FINACT2019A-03549-CHC-ROC-FinalAgencyAction-6857.pdf

2019A-03549-CHC-ROC · Registrar of Contractors · 2020-03-18

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Jeanne Reagan, Case No. 2019-03549 COMPLAINANT, Docket No. 2019A-03549-CHC-ROC v. Steven James Bates FINAL ADMINISTRATIVE DBA: Quality Tile Solutions, DECISION AND ORDER License No. ROC 297180, RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject

an administrative law judge’s written decision. If the Registrar modifies or rejects that

decision, then the Registrar must provide written justification setting forth the reasons for the

modification or rejection of each finding of fact or conclusion of law.

REGISTRAR’S ACCEPTANCE

In this case, a hearing was held, and the administrative law judge issued a written

decision. See Administrative Law Judge Decision, attached. The Registrar reviewed that

decision and accepts it.

CONCLUSION AND ORDER

Because the Registrar has accepted the administrative law judge’s decision, that

decision is the final administrative decision in this case and becomes effective on April 22,

2020.

FINAL NOTE

On page 4, line 28, after Ms., replace Bates with Reagan.

Dated March 12, 2020.

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 By: /s/ Joseph Citelli Joseph Citelli Chief Council Legal Department Arizona Registrar of Contractors Copy mailed via USPS First Class mail March 12, 2020 to: Respondent Steven James Bates 1009 W Antilles Dr Gilbert, AZ 85233 Respondent’s Attorney Erika L. Johnsen Esq. 6730 N. Scottsdale Rd., Ste. 101 Scottsdale, AZ 85253 Complainant Jeanne Reagan 7057 E McDonald Dr Scottsdale, AZ 85253 Copy sent electronically this same date to: Office of Administrative Hearings Thomas Shedden, Administrative Law Judge Respondent at email address on record with the Registrar Respondent’s Attorney at email address of record with Registrar Complainant at email address on record with the Registrar Case No. 2019-03549 / VE

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 RECEIVED 2.20.2020 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jeanne Reagan, No. 2019A-03549-CHC-ROC COMPLAINANT v. ADMINISTRATIVE LAW JUDGE Steven James Bates, DECISION DBA: Quality Tile Solutions, License No. ROC 297180, RESPONDENT

HEARING: January 31, 2020 APPEARANCES: Jeanne Reagan on her own behalf; Erika L. Johnsen, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden FINDINGS OF FACT 1. On October 18, 2019, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Contested Case setting the above-captioned matter for hearing on November 21, 2019 at the Office of Administrative Hearing. The matter was continued and the hearing was conducted on January 31, 2020. 2. The Notice of Hearing shows that the hearing was set to consider the charges made in the complaint and citation that were served on Respondent Steven James Bates on September 24, 2019. 3. Mr. Bates holds license number 297180 issued by ROC and does business as Quality Tile Solutions. 4. Complainant Jeanne Reagan hired Mr. Bates to install tile at her house located at 7057 East McDonald in Scottsdale. While Mr. Bates was working, other trades were also doing work in the house. 5. Through a complaint she filed with ROC on July 15, 2019, Ms. Reagan alleged that Mr. Bates abandoned the project. The evidence shows however that Ms. Reagan fired Mr. Bates, and not that he abandoned the project. 6. After ROC received Ms. Reagan’s complaint, it ordered Mr. Bates to complete the job. RECEIVED 2.20.2020 ROC LEGAL

7. Mr. Bates provided credible testimony that after he was allowed access to Ms. Reagan’s house to complete the job, he completed the work to professional industry standards. He acknowledged that there may be some touch-up work required, but his opinion was that touch-up work was required in virtually all tile jobs. 8. Through the Notice of Hearing and a Citation ROC issued on September 24, 2019, ROC alleges that Mr. Bates may have violated ARIZ. REV. STAT. sections 32- 1154(A)(3), (A)(12)( i.e., 32-1158), and (A)(22). 9. Ms. Reagan appeared and testified on her own behalf and she presented the testimony of Roy E. Morris, Eugene Burton, Terese Knapik, and Wally Fields.1 Mr. Bates was represented by counsel and testified on his own behalf. ROC’s Steve Lawton also testified. 10. The parties entered a contract on June 19, 2019. The contract called for the work to be completed by June 30, 2019, but due to delays not occasioned by Mr. Bates, work did not begin until about June 30, 2019 and the homeowners’ association approval required for work on a patio was not received until July 7, 2019. 11. The job totaled 789 square feet in four areas: a bathroom, the entryway, the kitchen, and an atrium. The job required 325 square feet of black tile and 444 square feet of white tile; the tiles used were 12 inch by 24 inch. 12. Mr. Bates was providing labor only with Ms. Reagan responsible for the materials, but as a courtesy to Ms. Reagan, Mr. Bates took payment from her and arranged to purchase the tile through one of his suppliers.2 13. There were unforeseen circumstances and verbal change orders that required additional labor on Mr. Bates’ part and for which he purchased supplies. 14. Mr. Bates’ exhibit 5 gives an accounting and description of this additional work. The original contract was for $6916.26 and the labor and material for the change

Mr. Fields performed plumbing work in Ms. Reagan’s house, including installing a shower drain. Although Ms. Reagan asserts that Mr. Bates was responsible for deficiencies at the drain, which Mr. Bates disputes, the installation of the drain is not within the scope of this hearing. Ms. Reagan asserts that Mr. Bates overcharged her for the tile, which is not properly at issue in this matter. Nevertheless, the evidence shows that Mr. Bates and Ms. Reagan each made an error in their cost-calculations resulting from the fact that the tile sample Ms. Reagan obtained was two square feet, whereas tile is typically priced by the square foot. 2 RECEIVED 2.20.2020 ROC LEGAL

orders totaled an additional $3881.58. The contract called for Ms. Reagan to pay Mr. Bates $3500 four days after he started work, which she paid, and the remaining original balance of $3416.26 to be paid on completion of the job. As of the hearing date Ms. Reagan had not paid the $3416.26 from the original contract or the $3881.58 for the change orders and she had an outstanding balance of $7297.84. 15. The change-order work included: removing vinyl that was under the carpet in the dining room; changes to the atrium requiring “mud work” to build up the floor and the laying of additional tile; and reframing a wall to accommodate a new shower door. In addition, after Mr. Bates had laid about 50 or 60 square feet of tile, Ms. Reagan changed her mind as to the layout. The parties had an argument about the cost of making the change, but after Ms. Reagan agreed to compensate Mr. Bates for his labor to remove the tile and reconfigure the layout, he did so. By working quickly to remove and reset the tile, Mr. Bates was able to salvage all the tiles he had laid. 16. When the project started, things were fine between the two, but as the project went on Ms. Reagan and Mr. Bates had disagreements and at times engaged in heated discussion or argument. At some point, Ms. Reagan shut off the air conditioning and had the toilets removed. 17. As of July 14, 2019, Mr. Bates believed that he would finish the job the following day. The parties have differing recollections of a dispute that occurred on the 14th, with Ms. Reagan asserting that Mr. Bates quit the job and Mr. Bates categorically denying that he did. 18. On July 14, 2019 after their dispute, Ms. Reagan sent Mr. Bates an email reading: Per your refusal to complete our contract. You are hereby fired. When you verbally quit today you, you stated that you would remove your personal tools and equipment. Your verbal aquittance [sic] today qualifies as abandonment and breaches your commitment to our contract. Entering my property at this time without notifying me in advance I would consider as trespassing and will be reported to the authorities.

3 RECEIVED 2.20.2020 ROC LEGAL

19. At the hearing, Ms. Reagan denied that she fired Mr. Bates and she testified to the effect that on July 14, 2019: she came to the home and Mr. Bates demanded payment; she said she would pay him only when the job was completed; he was screaming at her and chased her out of the garage; she feared for her life; and he said he was quitting the job. She called the police who told her to bar Mr. Bates from her property and what she should put in the email she sent him. 20. In the complaint Ms. Reagan filed with ROC, she wrote that on July 15th [sic] Mr. Bates demanded full payment or he would walk off the job; the work was not complete or correct and she refused to pay; Mr. Bates said he was taking his tools and leaving; and when she returned to the house, Mr. Bates was gone but not his tools. 21. Mr. Bates testified to the effect that he was working on July 14th when Ms. Reagan came to the house; he informed her that he would be finishing the job the next day and that he would like to receive his payment upon completion of the work; there was a discussion, but it was not loud or heated; they had engaged in loud/heated discussions at other times; and he did not chase her around the garage or bully her. 22. Mr. Bates also testified that he would not quit a job, he did not quit this job, and he did not tell Ms. Reagan that he quit; he would not leave his tools if he was not coming back to a job site; and he had been working hard for three weeks with only one day of work left before he would be paid, so it would have been foolish to quit. 23. According to Mr. Bates, when he got the email showing that he was fired, he was “blown away.” He called the Scottsdale PD, who appeared to expect his call and was told that he should go get his tools. Mr. Bates coordinated with Mr. Burton and got his tools on Tuesday July 16, 2019. 24. On July 15, 2019, Ms. Reagan filed with ROC her complaint against Mr. Bates alleging that he had abandoned the job. 25. ROC assigned Investigator Steve Lawton to Ms. Reagan’s complaint. Mr. Lawton conducted a jobsite inspection on July 31, 2019. 26. Mr. Bates and Ms. Reagan were both present, but there was little discussion because Ms. Bates would not communicate with Mr. Bates. Mr. Lawton did at times relay messages from Ms. Reagan to him. 4 RECEIVED 2.20.2020 ROC LEGAL

27. The upshot of Mr. Lawton’s investigation was that the job was not finished, but he also found what he considered to be some workmanship deficiencies. 28. During the jobsite inspection, Mr. Bates expressed his willingness to finish the project, including touching-up any areas that required correction. 29. On August 15, 2019, ROC issued to Mr. Bates a Directive through which it alleged that he had abandoned the job and that there were workmanship deficiencies. Through its Directive, ROC ordered Mr. Bates to remedy the alleged violations by the appropriate means. 30. ROC did not identify with particularity the areas that Mr. Lawton deemed to be workmanship deficiencies. Mr. Lawton acknowledged that the Directive was very general in nature, and he explained that ROC does not tell a contractor how to fix things, or in this case what was required for Mr. Bates to complete the job. 31. Mr. Bates provided credible testimony to the effect that the issues Mr. Lawton identified as workmanship deficiencies related to touch-up work that would be taken care of before the job was considered to be complete. Because the evidence at hearing shows that Mr. Bates did not abandon the job, but rather that Ms. Reagan fired him, it would be unfair to conclude that this unfinished touch-up work is a violation of the workmanship standards. 32. At about the time ROC issued the Directive, Ms. Reagan was out of town and her sister-in-law Ms. Knapik was staying at the house. Mr. Bates coordinated with Ms. Knapik to schedule his work. When Mr. Bates first arrived, Ms. Knapik had a note from Ms. Reagan to Mr. Bates with a list of work she wanted to have performed. Mr. Bates did not take that list because he had ROC’s Directive that set the scope of work he was required to complete. 33. On or about August 20, 2019, Mr. Bates finished the work. 34. At the hearing, Ms. Knapik acknowledged that she had told Mr. Bates that his work looked good. Although Ms. Reagan denied that Ms. Knapik had authority to approve Mr. Bates’ work, Ms. Reagan never contacted him to express dissatisfaction or to ask for any repairs to be made.

5 RECEIVED 2.20.2020 ROC LEGAL

35. On September 20, 2019, Mr. Lawton conducted a compliance jobsite inspection. Mr. Lawton’s opinion was to the effect that the work had been completed but that there were continued workmanship issues. Mr. Lawton’s compliance jobsite inspection notes show that: “It was observed that there are areas of grout missing at time of compliance inspection and tiles cut unevenly and not lining up with walls and tiles in the living room area. It was also observed that the exterior front entry was not completed at time of Compliance inspection.” 36. At the hearing, the parties presented testimony about Mr. Lawton’s compliance jobsite photographs and photographs that Ms. Reagan had admitted into evidence. 37. Mr. Bates presented credible and unrebutted testimony that in tile work, there will almost always be touch-up and warranty work required after a project is completed. Mr. Bates honors his warranties and stood ready to complete any required touch-up work at Ms. Reagan’s house. 38. Mr. Bates was asked to testify about each of Mr. Lawton’s compliance jobsite inspection photographs. Although he acknowledged that there were a few areas that required touch-up work, Mr. Bates’ opinion was to effect that work was very well done: the reflections that can be seen in the photographs are evidence that the tile is flat and square, and Mr. Bates noted that the lines were straight and even. He testified to the effect that the work he did in the atrium is something he can be proud of, and in one instance, he stated that Mr. Lawton’s photograph was the type of picture he would add to his portfolio to advertise his work. 39. Ms. Reagan asked her witness Mr. Fields what he had observed, to which he replied that he was a plumber, but he saw a couple of tiles with sharp edges and a few little things that required attention. Mr. Fields’ testimony essentially confirmed Mr. Bates’ position that there were only minor issues to be addressed. 40. During the compliance jobsite inspection, Mr. Lawton measured from a wall to the edge of the tile in the living room at two locations, which resulted in slightly different measurements (about 3/8 inch over eight feet). Mr. Bates testified to the effect the difference resulted from the wall being out of plumb, and not as a result of poor 6 RECEIVED 2.20.2020 ROC LEGAL

workmanship on his part. Ms. Reagan asked her witness Mr. Burton about the issue and his assessment was only that something was not square or was a little bit out of “kilter,” and he did not opine that it was Mr. Bates’ work that was the issue. Photographs of the tile show a straight line between the tile and the carpet and do not show any noticeably deficient work. 41. Ms. Reagan introduced photographs of the front entry that Mr. Lawton had concluded was not completely tiled and where there was some missing grout. Mr. Bates provided credible testimony to the effect that he had not been aware that Ms. Reagan wanted tile to extend to the areas she identified, but had he known, he would have added the extra piece of tile in each location, which he remained willing to do. 42. Regarding the missing grout at the front entry, Mr. Bates noted that one had to get on his hands and knees to see it, but nevertheless, it was an area that required touch-up work, which he was willing to do. 43. Ms. Reagan had introduced into evidence a photograph of a tile from the shower wall showing some lippage. Mr. Bates testified that the tile at issue was about six feet off the floor and that the lippage was about 1/32 of an inch. 44. Mr. Bates acknowledged that there were several areas where black grout had bled into the white grout. This is very hard to control when installing the tile, but is a quick and easy fix that Mr. Bates considered to be touch-up work that he remained willing to do. 45. After ROC issued its Directive and Mr. Bates returned to Ms. Reagan’s house, he found that carpet had been laid abutting one of the tile areas. This made it difficult for Mr. Bates to get to the grout line and a purported deficiency in the tile work is actually an issue with the carpet (the tile is fixed to the floor, whereas the carpet is not). Similarly, base-board or trim had been added in an area that Mr. Bates had been tiled and a photograph purporting to show deficient tile was actually an issue related to the base board. 46. One Ms. Reagan’s photographs showed an area that appeared to have excess grout, and a second photograph showed excess grout on the shower drain, but

7 RECEIVED 2.20.2020 ROC LEGAL

that had been rectified before the compliance jobsite inspection. Another of her photographs shows a small area that may require additional grout. 47. Ms. Reagan did not present any evidence to clarify in what regard Mr. Bates’ contract did not meet the requirements of ARIZ. REV. STAT. section 32-1158, but it appears that all the required elements were present, with the perceived deficiency being related to the font size or the lack of bold type required by subsection (A)(9). As of the hearing date Mr. Bates was using a new contract prepared by his attorney that he believes conforms to the statute and there was no evidence to the contrary. CONCLUSIONS OF LAW 1. 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. 2. “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). 3. “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). 4. 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). 5. 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."). 8 RECEIVED 2.20.2020 ROC LEGAL

6. “Statutes shall be liberally construed to effect their objects and to promote justice.” ARIZ. REV. STAT. § 1-211(B). 7. 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). 8. The Administrative Law Judge may consider ROC’s administrative record. See ARIZ. ADMIN. CODE § R4-9-118. 9. 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: ***** 3. Violation of any rule adopted by the registrar. ***** 12. Failure in any material respect to comply with this chapter. ***** 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…. 10. ARIZ. ADMIN. CODE § R4-9-108 provides that: 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. (Underscoring added). 11. ARIZ. REV. STAT. section 32-1158 sets out the minimum elements of contracts between contractors and property owners for jobs of more than $1000.

9 RECEIVED 2.20.2020 ROC LEGAL

12. 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). 13. There was no substantial evidence adduced showing that Mr. Bates is unscrupulous, unqualified, or financially irresponsible. 15. Ms. Reagan asserted that Mr. Bates abandoned the job by quitting, which he disputes. Mr. Bates was the more credible witness and his description of events is more plausible than hers, particularly with respect to whether he would have left his tools and risked forfeiting the $7300 balance due on the project by quitting when the work was almost completed. The preponderance of the evidence shows that Ms. Reagan fired Mr. Bates before he could finish the job. 16. Because Mr. Bates was fired, his work was not complete when ROC conducted the jobsite inspection or when it issued its Directive. As such, Mr. Bates was not in violation of ARIZ. ADMIN. CODE section R4-9-108 at those times. 17. The preponderance of the evidence shows that Mr. Bates complied with ROC’s Directive by completing the work to the same standards that a similarly licensed contractor would meet. Although Mr. Bates acknowledged the need to perform touch-up work, the preponderance of the evidence shows that this type of touch-up work is to be expected for almost any tile job. 18. It has not been shown by a preponderance of the evidence that Mr. Bates violated ARIZ. REV. STAT. section 32-1154(A)(3). 19. Even if one concluded that any of the required touch-up work did constitute a workmanship violation, considering that ROC’s Directive was issued after Ms. Reagan fired Mr. Bates and before the job was complete, the appropriate remedy would not be to discipline Mr. Bates’ license, but rather to allow him to make the required repairs. In this case, Mr. Bates stood ready to perform any required touch-up work, but Ms. Reagan was unwilling to allow him to do so. 20. It has not been shown by a preponderance of the evidence that Mr. Bates violated ARIZ. REV. STAT. section 32-1154(A)(22).

10 RECEIVED 2.20.2020 ROC LEGAL

21. It has not been shown by the preponderance of the evidence that Mr. Bates violated ARIZ. REV. STAT. section 32-1158, because his contract contained all nine elements set out in that statute and there was no evidence adduced to show specifically how the contract failed to comply with the statute. Assuming the font size or a lack of bolding was the issue, this has been rectified in that Mr. Bates is now using a new contract prepared by his attorney. 22. Considering the above, this matter should be dismissed. RECOMMENDED ORDER IT IS ORDERED that on the effective date of the final Order in this matter case number 2019-03549 is dismissed 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.

Done this day, February 20, 2020.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

11