ALJDEC

01F-2584-ROC · Registrar of Contractors · 2002-03-04

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARINGS: December 13, 2001 and February 21, 2002.

APPEARANCES: The Complainants, Tom and Carrie Tutrone, were represented by their attorney, Paul J. Faith, Esq. The Respondent, Sonoran Desert Homes, was represented by its attorney, John A. Buric, 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. Respondent, as the project’s general contractor, had constructed a residence originally built for speculation (“Spec” home). At a time when such home was nearing the completion stage, an entity that was somewhat related to Respondent by having one or more of the same individual owners and operators and that had ostensibly retained the contracting services of Respondent, concluded a written contract of purchase and sale of the residence to Complainants. The final, negotiated and agreed contract price was $1,660,000.

2. The final contract terms, as well as the ultimate cost price, were shown to have been the product of exchanges of an initial offer below the asking or listed sales price, a counter-offer and several submitted enumerated lists of identified items of work that were desired by the potential purchasers to be corrected, added or modified as part of the purchase. The appropriate addressing by the Seller and the Respondent (hereinafter referred to collectively as “Respondent”) of most, but not all, of the specifically listed items was mutually agreed to prior to the closing of escrow. With respect to those previously listed items as to which Respondent had expressly declined to take action, Complainants were informed that all previously transmitted earnest monies would be refunded in the event they elected not to deposit additional monies at that time and not to proceed to a closing of title.

3. The stated contractual purchase price was admittedly fully paid by Complainants to the selling entity related to Respondent. However, no portion of one identified subsequent change order relating to brick pavers for a driveway has been paid. Although this aspect of Respondent’s construction became the subject of some testimony at the hearing, it appeared that the actual complaint filed in this administrative action did not encompass any alleged deficiencies in the installation by Respondent of these driveway pavers.

4. Both individual Complainants were shown to have possessed above- average knowledge and experience in construction matters, having held and still holding a general contractor’s license, although specializing in stucco work.

Part of the closing arrangements included an escrow instruction traceable to the contents of a prior letter from Respondent and purporting to grant Complainants a credit at closing in the amount of $5,000.00. According to the express language of this

escrow instruction, the stated purpose of this credit amount was to be applicable against all potential costs, if any, attributable to further work efforts with respect to asserted problems of a cosmetic nature that Complainants may desire to subsequently address. The terms of such extra credit provision also specifically excluded any structural deficiencies from its scope. Other identified exclusions from this purported understanding were the items identified in the enumerated listings and schedules communicated prior to closing to the extent Respondent had agreed to undertake remedial efforts thereon.

6. Although the precise origin, the surrounding circumstances and the contemplated impact of this waiver-type provision was sharply disputed, little or no merit is found to Complainant’s contention that any waiver language was intended to be illusory but instead merely was to provide a gratuitous additional dollar benefit to the purchasers against the previously negotiated and agreed sales price.

7. Disclaimers or waivers in advance of construction work are normally not condoned and may not always be recognized by the State agency overseeing the quality of work performances. However, it is found and determined in this case, where only a minimal amount of completion work remained at the time (perhaps not more than 5%) and where the Complainants were knowledgeable, that the waiver-type provisions were supported by adequate consideration and should be held applicable to substantially all items that were known or that reasonable should and could have been known. Most certainly, the provisions must be held applicable to those items of a cosmetic nature that had been listed on previously identified schedules as to which Respondent had declined to take any further action. This Finding of Fact shall also serve as a Conclusion of Law.

8. Notwithstanding the foregoing, with respect to allegedly deficient items of a functional nature, as distinguished from either a structural or cosmetic nature, as well as items appearing on any of the enumerated lists that were subjects of agreed additional work efforts on the part of Respondent, the cosmetic results of any and all such subsequent work would be expected to conform to acceptable industry standards and tolerances.[1]

9. Moreover, even if no obligation to have undertaken measures to correct a cosmetic deficiency or to address an otherwise acceptable item may have existed, once a contractor commences remedial work, all resulting construction must conform to applicable building codes and prevailing acceptable minimum workmanship standards. Additionally, there would be a duty not to leave the property or the feature in a worse condition. Correspondingly, a property owner may not make the performance of a contractor’s corrective action duties more onerous or difficult by intervening acts.

10. Touch-up repairs by Respondent to the exterior stucco in areas around the house and on portions of the fencing, were shown to have been painted in a manner that differed from the originally painted surfaces, which was a four step process consisting of the application of a primer coat, two coats of an elastomeric paint product and a surface coat of a latex paint product. The repaired areas were patched and then painted with only a single elastomeric coat over which was applied a single latex coat, shown to have been obtained from a different products manufacturer or supplier.

The weight of credible testimonial and photographic evidence tended to indicate that, in numerous scattered locations, the painting over the repaired stucco

areas did not acceptably match the adjacent surface paint. Consequently, Respondent is presently obligated to repaint the non-matching exterior stucco surfaces in a manner and to the extent that any and all paint color discrepancies will be substantially reduced or eliminated. It is noted that, although Respondent may select the means and the materials to accomplish these corrective measures, whenever any contractor elects to perform a less expensive or less extensive treatment, it remains at its peril to achieve workmanship results that satisfy prevailing industry standards and tolerances.

12. Despite several prior corrective attempts by Respondent, the front entry door was shown to still require further adjustments so as to enable proper functioning. Additionally, weather stripping appeared to be incomplete around the door frame and the window inserts. These conditions must be rectified by Respondent.

13. Although prior repair efforts on the master shower drain did eliminate most, but not all, of a height differential, the credible testimony tended to indicate that a comparatively small elevation difference still remains between the top of the drain fitting and the surrounding surface shower floor tile, thereby hindering complete water drainage. This must become the subject of further remedial work by or on behalf of Respondent.

14. The originally intended interior drywall repair work was to have been confined to two locations on the kitchen ceiling and to one location on the master bedroom ceiling. It was not effectively disputed that the repairs started by or on behalf of Respondent in these areas were left incomplete and unpainted. Appropriate completion of these drywall locations, to include further sanding if needed, must be accomplished by Respondent.

15. It is well recognized that both a general contractor and a subcontractor normally retain responsibility for the results of work by individual workmen, irrespective of whether or not the extent of work was specifically authorized in advance by either or both of the respective contractors. However, in this case, where numerous drywall repairs were commenced after the filing of a Registrar’s complaint in an attempt to satisfy the homeowner/occupants, the ultimate correction was rendered far more difficult due to the Complainant’s extensive marking of areas in pencil, thereby reflecting somewhat questionable wisdom and perhaps severely damaging the capability of the drywall to accept finish painting without extraordinary methods.

16. The substandard condition of, and consequently the actual need for repairs on, the drywall surfaces at most all of the marked locations was never adequately demonstrated. With respect to the refinishing, re- painting and overall completion of the drywall in the areas where remedial efforts had commenced at the direction of Complainants, as communicated to employees of Respondent’s subcontractor, it is found and determined that the intervening conduct of Complainants in marking the drywall surfaces in an injurious manner serves to relieve Respondent and its subcontractor from any duty to further finish or complete the interior drywall repairs, subject to the ceiling location exceptions set forth the preceding Finding of Fact.

The exterior columns, constructed with decorative and non-structural Cantera stone surrounding supporting wood members, were existing at the time of purchase. The establishment of valid complaints by Complainant seeking to address any irregularities as to placement or levelness of these decorative columns is determined to be precluded based upon the both the wording of the escrow instruction as to cosmetic appearances and the advance specific declining of exhaustive work on these features set forth in the schedules that listed such items, all of which was made known to

Complainants at the outset. Nor did the evidence sufficiently demonstrate that a beam was impermissibly bearing on the decorative stone portion of any column so as to cause or contribute to any observable non-structural cracking condition. It is noted that several of the Cantera stone columns were subjects of extensive added corrective work, and no waiver or other continuing exclusion would be applicable. However, no actionable workmanship deficiencies, cosmetic, structural or functional, were sufficiently proven with respect to any of these columns.

18. The testimony was somewhat conflicting with respect to whether an agreed capping over the top of certain exterior walls, subsequently changed to utilize a more expensive decorative cap block material, was mutually intended to be subsequently painted to match the fence surfaces on the sides of the fencing. It must be held that no impropriety attributable to Respondent’s leaving the installed capping material unpainted was sufficiently established hereunder.

19. The evidence adduced at the hearing failed to sufficiently demonstrate that Respondent or any of its employees or subcontractors proximately caused damage to a portion of the flex ductwork in the attic.

CONCLUSIONS OF LAW

1. The Registrar of Contractors is statutorily empowered to impose disciplinary penalties, with or without reasonable conditions, against a licensee for proven violations of the State’s contracting laws. In many, if not most, administrative actions, corrective work or payment conditions, compliance with which serve to rectify or cure violations, are formulated and included as part of the Registrar’s Order so as to provide a means to reduce or eliminate otherwise appropriate penalties.

2. At these administrative hearings, the complaining party generally has the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (1996); Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (1985); Utah Construction Company v. Berg, 68 Ariz. 285, 205 P. 2d 367, (1949); See also Rule R2-19-119, A.A.C. 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). It is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not." Black's Law Dictionary, 1182 (6th ed. 1990).

3. The totality of the evidence adequately established that, with respect to several items of complaint, Complainants have sustained their burden of proving that Respondent has violated the workmanship provisions of A.R.S. §32-1154(A)(3); namely Rule R4-9-108. However, no violations by Respondent of the wrongful act provisions of A.R.S. §32-1154(A)(7) were sufficiently proven.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order that Respondent’s Class B License be suspended until the Registrar receives proof that proper corrections have been accomplished by Respondent to the painted exterior stucco, the front entry door, the shower drain and the interior drywall ceilings in the kitchen and master bedroom, as set forth in Findings of Fact Numbered 11 through 14, inclusive.

It is further recommended that if proof of Respondent’s proper accomplishment of the above-described corrective measures is filed with the Registrar on or before this Order’s effective date, then no license suspension shall be imposed, and the entire Citation and Complaint in Case Number 01-2584 shall be closed. Dated: March 6, 2002. 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: Joyce Armijo ----------------------- [1] These standards and tolerances are intended to be objectively tested. The personal subjective standards or tastes of any individual property owner would not be determinative of the existence or absence of any asserted cosmetic deficiency.

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