ALJDEC - Licensing

2022A-01057-CHC-ROC · Registrar of Contractors · 2023-03-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

United Southwest Properties, LLC

and

Zona Properties, LLC,

COMPLAINANT,

v.

Aaron Trail Contracting, Inc.

License No. ROC 334873,

RESPONDENT.

No. 2022A-01057-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 16, 2022, with further hearing on December 6, 2022, and February 15, 2023; the record closed on March 13, 2023

APPEARANCES: Mallory Powers, Esq. represented Complainant United Southwest Properties, LLC and Zona Properties, LLC. Thomas Gara appeared on behalf of United Southwest Properties, LLC. Tim Gara appeared on behalf of Zona Properties, LLC. Chris Feasel, Esq. represented Respondent Aaron Trail Contracting, Inc. Aaron Trail and John Trail appeared on behalf of Aaron Trail Contracting, Inc. Arizona Registrar of Contractors Investigator Michael Springer appeared as a witness. Robert Reardon, Christopher Busby, and Michael Helm also appeared as witnesses.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Aaron Trail Contracting, Inc. (“Respondent”) is the holder of License No. 334873 issued by the Arizona Registrar of Contractors (“Registrar”). Aaron Timothy Trail is Respondent’s Qualifying Party, Chief Executive Officer, and President. John Gilbert Trail is Respondent’s Director.

On or about October 25, 2021, United Southwest Properties, LLC and Zona Properties, LLC (“Complainant”) contracted with Respondent for Respondent to perform the following scope of work at the La Sombra Apartments:

Asphalt pavement parking lot restoration two flow lines

Crack clean and fill chip seal entire surface remove and replace all foundational failures

Install two stand up concrete curbs reestablish rear entry roadway to side walk and dumpster finish topcoat dressing seal. And pavement markings.

Per sketch sent provide City of Huachuca flow line drawing for pre-approval.

Permit by owner. Inspections per city requirements.

The contract price was $32,500.00.

On December 27, 2021, the parties executed a change order in the amount of $6,300.00 for Respondent to provide the following:

Demo/remove/haul off sidewalk @ Apt 28/30

-Form, pour to grade, finish to match $700

Demo/remove/haul off, dispose sidewalk @ 25/26

-Form, pour to grade, finish to match $2000

Demo (2) concrete pads at rear lots $3600

Remove, haul off, dispose inc.

On or about February 9, 2022, the Registrar received a Complaint against Respondent from Complainant alleging abandonment and poor work with respect to Respondent’s scope of work.

The Registrar assigned the Complaint to Investigator Mike Springer. After a March 8, 2022 Jobsite Inspection, at which Respondent was not present, Investigator Springer issued a Written Directive 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 April 10, 2022.

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

Compliance Item: 1 - ABANDOMENT OF SIGNED CONTRACT, QUIT

VERBAL. 1/19/22. DIVERSION OF PROJECT FUNDS TO PERSONAL

NEEDS, DOCUMENTED AND INCLUDED.

Investigator’s Observation: Work has not been finished. The back parking area and road remains unfinished. Debris and construction materials are scattered all over the property.

Compliance Item: 2 - INCORRECT MEANS AND METHODS, INCORRECT MATERIAL APPLICATION AND WORKMANSHIP ON SCOPE OF WORK.

Investigator’s Observation: Work on chip seal is failing. The rock is not attached to the sealing oil. There appears to be dirt or similar under the rock vs oil or sealant. Area behind buildings has grass growing up through newly laid chip seal. Contract stated crack filling and sealing. No pavement markings have been completed per contract.

Compliance Item: 3 - ADDITIONAL PROPERTY DAMAGES TO ALL SURROUNDING AREAS OF THE PROPERTY. BUSINESS DAMAGES DUE TO TENANTS IN PLACE.

Investigator’s Observation: Overspray of oil can be found throughout the property onto the adjacent structures, sidewalks, fencing and parking stops. Complainant states stucco columns were damaged during construction, I cannot verify that the Respondent caused the damage to the columns.

Compliance Item: 4 - CONCRETE FLOW LINES, DRAINAGE, COVERED

WITH OIL AND ROCK WITHOUT APPROVAL OR NOTIFICATION, VERBAL OR WRITTEN.

Investigator’s Observation: At the entry to the property, the concrete flow line is full of loose rock from the deteriorating chip seal. Does not appear to have saw cut at the edges and is rough. At the North side of the property, the concrete flow lines have been covered by oil and rock.

Compliance Item: 6 - INCORRECT MATERIALS USED. WE ADVANCED

THEM FUNDS $5800 TO PURCHASE MATERIALS TO KEEP THE PROJECT MOVING. 1/17/21 SET UP (2) ACCOUNTS WITH THEIR SUPPLIERS TO PAY FOR MATERIALS OIL AND ROCK FOR CHIP SEAL.

Investigator’s Observation: I cannot verify incorrect materials were used, but the chip seal is failing. Contract does state that the Respondent would furnish materials and labor.

ITEMS NOT REQUIRING CORRECTION

The following complaint items require no action by the Respondent:

Compliance Item: 5 - PROPERTY IN WORSE CONDITION THEN WHEN

THEY STARTED NOW. SEE ATTACHED LIST, WITH PHOTOS AND 3

REPLACEMENT ESTIMATES BY OTHER LICENSED CONTRACTORS. PAID $28,652.61 OF $38,800 CONTRACT. CONTRACTOR BROUGHT ANOTHER COMPANY IN TO BID THE REMAINING BALANCE SO THEY CAN QUIT. IMPROPER APPLICATION METHODS.

Investigator’s Observation: General statement, not a workmanship item.

Compliance Item: 7 - 1/19/22 THREATENED TO QUIT IF WE DID NOT PAY, QUIT ON THE PHONE AND HUNG UP. NO CALL BACKS OR EMAILS. WE TEXT AND EMAILED THEM TO RETURN TO SITE PER ROC REQUIREMENTS ON 2/6/22, TO RECTIFY THE DEFECTS, DEBRIS, PROPERTY DAMAGE, DISPOSAL OF DEBRIS AND MATERIALS. WAITING ON REPLY.

Investigator’s Observation: General statement, not a workmanship item.

Compliance Item: 8 - SEE ATTACHED CONTRACTS, CHANGE ORDERS, PAYMENTS, DIRECT PAYMENTS TO SUPPLIERS, PICTURES OF THE NIGHTMARE, 3 OF 4 BIDS FROM LOCAL LICENSED CONTRACTORS TO UNDO, CLEAN, AND COMPLETE PROPERLY.

Investigator’s Observation: General info of case, not workmanship items.

All errors in original.

The deadline for compliance with the Written Directive was ultimately extended to June 13, 2022. However, Respondent did not perform any corrective work within the period of the Written Directive, notwithstanding the extension. Consequently, a Compliance Inspection was not conducted. Thereafter, Investigator Springer forwarded the matter to the Registrar’s Legal Department. 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(a), and A.R.S. § 32-1154(A)(22).

Investigator Michael Springer’s Testimony

Investigator Springer testified consistently with his findings contained in his Jobsite Inspection Notes and the Written Directive. Investigator Springer testified regarding Respondent’s workmanship and referenced the photographs taken during the Jobsite Inspection depicting the workmanship deficiencies.

Investigator Springer testified that he had received a call from Aaron Trail regarding the Written Directive and asking whether “all he needed to do was sweep off the rock.” Investigator Springer testified that he advised Mr. Trail that Respondent needed to comply with the Written Directive and that the Registrar does not advise contractors how to perform corrective work. Mr. Trail asked for an extension of time to comply. Investigator Springer testified that Respondent requested through the end of October 2022, to comply and Investigator Springer testified that he believed that was an unreasonable timeframe as no corrective work had been completed. By email dated April 25, 2022, Investigator Springer advised the parties of the following:

I am extending the Written Directive deadline for this case to 6-13-22. All corrections need to be completed by 5:00PM that day. This includes any work to be done at the rear of the property. Waiting until October is unreasonable, especially with potential monsoon damage that may occur if left as is. As discussed, this only applies to completed work that has been noted in the Directive as poor work.

Investigator Springer testified that Respondent did not attend the Jobsite Inspection, and that he received an email the day after the inspection indicating that Aaron Trail was in the emergency room for a toe injury. Investigator Springer testified that if Aaron Trail was unable to attend, he could have designated a representative to attend in his stead.

Thomas Gara’s Testimony

Thomas Gara is United Southwest Properties, LLC’s representative and he filed the Complaint giving rise to this matter. Mr. Gara testified that four other licensed contractors in Cochise County informed him that Respondent utilized incorrect materials for the project and that Respondent’s work will need to be removed and replaced.

Mr. Gara testified that Respondent’s workmanship was poor, that Respondent continually asked for additional funds, and that Respondent was short on labor. Mr. Gara testified with specificity regarding Respondent’s poor workmanship and referenced photographs contained in Complainant’s Exhibit 39. Mr. Gara testified that two out of three flow lines were installed with a reverse grade, resulting in pooling water. Mr. Gara also testified regarding the excess oil on the concrete flow lines, and the damage to the gates and columns.

Mr. Gara further testified that the project was supposed to be completed by December 31, 2021, and that Respondent did not show up when it was scheduled to perform work, which presented an issue as there are 31 tenants with vehicles that needed to be moved, as well as traffic control and other safety precautions.

Mr. Gara testified that the original contract price was $32,500.00 with an additional $3,600.00 in change orders and that Respondent was paid $28,500.00, which included an advance of $5,800.00 for materials. Mr. Gara testified regarding a payment schedule that was agreed upon by the parties as follows:

$5,000.00 for demolition

$12,000.00 for prep and paving the flow lines and concrete curbs

$10,000.00 for paving, resurfacing restoration

$9,100.00 upon completion and acceptance

$3,600.00 for change orders for work performed prior to the parties’ execution of the contract

Mr. Gara testified that Complainant paid for materials directly because Respondent “was out of money within days” because Respondent spent the funds on “fuel, hotels, and personal items.” Mr. Gara asserted that Respondent “diverted funds” to personal use instead of using the funds for the purchase of materials. Respondent indicated in a January 17, 2022 text message to Mr. Gara that the $5,800.00 payment for materials was also used for motels, meals, gas, and “some for omicron sickness for me & my family.” Consequently, Complainant set up accounts with vendors to pay for supplies directly.

Mr. Gara testified that on January 19, 2022, during a phone call with Respondent, Respondent stated that if Complainant would not pay additional funds, Respondent would not return to the project. Mr. Gara asserted that Complainant had already overpaid for the work performed up to that point, and therefore, Complainant did not owe Respondent any monies at that time.

On February 6, 2022, Mr. Gara contacted the Registrar and was advised by Investigator Barrett to provide Respondent an opportunity to return to the project. Following Investigator Barrett’s guidance, on February 6, 2022, Complainant emailed Respondent to inform Respondent that Complainant would provide Respondent an opportunity to inspect the project, and set forth the items of deficiency.

Respondent replied to the email stating that Respondent had been terminated from the project and would not be returning due to a lack of payment.

On February 9, 2022, Mr. Gara filed the instant Complaint.

Mr. Gara testified that Complainant granted access to Respondent to perform corrective work via email on April 12, 2022, for Respondent to access the jobsite on April 14, 2022. Respondent did not perform any work.

In April 2022, Complainant discovered that Respondent did not carry workers compensation insurance. Complainant requested a “safety coordination meeting” prior to Respondent completing the work required by the Written Directive. Aaron Trail informed Mr. Gara that Respondent “did not need workers compensation insurance” and Aaron Trail stepped out of the meeting to contact Respondent’s attorney. Aaron Trail was away for over an hour and then left the property without informing Complainant.

On June 1, 2022, Respondent’s counsel corresponded with Complainant’s counsel and advised that Respondent would return to the jobsite on June 2, 2022, to perform the work required by the Written Directive. By correspondence dated June 2, 2022, Complainant granted access for June 6, 2022, advising Respondent’s counsel that a one-day notice was insufficient to advise tenants and ready the property. Notwithstanding such, Respondent arrived at the jobsite on June 2, 2022, requested tenants to move vehicles, and “upset the tenants.” Mr. Gara testified that “weather was coming in” and Respondent left debris scattered on the property.

Respondent did not return to the property until June 7, 2022. At that time, Mr. Gara met with both John and Aaron Trail to determine who would be Complainant’s point of contact. It was decided that Aaron Trail would be the point of contact between the parties.

Chris Busby’s Testimony

Mr. Busby has been a tenant at La Sombra Apartments for approximately three and a half years. Mr. Busby testified regarding his observations of Respondent’s work at the property and his interactions with Respondent’s workers. Mr. Busby testified that he spoke with Aaron and John Trail multiple times and that they had asked to use his vehicle to smooth out the gravel because they believed a vehicle would do a better job than their equipment. Mr. Busby further testified that Respondent sought his input regarding how many parking lines there should be.

Mr. Busby testified that Aaron Trail told him that he wished Complainant would “fire them because they would win in arbitration.”

Mr. Busby further testified that he utilizes a wheelchair and that for weeks, oil would stick to the wheels and would be brought onto the floor of his apartment.

Mr. Busby testified that John Trail, Jr. drank alcohol on the job while working.

Robert William Reardon’s Testimony

Mr. Reardon testified that he has been a tenant at La Sombra Apartments for a little over a year and saw Respondent on the property a “few times over a few months.” Mr. Reardon testified that he “would have fired Respondent after the first week.” Mr. Reardon described disagreements between Aaron and John Trail, as well as a physical altercation between John Trail, Jr. and another worker, and John Trail, Jr.’s daily drinking on the job while operating heavy machinery.

Mr. Reardon also testified that John Trail asked to use his vehicle as a roller, and Mr. Reardon declined to allow the use of his vehicle.

Michael Eugene Helm’s Testimony

Mr. Helm testified that he has been a tenant at La Sombra Apartments for seven years. Mr. Helm testified that he observed John Trail, Jr. consume alcohol and sleep on the jobsite. Mr. Helm testified that he was present for the June 7, 2022 meeting between the parties and corroborated Mr. Gara’s version of events.

Aaron Timothy Trail’s Testimony

Mr. Trail testified that he is an asphalt preservation contractor and has been in the construction industry for sixteen years. Mr. Trail testified that he owns Respondent with his father and that there are no employees at this time.

Mr. Trail testified that the parties contracted with the understanding that Respondent would perform an “aggressive surface treatment, chip seal, plus add-ons.” Mr. Trail testified that the plumbing contractor that Complainant had hired was “way behind” and Complainant needed additional slabs removed as well, resulting in a change order.

Mr. Trail further testified that he was “not aware of how extravagant the striping would be” and that he believed he was “bringing it to a maintenance standard.” Mr. Trail explained that the parking lot was 50 years old and would have been “brought up to a maintenance standard if Respondent had not been fired” from the job. Mr. Trail asserted that the repairs made are “not meant to get rid of pooling and ponding” and that Respondent did not correct the slope that was present. Mr. Trail also asserted that he “got confused by other trades” that were present at the property and that delays on the project were caused by “other things going on other than paving,” such as weather, and labor and supply price increases.

Mr. Trail testified that the payment schedule for this job was “inconsistent with other jobs” in that Respondent is typically paid in thirds. Mr. Trail testified that the agreed upon scope of work included one flow line, however, the document to which Mr. Trail referred indicates two flow lines. Mr. Trail also referenced a document dated December 1, 2021, that he asserted was the parties’ contract, although it is not signed by Complainant. That document indicates the following:

Change Order add on to $32,500 original contract

Add $3,600 for 2 concrete removals (demo and haul off)

2nd change order Dec 18-21 Approx 100 SF of sidewalk + 60 x a base + asphalt $2,700

Structure of payment request

$5,000 move in & demo

$12,000 prep & pour flow lines concrete & curbs

$10,000 paving resurfacing, restoration

$9,300 upon completion & acceptance no withholding

The document further indicates:

Recommended remove & replace asphalt owner chose restoration by structural repair crack fill & chip seal surface top slurry finish & striping flow lines for control drainage sidewalk repair & curbing & dumpster concrete pad

Penetration pave rear entrance to dumpster

Mr. Trail testified that by the end of December 2021, most of the chip seal and repair was complete, and that he was going to address the overspray. Mr. Trail testified that the seal coating was not completed, and therefore, the clean-up was not done.

Mr. Trail further testified that Respondent “never got to” the back parking lot, other than grading, notwithstanding that it was encompassed within the parties’ contract. Mr. Trail asserted that the back parking lot was “prepped to be finished.” Mr. Trail acknowledged that the road to the back parking lot was part of the original plan and asserted that Respondent had intended to complete this work.

Mr. Trail testified that by January 9, 2022, Complainant had paid Respondent $27,100.00 of the $38,500.00 contract price. Mr. Trail asserted that the work was not completed because Complainant asked Respondent to leave, however Mr. Trail also testified that Respondent did not complete its scope of work due to non-payment.

Mr. Trail testified regarding Respondent’s non-compliance with the Written Directive. Mr. Trail requested clarification from Investigator Springer and was told that he should know how to remedy his work. Mr. Trail testified that he could not comply by June 2022, because he was working at a car dealership at that time. Yet, Mr. Trail also testified that he was “always prepared to meet the June 13, 2022 Written Directive deadline.” Mr. Trail further asserted that “under the circumstances” Respondent completed the job per industry standards.

Mr. Trail testified that John Trail, Jr. “had nowhere to live at the time,” “was not there for the whole project,” was not an employee, and was not being paid. Mr. Trail asserted that he “did not have the heart to leave him on the street,” and John Trail, Jr. is “a great equipment operator.”

Mr. Trail denied telling Complainant that if Respondent did not receive additional funds Respondent would quit the project. Mr. Trail testified that Respondent is still willing to complete the project and address any deficiencies.

John Trail’s Testimony

Mr. Trail testified regarding his background and extensive experience in the industry.

Mr. Trail testified that he was involved in the contract negotiations and had recommended removal and replacement, however, Complainant simply wanted the lots to be “functional” and for them to be restored to “usable” parking lots. Mr. Trail asserted that Respondent’s work was performed to industry standards “based on the funds agreed upon” and that Respondent “made it safe compared to where it started.” Mr. Trail explained that Respondent utilized the same processes for this project as it had used in all of its restoration projects.

Mr. Trail testified that Respondent’s initial bid included four flow lines, but because Complainant did not want to pay for so many, “inversions were done” which “would solve the problem of flow lines.”

Mr. Trail asserted that Investigator Springer is “not familiar with the type of work performed” and “knows nothing about chip seal,” and that the work was performed in a professional and workmanlike manner. Mr. Trail contended that a proper chip seal was performed and that it is not failing, as it is not completed and cured because Complainant “refused to pay for paving work.” Mr. Trail asserted that the charged violations are due to the project not being completed, and that it is “just an unfinished project” and Respondent “intended to complete the project.” Mr. Trail testified that the project was not completed because “Tom Gara kept trying to tell him the steps to complete the project.”

Mr. Trail testified that he “foolishly” signed the agreement to accept $5,800.00 for materials.”

Mr. Trail further testified that he was “not aware that the Written Directive required Respondent to complete the whole job.”

Mr. Trail denied asking tenants to use their vehicles to roll over the surface.

Administrative notice is taken of Respondent’s prior License record on March 15, 2023. Such prior License record reflects that Respondent’s License No. 334873 was first issued on September 23, 2021, and is active. Such prior License record also reflects that there is only the instant open complaint, zero resolved/settled complaints, and no discipline against Respondent’s license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

In this case, Investigator Springer found that Respondent’s work was not in conformity with the Registrar’s standards. Investigator Springer determined the existence of workmanship issues concerning the work that was performed by Respondent. Although Respondent indicated that any deficiencies would have been remedied upon completion of its work, Respondent failed to complete its scope of work pursuant to its contract. Respondent blamed its failure to complete the contract on Complainant’s non-payment of additional funds and asserted that it was terminated from the project. The credible evidence of record established that the contract price including change orders was $38,300.00, and that Complainant paid Respondent at least $27,100.00 of the contract price pursuant to the terms of the parties’ payment schedule and change orders. The credible evidence of record further established that Respondent refused to perform further work unless and until Complainant paid additional funds. The credible evidence of record did not establish that Complainant terminated Respondent from the project. The credible, substantial, and probative evidence of record established that Respondent failed to perform its scope of work as agreed upon by the parties and that portions of the work performed were deficient. Therefore, Complainant established that Respondent did not complete the project in a professional and workmanlike manner in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(a).

The credible evidence of record established that Respondent did not complete the required corrective work following the Written Directive being issued notwithstanding the extension of the deadline for compliance. Mr. Aaron Trail testified that Respondent was working for a car dealership at the time and Mr. John Trail testified that he did not realize the scope of the Written Directive. The Administrative Law Judge concludes based on the evidence of record that valid justification did not exist for Respondent’s failure to comply with the Written Directive. 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. 334873 for a period of seven (7) days.

It is further recommended that the Registrar require Respondent to pay the sum of $500.00 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 (30) 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.

Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.

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.

Done this day, March 29, 2023.

/s/ Sondra J. Vanella

Administrative Law Judge

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

Martín Quezada, Director

Registrar of Contractors

[email redacted]

Mallory D. Powers, Esq.

PLATT & WESTBY, P.C.

[email redacted]

Christopher Feasel, Esq.

RESNICK & LOUIS, P.C.

[email redacted]

By: OAH Staff