Innovative Design & Construction, LLC v. Construction Contractors Board

375 P.3d 533, 278 Or. App. 448, 2016 WL 3024789, 2016 Ore. App. LEXIS 641
CourtCourt of Appeals of Oregon
DecidedMay 25, 2016
Docket75384; A151139
StatusPublished

This text of 375 P.3d 533 (Innovative Design & Construction, LLC v. Construction Contractors Board) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Innovative Design & Construction, LLC v. Construction Contractors Board, 375 P.3d 533, 278 Or. App. 448, 2016 WL 3024789, 2016 Ore. App. LEXIS 641 (Or. Ct. App. 2016).

Opinion

SERCOMBE, P. J.

Petitioner, Innovative Design & Construction, LLC (Innovative Design), seeks judicial review of a final order of the Construction Contractors Board (CCB) finding that Innovative Design had committed 12 violations of ORS 701.098(1)(L) and imposing a $1,000 penalty for each of those violations. On review, Innovative Design raises five assignments of error. We reject without discussion its third and fourth assignments of error, and write to address the first, second, and fifth assignments. In its first assignment, Innovative Design asserts that OAR 812-002-0260, the CCB’s rule defining dishonest and fraudulent conduct as used in ORS 701.098(1)(L), should be invalidated because it “depart [s] from the legal standard intended by the legislature” in the statute. However, we conclude that Innovative Design failed to preserve that contention during the administrative process. In its second assignment, Innovative Design contends that, in its order, the CCB erroneously interpreted the term “injurious to the welfare of the public” as used in ORS 701.098(1)(L) and that the order is “ambiguous such that reasonable minds could differ as to how the term ‘injurious to the public welfare’ [h]as been defined and applied.” As explained below, we conclude that those contentions, like those raised in the first assignment, were not preserved. Finally, in its fifth assignment of error, Innovative Design asserts that a number of factual findings contained in the board’s order are not supported by substantial evidence. See ORS 183.482(8)(c) (on review in a contested case, the “court shall set aside or remand [an] order if the court finds that the order is not supported by substantial evidence in the record”); see also Hettle v. Construction Contractors Board, 260 Or App 135, 137, 316 P3d 344 (2013), rev den, 355 Or 380 (2014) (substantial reason review requires us to determine whether the CCB’s findings of fact logically lead to its conclusions of law). As explained below, we conclude that most of the findings in question are supported by substantial evidence. Further, the findings that we conclude are not supported by substantial evidence were not material to the board’s order and, therefore, did not affect the validity of the order and do not provide a basis for reversal. Accordingly, we affirm.

[451]*451With certain exceptions discussed below, the parties do not challenge the CCB’s findings of historical fact.1 Our description of the facts is drawn from those findings.

Innovative Design is licensed by the CCB as a general contractor; its managing member is Gene Pfeifer. The violations found by the CCB in this case are related to three different residential remodeling projects: the Gatti project, the Rawson project, and the LaGrone project.

In 2006, Innovative Design entered into written cost plus contracts for the Gatti project.2 For the project, the total cost plus contract price was $431,561. In 2006 and 2007, Gatti paid Innovative Design $668,898 for the project. Because he also paid some of the subcontractors directly, in total, Gatti paid at least $700,000 for the project. Innovative Design hired a number of subcontractors to work on the project. Among those subcontractors were Pioneer Roofers, Terry’s Electric, and Aloha Ceilings. Although each of those companies completed the job for which it had been hired, Innovative Design failed to pay the full amount to which it had agreed. At the time of the administrative hearing, Innovative Design still owed money to each of those subcontractors. In 2008, Innovative Design “admitted that $17,894 was due and owing to various subcontractors that had worked on the Gatti project.”

In 2007, Innovative Design entered into a written fixed price contract for $149,829 for the Rawson project. In May 2008, the Rawsons filed a CCB complaint against Innovative Design. According to the CCB findings, Innovative Design’s progress billings to the Rawsons “are marked ‘PAID’ and the credit memo dated May 2, 2008 reflects a zero balance. [Innovative Design] did not sue Rawson for any amount due on the contract.” (Internal citations omitted.) Innovative Design hired subcontractors, including Sandy Electric, Perfection Hardwood Floors, and [452]*452Taylor & Son Drywall, to work on the project, a remodel of the Rawson home. Each of those three subcontractors completed the work it had been hired to perform on the remodel. However, Innovative Design failed to pay the subcontractors in full and, at the time of the administrative hearing, owed money to each of those subcontractors; it “admitted [in 2008] that $19,238 was due and owing to various subcontractors which had worked on the Rawson project.”

Finally, in 2008, Innovative Design entered into a written cost plus contract for approximately $58,405 to remodel the LaGrone home. At some point, a dispute arose between the LaGrones and Innovative Design regarding the amount owed for the project. Eventually, in July 2008, they entered into a settlement pursuant to which Innovative Design “agreed to accept $80,808 ($62,655 + $18,153) as payment in full.” The LaGrones paid Innovative Design that amount on the date of the settlement. For the LaGrone project, Innovative Design had hired subcontractors, including CL Woodworks, Inc., Ultimate Painting LLC, Five J’s Tile Co., EZ Flow Plumbing LLC, Anishchenkos FC Inc., and Keystone Granite, to perform work. Although each of those subcontractors completed the work for which it had been hired, Innovative Design failed to pay the full amount owing on the subcontracts. It owed money to several of those subcontractors at the time of the administrative hearing and, in 2008, it “admitted that $13,947 was due and owing to various subcontractors which had worked on the LaGrone project.” Furthermore, the LaGrones themselves paid “Five J’s in full, over and above the settlement amount [they] had already paid [Innovative Design].”

The CCB began an investigation of Innovative Design and Pfeifer and, as a result of Innovative Design’s failure to pay its subcontractors on the Gatti, Rawson, and LaGrone projects, in 2010, the CCB served Innovative Design with a notice of proposed disciplinary action. The notice stated that the CCB intended to assess a $12,000 penalty against Innovative Design, $1,000 for each of 12 violations of ORS 701.098(1) and OAR 812-002-0260. The statute provides that the CCB may, among other things, assess a civil penalty if it “determines after notice and opportunity [453]*453for hearing” that a “licensee or applicant has engaged in conduct as a contractor that is dishonest or fraudulent and that the board finds injurious to the welfare of the public.” ORS 701.098(1)(L). The CCB, in turn, has promulgated OAR 812-002-0260, which provides, in part,

“‘Dishonest and fraudulent conduct,’ as used in ORS 701.098

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Bluebook (online)
375 P.3d 533, 278 Or. App. 448, 2016 WL 3024789, 2016 Ore. App. LEXIS 641, Counsel Stack Legal Research, https://law.counselstack.com/opinion/innovative-design-construction-llc-v-construction-contractors-board-orctapp-2016.