ALJDEC - Licensing

2022A-11333-CHC-ROC · Registrar of Contractors · 2023-10-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Bryan Johnson,

COMPLAINANT

v.

Monument Development LLC

License No. ROC 327960,

RESPONDENT

No. 2022A-11333-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 25, 2023 and August 4, 2023.

APPEARANCES: Complainant Bryan Johnson appeared via Google Meet on his own behalf. Sterling Pratt appeared via Google Meet on behalf of Respondent Monument Development LLC. Registrar of Contractors Investigator David Fagerburg appeared via Google Meet.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

_____________________________________________________________________

FINDINGS OF FACT

Monument Development LLC (Respondent) is the holder of License No. 327960 issued by the Arizona Registrar of Contractors (Registrar).

On or about August 26, 2020, Bryan Johnson (Complainant) signed a contract with Respondent for the construction of a new home. The contract amount was for $868,236.99.

On or about December 12, 2022, the Registrar received a Complaint against Respondent from Complainant alleging poor work with respect to project.

The Registrar assigned the complaint to Investigator David Fagerburg. The jobsite inspection was performed on January 13, 2023.

Investigator Fagerburg then issued a written directive on or about January 27, 2023 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 Tuesday February 14, 2023.

. . .

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

Compliant Item 1: Brown Coat layer of Stucco: - This brown coat step began in July of 2022 and is about 2/3 completed. We were asked to prepay this work prior to its start and did so in full in May 2022. - We are requesting immediate completion of the brown coat stucco layer. (It should be noted that the incomplete state of this step has severely impacted the exterior build timeline as it is holding up several other steps & completion of the house.)

Investigator’s Observation: Verified. I am able to verify the project is not being completed in a timely manner. The respondent is to complete the project per the price stated in the contract.

Governing Rule: ARS §32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

Compliant Item 2: Doors (interior, exterior and interior trim):

- We have paid $22,000/$24,200 with payments made in Feb and May of 2022.- 3/21 interior doors are installed (no trim has been installed) - 0/11 exterior doors installed - We are requesting immediate completion of all remaining door and trim installs as we are being told that lack of doors is severely impacting the interior build timeline of the home.

Investigator’s Observation: Verified. The respondent is to complete the project per the price stated in contract.

Governing Rule: ARS §32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

Compliant Item 3: Electrical (final installs and finish):

- We have paid $25,025/$28,050 for all portions of the electrical step with the most recent $3000 payment made in May 2022. - We have been told that a sub has been selected and an agreement with the sub to complete the electrical work has been made with a start date given to us. We were told this information three weeks ago. We have been told that the work has been stopped due to a delay in receiving ordered canned lights. We do not see evidence of completed work by this sub. - We are requesting that this work begin immediately on other portions of the electrical finish work (major finish open items that we are aware of are outlets/switches/circuit breakers/canned lights and the install of hanging lights). If his order of the canned lights are still delayed, we are requesting that other work commence in a timely manner.

Investigator’s Observation: Verified. I am able to verify the project is not being completed in a timely manner. The respondent is to complete the project per the price stated in contract.

Governing Rule: ARS §32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

Compliant Item 4: Roof (the roof is a standing seam metal roof): - We have paid over 60% of this work item with the most recent payment in Feb 2022. - The roof liner was installed in the late summer of 2021. - As the liner has been in place for over a year, it has been exposed to full sun and wind and this lead to a recent water leaks that caused extensive interior drywall damage. He did and inspection and made repairs. As of today, leakage from the 12- 12-2022 storm appears to have caused additional leakage which requires additional repair. -We request that the condition of the roof liner should be inspected/reviewed. - We have been told that roofing material has been purchased and that the start of the roof will begin immediately upon completion of the stucco brown coat.- We are requesting that the roof install begin immediately upon completion of the stucco brown coat.

Investigator’s Observation: Verified. I am able to verify the project is not being completed in a timely manner. The respondent is to correct the damaged caused and complete the project per the price stated in contract.

Governing Rule: ARS §32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

Compliant Item 5: Pavers (patios/courtyard and driveway): - We have paid

$20,000/$30,000) for the pavers with the only payment of $20,000 made in Feb 2022 - We were told that funds were used to purchase materials needed for this step. – We have been told that a sub has been lined up to install the pavers but that this work is pending completion of the stucco brown. - We are requesting that the paver install begin immediately upon completion of the stucco brown coat.

Investigator’s Observation: Verified. The respondent is to complete the project per the price stated in contract.

Governing Rule: ARS §32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

Compliant Item 6: Water supply line: - The water supply line was installed about 2 years ago. It is PEC tubing and has been fully exposed to the elements since its install. This type of tubing is damaged /degraded by direct sun exposure which will have compromised the tubing strength. It is not currently leaking but needs to be replaced to avoid future problems. He agreed to do this but has not done this work to date. – The water supply tubing, as currently installed, is not deep enough (We want it to be well below finished grade once that work is done) - We ask to have the water supply replaced and then promptly covered to avoid future damage

Investigator’s Observation: Verified. The respondent is to correct the water supply line exposed beyond the manufacturer UV rating of 1 month by appropriate means, pass all required inspections by the local building authority and complete the project per the price stated in contract.

Governing Rule: ARS §32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

Compliant Item 7: Material prepays: - The payment schedule shows that we have fully paid for the kitchen appliances, the wood and carpet flooring and kitchen and bath counter tops. Payment has been provided to pay for all pavers. We have been told that he the door hardware has been purchased. We have not paid for the hardware. Several bath accessories have also been purchased and are being held by the contractor. – We have asked for a full inventory of all materials purchased to include ones we have paid for and ones that he hasn't asked for payment -Several items to include two electrical light transformers, door dogs, handheld bidet, etc. we're given to the contractor and should be included on requested list. - We would like the inventory list to be provided immediately.

Investigator’s Observation: Verified. I observed and am able to verify the above noted items are no onsite or installed. The respondent is to complete the project per the price stated in contract.

Governing Rule: ARS §32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

Compliant Item 8: Additional note: Our neighborhood HOA is applying considerable pressure on us, as they believe that a partially completed home exterior that has become "old" degrades the neighborhood and its home values. This problem was expressed to our contractor in mid October 2022, by letter from us and it is our understanding that the HOA also sent a letter with their concerns to him. The HOA is requesting that the stucco (completed brown coat and color layer), the roof and pavers (driveway and

patios) be completed immediately to remedy their concern. He has brought in and staged an earthmover to aid in the paver installation. The HOA is reminding us that they can't see any evident progress. Completing the above list should remedy the HOA concerns, as the stalled exterior has become an additional liability to us that he needs to resolve.

Investigator’s Observation: Verified. I am able to verify the project is not being completed in a timely manner. The respondent is to complete the project per the price stated in contract.

Governing Rule: ARS §32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

(All errors contained in the original).

On March 14, 2023, 2023, Investigator Fagerburg performed a Compliance Jobsite Inspection. In his notes regarding the same he found:

Investigator Notes:

1: Both parties sent a written request to extend the written directive issued January 27, 2023 with an expiration date of February 14, 2023. The written directive was extended via email on February 15, 2023 with a new expiration date of March 6, 2023 with a note that if significant progress is made related to the completion of the stucco and installation of the exterior doors an additional extension may be considered to facilitate the completion of the project.

2: Both parties acknowledged the stucco installation resumed March 9, 2023. Progress was made correcting the deficiencies in the brown coat previously installed. However, there is still one side of the home that does not have any stucco with the degrading foam and lath exposed.

3: The respondent has installed all but 2 exterior doors with double interior doors and pocket doors partially installed without casing.

4: Some progress has been made installing electrical components and trim. However, numerous can lights, outlets and switches remain incomplete.

5: The roof underlayment remains in poor condition and the only progress has been to try and patch existing underlayment in an attempt to prevent further water damage to the interior of the home. The respondent acknowledged the entire underlayment will need to be replaced prior to the metal roof installation.

6: There has been no progress regarding the paver installation.

7: The PEC main water supply line remains exposed. The respondent acknowledged that a new PEC water supply line is on site.

8: There are no kitchen appliances, wood or carpet flooring, kitchen and bath counter tops or plumbing fixtures installed or onsite. The respondent stated these items are being stored until they are needed.

9: On March 8, 2023 via phone conversation the complainant informed me that there has been little progress since the extension of the written directive and the respondent doesn’t appear to display much urgency in complying with the directive and completing the project on a critical path in a timely manner.

Compliance Findings:

Compliant Item 1: Brown Coat layer of Stucco: - This brown coat step began in July of 2022 and is about 2/3 completed. We were asked to prepay this work prior to its start and did so in full in May 2022. - We are requesting immediate completion of the brown coat stucco layer. (It should be noted that the incomplete state of this step has severely impacted the exterior build timeline as it is holding up several other steps & completion of the house.)

The respondent is not in compliance with the directive.

Compliant Item 2: Doors (interior, exterior and interior trim):

- We have paid $22,000/$24,200 with payments made in Feb and May of 2022. - 3/21 interior doors are installed (no trim has been installed) - 0/11 exterior doors installed - We are requesting immediate completion of all remaining door and trim installs as we are being told that lack of doors is severely impacting the interior build timeline of the home.

The respondent is not in compliance with the directive.

Compliant Item 3: Electrical (final installs and finish):

- We have paid $25,025/$28,050 for all portions of the electrical step with the most recent $3000 payment made in May 2022. - We have been told that a sub has been selected and an agreement with the sub to complete the electrical work has been made with a start date given to us. We were told this information three weeks ago. We have been told that the work has been stopped due to a delay in receiving ordered canned lights. We do not see evidence of completed work by this sub. - We are requesting that this work begin immediately on other portions of the electrical finish work (major

finish open items that we are aware of are outlets/switches/circuit breakers/canned lights and the install of hanging lights). If his order of the canned lights are still delayed, we are requesting that other work commence in a timely manner.

The respondent is not in compliance with the directive.

Compliant Item 4: Roof (the roof is a standing seam metal roof): - We have paid over 60% of this work item with the most recent payment in Feb 2022. - The roof liner was installed in the late summer of 2021. - As the liner has been in place for over a year, it has been exposed to full sun and wind and this lead to a recent water leaks that caused extensive interior drywall damage. He did and inspection and made repairs. As of today, leakage from the 12- 12-2022 storm appears to have caused additional leakage which requires additional repair. -We request that the condition of the roof liner should be inspected/reviewed. - We have been told that roofing material has been purchased and that the start of the roof will begin immediately upon completion of the stucco brown coat.- We are requesting that the roof install begin immediately upon completion of the stucco brown coat.

The respondent is not in compliance with the directive.

Compliant Item 5: Pavers (patios/courtyard and driveway): - We have paid $20,000/$30,000) for the pavers with the only payment of $20,000 made in Feb 2022 - We were told that funds were used to purchase materials needed for this step. - We have been told that a sub has been lined up to install the pavers but that this work is pending completion of the stucco brown. - We are requesting that the paver install begin immediately upon completion of the stucco brown coat.

The respondent is not in compliance with the directive.

Compliant Item 6: Water supply line: - The water supply line was installed about 2 years ago. It is PEC tubing and has been fully exposed to the elements since its install. This type of tubing is damaged /degraded by direct sun exposure which will have compromised the tubing strength. It is not currently leaking but needs to be replaced to avoid future problems. He agreed to do this but has not done this work to date. - The water supply tubing, as currently installed, is not deep enough (We want it to be well below finished grade once that work is done) - We ask to have the water supply replaced and then promptly covered to avoid future damage

The respondent is not in compliance with the directive.

Compliant Item 7: Material prepays: - The payment schedule shows that we have fully paid for the kitchen appliances, the wood and carpet flooring and kitchen and bath counter tops. Payment has been provided to pay for all pavers. We have been told that he the door hardware has been purchased. We have not paid for the hardware. Several bath accessories have also been purchased and are being held by the contractor. - We have asked for a full inventory of all materials purchased to include ones we have paid for and ones that he hasn't asked for payment -Several items to include two electrical light transformers, door dogs, handheld bidet, etc. we're given to the contractor and should be included on requested list. - We would like the inventory list to be provided immediately.

The respondent is not in compliance with the directive.

Compliant Item 8: Additional note: Our neighborhood HOA is applying considerable pressure on us, as they believe that a partially completed home exterior that has become "old" degrades the neighborhood and its home values. This problem was expressed to our contractor in mid October

2022, by letter from us and it is our understanding that the HOA also sent a letter with their concerns to him. The HOA is requesting that the stucco (completed brown coat and color layer), the roof and pavers (driveway and patios) be completed immediately to remedy their concern. He has brought in and staged an earthmover to aid in the paver installation. The HOA is reminding us that they can't see any evident progress. Completing the above list should remedy the HOA concerns, as the stalled exterior has become an additional liability to us that he needs to resolve.

The respondent is not in compliance with the directive.

(All errors contained in the original).

On March 17, 2023, 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).

On or about March 31, 2023, Respondent timely filed an Answer with the Registrar.

On or about April 18, 2023, a Notice of Hearing was issued setting a hearing on May 25, 2023 at the Office of Administrative Hearings, an independent state agency.

The hearing commenced on May 25, 2023 and was then set for a status update to allow Respondent additional time to complete the project. Complainant then notified the Office of Administrative Hearings that the work had not been completed, and requested a further hearing to finalize the matter.

At hearing, Investigator Fagerburg testified as to his involvement and the above timeline. Further, Investigator Fagerburg testified that he spoke with Complainant on May 25, 2023 prior to the hearing and was informed that while there had been significant progress, there was no compliance with full Directive.

Complainant testified on his own behalf and stated generally that the work had not been completed but acknowledged that Respondent was still working on the project.

As to the specific Directive items, Complainant testified as to the following:

Brown coat layer of Stucco: Complainant testified that while some repairs had been made, the stucco was the incorrect color, and as of August 3, 2023, some repairs still needed to be made to fully complete the item.

Doors: Complainant testified that interior doors had not been installed, and is not sure if the doors have actually been purchased.

Electrical: Complainant testified that while he paid for circuit breakers, line from transformed and the inside finishing, this work had been completed.

Roof: Complainant testified that remaining roof material needed to be ordered and he offered to help Respondent with the costs thereof, but this matter had not been resolved and the roof remained incomplete.

Pavers: Complainant testified that he was at the property on August 3, 2023, and did not see any work commenced on the pavers.

Water supply line: Complainant testified that the replacement water line was installed but had not been inspected prior to burial of the same so there was no verification that the repair had been properly completed.

Material prepays: Complainant testified that he had prepaid for material and had not received any evidence that this material existed and did not have receipts or an accounting for the same.

HOA issues: Complainant testified that trash had been left at the property which caused the HOA to become concerned. Complainant testified that he removed some of the trash, but is concerned that piles could re-appear since Respondent did not rent a trash container to contain the trash.

Further, Complainant testified that this was supposed to be an 8 month build on a fixed price contract. He testified that he made a good faith efforts and accepted great delays to allow things to work out and they have not.

Finally, Complainant testified that he had not made any further payments because no new work had commenced and was concerned about the transparency with the previously purchased materials

Spencer Pratt testified on behalf of Respondent.

Mr. Pratt testified that the cost of the project had increased $300,000.00-$400,000.00 due to the increase cost of materials and that he had put a lot of money into the project, and has had to take profits from other projects to fund this project.

Finally, Mr. Pratt testified that he was going to keep going until the job was completed.

In addition, Mr. Pratt testified that he has the materials stored and will only bring them to the project when they are needed or they would have to be moved, wasting additional time.

Mr. Pratt also testified that while Complainant had offered to bring additional money into the project, he had not received a payment from Complainant since 2022, and it was hard to build without any funds.

After the conclusion of the hearing, Complainant requested three times that the matter be held open before the Administrative Law Judge Decision was submitted to the Registrar. An order was issued on September 28, 2023, ordering that the record be held open until October 11, 2023.

Administrative notice was taken of Respondent’s prior License record on October 30, 2023. Such prior License record reflected that Respondent’s License No. 327960 was first issued on March 3, 2020, and reflected that there was one open complaint, namely the present complaint, as well as four resolved/settled cases.

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 Vazanno 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 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.

The evidence established Respondent failed to complete the corrective work following the Directive being issued. While the tribunal is sympathetic to the drastic increases in price for materials, this does not excuse the length this project has taken. Further, it was not unreasonable for Complainant to receipt a full accounting and proof of the materials Respondent has in its possession. 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. 327960 for a period of ten 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 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, October 30, 2023.

/s/ Adam D. Stone

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

Bryan Johnson

[email redacted]

Monument Development LLC

[email redacted]

[email redacted]

By: OAH Staff