PL H



Shannon Mullen and the Dept. of Consumer Affairs v. Ronald Hinderhofer, Inc. a/k/a RH Construction and Ronald Hinderhofer

CITY OF NEW YORK

DEPARTMENT OF CONSUMER AFFAIRS

| |SUPERSEDING DECISION AND ORDER* |

|SHANNON MULLEN | |

|AND |Violation No.: CD 500102312 |

|THE DEPARTMENT OF CONSUMER AFFAIRS, |DD 500102312 LL |

|Complainants, | |

| | |

|-against- | |

|RONALD HINDERHOFER, INC. | |

|A/K/A rh cONSTRUCTION | |

|175 wEST OLD COUNTRY ROAD |License No.: 089074(HIC) |

|HICKSVILLE, NY 11801 | |

| | |

|and | |

| | |

|RONALD HINDERHOFER | |

|189 PHILLIPS PLACE |License No.: 0867782(HIS) |

|OCEaNSIDE, NY 11572, | |

| | |

|Respondents. | |

| |Date: August 11, 2009 |

| | |

| | |

A hearing on the above-captioned matter was held on September 17, 2008, October 30, 2008 and January 14, 2009. The consumer appealed the Decision and Order, dated January 26, 2009. The resulting Appeal Determination of April 27, 2009 remanded this matter for an additional hearing on June 9, 2009 on the sole issue of “whether the consumer is entitled to be reimbursed for interest payments on a second mortgage and for losses she may have incurred in her pursuit of this matter.” On June 9, 2009 the matter was adjourned to June 23, 2009 at which time the additional hearing was held.

Appearances: On September 17, 2008: For the Complainants: Shannon Mullen. For the Respondents: Ronald Hinderhofer and Kenneth Brown, Esq. On October 30, 2008: For the Complainants: Shannon Mullen. For the Respondents: Ronald Hinderhofer. On January 14, 2009: For the Complainants: Shannon Mullen, Alice Johnson, Esq. and Deborah Garner, Deputy Director for Consumer Services.For the Respondents: Ronald Hinderhofer. On June 23, 2009: For the Complainants: Shannon Mullen. For the Respondents: Ronald Hinderhofer.

The respondents are charged with violating the following:

1. § 20-101 of the Administrative Code of the City of New York (“Code”) by failing to maintain the standards of integrity, honesty and fair dealing required of licensees in that Respondent failed to complete work required by the Contract.

2. §20-700 of the Code by engaging in deceptive or unconscionable trade practice by failing to provide Complainant with a comprehensive written contract in compliance with the relevant laws and rules.

3. § 20–700 of the Code (the “Consumer Protection Law”) and Title 6 of the Rules of the City of New York §1-12 by engaging in a deceptive trade practice by promising to complete the contracted work in a skillful and competent manner and failing to do so.

4. 6 RCNY §1-12 by failing to comply with the Consumer Protection Law of 1969 as amended and all regulations promulgated under that law in that they misrepresented the true identity of the Home Improvement Contractor and failed to perform work under a contract.

5. § 20-393 (1) of the Code by materially deviating from or disregarding the plans or specifications or any terms and conditions agreed to under a home improvement contract, without written consent of the owner

6. § 20-393 (1) of the Code by abandoning the work they had contracted to perform under the Contract prior to completion of that work.

7. § 20-113 of the Code by conducting activities under a name different from than that of the person or organization to whom such license was issued or the trade name stated in the application therefore, in that the trade name on the Contract is not on file with the Department.

8. § 20-387 by engaging in unlicensed home improvement activity.

9. § 20-393 (9) of the Code by willfully failing to comply with an order, demand, rule, regulation or requirement made by the Commissioner pursuant to provisions of this subchapter in that Respondent allowed John Napolitano to solicit and sell a home improvement contract on its behalf, without a home improvement salesperson license as required by § 20-387 (a) of the Code.

10. 6 RCNY § 2-221 (a) (1) by failing to include in the Contract the name of the home improvement contractor.

11. 6 RCNY § 2-221 (a) (1) by failing to include in the Contract the name of the home improvement salesperson.

12. 6 RCNY § 2-221 (a) (1) by failing to include in the Contract the license number of the home improvement salesperson.

13. 6 RCNY § 2-221 (a) (1) by failing to include in the Contract the telephone number.

14. 6 RCNY § 2-221 (a) (2) by failing to include in the contract any contingencies that would materially change the approximate or estimated completion date.

15. 6 RCNY § 2-221 (a) (2) by failing to state in the Contract as to whether a definite completion date has been determined to be of the essence.

16. 6 RCNY § 2-221 (a) (4) by failing to include in the contract a notice to the owner that the contractor or subcontractor who performs on the contract and is not paid may have a claim against the owner which may be enforced against the property in accordance with the applicable lien laws.

17. 6 RCNY § 2-221 (a) (5) by failing to include in the contract a notice to the owner that the home improvement contractor is legally required to deposit all payments received prior to completion in accordance with subdivision four of § 71-a of the New York State Lien Law and that, in lieu of such deposit, the home improvement contractor may post a bond or contract of indemnity with the owner guaranteeing the return or proper application of such payments to the purposes of the Contract.

18. 6 RCNY § 2-221 (a) (6) by failing, where the contract provides for one or more progress payments to be paid to the home improvement contractor by the owner before substantial completion of the work, to provide a schedule of progress payments showing the amount of each payment as a sum in dollars and cents and specifically identifying the state of completion of the work or services to be performed, including any materials to be supplied before each such progress payment is due.

19. 6 RCNY § 2-221 (a) (6) by failing to provide for progress payments which bear a reasonable relationship to the amount of work to be performed, materials to be purchased, or expenses for which the contractor would be obligated at the time of payment.

20. 6 RCNY § 2-221 (a) (8) by failing to include in the contract a clause wherein the contractor agrees to furnish the buyer with a Certificate of Workers' Compensation Insurance prior to commencement of work pursuant to the Contract.

21. 6 RCNY § 2-221 (a) (9) by failing to include in the contract a clause wherein the contractor agrees to procure all permits required by law.

22. 6 RCNY § 2-221 (a) (10) by failing to include in the contract, in immediate proximity to the space reserved for the signature of the buyer and in bold face type of a minimum size of 10 points, a statement that the buyer has the right to cancel the transaction at any time prior to midnight of the third business day after the date of the transaction.

23. 6 RCNY § 2-221 (b) by failing to provide a separate Notice of Cancellation to the owner.

24. 6 RCNY § 2-221 (b) and (d) by failing to furnish a written or oral Notice of Cancellation rights.

25. 6 RCNY § 1-05 by failing to clearly identify the license number of the HIC as a New York City Department of Consumer Affairs license number on all advertising, letterhead, receipts or other printed matter of the licensee.

Findings of Fact

The consumer complainant, Shannon Mullen (“Consumer”) is the owner of a one-family house located at 580 Decatur Street, Brooklyn, NY. On March 27, 2006 the consumer met with John Napolitano (“Napolitano”) and workers named Benny and Russ who represented that they were from respondent Ronald Hinderhofer, Inc a/k/a RH Construction (“RH”). The consumer told Napolitano that she wanted a sunroom built on the back of her house and they agreed the work would begin within weeks. Thereafter the consumer entered into a contract with R&H, signed by Napolitano on its behalf, whereby R&H agreed to perform the following home improvements for $15,000.00:

Build back sunroom in rear of home;

Install new footings and foundation;

Complete shell frame;

Install extension door and steps;

Install insulation and windows;

Install new bricks;

Install electric and heat system;

Install sheetrock and spackle;

Install tile floors; and

Install new roofing and flashing;

As per Napolitano’s instructions, on March 28, 2006 the consumer gave him two checks made payable to R&H Construction for $7500.00 each. The contract’s letterhead set forth the following information: RH Construction, A Division of Ronald Hinderhofer, Inc. 175 West Old Country Road, Hicksville, NY, Telephone: (516) 938-5414, Fax: (516)938-5424, 1-800-586-7796. Between the months of March and July 2006 the consumer called RH repeatedly because no work was being performed at her home. Each time she was told that someone would either come to her house or call her back, but no one ever did. In July 24, 2006, Russ came to her house and informed her that RH could not do the job and would refund her the $15,000.00. On this date the consumer and Russ sign an agreement stating that RH will immediately refund $1,000.00 on that date and that RH will refund the remaining $14,000 within 14 weeks. The agreement’s letterhead is identical to the original contract’s letterhead. Although the consumer received the $1000.00 payment she never received any additional money. From approximately August- October 2006, the consumer repeatedly called RH and complained about their failure to repay the $14,000.00. In October 2006 the consumer filed her complaint with the Department of Consumer Affairs (“DCA”). A copy of the complaint was mailed to RH’s address listed on the contract.

In December 2006, a response from RH signed by Russ and acknowledging the settlement agreement was received by DCA. In late December 2006, DCA mediator Deborah Garner (“Garner”) contacted RH by phone at 516- 938-5414 and spoke with Tommy and Napolitano. Both informed Garner that they worked for RH and wanted to settle the consumer’s complaint. In the weeks that followed, Garner contacted Napolitano by telephone at 516-938-5414, and she faxed documents regarding a settlement and payment schedule to him at 516-938-5424.

On February 13, 2007, the consumer, and Napolitano on RH’s behalf, entered into a settlement agreement whereby the consumer would receive a refund of $15,000 paid over 15 consecutive weeks of $1000.00 each week beginning on February 23, 2007. All the payments were to be mailed to Garner and she in turn would give them to the consumer.

According to the agreement, from February 28, 2007 through May 24, 2007 Garner was supposed to have received thirteen $1000.00 payments; however during this time period only five $1,000.00, payments were received. All five payments were received by express mail and RH’s business address was listed as the return address on the envelope. Since RH failed to timely abide by the payment schedule, Garner called RH numerous times during this period and inquired about the delays. Each time Napolitano either promised to mail the money or would request additional time to do so. Since RH failed to submit any additional money after May 2007, Garner forwarded the consumer’s complaint for a hearing. As of the end of May 2007, the consumer received a total of $6000.00 back from RH.

RH is licensed by the Department only under the name Ronald Hinderhofer Inc. and the trade name “RH Construction, A Division of Ronald Hinderhofer, Inc.” is not on file with the Department.

Respondent Ronald Hinderhofer (“Hinderhofer”) is the sole principal of RH, was not the salesperson on the contract and did not perform any of the home improvement work.

Additional Findings of Fact

On March 28, 2009, the consumer took out a loan for $290,000 at a per annum interest rate of 8.250%. Included in this loan amount was the $15,000 paid to RH. The consumer paid $3,238 in interest payments on the amounts not reimbursed by the respondent pursuant to the February 13, 2007 settlement agreement, up until the June 23, 2009 hearing date.

Opinion

The consumer established by a preponderance of the credible evidence that RH failed to provide the consumer with a comprehensive contract written in compliance with relevant laws and rules and accepted payment in full and then failed to perform the home improvements pursuant to the contract in a skillful and competent manner, in violation of Administrative Code § 20-700 and 6 RCNY § 1-12. Accordingly, charges #2 and #3 shall be sustained against respondent RH.

The credible evidence further establishes that RH conducted activities under a name that was not on file with the Department in violation of Administrative Code § 113. Accordingly charge #7 shall be sustained against respondent RH.

The credible evidence further establishes that respondent RH failed to include the required information and notices in the contract as set forth in charges #10 through #25. Accordingly these charges shall be sustained against respondent RH.

Hinderhofer did not dispute the consumer’s testimony regarding her transaction with Napolitano. However, he denied that Napolitano was authorized to transact business on behalf of RH and thus asserted that he is not responsible for Napolitano’s actions. I find this claim not credible for the following reasons:

Hinderhofer admitted that for several years he and Napolitano shared the Old Country Road business storefront where they each operated their own separate home improvement business providing different services from the location. He further admitted that in his absence, Napolitano would sometimes assist prospective customers seeking RH’s services. He admitted that the telephone number that the consumer and the mediator from the Department called repeatedly, (516) 938-5414, is the telephone number that RH used to transact business. He further acknowledged that the fax number the Department mediator used several times in attempting to settle this complaint also belonged to RH.

In addition, Hinderhofer claimed that he knew Napolitano for approximately twenty years and always viewed him to be dishonest, a “master schemer” and a compulsive gambler. He claimed further that Napolitano had to vacate his portion of their storefront in about 2004, because he failed to timely pay his portion of the rent. However, despite these negative feelings towards Napolitano he also claimed that from about 2004 until 2008, he permitted Napolitano to come into the his storefront whenever he wanted including when Hinderhofer was not present. He testified further that even after Napolitano vacated the premises, he permitted him to use RH’s business telephone and fax machine whenever he wanted and permitted RH’s receptionist to receive telephone messages on Napolitano’s behalf and allowed her to forward them to Napolitano. In addition subsequent to 2004, he allowed Napolitano to receive mail at RH’s storefront address and permitted him access to RH’s mail. Finally, he testified that in or about June 2008, he moved into a new storefront with Napolitano.

In light of how Hinderhofer claimed he felt towards Napolitano it does not make sense that Hinderhofer would then allow Napolitano unsupervised access to his storefront especially in his absence and permit him to use the business fax or telephone whenever he wanted. His further claim that despite all his feelings of mistrust towards Napolitano he moved into a new storefront with him in June 2008 is absolutely illogical. Hinderhofer’s assertion that Napolitano may have improperly transacted business with the consumer and attempted to settle this complaint with the mediator during these unsupervised visits is not credible.

Moreover, although Hinderhofer claimed that the two checks the consumer issued to RH were fraudulently endorsed by Napolitano, he never went to the bank where they were negotiated and requested an investigation or filed a formal complaint regarding the transactions. Finally Hinderhofer requested and was granted additional time to submit evidence from the Nassau County District Attorney’s Office that he claimed would demonstrate that only Napolitano took the consumer’s money and that Hinderhofer played no role in this matter, however he failed to do so.

Based on all the foregoing inconsistencies and illogical claims in Hinderhofer’s testimony, it is determined that Hinderhofer failed to rebut the consumer’s credible testimony that he allowed Napolitano to conduct business on RH’s behalf. Furthermore, by failing to perform the work, disregarding the terms and conditions agreed to under the contract, and by abandoning the work, RH violated Administrative Code §§ 20-101 and 20-393(1). Accordingly charges #1, #5 and #6 shall be sustained against RH.

Finally since RH allowed Napolitano to solicit and sell a home improvement contract on its behalf without a home improvement salesperson’s license, it is found in violation of Administrative Code § 20-393(9). Accordingly charge #9 shall be sustained against RH.

The consumer did not present any evidence in regard to charges #4 and #8. Accordingly these charges shall be dismissed against RH.

Inasmuch as the consumer credibly testified that she never met Hinderhofer or transacted any business relative to Hinderhofer’s HIS license, and the consumer failed to submit any evidence to establish that respondent Hinderhofer in his capacity as an HIS licensee violated charges #1 through #25, these charges shall be dismissed against Hinderhofer.

Additional Opinion

Based on the credible evidence, the consumer is entitled to restitution in the amount of $12,238.

The consumer submitted documentation which indicates the total amount of interest payments paid by her based on the outstanding balance on the February 13, 2007 settlement agreement. The consumer admits in her documentation that she received six $1,000 repayments between July 24, 2006 and May 27, 2007. However, she only deducted five repayments.[1]

Therefore, she is entitled to total restitution in the amount of $12,238, which represents the $9,000 originally ordered plus $3,238 in interest payments (see appendix A).

Regarding the $1,000 penalty claimed by the consumer pursuant to the February 13, 2007 settlement agreement, section 20-104(e)(2) of the New York Administrative Code states, in relevant part, that “[t]he commissioner may arrange for the redress of injuries caused by such violations…” The penalty amount agreed to among the parties is in addition the $15,000 contract. Punitive damages will not be considered by this tribunal.

The consumer also submitted a claim for lost income which she incurred as a result of pursuing this action. A claim for lost income incurred by a consumer which is based on time spent filing the complaint, checking on payments, preparing for hearings and attending hearings (even when there are several hearing dates or adjournments involved) is not compensable in this tribunal.

Order

CD 500102312:

Respondent RH is found guilty of charges numbered 1 through 3, charges numbered 5 through 7 and charges numbered 9 through 25 and is hereby ordered to pay to the Department a TOTAL FINE of $3,850.00 as follows:

Charges 2 & 3 $ 350.00

Charges 5 & 6 $ 100.00

Charge 7 $ 350.00

Charge 9 $ 600.00

Charges 10, 11, 12, &13 $ 200.00

Charges 14 & 15 $ 200.00

Charge 16 $ 200.00

Charge 17 $ 200.00

Charges 18 & 19 $ 200.00

Charge 20 $ 200.00

Charge 21 $ 200.00

Charge 22 $ 250.00

Charge 23 $ 350.00

Charge 24 $ 250.00

Charge 25 $ 200.00

Charges 4 and 8 are dismissed.

In addition, HIC License #089074 is REVOKED, EFFECTIVE IMMEDIATELY. Ronald Hinderhofer Inc. a/k/a RH Construction is directed to surrender its license documents to the Licensing Division immediately. If it continues to operate with revoked licenses, it is subject to CRIMINAL PROSECUTION and/or civil penalties of $100 per day for each day of unlicensed activity, as well as the closing of its business and/or the removal of items sold, offered for sale, or utilized in the operation of its business, pursuant to the Administrative Code of the City of New York Sections 20-105 and 20-106 (the “Padlock Law”).

Respondent Ronald Hinderhofer Inc. a/k/a RH Construction is hereby further Ordered to pay restitution to consumer Shannon Mullen in the amount of $12,238.

DD 500102312:

Respondent Ronald Hinderhofer is found not guilty of charges numbered 1 through 25.

This constitutes the recommendation of the Administrative Law Judge.

_______________________________

David S. Paul

Administrative Law Judge

DECISION AND ORDER

The recommendation of the Administrative Law Judge is approved.

This constitutes the Decision and Order of the Department.

_____________________________

Bruce M. Dennis

Deputy Director of Adjudication

NOTICE TO RESPONDENT(S): If you wish to file a MOTION TO VACATE this decision, you must submit the motion to the Director of Adjudication, Department of Consumer Affairs, 66 John Street, New York, NY 10038, within 15 days from the date you knew or should have known of this decision. The motion must include: A check or money order for the sum of $25 payable to the Department of Consumer Affairs; and a check or money order payable to the Department of Consumer Affairs for the entire restitution amount ordered by the decision; and a sworn statement outlining a meritorious defense to the charges alleged in the Notice of Hearing; and a statement offering an excuse for its failure to appear on the designated hearing date. In addition, you must serve a copy of the motion to vacate on both the Consumer complainant and the Legal Services Division of the Department of Consumer Affairs, 42 Broadway, 9th Floor, New York, NY 10004.

NOTICE TO CONSUMER COMPLAINANT(S): If you wish to APPEAL this decision, or file a MOTION FOR REHEARING, you must file the appeal or motion with the Director of Adjudication, Department of Consumer Affairs, 66 John Street, New York, NY 10038 within 30 days from the date of this decision. You must include with your appeal or motion a check or money order for the sum of $25 payable to the Department of Consumer Affairs. In addition, you must serve a copy of your appeal or motion on the respondent(s).

|Mail payment in the enclosed envelope addressed to: |

|NYC Department of Consumer Affairs |

|Collections Division |

|42 Broadway, 9th Floor |

|New York, NY  10004 |

-----------------------

* This Superseding Decision was prepared with the assistance of Legal Intern Andrew Tuch.

[1] The documentation submitted by the consumer only deducted five $1,000 repayments as follows: July 24, 2006; March 2007; March 2007; April 2007; and May 2007. Specifically, the consumer failed to include the February 2007 payment.

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