ALJDEC decisions subject to certification as final

2019A-02351-CHC-ROC · Registrar of Contractors · 2020-06-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Darian Pajak and Georfiana Kapsambelis,

Complainants,

Gramling Development LLC,

License No. 180270,

Respondent.

No. 2019A-02351-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: Stipulated Findings of Fact and Conclusions of Law were submitted by the parties in lieu of a hearing.

APPEARANCES: John C. Marcolini, Esq., represents Complainants Darian Pajak and Georfiana Kapsambelis. Michael T. Reynolds, Esq. represents Respondent Gramling Development LLC.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

____________________________________________________________________

The Office of Administrative Hearings is in receipt of the parties’ Stipulation and Joint Motion for Entry of Factual Findings, Conclusions of Law, and Recommended Order with Request to Vacate Hearing, filed by Complainants, Darian Pajak and Georgia Kapsambelis (“Complainants”), and Respondent, Gramling Development, LLC (“Respondent”); and having reviewed and considered the same, and good cause appearing therefor, adopts and enters the following Findings of Fact and Conclusions of Law and makes the following Recommended Order.

FINDINGS OF FACT

1. On May 6, 2019, Complainants filed a Complaint against Respondent with the Arizona Registrar of Contractors designated Complaint Number 2019-02351 (the “ROC Complaint”).

2. On January 30, 2020, the Arizona Registrar of Contractors issued a Citation in Case No. 2019-02351 (the “Citation”) against Respondent finding cause to charge Respondent with violations of Title 32, Chapter 10 of the Arizona Revised Statutes, and charging Respondent with violating: (i) A.R.S. § 32-1154(A)(6) (the doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured); (ii) A.R.S. § 32-1154(A)(8) (failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract); and (iii) A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158 (failure in any material respect to comply with this chapter).

3. Respondent filed an Answer to the Citation on February 10, 2020.

4. Complainants are the owners of residential real property designated as Lot 10, Artesano at Troon Canyon, having a street address 25072 North 107th Way, Scottsdale, Arizona 85255 (the “Property”).

5. Complainants acquired the Property as vacant land to construct a custom single family luxury home on the Property to be used as Complainants’ residence (the “Project”).

6. On December 14, 2016, Complainants entered into a Contract for Construction (the “Construction Contract”) with Respondent for Respondent to act as general contractor and provide construction services and build the Project on the Property for a price of $1,480,809.41. A true copy of the Construction Contract is attached as Exhibit A to the May 6, 2019 ROC Complaint.

7. Pursuant to A.R.S. § 32-1132(A), Respondent held a valid contractor license designated ROC License No. 180270 at the time the parties’ entered into the Construction Contract.

8. Andrew Gramling is the Qualifying Party and a Member of Respondent and any involvement in this matter by Mr. Gramling is in such capacities.

9. Complainants obtained a construction loan from Johnson Bank (the “Construction Loan”) to partially finance the Project secured by deed of trust against the Property.

10. Complainants are responsible for repayment of the Construction Loan.

11. During the course of the Project construction, Respondent submitted multiple requests for payment for work performed on the Project and was paid a total of $869,923.10 by Complainants.

12. Respondent abandoned the Project through no fault of Complainants in May 2018 and materially failed to complete construction of the Project for the price stated in the Construction Contract.

13. The state of construction of the Project was approximately 51% incomplete when Respondent abandoned the Project.

14. As a result of Respondent’s failure to complete construction of the Project for the price stated in the Construction Contract, Complainants obtained proposals from licensed general contractors to complete the Project.

15. On September 5, 2018, Claimants entered into a Custom Home Construction Agreement with Valenza Development Corporation, holding ROC License No. 108306, to complete the Project for a guaranteed maximum price of $1,158,546.25 (the “GMP Contract”). A true copy of the GMP Contract is attached at Exhibit J to the ROC Complaint.

16. The proposal received from Valenza Development Corporation resulting in the GMP Contract was the lowest contractor proposal received by Complainants to complete construction of the Project.

17. Claimants have to date completed the Project and paid Valenza Development Corporation the amount of $1,158,546.25.

18. As a result of Respondent’s failure to complete construction of the Project for the price stated in the Construction Contract, Complainants have been forced to incur additional costs to complete the Project of $547,029.94 above the original Construction Contract price of $1,480,809.41, itemized as follows:

Construction Contract Price $1,480,809.41

Less Total Paid to Respondent ($ 869,923.10)

Remaining Construction Contract Balance $ 611,516.31

GMP Contract Price to Complete Project $1,158,546.25

Less Remaining Construction Contract Balance ($ 611,516.31)

Additional Costs of Completion Paid by Complainants $ 547,659.94

19. The failure by Respondent to complete construction of the Project for the price stated in the Construction Contract resulting in Complainants having to spend an additional $547,029.94 to complete the Project is material and in violation of A.R.S. § 32-1154(A)(8).

20. The Construction Contract does not contain a provision providing notice of the right to file a written complaint with the Registrar of Contractors together with the Registrar’s telephone number and website address, and a statement that complaints must be made within the applicable time period as set forth in A.R.S. § 32-1155, subsection A.

21. Respondent and Complainants have entered into an agreement that nothing contained herein, nor the resolution of this proceeding, shall prevent, estop, restrict, limit, negate or in any manner have any preclusive effect on the ability and right of Complainants to allege, assert, claim and/or or testify to any fraudulent or unlawful acts by Respondent relating to, or arising from, the Project, Construction Contract, Construction Loan, Respondent’s dealings and relations with Complainants and/or the GMP Contract, whether such allegations, assertions, claims or testimony are based on contract, statute and/or common law or are made before any municipal, county or state governmental body or agency, state court, federal court, arbitration or any other legal or administrative proceedings including, but not limited to, claims under the Residential Contractors Recovery Fund, A.R.S., §§ 32-1131, et seq., and the regulations promulgated thereunder.

CONCLUSIONS OF LAW

1. Respondent has failed in a material respect to complete the construction of the Project for the price stated in the Construction Contract in violation of A.R.S. § 32-1154(A)(8).

2. Respondent failed to incorporate into the Construction Contract in violation of A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158(A)(9), notice of the right of the project owner to file a written complaint with the Registrar of Contractors together with the Registrar’s telephone number and website address, and a statement that complaints must be made within the applicable time period as set forth in A.R.S. § 32-1155, subsection A.

3. In addition to Respondent’s above violations, consideration of prior cases and any documents regarding Respondent on file with the Registrar of Contractors, and Respondent’s prior disciplinary and current license status have been considered as mitigating or aggravating factors in determining the appropriate discipline. The Respondent’s prior record with the Registrar of Contractors indicates the following aggravating factors: Four prior cases since 2018 resulting in discipline, including two license suspensions and two license revocations.

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. 180270.

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.

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-137160-45720000Done this day, June 30, 2020.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000