ALJDEC decisions subject to certification as final

2020A-00549-CHC-ROC · Registrar of Contractors · 2020-11-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Todd Allen Krombein,

COMPLAINANT

Old World Craftsmen LLC,

License No. ROC 280264,

RESPONDENT

No. 2020A-00549-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 4, 2020, September 30, 2020, and October 1, 2020

APPEARANCES: Complainant Todd Allen Krombein appeared and was represented by Kevin Estevez. Lucinda Griffin, Qualifying Party, appeared on behalf of Respondent Old World Craftsmen LLC.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

Old World Craftsmen LLC (Respondent) is the holder of License No. 280264, a General Residential B-3 General Remodeling and Repair Contractor license, issued by the Arizona Registrar of Contractors (Registrar).

On or about May 22, 2018, Todd Allen Krombein (Complainant) signed a contract with Respondent for the construction of a new home in Pinetop, Arizona for a total contract price of $350,000.00 and with an estimated date of completion of February 28, 2019. Complainant indicated Respondent had been paid a total of $449,000.00 toward the contract and Complainant had personally paid $30,000.00 for materials used on the project.

On or about February 4, 2020, the Registrar received a Complaint against Respondent from Complainant alleging abandonment with respect to the project. According to the complaint, Respondent stopped work on the project on January 24, 2020.

The Registrar assigned the complaint to Investigator Chris Allison, who conducted a jobsite inspection on or about February 26, 2020.

On or about March 5, 2020, Investigator Allison issued a written directive to Respondent that provided as follows:

WRITTEN DIRECTIVE FROM THE REGISTRAR

*** NOTE: THE RESPONDENT CURRENTLY POCESSES A B-3 LICENSE. THE RESPONDENT IS OPPERATING OUT OF SCOPE OF THE B-3 LICENSE. THE LICENSEE CANNOT PERFORM OR SUBCONTRACT TO COMPETE ITEMS OUTSIDE THE SCOPE OF THEIR LICENSE. THE OUT OF SCOPE ITEMS MAY ONLY BE REMEDIED BY WAY OF FINANCIAL SETTLEMENT WITH THE COMPLAINANT TO ALLOW THE COMPLAINANT TO HIRE APPROPRIATELY LICENSED CONTRACTORS. ***

Dear Respondent:

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 March 31, 2020.

RESTRICTIONS

• You may not perform or hire other contractors to perform work that is outside the scope of your license.

• If your license is currently suspended for administrative reasons1, or is inactive, expired, or cancelled, you may not perform any corrective work nor contract in any manner, which includes hiring other contractors to perform work, until the suspension of your license(s) has been lifted or your license(s) has been reactivated.

DIRECTIVE REQUIREMENTS

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

Compliance Item: 1 - Original Contract Date 6-1-18. Scheduled completion date 4-4-19. Home still not done.

Investigator’s Observation: At the time of inspection the home was about 90% completed. Respondent shall complete the project in accordance to the contract and all approved change orders.

NOTE: Respondent can only complete or subcontract work allowed under the scope of his license. All other work may only be remedied by way of financial settlement.

Governing Rule: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(b): A contractor shall perform all work in accordance with any applicable building codes and professional industry standards. For work to be performed in accordance with professional industry standards, a contractor shall use such skills, prudence, and diligence in performing and completing tasks undertaken that the completed work meets the standards of a similarly licensed contractor possessing ordinary skill and capacity.

Compliance Item: 8 - The builder verbally tells us things are included in the budget and then refuses to honor it

Investigator’s Observation: Respondent shall complete the project according to the agreed to contract and any approved change orders.

NOTE: Respondent can only complete or subcontract work allowed under the scope of his license. All other work may only be remedied by way of financial settlement with the Complainant.

Governing Rule: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(a): A contractor shall perform all work in a professional and workmanlike manner.

All errors in original.

On or about March 5, 2020, Investigator Allison issued a warning letter to Respondent advising that it appeared Respondent may have operated beyond the scope of its B-3 General Remodeling and Repair Contractor license. Investigator Allison indicated that he had reviewed evidence suggesting that Respondent had bid on, contracted for, and performed work that would require a B – General Residential Contractor license. Respondent was advised that knowingly contracting beyond the scope of its license would be a violation of A.R.S. § 32-1154(A)(16), which would constitute grounds to discipline its license.

Following the issuance of the written directive, Respondent performed no additional work on the project. After the deadline in the directive expired, Investigator Allison was notified no corrective work had been performed.

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) and (B); A.R.S. § 32-1154(A)(8); A.R.S. § 32-1154(A)(16); and A.R.S. § 32-1154(A)(22).

Investigator Allison testified that Respondent was not licensed to build a new home and was limited to general remodeling and repair. Investigator Allison estimated that Respondent could perform 50 percent of the work remaining on the project under its license. Investigator Allison reviewed the possible violations set forth in the citation. Investigator Allison posited that the home should have been built within a year, and the home was still not built a year and a half later.

Complainant acknowledged that he authorized a change order totaling $52,177.00, resulting in a total contract cost of $402,177.00. Complainant testified that he paid Respondent $243,277.00 and his lender paid Respondent $222,060.00. Complainant also stated that he authorized Respondent to represent him in all discussions to facilitate the installation of the various utilities to be installed at the property. According to the Engagement Agreement, Respondent was to be paid at the rate of $125.00 per hour. Complainant paid Respondent $56,207.00 in total regarding the utilities in addition to the payments made for the construction. Complainant indicated he paid $70,204.06 to other contractors to complete the project after Respondent abandoned the project. Complainant stated he paid approximately $611,000.00 in total to build the house, while the initial contract was for $350,000.00. Complainant further testified that the project took far longer than the agreed upon time in the contract and there were numerous times Respondent would stop working on the project for long periods at a time. Complainant denied that he ever signed a change order extending the estimated date of completion. Despite the delays, Respondent would provide Complainant with new completion timelines that included additional payments that needed to be paid to complete the project. Complainant testified that after the issuance of the written directive from the Registrar, Respondent reached out to him to perform further work on the project outside the scope of its license and with the expectation of more payment.

Robert Griffin, Respondent’s Project Manager and Loucinda Griffin’s husband, testified that he was not good at the paperwork and he was stressed out during the time period of the project. Mr. Griffin acknowledged that he did not have Complainant sign and approve written change orders during the course of the project. Mr. Griffin admitted that Respondent stopped work because Complainant would not pay more money on the project. Mr. Griffin asserted that he was forced to spend $60,000.00 of his own money on the project, but acknowledged that he did not present any evidence at the hearing to establish such expenditures. Mr. Griffin detailed that he previously held two General Residential Contractor licenses with one issued in March 1999 and revoked in December 2001 and one issued in March 2001 and revoked in May 2002.

Loucinda Griffin, Respondent’s Qualifying Party, testified as to her health issues, including severe sleep apnea, that prevented her from fully overseeing Complainant’s project and ensuring the paperwork was properly maintained for a prolonged period of time. Ms. Griffin asserted that her health had improved and she was back to running the company. Ms. Griffin admitted that Respondent “grossly underpriced” the project, but argued that Complainant’s refusal to pay further on the project justified Respondent’s decision to stop working on the project. Ms. Griffin admitted that Respondent made major errors in its handling of the project, but assured that it was going to learn from them and be more conscientious going forward.

Administrative notice is taken of Respondent’s prior License record on November 5, 2020. Such prior License record reflects that Respondent’s License No. 280264 was first issued on August 8, 2012, and is active. Such prior License record also reflects that there were two open complaints and three prior resolved/settled complaints against Respondent’s license.

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 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).

The evidence established that Respondent stopped working on Complainant’s project for prolonged periods of time and failed to complete the project. Accordingly, Complainant established that Respondent abandoned the project and failed to complete the project in a professional and workmanlike manner in violation of A.R.S. § 32-1154(A)(1) and A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(A) and (B).

The evidence established that Complainant paid Respondent $465,337.00, which was greatly in excess of the price of the project set forth in the contract and properly executed change orders of $402,177.00. Complainant also had to pay an additional $70,204.06 to complete the project and have a livable home. The fact that Respondent may have “grossly underpriced” the project does not justify its assertion that Complainant should have paid more than the agreed upon price. Accordingly, Complainant established that Respondent failed to complete the proejct for the price stated in the contract in violation of A.R.S. § 32-1154(A)(8).

The evidence established that Respondent knowingly contracted to build a new home when its license limited it to remodels and repairs. Mr. Griffin previously held two General Residential Contractor licenses and therefore, knew or should have known, that Respondent’s license did not include new build projects. Therefore, Complainant established that Respondent knowingly contracted beyond the scope of its license in violation of A.R.S. § 32-1154(A)(16).

The evidence established that Respondent did not attempt to complete the corrective work following the written directive being issued. Therefore, Complainant established that Respondent failed to take appropriate corrective action following a written directive from the Registrar in violation of A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall revoke Respondent’s License No. 280264.

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.

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-137160-45720000Done this day, November 5, 2020.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000