ALJDEC - Licensing

2023A-06801-CHC-ROC · Registrar of Contractors · 2024-02-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Cassandra Garcia,

COMPLAINANT,

Ultra Construction, LLC

License No. ROC 330397,

RESPONDENT.

No. 2023A-06801-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 30, 2024

APPEARANCES: Complainant Cassandra Garcia appeared on her own behalf. Tyler Garcia was also present. James Palecek, Esq. represented Respondent Ultra Construction, LLC. Derek and Kim Rice were present on behalf of Respondent Ultra Construction, LLC. Arizona Registrar of Contractors Investigator James Carter appeared as a witness.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

EXHIBITS ADMITTED INTO EVIDENCE: Respondent Ultra Construction, LLC’s Exhibits 1, 2, 4, 6-10

FINDINGS OF FACT

Ultra Construction, LLC (“Respondent”) is the holder of License Number 330397 issued by the Arizona Registrar of Contractors (“Registrar”). Derek Rice is the Qualifying Party and sole Member of Respondent.

In or about September 2022, Cassandra Garcia (“Complainant”) and her husband, Tyler Garcia, contracted with Respondent for the construction of their home.

On or about June 19, 2023, the Registrar received a Complaint against Respondent from Complainant alleging:

Ultra Construction LLC has been using a number of unlicensed subcontractors on our project for its entire duration without our knowledge or consent until yesterday when we became aware. They have been using funds from our projects to pay for their other work unrelated to ours without our consent. We will be obtaining a 3rd party inspection, and will communicate any poor workmanship as they are found.

The Registrar assigned the Complaint to Investigator James Carter. On June 19, 2023, Investigator Carter issued a letter to Complainant stating the following:

In order to continue the investigation into your complaint, the Registrar is requesting the following information.

• Specific allegation of workmanship issues

On or about July 21, 2023, Complainant sent a list of alleged workmanship deficiencies to Investigator Carter.

On or about July 25, 2023, Complainant sent an additional list of alleged workmanship deficiencies to Investigator Carter.

Ultimately, Investigator Carter scheduled a Jobsite Inspection for August 14, 2023. Following the Jobsite Inspection, on August 18, 2023, Investigator Carter 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 September 15, 2023.

. . . .

DIRECTIVE REQUIREMENTS

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

Compliance Item: 3 - Damaged Fascia- Needs repair

Investigator’s Observation: Verified. Inspector observed a number of fascia boards that were separating and missing clips. Respondent did not indicate during the inspection that the work was not completed yet. The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor.

Governing Rule: Violation of any rule adopted by the Registrar;

Compliance Item: 4 - Roof Sheathing - warped, but structurally okay that we know of. Asphalt shingles showing outlines of OSB. Inspector advised that many roofers would argue that if someone gets onto the roof to inspect, the warranty would be void, so he did not get onto the roof to ascertain weather the shingles or OSB are okay from above.

Investigator’s Observation: Verified. Investigator observed several areas on the roof where the shingles were lifting. The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor.

Compliance Item: 8 - Window/Slider- One window lock is offset that needs to be fixed, there is a hole in one of our window screens, and the sliding glass door does not close all the way.

Investigator’s Observation: Verified. While a full house window adjustment is still pending the Investigator did observe a screen that had been damaged on the south side of the home. The Respondent will need to correct this by the appropriate means.

Compliance Item: 9 - Wall next to master tub needs furred out to accommodate pipe that sticks out further than framing. If drywalled, the wall would bow out over the pipe.

Investigator’s Observation: Verified. Investigator observed a plumbing pipe that was out past the framing material by 1/2". Respondent indicated during the inspection that the drywall could be notch out to accommodate this however Respondent also indicated that this area will have durock installed. The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor.

Investigator’s Observation: Respondent admits to moving the wall however the modification was not compatible with other parts of the build. Respondent shall complete project per original contract agreement, properly executed change orders, verbal agreements, local building codes and manufacturers installation instructions.

Compliance Item: 11 - Master tub framing way too small, drain needs moved. (Ultra has had the tub and dimensions to be able to properly measure this).

Investigator’s Observation: Verified. Inspector observed that the tub is 36" and the framing is at 36" before any durock or tile is added. Respondent agreed area needed to be reframed. The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor.

Compliance Item: 13 - Entire water line from well to home is not deep enough (its 8” deep and should be 18”).

Investigator’s Observation: Verified. Investigator observed an area were the main water line was observed and the trench was only at 8-10" deep The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor.

Compliance Item: 15 - No clean out pipes (bullhorns) for septic at all

Investigator’s Observation: Verified. No clean outs were observed by the Investigator in the area that Respondent said they were per plan. Respondent indicated that the plumbing was not completed but trenches were already buried. The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor.

ITEMS NOT REQUIRING CORRECTION

The following complaint items require no action by the Respondent:

Compliance Item: 1 - Weep Screed- Incomplete, needing repair

Investigator’s Observation: Investigator observed weep screed in place and consistent through out the areas Complainant showed. Item was completed as per original contract and meets minimum workmanship standards.

Compliance Item: 2 - Stucco- We have a qualified stucco professional that says the stucco crew used a One Coat stucco product and mixed it with a low quality sand. The sand mixture mixed with the One Coat is what they were supposed to do, however, they over sanded the mixture in an effort to keep the cost down/cut corners and as a result we have a weak hollow sounding product that is crumbling off the walls/incomplete. He advises another crew applying a skim coat to build strength before going in with the final coat of stucco to prevent future cracks or large pieces breaking off the walls later down the line. We would obviously not be able to recover funds in the future because they are unlicensed so this is something definitely to consider.

Investigator’s Observation: Unable to verify, no evidence to prove or verify complaint item constitutes poor work due to the complaint item being incomplete. At the time of the inspection only the first layer of stucco had been applied. No evidence presented that showed the product was over sanded

Compliance Item: 5 - HVAC- Condensate vent obstructed, secondary drain pan not properly sloped.

Investigator’s Observation: Unable to verify, insufficient evidence to prove or disprove complaint item. Investigator was unable to observe the unit in the attic as it was not readily accessible to the attic opening

Compliance Item: 6 - Drywall- Holes need repair, some areas not complete, damaged window sill.

Investigator’s Observation: Unable to verify, no evidence to prove or verify complaint item constitutes poor work due to the complaint item being incomplete.

Compliance Item: 7 - Pocket doors- Frames not properly secured.

Investigator’s Observation: Unable to verify, no evidence to prove or verify complaint item constitutes poor work due to the complaint item being incomplete.

Compliance Item: 12 - Metal pipe for sink in garage to meet code (it is plastic now)

Investigator’s Observation: This is common industry practice and does not constitute poor workmanship.

Compliance Item: 14 - Vent pipes on roof too long, should be 12”.

Investigator’s Observation: Unable to verify, no evidence to prove or verify complaint item constitutes poor work due to the complaint item being incomplete.

Compliance Item: 16 - Missing clean out pipe in kitchen island

Investigator’s Observation: Complaint item does not constitute poor workmanship, and meets minimum workmanship standards. Cleanout is not required in a concealed area

Governing Rule: IRC P3005.2

Compliance Item: 17 - Attic Not vented properly

Investigator’s Observation: Complaint item does not constitute poor workmanship, and meets minimum workmanship standards. PER IRC 2018 which has been adopted by Maricopa County Governing Rule: IRC R806.5Complaint Item 1: Doors are not square.

Investigator’s Observation: It was observed that there are doors that the reveals are not square that were installed by the Respondent. Correct only the doors that were installed by the Respondent.

All errors in original.

Following the issuance of the Written Directive, Investigator Carter inadvertently scheduled a Compliance Jobsite Inspection for September 13, 2023. When Investigator Carter realized the error, given that the deadline for compliance with the Written Directive was September 15, 2023, he canceled the Compliance Jobsite Inspection.

On September 13, 2023, Investigator Carter received an email from Respondent’s Counsel requesting an extension to comply with the Written Directive as to the roof issue only as follows:

Good morning Mr. Carter. It was our understanding that the deadline was the 15th, but the repair work that could be done was done promptly. As you can see from our letter, all of the other issues were addressed at Ultra's visit to the project. The roof issue needed analysis. Ultra received the preliminary roof report last week, after which we had internal discussions and prepared this letter. We have not yet had the opportunity to discuss the preliminary findings on the roof issues with Mrs. Garcia, as we just formulated these ideas over the last week.

On September 13, 2023, Investigator Carter responded to Respondent’s Counsel as follows:

[Counsel] you are 100% correct. I had the wrong date written on my calendar. I will contact Ms. Garcia ASAP and correct that. I would encourage you to discuss the roof with you [sic] and I will grant an extension to 5/22/2023 [sic] to be able to come discuss with her what option on the roof [sic].

Investigator Carter testified that on September 22, 2023, he received an email from Complainant who stated that she had not heard from Respondent regarding options for the roof repair.

However, the evidence established that on September 22, 2023, at 10:04 a.m., Counsel for Respondent sent an email to Complainant outlining two viable options for the roof repair from two roofing subcontractors.

On September 22, 2023, at 11:55 a.m., Complainant responded to Respondent’s Counsel’s email and stated that she would keep Investigator Carter “in the loop.”

On September 22, 2023, Investigator Carter scheduled a Compliance Jobsite Inspection for September 26, 2023. Investigator Carter’s Compliance Jobsite Inspection Notes state the following:

Compliance Findings:

The following Directive Items were completed:

Compliance Item: 3 - Damaged Fascia- Needs repair Investigator’s Observation: Verified. Inspector observed a number of fascia boards that were separating and missing clips. Respondent did not indicate during the inspection that the work was not completed yet. The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor

Compliance Item: 8 - Window/Slider- One window lock is offset that needs to be fixed, there is a hole in one of our window screens, and the sliding glass door does not close all the way. Investigator’s Observation: Verified. While a full house window adjustment is still pending the Investigator did observe a screen that had been damaged on the south side of the home. The Respondent will need to correct this by the appropriate means.

Compliance Item: 9 - Wall next to master tub needs furred out to accommodate pipe that sticks out further than framing. If drywalled, the wall would bow out over the pipe. Investigator’s Observation: Verified. Investigator observed a plumbing pipe that was out past the framing material by 1/2". Respondent indicated during the inspection that the drywall could be notch out to accommodate this however Respondent also indicated that this area will have durock installed. The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor.

Compliance Item: 11 - Master tub framing way too small, drain needs moved. (Ultra has had the tub and dimensions to be able to properly measure this). Investigator’s Observation: Verified. Inspector observed that the tub is 36" and the framing is at 36" before any durock or tile is added. Respondent agreed area needed to be reframed. The Respondent will need to correct this by the appropriate means, using an appropriately licensed contractor.

The Following Items were not completed:

Investigator’s Observation: No work was done on this item. Governing Rule: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(a): A contractor shall perform all work in a professional and workmanlike manner.

The Following Items will need to be verified at final inspection by the local

municipality:

Compliance Item: 10 - Master water closet: toilet stub out needs to move back and properly centered. Wall is furred out 6” too far from Ultra who performed the work. Derek told is he moved the stub out and he chose to move the wall instead Investigator’s Observation: Toilet Stub out currently is in compliance with how far it sits from the wall but unable to determine how far it will sit from the door as it is not installed. This will need to be addressed at final inspection by the local municipality.

Compliance Item: 13 - Entire water line from well to home is not deep enough (its 8” deep and should be 18”). Investigator’s Observation: At the time of the JSI it was not disclosed to the Investigator that the grade was going to be raised before final inspection. A local inspector will need to approve the final depth of the waterline

Compliance Item: 15 - No clean out pipes (bullhorns) for septic at all Investigator’s Observation: At the JSI it was not disclosed to the Investigator that the septic tank was not installed and the work was not completed. Once the work is completed the local inspector will need to approve the location of the bullhorns

Note: At the original JSI Items #10, #13 and #15 were not fully disclosed to the Investigator as being not completed as they were during the CJSI. Had it been disclosed they would not have been listed on the directive as needing to be addressed. For Compliance Item #4 Respondent felt that they had to come have repair options available by the deadline so no work was completed on that item.

All errors in original.

Investigator Carter thereafter referred the matter to the Registrar’s Legal Department for the issuance of a Citation. 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 Carter testified that it was not disclosed during the initial Jobsite Inspection that there had not been a final inspection by the local municipality. Investigator Carter testified that had he been aware of such, he would not have included Complaint item numbers 10, 13, and 15 in the Written Directive because they had not been completed and this was a work in progress. Investigator Carter clarified that if Respondent had had an opportunity to have the city inspect its work, Respondent would have been given the opportunity to correct any deficiencies after such inspection.

Consequently, Investigator Carter testified that the only item of Complaint that remained in noncompliance with the Written Directive, was item number 4, pertaining to the roof.

However, Investigator Carter also testified that when he granted the extension for compliance with the Written Directive, it was to allow Respondent additional time to provide viable options to Complainant for the roof repair, not to perform the actual roof repair. Investigator Carter testified that either of the two options provided to Complainant would have been satisfactory, however, he “didn’t think they would get it done based on the information he had at the time,” specifically, because Mr. Rice told him that he was having difficulty finding a roofing contractor to perform repair work due to the Registrar’s involvement, and because of the “lack of communication” from Respondent during the period of the Written Directive. Investigator Carter acknowledged that he referred the matter to the Registrar’s Legal Department notwithstanding that Respondent timely provided the roof repair options to Complainant. Further, Respondent’s Counsel communicated with Investigator Carter via email on September 13, 2023, requesting an extension of the Written Directive deadline in order to provide options for repair to Complainant, and also on September 22, 2023, when Counsel for Respondent communicated the options to Complainant who indicated she would keep Investigator Carter “in the loop.” Investigator Carter’s email to the parties informing them of the deadline extension did not indicate that Respondent was required to communicate with him during this period.

Investigator Carter acknowledged that he knew that the actual repair work to the roof could not have been accomplished by the extended deadline and understood that the parties would need to discuss the options. Investigator Carter testified that Respondent complied with the Written Directive because Respondent provided the options to Complainant by the September 22, 2023 deadline. Investigator Carter further testified that he advised Complainant that after the extended deadline expired, she was no longer obligated to allow Respondent on her property. However, the Written Directive extension failed to provide the parties with a deadline for the actual corrective work to be performed, only a deadline for options for such work.

Complainant testified that she responded to Respondent’s Counsel’s September 22, 2023 email with some questions. Complainant testified that she did not receive a response on that day (which was a Friday). Respondent’s Counsel thoroughly responded to Complainant’s inquiries on Monday, September 25, 2023, at 9:31 a.m. Complainant testified that the response “was not good enough” because it was past the deadline. Complainant testified that the “communication was not what it should have been” as Respondent “waited until the last minute to reach out” and she did not believe that Respondent was “eager to fix the situation.” However, Complainant was aware that Respondent had hired a roofing consultant and was pursuing solutions.

Administrative notice is taken of Respondent’s prior License record on February 5, 2024. Such prior License record reflects that Respondent’s License Number 330397 was first issued on August 28, 2020, and is active. Such prior License record also reflects that there are no other open complaints against Respondent’s license, one complaint that was resolved/settled, and no complaints resulting in discipline against Respondent’s license.

The Registrar’s substantive policy statement 2017.01 sets out the following pertinent information:

Cooperation

“American jurisprudence implies in all contracts the obligation to cooperate in the performance of the contract and not to delay, hinder, or interfere with the performance of other parties. Over the years, owners have been found on numerous occasions to have breached their implied duty of cooperation in the context of construction contracts. Such instances have included failure to provide timely site access, failure to inspect the work or complete other work necessary to allow the contractor to proceed, and failure to reasonably schedule and coordinate owner-controlled work.”

Source: Philip L. Bruner and Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law, § 12:55 (West Group 2002) (citing inter alia Restatement (Second) of Contracts §§ 212 to 223); id. § 9:99 (noting subsidiary duties, including “an ‘implied duty’ to make timely decisions” and “an ‘implied duty’ to exercise inspection and approval rights reasonably”).

Denial of Access

“Complainants are not prevented from refusing access because of their right to exclude others from their homes and it would not be appropriate to require contractors to trespass. [But it] is recognized that lack of access impinges on one party’s ability to defend itself and utilizing the benefits of the Registrar of Contractors is a privilege. Therefore, it is recommended that the Registrar dismiss complaints in which access is denied.”

. . . .

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 party asserting an affirmative defense has the burden of establishing the affirmative defense.

The standard of proof on all issues in this matter is that of 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.” 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.”

A.R.S. § 32-1154(A) provides:

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:

. . . .

3. Violation of any rule adopted by the registrar.

. . . .

22. Failure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held.

A.A.C. R49108(A) provides that “[a] contractor shall perform all work in a professional and workmanlike manner.”

Substantive policy statement means:

[A] written expression which informs the general public of an agency’s current approach to, or opinion of, the requirements of the federal or state constitution, federal or state statute, administrative rule or regulation, or final judgment of a court of competent jurisdiction, including, where appropriate, the agency’s current practice, procedure or method of action based upon that approach or opinion. A substantive policy statement is advisory only.

“Statutes shall be liberally construed to effect their objects and to promote justice.” The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

The Registrar neither demands nor expects perfection from a licensee on the licensee’s first attempt at work. A licensee must be given a reasonable opportunity to remediate workmanship issues prior to the imposition of discipline against its license. In an administrative hearing, however, Respondent is responsible to establish a lack of opportunity or the preclusion from doing so.

In this case, workmanship deficiencies were initially verified by Investigator Carter. However, all but one of those deficiencies were either corrected by Respondent, or were found to have been inappropriately included in the Written Directive given the additional information provided to Investigator Carter. The only Complaint item that remained to be addressed pursuant to the Written Directive related to the roof sheathing. The credible evidence of record established that Respondent hired a roofing consultant to determine feasible options for the corrective work and Respondent timely requested an extension of the deadline in the Written Directive to provide options to Complainant for the required corrective work. The credible evidence of record further established that all involved, including Investigator Carter and Complainant, were well aware that the actual corrective work could not possibly have been completed during the period of the Written Directive and that options were being provided for Complainant to choose the way in which she wanted the work to proceed. Investigator Carter testified that the extension of the deadline in the Written Directive was to allow Respondent additional time to provide viable options to Complainant for the roof repair, not to perform the actual roof repair. The credible evidence of record further established that Complainant would not allow Respondent access to perform the repairs because the deadline in the Written Directive expired, notwithstanding the knowledge that the deadline was for the provision of options. Investigator Carter acknowledged that he referred this matter to the Registrar’s Legal Department for a Citation for failure to comply with the Written Directive, prior to the actual expiration of the deadline and notwithstanding that Respondent complied with the understanding and agreement that it was to provide options to Complainant by September 22, 2023. Therefore, it cannot be said that Respondent did not comply with the Written Directive.

The Administrative Law Judge concludes based on the credible, probative, and substantial evidence presented at hearing that Respondent established that it complied with the Written Directive. There was no substantial evidence adduced showing that Respondent was unscrupulous, unqualified, or financially irresponsible. Consequently, it would not be fair or just to impose discipline against Respondent’s license.

Considering the factors set out in the Registrar’s substantive policy statement, it is appropriate to dismiss this matter.

RECOMMENDED ORDER

IT IS ORDERED that Case number 2023-06801 is dismissed.

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, February 14, 2024.

/s/ Sondra J. Vanella

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

Cassandra Garcia

[email redacted]

James J. Palecek, Esq.

PALECEK & PALECEK, PLLC

[email redacted]

James Carter

[email redacted]

By: OAH Staff