ALJDEC

99F-A0024-ROC · Registrar of Contractors · 1999-05-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 18, 1999 APPEARANCES: Complainant appeared on her own behalf and Respondent appeared through its owner and qualifying party, Eric McNeill. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Order are made:

FINDINGS OF FACT

1. Complainant retained Respondent for the purpose of accomplishing specified remodeling of her home. In this regard, Respondent prepared a written contract document, dated July 2, 1998. Complainant alleges certain deficiencies in the work performed and materials provided by Respondent and same are discussed in the findings below. 2. Undisputed evidence of record established the following: a. Respondent’s license was suspended for lack of a qualifying party from August 31, 1997 through July 31, 1998 and suspended for lack of a bond from January 23, 1998 through August 3, 1998. Thus, on the above-described contract date Respondent was contracting while his license was suspended, in violation of the applicable charged section of the State’s Contracting laws. b. At the outset of the scheduled project, Respondent performed specified electrical and plumbing work on his own. Respondent’s Class B license specifically prohibits Respondent from performing electrical and plumbing work and thus, this activity constitutes contracting beyond the scope of his license and a wrongful act within the meaning of the applicable charged section of the State’s Contracting laws. c. Respondent commenced work on the project without first obtaining the required building permit from the local building authority and this failure to comply with the local building codes is deemed to constitute a wrongful act within the meaning of the applicable charged section of the State’s Contracting laws. 3. The following salient facts were adduced at the hearing and are important to note: a. The July 2, 1998 contract called for a contract price of $12,500.00 with a required downpayment of $6,250.00 and specified progress payments to be at the end of weekly intervals. The contract specifically states that it should be completed within three (3) weeks and the final payment would be due upon completion. Evidence of record showed that Complainant paid Respondent $8,500.00 on the original contract and a total of approximately $14,000.00 which included the extras or change orders that occurred during the period of time that Respondent worked on the project. b. Respondent commenced work on the project shortly after presenting the July 2, 1998 contract to Complainant. Within a few weeks subsequent to commencement of the project, Complainant became dissatisfied with Respondent’s work and progress on the project and immediately filed a complaint with the Registrar of Contractors. The complaint was filed on July 28, 1998. c. A jobsite inspection by the appointed inspector for the Registrar of Contractors was held, pursuant to which that Agency sent Respondent a letter directing it to accomplish specified items within a stated period of time, including bringing his license into active status, submitting all necessary documentation to the local building authority, obtaining all necessary permits for the job, and properly completing the contract. Notwithstanding the terms of said Agency directive and Respondent's efforts to comply with the Agency directive, substantial compliance was not accomplished within the time parameters set forth in said Agency directive. Respondent’s failure to comply with the terms and conditions of the Agency directive constitutes a violation of the applicable charged section of the State’s Contracting laws. d. Despite the fact that Respondent was unable to comply with the above-described Agency directive within the time limit imposed in said directive, it was undisputed that he ultimately returned to working on the project and worked on same until October 19, 1998. e. On October 19, 1998 Respondent made a demand for another progress payment on the original contract, seeking a payment of $2,000.00. At this point Respondent claimed that the project was 90% completed but Complainant contends that it was only 40% completed. Complainant refused to give Respondent any more money based on her claim that the project was not only taking too long but that a considerable portion of Respondent’s work was substandard and thus, unacceptable. f. Due to Respondent’s claim that Complainant’s refusal to pay the requested $2,000.00 was a unilateral breach of the contract, he terminated his work on the project and ultimately filed a preliminary lien on the project. g. Subsequent to Respondent’s termination of work on the project, Complainant retained the services of an unlicensed contractor, Larry Brooks, to complete most of the project. 4. As aforementioned, the original contract between the parties called for progress payments at the conclusion of the first and second week of the project. It made no mention of progress payments after specified aspects of the project were completed. It was not until September 24, 1998, well after the project and the problems on same had occurred, that Respondent sent Complainant a letter wherein he indicated that a $2,000.00 progress payment would be due when the plumbing and electrical rough-in, along with completion of the sheetrock installation, had been completed. 5. Complainant never agreed to the terms of the aforementioned September 24, 1998 letter and moreover, evidence of record demonstrated that on October 19, 1998 (the day Respondent made his demand for the additional $2,000.00) the sheetrock installation was not complete. Thus, it is determined and held that Complainant was under no contractual obligation to make the $2,000.00 payment and therefore, was within her rights to refuse to pay Respondent’s demand for $2,000.00. Accordingly, Respondent should not have terminated work on the project and his failure to complete the project is deemed to constitute a wrongful act within the meaning of the applicable charged section of the State’s Contracting laws. 6. The following deficiencies in Respondent’s work were determined at the time that Respondent terminated work on the project: a. Respondent failed to provide adequate clean-up of the construction debris. The debris was hauled away by Complainant. b. The wooden deck around the home did not pass inspection by the local building authority. Among other deficiencies in the deck construction, evidence of record showed that the rim joists installed were not of the size called for in the applicable plans and specifications, Respondent failed to utilize specified nails which were required by local building code for the hangers and post beam ties, there was no continuous handrail from top to bottom on one side of the stairs, untreated wood was in contact with the ground, wood slats were loose, handrails were not properly secured, and one of the stairway steps was missing. The deck remains incomplete and in violation of the local building code. c. There were several areas of the exterior work performed by Respondent that allowed water to leak into the interior of the home. These water leak areas have been repaired. d. Respondent delivered a wood burning stove to Complainant’s front yard which she does not want. It needs to be removed from her property. e. Perimeter fencing which Respondent agreed to install has not been completed. f. There are a number of loose roof fascia boards. g. Thresholds installed on specified doorways were too small. This has been corrected by others. h. There were numerous problems with the installation of the exterior masonite siding as manifested by, among other items, nails were protruding out of the siding, gaps in the siding, loose sections of the siding, broken pieces present in the siding, absence of corner trim pieces, and concrete splattered onto a specified section of the siding. These items have not been corrected. i. Subfloor installed in the old garage area was not level. This was corrected by others when the finish floor was installed. j. Numerous areas of the project were incomplete and required appropriate remedial work before progress could be made to finish said areas. 7. Although the foregoing are sufficient to support a finding of unacceptable workmanship and thus, violations of the applicable charged sections of the State’s Contracting laws, it is important to emphasize that Respondent did not complete the project. Notwithstanding the fact that construction work is not a perfect science and it is not uncommon to have corrections, repairs, or replacements of resultant poor workmanship prior or subsequent to completion of a specified project, in order to bring the final work product up to appropriate industry standards, Respondent’s performance on this job is found to be woefully substandard and the time that Respondent spent working on the original “three week” project is found to be grossly excessive, leaving Complainant to suffer for a seemingly endless period of time with her home torn-up while under construction. 8. After Respondent was advised by the Registrar of Contractors that he could not perform electrical work on the project, he contacted a licensed electrical subcontractor to perform the electrical work. The electrical subcontractor referred Respondent to one of his electrician employees, Chuck Woodsmall (“Woodsmall”), and advised Respondent to pay said employee directly, due to the fact that the subcontractor would not be in town. There was no evidence that the electrical subcontractor ever appeared on the jobsite and it was shown that Respondent paid Woodsmall directly. Under these facts and circumstances, it is determined that Woodsmall was acting on his own to perform the electrical work on this project and, as such, said activity constituted unlicensed contracting. Thus, Respondent aided and abetted the unlicensed activity of Woodsmall, which constitutes a wrongful act within the meaning of the applicable charged section of the State’s Contracting laws. 9. It is important to note that after Respondent terminated his work on the project, Complainant hired the aforementioned unlicensed electrician to complete the finish electrical work on the project and also paid him directly for his services. There was no showing that Woodsmall’s employer either appeared on the jobsite for the finish electrical work or received any compensation for said work and thus, this appears to be another incident of unlicensed contracting by Woodsmall. 10. Evidence of record supports a finding that there has been a complete breakdown of the ability of these parties to work together and the primary factor in said breakdown has been Respondent’s substandard work on the project and his failure to complete the project within a reasonable period of time. Under normal circumstances the Registrar would allow a contractor a reasonable opportunity to correct his own construction deficiencies, however the facts and circumstances presented herein would militate against allowing this Respondent to wreak any further havoc on Complainant’s life. Thus, any remaining construction corrections required by the instant order will have to be accomplished by other licensed contractors retained and paid by Respondent. 11. Complainant seeks restitution for her expenses incurred in having the project completed. Nevertheless, by virtue of utilizing an unlicensed contractor to complete the project, she may not expect the Registrar of Contractors to order a licensed contractor to pay for work that was clearly performed in contravention of the State’s Contractor Licensing laws. It stands to reason that the Registrar of Contractors, the very agency empowered by the legislature with enforcing the laws requiring contractors to be licensed, should not order any payment for unlicensed contracting work. Any such condition, were it to be imposed by the Registrar, could be construed by its very nature to constitute aiding and abetting the unlicensed activities of Larry Brooks. 12. Nothing in this Order should be construed as resolving any outstanding money claims that the parties may have against each other. In the event that Respondent continues to believe that Complainant still owes him additional monies on the original contract or Complainant wishes to pursue her claim for restitution, these money claims will necessarily have to be brought before a civil court of competent jurisdiction. 13. As set forth in the Citation and Complaint issued by the Registrar of Contractors, Respondent was advised that in the event of a finding of a violation against Respondent, Respondent's prior disciplinary record of final Registrar of Contractor’s orders may be considered in mitigation or aggravation. Accordingly, subsequent to conclusion of the instant hearing, notice was taken of official records of the Registrar of Contractors regarding any prior final disciplinary orders against Respondent and said notice revealed the absence of any prior disciplinary orders against Respondent. Therefore, Respondent's prior record is properly deemed to be good and thus, is viewed as a matter in mitigation for any disciplinary penalties to be imposed as a direct result of this case.

CONCLUSIONS OF LAW

1. Respondent violated the provisions of A.R.S. § 32-1154A (23), (18), (7), and (3); namely Rule R 4-9-108. RECOMMENDED ORDER

In view of the foregoing it is recommended, commencing on the effective date of the Order entered in this matter, that the Class B license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has caused a properly licensed contractor or contractors to accomplish appropriate and effective remedial work on the items set forth in Findings of Fact 6(b), 6(d), 6(e), 6(f), and 6(h). It is further recommended that if Respondent causes a properly licensed contractor or contractors to accomplish the above-described corrective work on or before the effective date of the Order entered in this matter, then the aforementioned license suspension shall not take place. It is further recommended, in addition to the foregoing license suspension, if any, that Respondent’s Class B license be placed on active suspension for a period of five (5) days, followed immediately by a period of 120 days disciplinary probation. This additional disciplinary penalty shall commence on the effective date of the Order entered in this matter or the date on which notice of Respondent’s compliance with the terms of this Order is filed with the Registrar, whichever is later. It is further recommended that the Registrar of Contractors conduct an investigation into the past and possible on-going unlicensed contracting activities of Larry Brooks and Chuck Woodsmall. Done this day, May 25, 1999.

______________________________________ MARK A. SILVER Administrative Law Judge

Original transmitted by mail this ____ day of May, 1999, to:

Registrar of Contractors Michael P. Goldwater ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826