ALJDEC decisions subject to certification as final

2022A-10965-RFA-LS-ROC · Registrar of Contractors · 2024-07-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Zoran Pelevic,

COMPLAINANT,

Red Star Handyman & Remodeling LLC

License No. ROC 310513,

RESPONDENT.

No. 2022A-10965-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: Convened and concluded on June 11, 2024.

APPEARANCES:

For Complainant: Zoran Pelevic, Complainant; Katarina Pelevic, Complainant’s daughter.

For Respondent: Nikolina Stjepanovic.

For the Registrar: Assistant Attorney General Mona Baskin, and Legal Assistant II Tedi Quezada.

ADMINISTRATIVE LAW JUDGE: Samuel Fox

EXHIBITS ADMITTED INTO EVIDENCE: Department’s Exhibits packet.

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (the Registrar) issued License No. 310513 to Respondent.

On December 4, 2022, the Registrar received a Complaint against Respondent from Complainant, alleging poor work on a remodel project. The Registrar conducted an inspection on January 12, 2023 and issued a Directive to correct work on January 24, 2023.

The investigator found that Respondent failed to complete the corrective work, and as a result, the Registrar issued a Citation against Respondent charging possible violations of (1) A.R.S. § 32-1154(A)(3), specifically R4-9-108(a); (2) A.R.S. § 32-1154(16); and A.R.S. § 32-1154(22).

On May 2, 2023, an administrative hearing was held. Administrative Law Judge Sondra J. Vanella considered Respondent’s arguments and concluded that Complainant established Respondent had violated A.R.S. § 32-1154(A)(3), specifically R4-9-108(a) with respect to uneven paint, uneven wall texture, excess grout, lack of sealant under glass divider, main register not installed, shower faucet installation, cracks in ceiling, and Schluter trim installation; A.R.S. § 32-1154(16) with respect to the contract exceeding $5,000; and A.R.S. § 32-1154(22) with respect to failing to take appropriate corrective action following the Written Directive from the Registrar.

The Judge Vanella recommended suspension of Respondent’s license for five days.

On June 13, 2023, the Registrar issued a Final Administrative Decision and Order accepting the Judge Vanella’s decision. As a result, Respondent’s license was suspended for five days.

Complainant then filed a claim with the Residential Contractors’ Recovery Fund (the Fund) to recover the cost of completing or repairing the project. As part of the claim process, Complainant submitted bids from two different contractors to correct the project.

The Registrar issued a Notice of Administrative Award, on February 26, 2024, finding that Complainant’s compensable actual damages were $20,037.00. Respondent requested a hearing, but the request did not provide any information or argument. Complainant did not contest the amount of the administrative payout. The Registrar referred the matter to the Office of Administrative Hearings (OAH) for an evidentiary hearing.

A hearing was held on April 26, 2024.

Hearing Evidence

The Directive from the Registrar specified that:

Compliance Item #2: Unevenly painted throughout house, some places with only 1 coat of paint vs. 2, some areas not touched by any paint

Investigator’s Observation: Verified

I saw there were areas where there was inadequate paint coverage in the primary bathroom (above shower at ceiling). I saw a section of the ceiling that was not painted in the primary bedroom closet. Interior paint should be applied in an amount conforming to the manufacturer’s specifications of coverage and in sufficient quantity to visually cover all specified areas.

The contractor should identify all locations where this condition exists and the respondent should correct by appropriate means, pursuant to the contract, applicable building codes, and within the scope of their license.

Reference Picture(s) 8-9

Governing Rule: 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.

Compliance Item #5: Uneven wall texture

Investigator’s Observation: Verified

I saw uneven and rough wall texture along with exposed mesh drywall tape in the following locations:

a) Primary bathroom (shower – window corner bead)

b) Primary bathroom (above sinks – trowel marks, pits, rough)

c) Primary bathroom (outlet drywall not complete)

d) Previous Fireplace – rough, trowel marks

Reference Picture(s) 11-21

Governing Rule: 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.

Compliance Item #10: Lots of grout used to patch up holes where mistakes were made

Investigator’s Observation: Verified

I saw multiple areas in the primary bathroom where the grout “ramped” up the wall. In these locations the grout extended well above the top edge of the tile. The grout was irregular and readily noticeable. The grout should be flush with the top edge of the adjacent tile. Missing or irregular grout is not acceptable.

Reference Picture(s) 26-33

Governing Rule: 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.

Compliance Item #15: No sealant under glass divider - water from shower going through; damages

Investigator’s Observation: Verified

I saw that the glass partition in the primary bathroom shower (pony wall) did not have any sealant and that water could penetrate to the other side and potentially cause damage and a slipping hazard. A contractor shall perform all work in a professional and workmanlike manner.

The respondent should correct by appropriate means, pursuant to the contract, applicable building codes, and within the scope of their license.

Reference Picture(s) 41

Governing Rule: 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.

Compliance Item #19: Main register not installed after wall was knocked down

Investigator’s Observation: Verified

The Complainant pointed out three locations where the registers had not been reinstalled (kitchen and living room).

I saw the AC registers were missing. A contractor shall perform all work in a professional and workmanlike manner.

Reference Picture(s) 44-46

Governing Rule: 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.

Compliance Item #22: The shower faucets are not installed correctly, we cannot reach a hotter temperature

Investigator’s Observation: Verified

The Complainant explained that the primary bathroom shower faucet does not turn enough toward “hot” and showers are warm.

I operated the shower faucet and noted that the handle turns completely through and passed the cold water markings while it stops at the midpoint on the hot water markings. I let the water run for about 3 minutes and the shower water was warm but not hot. I confirmed the water heater worked by testing the primary bathroom sink and noted that the water temperature was significantly hotter than the shower.

The respondent should correct by appropriate means, pursuant to the contract, applicable building codes, and within the scope of their license.

Reference Picture(s) 48-49

Governing Rule: 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.

Compliance Item #23: There are cracks in the ceiling when the wall was removed

Investigator’s Observation: Verified

I saw there was an excessively long crack at the seam (ceiling) where the wall had been removed. The Contractor should repair nail pops, seam lines and other hairline cracks one time within first year of occupancy

The respondent should correct by appropriate means, pursuant to the contract, applicable building codes, and within the scope of their license.

Reference Picture(s) 50

Governing Rule: 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.

Compliance Item #26: The shower Schluter trim is not properly installed along the shower glass

Investigator’s Observation: Verified

I saw in the primary bathroom area, the schluter trim was partially covered by grout and does not appear to be evenly installed. A contractor shall perform all work in a professional and workmanlike manner.

Reference Picture(s) 51-54

Governing Rule: 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.

Tedi Quezada, Legal Assistant II for the Fund, testified that she reviewed the State’s exhibits. Judge Vanella’s Decision stated that the contract amount was $28,200.00 and the amount paid was $22,400.00 and that the investigator was unable to verify issues with the laminate floor. Complainant submitted a Residential Recovery Fund Administrative Claim form, including all of the required information.

Ms. Quezada testified that Complainant is the owner of the property, made a claim on Respondent’s bond, and obtained two bids for corrective work. One of the bids did not provide itemized estimates, and both bids included the laminate flooring.

Ms. Quezada concluded that the non-itemized bid could not be accepted, but the itemized bid, dated January 29, 2024, which was also the lower bid, appeared appropriate, excluding the flooring bid for $11,400.00. Ms. Quezada determined that the itemized bid for $25,837.00 was an appropriate reflection of the cost to repair Respondent’s work; accordingly, it was accepted as the Total Compensable Bid Amount.

The Award amount was $20,037.00. Ms. Quezada arrived at this number as follows:

Unpaid Balance

Original contract price: $28,200.00

Less amount paid: ($22,400.00)

Unpaid balance: $5,800.00

Actual Damages

Total Compensable Bid Amount $25,837.00

Less Unpaid Balance: ($5,800.00)

Compensable “Actual Damages”: $20,037.00

Respondent sought to enter evidence to refute the findings from Judge Vanella’s Decision, specifically regarding the quality of work done on the project. Respondent offered testimony from two individuals who worked on the original project for that purpose. This Tribunal cannot consider those arguments in a Recovery Fund hearing. Respondent had the opportunity to dispute whether the work was completed properly at the May 2, 2023 hearing.

Respondent argued that the amount was too high and that such an award would not be fair. Respondent expressed concern about the unpaid contract amount, arguing that not collecting on that amount was a discount for the work. Respondent did not provide alternative bids or provide any evidence to explain why the bids provided to correct the work were incorrect.

Complainant did not dispute the bid. The contractor who issued the bid testified in favor of the amount.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Respondent bears the burden of proof to establish that the proposed payout from the Fund is incorrect 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.”

Respondent had an opportunity to correct the faulty work following the written directive from the Registrar and failed to do so.

After review of all the evidence, the Tribunal concludes that the award provided by the Fund accurately reflected Complainants’ actual damages. Accordingly, Complainants are entitled to a payout from the Fund in the amount of $20,037.00.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, Complainants receive a payout from the Residential Contractors’ Recovery Fund in the amount of $20,037.00.

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.

-54864001

/s/ Samuel Fox

Administrative Law Judge

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

Tom Cole

Registrar of Contractors

c/o Legal Department

1700 W. Washington Street, Suite 105

Phoenix, AZ 85007

[email redacted]

Zoran Pelevic

[email redacted]

Red Star Handyman & Remodeling LLC

[email redacted]

Registrar of Contractors

[email redacted]

By: OAH Staff