ALJDEC

01F-2200-ROC · Registrar of Contractors · 2001-09-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 17, 2001 APPEARANCES: Maura Abernethy, Esq. represented Complainant Hauptman’s Floor Covering, Inc. Respondent Red Rock Tile, Inc. appeared through its owner and qualifying party, Rory Hodge. ADMINISTRATIVE LAW JUDGE: Daniel G. Martin _____________________________________________________________________

The question presented by this matter is whether Respondent Red Rock Tile, 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 Red Rock Tile, Inc. (“Red Rock”), is the holder of a Class C-48 license (No. 144864) issued by the Registrar of Contractors (“ROC”). Rory Hodge is Red Rock’s qualifying party. According to the official records of the ROC, Red Rock’s Class C-48 license is currently suspended for non-renewal. On May 31, 2000, Red Rock entered into a contract with Complainant Hauptman’s Floor Covering, Inc. (“Hauptman’s”) to install 1,200 square feet of travertine tile in a home under construction in Scottsdale, Arizona. The contract price was $5,095.00. Red Rock completed the installation on or about June 29, 2000. Following Red Rock’s completion of the installation, both Hauptman’s and the project’s general contractor, Kirk Development, noticed a number of areas where individual tiles did not properly abut because of discrepancies in the heights of those tiles. This situation is referred to in the construction vernacular as “lippage.” Lippage in excess of 1/8 of an inch constitutes a departure from the ROC’s minimum workmanship standards applicable to licensed contractors in the State of Arizona (hereafter the “minimum workmanship standards”). The weight of the credible evidence demonstrated that Red Rock’s tile installation contained areas of lippage that exceeded the minimum workmanship standards. Red Rock attempted on several occasions to remedy the lippage by removing and replacing tiles. However, none of this work was performed to the satisfaction of Hauptman’s, which considered Red Rock’s remedial efforts to be “minimal.” In October 2000, the persons for whom the home had been built (the Kents) took possession of the home. The Kents were also dissatisfied with Red Rock’s workmanship, and indicated a number of areas that in their view required further remedial work. Red Rock continued to perform remedial work at the home until December 7, 2000, when the parties reached an impasse. According to Red Rock, it had by this time brought its tile work within minimum workmanship standards. According to Hauptman’s, Red Rock’s repair efforts remained unsatisfactory. The impasse between the parties led Hauptman’s to request a courtesy inspection from the ROC. On January 24, 2001, ROC Inspector Bud Combs conducted a courtesy inspection of Red Rock’s tile work at the home in question. During that inspection, Inspector Combs identified several areas where lippage between tiles exceeded the minimum workmanship standards. Inspector Combs concluded that further remedial work was required, and recommended that the tile be ground and polished in those areas where the lippage exceeded the minimum workmanship standards. Grinding and polishing is an appropriate means to correct lippage in a travertine tile surface. However, once grinding and polishing commences in one section of the floor, it must be carried over to all of the adjoining surfaces in order to maintain a consistent surface. Thus, in this case, Inspector Combs’ recommendation that the tile in the Kents’ home be ground and polished in those areas where the lippage exceeded the minimum workmanship standards was tantamount to a recommendation that the entire floor be ground and polished. Prior to Inspector Combs’ inspection, Hauptman’s had obtained a bid from Natural Stone Care, Inc. (“NSC”) of the cost to grind and polish the tile in the Kents’ home. That bid, which was the lowest bid received by Hauptman’s, was $5,500.00. [See Exhibit 4] Following Inspector Combs’ inspection, Hauptman’s requested that Red Rock perform the grinding and polishing work. Hauptman’s also informed Red Rock that it had received a bid from NSC to perform the work at a cost of $5,500.00. Red Rock informed Hauptman’s that it could not afford to perform the work. On February 20, 2001, in consequence of Red Rock’s stated inability to perform the work, and in view of the fact that the tile flooring had been at issue since July 2000 and needed to be completed, Hauptman’s engaged NSC to perform the work. At hearing, Red Rock urged that it had not been given sufficient opportunity to perform corrective work at the Kents’ home. The Administrative Law Judge disagrees. The weight of the credible evidence demonstrated that Red Rock’s workmanship was continually at issue from the completion of that work at the end of June 2000 until December 7, 2000, when the parties reached impasse. As of that point in time, Red Rock had taken the view that its work met minimum workmanship standards. Thus, the question is not whether Red Rock had sufficient opportunity to effect appropriate repairs ( it did. The sticking point was instead Red Rock’s insistence that its work met minimum workmanship standards, which, as the evidence demonstrated, it did not. Given the amount of time that had passed, and Red Rock’s refusal or inability to perform the corrective work requested by Hauptman’s and subsequently confirmed by Inspector Combs, Hauptman’s was within its rights to complete the work through a separate subcontractor. On February 23, 2001, Hauptman’s filed a complaint against Red Rock with the ROC. In that complaint, Hauptman’s asserted that Red Rock had effectively abandoned the Kent job, and sought reimbursement from Red Rock of the expenses that Hauptman’s incurred to perform remedial work. These expenses included: (i) the $5,500.00 that Hauptman’s paid to NSC to grind and polish the Kents’ floor, (ii) $300.00 to remedy improper lippage in the master bath tile; (iii) $150.00 for paint and drywall touch up; and (iv) $100.00 to re-connect the Kents’ television and sound system. At hearing, Hauptman’s modified its reimbursement claim by deleting its requests for reimbursement of expense items (ii) and (iii), and substituting in their place a request for reimbursement in the amount of $208.58 for thirty pieces of replacement tile that Hauptman’s purchased in August 2000 in anticipation of Red Rock’s performance of additional remedial work. [See Exhibit 2] As to Hauptman’s request for reimbursement in the amount of $100.00 to re-connect the Kents’ television and sound system, the evidence demonstrated that Hauptman’s deducted this amount from a March 1, 2001 invoice to the Kents (see Exhibit 7), and that a portion of this amount represented costs that Hauptman’s incurred to buy lunch for the Kents as a gesture of goodwill. The Administrative Law Judge finds, based on the evidence presented, that Hauptman’s incurred the entirety of this cost as a courtesy to the Kents and therefore a cost of doing business, and not in consequence of the performance of remedial work directly attributable to acts or omissions of Red Rock. On June 1, 2001, the ROC issued a Citation and Complaint charging Red Rock 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, Rule R4-9-108 covering workmanship standards). CONCLUSIONS OF LAW In this proceeding, Hauptman’s bears the burden to prove, by a preponderance of the evidence, that Red Rock is subject to discipline for violations of A.R.S. § 32-1154(A)(3) and/or (A)(7) as charged by the ROC in its June 1, 2001 Citation and Complaint. 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). The Administrative Law Judge concludes that Hauptman’s met its burden of proof as to both of the ROC’s charges. 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 Red Rock 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 presented at hearing, primarily the testimony of Inspector Combs, demonstrated that Red Rock’s workmanship at the Kent residence failed to meet the minimum workmanship standards. Therefore, Hauptman’s proved by a preponderance of the evidence that Red Rock violated A.A.C. R4-9-108, and in turn that Red Rock violated A.R.S. § 32-1154(A)(3). 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 Red Rock committed several wrongful acts that substantially injured Hauptman’s, including (1) failing to complete its work at the Kents’ home in accordance with the minimum workmanship standards, and (2) failing over an extended period of time to properly correct that workmanship. Therefore, Red Rock violated A.R.S. § 32-1154(A)(7). Based on the foregoing, it is appropriate for the ROC to impose discipline against Red Rock’s license.[1] The ROC’s June 1, 2001 Citation and Complaint advised Red Rock that in the event of a finding of a violation against it, Red Rock’s prior disciplinary record of final ROC orders could be considered in mitigation or aggravation. Accordingly, subsequent to the conclusion of the instant hearing, the Administrative Law Judge took notice of prior final disciplinary orders against Red Rock in the ROC’s official records. Those records revealed that Red Rock has not been the subject of any ROC disciplinary orders within the past two years. The Administrative Law Judge considered this disciplinary record when determining appropriate recommended discipline for this matter. Upon consideration of all of the facts and circumstances presented by this case, the Administrative Law Judge concludes that Red Rock’s license should be revoked, insofar as little purpose would be served in imposing discipline on an already-suspended license. The Administrative Law Judge further concludes, however, that such revocation should be made conditional on payment by Red Rock to Hauptman’s of restitution as set forth below. A.R.S. § 32-1156.01 authorizes an administrative law judge to recommend that a licensee provide restitution to a person who is injured by an action of the licensee. Upon consideration of the facts of this matter, the Administrative Law Judge concludes that restitution is an appropriate remedy, and that the evidence supports an award of restitution in the amount of $5,708.58, which represents Hauptman’s costs incurred for the purchase of additional tile ($208.58) and to grind and polish the Kents’ floor ($5,500.00). The Administrative Law Judge declines to recommend an award of restitution for the $100.00 expense that Hauptman’s incurred to buy lunch for the Kents and to re-connect the Kents’ television and stereo. As stated in Finding of Fact No. 20, the evidence demonstrated that Hauptman’s incurred this cost as a courtesy to the Kents and therefore as a cost of doing business, and not in consequence of the performance of remedial work directly attributable to acts or omissions of Red Rock. RECOMMENDED ORDER Based on the foregoing, the Administrative Law Judge makes the following recommended Order: Commencing on the effective date of the Order entered in this matter, Red Rock’s Class C-48 license shall be revoked. If Red Rock pays or tenders to Hauptman’s the sum of $5,708.58 on or before the effective date of the Order entered in this matter, and provides credible written proof to the ROC of such payment or tender, then the above provided license revocation shall not take place and this matter shall be closed.

Done this day, October 5, 2001.

______________________________________ Daniel G. Martin Administrative Law Judge

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

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

By ___________________________ ----------------------- [1] The fact that Red Rock’s license is currently suspended does not preclude the ROC from taking disciplinary action against Red Rock as recommended above. A.R.S. § 32-1154(C) specifically states: “The expiration, cancellation, suspension or revocation of a license by operation of law or by decision and order of the registrar or a court of law or the voluntary surrender of a license by a licensee shall not deprive the registrar of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such licensee, or to render a decision suspending or revoking such a license, or denying the renewal or right of renewal of such license.” (Emphasis added.)

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