PL H



Susan T. Hughes and the Department of Consumer Affairs v. James Hauer d/b/a Woodland Builders and James Hauer

CITY OF NEW YORK

DEPARTMENT OF CONSUMER AFFAIRS

| |DECISION AND ORDER |

|SUSAN T. HUGHES | |

| |Violation No.: CD5-82119 |

|and |DD5-82119 |

| | |

|THE DEPARTMENT OF CONSUMER AFFAIRS, |License Nos.: 1130778 (HIC) |

| |1130780 (HIS) |

|Complainants, | |

| |Licensee’s Address: |

|-against- |184 Broad Street |

| |Summit, NJ 07901 |

|JAMES HAUER d/b/a WOODLAND BUILDERS & James Hauer, | |

| | |

|Respondent-Licensee. |Date: October 25, 2004 |

| | |

An inquest was held on July 20, 2004.

Appearances: For the Complainants: Susan Hughes. Although duly notified of the time and place of the hearing, the respondent failed to appear.

The respondent is charged with violating the following:

New York Administrative Code:

1. Section 20-393(13) by including in a home improvement contract a provision or clause whereby the owner waives or is barred from asserting any rights, claims, defenses or remedies available to an owner under the applicable provisions of the Administrative Code or any rules promulgated pursuant thereto;

Title 6 of the Rules of the City of New York (6 RCNY):

2. Section 2-223(a) by failing to secure each and every permit necessary to properly complete the contract in accordance with applicable state or local building laws.

New York Administrative Code:

3. Section 20-101 by failing to maintain the standards of integrity, honesty and fair dealings required of licensees by misrepresenting that he had obtained or had attempted to obtain requisite authorizations from the Department of Buildings;

4. Section 20-101 by failing to maintain the standards of integrity, honesty and fair dealings required of licensees by misrepresenting that he had obtained or had attempted to obtain requisite authorizations from the complainant’s co-op board;

5. Section 20-101 by failing to maintain the standards of integrity, honesty and fair dealings required of licensees by refusing to refund the complainant’s deposit after failing to perform the work under a home improvement contract;

Title 6 of the Rules of the City of New York (6 RCNY):

6. Section 2-221(a)(1), by issuing a contract which did not contain the date of the transaction or the salesperson’s name and license number;

7. Section 2-221(a)(1), by issuing a contract which did not contain the date of the transaction or the salesperson’s name and license number;

8. Section 2-221(a)(2) by failing to include in the home improvement contract the approximate dates, or estimated dates, when the work will begin and be substantially completed;

9. Section 2-221(a)(4), by failing to include a clause notifying the complainant, as buyer, that the Licensee is legally required to deposit all payments received prior to completion in accordance with subdivision four of Section 71-a of the New York State Lien Law and that, in lieu of such deposit, the Licensee 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;

10. Section 2-221(a)(10) by failing to include in the contract a statement, in bold type, to the effect that the complainant, as 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;

11. Section 2-221(b), by failing to provide the Complainant with a separate Notice of Cancellation form;

12. Section 2-221(a)(8), by failing to include in the contract a clause wherein it agreed to furnish the complainant, as buyer, with a certificate of Worker’s Compensation prior to the commencement of work, pursuant to the contract;

13. Section 2-221(a)(9) by failing to include in the contract a clause requiring the Licensee to procure all permits required by law.

Based on the evidence in the record, I RECOMMEND the following:

Findings of Fact

The consumer complainant purchased a cooperative apartment at 21 East 22nd Street, #11D New York, NY on December 18, 2002. In or about the end of November 2002, while the sale was pending, the consumer met with designer Luis Garcia Maldonado, who resides in the building. On January 6, 2003, the consumer retained Mr. Maldonado to design her apartment, and he recommended the respondent as general contractor. Shortly thereafter, the consumer met with the respondent who represented that he could obtain all required permits, could do the job and could finish it by May 1, 2003. Relying on those representations, she rented an apartment in December 2002 with the intention of residing there until April 30, 2003. The rent was $1,300/month. She also put her furniture and possessions in storage at Chelsea Mini-Storage, at a cost of $129/month[1].

On January 4, 2003, the respondent presented her with a written proposal.

On January 30, 2003, pursuant to Mr. Garcia Maldonado’s suggestion, she paid the respondent a “construction deposit” of $7,947.50. Out of that money, the respondent paid architect Spence Genge $4,000 for drafting the architectural plans which were approved by the consumer’s co-op board on March 7, 2003.[2]

On April 16, 2003, the consumer and the respondent finally entered into a written contract whereby the respondent agreed to perform the gut renovation of the apartment for $74,682.77. The consumer entered into the contract, still relying on the respondent’s aforementioned representations. The contract price included but was not limited to Mr. Genge’s fee to draft the plans, as well as the fees for obtaining all required permits.[3] At the time the contract was executed, the consumer paid the respondent an additional $24,052.50, thus bringing the total amount paid to $32,000.

The respondent filed the plans with the NYC Department of Buildings (hereinafter “DOB”) to obtain a work permit. However, on April 30, 2003, his expediter, Thomas Tsue, advised the consumer that the permit could not be issued because the respondent is not registered as a contractor with the DOB. At that time, the consumer advised the respondent that she was canceling the contract and requested a refund. Thereafter, the respondent issued two reimbursement checks, totaling $21,000, but then stopped payment on them, prompting the consumer to file a complaint with the respondent’s local police department. As a result, the respondent paid her the sum of $18,463 by certified check.

On June 23, 2003, the consumer entered into a contract with another general contractor, Superman Contracting Corp., to renovate her apartment pursuant to the aforementioned plans. The contract price was $100,000.

From December 2002, the time when the consumer began renting the apartment, until June 2003, the time when she signed with Superman Contracting, the consumer had paid seven months rent totaling $9,100. She also paid a total of $903 for seven months of storage.

The contract document was deficient in that it failed to include the following:

• Respondent’s home improvement contractor and salesperson license numbers;

• Actual dates of estimated work commencement and substantial completion;

• A clause notifying the complainant, as buyer, that the Licensee is legally required to deposit all payments received prior to completion in accordance with subdivision four of Section 71-a of the New York State Lien Law and that, in lieu of such deposit, the Licensee 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;

• The required Cancellation clause;

• The required Workers Compensation clause; or,

• The required Permits clause.

The evidence further establishes that the respondent failed to provide the consumer with a separate Notice of Cancellation form. Lastly, the respondent violated 6 RCNY 1-14 by failing to appear at the duly noticed hearing.

Opinion

The credible evidence establishes that the respondent failed to maintain the standards of honesty, integrity and fair dealing by falsely representing that he was able to obtain all required permits, by falsely representing the time in which the work would be completed, by failing to commence any work, by accepting monies from the consumer without having first delivered a fully executed written contract, and by failing to refund all monies paid to him, minus the value of any services actually rendered (i.e. the $4,000 paid to the architect for the plans). Accordingly, it is determined that he violated Administrative Code §20-101, and charges #3 and #5 must be sustained. His actual failure to secure the DOB permit violated 6 RCNY 2-223(a), warranting that charge #2 be sustained.

The evidence further establishes that the contract document was deficient as alleged, except for charge #9, and that the respondent failed to provide the consumer with a separate Notice of Cancellation form, warranting that charges #6 through #13 be sustained. Regarding charge #9, the details set forth therein fail to establish a violation of the section of law cited. Accordingly, that charge must be dismissed.

The credible evidence further establishes that the respondent did, in fact, submit the architectural plans to the consumer’s co-op board, and that such plans were approved. Accordingly, charge #4 must be dismissed.

Administrative Code §20-393(11) prohibits the respondent from “including any provision or clause in a home improvement contract whereby the owner waives or is barred from asserting any rights, claims, defenses or remedies available to an owner under this subchapter or any rules promulgated pursuant thereto.” The subject home improvement contract included a clause that provided:

“All delays due to building departments/weather are not our responsibility, and we are not to be held responsible.”

This provision, as written, constitutes a waiver of the consumer’s rights and remedies for any Building Department delays, even those resulting from the respondent’s own negligence and/or malfeasance. It is thus determined that the inclusion of this provision in the home improvement contract violated Administrative Code §20-393(13). Accordingly, charge #1 must be sustained.

The credible evidence further establishes that the consumer paid the respondent a total of $32,000. Out of that amount, the respondent paid $4,000 to the architect for plans that were approved by the co-op board, were filed with the Department of Buildings and which are currently in the consumer’s possession and being used. The evidence further establishes that the respondent previously refunded $18,463 to the consumer. It is thus determined that the consumer is entitled to restitution in the amount of $9,537, computed as follows:

$32,000 (amount paid to the respondent)

- $ 4,000 (amount paid to architect for the plans)

- $18,463 (amount that the respondent has already refunded)

$ 9,537 Due the consumer

The consumer lost seven months[4] of time as a result of the respondent’s knowing failure and inability to perform the contract. A reasonable inference can be drawn that such delay would extend the time for the new contractor to complete the job by seven months and, consequently, would require the consumer to pay rent and storage costs for seven months. It is therefore determined that the consumer is entitled to be compensated for seven month’s rental and storage costs. The credible evidence establishes that she paid $9,100 in rent and $903 for storage during this period. Accordingly, the consumer shall be awarded additional restitution in the amount of $10,003.

The consumer’s claim for reimbursement for her monthly mortgage and maintenance expenses on her cooperative apartment during this period is denied, insofar as she became responsible for these charges as of the date of closing in December 2002, and the respondent’s actions and/or inactions did not impact on this obligation. Her claim for reimbursement of utilities and cable television costs is similarly denied insofar as these are expenses she would have ordinarily incurred, regardless of where she was living.

It is determined that the reimbursement of the balance of the monies paid to the respondent, minus the architect’s fee, and the rental and storage costs for seven months will place the consumer back in the position she was in prior to dealing with the respondent. Regarding the price difference between the respondent’s contract and Superman Contracting’s contract, the consumer failed to establish that Superman Contracting intended to use the same quality of materials and labor as was contemplated in the respondent’s contract.[5] She further failed to establish that the difference in price between the two contracts was due to an increase in materials and labor costs that may have occurred during the aforementioned seven-month delay, or otherwise account for the price difference. The fact that Superman Contracting’s price is $25,317.23 higher than the respondent’s price does not automatically warrant the conclusion that the higher cost resulted from the respondent’s failure to perform the subject home improvement contract. Accordingly, the consumer’s claim for restitution in the amount of the price difference is hereby denied.

Lastly, it is noted that there is no statute or rule that provides for the award of interest in the instant administrative proceeding and the consumer’s request seeking interest is accordingly denied.[6]

Order

On CD5-82119 & DD5-82119

The respondent is found guilty of charge number(s) 1, 2, 3, 5 and 6 through 13, and is

Ordered to pay to the Department a TOTAL FINE of $2,700, as follows:

Charge 1: $ 300

Charge 2: $ 500

Charge 6 & 7: $ 200

Charge 8: $ 200

Charge 10: $ 250

Charge 11: $ 350

Charge 12: $ 200

Charge 13: $ 200

6 RCNY Section 1-14: $ 500; and, the licensee is further hereby

Ordered to pay to the Complainant restitution in the amount of $19,540, calculated as follows:

$ 9,537 (the balance of the refund due from the respondent)

$10,003 (for seven months of storage and rent)

In addition, pursuant to Charges #3 and #5, respondent’s licenses #1130778 (HIC) and #1130780 (HIS) are REVOKED, EFFECTIVE IMMEDIATELY. The respondent is directed to surrender his license, documents the Licensing Division immediately. If the respondent continues to operate, with revoked licenses, he 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 his business and/or the removal of items sold, offered for sale, or utilized in the operation of his business, pursuant to the Administrative Code of the City of New York Sections 20-105 and 20-106 (the “Padlock Law”).

Charges #4 and #9 are dismissed.

This constitutes the recommendation of the Administrative Law Judge.

__________________________

Bruce M. Dennis

Administrative Law Judge

DECISION AND ORDER

The recommendation of the Administrative Law Judge is approved.

This constitutes the Decision and Order of the Department. Failure to comply with this Order with thirty (30) days will result in suspension of the license.

___________________________

Nancy J. Schindler

Deputy Director of Adjudication

cc: Christopher Morik, Esq.

Gaffin & Mayo, P.C.

225 Broadway – Suite 2510

New York, NY 10007-3001

If the respondent wishes to file a MOTION TO VACATE this decision, it must submit the motion within 15 days from the date it knew or should have known of this decision. The motion must include the following: A check or money order for the sum of $25 payable to the Department of Consumer Affairs; and the restitution amount; 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, the respondent must serve a copy of its motion to vacate on both the consumer complainant and the Legal Division of the Department of Consumer Affairs, 42 Broadway, 9th Floor, New York, NY 10004.

If the consumer complainant wishes to APPEAL this decision, or file a MOTION FOR REHEARING, you must file the appeal or motion within 30 days of 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).

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[1] As set forth on the consumer’s credit card statements, entered into evidence as Exhibit I.

[2] The consumer currently has the plans in her possession.

[3] The consumer was responsible for purchasing all kitchen appliances, tile and stone, bathroom fixtures, lighting fixtures.

[4] Computed from December 2002 (the time she relied on the respondent’s oral misrepresentations) through June 2003 (the time she contracted with Superman Contracting).

[5] It is noted that the respondent’s contract does include an itemized cost breakdown, whereas the Superman contract does not.

[6] In papers submitted after the inquest date, Christopher Morik, Esq., on the consumer’s behalf, requested that interest be imposed at a rate of 9% per annum, citing CPLR §5004. However, that section allows for the award of interest in judgments resulting from an “action” or “special proceeding”. CPLR §304 provides, in relevant part, that “an action is commenced by filing a summons and complaint or summons with notice” (emphasis added). A special proceeding is commenced by filing a petition” (emphasis added). It further provides that “filing shall mean the delivery of the summons with notice, summons and complaint or petition to the clerk of the court in the county in which the action or special proceeding is brought or any other person designated by the clerk of the court for that purpose together with any fee required as specified in rule twenty-one hundred two of this chapter for filing (emphasis added).” The instant administrative proceeding, which was commenced by the service of a Notice of Hearing upon the respondent, is not an “action”, and does not concern a judgment. In the absence of any other section of law providing for the award of interest in such proceeding, the consumer’s request must be denied.

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