ALJDEC decisions subject to certification as final

2019A-01694-CHC-ROC · Registrar of Contractors · 2019-09-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 26, 2019 APPEARANCES: Richard Kilroy (Complainant) appeared on his own behalf. Sarkis Payaslyan, appeared on behalf of S & P Consulting Incorporated, DBA: Schaefer Construction (Respondent). ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera _____________________________________________________________________ FINDINGS OF FACT 1. On May 18, 2018, the Registrar of Contractors (ROC) issued License No. 319838 for General Dual KB-2 Dual Residential and Small Commercial to S & P Consulting Incorporated, DBA: Schaefer Construction (Respondent). Respondent’s address of record for the license is 512 West Adams Street, Phoenix, AZ 85003. Sarkis Payaslyan is listed on the license as Qualifying Party.[1] 2. Administrative Notice is taken of Respondent’s prior License record, for License No. 319838, as reflected on the ROC’s public website on September 9, 2019. Such prior License record reflects that Respondent’s license is currently active. The license has never been disciplined by the ROC. 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 $14,000.00 surety bond issued through R L I Insurance Company effective April 27, 2018.[2] 3. On or about January 5, 2019, Richard Kilroy (Complainant) sustained water damage when his house flooded. Complainant’s address was 3651 McLaws Road, Holbrook, AZ 86025. On January 11, 2019, Respondent was contracted by Complainant’s insurance company to repair and restore Complainant’s home. Specifically, Respondent was to remove and clean the carpets, restore the drywall, and fix any and all standing water damage. The project commenced on February 21, 2019. The project was completed by February 25, 2019. Complainant was covered by his insurance company for the amount of the repairs. Complainant claimed personal property loss through his insurance company. 4. On April 4, 2019, the ROC received a Complaint against Respondent from Complainant alleging abandonment and poor workmanship. ROC Investigator Chris Allison (Investigator Allison) was subsequently assigned to the case. 5. The Complaint indicated a number of items that were done incorrectly by Respondent, including but not limited to, ceiling repair, replace carpet, paint splatter, door replacement, visible paint seams, and replace drywall. 6. On or about April 7, 2019, the ROC issued a Jobsite Inspection Notification letter to the parties, provided proper notice to them, and advised that an onsite review would be conducted at the project site by an ROC investigator on May 6, 2019, at 10:00 a.m. 7. On May 6, 2019, ROC Investigator Allison reviewed the work completed by Respondent, to date, and took about 10-20 photographs of the property. Respondent was not present during the inspection. 8. On or about May 14, 2019, Investigator Allison issued a Directive From The Registrar (Directive) to Respondent because he substantiated four of Complainant’s allegation that Respondent’s work failed to meet minimum ROC workmanship standards. The directive to Respondent provided the following: 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 June 4, 2019. You are hereby directed to remedy the following violations by the appropriate means: 1. Ceiling repair was done adequately The repaired area has a hump at the seam. Correct by appropriate means. 2. Carpet was only patched Per scope of work the carpet was to be replaced. It appears to have been only partially replaced in the living room. Correct per scope of work and by appropriate means. 3. Paint of bricks There is paint splattered on the brick work throughout the living room. Correct by appropriate means. 7. Drywall on the walls not replaced Per scope of work all wet drywall in living room was to be replaced. It appears that the drywall on the walls affected did not get replaced. Correct per scope of work and by appropriate means.

All errors in original. 9. Following the issuance of the Directive, Sarkis Payaslyan (Mr. Payaslyan), Respondent’s owner, acknowledged receipt of the Directive and responded accordingly. Mr. Payaslyan emailed Investigator Allison and acknowledged that while he completed all of the work he was contracted to complete, there were a couple of items that may not have been done adequately. He stated that the work was rushed due to a hostile work environment caused by Complainant who threatened his workers. Mr. Payaslyan informed Investigator Allison that he did not feel comfortable going back to the jobsite to complete any remedies for that reason. Mr. Payaslyan offered to reimburse Complainant financially, as an alternative. 10. On June 6, 2019, the ROC issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22), and Ariz. Admin. Code R4-9-108. Respondent was given until June 25, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155. 11. Respondent did not file an Answer to the Citation with the ROC. 12. On June 24, 2019, the ROC referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on August 26, 2019. 13. At hearing, Complainant testified on his own behalf. Complainant stated that his basement flooded when the copper water pipes froze. He stated he called his insurance company and his insurance company sent Respondent to restore and remodel his basement. Complainant testified that Respondent was supposed to replace the bedroom walls, replace, treat, and paint walls that sustained water damage, replace the carpeting, replace the electric sockets, and disinfect the basement. Complainant testified to issues with respect to Respondent’s workmanship. He stated that the paint bubbled in several areas, that the electrical sockets were not put back in, that there were paint stains on the corners of the walls, that there were carpet glue stains on the wall, that there was moisture in the walls, and that Respondent did not disinfect. 14. Complainant testified that he has not able to use his basement since January because it was still saturated and there was mold. Complaint stated that he suffered personal property loss as a result of the flood. He stated he filed a claim with his insurance company. 15. Complainant complained that Respondent’s crew did not speak English and that Respondent was not present when he asked them questions. He opined that, for those reasons, the work was not done correctly. 16. During Complainant’s cross examination by Mr. Payaslyan, Complainant became combative towards Mr. Payaslyan. Complainant asked Respondent to name the “fool” he went through to hire his workers. Complainant also inquired of Respondent if Respondent’s workers were legal citizens. At the end of cross examination, however, Complainant, acknowledged that he gave Respondent a “satisfactory” score on the survey following the completion of the work. 17. Mr. Payaslyan, testified on behalf of Respondent. Mr. Payaslyan stated that immediately upon his arrival, on January 25, 2019, he walked through the basement with Complainant and explained to Complainant, in detail, the work that would be done to repair the water damage. Mr. Payaslyan stated that the overall work took a little bit longer than he expected because the nearest Home Depot was more than one hour away. He stated that he spent several hours just traveling from Complainant’s home to Home Depot because he made several trips during the few days he was there. Mr. Payaslyan testified that his crew stayed at Complainant’s home, to work, while he went to get materials.

18. Mr. Payaslyan testified that after he began the work, he discovered other problems and that was why he had to make so many trips to the store. He observed that the pipes were not installed correctly and could cause additional problems in the future. He stated that even though those pipes were not part of the contract, he fixed all the pipes, on his own expense, to ensure that the repair and restoration was done completely. Mr. Payaslyan stated that he completed the water restoration per industry standards. He stated that he and his workers wore protective gear, used the brand name HEPA air purifier filters, used dehumidifiers, industrial fans, and properly disposed of all insulation and materials. Mr. Payaslyan testified that upon completion of the work, he and Complainant did a walk through. He stated that Complainant was satisfied with the job that was done and indicated so on the survey. 19. Mr. Payaslyan testified that while he and his crew worked at Complainant’s home, Complainant was hostile towards them. He stated that, after the first day of work, Complainant asked Mr. Payaslyan if Mr. Payaslyan “was going to bring the watermelons back.” Mr. Payaslyan stated that the workers complained of Complainant’s racial abuse. 20. Additionally, Mr. Payaslyan testified that Complainant created a dangerous atmosphere, for him and his crew, when Complainant repeatedly went to the basement, smoking a cigarette, after repeatedly being told not to come with a lighted cigarette. Mr. Payaslyan stated that he also observed Complainant smoke cigarettes in the presence of Complaint’s wife, who was on oxygen and had an oxygen tank next to her. Mr. Payaslyan stated that Complainant made Mr. Payaslyan aware that Complainant had guns in the house. That was the reason Mr. Payaslyan was not allowed to go near the storage room. 21. Mr. Payaslyan opined that he did not go back to Complainant’s house, following the Directive, for those reasons. He did not want to put his workers “in this line of abuse” by Complainant. He opined that the situation with Complainant was dangerous and racially abusive. 22. At hearing, Investigator Allison testified that while the carpet in the living room appeared to be new, the carpet by the closet area did not appear to be new. He also testified that paint on the bricks were present prior to Respondent starting work. Investigator Allison observed open junction boxes, unattached light fixtures, and exposed wires. 23. Investigator Allison acknowledged that Mr. Payaslyan contacted him after the Directive was issued. He stated that Mr. Payaslyan wanted to know what his options were, with respect to corrective measures, because he did not feel comfortable going back to Complainant’s home. CONCLUSIONS OF LAW 1. The ROC has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq. 2. The ROC may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation was not remedied by corrective action.[3] 3. The purpose of the ROC’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.[4] 4. 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). 5. Ariz. Rev. Stat. § 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.” 6. Ariz. Admin. Code 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.” 7. Ariz. Rev. Stat. § 32-1154(A)(22) holds, in pertinent part, that “[a] holder of a license may not fail to take appropriate corrective action to comply with this chapter or 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. The ROC has the authority to issue license discipline under this provision, including summary suspension, revocation, or imposing a civil penalty or recovery fund award.” 8. The evidence established that some of 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. 9. However, the evidence established that Respondent attempted to complete the corrective work following the Directive being issued, by inquiring about alternative options. Respondent established that it was unable to complete any corrective work due to the hostile work environment created by Complainant. Respondent offered financial reimbursement, as an alternative, because it did not want to put the crew in a dangerous and volatile situation. 10. Denial of access constitutes a valid justification for failing to comply with a written directive of the ROC. Respondent established by a preponderance of the evidence that Complainant denied it access to the property to allow Respondent to complete the required repairs when Complainant created a hostile and dangerous work environment. Therefore, because the ROC does not expect nor demand perfection from licensees, Respondent cannot properly be disciplined for the violation of A.R.S. § 32-1154(A)(22) unless it is given the opportunity to correct said issue. RECOMMENDED ORDER It is recommended that on the effective date of the ROC’s final order in this matter, ROC close as dismissed Complainant, Richard Kilroy’s, complaint in Case No. 2019A-01694 against Respondent S & P Consulting Incorporated, DBA: Schaefer Construction, License No. 319838. 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 12, 2019.

/s/ Antara Nath Rivera Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACPIjEAP. [2] Id. [3] See Ariz. Rev. Stat. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990). [4] See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

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