ALJDEC

00F-0624-ROC · Registrar of Contractors · 2000-03-08

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 8, 2000.

APPEARANCES: Complainants appeared through Cheryl J. Hintzen.

Respondent was represented by its attorney, Timothy B. O’Connor, Esq.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

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. Complainants presently occupy a now 15-year old residence that they had purchased in July, 1998 from a Mr. and Mrs. Lewin (herein called “Sellers”), who had resided in the home for approximately six or seven years.

2. In 1993, the aforesaid Sellers, by contract with Respondent, had arranged for the application by Respondent of a built-up roof covered with white reflective coating materials on two out of the three separate roof areas over the house. Further arrangements were subsequently concluded by these Sellers with Respondent in early March, 1997 for the same type of roofing work over the remaining portion of the roof.

3. Several months after Complainants’ 1998 purchase of the home, water leaks were experienced into the interior of the dwelling or into the garage, all of which leaking was reported to Respondent.

4. The evidence did not adequately establish that any leaks were previously experienced by or reported by the Sellers. On the contrary, the Sellers had confirmed in writing that no leaks were observed after Respondent’s original or subsequent work up until and including the date of sale to and occupancy by Complainants. The original phase of re-roofing and coating work over two portions of the roof had remained water tight for approximately five years. With respect to the subsequent phase of work over the third portion of the roof, Complainants reported water entry more than nineteen months following Respondent’s work beneath the third phase of roofing, additionally reported leaking from other locations below the roofing installed over the other two roof sections installed many years earlier.

5. The testimony was highly conflicting as to whether a leaking condition existed and also as to whether the source of such leakage, if any, was from the roof. No valid reason is perceived to disbelieve either party’s version. In any event, Respondent was shown to have returned to the jobsite on every occasion that problems were reported and to have performed numerous remedial repair measures over a much prolonged

time period commencing in late 1998 by way of efforts to address the reported problems. Most of such measures were in the nature of maintenance, consisting primarily of clearing the existing drains that were shown to have become clogged with debris. Complainants filed a formal complaint with the Registrar of Contractors on August 25, 1999.

6. It was shown that a hot-water heater line that was a component part of a unit used in the residence for approximately eight or more years malfunctioned and burst in early April, 1999, directly causing extensive damage to the interior walls, ceilings and flooring in the home, as well as to household articles. However, any finding that the failure of the existing water heater or its water line was proximately caused by leakage from the roof installed and coated by Respondent would be impermissibly based upon mere conjecture.

7. It was not disputed that Complainants had filed a claim with their insurance company under their homeowner’s policy for the damages resulting from the water heater line malfunction, and they were shown to have collected several thousand dollars for many of the same items of claimed damage to walls, ceilings, floor coverings and household articles for which Complainants seek to hold Respondent responsible.

8. Notwithstanding the relatively prompt responses by Respondent to reported water leak problems, Complainants ultimately concluded arrangements through another contractor for a complete roof replacement consisting of an admittedly upgraded foam coating application. Further substantial expenditures were incurred by Complainants for various repairs to interior damage, most of which payments were made to an individual not shown to have possessed a current valid contractor’s license.

9. In essence, Complainants are seeking to recover their expenses incurred for repairing damage and for installing a new roof system. Since the Registrar of Contractors is not empowered to adjudicate and award money damages, it appears that neither the Registrar nor the Office of Administrative Hearings are the most appropriate forum in which to seek and obtain such monetary relief, if any entitlement thereto could be otherwise adequately established. Moreover, to the extent that all or part of the monetary claim is predicated upon the reimbursement of amounts paid by Complainants to an unlicensed contractor, it would be incongruous for the Registrar, who is charged with enforcing the State’s licensing laws, to play any role in the repayment or reimbursement of sums transmitted to unlicensed individuals or entities for construction work performed in probable violation of such laws.

10. The making of subsequent repairs by a licensed contractor such as Respondent does not operate to waive, elongate or extend the period of limitations for commencing an administrative action against the license holder. When repair work is attempted “after” the running of the statutory time period, the statutory affirmative defense potentially available to a contractor is not lost. Instead, where the defense is raised at the first level of hearing, as here, and no conduct on the part of or attributable to the contractor has served to generate a delay by any complaining party in filing a formal complaint, thereby raising an estoppel to preclude the use of this defense, the corrective work actions by the contractor are deemed to have constituted a “gratuitous repair and will not generally be subject to disciplinary action by the Registrar. This analysis would tend to be dispositive of any and all repair efforts applicable to areas on or under the first two portions of the roofing that were installed in 1993.

11. The sole area of the roof that had been the subject of subsequent repair efforts less than two years after an original re-roofing and coating application by

Respondent appeared to be under the third phase roof portion performed in 1997. One such reported location of leakage was over and along the side walls of the circular staircase, at or near an eyebrow shaped feature. With respect to this item of complaint, as well as to another reported leaking condition into the garage that was under a prior phase of Respondent’s roofing installation, the evidence revealed that the causes of such water leaks were traceable to the clogging of drains and not to Respondent’s roofing work. Respondent was able to successfully perform corrective work on the drains so as to curtail further leaks at both locations.

12. Even assuming no statute of limitations bar to any element of the administrative complaint filed in this case, it must be held that the evidence did not sufficiently establish the existence of any uncorrected leaks from the roof traceable to Respondent’s original work and/or following Respondent’s remedial efforts. By way of a further example, in the kitchen where leaking around a window was observed, insufficient proof was presented to establish that the source of this water leaking was traceable to any act or omission attributable to Respondent’s jobsite roofing work as opposed to other potentially equal or more probable sources of water entry unrelated to Respondent’s work. Consequently, it is found and determined that the evidence failed to adequately demonstrate any contracting law violations based upon allegedly substandard workmanship on the part of Respondent with respect to any of the phases of roofing.

CONCLUSIONS OF LAW

1. The express provisions of A.R.S. §32-1155(A) provide for the “filing of a verified complaint with the registrar charging commission within two years prior to the date of filing the complaint, of an act which is cause for suspension or revocation of a license. (Emphasis added). 2. The above-quoted statutory subsection, like any Statute of Limitations, is a statute of repose, enacted as a matter of public policy in Arizona to fix a time within which administrative disciplinary complaints must be filed. See Ross v. Ross, 96 Ariz. 249, 393 P.2d 933 (1964); 1 Wood on Limitations, 4th Ed., Sec. 4. Such statute must be strictly construed and runs from the date of completion of the work which is the subject of the complaint and not from the date of discovery of the alleged wrong.

3. The construction act giving rise to the instant complaint was the allegedly improper and defective original roofing installation work by Respondent, and such act was committed on or prior to the date of completion. In this case, two dates are significant. The first phase in 1993 encompassed work on two portions of the roof surface, and the second phase in 1997 related to the remaining portion.

4. Subsequent repair work by a contractor does not operate to extend or toll the running of any applicable limitation period. Lyon v. Great American Insurance Company, 4 Ariz. App. 596, 422 P.2d 724 (1967). However, any such performed repair work, in and of itself, may give rise to a separate, independent claim for which the applicable statute of limitations may again begin to run. Op. Atty. Gen. I79-119 (R79-071), April 25, 1979.

5. So as not to discourage the undertaking of subsequent remedial efforts by a licensed contractor after the running of the statutory time period, the Registrar has long adhered to a policy that treats any post- limitation period repair as being “gratuitous” and not resulting in the loss of a timely asserted affirmative defense based upon the statute of limitations.[1]

6. Without commenting upon the existence or extent of potential civil liability, if any, of Respondent under its agreements with the Sellers, as to which Complainants may appropriately claim to have been a future intended beneficiary, it appears that A.R.S. §32-1155(A) effectively bars any administrative action on those items of complaint relating to or resulting from the 1993 installation work. Any and all subsequent repair efforts on the part of Respondent must be deemed to have been gratuitous, thereby not serving to waive or forfeit the ability of Respondent to assert defenses predicated upon the statutory time period for commencing administrative disciplinary actions. The passage of more than two years before any repairs were undertaken would warrant a dismissal of all claims relating to work on or damages under the 1993 roofing work by Respondent.

7. With respect to the remaining complaint items based upon or resulting from the 1997 installation work, repairs were undertaken within two years and these areas are held to constitute proper subjects for determination at the hearing. However, Complainants were unable to sustain their burden of establishing by a preponderance of reliable, substantial and probative evidence presented at the hearing that either Respondent’s original roofing work or subsequent repair efforts were substandard or unworkmanlike.

8. Wholly apart from considerations of the statute of limitation issues and workmanship standards, the Registrar of Contractors is not the most appropriate forum in which to seek and obtain monetary relief for damages allegedly sustained. These claims must be more properly pursued before a civil court of competent jurisdiction. This is especially significant in the instant case where a substantial portion of the amount claimed to constitute damages consisted of sums paid to an unlicensed individual to whom Complainants may have had no legal payment obligation pursuant to the provisions of A.R.S. §32-1153.

9. The evidence of record did not support any determination that Respondent has violated the provision of A.R.S. §32-1154(A) as charged in the within Citation.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the entire Citation and Complaint in Case Number 00-0624 be dismissed.

Dated: March 22, 2000.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Michael P. Goldwater, Director Registrar of Contractors 800 West Washington Street (6th Floor) Phoenix, AZ 85007

ATTN: Griselda Ybarra ----------------------- [1] Although not shown to be an issue in this case, it is probable that the Registrar would not and could not abstain from a legitimate exercise of its disciplinary police powers in the event that a “gratuitous” repair resulted in a violation of local building codes or otherwise posed a genuine danger to the public’s health and safety.

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