ALJDEC decisions subject to certification as final

2021A-02951-CHC-ROC · Registrar of Contractors · 2022-02-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Donald W Stecyk,

COMPLAINANT

Frontier Development Inc

License No. ROC 225655,

RESPONDENT

No. 2021A-02951-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 1, 2022

APPEARANCES: Complainant Donald W. Stecyk appeared on his own behalf. Brett Hagen and April Cervantes appeared via Google Meet on behalf of Respondent. Registrar of Contractors Investigator Steve Philpott appeared via Google Meet.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

_____________________________________________________________________

FINDINGS OF FACT

Frontier Development (Respondent) is the holder of License No. 225655 issued by the Arizona Registrar of Contractors (Registrar).

On or about May 7, 2019, Donald and Theresa Stecyk (Complainant) signed a contract with Respondent to construct a new home in Parks, Arizona. The contract amount was to be “cost plus” with an estimate of around $386,094.

On or about June 25, 2021, the Registrar received a Complaint containing five items against Respondent from Complainant alleging breach of fiduciary responsibility and poor work with respect to project.

The Registrar assigned the complaint to Investigator Steve Philpott. The jobsite inspection was performed on July 19, 2021.

Investigator Philpott then issued a written directive on or about July 22, 2021 to Respondent that provided as follows:

After investigation, the Registrar determined that you failed to meet the requirements of A.R.S. § 32-1154(A), and now issues this Directive requiring you to take appropriate corrective action. Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a citation, discipline of your license, and a civil penalty pursuant to A.R.S. § 32-1154(E) of up to $500.00. You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on August 9, 2021.

. . .

DIRECTIVE REQUIREMENTS

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

Compliance Item: 1 - Failure to maintain Fiduciary Responsibility: 1) Builder refuses to provide Owner copies of all receipts/invoices for all build purchases, permits received, materials, rentals, labor, subcontracts, etc. even after repeated requests via cell phone, texts and email.

Investigator’s Observation: This complaint if verified. The contract specifies the “estimated schedule of allowance will be provided in real-time basis so the client can always see exactly where they stand in their budget.” It appears that this has not occurred. According to the complaint documents, the contract amount is listed a $386,064.00 of which $347,653.81 was reported to be paid. The project is far from complete and a revised cost to complete has not been provided. Coconino County record show that 9 out the 34 required inspections for this project have been complete. The Respondent has advised that Complainant has not authorized the last draw request. Note: (§32-1182(D) An owner may decline to certify and approve a billing or estimate or portion of a billing or estimate for any of the following reasons: 8 reasonable evidence that the construction contract cannot be completed for the unpaid balance of the construction contract.) Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufactures installation instructions.

Governing Rule: Grounds for suspension or revocation of license; continuing jurisdiction; civil penalty; recovery fund award

A. 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:

2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state 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.

3. Violation of any rule adopted by the registrar. RULE 4-9-108

WORKMANSHIP STANDARDS

A. A contractor shall perform all work in a professional manner.

B. 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.

Governing Rule: 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.

Compliance Item: 5 - Failure to perform: The contract was signed on 5/7/2019 the permit approved 2/14/2020 and the metal roof material is not even installed, it sits on the garage floor, the building only protected by torn membrane material. Very little inside work is done, some roughed-in plumbing and HVAC. The contractor had difficulty with subs to get work done in a timely manner, the Owner arranged for the plumber to work with the Gen. Contractor to get the plumbing done.

Investigator’s Observation: This complaint item is verified. The estimated number of days to build the home is listed as 240 days on the proposal. At the time of this inspection, the project has been under construction more than 480 calendar days. At the time of this inspection, the complainant advised that they have not received an estimated cost to complete the project and have not received an estimated date of competition. It is not uncommon for unforeseen conditions to occur in the construction industry, however the time line on this project has exceeded what would be generally acceptably by professional industry standards. Respondent has submitted to the ROC numerous emails and text messages between the parties in an attempt to justify the lengthy project delays. Professionalism is expected from the Respondent. A professional licensed contractor must comply with the workmanship standards, and if it cannot comply with the standards, it must not undertake the job. Source: Evans v. Creative Finishing Services, No. 2016A-1138-ROC (ALJ Decision 7:13–17). · Licensed contractors are expected to have sufficient professionalism to deal with difficult clients and situations. Source: Evans v. Creative Finishing Services, No. 2016A-1138-ROC (ALJ Decision 7:24–26)

Respondent shall perform work in a timely fashion as agreed upon in the contract. Governing Rule: §32-1154. Grounds for suspension or revocation of license; continuing jurisdiction; civil penalty; recovery fund award

A. 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:

3. Violation of any rule adopted by the registrar. RULE 4-9-108

WORKMANSHIP STANDARDS

A. A contractor shall perform all work in a professional manner.

Governing Rule: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(b): 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.

(All errors contained in the original)

On August 17, 2021, Investigator Philpott conducted a compliance jobsite inspection. In his notes regarding the same, Investigator Philpott noted:

After the CJSI inspection, the Registrar determined that Respondent failed to meet the requirements of A.R.S. § 32-1154(A). The complaint items listed on the directive remain unresolved between the parties. Photos taken at the CJSI have been added to the case files to document the current status of the project.

On August 19, 2021, the Registrar issued a Citation against Respondent, charging possible violations of A.R.S. § 32-1154(A)(2)(a); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(a) and (b); and A.R.S. § 32-1154(A)(22).

On or about September 3, 2021, Respondent filed an Answer with the Registrar, denying all charges in the Citation.

On or about September 22, 2021, a Notice of Hearing was issued setting a hearing on October 29, 2021, at the Office of Administrative Hearings, an independent state agency. After two continuances, the hearing was held on February 1, 2022.

Investigator Philpott testified as to the Registrar’s involvement and the above timeline.

Investigator Philpott testified that he conducted a pre-hearing inspection on January 24, 2022, and the house was still in an unfinished state.

Investigator Philpott testified Respondent failed to appear at the Jobsite Inspection, and the reason that was given by Respondent was that the power was shut off, thereby disrupting their work.

Further, Investigator Philpott testified that he believed Respondent had not followed the terms of the contract as there were no “real-time” updates on the budget. Further, he believed that for the amount paid on the project, much more work should have been completed.

In addition, Investigator Philpott testified that he believed that Respondent was not acting professionally in dealing with Complainant and his wife. Investigator Philpott testified that Respondent should have moved forward on the project even if Complainant was delaying. For example, the electrical could have been done in the kitchen and if an outlet needed to be moved at least that was an easy fix.

Investigator Philpott also testified that the time delays in completing the house were not reasonable, as the contract stated an estimated date of 240, when 480 days had elapsed at the time of investigation.

On cross-examination, Investigator Philpott testified that he was not aware that Complainant was getting updates on the draws.

Theresa Holmes-Stecyk testified on behalf of Complainant who offered five exhibits into evidence. Ms. Stecyk testified that some delays were caused by Coconino County, like the change in windows, but the main delays came from Respondent who would use the weather as an excuse. Ms. Stecyk testified further that she believed that Respondent finished the construction on its own cabin while not working hers.

As to the stain issue. Ms. Stecyk testified that while she acknowledge issues with choosing a stain color, once one was chosen in December, Respondent said that it was now too cold to apply the same. However, Ms. Steyck testified that Respondent did not order the stain until April. As to the other delays, Ms. Stecyk testified that all parties met in December and drew all over the walls explaining what was going to go where, yet the plumbing and electrical were not done.

As the draw prior to filing the complaint, Ms. Stecyk testified that she was concerned with providing the money for the cabinets, when the roof had not even been completed. Further, Ms. Stecyk testified that Respondent had refused to provide receipts as to where their money was going.

As to workmanship issues, Ms. Stecyk testified that the air vents did not go to the ceiling in the bathroom, the anchor bolts were missing in the garage, and the corner of the decking was not consistent with the other parts of the decking.

Finally, Ms. Stecyk testified that Respondent had refused to give manuals for the septic system and there were no plans on site during the inspections.

On cross examination, Ms. Stecyk testified that she did recall Respondent sending progress reports on occasion.

April Cervantes testified on behalf of Respondent and offered 22 exhibits into evidence. Ms. Cervantes testified that Respondent had been in business since 1995 and has had zero complaints. Ms. Cervantes testified generally that she believed that Respondent did a good job to keep Complainant happy but it took Complainant so long to make decisions about everything in their custom home.

Ms. Cervantes testified that there were five draw requests and Complainant has known where all the money has gone, and was given constant updates as to the status of the project.

As to the allegation that Ms. Cervantes made her personal cabin build a priority, she stated that it had been under construction for three years so it was not as if the entire cabin was built before Complainant’s.

Ms. Cervantes testified that as to the stain issue, they did not have the room to store the stain had it been ordered in December. When it came time to order the stain, they found out that the supplier was back up which caused further delays.

In response to Mr. Philpott’s testimony as to the electrical work, Ms. Cervantes testified that when an electrician comes in, they want to “bang it out”, they want to know where everything is going to be and does not want to have to move outlets later.

Ms. Cervantes also testified that they were not licensed to perform plumbing and electrical work, thus those trades needed to be sub-contracted out.

Finally, Ms. Cervantes testified that they did everything according to the terms of the contracts, but Complainant wanted to do it for a cheaper price. Ms. Cervantes testified that Respondent has given Complainant’s cabin 100% attention and have done all work above and beyond the standards.

Administrative notice is taken of Respondent’s prior License record on February 16, 2022. Such prior License record reflects that Respondent’s License No. 225655 was first issued on October 19, 2006, and reflects that there was one open complaint, namely the present complaint.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq.

Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazzano v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).

The preponderance of credible evidence established there was work not completed in a professional and workmanlike standard. While some delays are inevitable, the ones in this case were unreasonable. While admittedly some were caused by Complainant’s inability to make decisions, ultimately, if this was a barrier to Respondent’s performance than a change order or other modification to the contract should have occurred. Further, the issue with the decking corner not matching was unacceptable when every other corner was what Complainant had planned. While it may have been to code as argued by Ms. Cervantes, it was not up to the plans for the project. Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(2)(a) and A.R.S. § 32-1154(A)(3) - R4-9-108(a).

The preponderance of the evidence established all inspections had been approved or partially approved as to where the work stands today, thus, the Tribunal finds no violation for and A.R.S. § 32-1154(A)(3) - R4-9-108(b).

The evidence established that Respondent failed to complete the corrective work following the Directive being issued. While Investigator Philpott agreed that some further had been completed, there are still many items left uncompleted. Therefore, Complainant established that Respondent failed to take appropriate corrective action following a written directive from the Registrar in violation of A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend Respondent’s License No. 225655 for a period of three days.

It is further recommended that the Registrar require Respondent to pay the sum of $300.00 as a civil penalty pursuant to A.R.S. § 32-1154(E).

It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s final order, the Registrar revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(7), unless Respondent tenders payment of any outstanding prior civil penalty.

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 30 days from the date of that certification.

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-137160-45720000Done this day, February 16, 2022.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000