ALJDEC

00F-T0254-ROC · Registrar of Contractors · 2000-08-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: Wednesday, July 19th, 2000; 9:00 a.m. APPEARANCES: The complainant, Dr. Leonard J. Harvey, was represented by Mr. Erwin D. Kratz, attorney-at-law. The respondent, Mikamac Homes, Inc., was represented by Ms. Brenda J. Lee, attorney-at-law. ADMINISTRATIVE LAW JUDGE: Grant Winston. _____________________________________________________________________ This matter was brought on for administrative hearing on July 19th, 2000, in Tucson, Arizona. The record was held open until August 2nd, 2000, for the parties to submit memoranda and proposed findings of fact, conclusions of law, and recommended orders. Testimony was heard and other evidence admitted to record, and, based on the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Order are made. FINDINGS OF FACT 1. The respondent herein, Mikamac Homes, Inc., is, and during all times material hereto was, a contractor, licensed by and doing business in the State of Arizona, holding Class B License number 105476. 2. The complainant herein, Dr. Leonard J. Harvey, is a resident of Tucson, Arizona. He resides there with his significant other, Mr. Daryl Mitchell. They reside together in the Tucson home constructed by the respondent. 3. The parties contracted for the construction of the home on or about May 11th, 1998. Complainant filed a verified complaint with the registrar on September 30th, 1999. Complainant took possession of the home on August 14th, 1999. The complaint and other evidence prove that the construction was not substantially complete until some weeks thereafter, near the end of September, 1999, just before the filing of this complaint. 4. The case was assigned to Registrar of Contractor’s Inspector, Mr. Richard C. Allen. Inspector Allen conducted a job-site inspection on October 28th, 1999. Complainant was present at the job-site inspection. The respondent, in the person of its qualifying party, Mr. Robert T. McClure, was not in attendance due to his not having received notice of the inspection. Inspector Allen issued a Corrective Work Order dated November 9th, 1999. He listed 25 separate items to be corrected, or to be corrected according to all agreements, contracts, prints, plans, drawings, etc. A 26th listed item ordered all work to be done in a professional and workmanlike manner, and according to all applicable codes. 5. Owing to lack of notice to Mr. McClure, he was allowed an extension of time to address the items in the CWO. A second job-site inspection was conducted by Inspector Allen in December, 1999. A pre-hearing inspection was conducted by Inspector Allen on July 13th, 2000. Prior to that time respondent had been taking steps to address most of the items on the CWO; however, respondent contended some items were not his responsibility to correct or provide. Respondent was awaiting a final agency order which he would accept as his ultimate directive. 6. During the prehearing inspection the respondent, Mr. McClure, was present. The complainant was not present. However, in his stead was his housemate and significant other Mr. Mitchell. The undisputed evidence, including that on the complainant’s side of the case as well as the respondent’s, is that complainant had unequivocally and expressly deputed Mr. Mitchell to act as his agent when dealing with the inspector at the prehearing inspection, and in other dealings with the construction of the home. The evidence proves that Mr. Mitchell was essentially the alter-ego of the complainant during the construction of this house, and one could regard speaking with Mr. Mitchell tantamount to speaking with complainant. Thus to all intents and purposes, Inspector Allen was discussing the situation with the complainant at the prehearing inspection. 7. Inspector Allen initiated the prehearing inspection by requesting Mr. Mitchell to show him all the items on the CWO that complainant regarded as not having been corrected. Obviously Inspector Allen did not wish to waste his and everyone else’s time inspecting items that all parties agreed had been corrected. The evidence is rather clear that Mr. Mitchell understood this direction from the inspector, and proceeded to show the inspector the items complainant still regarded as noncompliant with the CWO. Mr. Mitchell showed Inspector Allen seven items of the CWO; therein enumerated as Items ##5, 6, 9, 15, 16, 20 and 21. Those items, and those items alone, were inspected by Inspector Allen. 8. Before terminating the prehearing inspection, Mr. Mitchell raised the issue over Item #2 of the CWO, that is, the order to “[c]orrect/eliminate all ponding at all foundations and provide positive drainage away from all foundations.” Discussion of this was had between Mr. Mitchell and Inspector Allen. Mr. Mitchell informed Inspector Allen that he and the complainant had contracted with another contractor to correct this item. That being the case the inspector declined to inspect the area, it being irrelevant for his prehearing inspection purposes to inspect the work of a contractor uninvolved in this complaint. 9. The undisputed evidence is that an express agency was created as between the complainant and Mr. Mitchell throughout the construction of this house, and particularly concerning the prehearing inspection. It was made perfectly clear to Mr. Mitchell by Inspector Allen that the former was to show the latter only the items that complainant contended had not been corrected. Mr. Mitchell did just that. Both the inspector and the complainant, who was present at the prehearing for the sole purpose of protecting his interest, had an absolute right to rely on the representations made to them during the prehearing inspection by Mr. Mitchell. It would be grossly unfair, prejudicial and damaging to respondent’s case to allow the actions of complainant’s agent to deprive him of the prehearing right to inspect, and to have the inspector inspect, all the items complainant would subsequently seek to put in issue at the administrative hearing. To do so would allow the complainant the opportunity to “sandbag” and present his best evidence while at the same time deprive that opportunity to the respondent. Complainant is bound by the acts of his agent. Thus it is found that the only items still uncorrected at the time of the prehearing inspection and this administrative hearing were: Items ##5, 6, 9, 15, 16, 20 and 21, which were inspected, and Item #2, which was put into issue at the prehearing inspection, but not inspected because it had already been corrected by another contractor, and the two parts of Item #24, the grinder pump and the landscaping issues which were not inspected because there was nothing to inspect that would have aided the inspector’s work. 10. At the outset of the administrative hearing, the complainant stipulated that the following enumerated items of the 25 in the CWO had been adequately addressed by the respondent: Items ##1, 3, 4, 8, 13, 14, 17, 19, 23, and 25. Thus they are found to have been corrected and will not further be addressed herein. 11. Therefore, the only remaining items of the complaint and CWO that are in issue are the following: Items ## 2, 5, 6, 9, 15, 16, 20, 21, and the two parts of 24, namely, the grinder pump and the landscaping issues. 12. Item # 2 directed the respondent to correct or eliminate the ponding at all foundations and provide positive drainage away from all foundations. The area still in question is at the single-car garage. The evidence shows that the respondent did take some corrective measures to correct water runoff from a scupper. He even provided, pursuant to advice from the inspector, a letter from a registered engineer saying the work corrected the runoff from the scupper. However, the evidence clearly shows that the runoff water from the scupper was not the whole or even major source of the problem. Indeed, the major source of the ponding was from a wash at the rear of the house. Complainant’s evidence shows that this problem was not corrected. 13. The evidence, including photographic evidence, demonstrated that there remained a substantial problem of water runoff at the area of the single- car garage, as a result of runoff from the wash, and that complainant was constrained to hire a third-party contractor to correct this problem. Complainant’s evidence is that on July 2nd, 2000, he paid a reasonable amount of money to correct this problem, $2,166.47, to Lamb Excavating to rebuild a berm directing the water away from the house. This is work the respondent should have done. 14. Items ##5 and 6 dealt with the front entry door and doorway. The evidence shows that most of these corrections had been performed by the respondent, but that minor work remains to be done. The door continues to rub slightly along the T-astrigal at the top, and needs readjustment. There is also a small amount of daylight along the astrigal which needs to be eliminated. 15. Item #9 directed the respondent to correct or replace all windows with scratches in accordance with minimum workmanship standards. The evidence shows that there remain in complainant’s house two windows with scratches sufficient to make them below minimum workmanship standards. A window in the bedroom at the northwest side of the house has a scratch or mar 3/8 inch in diameter which is visible from a distance of 15 feet. A living room window has a scratch six inches long which is visible from a distance of 15 feet. These types of defects call for correction according to the inspector’s testimony. 16. It was the further testimony of the inspector, relative to Item #9, that the registrar’s standards call for a homeowner to notify the contractor of such scratches on the windows within 10 days of taking possession of the house. The complainant’s evidence in the form of a letter from complainant to respondent, Mr. McClure, dated August 13th, 1999, proves that within 10 days of taking possession complainant notified respondent of the window scratches. The window scratches in Finding of Fact #15, are to be corrected or the windows replaced by the respondent by appropriate means. 17. Items ##15 and 16 deal with the exterior stucco efflorescence and/or discoloration and cracks. Even the respondent concedes that there is discoloration and efflorescence and has agreed to appropriately correct that defect. (Again, respondent has been waiting to hear the final agency judgment on all these items so that he may take care of them all at once, rather than make multiple trips to the jobsite.) The evidence shows that there are some hairline cracks that ought to be corrected by the repainting and correction of the efflorescence. 18. Item #20 deals with the interior flagstone. The CWO directs the respondent to “[e]nsure that all interior flagstone floor has a proper seal and eliminate the stains at the office bath floor at vanity base.” Mr. Mitchell did not point out any stains during the prehearing inspection. Inspector Allen testified that he had seen some seal on the flagstone. Those facts, taken with the evidence that flagstone is a high maintenance flooring, and that complainant had had possession of his home since August of 1999, make it impossible to find that the flagstone was never properly sealed or that it simply now needs resealing incidental to normal homeowner maintenance requirements. 19. Item #21 directed the respondent to “[c]orrect drywall crack and exposed tape at rear porch lid.” Respondent took corrective steps to address this, but, as Inspector Allen testified, respondent now needs to correct a color mismatch between the repair work and the previously existing drywall area. Respondent has consented to repaint the area as needed. 20. Item #24 includes directives to the contractor to “provide the landscaping and sewer pump according to all agreements, contracts, prints, plans, drawings, etc.” There is insufficient evidence to find that the contract, or any other document called for the installation of a sewer or grinder pump. The evidence also shows that a grinder pump is not necessary at this house, owing to its elevation. 21. As to Item #24’s directive relating to landscaping, it is found that the landscaping that was installed by the respondent was a deviation from the landscaping design of the plans for the house. However, the evidence clearly shows that the deviations were brought about as much by the actions of the complainant and Mr. Mitchell as by any other cause. That being the case, the evidence of why the deviations from the landscaping plans occurred is so much intertwined with what the two parties did to contribute to this condition as to make it impossible to say there is a preponderance of evidence that respondent deviated from the landscaping plan without the consent of the complainant. 22. Notice is taken of the respondent’s prior license record with the Registrar of Contractors. CONCLUSIONS OF LAW 1. This hearing was held under authority of and pursuant to A.R.S. §32-1156 and A.R.S. §41-1092. 2. “’Agency’ is the relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and the consent of the other to so act.” Valley National Bank of Phoenix v. Milmoe, 74 Ariz. 290, 248 P.2d 740 at 743 (1952), quoting Restatement, Agency, section 1., pp. 7, 8. 3. Once agency is created the agent is empowered to act on behalf of his principal with third parties. See: Equitable Life & Casualty Ins. Co. v. Rutledge, 9 Ariz. App. 551, 454 P.2d 868 at 873 (Ariz. App. 1969). 4. Acts taken by the agent within the scope of his agency bind the principal. See: Lows Grunow Memorial Clinic v. Davis, 49 Ariz. 277, 66 P.2d 238 at 241 (1937). 5. The respondent herein is charged with possible violations of A.R.S. §32- 1154.A.2., 7., 13., 23., and 3. 6. A.R.S. §32-1154.A.7., prohibits a contractor from any wrongful or fraudulent act as a contractor which results in another person being substantially injured. There is insufficient evidence in the record to conclude that respondent violated A.R.S. §32-154.A.7. independently of the other violations concluded to have occurred below. 7. A.R.S. §32-1154.A.2., prohibits a contractor from deviating from or disregarding plans, or specifications or building codes in any material respect which is prejudicial to another without consent of the owner. The only deviation or disregard was in the landscaping, and, as found, that was done with the consent of the owner or his duly authorized representative. 8. A.R.S. §32-1154.A.13. prohibits a contractor from failing in any material respect to comply with A.R.S. Chapter 10 of Title 32. The respondent violated this section as concluded below. 9. A.R.S. §32-1154.A.23. prohibits a contractor from failing to take appropriate corrective measures to comply with the contracting laws without valid justification within a reasonable period of time after receiving written directive from the registrar. The CWO is the written directive in this case, and respondent was given a reasonable amount of time to comply with that order. That he failed to comply with some of the items in the CWO has been found. 10. A.R.S. §32-1154.A.3., prohibits a contractor from violating any administrative rule adopted by the registrar. The rule cited in this case is A.A.C. R4-9-108, Workmanship Standards. 11. Respondent violated A.R.S. §32-1154.A.23., and 3. (A.A.C. R4-9-108) in failing to correct the following workmanship defects in the CWO: Items ## 2, 5, 6, 9, 15, 16, and 21. 12. Complainant, under the holding in Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (App. 1990), is entitled to restitution from the respondent in the amount of $2,166.47, the amount he had to spend to correct the ponding at the foundation at the rear of the house. RECOMMENDED ORDER Wherefore, it is hereby recommended that respondent’s Class B License number 105476 be suspended until such time as the registrar receives proof that respondent has corrected Items ##5, 6, 9, 15, 16, and 21 of the Corrective Work Order, as set forth in the above Findings of Fact, and has made restitution to the complainant in the amount of $2,166.47, for failing to correct Item #2. It is further recommended that if the respondent properly accomplishes and makes the above directed corrective action and restitution on or before the effective date of this order, then the above provided license suspension shall not take place and Citation and Complaint No. T00- 0254 shall be closed. Done this day, August 15, 2000.

________________________________ GRANT WINSTON Administrative Law Judge

Original transmitted by mail this ____ day of August, 2000, to:

Michael P. Goldwater, Director Registrar of Contractors ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By _______________________________

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Office of Administrative Hearings 100 N. Stone Ave., Suite 704 Tucson, Arizona 85701 (520) 628-5488