ALJDEC decisions subject to certification as final

2019A-03218-CHC-ROC · Registrar of Contractors · 2020-03-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Meredith Rosemarie Gass,

COMPLAINANT

Avante Construction LLC,

License No. ROC 317877,

RESPONDENT

No. 2019A-03218-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: December 17, 2019 and February 11, 2020

APPEARANCES: Mark Molique, Esq. for Respondent; Taylor W. Tondevold, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On September 24, 2019, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Contested Case setting the above-captioned matter for hearing on October 28, 2019 at the Office of Administrative Hearings. The matter was continued and the hearing was conducted on December 17, 2019 and February 11, 2020.

The hearing was set to consider the charges made in the complaint and citation that were served on Respondent Avante Construction LLC. ROC alleges that Respondent may have violated Ariz. Rev Stat. sections 32-1154(A)(3)(R4-9-108), (A)(8), (A)(9), (A)(12)(32-1158), (A)(16) and 32-1154(A)(22).

Respondent holds license No. 317877 issued by ROC. Carlos Dominguez is Respondent’s qualifying party.

Complainant is Meredith Rosemarie Gass.

In February 2019, Ms. Gass and her husband Paul Gass entered a contract with Respondent that called for Respondent to extensively remodel the Gasses’ house. The parties also executed an addendum to the contract. Neither the contract nor the addendum is dated, and the parties disagree as to which document is which.

The pertinent point is that one of documents has a hand-written note showing that the project would be completed in eight to ten weeks. The Gasses assert that this is the original contract, whereas Respondent asserts that this is the addendum.

The weight of the evidence supports the Gasses’ position that the note showing that the work would be completed in eight to ten weeks was in the original contract. But the evidence also suggests that it was unreasonable for the Gasses to expect that the work at issue could be completed in that time.

Work started on about April 3, 2019. On June 20, 2019, Ms. Gass filed with ROC her complaint against Respondent alleging poor workmanship. The complaint was filed before Respondent had completed its work and while Respondent was actively working on the project.

The Gasses subsequently hired another contractor to complete the project, which work was being conducted as of the February 11, 2020 hearing date.

Contract issues

The Gasses take the position that Complainant’s exhibit 2 (“C 2”) at Bates page 8, which includes a handwritten note “8 – 10 weeks total construction time. Not to exceed[,]” is the original contract. Respondent takes the position that C 2 at Bates page 12 is the original contract and that page 8 is the addendum.

Mr. Gass’s testimony on this point is more credible than Mr. Dominguez’s and is in conformity with the payments that were made to Respondent.

The import of the contract disagreement is whether Respondent was bound to complete the project in eight to ten weeks and, as a corollary matter, if so, was that reasonable.

In February 2019, the Gasses wrote to Respondent three checks totaling $23,600, which was the amount of the down payment. At Respondent’s request, Respondent returned those checks to the Gasses who then made payment with a money order dated February 23, 2019.

On April 26, 2019, the Gasses made a payment of $16,000 to Respondent via wire transfer, which was an early payment or advance of part of the first draw.

The Gasses also made a payment of $2620, which was one-half the payment for an oral change order regarding joists and oleander removal.

C 2 at page 8 includes handwritten notes detailing the amounts of the three checks that the Gasses gave to Respondent.

C 2 at page 12 includes a handwritten note showing “4/25 first installment after completion of demolition $16,000 ....” This note is in the area just above the signature blocks.

Mr. Gass and Mr. Dominguez signed C 2 at page 12 under the signature blocks. Mr. Dominguez asserts that they signed under the signature blocks in February and that later, after the work had started, they added the note.

Mr. Gass’s recollection was that they signed the original contract on or about February 23, 2019 and the addendum on or about April 25, 2019 at the time that the Gasses made the early partial payment of the first draw.

The printed contract in one location shows that the construction would take sixteen weeks and in another location three to four months, and it sets out a schedule for each trade showing a total of fifteen weeks of construction.

Although the contract has the handwritten note showing that the project was to be completed in eight to ten weeks, Ms. Gass testified to the effect that the parties had agreed orally that that time-frame related only to the “interior” portion of the work, completion of which would allow the Gasses to move back into their home, and that Respondent would perform “exterior” work after that time.

Mr. Gass has worked in construction essentially since he was a child and has extensive experience as an adult, including building buildings from the ground up.

Mr. Gass testified that when the parties negotiated the contract, Mr. Dominguez said he could do the project in eight weeks, which Mr. Gass thought was very ambitious, and so the parties agreed to change the time to eight to ten weeks.

According to Mr. Gass, although the total time shown for all trades is fifteen weeks, Mr. Dominguez said Respondent would have multiple trades working at any given time.

Respondent started work on April 3, 2019. Eight weeks from April 3rd is May 29th, and ten weeks is June 12, 2019. Ms. Gass’s complaint was filed on June 20, 2019, which was before Respondent had finished its work.

The parties disagree as to how much of the project Respondent had completed (both before the complaint was filed and after ROC issued a Directive ordering Respondent to complete the project).

Respondent expressed a willingness to complete its work and Mr. Dominguez testified that it was not fair to judge Respondent’s work until it was complete.

The Gasses have hired The Contractor Guys to complete the project. Mr. Gass’s testimony shows that it was going to take The Contractor Guys a total of about four months to complete the project. But he added that The Contractor Guys were not staging the project (interior and exterior) as was Respondent.

ROC’s investigation and involvement

ROC assigned Investigator Stephen Lawton to the matter. Mr. Lawton conducted a jobsite investigation on June 26, 2019.

On July 9, 2019 ROC issued to Respondent a Directive that provided in part:

.... You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on July 31, 2019.

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

1. Complete project per agreement between both parties using licensed contractors for electrical, plumbing and mechanical per license classification KB-2. Employees cannot be 10-99.

2. Completed project per approved plans by the local jurisdiction and per agreement between parties.

3. Complaint Item 5: Installed wrong size glulam beam (34' x 5 1/2" x 22 1/2"), need re-engineering Investigator’s Observation: It was stated by the Respondent that the glulam beam was not the size as indicated on the plans. Needs to contact local jurisdiction on how to proceed.

Governing Rule: Workmanship Rule: ARS 32-1154 (A) (3); Namely R4-9-108

4. Complaint Item 6: Followed wrong step in plans for footers and skipped all termite pre-treat.

Investigator’s Observation: It was observed that the step at entry was not per plans.

Governing Rule: Workmanship Rule: ARS 32-1154 (A) (3); Namely R4-9-108

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.

At the hearing, Mr. Lawton acknowledged that it would not have been possible for Respondent to comply with ROC’s Directive in the time that ROC ordered Respondent to do so, and that even an additional 30 days would not have been enough time to finish the project.

Mr. Lawton testified to the effect that he was not able to allow Respondent more than the minimum number of days to comply with the Directive (15 plus mailing time) and that ROC would not extend that time unless the Gasses agreed to do so.

At the direction of his boss, Mr. Lawton conducted a compliance jobsite inspection on August 1, 2019, at which time none of the items on the Directive had been completed.

ROC issued to Respondent a citation on August 26, 2019 alleging that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(3)(R4-9-108), (A)(8), (A)(9), (A)(12)(32-1158), (A)(16) and 32-1154(A)(22).

Workmanship issues.

ROC alleges that Respondent committed two workmanship violations: installation of the glulam beam that did not meet the engineer’s specifications and failure to follow the plans in construction one of the footers. The Directive does mention termite pretreatment, but Mr. Lawton testified that this issue is not within ROC’s jurisdiction.

The Gasses presented evidence as to other alleged workmanship deficiencies, some of which was intended to show that the unlicensed contractors hired by Respondent performed deficient work (i.e., that the Gasses were injured by the incompetence of these unlicensed workers).

The wrong size beam was installed

The project engineer, Michael Willis, P.E., called for a beam 6 3⁄4 inches wide by 22 1⁄2 inches deep. Mr. Dominguez acknowledges that the beam that was installed was smaller than this.

Mr. Dominguez testified that he took the plans to his supplier, who then provided Respondent with the beam that was used. Mr. Dominguez likened the situation to that of a 2 by 4, which is known to be smaller than 2 inches by 4 inches.

Sizing the beam required making three calculations: shear stress, bending stress, and deflection. The applicable code considers only the shear and bending stresses, which are life and safety issues, whereas deflection is a serviceability issue.

The beam that was installed meets the code requirements.

After learning that the smaller beam had been installed, Mr. Willis calculated the amount of deflection for that beam to be 1 and 3/8 inches.

Although the beam that was installed meets the code requirements, Mr. Willis was not comfortable with the deflection because consumers are bothered by deflection and the deflection could lead to drywall cracking.

Mr. Willis acknowledged that the only issue is the possibility of drywall cracking and he testified that this cracking could be prevented with the use of “R-C” or resilient channels.

The Gasses presented the testimony of Michael Lusky, the owner of The Contractor Guys who the Gasses hired to complete the project.

Mr. Lusky’s opinion was that R-C was the standard in this application and he would recommend using R-C regardless of the issue with the beam.

Using R-C would cost about $2000 and it would reduce the ceiling height by about one-half inch.

According to Mr. Dominguez, before the beam was installed, Mr. Gass measured it and approved its installation. But Mr. Dominguez based his testimony on information that his foreman provided, not personal knowledge, and Mr. Gass provided credible testimony that he had not measured or approved the beam.

Respondent did not contact Mr. Willis prior to installing the beam that was too small. Mr. Dominguez testified that there was no reason to do so, because Mr. Gass approved the beam, but as set out above, the evidence shows that Mr. Gass did not measure or approve the beam that was used.

According to Mr. Dominguez, after Respondent learned that the wrong size beam was installed, he offered to replace the beam with the correct one, but Mr. Gass would not agree to let Respondent do so.

Mr. Dominguez gave conflicting testimony, stating that it would take about two to three weeks to replace the beam, which Mr. Gass told him was too long, but also stating that it would have taken four to six weeks to get the correct beam after it was special ordered.

The footer

The Directive shows that a step at the entry was not to plan. This misstates the issue, which is that Respondent followed the wrong step in the plans for a footer at the entry.

It is not disputed that the wrong step in the plans was followed, or that the inspector nevertheless approved the work.

The plan-step that should have been followed required rebar that was necessary to resist possible rotation of the load the footing was to bear, whereas the plan-step that was followed did not require the rebar.

Mr. Willis acknowledged that mistakes do happen during construction.

Termite pretreatment

The Directive notes that Ms. Gass alleged that termite pretreatment was not conducted. Termite pretreatment is not within ROC’s jurisdiction.

Mr. Dominguez testified to the effect that Respondent had performed the required pretreatment.

Other alleged deficiencies in Respondent’s work

The Gasses presented evidence showing that Respondent had unnecessarily disconnected power to the entire house. Respondent acknowledged that its workers did cut the electric lines. Mr. Dominguez explained that either the wiring had to be completely re-run or a junction box installed, and his assumption was that the workers concluded that running new wires was the better choice.

Mr. and Ms. Gass each testified to the effect that Respondent installed and removed the in-ground plumbing multiple times. The Gasses also testified to the effect that a worker hired by Respondent to perform plumbing work told the Gasses that he was not a plumber and that he had not done any plumbing work in the last seven years.

Although, there were several failed plumbing inspections, the work that was in place when Ms. Gass filed her complaint had passed inspection. Mr. Gass testified to the effect that passing inspection does not mean that the work was appropriately done in all respects. In particular, he testified as to a toilet flange that was not at the proper height.

Mr. Lusky testified that his company had to replace almost all of the plumbing that was in place.

Mr. Gass testified to the effect that the house suffered some potential damage as a result of Respondent’s failure to properly seal two holes in the roof. One hole was the result of demolition activity and the second was to allow the beam to be installed. Mr. Gass acknowledged that Mr. Lusky’s company had not repaired the holes as of the February 11th hearing date, but he added that he had installed a temporary seal that was sufficient for the time being.

Failure to complete the project for the price stated in the contract

As of the hearing dates, the project was not completed, but Respondent was willing to complete the project and stopped work only after the Gasses would not extend the deadline for Respondent to comply with ROC’s Directive and ROC informed Respondent that it had to stop work.

There was no evidence adduced to show that Respondent failed to honor the contract price (understanding that there was one change order).

Aiding and abetting an unlicensed person to evade the chapter or knowingly or recklessly combining with an unlicensed person

Mr. Dominguez acknowledges that Respondent hired unlicensed contractors to perform plumbing, mechanical, and electrical work at the project. The evidence shows that he was paying these workers and issuing 1099 forms to them.

Mr. Dominguez testified to the effect that he had been unaware that Respondent’s license did not allow it to hire workers on this basis until Mr. Lawton informed him of that fact at the jobsite investigation.

Mr. Gass testified to the effect that people who were performing electrical work after the Directive was issued told the Gasses that they were employed by “Subway,” but they could not answer questions such as where the office or yard were located. The import of this testimony being that Respondent may have continued to use unlicensed contractors after the Directive was issued.

Knowingly contracting beyond the scope of its license

By hiring workers to perform electrical and plumbing work, Respondent was contracting beyond the scope of its license.

Failure to comply with the Directive without a valid justification

ROC’s Directive did not allow Respondent enough time to make the ordered repairs. Nevertheless, Respondent had taken steps to complete the work after the Directive was issued. For example, after receiving the Directive, Respondent attempted to hire electrical contractors to comply with ROC’s order.

Mr. Dominguez informed the Gasses that Smartway Electrical was going to perform electrical work at the site. But Angel Vasquez, Smartway’s owner, testified that he does not know Mr. Dominguez, he never had any discussions about working on the job, and Smartway had no records regarding Avante Construction LLC, General Contractors & Builders of America, or Carlos Antonio Dominguez.

Mr. Dominguez testified to the effect that he had provided a copy of the plans to Luis Santamaria, who said he worked for Smartway, and that Mr. Santamaria was going to provide the plans to Smartway. It appears that Mr. Santamaria did not work Smartway, nor do two other men, Saul Duarte and Pedro Miranda, who Respondent indicated might be hired to perform electrical work.

Alfredo Sandoval is the owner of Freddy’s Electrical LLC that is licensed by ROC. Mr. Dominguez testified to the effect that after the Directive was issued, Respondent entered an oral contract with Freddy’s under which Freddy’s was going to inspect Respondent’s electrical work to verify that it met the applicable codes.

On July 29, 2019, Mr. Sandoval met with Respondent on the property and his recollection was that he agreed to prepare a written contract to cover the inspection work that Freddy’s was planning to perform.

Mr. Sandoval did not inspect all the work on July 29th, but what he did see was up to code and did not present any concerns. Mr. Sandoval estimated that it would have taken two days to perform a complete inspection.

On July 30, 2019, Mr. Lawton called Mr. Sandoval to ask him about his involvement in the project. During that call, Mr. Sandoval questioned whether he would be subject to discipline if he worked on the project, to which Mr. Lawton answered affirmatively. Mr. Lawton’s point was not that Freddy’s would be subject to discipline merely for taking on the project, but rather only if Freddy’s itself did not perform in conformity with the statutes and rules. Nevertheless, it is reasonable to conclude that the phone call resulted in Mr. Sandoval not preparing the proposed contract.

Regardless of Mr. Sandoval’s willingness, or lack thereof, to enter a contract with Respondent, within two days of Mr. Lawton’s conversation with Mr. Sandoval, ROC conducted its compliance inspection and, according to Mr. Dominguez, Mr. Lawton informed Respondent that it could not return to the job.

Mr. Gass acknowledged that Respondent did complete some work after the Directive was issued, but he asserted that all of that work must be redone.

CONCLUSIONS OF LAW

Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

“At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2).

“At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3).

A preponderance of the evidence is:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Black’s Law Dictionary 1373 (10th ed. 2014).

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

The term “knowingly” requires “[o]nly a knowledge that the facts exist that bring the act or omission within the provisions of the statute using such a word” and “[d]oes not require any knowledge of the unlawfulness of the act or omission.” Ariz. Rev. Stat. § 1-215(17).

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118.

Ariz. Rev. Stat. section 32-1154(A) provides that:

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:

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3. Violation of any rule adopted by the registrar.

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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.

9. Aiding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.

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12. Failure in any material respect to comply with this chapter.

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16. Knowingly contracting beyond the scope of the license or licenses of the licensee.

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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 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.

Ariz. Admin. Code section R49108 provides in part:

A. A contractor shall perform all work in a professional and workmanlike manner.

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 tasks undertaken that the completed work meets the standards of a similarly licensed contractor possessing ordinary skill and capacity.

Ariz. Rev. Stat. section 32-1154(E) provides that ROC may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of Ariz. Rev. Stat. section 32-1154(A)(22).

The preponderance of the evidence shows that Respondent violated Ariz. Admin. Code section R49108(A) by purchasing and installing the undersized beam without first consulting with the project engineer, which is also a violation of Ariz. Rev. Stat. section 32-1154(A)(3).

Respondent’s use of the wrong plan-step for the entryway footing is not properly seen as a workmanship violation, but rather an error of the type that can occur during construction projects, as evidenced by the fact that the inspector approved the work.

It has not been shown by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(8). Although Respondent has not completed the project, there was no substantial evidence adduced to show that Respondent was unwilling to do so for the contract price. Instead, the evidence shows that Respondent did not complete the project because Ms. Gass filed the complaint and ROC subsequently informed Respondent that it could no longer work on the project.

The preponderance of the evidence shows that Respondent paid unlicensed workers to perform work that was outside the scope of its license. This is a violation of Ariz. Rev. Stat. sections 32-1154(A)(9) and (A)(16).

The preponderance of the evidence shows that Respondent’s contract does not comply with Ariz. Rev. Stat. section 32-1158, which is a violation of section 32-1154(A)(12).

It has not been shown by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(22) because ROC did not allow Respondent a reasonable time to perform the work ROC ordered Respondent to complete.

Because Respondent has violated provisions of Ariz. Rev. Stat. section 32-1154, its license is subject to discipline.

In this case, it appears that the parties entered a contract with a deadline (eight to ten weeks) that was not realistic. Considering Mr. Gass’s experience in construction and his testimony that eight weeks was very ambitious, it is reasonable to conclude that the Gasses knew, or should have known, that an eight to ten week schedule was not realistic. Nevertheless, Ms. Gass filed her complaint shortly after ten weeks had elapsed and before Respondent completed its work, and much of what the Gasses complain of is work that Respondent did not finish. This suggests that matter is in some ways a contract dispute and it weighs against a severe penalty.

Nevertheless, Respondent’s use of unlicensed contractors is a serious violation and the evidence shows that the plumbers hired by Respondent were not qualified to perform that work. There was also evidence adduced showing that Respondent may have continued to use unlicensed people to perform electrical work after being informed by ROC that its license did not allow it to hire “1099” workers. This weighs toward a more severe penalty.

Although Respondent violated the workmanship standard by purchasing and installing the undersized beam, the Gasses’ witnesses testified that the error could be correct with resilient channels, and Mr. Lusky’s opinion was that R-C was standard regardless of the error with the beam. Mr. Lusky also provided that the cost of R-C would be about $2000.

Considering the above, Respondent’s license should be suspended for five days for its violation of Ariz. Rev. Stat. section 32-1154(A)(9), and it should be ordered to pay to the Gasses $2000 as restitution for its violation of subsection (A)(3). See Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430, (App. 1990)(ROC may order a party to pay restitution as a condition to the reinstatement of a suspended license).

RECOMMENDED ORDER

IT IS RECOMMENDED that the Registrar of Contractors suspend Avante Construction LLC’s license number 317877 for five days;

IT IS FURTHER RECOMMENDED that Avante’s license remain suspended until the Registrar receives proof that Avante Construction LLC has paid to Meredith Rosemarie Gass $2000 as restitution for its violation of Ariz. Rev. Stat. section 32-1154(A)(3).

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 is forty days after the date of that certification.

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-137160-45720000Done this day, March 10, 2020.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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