FINACT2019A-04193-CHC-ROC.pdf

2019A-04193-CHC-ROC · Registrar of Contractors · 2020-02-19

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Roy Grinnell, Case No. 2019-04193

COMPLAINANT, Docket No. 2019A-04193-CHC-ROC v. FINAL ADMINISTRATIVE Ikon Painting LLC, DECISION AND ORDER DBA: Ikon Painting, License No. ROC 306016, 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. MODIFICATION AND WRITTEN JUSTIFICATION 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 modifies it as set forth below. The Registrar issued a Directive on October 2, 2019, ordering Respondent to remediate certain issues by October 21, 2019. ALJ Dec. 2:13-19. Following issuance of the Directive, Respondent notified the Registrar’s investigator “that the corrective work was completed.” ALJ Dec. 2:23-24. After Respondent’s notification, Investigator Bernal conducted a compliance inspection on October 18, 2019, and determined Respondent had attempted, but failed, to comply with the Directive. ALJ Dec. 3:1-3. The Registrar therefore issued a Citation

of 5 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 on October 31, 2019, alleging violations of A.R.S. §§ 32-1154(A)(3) (namely A.A.C. R4-9- 108); -1154(A)(12) (namely A.R.S. § 32-1158); and -1154(A)(22). ALJ Dec. 3:6-9. At hearing, Respondent testified that “the rust was not just from his previous paint job but that the rust came through the material of the fence.” ALJ Dec. 4:28-29. Respondent further testified that “while his 10-year warranty was valid, he was not responsible for replacing or repairing the fence itself. ALJ Dec. 5:4-5. The administrative law judge concluded that Complainant failed to establish that Respondent’s work fell below the Registrar’s minimum workmanship standards. ALJ Dec. 7:3-4. The administrative law judge reasoned that “[t]here was evidence that the rust may not have resulted from the paint, but from a separate material issue,” and that “Complainant failed to credibly establish a connection between Respondent’s workmanship and the original condition of the fence.” ALJ Dec. 13-16. The administrative law judge’s conclusion that Respondent cannot be found in violation of A.R.S. § 32-1154(A)(3) because the issues arose from the fence itself, is erroneous and must be modified. The general rule regarding acceptance of the surface is that: [A] subcontractor who performs work on top of a surface prepared by another accepts the surface. The subcontractor should have inspected the surface for any flaws or defects that would affect the work he proposes before performing the work. If he found the surface to be unacceptable, he should have called any defects to the owner’s … attention so that the owner can choose whether to pay for the defective surface to be corrected or if the owner is not willing to pay to correct the surface, the contractor may obtain an explicit warranty disclaimer. Deeb v. Checks Epoxy, No. 2014A-3258 (ALJ Dec. at 11:11-19) (quoted in Registrar’s Substantive Policy Statement 2017.01); see also Warren v. Ashton Holdings LLC, No. 2018A-05999-ROC (ALJ Dec. at 10-11) (“Because Respondent accepted the surface … by

of 5 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 painting it and did not obtain any explicit warranty disclaimer signed by Complainant, Complainant established cause to suspend or revoke Respondent’s contractor’s license”). Here, Respondent was fully aware of the condition of the iron fence prior to commencing work. Respondent testified that Complainant’s house was just eighteen inches from the golf course, observed rust on the fence, and agreed to apply a “top shelf clear coat, Silcrete, to protect the fence against water from the golf course.” ALJ Dec. 4:19, 25-27. But rather than obtaining an explicit warranty disclaimer, Respondent reaffirmed that his ten-year warranty was valid. Accordingly, the preponderance of the evidence established that Respondent’s work failed to meet the Registrar’s minimum workmanship standards, in violation of A.R.S. § 32-1154(A)(3), namely, A.A.C. R4-9-108. As to the alleged violation of A.R.S. § 32-1154(A)(22), the administrative law judge concluded that “Respondent was not given the chance to perform corrective work after the Directive was issued,” and therefore could not be found in violation of 32-1154(A)(22). ALJ Dec. 7:18-28. This conclusion is not supported by the evidence presented at hearing, and therefore must be modified. On October 2, 2019, Respondent notified Investigator Bernal “that the corrective work was completed.” ALJ Dec. 2:23-24. Investigator Bernal therefore conducted a compliance inspection on October 18, 2019, but found that Respondent’s work was still deficient. ALJ Dec. 3:1-3. There was no indication that Respondent was not given the chance to perform corrective work. Rather, the evidence clearly shows that Respondent did, in fact, perform corrective work, albeit unsuccessfully. 1 /// /// /// 1 The Registrar notes that the Administrative Law Judge Decision states that “Investigator Bernal opined that Respondent was in compliance with the Directive.” ALJ Dec. 3:20-21. This appears to be a simple misstatement by Investigator Bernal at the hearing, and clearly conflicts with the rest of his testimony and other evidence indicating that Respondent was not in compliance with the Directive. of 5 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 CONCLUSION AND ORDER Under Conclusions of Law, strike paragraphs 11-13 on page 7, and replace with: 11. Complainant established, by a preponderance of the evidence, that the work Respondent completed fell below the Registrar’s minimum workmanship standards, in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. While the fence was located next to a golf course and exposed to water, Respondent accepted the surface of the fence, and failed to obtain an explicit warranty disclaimer from Complainant. Respondent’s ten-year warranty further shows that Respondent himself expected the work to last. 12. The evidence established that the Registrar’s investigator conducted a compliance inspection after Respondent notified the investigator that it had completed the work as required by the Directive. Despite Respondent’s attempt to comply with the Directive, it failed to do so. Therefore, the preponderance of the evidence established that Respondent failed to comply with the Directive, in violation of A.R.S. § 32-1154(A)(22). Replace the Recommended Order with: • IT IS ORDERED that on the effective date of this Order, Respondent’s License No. 306016 is suspended for one day; • IT IS FURTHER ORDERED, pursuant to A.R.S. § 32-1154(E), that Respondent is assessed a civil penalty of $250, payable to the Registrar on or before 30 days from the effective date of this Order. Payment may be hand- delivered to the Registrar’s physical address or mailed to: Registrar of Contractors P.O. Box 6748 Phoenix, Arizona 85505-6748 The Registrar accepts the remainder of the administrative law judge’s decision, which

becomes effective on March 29, 2020.

of 5 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 FINAL NOTE On page two, paragraph seven, line 13, “September 25” should be “October 2.” On page two, paragraph eight, line 22, “unspecified date” should be “October 2, 2019.” Dated February 18, 2020. By: /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund Arizona Registrar of Contractors Copy mailed via USPS First Class Mail February 18, 2020 to: Respondent Ikon Painting LLC DBA: Ikon Painting 1058 E Rosebud Dr San Tan Valley, AZ 85143 Complainant Roy Grinnell 1205 N Renee Ave Gilbert, AZ 85234 Copy sent electronically this same date to: Office of Administrative Hearings Antara Nath Rivera, Administrative Law Judge Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar Case No. 2019-04193 / KR

of 5 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 1.21.2020 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Roy Grinnell, No. 2019A-04193-CHC-ROC COMPLAINANT, v. ADMINISTRATIVE LAW JUDGE DECISION Ikon Painting LLC, DBA: Ikon Painting, ROC License: ROC 306016, RESPONDENT.

HEARING: January 3, 2020. APPEARANCES: Roy Grinnell (Complainant) appeared on his own behalf. Jon Uptergrove, appeared on behalf of Ikon Painting, DBA: Ikon Painting (Respondent). ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera. _____________________________________________________________________

FINDINGS OF FACT

1. On or about June 20, 2016, the Registrar of Contractors (“ROC”) issued

License No. 306016 for Specialty Dual CR-34 Painting and Wall Covering to Respondent. Respondent’s address of record for the licenses is 1058 East Rosebud Drive, San Tan Valley, AZ 85143-6328. Jonathan William Uptergrove is listed on the license as Qualifying Party and Bradley Gene Larson is listed on the license as Member. 1 2. Administrative Notice is taken of Respondent’s prior License record, for License No. 306016, as reflected on the ROC’s public website on January 3, 2020. Such prior License record reflects that the license number is currently active. License number 306016 has not been disciplined by the ROC. The record also reflects that License number 306016 has one open complaint against Respondent’s license, which is presumed to be related to this matter. Respondent has an active $6,750.00 surety bond issued through RLI Insurance Company.2 3. On or about February 6, 2019, Complainant entered into a written contract whereby Respondent agreed to scrape any rust and loose paint, prime, and paint Complainant’s metal fence for the sum total of $700.00. Complainant’s residential

1See https://roc.az.gov/contractor-search?Id=a0Yt000000ACXAREA5. Id. RECEIVED 1.21.2020 ROC LEGAL

property was located at 1205 North Renee Avenue, Gilbert, AZ 85234. The project commenced on February 11, 2019. Complainant paid Respondent a total $700.00 by the time Respondent stopped working on the date of February 12, 2019. 4. On or about August 19, 2019, the ROC received a workmanship complaint from Complainant. 5. On or about August 29, 2019, the ROC issued a Jobsite Inspection Notification letter to the parties, providing proper notice to them, and advising that an onsite review would be conducted at the project site by an ROC investigator on September 11, 2019, at 1:30 p.m. 6. On or about September 11, 2019, ROC Investigator Albert Bernal (“Investigator Bernal”) conducted a review of the contract executed between the parties. Investigator Bernal also inspected the work that had been done on the project to date and took approximately 15 photographs. Respondent was not present during the inspection. 7. On or about September 25, 2019, Investigator Bernal issued a Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s allegation that Respondent’s work failed to meet minimum ROC workmanship standards. Specifically, Respondent was ordered to remediate the following complaint item via appropriate means: “Complaint Item 1: The Contractor failed to scrape all the rust and missed painting some areas of the fence and let rust exposed.” Respondent was put on notice that it had until October 21, 2019, to notify the ROC of its compliance with the written Directive or face discipline pursuant to ARIZ. ADMIN. CODE R4-9-108, and ARIZ. REV. STAT. § 32-1154(A)(22) and 32-1154(E). 8. On an unspecified date following the Directive, Respondent did not file an Answer but called Investigator Bernal to notify him that the corrective work was completed. 9. On or about October 11, 2019, Investigator Bernal issued a Compliance Jobsite Inspection notification letter to the parties, providing proper notice to them, and advising that the inspection would be conducted at the project site on October 18, 2019, at 2:00 p.m.

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10. On or about October 18, 2019, Investigator Bernal inspected the work that had been done on the project to date and determined that the wrought iron fence showed rust. Investigator Bernal directed Respondent to correct the issue via appropriate means. No due date was specified in the Compliance Jobsite Inspection Notes. Respondent was not present at the Compliance Jobsite Inspection. 11. On or about October 31, 2019, the ROC issued a Citation to Respondent for alleged violations of Arizona Revised Statute (A.R.S.) §§ 32-1154(A)(3), 32- 1154(A)(12), 32-1158, and 32-1154(A)(22), and Arizona Administrative Code (A.A.C.) R4-9-108. Respondent was given until November 15, 2019, to respond with its Answer or face discipline pursuant to A.R.S. §§ 32-1154(A)(22) and 32-1155. 12. On November 18, 2019, the ROC referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on January 3, 2020. HEARING EVIDENCE 1. At the hearing, Investigator Bernal testified that the contract between Complainant and Respondent was missing elements. Investigator Bernal did not recall what elements were missing. 2. During the Jobsite Inspection, Investigator Bernal observed rust coming through the paint and that some of the fence was not painted. Investigator Bernal issued a Directive. 3. Investigator Bernal opined that Respondent was in compliance with the Directive. 4. Investigator Bernal testified that the Compliance Jobsite Inspection occurred on October 23, 2019, and only Complainant was present. Investigator Bernal observed rust at the Compliance Jobsite Inspection and issued a Citation. 5. Complainant testified on his own behalf and presented one group exhibit which contained five photos. Complainant stated that he was in violation of his homeowner’s association rules because his metal fence had rust on it. Complainant hired Respondent to scrape the rust and loose paint, prime, and paint his metal fence.

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6. On or about February 11, 2019, Respondent began to paint. Complainant noticed that Respondent missed some areas. Respondent fixed those areas after it bought more paint. Respondent gave Complainant a 10 year warranty. After Respondent finished, Complainant was satisfied with the project. 7. On or about March 14, 2019, Complainant noticed rust on the fence, at the same location Respondent painted. Complainant emailed Respondent. Respondent did not answer. Complainant filed his Complaint in August 2019. 8. On or about September 10, 2019, Respondent went to Complainant’s home to remedy the issue. After Respondent was done, Complainant was satisfied with Respondent’s corrective work. 9. A few months later, Complainant again noticed rust and deterioration of the fence from moisture from the golf course. Complainant requested a Compliance Jobsite Inspection. Complainant argued that Respondent should have known that there would be rust because Complainant is next to a golf course and the moisture was the reason for the deterioration. Complainant argued that Respondent must repair the fence to a professional standard that was amenable to the homeowner’s association. 10. John Uptergrove, Qualifying Party of Respondent, testified for Respondent and presented one group exhibit which contained six photos. Mr. Uptergrove testified that that Complainant’s house was the first house, on that block, to border the golf course. Complainant’s home was 18 inches from the golf course instead of 18 feet as most homes were, based on his experience. 11. Complainant was satisfied with Respondent’s paint job after it completed the project on February 13, 2019, Mr. Uptergrove did not receive Complainant’s March 2019, email due to his wife being in the hospital. Mr. Uptergrove did not know of any rust issues until he received the Complaint. He immediately contacted Complainant and set up an appointment to perform corrective work. Mr. Uptergrove observed the rust and told Complainant that he would put a top shelf clear coat, Silcrete, to protect the fence against water from the golf course. 12. During this time, Mr. Uptergrove observed that the rust was not just from his previous paint job but that the rust came through the material of the fence. Mr. Uptergrove 4 RECEIVED 1.21.2020 ROC LEGAL

did not charge Complainant for the clear coat application. Complainant was satisfied with the corrective work. Respondent believed the work was corrected until he received the Citation. 13. Mr. Uptergrove acknowledged that while his 10 year warranty was valid, he was not responsible for replacing or repairing the fence itself. CONCLUSIONS OF LAW 1. The ROC has jurisdiction over this matter pursuant to A.R.S. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before the Office of Administrative Hearings pursuant to A.R.S. § 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. A.R.S. § 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. 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 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). See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

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7. A.R.S. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” 8. A.R.S. § 32-1158(A) requires, in pertinent part, as follows:

Any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. A.R.S. § 32-1154(A)(22) provides, in pertinent part, as follows: 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. 10. The evidence failed to establish that Respondent violated A.R.S. §§ 32- 1154(A)(12) and 32-1158. Although Investigator Bernal testified that there were missing elements of the contract, he did not recall what elements were missing. Neither

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Complainant nor Respondent provided a copy of the contract nor addressed the issue of missing elements of the contract. 11. Complainant failed to establish, by a preponderance of the evidence, that the work Respondent completed fell below the ROC’s minimum workmanship standards. The evidence established that on the two occasions Respondent painted, Complainant was satisfied with Respondent’s work. On each occasion, Complainant noticed rust on the areas Respondent painted after a few months had passed. The evidence established that Respondent went to Complainant’s home to fix the rust issue and used higher end clear coat to protect the fence from rusting. 12. There was evidence that Complainant wanted Respondent to repair the fence after the second time he noticed rust. Complainant established that Respondent offered a 10 year warranty. Per the warranty, Respondent was obligated to fix the rust issue only. The evidence established that Respondent fixed the rust issue every time it was notified of the rust issue. There was evidence that the rust may not have resulted from the paint, but from a separate material issue. Furthermore, Complainant failed to credibly establish a connection between Respondent’s workmanship and the original condition of the fence. Thus, Respondent was not in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 13. The evidence established that Respondent was not given the chance to perform corrective work after the Directive was issued. There was inconsistent evidence with respect to the date of the Compliance Jobsite Inspection and why the Compliance Jobsite Inspection occurred before the Directive deadline. The notice of the Compliance Jobsite Inspection indicated that the date of the inspection was October 18, 2019. This was before the Directive compliance deadline of October 21, 2019. The hearing evidence established that the Compliance Jobsite Inspection occurred on October 23, 2019. There was no evidence that Respondent was given the opportunity to correct the rust issue prior to the Directive deadline date of October 21, 2019. Moreover, Complainant failed to establish a consistent timeline. Therefore, Respondent cannot properly be disciplined for the violation of A.R.S. § 32-1154(A)(22). RECOMMENDED ORDER 7 RECEIVED 1.21.2020 ROC LEGAL

IT IS RECOMMENDED that on the effective date of the Registrar’s final order in this matter, the Registrar close Complainant Roy Grinnell’s complaint in Case No. 2019A- 04193 against Respondent Ikon Painting, DBA: Ikon Painting’s License No. 306016. 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, January 21, 2020.

/s/ Antara Nath Rivera Administrative Law Judge Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors

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