as Del Miller Construction (Respondent) is the holder of License No. 280180 and 153221 issued by the Arizona Registrar of Contractors (Registrar). On or about April 20, 2018, Dawn LLC, doing business as Mainstay Suites (Complainant) signed a contract with Respondent for the construction of a swimming pool and spa, ADA compliant chair lifts, and a block privacy wall. The contract indicated a total project cost of $41,000.00, with a $15,000.00 down payment, a payment of $13,000.00 at three-quarter completion, and a final payment of $13,000.00 due upon completion. The Contract provided that checks should be made payable to DBLB Transport, LLC (DBLB Transport). The contract did not include an estimated date of completion or an advisement that the property owner had the right to file a written complaint with the Registrar for alleged violations of A.R.S. § 32- 1154(A). The contract included a footer identifying David Bailey as the Superintendent and Linda A. Benson as the Interior Designer. On or about February 20, 2019, the Registrar received a Complaint against Respondent from Complainant alleging abandonment with respect to the project. The Registrar assigned the complaint to Investigator John Smith. Investigator Smith conducted a jobsite inspection. During the jobsite inspection, Ms. Benson told Investigator Smith that she was a “virtual assistant” for Respondent and that neither she nor Mr. Bailey were employees of Respondent. Investigator Smith discovered that Respondent did not have any workers’ compensation insurance, which Investigator Smith took to mean that Respondent did not have any employees. Investigator Smith also noted that Ms. Benson and Mr. Bailey were the owners of DBLB Transport, the company to which payment under the contracts were to be made. After the jobsite inspection, Investigator Smith issued a written directive to Respondent that provided as follows: ***NOTE: THE RESPONDENT PERFORMED WORK ON THIS SWIMMING POOL PROJECT BEYOND THE SCOPE OF THE RESPONDENT’S B-1 GENERAL COMMERCIAL CONTRACTOR LICENSE.

THE RESPONDENT CANNOT PERFORM THE DIRECTED REPAIRS AND CAN ONLY RESOLVE THE COMPLAINT IN THE MANNER PRESCRIBED BY THE BOLD, ITALICIZED AND UNDERLINED PARAGRAPH ON THE LAST PAGE OF THIS DIRECTIVE***

Dear Respondent:

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 April 5, 2019. You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 4: “Work quality is poor…” The dirt sidewalls of the pool are caving in. The rebar is sagging and incomplete. The PVC piping is sagging, warping, and incomplete. No work is currently being done. The project is not complete. Governing Rule: Workmanship Rule 32-1154 A 3, namely R4-9-108

Complaint Item 10: “Now they are not working…” The project is incomplete. Governing Rule: 32-1154 A 1: Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action. . . . . You may not perform or hire other contractors to perform work that is outside the scope of your license. If any workmanship violations listed above are designated as outside the scope of your license, then 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. This project requires a contractor to have an A-9 Commercial Swimming Pools license, a KA-5 Dual Swimming Pool Contractor license, or a KA-6 Dual Swimming Pool Contractor Including Solar license.

Following the issuance of the written directive, no corrective work was done and no financial settlement was reached. After the deadline in the directive expired, Investigator Smith was notified no corrective work had been performed. The Registrar issued a Citation against Respondent, charging possible violations of A.R.S. § 32-1154(A)(1); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108; A.R.S. § 32-1154(A)(9); A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1124(B); A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158; A.R.S. § 32- 1154(A)(12), namely A.R.S. § 32-1158.01; A.R.S. § 32-1154(A)(16); and A.R.S. § 32-1154(A)(22). Investigator Smith testified as to the Registrar’s involvement in this matter. Investigator Smith stated that Respondent was not licensed to install swimming pools under its license. Investigator Smith testified that the payment plan in the contract was in violation of Arizona statute relating to pool contracts. Investigator Smith also noted that Ms. Benson and Mr. Bailey were purportedly “working under” Respondent’s license, but neither were licensed by the Registrar and were not employees, so they were not able to “work under” Respondent’s license. Nazir Alam testified that the delay in getting the swimming pool and spa installed was affecting his business because and he was losing money. Mr. Alam stated that the project was supposed to take two months and was not complete at over a year later. Mr. Alam indicated that Respondent performed no work on the project after some time and the hole was left as it was after the October 2018 monsoon rains caused issues. Mr. Alam also testified that Mr. Bailey was staying in one of the hotel rooms while the project was ongoing to oversee the project and ended up staying in the room for months free of charge instead of the two months it was supposed to have been. Mr. Alam stated that he hired a new contractor to complete the project, but not until after the deadline in the directive expired. Brandon Cotter, AZ Elite Builders, testified on behalf of Complainant. Mr. Cotter provided an estimate to finish the pool, which he stated had a number of problems. Mr. Cotter testified that the plumbing was sagging, but it was also undersized and was not adequate to maintain the flow rate needed for a commercial pool. Mr. Cotter also indicated that the pool deck was improperly connected to the pool structure. Mr. Cotter noted that the pool began by Respondent was four feet off from what the plans provided to and approved by the city. Because the parking lot had the exact number of parking spaces required, the pool being four feet off resulted in the loss of a parking spot and the city would not approve the change. Mr. Cotter, therefore, had to abandon everything that had been done by Respondent and redig the hole. Del Miller, Respondent Owner and Qualifying Party, offered very limited testimony related to this matter. In the opinion of the Administrative Law Judge, Mr. Miller was not at all involved in the project and was allowing Ms. Benson and Mr. Bailey to run the project in Respondent’s name. Throughout Mr. Miller’s testimony, Ms. Benson attempted to provide him with information to help with his testimony. Ms. Benson testified that she had been hired as Mr. Miller’s “virtual assistant” and was responsible for paying bills, paying insurance, updating the website, and handling subcontractors. Ms. Benson indicated that the plan after her probationary period, she was supposed to become a member of Respondent’s corporation. Ms. Benson had no evidence as to any licensed contractors who worked on the project. Ms. Benson acknowledged that she and Mr. Bailey, as DBLB Transport, were working under the “permission” of Respondent on this project. Administrative notice is taken of Respondent’s prior License records on September 23, 2019. Such prior License record reflects that Respondent’s License No. 153221, was first issued on March 9, 2000, and was active. Such prior License record also reflects that there were no open complaints and no prior complaints against Respondent’s license. Such prior License record reflects that Respondent’s License No. 280180, was first issued on July 28, 2012, and was active. Such prior License record also reflects that there were no other open complaints and no prior complaints against Respondent’s license. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32- 1101 et seq. 2. 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). 3. The evidence established that Respondent abandoned the work on the project in violation of A.R.S. § 32-1154(A)(1).[1] 4. The evidence established that Respondent’s work was not in conformity with the Registrar’s standards. Therefore, Complainant established that Respondent did not complete the project in a workmanlike manner in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.[2] 5. The evidence established that Respondent aided and abetted unlicensed individuals and entity, Ms. Benson, Mr. Bailey, and DBLB Transport, in evading the Registrar’s statutes and regulations by letting them “work under” its license in violation of A.R.S. § 32-1154(A)(9).[3] 6. The evidence established that on certain documents, Respondent did not have the acronym “ROC” preceding its license number in violation of A.R.S. § 32-1124(B).[4] Therefore, Complainant established that Respondent failed to comply with the Registrar’s statutes in violation of A.R.S. § 32-1154(A)(12).[5] 7. The evidence established that Respondent’s contract failed to include the required elements of a contract set forth in A.R.S. § 32-1158.[6] Therefore, the Registrar established that Respondent failed to comply with the Registrar’s statute in violation of A.R.S. § 32-1154(A)(12). 8. The evidence established that the contract required a down payment of $15,000.00 of the total contract price of $41,000.00, or approximately 36.6 percent of the total contract price. However, because this was not a residential swimming pool project, Complainant failed to establish a violation of the payment terms set forth in A.R.S. § 32- 1158.01.[7] 9. The evidence established that Respondent did not have a license that allowed it to install swimming pools. Accordingly, Complainant established that Respondent contracted beyond the scope of its license in A.R.S. § 32-1154(A)(16).[8] 10. The evidence established that Respondent did not attempt to complete the corrective work following the Directive being issued. Therefore, Complainant established that Respondent failed to take appropriate corrective action following a written directive from the Registrar in violation of A.R.S. § 32-1154(A)(22).[9] 11. Given the circumstances of Mr. Miller allowing Ms. Benson and Mr. Bailey to “work under” his license and his seemingly lack of knowledge of Respondent’s business operations. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall revoke Respondent’s License No. 280180 and 153221. It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(E). It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s final order, the Registrar revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty. 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, September 23, 2019.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] 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.” [2] 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.” 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.” [3] A.R.S. § 32-1154(A)(9) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]ttempting to evade this chapter by . . . [a]iding or abetting a licensed or unlicensed person.” [4] A.R.S. § 32-1124 provides, in pertinent part, as follows: The license number appearing on any licenses held by the licensee must be preceded by the acronym "ROC" and shall be posted in a conspicuous place on premises where any work is being performed, shall be placed on all written bids submitted by the licensee and shall be placed on all broadcast, published, internet or billboard advertising, letterheads and other documents used by the licensee to correspond with the licensee's customers or potential customers in the conduct of business regulated by this chapter. [5] A.R.S. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f] ailure in any material respect to comply with this chapter.” A.R.S. § 32-1124 provides,

[6] A.R.S. § 32-1158 provides as follows: 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: . . . . 4. The estimated date of completion of all work to be performed 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. [7] A.R.S. § 32-1158.01 provides the following payment provisions for swimming pool, spa, construction contracts: A. In addition to the requirements of section 32-1158, a licensed contractor who enters into a contract for the construction or installation of a residential in-ground swimming pool or spa with a purchaser who resides in the residence or who intends to reside in the residence after the completion of the contract shall include at least the following provisions: . . . . 2. The following payment provisions: (a) A down payment payable on the execution of the contract of not more than fifteen percent of the original contract price. (b) After the completion of the excavation work on the swimming pool or spa, a payment of not more than twenty-five percent of the amount of the original contract price plus any written change orders approved by the purchaser. (c) After the installation of steel, plumbing and pneumatically applied concrete materials or the installation of a prefabricated swimming pool or spa, a payment of not more than twenty-five percent of the amount of the original contract price plus any written change orders approved by the purchaser. (d) After the installation of decking materials, a payment of not more than twenty-five percent of the amount of the original contract price plus any written change orders approved by the purchaser. (e) Before the application of the finishing interior materials or completion of all work on a prefabricated pool or spa, payment of all remaining sums due on the original contract plus any written change orders approved by the purchaser. [8] A.R.S. § 32-1154(A)(16) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.” [9] A.R.S. § 32-1154(A)(22) includes among the grounds for suspension, revocation, or other disciplinary action against 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.”

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