ALJDEC decisions subject to certification as final

2020A-05900-CHC-ROC · Registrar of Contractors · 2022-03-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Yisroel Loeb,

COMPLAINANT

J & Sons Construction LLC,

License No. ROC 323939,

RESPONDENT

No. 2020A-05900-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 30, November 22 and November 23, 2021

APPEARANCES: Richard L. Cobb, Esq. for Complainant; Marcus D. Tappe, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On June 22, 2021, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Contested Case setting the above-captioned matter for hearing on July 30, 2021 at the Office of Administrative Hearing.

Through its Notice of Hearing, ROC alleges that Respondent J & Sons Construction LLC may have violated Ariz. Rev. Stat. sections 32-1154(A)(2)(a), (A)(2)(b), (A)(3), and (A)(22).

Respondent holds license number 327126. Eliyahu Ickovic, Respondent’s qualifying party and a member of the LLC testified for Respondent.

Complainant Yisroel Loeb testified on his own behalf and presented the testimony of his wife Leah Loeb aka Erlich, and contractor Bryan Rector.

ROC investigator Lisa Melton also testified.

On or about November 8, 2019, Complainant and Ms. Loeb entered a contract with Respondent that called for Respondent to remodel and add an addition to a home owned by Ms. Loeb. For reasons that are not clear, the home is shown as being at both 275 East Maryland and 275 East Sierra Vista Drive in Phoenix.

The contract price was $219,684.63, and Complainants’ complaint shows that they had paid $210,582.63.

The contract shows that Respondent was not to perform work on the existing HVAC units at the house, but at some point the parties modified their agreement and Respondent acknowledges that it did work on the unit on the west side of the house.

Through an email to ROC, Complainants acknowledged that they had arranged for people to conduct work at the house while under Respondent’s supervision, but Respondent had informed Complainants that he would not be responsible for this work.

Some of the work at issue was performed by a Luis, whose last name the parties did not provide.

At the hearing, Complainants acknowledged that they arranged for Luis (and others) to perform work, but take the position that Respondent was nevertheless responsible for that work. Respondent’s position is that it was not responsible for Luis’s work.

Luis was paid with money that Complainants paid Respondent and Respondent then provided to Luis.

On September 22, 2020, the City of Phoenix issued a Certificate of Occupancy showing that “Issuance of this Certificate of Occupancy indicates the following described building, or portion of a building, has been inspected and been found to be in substantial compliance with applicable city codes and ordinances for the hereby authorized use and occupancy.”

The COO shows that the project was a remodel and addition, but does not show that it was limited to only a portion of the house.

The Permit Inspection History shows that the project was completed on September 22, 2020, which is also the date that final inspection was passed.

That history also shows however that a rough electrical inspection was performed (and failed) on February 24, 2021, and that the west side of the house, which included an air conditioning unit that was moved and other electrical work, was never inspected (and that there was never a request for inspection).

The contract set out a payment schedule that required a sixth and final payment of 10% of the contract price to be made when the COO was issued and the construction on the east wing of the house was complete.

The contract required Complainants to provide Respondent with a punch list within five working days after substantial completion, with the Respondent then allowed ten working days to complete the punch list.

Under the contract, the work was substantially complete when the COO was issued.

Through an email dated September 30, 2020, Respondent informed Complainants of its opinions that Complainants owed Respondent for the 5th and 6th draws; that Respondent understood Complainants were withholding payment because they were concerned that Respondent would not complete the punch list within ten days; that Respondent was not obligated to work on the punch list until these payments were made, but Respondent would accept $15,000 now and $5000 on completion of an attached punch list; and it would start on the punch list the next day; but items completed by Luis on the west side of the house were not Respondent’s responsibility.

Complainants responded to Respondent’s email providing their opinions that not one room in the house was complete; there were items requiring work that were not on the punch list; and there was work that had been assigned to Luis that had not been completed and even under Respondent’s interpretation of their agreement, Respondent was responsible for that work.

The parties reached an agreement under which Complainants paid Respondent $10,000 and Respondent began work on the punch list. Over time, more items were added to that list.

On November 19, 2020, Respondent informed Complainants that their work was complete and requested payment. Respondent also asserted that Complainants had violated their agreement not to talk to Respondent’s workers and that workers had left the job due to unpleasant interactions with Complainants.

On November 26, 2020, Complainants sent a response showing that they did not agree the project was complete and providing a list of items they believed required repair. Complainants also informed Respondents that it had until November 30th to notify Complainants of its willingness to complete this work, and that if Respondent did not reply, Complainants would consider the contract to be completed and paid in full.

On or about December 19, 2020, Complainants filed a complaint against Respondent alleging abandonment and poor work, and setting out 80 specific alleged deficiencies.

Ms. Melton reviewed the complaint and suggested that Complainants have the City return to the site because she was of the opinion that Respondent had not informed the City as to the full scope of its work.

The record includes an Inspector’s Notice (Short form) dated February 24, 2021. The Notice does not identify the contractor or the permit number and the “Notice Received By” box is unsigned. The Notice shows that the inspector was number 670, and although the Notice was signed, the signatory’s name is not legible.

Through its February 24, 2021 Notice, the City identified ten issues, which include a statement that the air conditioning unit that was relocated and the west side remodel of the house had not been permitted or inspected.

On February 28, 2021, after receiving the City’s Notice, Complainants notified Ms. Melton that they were adding nine items to their complaint.

On March 18, 2021, ROC’s Ms. Melton conducted a jobsite inspection.

Ms. Melton could not recall if she had reviewed the permit history before her inspection, but she did not review the contract, the plans or related documents.

During Ms. Melton’s inspection, unless the Respondent could show her by a preponderance of the evidence that it was not responsible for any individual compliance item raised by Complainants, Ms. Melton concluded that Respondent was responsible and included those items in ROC’s Directive.

During Ms. Melton’s inspection, if she found an example of poor workmanship for a particular compliance item, she did not continuing looking to identify every example. For example if Ms. Melton found deficiencies with tile grout, she did not investigate further to locate every instance thereof.

On April 2, 2021, ROC issued to Respondent a thirty-nine page Directive that addressed each of Complainants’ eighty-nine compliance items.

The compliance items can be classed in three categories: (1) items that Ms. Melton did not inspect because she was of the opinion that the City had not inspected these items before issuing the COO (compliance items 1, 10, 14, 20, 21, 22, 36, 37, 43, 64, 77, 78, 81, 82, 83, 84, 85, 86, 87, 88, and 89); (2) items that ROC ordered Respondent to correct on or before May 4, 2021 (compliance items 2, 3, 4, 5, 6, 7, 8, 9, 12, 13, 15, 16, 17, 18, 19, 23, 27, 30, 32, 33, 34, 35, 38, 39, 40, 41, 44, 45, 46, 47, 50, 52, 53 ,54, 55, 56, 57, 58 , 59, 60 , 63, 65, 66, 68 , 69, 70, 71, 73, 74, 75, and 76); and (3) items that required no action on Respondent’s part (compliance items 11, 24, 25, 26, 28, 29, 31, 42, 48, 49, 51, 61, 62, 67, and 72).

Respondent did not attempt to correct the compliance items that ROC ordered it to correct, effectively taking the position that Complainants had breached the contract by failing to make all required payments. Respondent also has taken the position that it was willing to resolve this matter with Complainants.

ROC issued to Respondent a Citation dated May 17, 2021, through which ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(2)(a), (A)(2)(b), (A)(3), and (A)(22).

Regarding the compliance items that Ms. Melton did not inspect, with the exception of compliance items 1 and 37, it has not been proven that Respondent committed the alleged violations because the City’s issuance of the COO in September 2020 is prima facie evidence that this work met all code requirements and there is insufficient information to show what the City was relying on when it conducted its February 24, 2021 inspection. In addition, the COO does not show that it was limited only to a portion of the house and the only plans in the record show that the west side of the house was to undergo demolition and remodeling.

Regarding compliance items 1 and 37, related to the HVAC system, Complainant presented credible evidence showing there were numerous deficiencies with the unit at issue. In its answer to the complaint, Respondent asserted that deficiencies were preexisting, but at the hearing, Respondent acknowledged that it had moved the unit, but that the alleged deficiencies were not present when it completed its work. There is sufficient evidence to show a workmanship violation.

Regarding compliance item 2, the hole in the side of the house, the evidence shows that the hole was preexisting and there is not sufficient evidence to show that it was covered before Respondent accessed the house through that hole.

Regarding compliance item 15, a shower drain, it has not been proven that shower drains are required to be centered.

Regarding compliance item 18, a gap between the vanity and wall, it does appear that this is not in conformity with the plans, but it has not been proven to be a material defect.

Regarding compliance item 19, a two-inch difference in the flooring height, it has not been proven to be a deficiency because the plans show that these pre-existing slabs were to be left at their existing heights.

Regarding compliance item 60, color of mortar, it has not been proven that this is a deficiency because the existing mortar was very old and Mr. Ickovic provided credible testimony that the mortar Respondent used was the closest match available.

Regarding compliance item 63, paint on the garage floor, it has not been proven that this is a deficiency caused by Respondent.

Regarding compliance item 66, a linen closet door, it has not been proven that this is a deficiency because the alleged violation is predicated on the assumption that Respondent cut down an existing door, which was not proven to be accurate.

It has been proven that the remaining compliance items that ROC ordered Respondent to correct are workmanship violations, but the majority of these are cosmetic and or punch list items.

Respondent’s assertion that it is was not responsible for some of this work because it was performed by Luis is unavailing because Respondent was accepting money from Complainants for this work and then paying Luis.

CONCLUSIONS OF LAW

Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

“At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2).

“At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3).

A preponderance of the evidence is:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

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

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118.

Ariz. Rev. Stat. section 32-1154(A) provides that

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:

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2. Departure from or disregard of:

(a) Plans or specifications in any material respect that is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.

(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....

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. subsection 32-1154(B)(3) provides that ROC “May temporarily suspend ... or permanently revoke any or all licenses issued under this chapter if the holder of the license ... commits any of the acts or omissions set forth in” subsection 32-1154(A).

Ariz. Rev. Stat. section 32-1154(E) provides that “The registrar may impose a civil penalty of not to exceed $500 on a contractor for each violation of [Ariz. Rev. Stat. 32-1154] subsection A, paragraph 22.”

It has not been shown by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(2)(a) because the only proven departure from plans or specifications that was made without Complainants’ approval was compliance item 18, which is not proven to be material within the meaning of the statute.

It has not been shown by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(2)(b) because there were no building codes identified as having been violated.

As set out above, the preponderance of the evidence shows that Respondent’s work on did not meet the workmanship standards for compliance items 1, 3, 4, 5, 6, 7, 8, 9, 12, 13, 16, 17, 23, 27, 30, 32, 33, 34, 35, 37, 38, 39, 40, 41, 44, 45, 46, 47, 50, 52, 53 ,54, 55, 56, 57, 58 , 59, 63, 65, 68 , 69, 70, 71, 73, 74, 75, and 76, which is a violation of Ariz. Admin. Code section 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 Respondent did not comply with ROC’s Directive, which is a violation of subsection 32-1154(A)(22).

Because Respondent has violated the applicable statutes, ROC has authority to discipline its license.

Although many of the workmanship issues are cosmetic or punch list items, Respondent’s work related to the HVAC unit presented a safety hazard. Consequently, Respondent’s license should be suspended for five days and Respondent should be required to pay a civil penalty of $250.

RECOMMENDED ORDER

IT IS RECOMMENDED that the Registrar suspend Respondent J & Sons Construction LLC’s license number 323939 for five days and impose against Respondent a civil penalty of $250.

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 17, 2022.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey\s Fleetham, Director

Registrar of Contractors

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