ALJDEC decisions subject to certification as final

2019A-05494-CHC-ROC · Registrar of Contractors · 2020-10-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Larry Fuller,

COMPLAINANT

Frontier Excavation & Grading LLC,

License No. 271072, 278465, 271073, 270750,

RESPONDENT

No. 2019A-05494-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 16 and September 18, 2020

APPEARANCES: William J. O’Leary Esq. for Complainant; Jeffrey A. McKee, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On April 14, 2020, the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for hearing on May 14, 2020 at the Office of Administrative Hearing. The matter was continued and the hearing as conducted on July 16 and September 18, 2020.

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 Frontier Excavation & Grading LLC on January 27, 2020.

Respondent holds license numbers 271072, 278465, 271073, and 270750 issued by ROC. John Reyes is Frontier’s owner.

Complainant Larry Fuller hired Frontier to perform several projects at his house. At issue in this matter is work related to the installation of material known as 3/8th minus on Mr. Fuller’s driveway. 3/8th minus is crushed rock.

The driveway is 387 feet long with a fairly steep slope (ROC investigator Jim Dimond estimated that there was an elevation gain of about 100 feet).

On November 4, 2019, ROC received from Mr. Fuller a complaint against Respondent alleging poor work on Frontier’s part.

ROC assigned Mr. Dimond to Mr. Fuller’s complaint.

Mr. Dimond conducted a job site inspection on November 19, 2019 and he returned to the site on December 10, 2019. Mr. Reyes and his estimator were present on November 19th, but not on December 10th, which was not a scheduled inspection.

On November 19, 2019, ROC received from Respondent a statement in which Mr. Reyes provided a short summary about the work at Mr. Fuller’s, and in which he interlineated his comments with issues that had been raised by Mr. Fuller in an October 17, 2019 email to Mr. Reyes.

Through his November 19th statement, Mr. Reyes provided information including: (1) the scope of work changed over time as the parties agreed to projects not in the original agreement; (2) Respondent completed most of the work, but not all of it; (3) incomplete work included issues affecting the drainage at the site including trenches being left open and downspouts not being reconnected; (4) the 3/8 minus will withstand heavy rain on the slope when the proper compaction and drainage mitigation is complete; (5) Respondent did not finish before the rain came; (5) the upper driveway parking area was properly graded, but was not finished; (6) the pooling in the middle is caused by two things: additional material that Mr. Fuller wanted was stockpiled and blocked the runoff and because the downspout was not reconnected to the pipe in the drainage ditch to route the water away; (7) Respondent is willing to complete the work but Mr. Fuller seems reluctant to let us do so; (8) Mr. Fuller has not paid for all the work; and (9) Respondent is happy to have ROC get involved.

On December 10, 2019, ROC issued to Frontier a Directive that provides in part:

*** You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on December 31, 2019.

***

The complaint was submitted as a lengthy narrative and after the inspection and review of the complaint,

I have culled out the actual allegations.

DIRECTIVE REQUIREMENTS

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

Complaint Item 1: Mr. Reyes came to my home and we met and discussed the project consisting of:

Excavating a portion of land to create additional parking on the lot, creating swells for drainage, installing culverts and application of driveway material allowing for vehicle travel and compaction of drive making it stable and strong.

The work for the excavating of the larger parking area is good, culvert installation is good, creations of the swells are good.

The area of poor workmanship is the driveway material and installation.

Investigator’s Observation: At issue is the installation of a 3/8” minus gravel product at the driveway and parking area. The parking area is fairly flat and may be a future location for a detached garage.

The driveway is a steep one lane driveway with a loop at the top.

There are several locations on the driveway in which the product is eroding due to recent rains.

Shortly after the inspection, the area has received significant rain and snow.

The complainant has provided a plethora of video evidence of severe deterioration of the driveway and vehicles being unable to traverse the driveway.

In the areas of erosion, it does appear that the 3/8” minus is about 3” thick.

The videos provided to appear to be the complainant’s driveway. They also depict a very slick, sloppy mud condition.

Thanksgiving weekend was exceptionally wet with rain and snow.

The weekend of 12/7 through 12/9, we had another significant rain storm in the Prescott area. The complainant provided another video and pictures of a storage tub at the bottom of the driveway for deliveries.

On 12/10/19, I drove to the complainant’s property to observe its condition after a day of sun. This was about 36 hours since the rain stopped. I did this to confirm the conditions depicted in the correspondence from the complainant.

It visually appeared to still be moist. The complainant noticed that I was at the bottom of the hill and asked for me to drive up.

I noted the road to be moderately slippery and did engage the 4-wheel drive in my state vehicle in order to not spin the wheels and create ruts while traversing up the fairly steep hil.

At the top where the house pad is, there is still an amount of standing water in the tire tracks and the wet areas are absolute mush. At the northern portion of the loop driveway, the material is very spongy and when you lift your foot you can see water in your footprint.

The driveway installation is clearly not functioning as intended and the respondent is to correct the

condition in an appropriate manner.

Governing Rule: Statute ARS 32-1154.A.(3)(namely AAC R4-9-108)

Complaint Item 4: The quotes are not contracts and Mr. Reyes did not follow contract procedures per AZ State Statutes.

Investigator’s Observation: The proposals provided do not meet the requirements of Arizona contracting law, ARS 32-1158.A as the respondents license number is not on the contract (32-1158.A.(1), there is not approximate completion date (4), the applicable taxes are not listed (6) and the notice of the right to file an ROC complaint is not included (9).

Additionally, the failure to display the license number preceded by the ROC acronym is a violation of ARS 32-1124.B.

The respondent is to correct his contracts in a manner to comply with statute.

Governing Rule: Statute ARS 32-1158.A.(1)(4)(6)(9) and ARS 32-1124.B

ROC determined that the other issues raised in Mr. Fuller’s complaint did not require correction.

Respondent prepared an invoice dated December 12, 2019 through which it detailed the work it intended to do to comply with ROC’s Directive. That invoice provides the following description of the work:

Equipment, Material, and Labor to apply corrective action and completion of the original road and driveway work. To include drainage swale to direct flow away from pad and driveway into existing rip rap lined swales; regrade and crown driveway with compaction using existing material previously delivered on site; and restore all damaged surfaces from previous rain and snow.

Frontier performed corrective work at the site and on December 18, 2019, Mr. Reyes informed Mr. Fuller that the remedial work was completed. At the hearing, Mr. Reyes testified to the effect that in hindsight, he should have requested more time to complete the work because of the weather conditions.

On January 9, 2020, Mr. Dimond conducted a compliance job site inspection at which time he determined that the corrective work had not been properly completed. Mr. Dimond’s Compliance Jobsite Inspection Notes provide:

Compliance Jobsite General Notes: Present at the inspection was the complainant Larry Fuller.

Present on behalf of the respondent was owner John Reyes and estimator, Carlo Pastore.

I took pictures at the inspection with my state issued Google Pixel 2 cellphone camera and I have uploaded the pictures to the complaint document file and the licensed investigations evidence locker under this case number.

I also recorded the inspection with my state issued Olympus DS-30 digital audio recorder and I have uploaded the audio recording to the same licensed investigations evidence locker.

Compliance Findings: On or about December 19th, 2019, the respondent performed remedial work using the 3 piles of material that were left.

In order to determine if the work was going to remedy the issue, some time and weather was needed ascertain if the remedial work was going to be successful.

The Prescott area received rain and snow Christmas day and the day after. It was reported to me shortly after that the surface was exhibiting the same failure.

I scheduled the compliance inspection out far enough to hopefully allow the surface to dry out.

At the inspection, the lower quarter of the driveway is still retaining moisture.’ At the loop portion of the driveway, the steeper portion at the top is also still retaining moisture. So much so that the saturation was visible in my footprint. The driveway is in direct sun. The areas still retaining moisture are also in direct sun however the angle of the sun is slightly less than most of the driveway.

Due to the concerns that this material may not be suitable for this type of installation, I went to Arrowhead Materials in Prescott Valley.

I spoke with Chris Mathern, materials manager. I explained the installation and had a baggie of the material with me that the complainant had given me at the initial inspection.

I described that this is a driveway with a considerable vertical rise and showed him some of the pictures I had taken.

He immediately identified the product as a 3/8” minus and relayed that he does not carry it at this plant. He also relayed that it comes from the plant in Chino Valley.

I asked him specifically if the product was suitable for a driveway installation and he indicated no, it is not.

Considering that this was the contracted product, I determined that it would be helpful to speak with a staff attorney.

I discussed the situation with staff attorney Chance Peterson and we agreed that although it was the contracted material it is not suitable for the installation and that the complainant relied on the respondent’s expertise to choose the product.

Under these conditions, the respondent is not compliant with the directive as the driveway is still not functioning as intended.

On January 27, 2020, ROC issued to Respondent a Citation through which it alleged that Frontier may have violated Ariz. Rev. Stat. sections 32-1154(A)(3), (A)(12) and (A)(22).

Mr. Dimond conducted a prehearing inspection on June 18, 2020.

At the hearing, Mr. Dimond testified consistently with his Jobsite and Compliance Jobsite Inspection Notes.

Mr. Dimond’s opinion is that the driveway was not functioning as intended, with the intention having been to prevent water from pooling and creating muddy conditions. Mr. Dimond also acknowledged however that much of the driveway was functioning as intended.

Mr. Dimond’s opinion was that the flatter areas of the driveway might be expected to stay wet or soggy for three or four days, but he observed this that this condition still existed ten days after the rain ended.

Although Mr. Dimond had inspected three areas of the driveway, he testified to the effect that the Directive addressed a general condition, rather than any specific area.

Mr. Reyes’s opinion was that considering that the ground freezes and thaws, it was to be expected that the 3/8 minus would retain moisture.

Although the Mr. Mathern’s opinion was that the 3/8 minus was not suitable for this application, Mr. Dimond acknowledged that he had subsequently spoken to Clay at the Chino Valley materials yard, who was of the opinion that the 3/8th minus was suitable for the project.

After his June 18, 2020, prehearing inspection, Mr. Dimond was still of the opinion that the driveway was not functioning as intended and that the 3/8th minus was not an appropriate product for this application.

At the hearing, Mr. Reyes confirmed his opinion that the 3/8 minus is an appropriate material for the driveway.

ROC typically does not address issues related to the material being used, and consequently ROC did not order Respondent to remove and replace the 3/8 minus.

Mr. Reyes testified consistently with his November 19, 2019 statement to ROC providing that the problems that occurred before Mr. Dimond’s jobsite inspection were due to the fact that Respondent had not finished its work at that time.

Mr. Reyes added that Respondent had not finished the project because Mr. Fuller had changed the scope of the work and there was a logical order that had to be followed with the 3/8 minus being the last thing to do. Mr. Reyes acknowledged that Respondent had stopped work at Mr. Fuller’s to work on other projects, but he could not recall how long the work stoppage lasted.

Mr. Reyes acknowledged that there were ruts in the driveway and that there were areas that were not shedding water, but he was of the opinion that these deficiencies were not Respondent’s fault.

Regarding the ruts, Mr. Reyes testified to the effect that the ruts were being caused by water that was not being shed into the drainage swales because the riprap that Mr. Fuller added was too large and the water could not get through.

Mr. Reyes acknowledged that photographs show that the ruts are several feet from the drainage swale, but he testified that the problem originated higher up the slope and the water that was not entering the swales had cut toward the center of the driveway.

Mr. Dimond could not offer any definitive opinion as to whether the ruts he observed were being caused by the riprap that Mr. Fuller had added to the swales, because he did not observe ruts being created. He did note however that the riprap might be an issue in the lower portion of the driveway, but not the upper portion.

The parties’ agreement contains the following: “Disclaimer... if unforeseen difficulties arise, there may be additional charges for the following: .... Frontier Excavation cannot guarantee fill/soil compliance or subgrade material integrity without a detailed Soil Report provided by contractor/owner....”

According to Mr. Reyes, the work should not have been undertaken without a soils report, but there was nothing he could do when Mr. Fuller was unwilling to pay for one.

Mr. Reyes testified that the area Mr. Dimond found to be soft was being caused by clay soils present at the site. But Mr. Reyes also testified that without a soils report, the underling conditions cannot be known.

Respondent’s position is to the effect that Mr. Fuller assumed this risk because he did not have a soils report prepared by an engineer before Respondent conducted its work.

The parties knew that there were clay soils near the house and had discussed the possibility of obtaining a soils report in regard to work that Respondent conducted in that area. That work is not at issue in this matter.

Mr. Dimond testified that it is not common to conduct a soils test for a driveway and he knew of no one who has or would obtain a soils test for a driveway considering the cost of such test.

Mr. Dimond’s opinion was to the effect that an owner such as Mr. Fuller should be able to rely on the contractor’s expertise and that if Respondent was of the opinion that a soils report was required, Mr. Reyes should have notified Mr. Fuller in writing that the soil conditions required a report and had Mr. Fuller sign off if he did not want to get a test, and that the existing disclaimer was not sufficient.

Mr. Reyes acknowledged that in Respondent’s November 19, 2019 statement filed with ROC, it did not raise the point that no soils test had been completed.

Mr. Fuller testified to the effect that Mr. Reyes had expressed concerns about using the 3/8th minus because the driveway was so steep. Mr. Reyes acknowledged raising the issue, but he did not agree that the concern was with the 3/8 minus per se, but rather was related to whether the wheel-roller (a piece of compaction equipment), could make it up the slope. Mr. Reyes appeared to acknowledge that one area that Mr. Dimond stood identified as problematic had not been properly compacted.

Mr. Fuller has experience as a flooring contractor in California.

The parties disagree as to the contract price for the 3/8 minus. Mr. Fuller’s position is that the cost was $19,813, whereas Mr. Reyes disputed that this was the contract price, but Respondent did not offer any other figure into evidence.

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 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:

*****

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. The written directive must set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance may not be less than fifteen days from the date of issuance of the directive....

Ariz. Rev. Stat. § 32-1124(B) provides in part that:

The license number appearing on any licenses held by the licensee must be preceded by the acronym "ROC" and shall be posted in a conspicuous place on premises where any work is being performed, shall be placed on all written bids submitted by the licensee ....

Ariz. Rev. Stat. section 32-1158 sets out nine elements that must be included in every contract, which includes a statement showing that a party has a right to file a complaint with ROC, the approximate completion date of the project, and the applicable taxes.

Ariz. Admin. Code section R49108 provides that “A contractor shall perform all work in a professional and workmanlike manner [and a] contractor shall perform all work in accordance with any applicable building codes and professional industry standards.”

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).

Mr. Reyes acknowledged that there are problems with the driveway in that it is retaining moisture and has ruts. He asserts that these problems were not the fault of Respondent, but did not prove that assertion.

With regard to the moisture. Mr. Reyes asserts that this was being caused by clay in the underlying soils and that Mr. Fuller took that risk because he did not have a soils report completed. But Mr. Reyes testified that one could not be sure what conditions existed without a soils report, and has not proven that the moisture retention was being caused by clay. Moreover, Mr. Reyes acknowledged that in at least one area the 3/8 minus could not be properly compacted.

Regarding the ruts, Mr. Reyes testified that these were the result of water not draining into the swales because the riprap was too large. But the photographs Mr. Fuller had entered into evidence show that the ruts are not adjacent to the swales, and although Mr. Reyes testified that these ruts started higher up on the driveway than was seen in the photographs, he offered no corroborating evidence. And Mr. Dimond was of the opinion that the riprap at the upper part of the driveway would not have been the cause of the ruts.

The preponderance of the evidence shows that Respondent violated Ariz. Admin. Code section R4-19-108 because the driveway is retaining moisture for longer than should be expected and because the driveway is experiencing rutting. This is also a violation of Ariz. Rev. Stat. section 32-1154(A)(3).

The preponderance of the evidence shows that Respondent did not comply with ROC’s Directive in the time that was allowed, which is a violation of Ariz. Rev. Stat. section 32-1154(A)(22).

The preponderance of the evidence shows that Respondent violated Ariz. Rev. Stat. section 32-1124(B) because its bid did not include its license numbers.

The preponderance of the evidence shows that Frontier violated Ariz. Rev. Stat. section 32-1158 because its contract did not include all the required elements.

Because Frontier has violated Ariz. Rev. Stat. sections 32-1154(A)(3), (A)(12) and (A)(22), ROC has authority to discipline its license, including imposition of a civil penalty.

Frontier has been licensed since January 2011, with no prior discipline, which is a factor in mitigation.

Considering the facts and circumstances of this matter, Respondent’s license should be suspended for one day and a civil penalty of $250.00 should be assessed against it.

RECOMMENDED ORDER

IT IS RECOMMENDED that on the effective date of the final Order in this matter Frontier Excavation & Grading LLC’s license numbers 271072, 278465, 271073, and 270750 be suspended for one day;

IT IS FURTHER RECOMMENDED that the Registrar of Contractors assess against Frontier Excavation & Grading LLC a civil penalty of $250.00.

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.

-54864001

001

-137160-45720000Done this day, October 8, 2020.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors-54864001

001

-137160-45720000