ALJDEC

00F-Y0118-ROC · Registrar of Contractors · 2000-10-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 4, 2000 at 9:00 a.m. APPEARANCES: Complainants Albert and Aida Urbieta appeared through their attorney, William S. Dieckhoff, Esq.; Respondent Riverfront Development Associates, Inc. (“Riverfront”) appeared through its attorney, Ted Bowen, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The parties presented evidence and, after a discussion of its significance, agreed to settle Mr. and Mrs. Urbieta’s complaint to the Registrar of Contractors against Riverfront’s contractor’s license. The undersigned therefore makes the following Findings of Fact, Conclusions of Law, and Recommended Order, which set forth the parties’ settlement, to the Registrar for his approval and adoption. FINDINGS OF FACT Background The Registrar issued License No. 127103, Class B- to Riverfront, a corporation, on September 10, 1997. In July 1998, Riverfront contracted to construct a residence for Mr. and Mrs. Urbieta at a cost to them of $206,000.00. The contract subsequently was amended and the cost raised somewhat. Mr. and Mrs. Urbieta and their family moved into the residence in May 1999.

On January 14, 2000, the Registrar’s Yuma office received Mr. and Mrs. Urbieta’s complaint against Riverfront’s contractor’s license, which alleged 99 specific items. Mr. and Mrs. Urbieta have not paid Riverfront the full amount of the contract. On the date of the hearing, a civil lawsuit was pending that involved Riverfront’s claim for payment and various other common-law tort or breach-of-contract claims or counterclaims. The Registrar’s Inspector C.E. Jorgensen inspected Mr. and Mrs. Urbieta’s residence and, on January 27, 2000 noted that several items had been adequately repaired or did not require repair and that many items involved not workmanship but contractual disagreements. Inspector Jorgensen also directed Riverfront to take appropriate action to correct most of the remaining items that Mr. and Mrs. Urbieta complained about. On February 25, 2000, Mr. and Mrs. Urbieta requested a hearing because Riverfront allegedly had not corrected the items that Inspector Jorgensen had directed it to correct. On March 30, 2000, the Registrar issued a Citation and Complaint in this matter, charging Riverfront with violations of A.R.S. § 32-1154.A.7,[1] .23,[2] and .3.[3] On April 10, 2000, Riverfront answered the Citation and Complaint, alleging that it had complied with Inspector Jorgensen’s directive, that the Urbieta family was living in the residence, and that Mr. and Mrs. Urbieta had not yet paid the full contract price. The Registrar issued a notice of hearing, which was held on October 4, 2000. At the hearing, Inspector Jorgensen and Riverfront’s qualifying party, Dennis Harris, testified. Following this testimony, the parties informed the undersigned that they had agreed to settle most of the disputes involving workmanship based on Inspector Jorgensen’s opinion regarding what items still needed correction and to resolve their remaining disputes in the civil proceeding. The Parties’ Settlement of Mr. and Mrs. Urbieta’s Complaint to the Registrar against Riverfront’s Contractor’s License

Inspector Jorgensen on September 22, 2000 performed a prehearing inspection of Mr. and Mrs. Urbieta’s residence. His report of that inspection, in addition to his January 27, 2000, directive to Riverfront, was admitted into evidence and, with his testimony, formed the basis of the parties’ settlement. Riverfront agreed to perform and Mr. and Mrs. Urbieta agreed to accept in full satisfaction of their complaint to the Registrar against Riverfront’s contractor’s license the following corrective work, if it is performed in a professional and workmanlike manner in the Registrar’s inspector’s opinion: Item #A1,[4] touchup painting and silicone caulking in garage; Item #A6, touchup stucco outside garage door;[5] p) Item #A7, adjust garage and storage room doors to seal tight against the weatherstripping; q) Item #B1, final retouch of texturing and paint around electrical outlet in the breakfast nook;[6] r) Item #B3, finish, recaulk, or replace wood trim around granite countertops in kitchen so that the seams meet properly;[7] s) Item #B5, install trim around cabinetry as needed in the kitchen/breakfast nook; t) Item #B6, adjust kitchen door to seal tight against the weatherstripping and, if necessary, add more weatherstripping; u) Item #C1, touchup paint in guest room; v) Item #C2, touchup paint in hallway; w) Item #D4, install door stop, if necessary, and weatherstripping around door in guest bath; x) Item #E1, repair cracked ceramic floor tile between the dining room and family room; y) Item #E2, repair cracked floor tile grout in dining room; z) Item #F2, adjust doors to seal against weather stripping in formal living room; aa) Item #F5, repair grout in formal living room that is cracked or separating from floor tile; ab) Item #G2, touchup stucco around exterior of door to office/den room; ac) Item #I7, touchup back of door in boys’ bathroom (hallway); ad) Item #J5, touch up texture and paint in area over door to master bedroom closet; ae) Item #L5, straighten wall and repair so that counter meets backsplash wall in laundry room; af) Item #L6, mount valve door cover in laundry room; ag) Item #L8, install doors that match[8] to air conditioner and water heater and install missing trim; ah) Item #L13, adjust door to laundry room so that it seals tight against weather stripping; ai) Item #M1, adjust closet door in boys’ bedroom so it is balanced; aj) Items #N1, N10-12, repair stucco cracks and color coat on exterior of house, including on inside walls of balcony, outside the patio, and around the front door; ak) Item #N6, touchup one small area of exterior stucco by chimney. Mr. and Mrs. Urbieta agreed to accept Riverfront’s workmanship and repairs to the following items and agreed not to make any further complaints concerning them, unless Riverfront’s repairs fail within two years of the time they were made without legal excuse: Item #A2, adjustment of storage door in the garage; Item #A3, the storage room base in garage; Item #A7, knobs on garage and storage room doors; ap) Item #B2, caulking of mantle on fireplace in kitchen/family room area; aq) Item #B4, repairs to cracked tile grout in kitchen/family room area; ar) Item #B6, knobs on the kitchen door; as) Item #B7, installation of refrigerator water inlet trim in kitchen; at) Item #B8, construction and/or repair of island sink drain in kitchen; au) Item #B9, installation of appliances in kitchen; av) Item #B10, installation of ceiling lights in kitchen/family room area; aw) Item #B11, installation of trim piece on kitchen sink and island sink drainage; ax) Item #B12, installation or repair of kitchen and breakfast nook windows; ay) Item #B13, furnishing spice rack and cutting board in kitchen; az) Item #C1, texture of walls in guest room; ba) Item #C3, installation of closet door in guest room; bb) Item #C4, installation of door hinges and screws in guest room; bc) Item #C5, installation or repair of window in guest room; bd) Item #C6, installation of carpet in guest room; be) Item #D1, installation of mirror in guest bath; bf) Item #D2, ceramic tile countertop in guest bath; bg) Item #D3, installation of shower enclosure in guest bath; bh) Item #D5, repair of cracked floor tile grout in guest bath; bi) Item #E3, installation or repair of window in dining room; bj) Item #F1, repair of ceiling drywall edges in formal living room; bk) Item #F3, ceiling light fixtures in formal living room; bl) Item #F4, installation of carpet in formal living room; bm) Item #G1, installation or repair of windows in office/den room; bn) Item #H1, repair of cracked grout around floor tiles in hallway going toward master bedroom and other rooms; bo) Item #H2, painting of light fixtures in hallway going toward master bedroom and other rooms; bp) Item #I1, installation of mirror in boys’ bathroom (hallway); bq) Item #I2, installation of shower enclosure in boys’ bathroom; br) Item #I3, repair of cracked floor tile grout in boys’ bathroom (hallway); bs) Item #I4, caulking of drain inlet under vanity in boys’ bathroom; bt) Item #I5, repair of drywall cracking around skylight in boys’ bathroom (hallway); bu) Item #I6, cabinet trim in boys’ bathroom (hallway); bv) Item #J1, installation or repair of windows in master bedroom and closet; bw) Item #J2, touchup paint on or around and number of hinges on door in master bedroom and closet; bx) Item #J3, installation of carpet in master bedroom and closet; by) Item #J2, the texture around and painting of door to master bedroom; bz) Item #J4, installation of weatherstripping and door stops around door in master bedroom and closet; ca) Item #K1, installation of Jacuzzi in master bathroom; cb) Item #K2, the floor tile in the bottom of the shower in the master bedroom; cc) Item #K3, installation of the mirror in the master bathroom; cd) Item #K4, sealing and caulking underneath the Jacuzzi in the master bathroom; ce) Item #L1, cabinet door in laundry room; cf) Item #L2, ceramic counter tile in laundry room; cg) Item #L3, dryer hookup in laundry room; ch) Item #L4, ironing board finish in laundry room; ci) Item #L7, trim on attic opening in laundry room; cj) Item #L9, installation of water heater in laundry room; ck) Item #L10, exhaust for inside air conditioner and water heater in laundry room; cl) Item #L11, repair of floor tile grout in laundry room; cm) Item #L12, installation or repair of windows in laundry room; cn) Item #L14, installation of bar between cabinets in laundry room; co) Item #M1, installation of clothes bars in closet in boys’ bedroom; cp) Item #M2, installation of carpet in boys’ bedroom; cq) Item #N2, placement of west side residence windows in arches; cr) Item #N8, repair of cracks in concrete driveway; cs) Item #N9, color of paint on drain gutter; ct) Item #N13, painting of Jacuzzi access door and front light pillar access; cu) Item #N14, anchoring of front light pillars; cv) Item #N17, construction or repair of front concrete steps; cw) Item #N18, installation of outdoor carpeting on balcony and steps. Mr. and Mrs. Urbieta agreed to withdraw their complaints to the Registrar against Riverfront’s contractor’s license regarding the following items, without prejudice to resolving these items of complaint in the civil proceeding: Items #1-6 on Mr. and Mrs. Urbieta’s original complaint to the Registrar, concerning Riverfront’s alleged breach of contract, overall poor workmanship, poor materials, lack of professionalism, failure to pay subcontractors, and demands that Mr. and Mrs. Urbieta pay subcontractors directly; Item #A4, the workbench top in the garage; Item #A5, 7’ rather than 6’8” doors in the garage; Item #G2, 7’ rather than 6’8” doors in the office/den room; Amended Item #I5, the size of the skylight in the boys’ bathroom (hallway); Item #I7, 7’ rather than 6’8” door in the boys’ bathroom (hallway); Item #J2, 7’ rather than 6’8” door to the master bedroom; Item #J5, 7’ rather than 6’8” door to the master bedroom closet; Item #K5, 7’ rather than 6’8” door in the master bathroom; Item #N3, the course of roof tiles that appears crooked and broken roof tiles; Item #N5, the chimney collar; Item #N7, details on exterior of garage; Item #N15, design of front light pillars; Item #N16, elevation of front light pillars; dm) Any other item involving workmanship or breach of contract not specifically noted in this recommended decision. CONCLUSIONS OF LAW Public policy favors settlement of disputes and adverse parties should be free to resolve their differences voluntarily. The terms of the settlement are fair and reasonable, under all the circumstances. Both parties voluntarily entered the settlement, knowing its consequences. As discussed at the hearing, although the Registrar is well qualified to determine pure workmanship issues, where the parties’ dispute primarily involves common-law tort or breach-of-contract claims and they are both represented by attorneys, their dispute may be better resolved in a judicial forum, where they are afforded more extensive discovery, are required to make disclosure, and may be awarded attorneys’ fees and taxable costs. All rights and defenses of the parties are merged into the settlement agreement. But the closure of this administrative action does not prevent either party from requesting a rehearing if the other breaches the settlement. In addition, if any of Riverfront’s repairs, described in Findings of Fact Nos. 13 and 14, fail without legal excuse within two years of the time Riverfront performed the repair, Mr. and Mrs. Urbieta may file a new complaint or request that this complaint be reopened. The settlement warranted termination of the hearing and warrants closure of the charges contained in the Citation and Complaint. RECOMMENDED ORDER In view of the foregoing, it is recommended that the Registrar close the Citation and Complaint in Case No. Y00-0117 against Riverfront Development Associates, Inc.’s contractor’s License No. 127103, Class B-. Done this day, October 13, 2000.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

By ___________________________

----------------------- [1] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

[2] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving written directive from the registrar.”

[3] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar.” The rule violated here was A.A.C. R4-9-108, which requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [4] The same item numbers were used on Mr. and Mrs. Urbieta’s original complaint to the Registrar, received January 14, 2000, Inspector Jorgensen’s January 27, 2000 directive, and Inspector Jorgensen’s October 3, 2000 report of his September 22, 2000 prehearing inspection. Mr. and Mrs. Urbieta enumerated the items by room or area of the residence. Inspector Jorgensen gave letters to the different categories. For clarity, both systems will be referred to in this recommended order. Some item numbers are mentioned more than once, for example, if one part of the complaint has been adequately corrected but additional corrections need to be done or a part of the complaint has been reserved for resolution in the superior court proceeding.

[5] Inspector Jorgensen cautioned Mr. and Mrs. Urbieta at the hearing that stucco texture is hard to match and, even if the texture of the touchup was distinguishable from the original stucco, it still could very well comply with minimum standards.

[6] Inspector Jorgensen testified this item was “very close” to meeting applicable industry standards at the prehearing inspection.

[7] Inspector Jorgensen testified that the nail holes meet applicable minimum standards in his opinion. The nail holes will not match the surrounding wood perfectly unless the wood is painted, rather than stained.

[8] Riverfront agreed at the hearing to take the doors back to the vendor and request it to provide two doors whose grain pattern matches. If the vendor for some reason refuses Riverfront’s request, it is responsible to provide the matching door and may make a claim against the vendor in another forum.

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