FINACT2019A-02455-ROC.pdf

2019A-02455-CHC-ROC · Registrar of Contractors · 2019-09-19



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IN THE OFFICE OF ADMINISTRATIVE HEARINGS

David Russ, No. 2019A-02455-CHC-ROC COMPLAINANT v. ADMINISTRATIVE LAW JUDGE Penrod Drilling LLC, DECISION ROC License: ROC 286583, RESPONDENT HEARING: August 23, 2019 APPEARANCES: Complainant David Russ appeared on his own behalf. Brent

Penrod, Owner and Qualifying Party, appeared on behalf of Respondent Penrod

Drilling LLC.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

1. Penrod Drilling LLC (Respondent) is the holder of License No. 286583

issued by the Arizona Registrar of Contractors (Registrar).

2. On or about December 17, 2018, David Russ (Complainant) signed a

contract with Respondent for a new well to be drilled on his property using mud rotary drilling and including the installation of a submersible well pump with all plumbing and electrical work done. The contract did not include Respondent’s license number, the address of the jobsite, the estimated date of completion of all work to be performed under the contract, or an advisement that the property owner had the right to file a written complaint with the Registrar. 3. On or about May 9, 2019, the Registrar received a Complaint against Respondent from Complainant alleging that Respondent failed to perform the work in a timely manner, that the well would have to be abandoned due to poor work, and that Respondent “used unqualified help without supervision.” 4. The Registrar assigned the complaint to Investigator Cliff Corlett. After a jobsite inspection, Investigator Corlett issued a written directive to Respondent that provided as follows:

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 9.13.2019 ROC LEGAL

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 or before June 7, 2019.

You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 1: Contractor failed to perform work in timely manner. Investigator’s Observation: A.R.S. § 32-1154-(A)(12) R-4-9-108-(B) A contractor shall perform all work in accordance with any applicable building codes and professional industry standards. For work to be performed in accordance with professional industry standards, a contractor shall use such skills, prudence, and diligence in performing and completing task undertaken that the completed work meets the standards of a similarly licensed contractor possessing ordinary skill and capacity. Governing Rule: A.R.S. § 32-1154-(A)(12) R-4-9-108-(B) Complaint Item 2: Well will have to be abandoned due to poor work and mis-steps in procedures. Investigator’s Observation: Respondents 12-17-18 proposal/contract states Respondent will drill new water well to an approx. depth of 800 feet. Per statement from Brent Penrod the drill bit is stuck approx. 700 feet down. Mr. Penrod indicated that the well could be put in operation at the current depth, however the Arizona Department of Water Resources (ADWR) documentation indicated that viable water should be found deeper than 800feet. RESPONDENT SHOULD PROPERLY PROVIDE A VIABLE WATER WELL TO AT LEAST THE APPROX. 800FEET AGREED TO ON CONTRACT. RESPONDENT MUST COMPLY WITH ALL ADWR REGULATIONS, I.E., PROPPER SIGNAGE ON DRILL RIG, ONLY OPPERATING DRILL RIGS AS DRILLER IS LICENSED AND CERTIFIED TO OPPERATE Governing Rule: A.R.S. § 32-1154-A.(3)(namely A.A.C. R4-9-108 Workmanship Standards for Licensed Contractors. RECEIVED 9.13.2019 ROC LEGAL

Complaint Item 3: Used unqualified help without supervision. Investigator’s Observation: ADWR regulations require that a well driller be properly licensed and certified to operate the type of drill equipment that is being used. AZROC regulations require the contractor to use only bonified employees covered by Workman’s Comp Insurance and who have all required taxes withheld. Otherwise he is aiding & abetting an unlicensed entity. RESPONDENT SHOULD PROPERLY COMPLETE WELL CONTRACT COMPLYING WITH ALL ADWR REGULATIONS AND WITH ONLY BONIFIED EMPLOYEES Governing Rule: A.R.S. §32-1154-A. (3)(9) Aiding & Abetting a licensed or unlicensed person to evade this chapter. Complaint Item 4: They are now planning to dynamite their stuck drill bit to save their rods and complete the well installation. Investigator’s Observation: Per ADWR this is not any violation Governing Rule:

Complaint Item 5: Contractor has left an environmental mess. The ground at the drill site is contaminated with drill/well cuttings and petroleum products. Investigator’s Observation: Respondents drilling operation has created several areas of environmental concern on the grounds in proximity to the drilling site, that will need to be properly cleaned up. All clean-up shall conform to any/all local/state and or Federal regulations. REESPONDENT SHALL PROPERLY CLEAN-UP ALL WELL DRILLING SITE DEBRIS. Governing Rule: A.R.S. §32-1154-A. (3) (namely A.A.C. R4-9-108 Workmanship Standards for Licensed Contractors.

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 in original.

5. Following the issuance of the written directive, Respondent performed no further work on the project. After the deadline in the directive expired, Investigator Corlett was notified no corrective work had been performed.

RECEIVED 9.13.2019 ROC LEGAL

6. The Registrar issued a Citation against Respondent, charging possible violations of A.R.S. § 32-1154(A)(1);1 A.R.S. § 32-1154(A)(2); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108;2 A.R.S. § 32-1154(A)(9); A.R.S. § 32-1154(A)(12), namely

A.R.S. § 32-1158;3 A.R.S. § 32-1154(A)(13); and A.R.S. § 32-1154(A)(22).

7. Investigator Corlett testified that well drillers in Arizona are required to be

licensed with both the Registrar and the Department of Water Resources (DWR).

According to Investigator Corlett’s discussions with Mike Ball with the DWR,

Respondent was licensed to perform cable drilling, but was not licensed to perform

rotary drilling through DWR. Mr. Ball stated that Brent Penrod’s brother was licensed

to perform rotary drilling, but the license was not transferrable.

8. During a joint inspection of the jobsite with DWR, Investigator Corlett

noted that the truck on site did not have any identifying signage. Following the

1 A.R.S. § 32-1154(A) provides, in pertinent part, as follows: The holder of a license or any person named on a license pursuant to this chapter may not commit any of the following acts or omissions: 1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal. 2. Departure from or disregard of: (a) Plans or specifications 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. .... 9. Attempting to evade this chapter by: (a) Aiding or abetting a licensed or unlicensed person. .... 12. Failure in any material respect to comply with this chapter. 13. Knowingly entering into a contract with a contractor for work to be performed for which a license is required with a person that is not duly licensed in the required classification. .... 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 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. 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. § 32-1158 sets forth the required elements of a contract. RECEIVED 9.13.2019 ROC LEGAL

inspection, Investigator Corlett reached out to Mr. Penrod regarding the complaint. Mr. Penrod explained that the drill bit was stuck in the hole and that the other men doing the drilling on the job were not his employees, but were his partners.

9. Gary Lee Hix, licensed driller, testified on behalf of Complainant. Mr. Hix

stated that the bore hole on Complainant’s property could not be made into a viable

well, but it had not been properly abandoned. Mr. Hix opined that to properly abandon

the bore hole would cost approximately $6,000.00. Mr. Hix acknowledged that from

time to time things do go awry in the drilling industry, but the driller should not just walk

away from the project.

10. Complainant testified that Respondent had been paid $24,000.00 toward

the total contract price of $28,000.00. Complainant stated that because of the failure of

Respondent to dig the well as contracted, he was forced to contract with another

company to drill a viable well on his property because his loan package for his home

required an operable well on the property. Complainant stated that he paid the

contractor $30,000.00 to drill the new well and $12,000.00 to $13,000.00 to install the

pump and electrical work necessary to access the well. Complainant stated he was

forced to draw from his and his wife’s retirement accounts to pay for the well. Complainant also stated he had received a quote of $6,487.66 from that contractor to properly abandon the bore hole. 11. Mr. Penrod, while initially denying some of the allegations in citation, eventually admitted that he was “totally guilty of all charges.” Mr. Penrod testified that he went into the job with good intentions, but acknowledged that the job was “totally screwed” up and stated that he was sorry. 12. Administrative notice is taken of Respondent’s prior License record on September 12, 2019. Such prior License record reflects that Respondent’s License No. 286583 was first issued on October 9, 2013, and was active. Such prior License record also reflects that there were no other open complaints or prior complaints against Respondent’s license. CONCLUSIONS OF LAW RECEIVED 9.13.2019 ROC LEGAL

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 and Respondent admitted the violations of

A.R.S. § 32-1154(A)(1); A.R.S. § 32-1154(A)(2); 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. § 32-1158;

A.R.S. § 32-1154(A)(13); and A.R.S. § 32-1154(A)(22).

4. A.R.S. § 32-1156.01 provides that after a hearing, an administrative law

judge may recommend that a licensee provide restitution to any person who is injured

or whose property is damaged by an action of the licensee.

5. The evidence established that Complainant suffered damages in the

amount of at least $42,000.00 to drill a new well and $6,486.66 to properly abandon the bore hole left by Respondent. Less the $4,000.00 still owing on the contract with Respondent, Complainant’s actual damages total $44,486.66. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend Respondent’s License No. 286583 for a period of five days. It is further recommended that the Registrar require Respondent to pay to Complainant the sum of $44,486.66 as restitution pursuant to A.R.S. § 32-1156.01. It is further recommended that if Respondent fails to pay the entire amount of the restitution 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 RECEIVED 9.13.2019 ROC LEGAL

Respondent, as defined in A.R.S. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding restitution. 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

days from the date of that certification.

Done this day, September 12, 2019.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors