Hearing Set on Loopholes in Contractor Regulations : Consumers: Legislative aide finds many examples of state board ignoring complaints. An O.C. homeowner is a key witness.
Loopholes in California’s system of regulating building contractors will come under scrutiny from state legislators in early October.
A key witness at the hearing will be Mission Viejo homeowner Gina Lamourelle, whose story was part of a recent Times article that demonstrated how the regulatory system can mislead consumers into believing that contractors have unblemished records.
The Contractors State License Board, supported largely by license fees collected from contractors, does not routinely investigate complaints against contractors that use private arbitration to resolve disputes with their clients. Nor does the board have a system for monitoring civil actions against contractors, relying instead on voluntary disclosure by builders or their clients.
The Oct. 6 hearing by the Assembly’s Consumer Protection Committee is an effort to collect consumers’ testimony about how the license board has responded to their complaints against contractors, said Michael Miiller, senior consultant to the committee.
After examining 100 complaints that license board officials declined to investigate, Miiller said he found that in many instances there were reasons to investigate, but the cases were dropped because of the hands-off policy regarding contractors who use arbitration. Miiller said he believes the policy must be changed to provide consumers more protection.
The consumer committee, chaired by Assemblywoman Jackie Speier (D-Burlingame), also is reviewing the license board’s screening of contractor license applications.
“Right now, they only check out the information of about 3% of them,” he said, “and we have informal testimony that as many as half of those have problems, including false statements by the license applicants.”
A preliminary investigation, Miiller said, has found several instances in which the board routinely renewed the licenses of contractors who falsely stated on their application that they had no outstanding judgments against them when, in fact, “the board had fielded complaints that resulted in suits and judgments against the contractor.”
Because so few applications are reviewed, unscrupulous contractors can lie with little fear of being caught, Miiller said.
Mickey M. Matsumoto, chief of enforcement for the license board, said the board “welcomes the opportunity to explain how and why we do what we do.” The Consumer Affairs Committee hearing will be held at the state Capitol building in Sacramento. Miiller said consumers with information about their dealings with the Contractors State License Board can call the committee office at (916) 324-7440.
The hearing was scheduled after The Times published articles about the license board that uncovered dozens of stories like that of Gina and Alain Lamourelle. The couple have spent more than $300,000 on repairs and legal fees after paying an Orange County contractor to build a $178,000 custom home.
The contractor has been the subject of dozens of lawsuits and arbitration judgments but was given a clean bill of health by the license board when Lamourelle called in 1987 to check on the status of its license. Later, the board refused to investigate the Lamourelles’ 1989 complaints against the company because its contract called for arbitration.
“The system doesn’t work to protect the consumer,” Lamourelle maintains. “The real concern is, how many licensed contractors are out there doing substandard work? It is a public safety issue. Look at all the testimony about how poor workmanship resulted in all the damage to homes in Florida after Hurricane Andrew. What will happen when the big earthquake finally hits Southern California?”
The Contractors State License Board, which licenses and regulates contractors in 43 different building trades, has told Lamourelle and other customers of contractor Jeffrey Weiner--who now does business as Gotech Builders Inc. in Orange--that the board’s records did not show any judgments or legal actions against Gotech or an earlier Weiner company, Systems Construction in Anaheim.
Though denying any wrongdoing, Weiner said in interviews with The Times that he has lost “six to eight” arbitrations and been ordered to pay clients hundreds of thousands of dollars in damages.
In addition, The Times disclosed that Weiner and his companies have been sued for fraud, negligence and breach of contract by more than two dozen former clients.
The state attorney general’s office filed a civil complaint against Weiner in July for falsely stating on a 1990 license renewal application that he was not subject to any outstanding judgments.
Weiner said the state’s complaint resulted from his misunderstanding of a question on the license application. While acknowledging that some problems did result from a 1990 reorganization of his company, Weiner maintains that the dozens of complaints and lawsuits by former customers are normal for building contractors. He also said that his company is always willing to correct any problems clients bring to his attention.
