ALJDEC decisions subject to certification as final

2019A-05435-RFA-LS-ROC-RS · Registrar of Contractors · 2022-08-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Tam Minh Nguyen,

COMPLAINANT

Hardpak Holdings, LLC

License No. ROC 266817,

RESPONDENT

No. 2019A-05435-RFA-LS-ROC-RS

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: March 17, 2022, with further hearing on July 25, 2022

APPEARANCES: Complainant Tam Ming Nguyen appeared on his own behalf. Patrick Kariniemi appeared on behalf of Respondent Hardpak Holdings, LLC. Assistant Attorney General Sarah Asta represented the Arizona Registrar of Contractors. Katelyn Rolling and Investigator Wes Ellington appeared as witnesses for the Arizona Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (“Registrar)” issued License No. 266817 to Hardpak Holdings, LLC (“Respondent”).

On or about October 29, 2019, the Registrar received a Complaint against Respondent from Tam Ming Nguyen (“Complainant”) alleging that Respondent did not properly perform its scope of work pursuant to the parties’ contract, which called for the injection of polyurethane foam in the exterior walls of Complainant’s home.

As a result of the Complaint, and after investigation, the Registrar issued a Citation against Respondent charging possible violations of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, and (A)(22).

On or about March 11, 2020, the matter proceeded to an administrative hearing.

In her March 30, 2020 Decision, Administrative Law Judge Tammy L. Eigenheer concluded that Complainant established the alleged violations. Administrative Law Judge Eigenheer recommended that the Registrar suspend Respondent’s License No. 266817 for a period of five days and that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty.

On or about April 10, 2020, the Registrar issued a Final Administrative Decision and Order (“Decision”) accepting the Administrative Law Judge Decision. The Decision provided that it became effective on May 20, 2020.

No appeals were taken from the Decision.

On or about May 21, 2021, Complainant filed a claim with the Residential Contractors’ Recovery Fund (the “Fund”) to recover the cost of correcting the work.

Katelyn Rolling, Legal Assistant II, reviewed Complainant’s claim.

The Registrar issued a Notice of Claim for Administrative Award, determining that Complainant should be awarded $6,137.00.

Respondent requested a hearing, believing the payout was too high. Complainant did not contest the amount of the administrative payout.

On November 2, 2021, Registrar Investigator Wes Ellington conducted a Recovery Fund Inspection. Investigator Ellington’s Recovery Fund Inspection Notes state the following in pertinent part:

The purpose of this inspection was to confirm if the Respondent’s additional work completed after the complaint had been referred to legal had fulfilled the directive requirements.

At the inspection, the Complainant had opened several sections of the top plate above the block wall to expose the cavity within the block wall. Seven areas had been opened, three in the garage, three on the east wall of the home, and one on the north wall of the home. I was able to inspect using a flashlight directly above the hole, or with the assistance of a mirror. All seven holes revealed voids where the insulation had not completely filled the wall to the top. The depth of the voids ranged from approximately 3 inches to 12 inches.

This sample testing of the wall shows that the cavities within the block wall have not been completely filled even after the additional work had been performed.

The Respondent explained that the procedure is performed by drilling holes at the top and bottom of the wall. Then the foam insulation is injected at the bottom until it comes out the top hole. This is timed for several sections, then there is only a bottom hole drilled and the insulation is injected for the allotted amount of time measured on previous sections. The respondent additionally stated that if this had been the first time he had returned, he would have agreed and finished filling all the walls.

All errors in original.

On November 24, 2021, the Registrar issued an Order Quashing Notice of Claim for Administrative Award, having determined that additional review of the administrative award was necessary.

On December 16, 2021, the Registrar issued a letter to Complainant requesting that Complainant provide “new bids for the cost to repair only the areas requiring correction.” Complainant provided the requested bids.

On January 10, 2022, the Registrar issued a Notice of Claim for Administrative Award, determining that Complainant should be awarded $1,125.00.

On January 19, 2022, Complainant requested a hearing, believing the payout was too low. Respondent did not contest the amount of the administrative payout.

The Registrar referred the matter to the Office of Administrative Hearings for an evidentiary hearing.

A hearing was held on March 17, 2022, with further hearing on July 25, 2022.

Hearing Evidence

The Written Directive from the Registrar specified that:

After investigation, the Registrar has verified that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). . . .

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

The Complainant walked me around the home showing the areas where the

Respondent had drilled and injected the foam. Many areas are not filled completely as described by the Complainant. This will need to be corrected by the Respondent.

Investigator Ellington testified regarding his jobsite inspection and the Written Directive issued. Investigator Ellington further testified that he received a January 17, 2020 email from Respondent advising that Respondent’s crew was at Complainant’s house on that date, performing the required corrective work, and that the corrective work would be completed by the end of the day to Complainant’s satisfaction. Investigator Ellington explained that because further work was performed by Respondent, the Registrar determined that the initial award amount from the Fund, may not be correct. Consequently, the Recovery Fund Inspection was conducted on November 2, 2021. Investigator Ellington testified that he needed to ascertain whether Respondent’s additional work complied with the Written Directive.

Investigator Ellington testified that Complainant opened seven areas at the top of the walls to determine if the foam was injected to the top of the walls. Investigator Ellington testified that during the Recovery Fund Inspection, Respondent’s representative, Patrick Kariniemi, explained the process of timing the injections in order to ensure that the cavities were filled.

Investigator Ellington testified that in all seven exposed areas, there were voids. However, those voids were only three to twelve inches. Investigator Ellington testified that the proposals submitted by Complainant were excessive. The proposal from Southwest Insealators, LLC (“Southwest”) was in the amount of $7,530.00 and called for the injection of 2,008 square feet of foam. The proposal from Banker Insulation (“Banker”) was in the amount of $7,246.00, was very general, and did not contain any square or linear feet. Investigator Ellington testified that both of these proposals were greater than the parties’ original contract amount of $6,650.00. Investigator Ellington testified that the proposal from Thermal Advantage, LLC (“Thermal”) in the amount of $5,400.00, included re-insulating all exterior walls. Investigator Ellington questioned whether Complainant informed the three contractors from which the proposals were obtained that only portions of the top course of wall needed to be injected.

When questioned by Mr. Kariniemi, Investigator Ellington testified that at most, there are 200 square feet of voids in the walls, and that is only if all cavities have twelve inches of void. However, given the seven cavities that were inspected, the voids ranged from only three inches to twelve inches, and most were much less than twelve inches. Investigator Ellington testified that based upon his observations, there were less than seven square feet of voids.

Investigator Ellington testified that Respondent came prepared to the inspection with a drill and grout for repairs and offered to drill additional holes for inspection. Complainant did not want any additional holes drilled and did not want any further investigation to determine if more voids exist.

Ms. Rolling, Claims Reviewer for the Fund, testified regarding the above delineated procedural history of the matter and the revocable living trust, Quit Claim Deed, and bond documentation submitted by Complainant to satisfy the eligibility requirements for application to the Fund. Ms. Rolling testified that when she reviewed the bids provided by Complainant from Southwest and Banker, she was not aware that Respondent had performed further repairs to the project, and consequently, she believed the initial proposed award was appropriate at that time. However, after Respondent requested a hearing contesting the amount of the award, and further investigation, it was discovered that Respondent performed corrective work and that the initially proposed award may no longer be appropriate. Thereafter, Investigator Ellington performed a Recovery Fund Inspection, and based upon his findings, the Registrar issued the Order Quashing Notice of Claim of Administrative Award.

Ms. Rolling testified that she then sent Complainant a letter requesting new bids for the cost to repair only the remaining areas requiring correction with the correct amount of square footage.

Ms. Rolling testified that she spoke with Investigator Ellington regarding Southwest’s proposal for $7,530.00, and that Investigator Ellington advised her that the bid was excessive. Ms. Rolling contacted Southwest and was informed that Complainant had provided Southwest with the measurement of 2,008 square feet and that Southwest had not been to the property and did not perform any measurements. Therefore, the bid was provided based solely upon information provided by Complainant.

Regarding the Banker bid, Ms. Rolling contacted Banker and was informed that Complainant told Banker that the walls were “completely empty, so the bid was based on the square footage of the entire house.”

Regarding the bid from Thermal, Ms. Rolling contacted Thermal and was informed that the bid encompassed all exterior walls and the only deductions for square footage were for doors and windows on the home.

Based on the information Ms. Rolling obtained, the January 10, 2022 Notice of Claim of Administrative Award was issued. Ms. Rolling explained that she calculated the revised award amount based upon 300 square feet of voids, as that measurement was “most generous” given Investigator Ellington’s observations and calculations, and the fact that Complainant did not provide any information regarding the actual square footage of the voids.

Complainant testified that the Registrar’s photograph taken during the Recovery Fund Inspection depicts a void in the wall. Complainant asserted that he “paid for foam and it did not happen.” Complainant contended that the Registrar’s decision was “arbitrary” and he believed the Registrar is to “protect the consumer but put the burden on him.” Complainant asserted that “no one can tell how much foam is in there” and “now they want more holes drilled.”

Mr. Kariniemi testified that at the Recovery Fund Inspection, there was a maximum of seven square feet that had voids demonstrated and that Complainant would not allow any additional holes to be drilled, and therefore, no further inspection could be performed. Mr. Kariniemi asserted that the Registrar’s calculation is generous.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132(A) provides that “[t]he residential contractors' recovery fund is established, to be administered by the registrar, for the benefit of a claimant damaged by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter.” The Registrar’s final decision in the underlying workmanship case giving rise to the instant matter establishes that Respondent’s work violated the sections of A.R.S. § 32-1154(A) that were charged in the Citation.

For the purposes of an award under A.R.S. § 32-1132(A), A.R.S. § 32-1133.01(B) provides as follows:

An award from the residential contractors' recovery fund may not exceed the actual damages suffered by the claimant as a direct result of a contractor's violation. Actual damages:

May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.

Must be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.

When the Registrar has calculated the amount of a Complainant’s compensable damages and proposed a payout from the Fund to which he is entitled, the calculation is a prima facie showing of the amount that Complainant is entitled to recover as a payout from the Fund. The burden shifts to the party challenging the amount of the payout to establish that the Registrar’s calculations were erroneous or not supported by a preponderance of the evidence. In this case, Complainant requested a hearing challenging the Recovery Fund payout. Therefore, the burden was on Complainant to establish by a preponderance of the evidence that the amount of the proposed payout was erroneous or inappropriate.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he 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.”

After review of all the evidence, the Tribunal concludes that the award provided by the Fund is appropriate based upon the particular facts and circumstances in this matter. Accordingly, Complainant is entitled to a payout from the Fund in the amount of $1,125.00.

RECOMMENDED ORDER

In view of the foregoing,

IT IS ORDERED that on the effective date of the final Order in this matter, the Residential Contractors’ Recovery Fund shall pay $1,125.00 to Complainant Tam Ming Nguyen.

IT IS FURTHER ORDERED that under A.R.S. § 32-1139(B), the Registrar shall charge $1,125.00, plus interest at a rate of ten percent a year, to Respondent Hardpak Holdings, LLC’s License Number 266817.

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 five (5) days from the date of that certification.

-54864001

001

-137160-45720000Done this day, August 2, 2022.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

-54864001

001

-137160-45720000By Miranda Alvarez

Legal Secretary