ALJDEC - Licensing

2022A-02495-RFA-LS-ROC · Registrar of Contractors · 2023-04-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Barbara Marie Tarsha,

COMPLAINANT,

v.

Stone Hand Construction, LLC,

License No. ROC 329244,

RESPONDENT.

No. 2022A-02495-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 5, 2023

APPEARANCES: Assistant Attorney General Seth Hargraves represented the Arizona Registrar of Contractors. Complainant Barbara Marie Tarsha appeared on her own behalf. Aaron Garcia appeared on behalf of Respondent Stone Hand Construction, LLC. Gail Mathews appeared as a witness for the Arizona Registrar of Contractors. Anthony Rios appeared as a witness for Respondent Stone Hand Construction, LLC.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (“Registrar)” issued License Number 329244 to Stone Hand Construction, LLC (“Respondent”).

On or about March 28, 2022, the Registrar received a Complaint against Respondent from Barbara Marie Tarsha (“Complainant”) alleging abandonment and poor work with respect to Respondent’s contracted scope of work. Respondent’s scope of work pursuant to the terms of the parties’ contract, as it relates to the instant matter, included tile installation in the master bedroom, living room, kitchen, four additional bedrooms, two bathrooms, the entry hallway, the main hallway, a second hallway, and the hallway closet.

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)(12), specifically, A.R.S. § 32-1158, and A.R.S. § 32-1154(A)(22).

Respondent filed a timely answer to the Citation. An administrative hearing was held. In the August 11, 2022 Decision, the undersigned Administrative Law Judge considered Respondent’s arguments and concluded that Respondent violated all but one of the charged provisions of this State’s contracting laws.

On August 26, 2022, the Registrar issued a Final Administrative Decision and Order accepting the August 11, 2022 Decision and imposing a five day suspension, as well as a $500.00 civil penalty. The effective date of that Order was October 5, 2022.

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 repair to the project.

The Registrar issued a Notice of Administrative Award, finding that Complainant’s actual damages were $17,773.00. 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 April 5, 2023.

Hearing Evidence

The Written Directive from the Registrar specified that:

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:

Complaint Item 1: “Tile throughout is uneven, grout hollow under tile, grout

lines crumbling or too thick, cracked tiles from poor installation, grout residue on surface.”

Investigator’s Observations: Verified.

Tile and grout issues observed throughout the house:

• Poor, uneven, and inconsistent texture in the grout.

• Low areas in the grout.

• Areas of grout on the surface of the tiles.

• Voids in the grout.

• Cracking/chipping grout.

• Some tiles loose and moving when walked on.

• Several areas of tile lippage that exceeds 1/32 inch. (Grout line are 3/16

inch.)

• At least one cracked/broken tile in a bathroom.

Additionally, the tile by the rear exterior door::

• Uneven grout widths due to poor cuts.

• Chipped tile

• Gap between tile and threshold up to 3/4 inch wide

Complaint Item 2: “Supposed to be 5ton unit w/split unit. AC too small and

no split”

Investigator’s Observations: Verified.

As stated in the contract, the respondent did install a 5 ton split system air

conditioner.

• The respondent installed a 5 ton compressor / condensing unit on the roof

and connected it to a pre-existing furnace / air handler inside the house.

The system was not functioning properly during this inspection.

• The system would turn on and run by use of the thermostat; however, the

system was not producing any cool air.

• The air coming out of the air diffusers was the same temperature as the air going into the return air grills.

All errors in original.

At the Compliance Inspection, it was determined that Respondent had remedied the item of Complainant concerning the air conditioning unit.

Gail Mathews, Legal Assistant II and Claims Reviewer for the Fund, testified that she reviewed the Written Directive, the Compliance Jobsite findings, the August 11, 2022 Decision regarding the underlying Complaint, the parties’ contract, the payments made by Complainant, the letter from Respondent’s bonding company, the deed to the property, the county assessor’s records, monies Complainant received from other sources, 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.

Ms. Mathews determined upon her 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.

Ms. Mathews 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 received a $9,000.00 payment from Respondent’s bonding company.

Ms. Mathews testified that her calculations took into account the contract price of $43,000.00 and the payments made toward the contract price in the amount of $21,500.00, and concluded that there was a remaining balance on the contract in the amount of $21,500.00.

Complainant submitted two estimates for completion of the project to the Fund. The bid from Express Flooring was in the amount of $51,947.00. The bid from Aztec Flooring was in the amount of $48,273.00. Ms. Mathews concluded that the lowest bid of $48,273.00 for the completion of the project was appropriate. However, she referred the bid to the assigned investigator, John Smith, to verify if the bid was acceptable and in line with the scope of work contained in the Written Directive. Investigator Smith informed Ms. Mathews via email of the following:

The respondent installed tile throughout the house. Based on the conditions observed during the jobsite inspection, it is realistic that the only way to successfully correct the issues will include:

A complete removal of all floor tile

Proper prep work

Installation of all new tile

Given Investigator Smith’s feedback, Ms. Mathews subtracted the unpaid balance of the parties’ contract in the amount of $21,500.00 from the low bid amount of $48,732.00, which calculated to $26,773.00, and then she subtracted the $9,000.00 Complainant received from Respondent’s bonding company, which equated to the amount of $17,773.00. Ms. Mathews recommended a payout from the Fund to Complainant in the amount of $17,773.00.

Aaron Garcia, Respondent’s owner, initially asserted that Complainant is not eligible for an award from the Fund because she no longer owns the property as she sold it to Anthony Rios on January 5, 2023. However, toward the conclusion of the hearing, Mr. Garcia did not contest Complainant’s eligibility. Mr. Garcia continued to contest the amount of the award.

Mr. Garcia testified that he requested a hearing because he disagrees with the estimates submitted by Complainant. Mr. Garcia took issue with the fact that there were no measurements contained in the estimates and he does not believe that the estimates are comparable to the work he contracted to perform or the work required by the Written Directive. Mr. Garcia testified that he feels Complainant was “upsold” given that his contract for the entire remodel was $43,000.00 and the estimate utilized by the Registrar is in excess of $48,000.00 just for tile.

Complainant agreed with the Registrar’s presentation at hearing and agrees with the proposed award amount. Complainant testified that both contractors that supplied the bids would not install “small tile” because there would be “too many grout lines.”

The Administrative Law Judge notes that the parties’ contract called for tile installation throughout the entire home and the Written Directive verified “[t]ile and grout issues observed throughout the house.” Further, Investigator Smith confirmed to Ms. Mathews that Respondent installed tile throughout the house and that it is “realistic that the only way to successfully correct the issues” will include the complete removal of the tile installed by Respondent, proper prep work, and then installation of all new tile.

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 $17,773.00.

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 $17,773.00 to Complainant Barbara Marie Tarsha.

IT IS FURTHER ORDERED that under A.R.S. § 32-1139(B), the Registrar shall charge $17,773.00, plus interest at a rate of ten percent a year, to Respondent Stone Hand Construction, LLC’s License Number 329244.

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, April 17, 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]

Stone Hand Construction, LLC

[email redacted]

Barbara Marie Tarsha

[email redacted]

Seth Hargraves

Assistant Attorney General

[email redacted]

By: OAH Staff