ALJDEC

01F-H0258-ROC · Registrar of Contractors · 2002-02-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 15, 2002 in Kingman, Arizona. APPEARANCES: Complainant Findlay Auto Center appeared through its owner, Henry Nolte, and was represented by Stephen Lee, Esq. Qualifying party and owner Jim Dougherty appeared for Respondent ASCO Asphalt, representing himself. 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 such that discipline be recommended against Respondent’s license. 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 Class K-69 License No. 151507 issued by the Registrar of Contractors (Registrar). 2. The Complainant’s automobile dealership lot area in question was a dirt parking lot and service area where cars were generally parked temporarily or stored for sale. The lot area was 80% to 90% unpaved dirt, with drainage problems. 3. As a result of Respondent coming into the dealership for the possible purchase of a car, there were several meetings between Complainant and Respondent, some having to do with the purchase of a vehicle at Complainant’s business, and some with regard to the paving project to be undertaken. Meetings took place at the Complainant’s place of business, and included viewings of the lot areas for the paving project. There may have been two or more proposals, which included the dealings with regard to a car being purchased by Respondent at the same time. Eventually, a contract for asphalt paving work was drawn up. 4. The (undated) contract between the parties states thereon that Respondent contracted to do “Asphalt paving” “Chip & Seal method” with the following two provisions: (Surface prep: add base where needed, Blade and Roll. (Apply double layer chip & seal, Roll between layers. The contract states a price for “All material & labor” to be $25,000. Payment terms were to be payment in full on completion. The contract further provides a “(3) Three year warranty against wash-out, potholes ect. (sic) except all acts of God or man.” The entire contract (invoice) [excepting the Acceptance signature] clearly appears to have been written by the same person; the appearance of the handwriting is the same. 5. The work was done in April 2001. Complainant was unhappy with the work from the beginning, and the surface began deteriorating within two months. 6. On June 11, 2001, Complainant filed a formal complaint with the Registrar alleging it had contracted to have the “rear storage and service yard of the facility graded and asphalted the same as the rest of the building” (meaning, the new and used car area and service area). Complainant alleged in the complaint that it was told the chip and seal method was a “less expensive method with the same result as doing regular hot asphalt.” Complainant stated in the complaint that it understood the methodology to be used was “low cost paving”, i.e., “paving with recycled asphalt”. Complainant alleged in the complaint that it only received “oiling of the lot which was then covered with crushed stone spread on top and rolled.” Complainant further alleged: that the work was “not asphalt”, the work did not withstand the first rain, the product “has broken down, washed out and is deteriorating.” 7. The Registrar’s Inspector (Inspector), Bill Redman, issued the Registrar’s standard letters to the Respondent, and scheduled a jobsite inspection. 8. On July 2, 2001, the Registrar’s Inspector issued his Corrective Work Order (CWO). The CWO directed Respondent to “Repair parking lot surface and base using proper method before re-doing the chip seal.” 9. In August 2001, counsel for Complainant filed letters to the Registrar’s Inspector indicating that the work had not been rectified and requested the matter be set for formal hearing. 10. In late August 2001, Respondent wrote to the Registrar’s Inspector and explained his position with respect to a base and having time to harden. Respondent then stated that he would apply “two course Chip and Seal paving to water proof this surface.” Respondent further stated that “If … the A.B.C. has not set or hardened sufficiently I will incorporate dry concrete and lime mixture to base material, water and roll to hopefully achieve the desired compaction and RE-chip.” Lastly, Respondent stated that he was “willing to continue trying, for as long as it takes to satisfy this customer within the terms of our contract!” and that “The base density is the life of the surface.” 11. On September 13, 2001, Complainant advised the Inspector that the situation had gotten worse, as “One of ASCO’s workers …knocked down the back wall”. Complainant requested that the matter be set for formal hearing. 12. On September 27, 2001, the Registrar issued its Citation and Complaint against Respondent alleging violations of Arizona Revised Statutes (A.R.S.) §32-1154.A.3, A.A.C. R4-9-108, A.R.S. §32-1154.A.7, and A.R.S. §32-1154.A.23. 13. Respondent filed his Answer in October 2001. Respondent stated that “all surfaces paved have held up very well with no wash-out or pot holes.” Respondent further explains that he believed he had followed his contract and that he had not “at any time” told or conveyed to Complainant that the two course chip and seal method was “hot mix asphalt”. Respondent set out his stated methodology used [and his stated materials used for application] and his concern that the whole problem was really the drainage of the area, and that the soft spots were due to “very little to no traffic and very poor drainage” on the area. Respondent’s Answer further states “Chip and seal method … It is a very good surface that is weatherproof and durable at a lower cost than hot mix or concrete, with virtually no maintenance for 8 to 10 years.” 14. At the hearing, Complainant’s owner testified that, after all their conversations, he believed he was receiving “asphalt” just like streets and his other asphalted lot areas. Complainant testified that “oiled chips” was not what he expected to be placed on the dirt lot. Complainant testified that there was not much thickness and that the first rains caused the oil and stones to float, leaving the lot unable to be used for driving or parking. Complainant testified that they had to pull (tow) the cars out of the mud and dirt on the lot. 15. Complainant testified that he was there for the repairs, but had not seen all the repairs. Complainant testified that, with the repairs attempted, that Respondent had used a different color rock (reddish, instead of gray) and that the repairs have also not held up. Additionally, Complainant testified that during the repairs attempted, one of Respondent’s guys knocked down a section of the back wall. Complainant testified that he salvaged most of the bricks from the wall section and that it cost $1,135.11 for both the temporary fence needed (for one month) and to rebuild the fence. 16. Complainant’s service manager, Jack Fields, testified that his impression from the pre-work conversations, were that the lot was being asphalted, like asphalt paving. Mr. Fields testified that there was nothing in the conversations that the lot was to be only graded, filled, oiled and chipped. Mr. Fields testified that, on the first day, a grader came in and worked, but that he never saw a base come onto, or being put onto, or graded onto the lot. Mr. Fields testified that, it was his understanding that a base of AB plus gravel would be brought in and spread, but that he only saw some rock loads come in. Mr. Fields testified that another person told him that the lot was being oiled and then the rock [taken from the rock piles already brought to the lot] was being laid or dumped over it . Mr. Fields testified that when he stopped the work to ask about the work being done, that Respondent and he got into a heated argument over the work to be done. Mr. Fields testified that Respondent showed him a contract that did not contain the top line stating “Asphalt paving” “Chip & seal method”, but that he and the owner’s son then got out Complainant’s copy of the contract, and the top line was, in fact, on the contract. 17. Mr. Fields testified that, during the repairs, he saw Respondent’s bobcat regrading the lot area near the wall, and was working up and down by the wall. Mr. Fields testified that the service area closed, and he went home. Mr. Fields testified that, when he came in the next morning, that back lot area had brown gravel on it and the oil truck and the bobcat were gone. Mr. Fields testified that the condition of the lot has worsened, that you can dig right through the surface, and that you cannot park any cars on it if it is wet. 18. The Registrar’s Inspector testified that, on the job site inspection, the resulting surface was not an asphalt paving job. The Inspector testified that asphalt paving is a hot mix laid down and compacted to a hard surface, likening it to a city asphalt-paved street. The Inspector testified that asphalt versus chip & seal are two different things in the industry, and that an asphalt surface is to be a hard surface. The Inspector testified that, even with a chip and seal method, there has to be a strong substantial base and it has to be packed. 19. The Inspector testified that the original job and the attempted repairs have not resulted in a good job result. The Inspector testified that the lot has loose aggregate on it (which has not helped the lot), that the lot does not have a substantial base, and that he has never seen a chip and seal be put on a “raw” lot. The Inspector testified that it appeared that AB loose aggregate had been dumped onto the lot, and that he did not see any emulsion on it. 20. The Inspector opined that the wall being knocked down during repairs would then be the responsibility of the contractor, its subcontractor or its employees. 21. Respondent testified that he had taken great pains to explain the process to Complainant and that they knew they were getting a chip and seal method. Respondent testified that he had not wanted to invest $16,000 in the material and not have the customer be happy. Respondent argued that Complainant was a businessman and should have asked more questions or researched what he was getting. Respondent testified that there were two contracts, the first one specifying the asphalt within the terms of the contract and the second one specifying it on the first line. 22. In response to a query, Respondent testified that he did not have any cost or material type or amount information with him at the hearing. Respondent guessed that he had brought in 300 tons[1], maybe 25 to 30 loads, and had used 6,000 to 8,000 gallons of emulsion. Respondent testified that different trucks brought in different material and that he also used a water truck [“to improve density”] and a grader [‘rolling excess graded material into the soft areas”]. Respondent testified that the drainage problem was not agreed to be corrected by Complainant and that, without additional weep holes in the wall, there would continue to be soft spots and poor drainage. Respondent presented pictures to the record, mostly to support his arguments that the lack of drainage was the problem.

23. Respondent testified that, because of the CWO, the area near the wall was left loose, “not compacted”, for about eight feet out to allow for drainage, and that he does not believe that cars are sinking into the lot. Respondent testified that this is a durable surface and is a good waterproof surface. Respondent testified that his crew [he and two others] only did hand work by the wall [with rakes, shovels and a 30” lute], and argued that the wall had been ready to fall over and just fell over, and that you can see it was already leaning in the pictures. Hearing Exhibits through 7. 24. Respondent testified that chip and seal is used throughout the country and that he used asphalt machinery to put down a weather resistant surface to prevent water from penetrating the lot surface. Respondent testified that he used crushed stones, not ABC, and that he would get better density with crushed stones.[2] Respondent testified that he used an emulsified product [“CFS with 2% polymer”], not oil, and that it is a cheaper method of paving because you do not need an offsite mixed material. Respondent testified that he did as good a job as could for the money on the contract. 25. Respondent testified that he had corrected the “surface preparation” to the best of his contractor’s knowledge and would do whatever he could to please the customer and try to correct it in any way. Respondent testified that, if he was trying to defraud Complainant, he would not have invested ($16,000) in materials. Respondent believed that they were looking at the same thing from different points of view. Respondent testified that he went back to Complainant a couple of times to straighten this out, and that he’s open to work out the cost of repairs.

26. Complainant testified on rebuttal that there are dirt and weeds in the lot area (which can be seen in the pictures), and that there continue to be problems when it rains, with potholes and ruts. Complainant testified that he did not recall any conversations with the Inspector or with Respondent about not compacting the back area for drainage purposes. Complainant testified that he thought Respondent was bringing in an asphalt laying machine and that he intended to have the lot area all paved with asphalting and compacted. Complainant testified that the first contract had said pave with chip and seal and the second contract said asphalt and chip and seal. Complainant testified that he had seen the bobcat only one to two feet from the wall, and that it had appeared to him that the bottom course of bricks had been pushed back and the rest of the wall had collapsed. Complainant testified that the original work and the “corrected” work is all in the same condition, and still has problems. 27. Based on the testimony and evidence, it is more likely than not that the wall was knocked down by Respondent’s worker. 28. Per his testimony, Respondent has been in business with this particular license for about two years, and has never had a complaint about his work in these two years. The Registrar’s records show the license was issued on January 11, 2000, with a Texas contact address. The Registrar’s records show an address change to Mesa, Arizona in June 2001. Per his testimony, Respondent had been licensed in Texas previously. 29. The Registrar’s records show that Respondent’s license[3] was to have expired in January 2002. 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. … … 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 with in a reasonable period of time after receiving the written directive from the registrar. …

CONCLUSIONS OF LAW 1. Respondent holds a specialty license to perform ”Asphalt Paving”. The K-69 license allows the work permitted by commercial A-14 “Asphalt Paving” licenses and residential C-13 “Asphalt Paving” licenses. The commercial A-14 licenses allows: Installation of asphalt paving, and all related fine grading on streets, highways, driveways, parking lots, tennis courts, running tracks, play areas and gas station driveways and areas, using materials and accessories common to the industry. Includes the necessary excavation and grading only for height adjustment of existing sewer access holes, storm drains, water valves, sewer clean outs and drain gates.

2. In this instance, after several meetings and reviews of the site, which was a dirt lot with little to no aggregate thereon, Respondent gave Complainant a bid to “asphalt” pave the area using a “chip and seal” method. However, based on the lot descriptions given at hearing; the testimony of the job, as known to have been performed; the testimony of the allegations and continued problems; the testimony of the repairs and the pictures provided by both parties, it is clear that Respondent did not perform as was contracted. The evidence showed that Respondent did not install, and the lot area he worked on contains no, “asphalt paving”, as that term is commonly known in the industry. Neither did Respondent install an adequate, sufficient, or industry standard, “chip and seal” to the lot area. The language of the contract called for “asphalt paving” and “chip and seal” method. The contract itself is suspect in calling for two very different types of work to be done. The testimony, and resulting job inspection, showed that there was some, but clearly insufficient, base installed for either asphalt paving or chip and seal. The testimony and the photographs show that a portion of the site contains no “paving” of any kind at this point, but is now graded dirt and weeds. The testimony, evidence and photographs show that the work would not survive to a three year warranty in the case of this performed work, which did not hold up from April 2001 to June 2001, past the first major rains. With this specialty license, a high standard of work and workmanship is applicable. For Respondent to have offered to “chip and seal” a dirt lot, with minimal base is not acceptable workmanship. Respondent has a duty to complete the work for which Complainant contracted in a workmanlike manner, and Respondent, as a specialty contractor, impliedly warrants that the work he performs will be fit for the specialty purpose intended. By this performance, at a level far below industry standards, and by not completing the work to a level of fitness for its intended purpose, Respondent committed a wrongful, and fraudulent, act in violation of §32- 1154.A.7. 3. According to contracting law, Respondent is responsible to complete any contracted construction activity in conformance with industry standards, applicable workmanship standards and any applicable building codes. The CWO called for Respondent to “repair parking lot surface and base using proper methods before re-doing the chip seal.” Based on the testimony regarding industry standard, a chip and seal method must be done over an adequate base structure to allow not only adherence of asphalt emulsion or surface to the base, but a substantial base with a complete and hardened surface which will not deteriorate with “rains”. The resulting graded dirt lot with some added base and oiling is neither asphalt paved nor paved with a chip and seal method. The deterioration of the “asphalt” work Respondent did, after only two months time with rains having been the only weathering of the so-called “waterproofed” surface, is so insufficient as to raise serious questions as to Respondent’s competency to be so licensed. Respondent’s actions were violations of A.R.S. §§32-1154.A.3 and 32-1154.A.723. 4. It is not a function of this Tribunal or the Registrar to adjudicate and award money damages, which must be recovered, if at all, through civil court action. However, the Registrar is empowered to impose reasonable conditions which may serve to reduce or eliminate any otherwise appropriate disciplinary penalties for violations of the Arizona contracting laws. Whenever corrective measures on a jobsite are no longer possible or warranted, the remedy of restitution, partial or total, is justified. In this way, a Respondent is given the means to control, to some extent, the severity of any disciplinary penalty and Complainant need not await the ultimate outcome of protracted civil litigation to recover at least a portion of a demonstrated loss. Moreover, any amounts paid in satisfaction of a condition affecting licensure may properly be credited or applied against any civil judgment ultimately obtained in favor of either party. RECOMMENDED ORDER In view of the foregoing, 1. IT IS RECOMMENDED commencing on the effective date of this ORDER, that the Respondent’s Class K-69 license be revoked until the Registrar receives proof that Respondent has caused this asphalt paving contract with Complainant to be completed to industry standard by a properly licensed contractor, and reimburses Complainant for the temporary fence and wall repairs. Given that the current records available to this Tribunal show that the Respondent’s license has not been renewed, absent a timely and proper renewal of this license, Respondent is not appropriately able to complete the directed or contracted asphalt work. 2. IT IS FURTHER RECOMMENDED that if Respondent appropriately accomplishes the above, or if the parties mutually settle the matter, and so jointly advise the Registrar in writing, on or before the effective date of that ORDER, then the above recommended license revocation shall not take place and Citation No. H01-0258 shall be closed. RECOMMENDED this day, February 5, 2002.

______________________________________ Kay A. Abramsohn Administrative Law Judge

Transmitted by mail this _____ day of February, 2002 to:

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

By ___________________________ ----------------------- [1] This testimony conflicts with Respondent’s Answer wherein he stated he “added approximately 100 tons crushed stone with fine dust until compacted.” [2] This testimony conflicts with Respondent’s August 2001 letter to the Inspector wherein he stated “If … the A.B.C. has not set or hardened sufficiently I will incorporate dry concrete and lime mixture to base material, water and roll to hopefully achieve the desired compaction and RE- chip.” Emphasis added here. [3] The records available to this Tribunal as of the date of this recommended decision do not reflect a renewal.

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