ALJDEC

01F-A0192-ROC · Registrar of Contractors · 2001-09-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 24, 2001 in Prescott, Arizona. APPEARANCES: Complainants Donald and Kathleen Mountain appeared, representing themselves. Qualifying Party Louis F. Feher appeared for Respondent Northwood Investments and Development. Inc., which was represented by Alex B. Vakula, Esq. ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn _____________________________________________________________________ The hearing in this above captioned matter was held for the purpose of determining whether Respondent was in violation of statute as alleged by the Complainant and as Cited by the Registrar of Contractors. Evidence and testimony were presented, and based upon review of the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. Respondent is the holder of a Class KB-01 license issued by the Registrar of Contractors (Registrar). 2. Respondent was the contractor for a new home for Complainants located in or near Chino Valley, Arizona. 3. In November 2000, Complainants filed a formal complaint with the Registrar alleging complaints against Respondent’s work on the home. There were twenty-seven problems noted on the attached paperwork to the complaint.

4. As a result of receiving the complaint, Registrar’s Inspector (“Inspector”) Cliff Frandsen scheduled a site inspection for November 29, 2000, by letters dated November 16, 2000. Complainants attended the inspection, but Respondent did not attend the inspection. 5. On November 30, 2000, Complainants faxed to the Inspector copies of a Cost Breakdown indicating allowances for the home and receipts for items they paid for or charged to Respondent relating to the home and those allowances. 6. On December 8, 2000, Respondent faxed to the Inspector a response (dated December 7, 2000) to Complainants’ complaint. This response recites an explanation or information with regard to the twenty-seven items listed on Complainants’ filed complaint. 7. On December 8, 2000, the Inspector issued a Corrective Work Order (CWO) regarding certain items required to be repaired, corrected, or no action being required. Pursuant to the CWO, Respondent was required to make corrections within fifteen days. 8. The corrective work was not completed and the matter did not get resolved in that time period. Attempts to have the corrective work done were met with some delays and scheduling problems. 9. Respondent and Complainants each wrote to the Registrar’s Inspector regarding the work, the CWO or some disagreement with the CWO determinations. In January 2001, Complainants requested that the matter proceed to hearing. 10. On February 15, 2001, the Registrar issued its Citation and Complaint against Respondent alleging violations of Arizona Revised Statutes (A.R.S.) §§32-1154.A.7, 32-1154.A.23 and 32-1154.A.3, specifying Arizona Administrative Code (A.A.C.) R4-9-108. 11. On February 19, 2001, Respondent filed its written answer, indicating all of the items had been done except six items: #10 - covers for exhaust vents to be supplied when painting finished; #13 - damaged window screen to be deducted from “extras” amounts because Homeowner agreed to fix; ##16, 17 and 18 - french doors, weather stripping and door adjustments in frames, to be scheduled; and # 20 - hallway opening framing to accommodate trim, to be completed on access to home. The Answer disputes Complainant’s continued disagreement with the CWO item #15 [no action required - door color/stain], indicating that Respondent had sampled the door color/stain and Complainants had indicated it was fine and never mentioned a problem with the color at the walk through. 12. The matter remained unresolved, and was forwarded for formal administrative hearing. On request of Respondent, due to travel schedule, a Continuance was granted in the matter, moving it from June 2001 to August 2001. 13. Four days before the August hearing date, Complainants filed an ex-parte letter to the Tribunal, regarding a January 26, 2001 invoice from Respondent and Complainant’s requests for documentation. In the letter, Complainants wondered whether Respondents could be ordered to provide the information. 14. This Tribunal did not act on the ex-parte request. 15. The day before the hearing, at 4:30 p.m., the parties filed a joint Stipulation to Continue the hearing, which indicated that the parties had “resolved substantially all of the outstanding issues and the remaining issues are expected to be resolved within the next few weeks.” The parties requested that the matter be continued for approximately four weeks. The Stipulation was signed by counsel for Respondent and by Complainants on their own behalf. 16. This Tribunal did not act on the last-minute request. 17. At hearing, the parties discussed the items remaining and their respective positions, concerns and hope for settlement. The Tribunal denied a Continuance, and the matter proceeded to hearing. 18. Since the time of the hearing [twenty days ago], there has been no notification to the Tribunal of a full settlement of this matter between the parties. /// /// 19. According to the parties, the items remaining at issue at the time of the hearing were as follows: a. Four exterior doors on the house - the color/stain of the doors; b. Rear patio concrete slab - “cap” repairs which were made are failing; c. Granted credits not yet allowed to Complainant, with Respondent claiming set-offs and additional monies due to Respondent. d. Painting of a repaired/patched area of stucco. 20. The December 8, 2000 CWO determined, at Item 28, that Respondent was directed to “reimburse” Complainants the amounts shown on the Cost Breakdown [line 28 - Paint/weatherproofing, $4,600.00; line 39 - Carpet/tile, $2,500.00; and line 59 - Appliance allowance, $1,000.00] for contract items that Complainants had completed themselves per contractual agreement. The total of these amounts is $8,100.00. 21. The Inspector testified that the CWO “reimbursement” item came about because the contract showed that Complainants had done this work or had an allowance, and the contract with Respondent had included those items, which would not be appropriate if the Respondent had not done those items or did owe Complainants an allowance. 22. The December 8, 2000 CWO determined, at Item 5, that Respondent was to remove and replace two sections of the concrete due to compound cracking. At the hearing, the Registrar’s Inspector testified that the concrete slab (rear patio) had compound cracks in the repairs, which had failed. The Inspector recommended repairs to the cracks, unless the cracks continued to deteriorate. The Inspector opined that when a repair fails, there is an issue of whether the repairs were appropriately done. 23. The Inspector testified that, if there had been corrective work to the stucco, that it was the responsibility of the contractor to repaint those areas unless something else had been negotiated at that time. 24. The Inspector testified that the CWO indicated “no action” as to the doors because he had not had sufficient information regarding the color/stain of the exterior doors to determine that any action was required of Respondent. 25. Complainants testified that they had done the painting (interior and exterior) per the change to the original contract, and that they expected to receive a $4,600 credit on this item. Complainants testified that they had done the flooring work themselves and, with the $2,500 contract allowance for carpet and tile, they expected to receive a credit for this item. Complainants testified that, just before they were ready to install the hardwood flooring, Respondent had offered to purchase the subflooring material and then had it delivered to Complainants [Hearing Exhibit 3]. Complainants testified that they purchased appliances themselves and, with the $1,000 contract allowance for appliances, they expected to receive a credit for this item. Complainants also testified that they had compiled documentation for items they had, during their own work, purchased or received on Respondent’s account, and for which they did not expect Respondent to give them credit. According to Mr. Mountain’s testimony, this included subtractions for burying a propane tank and the purchase of the subflooring materials. Complainants reduced the reimbursement amount they are asking from Respondent from $8,100.00 to $6,852.89. Hearing Exhibit A, and Complainants’ November 30, 2000 letter to Registrar’s Inspector with receipts. 26. Complainants testified that the concrete patio had continued to crack after the repair (capping) with the cracks getting worse, and requested that Respondent remedy this item. 27. Complainants testified that the stucco repaired areas on the East side of the house need to be painted, and they believe that Respondent is responsible for this correction. 28. Complainants testified that the four doors were to have been stained to match the oak color in the house, but that they had been stained a reddish brown color. Complainants requested that the doors be replaced or restained to match the oak color. 29. Respondent testified that it had just found out about the failures in the concrete “cap” repair and that, although it feels the failures were caused by a combination or problems, it would repair the concrete again unless it saw something abnormal about the cracking. 30. Respondent testified that it just found out there were continued problems with the stucco not having been painted, and that it would have taken care of the painting on this repaired area earlier had it been brought to Respondent’s attention. 31. Respondent testified that it does not believe that any action is required on the four exterior doors. Respondent testified that this would have been a part of the painting it would have done under the contract and that, once the Complainants took over the painting responsibility, that this really was under Complainants’ realm. Respondent testified that it had agreed to do the doors at a cost of $900.00 and that was one of the back charges or set-offs it was concerned about. 32. Respondent agreed, according to the contract, that it owes a credit, or “reimbursement”, amount to Complainants. However, Respondent argues that Complainant owes Respondent monies from change orders and other allowances. 33. Respondent argued that the Registrar has no jurisdiction on money disputes, and that it believes that Complainants owe it more money from the overall contract, less that claimed credit amount. Respondent agreed that it had just provided, the day before the hearing, the supporting documentation for the final invoice it had sent to Complainants, and that Complainants had not had the opportunity to thoroughly review it or talk with Respondent regarding the invoice and the documentation. Respondent calculated that the total of changes and allowances due to it was $10,658.47 with a $8,100.00 credit due to Complainants, for a net total due to it of $2,558.47. Respondent further argued that, because Complainants had been given a floor allowance, that Complainant should be responsible for the subflooring invoice [Hearing Exhibit 3] in addition to the amount Respondent determined to be due to Respondent. 34. Respondent testified that they had engineered and properly compacted the house pad, and that the foundation had to be part concrete and part wood with the approval of the County. Respondent inferred that “blasting” which Complainants had done behind the house had possibly impacted the foundation or the ground underneath the patio, possibly being a factor in the failure of the “cap”. 35. Complainants testified that the blasting had been done prior to the pouring of the concrete patio, and that it had been done by a licensed person. 36. Respondent testified that its subcontractors had had a difficult time with scheduling or with access to the home to complete items or do certain items during the contract. Respondent argued that was a factor in mitigation of its not doing the corrective work in this matter. 37. Complainants testified that they never missed an appointment which was made with them with any subcontractor or with the Inspector. 38. A respondent is required to appropriately and properly repair items as noted on Registrar’s CWO, absent proof that the CWO direction is inaccurate, inappropriate or unnecessary. A respondent is required to correct determined items according to the CWO and as necessary by industry standards. APPLICABLE LAW A.R.S. §32-1154.A. provides that a holder of a license or a person listed on a license shall not commit the following: … 3. Violation of any rule adopted by the Registrar; specifically Arizona Administrative Code (A.A.C.) R4-9-108[1]. … 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. … 23. Failure 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. CONCLUSIONS OF LAW 1. In this case, Respondent agreed that two repair items would be further repaired or corrected: the stucco repair area/wall that needs to be painted and the concrete “cap” cracks which need to be repaired. With respect to these items, the testimony and evidence shows that these items need correction, and it is Respondent’s responsibility to do so. 2. Respondent also agreed that, as the Inspector directed in the CWO, it owes Complainant the $8,100.00 “credit” or “reimbursement” per the contract between the parties. Respondent had not reimbursed Complainants that directed amount in response to the CWO, and therefore, remains responsible to make this “credit” amount available to Complainants. 3. While money disputes are not properly before this Tribunal and are better settled in another forum, it must be noted that Complainants are not insisting on that full $8,100.00 amount for a credit, given other expenditures for which they wish to have an amount subtracted from the “credit”. See Finding No. 25. Additionally, Respondent wants a set-off for changes and other allowances, and the parties have not detailed to each other the reasons for the amounts of “credits” or “set-offs” they believe to be due. Respondent unreasonably infers that Complainants are thwarting the settlement, or final payment, of the contract, Respondent itself having delayed the provision of details with regard to its final invoice, and having not taken into account the items Complainants indicate need to be accounted for. 4. There is insufficient evidence that the color/stain on the four exterior doors are items for which Respondent should be held responsible. The written contract makes no mention of the color for the doors, or of any responsibility for the doors. The Respondent’s testimony, with no contradiction from Complainants, was that the doors were first taken out of Respondent’s responsibility, under the Complainants’ agreement to paint (interior and exterior of) the house, and then added back for a charge of $900.00. The original painter then not being available, Respondent’s worker painted the doors apparently with Complainants‘ approval of the color/stain at the time of painting. The Complainants’ dissatisfaction with the color of the doors is not a reason to replace doors, nor call for the doors to be repainted by Respondent. Respondent’s offer to reimburse Complainants, or not charge them, the $900.00 for the doors is a matter between the parties or best resolved in another forum. 5. The administrative hearing process cannot mediate the solution for the parties. However, this process will essentially direct that a responsible contractor do the work with cooperation from the homeowner. Respondent inferred that Complainants were refusing to allow the contractors to do work and that this was a problem because it was so far and the roads were so bad to the site. However, Respondent gave a bid proposal for this project and, having then agreed to do the job, Respondent was responsible to assure that its subcontractors arrived and did the work they contracted to do. A complainant’s refusal to allow access may be a contractor’s defense against doing or having the ordered work done. In this case, however, there was no showing that Complainants refused access or were unavailable to the contractors either during the construction or during corrective repair work. A complainant may reasonably insist on having arrangements made so that he or she may be available to grant access to a site for work to be done. However, a complainant may not insist that work be done at a time other than when a contractor is normally available to do such business activity. 6. Based on the foregoing, as to these above items noted to be required, or agreed, to be replaced or corrected, the evidence and testimony at the hearing established violations, by Respondent, of A.R.S. §§32-1154.A.23 and 32-1154.A.3 namely A.A.C. R4-9-108. 7. In this case, the failure by Respondent to complete directed corrective action within the applicable time frames under the CWO further indicates the commission of a wrongful, but not fraudulent, contracting act to the detriment of Complainant, pursuant to A.R.S. §32-1154.A.7. RECOMMENDED ORDER In view of the foregoing, 1. IT IS RECOMMENDED commencing on the effective date of this ORDER, that the Respondent’s Class KB-01 license be temporarily suspended until the Registrar receives written proof from the parties that an appropriate correction, or settlement, of the remaining determined items, in Conclusions 1 and 2, are completed. As to these determined needed corrective repairs, Respondent is required to make those corrections as appropriate and according to workmanship standards. 2. IT IS FURTHER RECOMMENDED that if Respondent appropriately accomplishes the above described and determined repairs, or the parties fully settle the matter, and so jointly advise the Registrar, on or before the effective date of that ORDER, then the above recommended temporary license suspension shall not take place and Citation No. A01-0192 shall be closed. RECOMMENDED this day, September 13, 2001.

______________________________________ Kay A. Abramsohn Administrative Law Judge

Transmitted by FAX this 13th day of September, 2001 to:

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

By ___________________________ ----------------------- [1] A.A.C. R4-9-108 provides that all work shall be done in a workmanlike manner which is described to be in compliance with local building codes of express application to the types of work done and complained of.

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 PH(602) 542-9826/ FAX 542-9827