ALJDEC decisions subject to certification as final

2020A-05869-CHC-ROC · Registrar of Contractors · 2021-06-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Stephanie A Shockey ,

COMPLAINANT

Kashey Contracting Services, Limited

Liability Company

License No. ROC 330772,

RESPONDENT

No. 2020A-05869-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: May 12, 2021

APPEARANCES: Stephanie A Shockey on her own behalf; Steven R. Beeghley, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On April 9, 2021, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Contested Case setting the above-captioned matter for hearing on May 12, 2021 at the Office of Administrative Hearing.

Through its Notice of Hearing, ROC alleges that Respondent Kashey Contracting Services, Limited Liability Company may have violated Ariz. Rev. Stat. sections 32-1154(A)(2)(b), (A)(3) and (A)(22).

Respondent holds license No. 330772 issued by ROC. Adrian Kashey is Respondent’s president.

Complainant is Stephanie A Shockey, who appeared and testified. Ms. Shockey’s father and mother, Stephen Shocky and Nancy Shockey, were also involved in the transactions at issue.

Respondent was represented by counsel at the hearing and Mr. Kashey testified.

ROC investigator Lisa Melton also testified.

Mr. Kashey has known Ms. Shocky and her family for about twenty years, and Ms. Shockey worked for Mr. Kashey’s family’s non-profit.

In August 2020, Respondent and Ms. Shockey began discussing remodeling work at a house on Earl Drive owned by the Shockeys. Ms. Shockey’s father and her mother joined the discussions, were involved the decision making and made the payments to Respondent.

Mr. Kashey had previously done handyman work for Mr. Shockey.

The project evolved over time, with the budget being a concern.

The parties agreed to proceed in two phases, with the original estimate for phase 1 being dated August 27, 2020, and the original estimate for phase 2 dated October 16, 2020.

Included in the work was removing a wall that then required a beam to be installed.

On August 28, 2020, Mr. Kashey informed the Shockeys that a permit was required, but because the Shockeys did not want to incur the expense of obtaining the permit, they authorized Respondent to go forward without a permit and work began that day.

Mr. Kashey acknowledges that performing the work without a permit was wrong and he explained that he did so based on his long-standing friendship with the Shockeys.

The estimate for the first phase was $8758.15, the estimate for the second phase was $12,028.15, there was $500 in change orders for the first phase and $1179.68 in change orders for the second, resulting in a total price of $22,465.98. Respondent however issued to the Shockeys credits totaling $1365.

Mr. and Mrs. Shockey paid to Respondent $6603 for phase 1 and $7300 for phase 2, a total of $13,603.15. But after Ms. Shockey expressed dissatisfaction with the work, Respondent refunded to Complainant $5000, which was made in two $2500 payments. Consequently, the Shockeys net payment to Respondent was $8603.15.

The first phase was completed in early October 2021, with the Shockeys being satisfied with that work. After the second phase was completed, Ms. Shockey expressed dissatisfaction with the work. Respondent performed some additional work, but because Ms. Shockey was still not satisfied, Respondent offered to have another company work on the transitions between the new work and the existing plaster, but Ms. Shockey did not agree to that proposal.

Respondent then proposed the $5000 refund to Mr. Shockey to help resolve the matter.

On or about December 17, 2020, Complainant filed with ROC a complaint against Respondent alleging poor work on Respondent’s part and listing seventeen separate allegations.

In her complaint, Ms. Shockey declared that the contract price was $16,240.98 and that she/the Shockeys had paid Respondent $13,603.15.

Ms. Shockey’s complaint is in error because the contract price including the changes orders was $22,465.98.

Ms. Shockey also did not account for $2500 that was refunded to the Shockeys before the complaint was filed. (Respondent made the second $2500 after Ms. Shockey filed the complaint, but before Mr. Kashey learned that the complaint had been filed.)

On January 8, 2021, ROC’s Ms. Melton conducted a jobsite inspection. No representative for Respondent appeared at the inspection.

During her jobsite inspection, Ms. Melton learned that the required permit(s) had not been obtained and she added to the complaint an allegation that Respondent had departed from, or disregarded, a building code in a material respect that was prejudicial to Complainant.

Ms. Melton’s opinion was that Respondent’s work did not meet the workmanship standard set out in Ariz. Admin. Code section R4-9-108(B) for eleven of the seventeen items listed in Ms. Shockey’s complaint, (i.e., compliance items 2, 3, 4, 6, 7, 8, 9, 11, 12, 13, and 17). At the hearing, Ms. Melton clarified that these were all workmanship related and not violations of any building code.

Respondent’s work was deficient in that Respondent: painted over debris; got paint on strike plates, glass in a door, a ceiling fan, the cement floor, the beam, and a bathroom fixture consisting of a fan, a light and a speaker; failed to fill all nail holes and cracks in door frames; failed to properly patch at the kitchen light fixtures. In addition there were areas with inconsistent drywall texture, including areas in which the substrate was the existing plaster, and inconsistent and missing grout by a shower wall.

Respondent acknowledged that compliance items 2, 3, 4, 6, 7, 8, 9, 11, 12, 13, and 17 identified by Ms. Melton do require correction, but it considered these to be punch-list items, and referred to those compliance items as the “punch list” items, to distinguish from compliance item 18, the permit issue.

At the hearing, Ms. Melton agreed that all the compliance items except getting the permit, could be considered punch-list items, but it would be a “bad” punch-list.

On January 14, 2021, ROC issued to Respondent a Directive through which it ordered Respondent to correct by appropriate means compliance items 2, 3, 4, 6, 7, 8, 9, 11, 12, 13, 17, and 18.

ROC’s Directive required Respondent to inform Ms. Melton of its compliance by 5:00 p.m. on February 19, 2021.

After receiving ROC’s Directive, Respondent consulted with and hired an attorney, developed a plan, and began working to comply with the Directive.

Respondent consulted with the City of Phoenix and confirmed that the project could be issued an as-built permit. Securing that permit would require a complete set of plans and an inspection by the City after it approved the plans, which plan review would take four to six weeks.

The City of Phoenix would not allow the permit application to be opened or filed without all the required plans being submitted, which was a change in how the City had been processing applications.

The City’s inspection would involve the removal of drywall that would then need to be patched and painted. To ensure consistent drywall texture throughout the house, all drywall work has to be completed at the same time. Consequently, to prevent waste, Respondent determined that it was appropriate to delay correcting the punch list items until the City’s inspection was completed.

In the first week of February 2021, Respondent hired an architect to prepare the plans required for the as-built permit.

Respondent also hired APS Structural Engineers to evaluate the adequacy of the beam, because Mr. Kashey was of the opinion that the City would require this information. Respondent had consulted with APS about the beam when it was installed, but did not pay the engineer for any work at that time.

Because the City would require four to eight weeks to review the plans, it was apparent that Respondent could not comply with ROC’s Directive by the February 19, 2021 deadline. Respondent estimated that it would be mid-April before all the work could be completed and, as of February 17th, the parties were in informal agreement that the deadline should be extended until mid-April.

Through an email to Ms. Melton and Ms. Shockey dated February 8, 2021, Respondent (through the attorney then representing it) requested that its deadline for compliance with ROC’s Directive be extended to April 15, 2021.

In support of its request, Respondent explained that the City required a full set of plans; it had hired an architect who would be at the house on February 10th to get the information required for the plans; the engineer would then provide his input, completing his work by about February 19th; after the application was submitted, it could take the City several weeks to review and approve the plans; once the plans were approved and the City’s inspection complete, Respondent would correct any issues identified during the inspection; and then Respondent would repair the compliance items related to the drywall and painting.

Respondent also explained that to ensure that the drywall-texture was consistent throughout the project, all drywall repairs had to be made at the same time. Because the City’s inspection would involve removal of drywall, which would then need to be repaired, the repairs to the drywall set out in ROC’s Directive could not begin until the City’s inspection was complete.

Respondent’s email also showed that it intended to hire licensed contractors to perform work at the house. Through email dated February 10, 2021, Ms. Melton informed Respondent that it could not hire contractors to perform work that it could not itself perform under its CR-34 license.

As of February 17, 2021, ROC had not responded substantively to Respondent’s request for an extension.

On February 17th, Ms. Shockey emailed Respondent’s attorney stating that the Shockeys were waiting to hear back from ROC regarding the request for an extension, and “fe[lt] it a good idea to keep this process going to finish by the proposed extension date.”

Through an email to Ms. Melton and Ms. Shockey on February 17th, Respondent again requested that the deadline for its compliance with ROC’s Directive be extended.

In its second request for an extension, Respondent inform Ms. Melton that it was making progress toward compliance including having engaged the architect who was expected to complete the required plans within a week, and it had obtained calculations stamped by APS Engineering showing that the beam was acceptable.

Respondent also informed Ms. Melton that the City’s required turn-around time was three to six weeks; the plumbing and electrical work had been performed by licensed contractors, and Respondent expected it to be approved by the City; and that after all the City approvals were obtained, Respondent would complete the remaining items in a matter of days.

On February 17th, Ms. Melton responded to Respondent’s email asking for particularity with regard to the length of its requested extension. Still on the 17th, Respondent replied with an estimated timeline showing: “Architect: 1 week, City: 6 weeks, Inspection: 1 week, Remaining work: 4 days, [total] 8 weeks 4 days, or 60 days[,] that puts us at Monday April 19, 2021.”

Through an email dated February 18th, Ms. Melton informed Respondent that she had anticipated that the requested extension would be for less time because Respondent could not perform work beyond the scope of its license. She also informed Respondent that she planned to discuss the request with Ms. Shockey.

Through an email dated February 19, 2021, Ms. Shockey informed ROC and Respondent that she objected to any extension of the deadline, for reasons including her belief that Respondent was not acting in good faith, that Respondent had informed her the engineering work it detailed in its extension-request had been finished before the beam was installed, and that the work set out in the Directive was beyond the scope of Respondent’s license.

Other emails appear to show that Ms. Shockey was of the opinion that Respondent’s license did not allow it to hire the engineer, but there was no evidence adduced to show that the work performed by the engineer meets the applicable definition of contracting.

At the hearing, Mr. Kashey clarified that he had consulted with APS about the beam at the time of installation, but Respondent had not hired APS at that time.

On February 19th, Ms. Melton informed Respondent and Ms. Shockey that ROC “cannot require the Complainant to allow access after the Directive period” and that the matter would be forwarded to ROC’s legal department (i.e., that ROC was denying Respondent’s request for an extension.)

At the hearing, Ms. Melton explained that during the COVID pandemic, ROC’s policy was to allow contractors thirty days to comply with a directive and that the deadline for Respondent was set based on that policy.

Ms. Melton’s opinion was that thirty days was a reasonable amount of time for Respondent to comply with the Directive, which was based on her opinion that Respondent could have applied for permit without the required plans and because she was aware of permits that have been issued in one day.

At the hearing, Ms. Melton testified that ROC denied Respondent’s request for an extension because Ms. Shockey objected to that request.

Ms. Melton was aware that the City required the engineering calculations and plans, and noted that she had never received copies of those plans.

Ms. Melton testified that she had not seen that Respondent was making progress toward compliance. When asked about the emails in which Respondent had provided her with details of its work, she acknowledged that she had received that information, but she had not followed up with Respondent because it was not her job to babysit the contractor.

Ms. Melton’s opinion was that on February 8th, when Respondent made its request for an extension, it should have applied for the permit without the required plans and calculations and then provided those to the City at a later date. Ms. Melton acknowledged however that she did not have knowledge of the City of Phoenix’s policy regarding permit applications in February 2021.

On February 22, 2021, Respondent had completed the work required to submit an application to the City for the as-built permit. Respondent’s belief was to the effect that Complainant was required to submit the application and that Respondent could not. Ms. Melton did not agree that this was the case.

ROC issued to Respondent a Citation dated March 1, 2021, through which ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(2)(b), (A)(3)(i.e., R4-9-108(B)) and (A)(22).

On March 16, 2021, Respondent filed a Response to Citation in which it: acknowledged that it did not obtain a building permit before performing its work, but asserted that the Shockeys direction to proceed without a permit constituted consent under subsection 32-1154(A)(2)(b); asserted that the punch list compliance items were cosmetic and could be remedied in a few hours; and denied that it had violated subsection 32-1154(A)(22) because its failure to comply was justified by the fact that it was not provided a reasonable time in which to secure the required permit and it would have been waste to repair the other items until after the City had completed its inspection.

In its Response, Respondent also provided details of the work it had completed in its effort to comply with ROC’s Directive, and it attached APS’s calculations and a copy of the plans that were ready to submit to the City.

After ROC issued the Citation, Ms. Shockey turned down Respondent’s offer for the parties to work cooperatively toward obtaining the as-built permit using the engineering calculations and plans that Respondent had paid to have prepared.

Ms. Shockey testified that she turned down Respondent’s offer because she did not know what an as-built permit was and because ROC’s deadline for compliance with the Directive had passed.

As of March 22, 2021, Ms. Shockey informed Respondent that the Shockeys had no desire to have further contact with Respondent.

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).

There was no substantial evidence adduced showing 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 in part:

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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2. Departure from or disregard of:

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(b) A building code of this state or any political subdivision of this state in any material respect that is prejudicial to another.

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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(B) provides that:

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.

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).

Respondent acknowledges that it performed work without the required permit, which is a violation of R4-9-108(B). The preponderance of the evidence shows that the Shockeys were aware of the need for a permit and authorized Respondent to perform the work without one to save money. Consequently, Respondent’s failure to obtain a permit was not prejudicial to the Shockeys and not a violation of subsection 32-1154(A)(2)(b).

The preponderance of the evidence shows that there is punch list work (compliance items 2, 3, 4, 6, 7, 8, 9, 11, 12, 13, and 17) to be completed at the house, which in this case is a violation of R4-9-108(B), which is also a violation of Ariz. Rev. Stat. section 32-1154(A)(3). The preponderance of the evidence shows that this work does not constitute any code violations and that the work required is minor and could be completed in a few hours.

Although Respondent did not comply with ROC’s Directive within the time ordered, the preponderance of the evidence shows that the Directive did not provide Respondent with sufficient time to obtain the required permit. The evidence also shows that it would not have been sensible for Respondent to perform the other corrective work until the City completed any inspections related to the permit. Although Ms. Melton’s opinion was that the Directive provided Respondent with enough time to comply, her opinion was based on a mistaken belief that Respondent could have applied for the permit without all the required plans, and she apparently did not understand how long it would take the City to review the plans once these were submitted.

As such, Respondent’s failure to timely comply with ROC’s Directive is justified and Respondent has not violated subsection 32-1154(A)(22).

Because Respondent has violated Ariz. Rev. Stat. section 32-1154(A)(3), ROC has authority to discipline its license. In this case however, no discipline should be imposed.

The preponderance of the evidence shows that Respondent was working to satisfy the Shockeys before the complaint was filed, which included refunding a significant portion of their payment, and that it continued to try to resolve the matter throughout the process until Ms. Shockey informed Respondent that the Shockeys wanted no further contact.

With regard to the punch list compliance items, the preponderance of the evidence shows that these are minor issues that can be corrected in a few hours.

With regard to Respondent’s failure to obtain the permit, the Shockeys suffered no prejudice because they were aware of the need for a permit, but chose to go forward without one to save money. In addition, the preponderance of the evidence shows that Respondent was working diligently to obtain that permit during the time ROC allowed for compliance with the Directive, that it paid to have the required engineering and plans done without charge to the Shockeys, and that it was prepared to work with Ms. Shockey to submit the application even after ROC issued its Citation, which are mitigating factors.

Considering the facts and circumstances of this matter, particularly Respondent’s good faith efforts to correct the deficiencies, this matter should be dismissed.

RECOMMENDED ORDER

IT IS ORDERED that case number 2020-05869 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, June 1, 2021.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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