ALJDEC

01F-1921-ROC · Registrar of Contractors · 2001-07-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 22, 2001 APPEARANCES: Complainant William Whitlow was present with his wife, Patricia Whitlow. Respondent William Lyon Homes, Inc. was represented by counsel, Dawn Sinclair. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ The issue presented by this matter is whether Respondent William Lyon Homes, Inc. is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154. Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order:

FINDINGS OF FACT Respondent William Lyon Homes, Inc. (“WLH”) is the holder of a Class B license (No. 080777) issued by the Registrar of Contractors (“ROC”). On or about April 23, 1999, Complainant William Whitlow and his wife (the “Whitlows”) entered into a contract for the construction of a new home with WLH. The Whitlows closed escrow on their home on November 5, 1999. In a complaint to the ROC dated January 31, 2001, Mr. Whitlow alleged poor workmanship in the construction of the home, for which he believed WLH was responsible. Mr. Whitlow also complained of an untimely response to his concerns by WLH. On February 28, 2001, ROC Inspector Bob Mechsner conducted a jobsite inspection at the Whitlow’s home. The Whitlows, Mr. Ray Nemger, WLH’s customer service manager, and a representative from Door Sales, Inc., a sub- contractor who performed work on the home, were present for that inspection. On March 2, 2001, Inspector Mechsner issued a letter to Mr. Whitlow, indicating: [I]t appears appropriate that we close your complaint for the following reason(s): #1) Exterior stucco has had repairs and painting done by homeowner prior to jobsite meeting. No action required by Contractor. #2) Main door no longer leaks. Floor coating was applied by homeowner prior to jobsite meeting. While door sweep and seal are beyond one year, sub contractor agrees to replace as a courtesy to homeowner. #3) Site drainage was functioning properly at time of jobsite meeting. #4) It is impossible for an inspector to determine the cause or source of a spot on master bedroom carpet at this time. #5) Cabinets show minor wear of finish in bathrooms. This is beyond one year of occupancy. No action required by Contractor. #6) Drywall texture and finish generally looked very good at time of jobsite. No action required by Contractor. #7) The standard for windows is viewing them at a distance in normal lighting. While homeowner says that something can be seen between window panes in certain types of lighting, and viewed up close, there were no visible flaws at time of jobsite. No action required by Contractor.

By way of background, the Whitlows had previously filed a complaint with the ROC against WLH. That matter was scheduled for hearing before the Office of Administrative Hearings, on July 27, 2000. However, prior to the commencement of the hearing, the parties settled the matter. Pursuant to the agreement between the parties, the Whitlows agreed that any items remaining in dispute would be addressed at the time of the submission of the Whitlow’s one-year punch list, in November 2000. See Exhibit 1. On November 17, 2000, the Whitlows submitted their one-year punch list to WLH. On November 28, 2000, WLH’s customer service coordinator, Alexandra Jamison, contacted the Whitlows to schedule an appointment in order for WLH to address the items on the punch list. On December 6, 2000, WLH’s customer service manager, Ray Nemger, met with the Whitlows to discuss the punch list items. Mr. Nemger testified that he explained to Mr. Whitlow that because Christmas and New Years were approaching, the work would not be accomplished before mid-January 2001. Mr. Nemger further testified that Mr. Whitlow asked if there was any way to accelerate the remedial work. Mr. Nemger advised that the work could be accomplished sooner if Mr. Whitlow scheduled the sub-contractors himself. Mr. Whitlow agreed to do so. The Whitlows were under a self-imposed time constraint to have all of their requested repairs made because they had purchased another home, on which they were closing in March 2001. Consequently, the Whitlows desired to place their home on the market in January 2001, with the hope it would sell prior to their new closing date, in order to avoid the financial responsibility of two mortgage payments. On December 18, 2000, WLH provided to the Whitlows the work orders needed to schedule the appropriate subcontractors. Mr. Whitlow proceeded to schedule the various subcontractors to perform the punch list items. At the hearing, the Whitlows testified that there were only three items of complaint remaining that they wished to address. Those remaining items were the stucco, the painting, and the main door leak. The initial stucco repair was conducted on or about December 20, 2000, by Valleywide Plastering (“Valleywide”). The stucco repair was painted during the first week of January 2001, by Cobra Painting. On January 16, 2001, WLH received a fax from the Whitlows, expressing their dissatisfaction with the painting and the stucco patching. The Whitlows alleged that the paint used by Cobra Painting did not match the original paint on the home. They further alleged that the stucco repair was not smooth. On January 29, 2001, WLH dispatched Valleywide once again to make the requested stucco repairs. Mr. Nemger testified that none of the cracks that Mrs. Whitlow pointed out to Valleywide were greater than 1/16 of an inch in width.[1] The Whitlows remained unsatisfied, so WLH hired Rudolfo Bros. Plastering, Inc., (“Rudolfo”), another subcontractor, on February 9, 2001, to complete the stucco repairs. Rudolfo only “stuccoed wall sections, as for punch. Did only blue tag items because homeowner put stuccolastic on walls, not responsible for homeowner’s work.” See Exhibit M. Rudolfo refused to perform any other repair work because it discovered that the Whitlows had attempted to repair the stucco themselves. Rudolfo refused to accept the surface of the stucco as repaired by the Whitlows. The Whitlows acknowledged that they did in fact attempt to perform the stucco repairs themselves by using a substance called Elastomeric. On or about January 22, 2001, WLH’s subcontractor, Ultimate Drywall (“Ultimate”), repaired and painted the drywall throughout the Whitlow’s home. During the course of this corrective work, Ultimate caulked and painted around the windows. As stated previously, Mr. Whitlow had scheduled the subcontractors. In so doing, Mr. Whitlow scheduled the drywall repair and painting subcontractor prior to the window subcontractor. Consequently, after the window subcontractor performed its corrective work, the area surrounding the windows needed re-painting. WLH, at its own expense, despite the scheduling error made by Mr. Whitlow, dispatched another painting subcontractor, Ted’s Painting, to perform this corrective work. On December 27, 2000, in response to the Whitlows’ complaint regarding the main door leak, WLH’s door subcontractor, Door Sales Inc. (“Door Sales”), adjusted the weather stripping, the door itself, the sweep, and the threshold, and caulked and sealed the door. On January 29, 2001, the Whitlows claimed that the door continued to leak after the above described repair attempt. In response, WLH dispatched Door Sales to the Whitlows’ home for a second time. The Whitlows testified that the leak still existed. The Whitlows then attempted to remedy the leak themselves by applying an epoxy coating to their entire garage floor. Mrs. Whitlow testified that the garage floor had been in “bad shape” when they moved into the home and they needed to make the house look “saleable”. Inspector Mechsner testified that at the time of his inspection, the door was not leaking. The evidence established that WLH responded to the Whitlows’ concerns appropriately and within a reasonable period of time. The Whitlows’ financial frustration is understandable. However, it was of their own doing. The Whitlows should not have assumed that all of their punch list items would be satisfactorily addressed within their self-imposed time parameters. The Administrative Law Judge finds that the stucco repair done by the Whitlows justifies and excuses WLH from further corrective work regarding the stucco and painting. The evidence failed to establish that the door continues to leak. On March 29, 2001, the ROC issued a Citation and Complaint charging WLH with violations of A.R.S. § 32-1154(A)(7) (wrongful or fraudulent act resulting in substantial injury) and (A)(3) (violation of any rule adopted by the ROC, in this case, A.A.C. Rule R4-9-108 covering workmanship standards).

CONCLUSIONS OF LAW In this proceeding, Mr. Whitlow bears the burden to prove, by a preponderance of the evidence, that WHL is subject to discipline for violations of A.R.S. § 32-1154(A)(3) and/or (A)(7) as charged by the ROC. See Arizona Administrative Code (“A.A.C.”) R2-19-119. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). Under A.R.S. § 32-1154(A)(3), a contractor is subject to discipline for “violation of any rule adopted by the registrar.” In this case, the ROC charged WLH with a violation of A.A.C. R4-9-108, which, among other things, requires contractors to perform work in a professional and workmanlike manner and in accordance with any applicable building codes and professional industry standards. The weight of the credible evidence failed to demonstrate that WLH performed its work in an unprofessional and unworkmanlike manner. In fact, the evidence demonstrated just the opposite. WLH diligently addressed all of the Whitlows’ concerns, including the scheduling of the subcontractors. Because the Whitlows did not want to wait until after the holidays, WLH provided the Whitlows with the work orders needed to schedule the various subcontractors themselves. Even upon Mr. Whitlows’ error in scheduling, WLH, at its own expense, dispatched a second painting subcontractor, Ted’s Painting, to re-paint the areas surrounding the windows. The Whitlows performed their own stucco repair and by doing so, exposed WLH and its subcontractors to further liability if they attempted to repair the Whitlows’ corrective work. Therefore, the undersigned Administrative Law Judge concludes that WLH acted reasonably in not performing further remedial work to the stucco and paint. Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The Administrative Law Judge concludes, from the evidence presented, that WLH did not commit a wrongful or fraudulent act resulting in substantial injury to the Whitlows. WLH acted reasonably and appropriately in addressing the Whitlows’ complaints. Based on the foregoing, it is inappropriate for the ROC to impose discipline against WLH’s license. RECOMMENDED ORDER In light of the foregoing, it is recommended that Citation Number 01- 1921, together with the complaint upon which it is based, be dismissed.

Done this day, July 10, 2001.

______________________________________ Sondra J. Vanella Administrative Law Judge

Original transmitted by mail this ____ day of July, 2001, to:

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

By ___________________________

----------------------- [1] Industry standards only require cracks in excess of 1/16 of an inch in width be repaired.

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