ALJDEC decisions subject to certification as final

2021A-02269-RFA-LS-ROC · Registrar of Contractors · 2022-08-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kenneth W. Zobel and

Yvonne Zobel,

COMPLAINANTS,

Jackson Tile and Design, LLC,

License No. ROC 168442,

RESPONDENT.

No. 2021A-02269-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 27, 2022

APPEARANCES: Complainants Kenneth and Yvonne Zobel appeared on their own behalf. Bart and Jennifer Jackson appeared on behalf of Respondent Jackson Tile and Design, LLC. Art Ehman appeared as a witness for Respondent Jackson Tile and Design, LLC. Assistant Attorney General Mary DeLaat Williams represented the Arizona Registrar of Contractors. Katelyn Rolling and Investigator Steve Hammons appeared as witnesses 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 No. 168442 to Jackson Tile and Design, LLC (“Respondent”).

On or about May 21, 2021, the Registrar received a Complaint against Respondent from Kenneth Zobel and his wife, Yvonne Zobel, (“Complainants”) alleging that Respondent poorly performed its scope of work pursuant to the parties’ contract, which called for the installation of tile throughout Complainants’ home. The parties’ contract specifically called for: i) the installation of 1,750 square feet of tile at a price of $5,250.00; ii) grout for a price of $125.00; iii) removing and replacing the toilets for a price of $120.00; iv) moving appliances for a price of $80.00; and v) “FLEX GUARD” for a price of $40.00. The total contract price was $5,615.00. Complainants paid Respondent a total of $5,100.00. Complainants purchased the tile separately from Prosource at a price of $10,159.37.

As a result of the Complaint, and after investigation, the Registrar issued a Citation against Respondent charging possible violations of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, and (A)(22).

On or about November 5, 2021, the matter proceeded to an administrative hearing.

In his November 15, 2021 Decision, Administrative Law Judge Thomas Shedden considered Respondent’s arguments and concluded that Complainants established the alleged violations. Administrative Law Judge Shedden recommended that the Registrar suspend Respondent’s License No. 168442 for a period of one day and that the Registrar require Respondent to pay the sum of $250.00 as a civil penalty.

On or about November 24, 2021, the Registrar issued a Final Administrative Decision and Order (“Decision”) accepting the Administrative Law Judge Decision. The Decision provided that it became effective on January 3, 2022.

No appeals were taken from the Decision.

On or about January 14, 2022, Complainants filed a claim with the Residential Contractors’ Recovery Fund (the “Fund”) to recover the cost of correcting the work.

Katelyn Rolling, Legal Assistant II, reviewed Complainants’ claim.

The Registrar issued a Notice of Claim for Administrative Award, determining that Complainants should be awarded $29,248.94.

Respondent requested a hearing, believing the award was too high. Complainants 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 July 27, 2022.

Hearing Evidence

The Written Directive from the Registrar specified that Respondent was to correct by appropriate means all of the issues relating to the workmanship deficiencies identified, including the uneven tiles, sharp edges, raised corners, varying tile heights, inconsistent grout width, sparse grout, misalignment of tiles, and chipped tiles.

Ms. Rolling, Claims Reviewer for the Fund, testified regarding the above delineated procedural history of the matter, as well as the Deed of Trust, bond documentation, and Affidavit of cash payments submitted by Complainants to satisfy the eligibility requirements for application to the Fund.

Ms. Rolling testified that she did not utilize the bid from TAB because Mrs. Zobel is employed by this company and Ms. Rolling determined that a conflict of interest existed.

Ms. Rolling testified that she utilized the bid from Prosource establishing the amount Complainants paid for the tile for the initial installation which was $4.12 square foot. The bid for the tile indicated that the square footage was 1,969.

Ms. Rolling further testified that she reviewed the bids from Distinctive Custom Designs, LLC (“Distinctive”), as well as the bid from R Squared Cabinets and Carpentry, LLC (“R Squared”).

In order to verify the square footage of the home, Ms. Rolling consulted Zillow and Redfin and determined that the square footage of the home is 1,849. Due to the discrepancy in the actual square footage of the home versus the square footage of the bids, Ms. Rolling consulted with Registrar Investigator Steve Hammons, who investigated the underlying Complaint. Investigator Hammons informed Ms. Rolling that when dealing with tile, an overage of ten to fifteen percent is acceptable as it that takes into account any breakage or tiles that need to be cut.

On April 22, 2022, Ms. Rolling sent Complainants a letter requesting “another bid for the cost to repair the project that includes the cost for everything (tile, materials, and labor.” Ms. Rolling explained that she requested another bid because she could not consider the bid from TAB due to the conflict that existed. In response to the request, Complainants provided the bid from R Squared.

Ms. Rolling testified that she used the bid from Prosource to determine the cost of the tile and deducted the delivery and fuel surcharge costs on that bid, and she utilized the bid from Distinctive, however, disallowed the amount for removing and installing new baseboards, as well as painting the baseboards. In determining the disallowances, Ms. Rolling compared the bid to the substantiated deficiencies. Ms. Rolling testified that she believed the award was fair based upon industry standards.

Ms. Rolling testified that she reviewed the bids submitted by Respondent with its request for hearing and that those bids were submitted by contractors that did not view the worksite or take any measurements, and that those bids did not take into account any industry standard overages for tile as they were based on a square footage of 1,786.

Complainants did not provide any evidence and relied on the Registrar’s presentation at hearing.

Bart Jackson testified on behalf of Respondent. Mr. Jackson took issue with the fact that the Registrar allowed the line item in Distinctive’s bid for grout sealing in the amount of $2.456.00, notwithstanding that this line item was beyond the scope of the parties’ contract.

Mr. Jackson also testified that according to the County Assessor’s records, the square footage of Complainants’ home is 1,786.00, not 1,849.

Mr. Jackson testified regarding the bids he obtained, asserting that his bids were much less than those obtained by Complainants, and that the cost of materials in Complainants’ bids is excessive, as well as the square footage. Mr. Jackson testified that when obtaining his bids, he requested that contractors provide their respective bids based upon the square footage on record with the County Assessor and based on the scope of work in the parties’ contract, however acknowledged that he did not provide the contractors with the Written Directive and the contractors did not observe the jobsite.

Following Mr. Jackson’s testimony, the parties agreed that the sealing of the grout should not have been included in the award because it was not included in the parties’ contract, and that this inclusion was an oversight by the Registrar.

Investigator Hammons testified that his Written Directive addressed all of the deficiencies with the tile and grout with regard to both the interior and exterior of the residence, as Respondent also installed tile on the patio.

Given the clarification that the scope of the project and the Written Directive included the patio, the Administrative Law Judge finds that the square footage in the bids provided by Complainants is reasonable. Further the bids presumably included overage for waste per industry standard.

Art Ehman, Branch Manager for Emser Tile, the manufacturer of the tile used in the initial installation, testified that the bid provided to Respondent is based on information provided by Respondent regarding square footage, specifically 1,780 square feet. Mr. Ehman testified that in his opinion, $4,192.00 is an excessive amount for materials given the square footage, however acknowledged that costs for supplies vary between vendors.

Prior to the conclusion of the hearing, Ms. Rolling performed several calculations based on the information adduced at the hearing. Ms. Rolling explained her new calculations and arrived at a figure of $21,426.27. Complainants agreed to that figure. Respondent disagreed asserting that the “labor is out of bounds.”

Ms. Rolling utilized the County Assessor square footage of 1,786, added 10% for overage, and arrived at a square footage of 1,964.60. Ms. Rolling multiplied the square footage by $9.15, Distinctive’s cost of labor, and arrived at the amount of $17.976.09. Ms. Rolling then calculated the cost of the tile at $4.12 per square foot and multiplied by 1,964 square feet. This equates to $8,091.68, which when added to $17,976.09, equates to $26,067.77. Then Ms. Rolling subtracted $2,456.00 for the sealing of the grout, and $1,670.00 for the baseboards. The final figure, as calculated by the Administrative Law Judge, based upon Ms. Rolling’s recalculation, is actually $21,941.77. The Administrative Law Judge finds this final calculation to be an appropriate award from the Fund.

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 he is entitled, the calculation is a prima facie showing of the amount that Complainant is entitled to recover as a payout from the Fund. The burden shifts to the party challenging the amount of the payout to establish that the Registrar’s calculations were erroneous or not supported by a preponderance of the evidence. In this case, Respondent requested a hearing challenging the Recovery Fund payout. Therefore, the burden was on Respondent to establish by a preponderance of the evidence that amount of the proposed payout was erroneous or inappropriate.

“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.”

The Tribunal concludes that Respondent established that the initial proposed award of $29,248.94 was inappropriate. After a review of the evidence presented at hearing, the Administrative Law Judge concludes that an appropriate award from the Fund based upon the particular facts and circumstances in this matter is $21,941.77. Accordingly, Complainants are entitled to a payout from the Fund in the amount of $21,941.77.

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 $21,941.77 to Complainants Kenneth and Yvonne Zobel.

IT IS FURTHER ORDERED that under A.R.S. § 32-1139(B), the Registrar shall charge $21,941.77, plus interest at a rate of ten percent a year, to Respondent Jackson Tile and Design, LLC License Number 168442.

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 five (5) days from the date of that certification.

-54864001

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-137160-45720000Done this day, August 3, 2022.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

-54864001

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-137160-45720000By Miranda Alvarez

Legal Secretary