ALJDEC decisions subject to certification as final

2020A-00159-CHC-ROC · Registrar of Contractors · 2020-12-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Doreen Holcomb,

COMPLAINANT

Stephen Bart Benge,

DBA: Stephen Bart Benge Construction,

License No. ROC 256398,

RESPONDENT

No. 2020A-00159-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 16, 2020, with further hearing on September 17, 2020, and December 2, 2020

APPEARANCES: Craig Cline, Esq. represented Complainant Doreen Holcomb, who was present. Jeffrey Brei, Esq. represented Respondent Stephen Bart Benge, doing business as Stephen Bart Benge Construction. Stephen Benge was present. Arizona Registrar of Contractors Investigator Arlo Houston testified, as well as witnesses Jake Boen and Chris Cramer.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Stephen Bart Benge, doing business as Stephen Bart Benge Construction (“Respondent”) is the holder of License No. 256398 issued by the Arizona Registrar of Contractors (“Registrar”). Stephen Bart Benge is Respondent’s qualifying party.

Doreen Holcomb (“Complainant”) contracted with Respondent for demolition work, the construction of a retaining wall, and the construction of an addition to her existing home. The parties entered into three separate contracts.

The first contract was dated August 23, 2018, for the demolition of an approximate 400 square foot structure, removal of brick pavers and dog run, moving of a sub-panel, removal of existing retaining wall, and framing in of an opening to a room that was to be demolished. See Respondent’s Exhibit 3. The total contract price was $32,000.00. Id. Complainant paid Respondent in full for this contract.

The second contract was dated September 4, 2018, for the construction of a retaining wall with drainage and a sidewalk ramp. See Respondent’s Exhibit 6. The total contract price was $84,500.00. Id. Complainant paid Respondent in full for this contract.

The third contract was dated October 5, 2018, for the construction of an addition to Complainant’s home. See Respondent’s Exhibit 12. The contract included allowances for new kitchen cabinets, countertops, and other upgrades to the kitchen in the existing structure, as well as for the addition. Id. The total contract price was $190,800.00. Id. Complainant paid Respondent $80,000.00 toward this contract.

None of the contracts contained Respondent’s license number or the estimated date of completion of the work. See Exhibits 3, 6, and 12. There was some discrepancy at hearing as to whether some copies of the contracts contained the information that the property owner had a right to file a complaint with the Registrar.

On or about January 9, 2020, the Registrar received a Complaint against Respondent from Complainant alleging abandonment, poor work, and failure to comply with the minimum elements of a contract, with respect to the projects.

The Registrar assigned the Complaint to Investigator Arlo Houston. After a jobsite inspection, Investigator Houston issued a Written Directive to Respondent that provided as follows:

After investigation, the Registrar has verified that your work fails to meet minimum workmanship standards. A.R.S. § 32-1154(A)(3); A.A.C. R4-9-108. Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a citation, discipline of your license, and a civil penalty pursuant to A.R.S. § 32-1154(E) of up to $500.00. You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on April 1, 2020.

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

Complaint Item 1: “Benge has abandoned the project, stopped all work and failed to enter into a proper construction contract as required.”

Investigator’s Observation: Respondent advised at time of inspection that they had no intent to abandon work. However, at time of inspection I observed that work per the October 5, 2018 Proposal Addition had not been completed.

Complaint Item 3: “(1) the retaining wall, and engineered drainage system are incomplete. Plans specified integral color to comply with Zoning Code light reflectance value to meet code however standard gray masonry was installed.”

Investigator’s Observation: Plans specify for an integral color of the retaining wall and at time of inspection I observed that the retaining wall was grey in color.

Complaint Item 4: “Sidewalk, ramp and guardrails are incomplete, installed with incorrect width and of a questionable slope and cross slope.”

Investigator’s Observation: At time of inspection I observed that the guardrails had not been installed around the sidewalk.

Complaint Item 7: “Benge poured the concrete foundation without providing all of the sewer lines per plans.”

Investigator’s Observation: Complainant advised that a drain line for a sink was not present in the area of an exterior stud bay. Respondent advised they had installed the underground drain line and produced a picture at the time of inspection of the location that he said the drain line was installed in. At time of inspection I did not observe for a pipe stub out for the rough in plumbing for the sink located in the area shown in the plans. I was unable to visually inspect for any drain lines installed below grade for this item.

Complaint Item 8: “the slab and foundation laid by Benge was installed without code and plan required control joints, is cracking; and upon information and belief,.”

Investigator’s Observation: Respondent advised at time of jobsite inspection that they had intended to saw cut control joints into the foundation. At time of inspection I observed that the foundation for the addition did not have tooled control joints or saw cuts.

Complaint Item 9: “Benge poured the concrete foundation without installing rebar dowels and obtaining proper special inspections for structural epoxy (as required by Code and Pima County)

Investigator’s Observation: Respondent advised at time of jobsite inspection that they had not installed rebar dowels into the existing house foundation and the addition foundation but that they intended to remove sections of concrete in the addition foundation, add rebar dowels, and re-pour areas of removed concrete into the addition foundation as part of their work.

Complaint Item 10: “additionally, Benge poured slab without shower recess for accessible shower to be installed with proper shower pan/lining and drainage.”

Investigator’s Observation: At time of inspection I observed that the addition foundation did not have a recessed shower area as shown on the plans and as specified in Note 3 of Foundation Plan Keynotes in the Foundation Schedule.

The following complaint items require no action by the Respondent:

Complaint Item 2: “Benge and Holcomb agreed that Benge would provide Holcomb final adjustments for the project, including billing, actual time and materials. Repeated demand has been made for same, and Benge has refused to produce.”

Investigator’s Observation: Complainant advised at time of inspection that work was being performed on a time and materials basis. Respondent advised at time of jobsite inspection that work was being performed under separate proposals. The complaint documents appear to contain separate proposals from different dates.

Complaint Item 5: “the kitchen remodel and addition are incomplete.”

Investigator’s Observation: Complaint documents submitted by complainant appear to show for the removal of the kitchen renovation by the complainant. At time of inspection I observed that work per the October 5, 2018 Proposal Addition had not been completed. This item represents a duplication of complaint item 1.

Complaint Item 6: “the demolition has left the property exposed to the elements, insects, nature and water.”

Investigator’s Observation: At time of inspection I observed that work per the October 5, 2018 Proposal Addition had not been completed. This item represents a duplication of complaint item 1.

Complaint Item 11: “Benge purchased pre-engineered trusses without required shop drawing reviews of the architect (Jake Boen) and deferred submittal review by Pima County.”

Investigator’s Observation: At time of inspection Jake Boen (project architect) advised he had reviewed the trusses.

Following the issuance of the Written Directive and after the deadline in the Written Directive expired, Investigator Houston was notified that the corrective work had not been completed.

The Registrar issued a Citation against Respondent, charging possible violations of A.R.S. § 32-1154(A)(1); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(a); A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158; and A.R.S. § 32-1154(A)(22).

Investigator Houston testified that he conducted a pre-hearing inspection on June 29, 2020, and the status of the work remained unchanged. Investigator Houston testified consistently with his findings contained in the Written Directive.

When questioned regarding Complaint item number 3, Investigator Houston testified that the height of the retaining wall was not the issue specified in the Complaint, but rather, the color of the wall was the issue.

Regarding Complaint item number 4, Investigator Houston indicated that at the time of the prehearing inspection, guardrails had not been installed. However, at hearing, Investigator Houston testified that according to the plans and photographs presented, guardrails were not required to be installed. Investigator Houston came to the conclusion that guardrails were not required because the plans specify the installation of guardrails only where there is a 24 inch drop on either side of the sidewalk. The photographic evidence did not demonstrate any 24 inch drops. See Jobsite Inspection photos contained in the Registrar’s record, photo numbers 4 and 5, and Respondent’s Exhibit 26, photo numbers 83, 84, 86 through 88. Consequently, guardrails are not required.

Complaint item number 7 is no longer an issue as Complainant withdrew that item of Complaint.

Investigator Houston testified concerning Complaint item number 8, that he observed visible control joints in the sidewalk and exterior areas, however, he did not observe them in the interior slab. Investigator Houston testified that control joints were not visible in the interior slab, however, he opined that it makes sense to fill in the control joints as they would need to be filled in prior to installing flooring. Investigator Houston testified that if Respondent had filled in the control joints prior to the inspection, those control joints would not have been visible even if they existed. However, Investigator Houston testified that Mr. Benge told him that “he intended to do it, not that they were there.”

Regarding Complaint item number 10, concerning the shower recess, Investigator Houston opined that the appropriate slope for wheelchair accessibility can still be achieved and be within compliance by simply grinding the concrete.

Investigator Houston testified that Respondent’s proposals/contracts were not in compliance with Registrar requirements because they failed to contain all minimum elements of a contract.

Jake Boen, the architect hired by Complainant, testified that he prepared the plans for the project which were approved on September 4, 2018. See Respondent’s Exhibit 25. Mr. Boen testified regarding the specified height of the retaining wall, that he never approved a modification to the height of the wall, and that the height was an integral part of the plan. The issue concerning the retaining wall about which Complainant delineated on her filed Complaint was “the retaining wall, and engineered drainage system are incomplete. Plans specified integral color to comply with Zoning Code light reflectance value to meet code however standard gray masonry was installed.” Investigator Houston only addressed the color of the retaining wall in the Written Directive. Consequently, the issue to be addressed in this administrative proceeding does not concern the height of the retaining wall. Mr. Boen testified that the Pima County hillside zoning ordinance requires a light reflective value of 60% and that Respondent did not consult him regarding a change in plans to grey block.

Mr. Boen testified regarding the other items in the Complaint. Mr. Boen testified that the drainage system for the retaining wall is incomplete as a conveyance was not installed. Mr. Boen also testified that the plans required guardrails to be installed in areas where there was greater than a 24 inch drop off.

Mr. Boen testified that control joints were not installed in the interior slab and that such installation was important to control cracking. Mr. Boen testified that although not required by code, the plans called for control joints. Mr. Boen testified that Mr. Benge told him he would saw cut the concrete to create control joints. Mr. Boen acknowledged that control joints were installed in the sidewalks and the exterior of the addition.

Mr. Boen testified that rebar dowels were not installed to prevent differential settlement between the existing and new slab. Mr. Boen acknowledged that at this point, the new concrete had been installed approximately two years and there had been no differential settlement between the existing structure and the addition.

Regarding the recessed shower for wheelchair accessibility and proper drainage, Mr. Boen testified that there was a “hard 3 inch drop.” Mr. Boen acknowledged that the recessed shower can be accomplished by grinding the existing concrete.

Mr. Boen testified that Complainant contacted him in January 2019, stating that “she thought she paid too much” for the work performed to date. Mr. Boen became an advocate for Complainant and reviewed the proposals and the amounts paid. Mr. Boen had a meeting with Mr. Benge in mid-January 2019, and on January 16, 2019, sent an email to Complainant summarizing the meeting. See Respondent’s Exhibit 29. Mr. Boen testified that as of October 2018, the last time Complainant made a payment to Respondent, Respondent had been paid a total of $204,000.00 for all three contracts. However, Respondent continued to work on the project through March 2019. Mr. Boen referenced several times in his email to Complainant that the “proposals” were the contracts between the parties and that Complainant accepted the terms of those contracts as evidenced by her payments. Id. The email also stated the following:

Lastly Stephen was really put off by the fact that you said you did not have any additional funds or lending options. When he hears that he wants to stop work and he has no right to do so. So, I’m not going to bring that up until we’re down to splitting hairs. At the moment I can still justify leverage as we’ve paid 79% or greater of the fees.

Id.

Mr. Boen testified that he convinced Respondent to keep working on the project for five months from October 2018 through March 2019, without receiving additional payment. Mr. Boen acknowledged that based on the draw schedule in the contract for the addition, Complainant owed Respondent monies.

In a February 13, 2019 email to Mr. Boen, Complainant stated the following in pertinent part: “Thanks Jake. For everything. Once this gets resolved or I am simply able to proceed with construction, I would like you to give me a bid for completing the addition. I know I can get a loan as I have excellent credit.” See Respondent’s Exhibit 30. This was in direct contradiction of the information regarding Complainant’s financial situation provided to Respondent by Mr. Boen in mid-January 2019.

In a February 14, 2019 email from Complainant to Mr. Boen, Complainant stated, “Jake, do keep pushing him to begin framing. It can’t hurt and if he stops hearing from both of us he may figure out that I have decided on a legal remedy.” See Respondent’s Exhibit 30.

Mr. Boen acknowledged Respondent had poured the concrete for the addition and that according to the draw schedule contained in the contract for the addition, Respondent should have been paid the second draw in the amount of $24,000.00. See Respondent’s Exhibit 16.

Regarding the retaining wall, Mr. Boen advised Complainant in a July 13, 2020 email:

I think that because the construction did not meet the original design, the best approach is to obtain the maximum amount of money back that you can. It is more expensive to show that the existing wall does not comply and would need to be reconstructed. Demo cost plus re-build cost is likely to get you the maximum amount of funds recovered. When you go to fix the current construction you can use the new design so that it’s less expensive to build and use the extra funds elsewhere to stretch what little funds you’ll recover.

See Respondent’s Exhibit 31.

Chris Cramer, a general contractor, reviewed the Written Directive and the plans, and observed the project in June 2020. Mr. Cramer opined that the amount Complainant paid Respondent was not commensurate with the amount of work performed. See also Complainant’s Exhibit 12. Mr. Cramer prepared an estimate to perform the work listed in the Written Directive, however, the estimate did not include a cost breakdown and the cost further included the complete demolition and rebuild of the retaining wall, notwithstanding that Mr. Boen confirmed that the existing retaining wall could be retrofit. Moreover, the only deficiency with the retaining wall noted in the Written Directive was the color. Further, Mr. Cramer was unaware that the retaining wall had been approved by Talavera, the engineering company. Again, the only issue within the scope of this hearing is the color of the retaining wall. Mr. Cramer testified there was a 24 inch drop off along the walkway, that there were no control joints in the interior, and that the work was not performed in a professional and workmanlike manner. However, regarding the control joints, Mr. Cramer also testified that there was “very minor cracking” called spalling, which was not uncommon.

Complainant testified regarding her medical conditions and that her goal was to have an Americans with Disabilities Act (“ADA”) compliant home. Complainant testified that Respondent began working on the project in August 2018, and that she paid Respondent in full for the demolition contract. Complainant testified that Respondent performed all work on that contract with the exception of framing in of an opening. However, that was not part of Complainant’s filed Complaint to the Registrar.

Regarding the retaining wall, Complainant testified that she paid Respondent in full for this scope of work and that there are two items within the scope of work that have not been completed. However, the only item of Complaint concerning the retaining wall for which Respondent was ordered to perform work was in regard to the color of the wall. Complainant acknowledged that Mr. Benge spoke with her about the color in an attempt to save Complainant money. Respondent advised Complainant that the excavation cost more than originally thought which increased the cost of the project. Complainant did not complain at any time in October, November, or December 2018, about the color of the retaining wall, the issue she specified in the filed Complaint.

The parties spent a great deal of time addressing the construction of the retaining wall. The majority of the evidence presented was outside the scope of the hearing as it was outside of what Complainant specified in the filed Complaint and not ordered to be addressed in the Written Directive. One of those issues was the approval of the wall by Talavera Engineering & Construction and the discipline imposed on the assigned engineer by the Board of Technical Registration for conduct that occurred on a completely separate project.

Concerning the contract for the addition to her home, that contract was entitled, “Proposal Addition.” See Complainant’s Exhibit 2. The contract is dated October 5, 2018. Id. In the description of the contract, was specified, “DESCRIPTION – ADDITION ONLY PER APPROVED PLANS.” Id. (emphasis in original.) The scope of work included the following: concrete; plumbing; lumber and framing; electrical; air conditioning and heating; windows; roof; lathe and stucco; insulation; drywall; paint; tile labor including thin set; and cabinets. Id. The allowances included: cabinets and install; lighting fixtures; plumbing fixtures, tile allowance for flooring; kitchen and bath countertops; and windows. Id. Those allowances included renovations to the existing kitchen as well. The total contract price was $190,800.00. Id. The draw schedule included an $80,000.00 down payment and a second draw upon the pouring of the concrete. Id. The contract did not mention demolition or a retaining wall. Notwithstanding the clarity and specificity of the contract for the addition and the fact that Complainant entered into two prior separate contracts with Respondent for the demotion and retaining wall and had paid for those two contracts, Complainant testified that she believed that the contract amount of $190,800.00, specified as the contract price for the addition, was actually the price for all three contracts. Complainant asserted such position despite her testimony that she read, questioned, and had the contracts explained to her.

Moreover, after a November 2018 meeting, on December 18, 2018, and in an effort to save Complainant money, the parties modified the contract for the addition to include allowances only for the addition and whereby Complainant agreed to forego renovations to the existing kitchen, lowering the contract price to $134,000.00. See Respondent’s Exhibit 16.

Complainant acknowledged that she last paid Respondent in October 2018, that Respondent continued to work through March 2019, and that she hired counsel in April 2019, to file a lawsuit.

In May 2019, counsel for Complainant and counsel for Respondent exchanged correspondence in which Respondent’s counsel advised of the following in pertinent part:

The Project is not complete because your client told Mr. Benge in the middle of the construction project that she had no more funds to pay against the Contract dated October 5, 2018 . . . . Mr. Benge stands ready[,] willing[,] and able to complete this Project, so long as your client is agreeable to pay him the money he is owed. At this point, construction was stopped after your client failed to pay draw number 2 after the concrete was poured. It was at this time Ms. Holcomb told Mr. Benge she had no more money. This event occurred despite the fact that she signed a Contract in October 2018 agreeing to pay Mr. Benge $190,800.00 for the work set forth in the Contract.

Respondent’s Exhibit 22.

Mr. Benge testified regarding the separate contracts and the separate and distinct scopes of work contained in the respective contracts. Mr. Benge testified that Complainant was very construction savvy as her father was a contractor. Complainant obtained three bids for the work and requested references. Mr. Benge testified that the revised December 18, 2018 contract for the addition came about after Complainant told him she did not have any funds remaining for the project. Mr. Benge testified that although he was not obligated to do so, he revised the contract in order to reduce the cost for Complainant.

Mr. Benge testified with regard to the items delineated in the Written Directive. Regarding Complaint item number 3, Mr. Benge testified that in an attempt to save money, Complainant agreed to the grey block wall rather than the integral color as the grey block was less expensive. Mr. Benge testified that Complainant agreed to have Respondent paint the wall to comply with all zoning and homeowner association requirements. Mr. Benge testified that the retaining wall passed the Pima County inspection. See Respondent’s Exhibit 7.

Regarding Complaint item number 4, Mr. Benge testified that guardrails were only required where there was a 24 inch drop and that there were no 24 inch drops. Consequently, guardrails were not installed.

Regarding Complaint item number 8 concerning control joints, Mr. Benge testified that all of the concrete, exterior and interior, contained control joints. Concerning the interior slab, Mr. Benge testified that there were control joints in the slab and that Investigator Houston misunderstood him at the jobsite inspection. Mr. Benge testified that he said he “could go back and do saw cuts if he wanted.” Mr. Benge testified that he contacted his concrete subcontractor who informed him that he installed control joints. Mr. Benge testified that “you are not supposed to see control joints,” and that the control joints were troweled and filled in anticipation of flooring installation. Mr. Benge referenced Complainant’s Exhibit 8, photograph 7, to illustrate the straight lines that were troweled and filled in.

Mr. Benge testified that regarding Complaint item number 9, there were no footers on the existing home in which he could install rebar because they were so deteriorated. However, he could drill further and install the rebar at this point if Complainant would allow him to do so. Mr. Benge explained that he did not install the rebar at the time because he was dealing with a bankruptcy, the lawsuit filed by Complainant, and because of COVID-19, he had difficulty finding subcontractors to perform work, as the Written Directive was issued on March 11, 2020, the start of the pandemic. Mr. Benge explained that he did not work for two months because of the pandemic and he was not aware that he could request an extension to comply with the Written Directive.

Regarding Complainant item number 10, Mr. Benge testified that the shower floor would have been recessed at the time the tile was installed as the grinding of the concrete is typically performed by the tile installer, and as such would have been performed if he had been given the opportunity to complete the project.

Administrative notice is taken of Respondent’s prior License record on December 14, 2020. Such prior License record reflects that Respondent’s License No. 256398 was first issued on July 13, 2009, and is active. Such prior License record also reflects that there is only one open complaint, that being the instant Complaint, and no prior complaints or discipline against Respondent’s license.

The Registrar’s substantive policy statement 2017.01 sets out the following pertinent information:

Abuse of the Administrative Process

The Registrar of Contractors relies on complaints to carry out some of the mandates of the office. When anyone attempts to use the complaint process inappropriately, it undermines the Registrar’s ability to perform the duties that the citizens of Arizona depend on to ensure that the buildings in which they live, work, and play are safe. When that process is compromised, it is appropriate to dismiss the complaint in its entirety.

. . . .

Cooperation

“American jurisprudence implies in all contracts the obligation to cooperate in the performance of the contract and not to delay, hinder, or interfere with the performance of other parties. Over the years, owners have been found on numerous occasions to have breached their implied duty of cooperation in the context of construction contracts. Such instances have included failure to provide timely site access, failure to inspect the work or complete other work necessary to allow the contractor to proceed, and failure to reasonably schedule and coordinate owner-controlled work.”

Source: Philip L. Bruner and Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law, § 12:55 (West Group 2002) (citing inter alia Restatement (Second) of Contracts §§ 212 to 223); id. § 9:99 (noting subsidiary duties, including “an ‘implied duty’ to make timely decisions” and “an ‘implied duty’ to exercise inspection and approval rights reasonably”).

Denial of Access

Complainants are not prevented from refusing access because of their right to exclude others from their homes and it would not be appropriate to require contractors to trespass. [But it] is recognized that lack of access impinges on one party’s ability to defend itself and utilizing the benefits of the Registrar of Contractors is a privilege. Therefore, it is recommended that the Registrar dismiss complaints in which access is denied.”

. . . .

Notice and Opportunity to Cure

A breach cannot be said to be material if it is curable, notice to cure is given, and prompt steps are taken to cure or to offer assurances of cure. The right of a breaching party to be given an opportunity to cure its own material breach is an ancient equitable principle.... Cure is relevant to materiality by virtue of its focus on elimination of the breach and its implied assurance of intent to tender adequate future performance.... Providing a cure notice of curable breaches deemed by the nonbreaching party to be sufficiently material to warrant termination for cause is a fundamental prerequisite to termination.... Unless expressly waived, the right to cure is implied in every contract as a matter of law.”

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq.

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 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.

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

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:

Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

. . . .

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 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 R49108 provides that “[a] contractor shall perform all work in a professional and workmanlike manner” and that “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 32-1158 sets forth the following:

A. 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. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365.

. . . .

C. The requirements of this section are not prerequisites to the formation or enforcement of a contract. Failure to comply with the requirements of this section does not constitute a defense by either party to an action for compensation, damages, breach, enforcement or other cause of action based on the contract.

Substantive policy statement means:

[A] written expression which informs the general public of an agency’s current approach to, or opinion of, the requirements of the federal or state constitution, federal or state statute, administrative rule or regulation, or final judgment of a court of competent jurisdiction, including, where appropriate, the agency’s current practice, procedure or method of action based upon that approach or opinion. A substantive policy statement is advisory only.

Ariz. Rev. Stat. § 41-1001(22).

“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 Registrar neither demands nor expects perfection from a licensee on the licensee’s first attempt at work. A licensee must be given a reasonable opportunity to remediate workmanship issues prior to the imposition of discipline against its license. In an administrative hearing, however, Respondent is responsible to establish a lack of opportunity or the preclusion from doing so.

The Administrative Law Judge does not find Complainant’s testimony asserting that the contract for the addition encompassed all three scopes of work, including the demolition and construction of the retaining wall, to be credible. Such testimony was completely contrary to the credible, probative, and substantial evidence presented at hearing, given all of the evidence presented regarding the three separate contracts.

Regarding the Registrar’s charge of abandonment, the credible evidence of record failed to establish that Respondent abandoned the project. The credible evidence of record established that the demolition work had been completed and the retaining wall had been completed. Regarding the contract for the addition, the credible, substantial, and probative evidence of record established that Complainant entered into that contract with Respondent with full knowledge and understanding that the scope of that contract encompassed the addition and renovations to the existing kitchen, and that the contracts for demolition and retaining wall were separate and distinct contracts. Complainant paid the first draw specified in the addition contract in October 2018. Respondent continued to work on the project, including pouring the concrete, until March 2019. Complainant failed to pay the second draw specified in the contract due upon the pouring of the concrete. Correspondence between Complainant and Mr. Boen in January 2019 established that Complainant did not intend to pay Respondent any more monies after the October 2018 payment and Respondent was informed that Complainant did not have the funds to pay for the contract, notwithstanding that Complainant advised Mr. Boen that she had access to funds and in fact, wanted to hire him to complete the project. Moreover, in December 2018, Complainant and Respondent modified the addition contract to decrease the cost to Complainant. The credible evidence of record established that Respondent has been ready, willing, and able to perform the work, however, Complainant filed a lawsuit instead.

Regarding the Registrar’s charge of poor workmanship, the credible evidence of record established that with regard to the retaining wall, Complainant agreed to the use of grey block and then to have that grey block painted in an effort to save money. Complainant’s denials in this regard are not found credible. The color of the wall is the only issue that needed to be addressed per the Written Directive, however, Complainant’s correspondence with Mr. Boen regarding the intent to procure monies for the wall to be demolished and rebuilt when it could admittedly be retrofit, in order to use those funds for other portions of the project again goes towards Complainant’s lack of credibility.

Regarding the guardrails, the credible evidence of record established that guardrails were not required as the evidence failed to establish any 24 inch drop offs.

Regarding the control joints, it was undisputed that they were present in the exterior concrete. With regard to the interior slab, Mr. Benge’s testimony that Investigator Houston misunderstood what he said is deemed credible. Mr. Benge’s testimony that his subcontractor cut the joints and refilled them in preparation for the installation of flooring, is deemed credible. Further, the lack of cracking, except for normal spalling, corroborates this testimony.

With regard to the rebar dowels, because the footer was so deteriorated, the rebar could be installed but must be done under the supervision of an engineer, and Mr. Benge was willing to perform such work.

The evidence established that the recessed shower was not complete due to the fact that this work was to be accomplished by the tile subcontractor, and that if Respondent had been given the opportunity to complete the project, such would have been done.

The evidence established that Respondent’s contract failed to include the required elements of a contract set forth in A.R.S. § 32-1158(A). Therefore, Respondent failed to comply with the Registrar’s statute in violation of A.R.S. § 32-1154(A)(12).

Regarding Respondent’s alleged failure to comply with the Written Directive, the Written Directive was issued on March 11, 2020, at the start of a global pandemic and shutdown. Mr. Benge testified that because of COVID-19, he was not able to secure subcontractors to perform the corrective work, and additionally Respondent’s bankruptcy was a factor. The Administrative Law Judge concludes based on the credible, probative, and substantial evidence presented at hearing that Respondent established valid justification for not complying with the Written Directive.

Considering Complainant’s disingenuous dealings with Respondent, her failure to make payment to Respondent for a period of five months, notwithstanding the draw schedule in the contract for the addition, Respondent’s valid justification for not complying with the Written Directive, and the fact that Respondent has been licensed since 2009 without any other complaints against his license, are all factors in mitigation. There was no substantial evidence adduced showing that Respondent was unscrupulous, unqualified, or financially irresponsible. Consequently, it would not be fair or just to impose discipline against Respondent’s license.

Considering the factors set out in the Registrar’s substantive policy statement, it is appropriate to dismiss this matter as to alleged violations of A.R.S. § 32-1154(A)(1); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(a); and A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

It is recommended Respondent’s License No. 256398 shall be suspended based on his violation of A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158(A), until such time that Respondent provides written proof that is acceptable to the Registrar that it has amended its form contract to comply with A.R.S. § 32-1158(A).

In all other respects, it is recommended that the Registrar dismiss Complaint Number 2020-00159 against Respondent.

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 forty (40) days from the date of that certification.

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-137160-45720000Done this day, December 22, 2020.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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