ALJDEC decisions subject to certification as final

2020A-06042-RFA-LS-ROC · Registrar of Contractors · 2023-10-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jamie Maria Sanchez,

COMPLAINANT,

Arizona Restoration Experts, LLC

License No. ROC 267098,

RESPONDENT.

No. 2020A-06042-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: October 19, 2023

APPEARANCES: Complainant Jamie Maria Sanchez appeared on her own behalf. Alan Hill, Esq. represented Respondent Arizona Restoration Experts, LLC. William Terrazas was present as Respondent Arizona Restoration Experts, LLC’s representative. Assistant Attorney General Mona Baskin represented the Arizona Registrar of Contractors. Doug Ulmer appeared as a witness for the Arizona Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (“Registrar”) issued License Number 267098 to Arizona Restoration Experts, LLC (“Respondent”).

On or about December 30, 2020, the Registrar received a Complaint against Respondent from Jamie Maria Sanchez (“Complainant”) alleging abandonment and poor work with respect to Respondent’s contracted scope of work. Respondent’s scope of work included the complete remodel of Complainant’s double wide manufactured home.

As a result of the Complaint, the Registrar issued a Citation against Respondent charging possible violations of A.R.S. § 32-1154(A)(2)(b), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(a) and (b), A.R.S. § 32-1154(A)(9), A.R.S. § 32-1154(A)(12), specifically, A.R.S. § 32-1158, A.R.S. § 32-1154(A)(13), A.R.S. § 32-1154(A)(16), and A.R.S. § 32-1154(A)(22).

Respondent filed a timely answer to the Citation. An administrative hearing was held on May 7, 2021, before Administrative Law Judge Adam D. Stone. In his May 17, 2021 Decision, Administrative Law Judge Stone considered Respondent’s arguments and concluded that Respondent violated all of the charged provisions of this State’s contracting laws.

On May 21, 2021, the Registrar issued a Final Administrative Decision and Order accepting the May 17, 2021 Decision and imposing a ten (10) day suspension, as well as a $500.00 civil penalty. The effective date of that Order was June 30, 2021.

Complainant thereafter filed a claim with the Residential Contractors’ Recovery Fund (“the Fund”) to recover the cost of performing the corrective work. As part of the claim process, Complainant submitted bids from two different contractors that Complainant had received to perform the repairs to the project.

The Registrar issued a Notice of Administrative Award, finding that Complainant’s actual damages were $30,000.00. Respondent requested a hearing, believing the award was too high. Complainant did not contest the amount of the administrative award. The Registrar referred the matter to the Office of Administrative Hearings for an evidentiary hearing.

A hearing was held on October 19, 2023.

Hearing Evidence

The Written Directive from the Registrar specified the following:

After investigation, the Registrar determined that you failed to meet the requirements of A.R.S. § 32-1154(A). . . .

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

The Respondent is to ensure that any and all required building permits are obtained from the Local Building Authorities prior to making corrections listed in this Directive.

If the local jurisdiction finds corrective issues relating to the respondent’s work, the respondent will be required to correct those issues by appropriate means. The respondent is required to submit a copy of the approved inspection results to the ROC Investigator.

Complaint Item 1: “Master bath has patchwork baseboard job by right corner of mirror”

Investigator’s Observation: Verified:

The base trim surfaces are not flush across the mitered corner to the right of the closet door in the master bathroom.

As an example, the surfaces are flush across the mitered corner on the left side of the same door opening.

Complaint Item 2: “window in Master Bath only has half the track. and is crooked.”

This was described by the complainant to include the master bathroom window not staying open, and gaps between the drywall and the windows throughout most of the house.

Investigator’s Observation: Verified:

The window in the master bathroom will not stay open. The sash is loose in the frame. The track is missing from the right side of the frame.

There are excessive gaps between the drywall and the window frames at most windows throughout the house.

Complaint Item 3: “front door does not shut correctly”

This was described by the complainant to include the main entry door not closing properly, and unpainted putty on trim throughout the interior of the house.

Investigator’s Observation: Verified:

When opening and/or closing the door, the door gets hung op on the threshold.

The deadbolt is not properly aligned with the strike plate.

There is unpainted wood filler/putty on interior trim throughout the interior of the house.

Complaint Item 4: “proper permits required by the county were not pulled by the contractor according to our agreement”

Investigator’s Observation: Verified:

Several aspects of this project require a permit to be obtained prior to work beginning:

• Relocating walls

• Replacing and relocating windows

• Modifying duct work

• Modifying plumbing

• Modifying electrical wiring

All work was performed without a permit being obtained.

Complaint Item 5: “contractor did not inform me that house should be leveled before laying an entire house with tile and adding marble.”

Investigator’s Observation: Verified: Tiled floors in the house are not level.

In areas checked, the floors are out of level 1/2 to 5/8 inch in a four foot span.

Unevenness of wood or metal framed floors should not exceed 3/16 inch in a four foot span.

Wood or metal framed floors should be level within 1/2 inch in a 12 foot span, which is equal to approximately 5/16 inch in a four foot span.

By installing the floor tile, the respondent accepted the condition of the underlying surfaces.

Quoted from Substantive Policy Statement 2017.01

Acceptance of the Surface

• "As a general principle in construction, a subcontractor who performs work on top of a surface prepared by another accepts the surface. The subcontractor should have inspected the surface for any flaws or defects that would affect the work he proposes before performing the work. If he found the surface to be unacceptable, he should have called any defects to the owner's or general contractor's attention so that the owner can choose whether to pay for the defective surface to be corrected or if the owner is not willing to pay to correct the surface, the contractor may obtain an explicit warranty disclaimer."

Source: Deebv. Check s Epoxy , No. 2014A-3258 (ALJ Decision at 11:11- 19).

Complaint Item 6: “There is a crack in the ceiling in the center of the home.”

Investigator’s Observation: Verified: There is visible cracking in the ceiling of the living room / kitchen area. The project was completed approximately eight months prior to the complaint being filed with the Registrar of Contractors.

Complaint Item 8: “grout is coming up, cracking and breaking in parts where it was not properly mixed or applied. There is no grout at the base of the front entry”

Investigator’s Observation: Verified:

The following grout issues were observed during the inspection:

• Grout is chipping out between the tile and the threshold of the main entry door.

• Voids, chips, and cracks in the grout throughout the house.

• Uneven grout width due to overcut tile in master bathroom.

• Areas of lippage exceeding the allowable 1/32 inch tolerance.

• Cracked tiles.

Complaint Item 9: “Finish on drywall is not satisfactory especially in the guest and master baths. drywall mud was not smoothed and sanded”

Investigator’s Observation: Verified:

The following drywall issues were observed during the inspection.

• Numerous dents in diagonal cornerbeads.

• Bulges in tape at drywall joints.

• Several drywall cracks.

• Poor, uneven, inconstant finish.

• Drywall compound and paint coming loose from the ceiling.

• Gouges and voids that have been painted over.

Complaint Item 10: “paint drips on the tile throughout the house”

Investigator’s Observation: Verified: There are random locations of paint drips on the tile floor throughout the house.

Complaint Item 11: “malfunctioning plug in the guest bath”

Investigator’s Observation: Verified: This intermittent problem was not able to be duplicated during this inspection, however; the wiring to this outlet was done without a permit being obtained.

Complaint Item 12: “runner of center island cabinets not properly attached”

Investigator’s Observation: Verified: The toe kick board is loose from the island cabinets in the kitchen.

Complaint Item 20: “moisture barrier was not repaired/replaced where duct was repaired”

Investigator’s Observation: Verified: There are visible areas of the moisture barrier and insulation below the house that are loose and falling.

(All errors in original)

Doug Ulmer, Legal Assistant and Claims Reviewer for the Fund, testified that he has been in such position for approximately seventeen (17) years. Mr. Ulmer testified that he reviewed the Jobsite Inspection Notes, the Written Directive, the May 17, 2021 Decision regarding the underlying Complaint, the payments made by Complainant, the letter from Respondent’s bonding company, the Warranty Deed to the property, the Pima County Assessor’s records, and bids submitted by Complainant, in determining that Complainant was eligible to file a claim with the Fund and in calculating Complainant’s actual damages.

Mr. Ulmer determined upon his review, that Complainant owned and occupied the home when she entered into the contract with Respondent, when she paid Respondent, and when the work was performed by Respondent.

Mr. Ulmer testified that the Registrar requires a complainant to file a claim with a respondent’s bonding company as a prerequisite to obtaining a payout from the Fund. Complainant did so and Respondent’s bonding company denied the claim.

The parties did not have a written contract. Mr. Ulmer testified that his calculations took into account the contract price of $50,752.10 and the payments made toward the contract price in the amount of $50,752.10, and concluded that there was no remaining balance on the contract.

Regarding payments that Respondent asserted were not made directly to Respondent, Mr. Ulmer testified that in concluding that those payments were indeed attributable to Respondent, he considered the conclusions contained in Judge Stone’s Decision concerning Respondent’s manager, Adan Vasquez, was working without a license and Respondent’s workers did not have the proper licenses to perform some of the work that was performed, all in violation of this State’s contracting laws.

Mr. Ulmer testified that the Registrar requests two itemized bids for the completion/repair of the project. In this case, Complainant submitted two estimates for completion of the project. Complainant lives in a rural area and she experienced difficulty in obtaining bids. Complainant emailed Mr. Ulmer on May 25, 2023, informing him of the following:

I have talked to over 100 contractors of different specialties. I have been able to schedule 12 of them to come out and give me a bid. Out of the 12, 2 said that they were not interested in the job after seeing the extent of the work, 9 never even returned my call after spending hours of my time walking through my house and writing down everything that needs to be considered from the directive. 1 gave me a bid and it is not for the entire repair job. I am at a loss on what to do about this. The Majority of the contractors that are in the area do not want to make the trip to my home in Avra Valley.

(All errors in original)

On June 1, 2023, Mr. Ulmer provided Complainant a thirty (30) day extension in which to obtain bids.

On July 7, 2023, Complainant emailed Mr. Ulmer an update as follows: “I am diligently still trying to get contractors to come and bid the job, but I am still having trouble. Either they don’t want to come out here, or they come out here, see the size of the job and never get back with me.”

On July 17, 2023, Complainant sent Mr. Ulmer an email with an attached bid. Complainant informed Mr. Ulmer of the following:

Please find attached the only bid that I have been able to obtain on this job. I do not know if contractors are intimidated by the extent of the work that needs to be done, but they come out to look at the job, and then I never hear from them again. Others simply would not do the job saying they have too much on their plate, or that if we have cash in hand, they would be happy to send someone out. I find this experience very disturbing, but I did keep a record of company names, excuses, and experiences if you would like it.

Mr. Ulmer determined that Complainant made sufficient efforts at obtaining bids and recognized the inability to obtain additional bids. Mr. Ulmer testified that the Registrar regularly moves forward with Fund claims with one appropriate bid.

The bid obtained from The Grout Medic was in the amount of $16,170.00, however, only addressed Written Directive item numbers 5 and 8. Mr. Ulmer testified that The Grout Medic’s bid was appropriate, however it only addressed part of the Written Directive, and therefore did not cover the entire cost of the corrective work.

The bid obtained from Strong Rock Construction (“Strong Rock”) was in the amount of $38,407.20, and addressed the majority of the items in the Written Directive. Strong Rock’s bid does not include the costs for items 5 and 20 on the Written Directive. Strong Rock’s bid also does not include reinforced piers that Strong Rock determined would be required to level the floors. Mr. Ulmer testified that Respondent is responsible for the substrate not being level, as Respondent accepted the surface upon which to install tile and this corrective work was specified within the Written Directive. Because some of the costs for repair are not included in Strong Rock’s bid, the actual cost for repair will exceed the amount in the bid.

Regarding that fact that Strong Rock’s bid was not itemized, Mr. Ulmer determined that the bid correlated with the Written Directive, and in light of The Grout Medic’s bid in the amount of $16,170.00 for repair work to only two items, Strong Rock’s bid in the amount of $38,407.20 was reasonable to address the majority of the items. Mr. Ulmer further testified that most bids received by the Registrar are not itemized, but rather contain a lump sum. Mr. Ulmer determined that Strong Rock’s bid aligned with the work contained in the Written Directive and was appropriate.

Mr. Ulmer recommended a payout from the Fund to Complainant in the amount of $30,000.00, which is the maximum amount recoverable.

Complainant testified consistently with the emails she sent to Mr. Ulmer that are referenced above. Complainant further testified that Respondent’s representative, William Terrazas, was only at the jobsite twice, however, he instructed her who to pay in what amounts, and when.

Respondent did not present any evidence at hearing.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132(A) provides that “[t]he residential contractors' recovery fund is established, to be administered by the registrar, for the benefit of a claimant damaged by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter.” The Registrar’s final decision in the underlying workmanship case giving rise to the instant matter establishes that Respondent’s work violated the sections of A.R.S. § 32-1154(A) that were charged in the Citation.

For the purposes of an award under A.R.S. § 32-1132(A), A.R.S. § 32-1133.01(B) provides as follows:

An award from the residential contractors' recovery fund may not exceed the actual damages suffered by the claimant as a direct result of a contractor's violation. Actual damages:

May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.

Must be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.

When the Registrar has calculated the amount of a complainant’s compensable damages and proposed a payout from the Fund to which s/he is entitled, the calculation is a prima facie showing of the amount that the complainant is entitled to recover as a payout from the Fund. In this case, Respondent requested a hearing challenging the Recovery Fund payout.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

After review of all the evidence, the Tribunal concludes that Complainant is eligible for an award from the Fund and that the award proposed by the Fund accurately reflects Complainant’s actual damages. Accordingly, Complainant is entitled to a payout from the Fund in the amount of $30,000.00.

RECOMMENDED ORDER

In view of the foregoing, IT IS ORDERED that on the effective date of the final Order in this matter, the Residential Contractors’ Recovery Fund shall pay $30,000.00 to Complainant Jamie Maria Sanchez.

IT IS FURTHER ORDERED that under A.R.S. § 32-1139(B), the Registrar shall charge $30,000.00, plus interest at a rate of ten percent a year, to Respondent Arizona Restoration Experts, LLC’s License Number 267098.

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.

-54864001

001

-137160-45720000Done this day, October 25, 2023.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Tom Cole, Director

Registrar of Contractors

[email redacted]

Arizona Restoration Experts, LLC

[email redacted]

Alan R. Hill

Thompson Krone, PLC

[email redacted]

Jamie Maria Sanchez

[email redacted]

Mona Baskin

Office of the Attorney General

[email redacted]

By: OAH Staff