ALJDEC decisions subject to certification as final

2020A-02567-CHC-ROC · Registrar of Contractors · 2021-03-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jennifer Duncan

COMPLAINANT

v.

Lablonde Development Corporation

License No. ROC 080218,

RESPONDENT

No. 2020A-02567-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: November 9, 2020, January 7, 2021, and March 4, 2021

APPEARANCES: Jennifer Duncan appeared on her own behalf on November 9, 2020 and January 7, 2021, and was represented by Stephanie M. Wilson, Esq. on March 4, 2021; Hank E. Pearson, Esq. appeared for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On October 9, 2020, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Contested Case setting the above-captioned matter for hearing on November 9, 2020 at the Office of Administrative Hearing.

Through the Notice of Hearing ROC alleges that Respondent LaBlonde Development Corporation may have violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22).

Respondent holds license No. 080218 issued by ROC. Thomas LaBlonde is Respondent’s qualifying party and president.

On May 16, 2018, Complainant Jennifer Duncan and her husband Raymond entered a contract with Respondent through which Respondent was to build a new home of 7891 square feet for the Duncans. The estimated price was $1,321,000, with a guaranteed maximum price of $1,600,000. On September 27, 2018, the parties entered a written change order that among other things increased the size of the house.

The contract called for the home to be completed within two years of the issuance of the permit, subject to extension for a number of specified causes, including owner caused delays, force majeure events, and extensions agreed to in change orders.

The permit was issued on August 11, 2018.

Prior to completion of construction, to accommodate the Duncans, Respondent obtained a temporary certificate of occupancy and the Duncans moved into the home.

Prior to the completion of construction, on or about May 22, 2020, Ms. Duncan filed with ROC a first complaint against Respondent alleging “Abandonment Poor Work Fraud.” Ms. Duncan subsequently filed two additional complaints against Respondent, the dates of which are not in evidence.

Ms. Duncan’s first complaint set out thirty-five numbered allegations including that: LaBlonde had abandoned the contract and was refusing to perform work without legal excuse; LaBlonde had failed in a material respect to complete a construction project for the price stated in the contract or in any modification of the contract; LaBlonde made material misrepresentations that the Duncans relied on, which resulted in damage to them and their property; and LaBlonde knowingly entered into contracts with unlicensed entities to perform work for which a license is required.

The remainder of Ms. Duncan’s compliant (items 6 through 35) covered specific alleged deficiencies, the vast majority of which included the allegation that there was incomplete or unfinished work.

Respondent filed an answer to Ms. Duncan’s first complaint showing that it had not abandoned the project, that the contract’s deadline for completion had not yet occurred, and that the contract price had been changed based on change orders the Duncans initiated. Respondent also noted that the parties were having substantial cost disputes that were slowing things down, and provided Respondent’s opinion that the Duncans occupying the house before it was completed had also caused delays.

ROC investigator David Fagerburg conducted jobsite inspections on June 23 and July 21, 2020.

On July 24, 2020, ROC issued to Respondent 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 Tuesday 8-25-2020.

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DIRECTIVE REQUIREMENTS

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

Compliant Item 6: Drywall: failed to complete or repair. Of the drywall which was deemed complete by Lablonde, many walls, corners and soffits are not straight or plumb. Corner beading is exposed. Only one coat of mud was applied to the drywall, which results in poor quality finish. Contractor has been paid in cash from the Duncans. Holes remain, cut drywall needs to be repaired.

Investigator’s Observation: I was able to verify that the drywall was initially considered complete. The respondent is to complete the drywall repairs to the corners, soffits and remaining holes by appropriate means.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 6 a: Drywall: The finish is not consistent to the floor. Improper, inadequate and unsightly finishing.

Investigator’s Observation: I was able to verify that the drywall was considered complete. The respondent is to complete the drywall repairs.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 7 a: Framing: Several areas of walls and corners not being straight or plumb. Reframing of an exterior wall due to Lablonde not following plans remains incomplete and the work that has been done is not acceptable.

Investigator’s Observation: The respondent acknowledged that there are issues with the interior and exterior framing and is in the process of making corrections.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 7 b: Framing - Framing for beams in the hallways is incomplete. Beams which have been complete are improperly spaced, not set level, the finish is not consistent and one was cut too short so both pieces were hung in a way that they do not align properly. It is obvious to see the cut all the way through the beam. Several beams have cracks and splits. Mantel on master bedroom fireplace is not stained/finished and the wood is warped. Exterior eves and overhangs have not been framed and are incomplete per the plans

Investigator’s Observation: The respondent is to correct the short beam, the twisted beam covers and the miter joints by appropriate means.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 10: Paver installation: remains incomplete and several areas that are complete are incorrectly installed. Duncans were told by Lablonde that unless they pay this subcontractor immediately and in cash, for an amount significantly higher than the contract line item amount, and without any change order, all work on the home would cease. Pavers on back patio need to be fixed due to mistakes in installation height.

Investigator’s Observation: The Respondent acknowledged that the paver height is incorrect and will correct the issue.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 10 b: Paver Installation: Pavers in front are not at the height/level indicated on the plans. Installation issues include not being the proper height relative to the doors, sloppy mud set, uneven installation and improper slope and not being finished around door areas.

Investigator’s Observation: The respondent acknowledged there is a bump and some of the pavers have a gap larger than 1⁄4”. The respondent stated that he will correct the paver issues at the front patio.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 11: HVAC - remains incomplete. Dampers need to be installed, registers need to be installed and some need to be repaired or replaced due to extreme difficulty in adjusting them. Registers not level. HVAC subcontractor demanded additional payment of $1600 to set the equipment as shown on the plans.

Investigator’s Observation: The respondent is to correct the HVAC supply vents that were painted shut by appropriate means.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 13: Flooring - Flooring remains unfinished. Damage by construction remains unrepaired. Multiple areas of uneven flooring transition resulting in tripping hazard. Uneven grout in tile. Flooring installation was performed by an unlicensed subcontractor who initially over-billed for the amount of tile installed and Duncans were compelled by Lablonde to pay for this work in cash.

Investigator’s Observation: I was able to verify that there is lippage at the tile to wood floor transition in the kitchen and a 1⁄2” bump in the wood floor walkway transition to tile at the master bedroom. The respondent is to correct the flooring issues by appropriate means.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 14: Stucco - Improper, inadequate and unsightly finishing and remains incomplete. Several areas on the house remain incomplete. Cracking and flaking needs to be repaired. An insufficient coat of stucco is present on many of the exterior walls. Duncans were compelled by Lablonde to pay for this work in cash.

Investigator’s Observation: The respondent is to correct the unsightly finishing at the stem walls and complete the stucco repairs by appropriate means.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 16: Plumbing - wrong drain in master shower, powder bath faucet remains incomplete, pot filler remains uninstalled

Investigator’s Observation: The respondent is to complete the plumbing fixture installation.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 18: Windows - remain unclean with construction debris (paint, stucco, etc), some leaking or have areas in the frame where you can see outside. Bar "garage door" window has an improperly placed lock and therefore cannot be secured. The garage door opener on it has not been completed.

Investigator’s Observation: The respondent is to correct the laundry room window and complete the bar garage door installation.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 19 a: Doors - Another external door is not properly aligned so the top hits the frame when it's opened and closed.

Investigator’s Observation: The respondent is to correct the misaligned door by appropriate means.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 19 b: Doors - Several doors are not aligned properly for the hardware so the deadbolt or door latch is not functioning properly. One exterior door is supposed to have a key lock and does not. A closet door in the office is supposed to have a deadbolt and it does not.

Investigator’s Observation: The respondent acknowledged the door hardware was not properly installed or it may defective and will make the proper corrections.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 19 c: Doors - Several exterior doors have bent and/or scratched frames, many of which are full of dirt and construction debris and have not been cleaned, and at least 2 leak.

Investigator’s Observation: The respondent acknowledged the bent frame and will have the supplier/installer make the proper corrections.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 19 d: Doors - Many of the interior doors are not installed properly. Gaps show between parts of the frame. Frames are scraped, gouged and damaged and need to be repaired.

Investigator’s Observation: The respondent acknowledged the incomplete door stop installation and will make the proper corrections.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 24: Appliances - several appliances were improperly installed. American Mustang Landscaping" ROC 305375, licensed for "Specialty Dual CR-21 Hardscaping and Irrigation Systems" was contracted by Lablonde to install the range hood, which is outside of their license classification.

Investigator’s Observation: I was able to verify the dishwasher is not properly installed. The respondent is to complete the appliance installation.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 25: Paint - failed to complete. Needs to be repainted due to other issues.

Investigator’s Observation: The respondent is to complete the interior painting.

Governing Rule: ARS §32-1154 (A) (3)

Compliant Item 29 a: Landscaping - Saguaro that died shortly after transplant needs to be replaced.

Investigator’s Observation: The respondent is to replace the Saguaro.

Governing Rule: ARS §32-1154 (A) (3)

The Directive shows that ROC had determined that all other violations alleged in Ms. Duncan’s first complaint did not require correction and that Respondent was not required to take action on those items.

Mr. Fagerburg testified to the effect that no independent consideration was used in determining how much time to allow Respondent to make the repairs ROC ordered it make, but rather the time was set as a matter of policy.

On September 10, 2020, Mr. Fagerburg conducted a compliance jobsite inspection at which time he determined that complaint items 6a, 6b, 10b, 13, 14, 16, 18, 19d, and 25 had not been corrected, but all other items had been corrected.

ROC issued to Respondent a Citation dated September 11, 2020, through which ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22).

Mr. Fagerburg conducted a prehearing inspection on November 6, 2020, prior to which time Respondent had made additional repairs.

Prior to the November 9, 2020 hearing date, and again on that date, Respondent moved to continue this matter until such time as the allegations in Ms. Duncan’s second complaint could be consolidated into this matter. Ms. Duncan objected to continuing this matter and Respondent’s motion was denied.

On November 9, 2020, Mr. Fagerburg testified to the effect that about 95% of the items from Ms. Duncan’s first complaint that ROC had ordered Respondent to correct had been corrected by November 6, 2020, and that the remaining items were all minimal.

One of the items that was not completed as of November 6th was plumbing work in a guest bathroom that was delayed because the special-order sink had not been obtained. Respondent had previously agreed to install a temporary sink, but the Duncans declined that offer.

Although evidence was taken on November 9, 2020, the matter was not concluded on that date. The matter was reconvened on January 7, 2021, but no evidence was taken because the parties believed that the matter could be settled.

On January 7, 2021, the parties agreed that there were two items from Ms. Duncan’s first complaint left to be corrected: a transition in the master bedroom and the plumbing in the guest bathroom, although Respondent’s position is that the transition meets the required standards. At that time, Respondent acknowledged that there was additional work related to Ms. Duncan’s second complaint to be completed, and the parties disagreed as to whether drywall and painting issues that remained to be completed were the subject of Duncan’s first or second complaint.

The parties did not settle the matter and it was reconvened on March 4, 2021 at which time additional evidence was taken.

On March 4, 2021, Mr. LaBlonde gave his opinion that the home was substantially complete and had been for about six months or so. He acknowledged that there may have been some punch-list items at that time, and he testified that Respondent was willing to make any required repairs.

Although the scope of this hearing is limited to the issues raised in Ms. Duncan’s first complaint, at times there was confusion or uncertainty as to whether issues being addressed were properly the subject of the first complaint. There was also ambiguity as to what repairs ROC had actually ordered Respondent to make. For example, Mr. La Blonde testified that Respondent had made repairs to a soffit in the dining room, whereas Mr. Duncan testified that a different soffit required repair.

In addition, ROC’s Directive resulting from Ms. Duncan’s second complaint would require Respondent to redo work that Respondent had been ordered to complete in the Directive at issue (e.g., cutting into drywall which would then need to be repainted).

By March 4, 2021, the plumbing had been resolved, the floor transition had not been fixed to the Duncans’ satisfaction, but there was material onsite to make additional repairs, and the parties disagreed as to whether all the drywall had been fixed.

Regarding the floor transition, Respondent’s position is that the existing work met the applicable standards, but it was willing to make additional corrections.

The contract calls for the Duncans to issue to Respondent a punch-list identifying issues that they believed required repair. Prior to filing the first complaint, the Duncans had not prepared a punch-list because they believed Respondent had breached the contract through abandonment and an unwillingness to complete the work for the agreed upon price. Prior to the March 4, 2021 hearing date, the Duncans had provided Respondent with a punch-list, but that list included items that were not raised in Ms. Duncan’s first complaint.

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).

The scope of the hearing is limited to issues properly noticed. See Ariz. Rev. Stat. § 41-1092.07(F)(6).

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).

It has not been proven that Respondent is unscrupulous, unqualified, or financially irresponsible.

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:

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3. Violation of any rule adopted by the registrar.

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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 section R49108(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.”

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).

Ms. Duncan’s first complaint was filed before the contract’s completion date and alleged that Respondent had breached the contract by abandoning the project, by failing the complete the project for the agreed upon price, and by making material misrepresentations. Respondent’s answer to that complaint shows that parties had a dispute over the terms of the contract, including disputes over the cost of the project. Although there was work subject to the first complaint that required correction, this matter is better seen as a contract dispute, rather than a matter in discipline. Moreover, it appears Respondent has corrected the work at issue and is willing to fix any work that has not been corrected. Under these facts, it would not be fair or just to discipline Respondent’s license.

The preponderance of the evidence does not show that Respondent violated Ariz. Admin. Code section R4-9-108(A) or Ariz. Rev. Stat. section 32-1154(A)(3).

Respondent made good faith efforts to comply with ROC’s Directive, but there was ambiguity and uncertainty as to what work was required under that Directive, as opposed to issues raised in Ms. Duncan’s other complaints. The facts and circumstances of this matter provide a valid justification for Respondent’s failure to complete the work in the time ROC allowed, and it has not been shown that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(22).

Consequently, this matter should be dismissed.

RECOMMENDED ORDER

IT IS ORDERED that case number 2020-02567 is dismissed.

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.

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-137160-45720000Done this day, March 24, 2021.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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