ALJDEC - Licensing

2022A-05004-CHC-ROC · Registrar of Contractors · 2023-05-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Eric Slabaugh and Joyce Slabaugh,

COMPLAINANTS

Zuhaus, LLC

DBA: Zuhaus Construction and

Remodeling Tucson

License No. ROC 323570,

RESPONDENT

No. 2022A-05004-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 27, 2023, March 21, 2023, and March 24, 2023, with the record held open to receive written closing arguments

APPEARANCES: Complainants Eric Slabaugh and Joyce Slabaugh appeared and were represented by Jeanna Chandler. Fred Fisher, Jr., Owner, appeared on behalf of Respondent Zuhaus, LLC, doing business as Zuhaus Construction and Remodeling Tucson, which was represented by Brenda Lee.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

Zuhaus, LLC, doing business as Zuhaus Construction and Remodeling Tucson (Respondent) is the holder of License No. 323570 issued by the Arizona Registrar of Contractors (Registrar).

In early 2021, Joyce Slabaugh (Complainant) began discussing with Respondent a project involving the construction of a small home on property belonging to her son, Complainant Eric Slabaugh. The property was located in a flood plain; therefore, additional flood control measures were required.

On or about February 22, 2021, architect Earl C. Yousey, IV, completed a set of plans (Plans) for Complainant’s project.

The Plans were approved by the Regional Flood Control District (RFCD) on March 8, 2021. The Plans included the installation of rip rap around the home.

On or about March 9, 2023, a flood plain use permit was issued.

On or about April 21, 2021, Complainant entered into a contract with Respondent for the project. Included in the scope of work in the contract was that Respondent was to “Clear and prepare site for new addition . . . .” The initial contract price was $151,391.75. The contract did not include Respondent’s business address, license number, the name of the property owner, the estimated date of completion, a payment schedule, or an advisement that the homeowner could file a complaint with the Registrar for violations of the applicable statutes.

On or about June 25, 2021, the Plans were approved for code compliance.

While the estimated date of completion was not included in the contract, that date was extended multiple times during the course of the project with Respondent verbally telling Complainant of the new expected date.

On or about May 9, 2022, Complainant signed a change order for “Riprap Materials and Installation” for an increased cost of $6,673.70.

Respondent installed the riprap along the upstream side of the elevated pad. During an inspection by the building authority, Respondent was notified that, per the Plans, the riprap was to be installed around the pad, not just on the upstream side.

On or about June 22, 2022, Respondent provided Complainant with a proposed change order for “Erosion Control Subcontractor and Materials” for an increased cost of $22,827.00 to account for the need for riprap on three sides of the project. Complainant did not sign the change order.

During the construction of the project, Respondent moved a bathroom wall approximately 10.5 inches into the shower area, which resulted in a substantially smaller shower stall than provided for in the Plans. Respondent did not notify or obtain Complainant’s approval of the change prior to making it.

On or about June 21, 2022, the Registrar received a Complaint against Respondent from Complainant alleging deviations from plans, delays, and increased costs with respect to the project.

The Registrar assigned the complaint to Investigator John Smith. After a jobsite inspection, Investigator Smith issued a written directive to Respondent that provided, in pertinent part, 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 8, 2022.

. . . .

DIRECTIVE REQUIREMENTS

You are directed to:

• Complete work per contract

• Complete work per the approved plans

• Complete work per the approved Floodplain Use Permit

• Satisfy all requirements of the local building authorities

• Remedy the following violations by the appropriate means:

Complaint Item 1: “Delay of project completion: at least 8 dates given verbally or via email over past 18 months;”

Investigator’s Observations: Verified.

This is not verified as a workmanship violation or a violation of plans and specifications. The signed contract does not include an estimated date of completion. Considering the project remains incomplete, and the contract does not include an estimated date of completion, this allegation is verified as a violation of the following statues:

Governing Rule: A.R.S. § 32-1154(A)(8): Failure in a material respect by the licensee to complete a construction project...

Governing Rule: A.R.S. § 32-1154(A)(12), Namely A.R.S. § 32-1158(A) Minimum Elements of a Contract.

Complaint Item 2: “Bathroom wall placement changed w/o notification/approval resulting in smaller than standard shower;”

Investigator’s Observations: Verified.

As specified in the approved plans, the shower is to be the full width of the bathroom. Currently the shower is not the full width of the bathroom. There is a jog in the bathroom/bedroom wall causing the shower to be approximately one foot narrower than the rest of the bathroom. Additionally, the water heater closet is not in the correct location as specified on the approved plans.

The approved plans are dated 3/9/2021

The estimate and the contract signatures are dated 4/21/2021

The signed contract includes “Such changes in the Work shall be authorized only by written Change Order signed by the Owner and Contractor.”

The respondent acknowledged there is no signed change order for this deviation from the approved plans.

Governing Rule: A.R.S. § 32-1154(A)(2)(a): Departure from or disregard of: (a) Plans or specifications...

Governing Rule: A.R.S. § 32-1154 (A)(3) - R4-9-108(a): Violation of any rule adopted by the registrar; Namely R 4-9-108(a) A contractor shall perform work in a professional and workmanlike manner.

. . . .

Complaint Item 5: “Riprap requirement on permit issued 6/25/21, not disclosed until 4/14/22; Riprap change order signed 5/10/22, not yet installed;”

Investigator’s Observations: Verified.

The respondent’s written response to this complaint includes “The original estimate did NOT include flood plain erosion control. The construction contract also states that price can increase after permit is approved.”

The signed estimate includes “Assumed no flood plain issues”

The approved plans and the approved Floodplain Use Permit both predate the signed estimate and the signed contract.

The signed contract includes “...prices may increase after approved permit and drawings are completed.”

The approved plans and the approved Floodplain Use Permit both predate the signed estimate and the signed contract.

The site has not been fully prepared to meet the requirements specified on the approved plans and on the Floodplain Use Permit.

The respondent has not performed this work, stating this work was not included in their contracted scope of work.

The respondent has submitted a change order to complete this work; however, this work is part of the contracted scope of work.

The approved plans and Floodplain Use permit both predate the signed contract.

The approved plans are dated 3/9/2021.

The Floodplain Use Permit is dated 3/9/2021.

The signatures on the Estimate are dated 4/21/2021

Scope of work per the signed “Estimate” includes “Clear and prepare site for new addition...”

The signatures on the contract are dated 4/21/2021

The contract does not specify a scope of work.

The scope of work is specified on a document titled “Estimate”.

The signed contract includes “Such changes in the Work shall be authorized only by written Change Order signed by the Owner and Contractor.”

The requirements to prepare the site are specified on the approved plans, and on the approved Floodplain Use Permit, both of which predate the signed contract and the signed estimate.

Governing Rule: A.R.S. § 32-1154(A)(2)(a): Departure from or disregard of: (a) Plans or specifications...

Governing Rule: A.R.S. § 32-1154 (A)(3) - R4-9-108(a): Violation of any rule adopted by the registrar; Namely R 4-9-108(a) A contractor shall perform work in a professional and workmanlike manner.

Governing Rule: A.R.S. § 32-1154(A)(8): Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.

Complaint Item 7: “Exterior issue: foam ‘seals’ on roof edges falling out/hanging;”

Investigator’s Observations: Verified.

The preform foam enclosures along the down slope end of the metal roof panels is coming out. Some areas have been filled with a spray foam product. The spray foam product is protruding and exposed to the elements.

Governing Rule: A.R.S. § 32-1154 (A)(3) - R4-9-108(a): Violation of any rule adopted by the registrar; Namely R 4-9-108(a) A contractor shall perform work in a professional and workmanlike manner.

Complaint Item 8: “Demands for additional price increases under threats of stopping progress; Budget exceeded by double, now additional cost indication of $22827 rec’d on 6/20/22”

Investigator’s Observations: Verified.

The respondent’s written response to this complaint confirms the respondent is charging more than the price stated in the contract, and in authorized modifications to the contract. The respondent’s written response to this complaint includes “The current total including change orders are $185,989.45. As stated above in #9 the client has the option to hire a separate subcontractor to complete the requirements for erosion control. If the client decides to hire a subcontractor to complete the riprap for change order #2 herself, that will bring the total to $163,162.45.”

Dollar amounts per the Contract and Change Orders:

$151,391.75 Original Contracted price – Signed

$5,097.00 Change Order 1 – Not signed (Appliances, Plumbing, HVAC)

$6,673.70 Change Order 2 – Signed (Riprap materials and installation) – Dated 5/10/2022

$22,827.00 Change Order 3 – Not signed (Erosion Control)

Currently the signed/authorized charges include the original contracted price, and Change Order 2, which total $158,065.45.

Change Order 1 is for work that was stated to have already been completed.

Change Order 1 is not signed by the complainant.

Change Order 3 is for work that has not been performed; however, the work described in Change order 3 is work that is specified in the contract, in the approved plans, and in the Floodplain Use Permit.

The approved plans and Floodplain Use permit both predate the signed contract.

The approved plans are dated 3/9/2021.

The Floodplain Use Permit is dated 3/9/2021.

The signatures on the Estimate are dated 4/21/2021

Scope of work per the signed “Estimate” includes “Clear and prepare site for new addition...”

The signatures on the contract are dated 4/21/2021

The contract does not specify a scope of work.

The scope of work is specified on a document titled “Estimate”.

The signed contract includes “Such changes in the Work shall be authorized only by written Change Order signed by the Owner and Contractor.”

The requirements to prepare the site are specified on the approved plans, and on the approved Floodplain Use Permit, both of which predate the signed contract and the signed estimate.

Governing Rule: A.R.S. § 32-1154(A)(2)(a): Departure from or disregard of: (a) Plans or specifications...

Following the issuance of the written directive, Respondent performed some of the corrective work ordered. After the deadline in the directive expired, Investigator Smith was notified some corrective work had been performed.

At a compliance inspection, Investigator Smith noted that, with respect to item 7, work had been performed, but the work was not in conformity with the Registrar’s standards.

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); A.R.S. § 32-1154(A)(8); A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158; and A.R.S. § 32-1154(A)(22).

Investigator Smith testified that he interpreted the scope of the work in the contract to include the installation of the riprap pursuant to the Plans. Because the contract provided that Respondent was responsible to clear and prepare the site, Investigator Smith interpreted that to include the installation of the riprap required by the Plans. Investigator Smith also noted that the flood plan use permit was issued prior to the execution of the contract in this matter, therefore, Respondent knew of the riprap requirement at the time of the contract.

Complainant testified that the price of the project kept increasing from the initial discussion through to the final stages of the project. Complainant stated that she was intending to reside in the home after her retirement and the increasing cost of the project affected her ability to afford the home after it was constructed. Complainant understood that the riprap would be included in the cost of the project. Further, Complainant explained the small shower was significant to her as she may have accessibility needs in the future. Complainant stated the change to the Plans was never communicated to her.

Earl Charles Yousey, IV, architect, testified that the flood plain approval would be issued first, then the approval would go to plan approval. Mr. Yousey stated that once plans are approved, they are not normally changed. Mr. Yousey testified that the riprap requirement in the Plans was “consistent” throughout the project and that the flood control requirements “never changed.” Mr. Yousey acknowledged sending an email in which he stated that, at project outset, the riprap was estimated to cost $5,000.00, but bids at that time were estimated to be $40,000.00.

Mr. Fisher testified that he understood the Plans to require the installation of riprap on only the upstream side of the project despite a keynote on the Plans that referenced “riprap slopes”. Mr. Fisher asserted that the contract assumed no flood plain issues existed and the requirement of additional riprap constituted a flood plain issue. Mr. Fisher admitted that the reference to flood plain issues was listed in the permits and fees section of the scope of work, and the Plans were approved by the Regional Flood Control District without issue. Mr. Fisher asserted that Complainant was notified of the need to move the wall in the shower area and approved the change, but admitted there was no written change order to that effect.

Administrative notice is taken of Respondent’s prior License record on May 1, 2023. Such prior License record reflects that Respondent’s License No. 323570 was first issued on February 13, 2019, and is active. Such prior License record also reflects that there were no other open or prior complaints against Respondent’s license.

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 evidence established that Respondent did not complete the project in accordance with the plans without Complainant’s consent in a manner that was prejudicial to Complainant. The shower was smaller than outlined in the Plans and no change orders were executed relating to that change. Therefore, Complainant established that Respondent departed from or disregarded the plans in violation of A.R.S. § 32-1154(A)(2)(a).

The evidence established that Respondent’s work was not in conformity with the Registrar’s standards. Therefore, Complainant established that Respondent did not complete the project in a workmanlike manner in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(A).

The evidence established that the scope of the work in the contract required Respondent to install riprap on the slopes of the elevated pad, not just on the upstream side. The Plans were approved prior to the contract being signed and were not altered throughout the project. The fact that Respondent did not properly understand the requirements of the Plans did not excuse its failure to perform the work required for the price agreed initially agreed upon and to seek a change order for $22,827.00 more to complete the work. Therefore, Complainant established that Respondent failed to complete the project for the price stated in the contract in violation of A.R.S. § 32-1154(A)(8).

The evidence established that Respondent’s contract failed to include the required elements of a contract set forth in A.R.S. § 32-1158(A). Therefore, Complainant established that Respondent failed to comply with the Registrar’s statute in violation of A.R.S. § 32-1154(A)(12).

The evidence established that Respondent did not complete the corrective work following the Directive being issued. 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. 323570 for a period of five days.

It is further recommended that, on or before thirty (30) days after the effective date of the final order, Respondent shall provide a sample contract to the Registrar to demonstrate that it has amended its contracts to include the nine terms required by A.R.S. § 32-1158(A). If Respondent fails to establish to the Registrar that it has brought its contracts into compliance with A.R.S. § 32-1158(A) within thirty days, its contractor’s license shall be suspended until it demonstrates that it has done so.

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 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)(5), 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, May 2, 2023.

/s/ Tammy L. Eigenheer

Administrative Law Judge

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

Martín Quezada, Director

Registrar of Contractors

Jeanna M.W. Chandler, Esq.

Udall Law Firm, LLP

[email redacted]

John Smith

[email redacted]

Brenda J. Lee, Esq.

Lee & Travers PLC

[email redacted]

By: OAH Staff