ALJDEC

01F-C001248-BFS-res · Department of Building and Fire Safety · 2002-08-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 17, July 29 and 30, 2002 APPEARANCES: Gary S. McCaleb, Esq. on behalf of the Complainants Carlos L. Estrada, Esq. on behalf of the Respondent ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________ Preliminary Matters The instant case came on for rehearing before the Office of Administrative Hearings upon Order of the Director of the Department of Building and Fire Safety (BFS). The rehearing is a result of the Respondent not having received notice of the original hearing that was held on May 16, 2001, which resulted in the revocation of the Respondent’s license. As a consequence of the revocation, a Consumer Recovery Fund (Fund) hearing was held on October 15, 2001, in Docket No. 01F-R012002-BFS. The Respondent was present at the Fund hearing and was represented by counsel. The decision in the Fund hearing became final but was not sent to the Respondent’s counsel. The Complainants were awarded $21,651.58 in damages by the Fund. At approximately the same time as payment was made to the Complainants, the Respondent filed the motions for rehearing in the instant case and in the Fund case. The final decision in the Fund case was mailed on December 6, 2001, the Fund payment to the Complainants was issued on January 17, 2002 (42 days after the mailing of the decision in the Fund case), and the Respondent’s motion for rehearing was received by the Department of Building and Fire Safety on January 18, 2002. The motions for rehearing were granted in both cases and the Order issued on March 7, 2002, because of a lack of notice (improper addresses for the Notice of Hearing in the original case and improper notice of the decision in the Fund case). The Respondent’s counsel moved for a continuance of the May 17, 2002 rehearing date because counsel was going to be out of state at the time scheduled for the hearing, and the Respondent’s Qualifying Party, Guy Williams, was ill. After a telephone conference with the parties, the Administrative Law Judge (ALJ) denied the motion. Guy Williams and his wife Cynthia Williams appeared at the hearing without counsel. Cynthia Williams was a licensed Arizona attorney for 17 years and was allowed to participate in the defense of the case as a spouse with a potential community property interest, and because of the illness of Guy Williams. She was not representing the Respondent in the capacity of an attorney. On May 17, 2002, the Complainants presented their prima facie case on the violations which are charged in 01F-C001248-BFS-res. The Respondent did not cross examine the Complainants, and had not presented a defense in the case. The matter was set for further hearing to commence July 29, 2002. It is the opinion of the ALJ that the Respondent’s essential due process rights, including the right to an attorney are fully protected. The taped hearing record was available to the Respondent to allow counsel to review the direct evidence presented by the Complainants. Respondent’s counsel also had the opportunity to subpoena witnesses who had already testified, in order to cross examine those witnesses (at most two witnesses would need to be subpoenaed). The Complainants were required to file an amended Recovery Fund claim and submit a copy to the Respondent, to reflect any new estimates which are being claimed. The essential, elements of administrative due process are adequate notice, right to prepare a defense, the right to cross examine witnesses, the right to present evidence in your own behalf, and the right to an impartial fact finder (judge). The further hearing order in this case satisfies these due process concerns. On July 29, 2002, the hearing reconvened and the Complainants were present and represented by counsel, Gary S. McCaleb, Attorney at Law Esq. The Respondent was represented by Carlos L. Estrada, Attorney at Law. The evidentiary portion of the rehearing (including the Fund case, Docket No. 01F-R12002-BFS-res) was concluded on July 30, 2002. The record of the instant case stayed open until August 12, 2002, to allow the parties to submit information on the status of the Respondent’s license. A decision on the Fund case is held in abeyance (the record is open until at least October 15, 2002), because the Fund matter cannot be addressed until the instant case is properly adjudicated and a final decision is issued.

Findings of Fact The facts of the instant case are similar in many respects to the facts as set forth in the Recommended Decision in the original hearing. This is because the evidence presented at the rehearing is essentially the same as that which was presented in the original hearing. The Respondent was present and able to contest the allegations and present its own evidence during the rehearing. That evidence has been fully weighed and considered. Despite any similarities that may exist between the instant decision and the prior decision, it should be understood that the findings and conclusions in this rehearing are based on evidence, stipulations and those matters administratively noticed as a part of the record of the rehearing.

1. The Complainants, residents of Eager, Arizona purchased their triple wide manufactured home from the Respondent, doing business in Show Low, Arizona, in December, 1999. The price was $87,318.00. The Complainants paid cash. 2. The home was set up in Eager, Arizona, and the Complainants moved into the home in January, 2000. 3. When the home was set up, the Complainant, Mrs. Brown noticed a ¾ inch gap and a ½ inch dip in the floor marriage line between the A and B sections. Mrs. Brown discussed the problem with the installer (Lund), who ignored the issue. Mrs. Brown also voiced her concerns to the carpet installer, Wally’s Quick Carpet (Wally’s), who nevertheless installed the carpet despite the gap and the Complainant’s concerns. 4. The home sits on piers and a concrete pad. After being “set up”, the Complainants noted numerous paint problems. The Complainants reached an agreement with the factory, and the home was repainted with a semi gloss paint. Some drywall cracking became evident at the marriage line, windows and doors. It was not completely repaired by the person (Hackman) who did the initial set up, tape and texture of the home as well as the repainting. The drywall cracking has worsened over time in part as a consequence of attempts to re-level the home and correct the marriage line. There are presently numerous areas in the home with drywall cracks and patched areas which have not been repainted (Photographic evidence 1- 38). According to the Respondent (Guy Williams), Hackman did no further work for the Respondent after the initial set up of the home and any additional work which was done by Hackman was for the factory. 5. There were problems with the carpet seams. This along with other problems were noted by the Complainants who attempted to have them addressed by the Respondent. The other problem areas of the home will be specifically identified and addressed later in this Recommended Decision as part of the items set forth in the Verified Complaint. 6. The Respondent gave assurances to the Complainants, including assurances about replacing the carpet. Exhibit 7 is a written acceptance by the Respondent of the responsibility to correct the noted problems including the carpet, baseboard, painting, drywall and re-leveling the home. 7. The carpet was not replaced but an attempt to repair the carpet was made in mid July of 2000, by a person, Gary Crane, who was hired by the Respondent. Marcus Williams gave a written guarantee on behalf of the Respondent that the carpet seams would be free from visual or functional defects for two years. The guarantee also included carpet sagging and fraying. The Respondent failed to address other issues which had been raised by the Complainants although according to Mr. Brown the Respondent attempted to address the marriage line issues and re-level the home in late July, 2000. 8. The carpet repair was unsuccessful and in August, 2000, the Respondent filed a complaint against the carpet installer (Carpet Wally’s) with the Registrar of Contractors (ROC). After an inspection, ROC required repair rather than replacement of the carpet. Some carpet areas were loose because the tack strips were too far from the wall. However, the ROC Corrective Work Order (Exhibit 13) did not require repair of all of the carpet seams because “another contractor” (apparently Gary Crane), had attempted to do corrective work thereby relieving Carpet Wally’s of the responsibility. The nicked baseboard was considered a ”walkthrough” issue by the assigned ROC inspector. Mrs. Brown testified the problems with the baseboard were caused by a “knee kicker” during initial installation. Cuts to the baseboard were apparently caused by a utility knife when the carpet was being cut. 9. The Complainants contacted ROC after agreeing to an extension of time for the corrective work to be done. They were told the ROC case was closed. The Complainants were under the impression they could not file a separate complaint against Carpet Wally’s, with the ROC. 10. On October 4, 2000, the Complainants filed their complaint against the Respondent, with the Department of Building and Fire Safety-Office of Manufactured Housing (Department). 11. On October 25, 2000, Department inspector Dennis Butzen (Butzen) performed an inspection at the Complainants’ home. 12. Based on the inspection, Butzen issued a Verified Complaint and Sign Off Form (Verified Complaint), which required the Respondent to correct loose seams, tack strips, re-stretch and properly secure the carpet throughout the home. According to Butzen’s testimony at the hearing, it appeared there may have been two prior repairs on the carpet seams (Butzen was not certain of this). In any event, the efficacy of re- seaming, re-stretching and otherwise making more repairs on the carpet at this time is suspect because the carpet will no longer line up with heater vents and door openings, and the carpet will likely have a patchwork quality which lessens its utility and value. There are numerous holes in the carpet seams. Prior repairs have been unsuccessful and documentation obtained by the Complainants from two carpet dealers (Exhibits 39 and 40), concurred with Butzen’s opinion at the hearing, that the carpeting needed to be replaced. The Respondent agrees that the carpet was poorly installed and has a number of problems including the seams. During the course of the hearing, Williams gave different answers as to whether the carpet needed replacement. At one point he acknowledged that it (or at least certain areas required replacement), but later altered his response. 13. Other items which were to be corrected by the Respondent included the replacement of cut, nicked and marked baseboards throughout the house, replacement of the ridgecap, repair, sealing, texturing and painting of drywall cracks, wall joints, window sills and nail pops, and corner rosettes need to be installed at top corners of various doors, after the drywall repairs. 14. On January 30, 2001, Butzen performed another inspection and issued another Verified Complaint which required the Respondent to level the home and tighten the shims. During his inspection, Butzen had found three of six piers with loose shims in the master bedroom-living room area. The floor of the home was vibrating when persons walked across it. 15. The corrective work was not done by the Respondent, and the Department issued a Citation and Complaint on March 16, 2001. The Respondent filed an Answer to the Citation and Complaint and the Notice of Hearing was issued on April 4, 2001. The history of the case since that time is summarized in the Preliminary Matters of this Recommended Decision. 16. The Respondent requested that the ROC reopen the complaint against Carpet Wally’s (a hearing in the case is still pending). 17. The Respondent ceased business operations in approximately April, 2001. Conclusions of Law The Citation and Complaint alleges violations of A.R.S. §41-2186(1), failure to comply with the applicable law; (12), failure to respond to a verified complaint after notice; (19), failure to provide all agreed upon goods and services; and (20), failure to install in a workmanlike manner. 1. Any violation of the statutory provisions of A.R.S. §41-2186 (12), (19) and (20), constitute a violation of A.R.S. §41-2186(1). To this extent any violation of A.R.S. §41-2186(1) is duplicative. 2. Based on the most competent evidence, it is concluded that the Respondent is in violation of the cited statutory provisions. 3. State agency processes should be consistent and have a common goal with respect to their regulatory function and carrying out their public purpose. The relationship between the Respondent and Carpet Wally’s, which is under the jurisdiction of the ROC, does not control the relationship between the Complainant and the Respondent, which is under the jurisdiction of the Department of Building and Fire Safety. The carpet plus tack strips need replacement. The decision on this issue, is based on the record in this case and is not contingent on any past or pending ROC decision. The evidence also shows that the missing “rosettes” need to be installed, the baseboard needs to be replaced. The Respondent accepted responsibility for the ridgecap and re-leveling of the home (re- leveling has been recently done by the Complainants). 4. The painting and drywall cracking issues merit discussion. Much of the damage occurred after initial installation by Hackman who then repainted the home for the manufacturer. The continuing drywall cracking after the repainting by Hackman was a consequence of attempts to correct the marriage line gap and re-leveling of the home. The evidence is that Hackman was to finish the drywall patching and painting after the Respondent re-leveled the home in July, 2000, but Hackman did not return to finish the job after that time. Based on this, it is concluded that the Respondent is responsible for the repair of the drywall and any painting necessary because of the repair. The conclusion is reached because the damage was caused by improper installation and leveling (also see Butzen’s Verified Complaint –exhibit 25), and inadequate correction of the problem. These were the responsibility of the Respondent in the first instance (drywall cracking caused by set up, improper leveling, loose shims and attempts to level). The fact that Hackman painted the home for the manufacturer has no direct relevance to the continued drywall cracking and the patching and repainting which is required as a consequence of that cracking. 5. The parties were given until August 11, 2002 to inform the ALJ of the status of the Respondent’s license. The Complainants spent a portion of the damages prior to the granting of the rehearing but are holding the remainder until final disposition of this and the Fund case. Post Hearing Matters 1. At the conclusion of the rehearing, the future status of the Respondent’s license with the Department was uncertain. Although the revocation in the instant original case was reversed by the Order for Rehearing, the Respondent was liable for a Fund payout in the amount of $1,270.00 in an unrelated case, Docket No 01F-R012004-BFS. Another unrelated Fund case, Docket No. 01F-R012031-BFS ordered a payout of $7,496.76. The Respondent filed a motion for rehearing in that case and its current status is unknown. 2. The Respondent submitted a post hearing Motion to Extend Time and for the Record to Remain Open. According to the Respondent, it has paid “…all due and outstanding assessments (not appealed) to date”, and once the suspension is vacated the Respondent will place the license on active status. The motion also acknowledges the fact that the Respondent’s license is still on suspended status with the Department but does specify why that status has not been changed. It is concluded that the motion is insufficient to justify further delay and it is denied as part of this recommended decision. 3. The Complainant’s memorandum on the status of the license was that as of August 9, 2002 the license was “invalid” because the corporation, Oakcrest Mobile Homes, Inc. was not in good standing. The Complainants urge that if violations are found, an Order for payment from the Fund should also entered irrespective of the status of the Respondent’s license. Understanding the practical dilemma which has been created for the parties as a consequence of the unique circumstances of the case, the Complainants motion is not accepted. The normal sequence of adjudicatory - administrative events cannot be abandoned to the likely prejudice of one of the parties (in this case the Respondent), because of misaddressed mailings. To deprive the Respondent of possible alternatives which would normally be available in a case such as this, in order to compensate for the error, is not supportable under the law. The argument would be considered if it was known that that the Respondent would not or could not correct the problems which constituted the violation. The Complainant’s motion is also denied as part of this decision. Recommended Order In view of the foregoing it is recommended commencing the effective date of the Order entered in this matter that the Respondent’s Class D-8 License No. 7085 shall be revoked unless the Department receives written proof that the Respondent has accomplished or caused to be accomplished acceptable, appropriate and effective remedial work consisting of replacement of the carpeting with carpeting of an equal or superior quality, replacement of damaged baseboard, the repair and retexturing of cracked drywall and repainting of the home as may be necessary, ridgecap repair or if necessary replacement, installation of missing rosettes, said remedial work to be done by properly licensed contractors or if allowable, by otherwise qualified persons. In addition to the requirement to accomplish the above remedial work, the Respondent shall reimburse the Complainant $410.00 for the leveling of the home. In the alternative it is recommended that the revocation not take place if at the Complainants’ option, the parties enter an agreed to monetary settlement in lieu of the remedial work, and notify the Department of said agreement prior to the effective date of the Order entered in this matter.

Done this day, August 23, 2002

______________________________________ Allen Reed Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2002, to:

N. Eric Borg, Director Department of Building and Fire Safety ATTN: Shawna Blank 1110 West Washington Avenue, Suite 100 Phoenix AZ 85007

By ___________________________ -----------------------

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