ALJDEC decisions subject to certification as final

03F-Y0118-ROC · Registrar of Contractors · 2003-09-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 9, 2003 at 1:30 p.m. APPEARANCES: Complainant Wanda M. Walden appeared on her own behalf; Respondent Dennis Alexander Mundell dba The Company appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The parties presented evidence and made argument on whether Respondent contractor had violated A.R.S. § 32-1154(A)(7), (17), (23) or (3) in his refurbishment of the swimming pool at Complainant’s residence into a “swimming pond.” Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order to the Arizona Registrar of Contractors. FINDINGS OF FACT Background and Procedure 1. On June 4, 1981, the Registrar issued License No. ROC054726, Class C-21 to Respondent Dennis Alexander Mundell dba The Company, a sole proprietorship. This license allowed Respondent to contract to perform landscaping and installation and repair of irrigation systems. 2. On April 2, 2002, Respondent submitted three proposals to Complainant to “refurbish [her] pool,” as follows: I. Carte Blanche . . . $7,785 “Cadillac Installation” A. 45 mil. EPDM soft polyethylene liner – 20 yr. warranty B. Grande Bio-Falls with Barley Mat filters and net – 53” wide fall C. Flagstone existing cool deck – 300 sq. ft., plus or minus D. Rock and boulder accents for waterfall.

II. Middle of the Road . . . $6,575 “Fence Sitters Special” A. 45 mil. Liner – 20 yr. warranty B. Standard Bio-Falls – 23” wide fall C. Flagstone existing cool deck D. Smaller falls built with less rock

III. Mid-Night Special . . . $5,735 “Seen Only In The Dark” This selection would use your current pool pump and filter with no rock in the pool, just liner. Falls would also be built solely with rock and flagstone, no Bio-Falls.

3. On April 7, 2003, the Registrar received Complainant’s complaint against Respondent’s contractor’s license, in relevant part as follows: This contractor promised me a chemical free and all natural fully functional pool. I read his advertisement in the yellow pages. I already had a functional pool but according to him I could have a dream pool including a waterfall and a beautiful landscape surrounded with flagstone. I have five grandchildren and I thought this would be a beautiful and fun addition for my grandchildren.

What I have now is a non-functional swimming pool that does not even come close to satisfying the terms of our contract. I am the proud owner of a non-functional swamp that according to the newest contractor’s employees is going to require chemicals and servicing approximately three times a week. . . .

According to the complaint, Complainant had paid the full $7,785.00 price for the “Carte Blanche ‘Cadillac Installation’” that Respondent had contracted to build. Attached to Complainant’s complaint was a copy of Respondent’s advertisement in the Yellow Pages, which offered to construct “swimming ponds” that would allow property owners to “have your backyard garden & your pool too!” According to the advertisement, “swimming ponds” did not require chlorine or a pool service and would provide a suitable environment for “aqua plants” and fish. 4. The complaint was assigned to the Registrar’s Inspector John Prince. Inspector Prince performed a jobsite inspection and, on April 15, 2003 issued a Corrective Work Order to Respondent, directing it without fifteen days to perform the following: 1. Contractor failed to satisfy the terms of the contract: Contractor to determine cause and make necessary repairs to the waterfall so it functions as it was intended to. Contractor to make necessary repairs to areas that were damaged during construction (sprinkler system and 2 broken bricks). Contractor to complete landscaping on the north, south and east sides of the pool. Contractor to hire a licensed Arizona pool contractor to determine cause and make necessary repairs to the pool so it will function properly and can be used as it was intended to or rectify all or part with the homeowner.

5. On May 1, 2003, the Registrar received Complainant’s request for hearing. 6. On May 16, 2003, the Registrar issued a Citation and complaint against Respondent’s license, charging violations of A.R.S. § 32- 1154(A)(7), (17), (23), and (3). 7. On May 21, 2003, the Registrar received Respondent’s response to the Corrective Work Order. Respondent denied having performed work beyond the scope of its C-21 license because it only contracted to “refurbish an old pool not build a pool” and because, in any event, it builds “swimming ponds,” not swimming pools. With respect to the cause of the admitted problems in Complainant’s “swimming pond,” Respondent explained: Pictures I showed Mrs. Walden of our parent company’s owner, in Chicago, swimming in his swimming pond was what she indicated she would like. Eco system and water clarity are balanced with Bio-falls, fish, plants and non-chemical additives. River rock on the bottom of the pond to help with filtration is also recommended. For various reasons, Mrs. Walden did not want fish, rock, or water plants and most revolved around her grand children. Bio-falls were never cleaned as shown which contributed to algae accumulation. After the cleaning the pool on two different occasions (with our personal pool company, Sun Desert Pool Service) it was evident that pond maintenance was not taking place by the Walden family. At that time I spoke to Sun Desert Pool Service; my supervisor, Tim Bowman and Wanda, and at our cost (over $1,200) we installed a new pool pump and filter as a back up to the Bio-falls. In essence, Mrs. Walden now had a new swimming pond with waterfalls and would need to use chlorine and still maintain on a regular basis.

8. On May 22, 2003, the Registrar received Respondent’s written answer to the Citation and Complaint, which denied any statutory violation and incorporated by reference Respondent’s response to the Corrective Work Order. 9. The Registrar referred the matter to the Office of Administrative Hearings and scheduled a hearing in due course. After the Administrative Law Judge denied Respondent’s request for a continuance, an administrative hearing was held as scheduled, at which both parties and Inspector Prince testified. Respondent also presented the testimony of two witnesses and Complainant had admitted into evidence twelve exhibits. Additional Evidence 10. Inspector Prince testified that, at the jobsite inspection, the pool was green and dirty. The edge of the flagstone deck over the pool was rough and jagged. Respondent was not present at the jobsite inspection. Complainant told Inspector Prince that the pump did not work. Inspector Prince could see where the waterfall leaked into the yard. 11. Inspector Prince testified that the pool (or pond) looked the same when he conducted a prehearing inspection on September 4, 2003. 12. Inspector Prince testified that, although Respondent’s C-21 license allowed him to construct pools for landscaping, he needed a B-05 license to construct, repair, or refurbish pools or ponds that were intended for humans to swim in. 13. Respondent testified that, before he placed the advertisement in the Yellow Pages, he called the Registrar’s office. An unnamed employee told him that his C-21 license allowed him to refurbish swimming pools into swimming ponds. Respondent argued that he was not adding anything to the pool; he was just refurbishing it. 14. Complainant testified that she had a 20-year-old swimming pool that needed to be refurbished. She got three bids from licensed contractors. She emphasized that the pool needed to be safe for her grandchildren to swim in. Respondent showed her pictures of pretty, natural looking ponds. He promised that pond would require one-half the maintenance of a pool. The pool would be kept clean by two barley mat filtering pads, volcanic rock on the bottom, and the waterfall. 15. Respondent testified that “swimming ponds” are very popular in the Midwest. The photographs used to market the pools show small bodies of water that look like small lakes or natural ponds. The water is not absolutely clear. Respondent testified that no other licensed contractors in Yuma construct “swimming ponds.” 16. Complainant had admitted into evidence photographs of the pool (or pond) before, during, and after construction. The black liner that Respondent installed looks dirty and pea-sized gravel has been laid over the bottom of the pool. Complainant testified that the liner covers up the drain at the bottom of the pool. As a result, the water at the bottom of the pool does not circulate and dirt became adhered to the liner. The pump could not move the heavy water, dirt, and gravel at the bottom of the pool and broke. The waterfall only worked two or three times in the year after construction. The photographs also show the green murky water that Inspector Prince testified he saw, the two broken bricks, and damage to the yard and shed caused by the leaking waterfall. 17. Complainant testified that Herman A. Oumauk, whom Respondent hired to clarify the water in Complainant’s pool, told her she would need to put chlorine in to keep the pool clean enough to swim in. 18. Respondent testified that the barley mat filter needed to be cleaned once a week and that the skimmers might need to be cleaned daily, especially if there was a ficus or other shedding tree in the yard. Because Complainant did not perform any maintenance, the filtration and cleaning system in the pool did not work. Respondent testified that Complainant’s pool was the first swimming pool he put a liner in to turn into a “swimming pond.” 19. Mr. Oumauk testified that he has run a pool maintenance company for 9 or 10 years. Complainant’s is the only “swimming pond” he has attempted to clean by putting algaecide in it to clear up the water. Artificial ponds are hard to keep clean in Arizona, because the wind blows dust in and the high temperatures promote algae growth. He does not know how to maintain a pond, as distinct from a pool. 20. Respondent testified that, once chlorine is put into a pond, the barley mat filters will not work. When it became clear that the “swimming pond” system would not work at Complainant’s residence without maintenance, he suggested that it be returned to a regular pool system. He took out 10 tons of pea gravel from the bottom of the pool and added an extra pump and filter. 21. Complainant testified that she no longer has what she started with, a functioning pool. She obtained two bids from licensed pool contractors, both of whom told her that the problem is that the water is not circulating at the bottom of the pool. Neither contractor thought he could make the “swimming pond” work and both suggested removing the liner, flagstone deck, and waterfall and starting over. Complainant had admitted into evidence bids by Specialty Pools & Spas, License No. ROC151569, Class B-05, and Paradise Pools Inc., License No. ROC059973, Class B-05, for, respectively, $12,800.00 and $13,500.00 plus tax. In addition to removing Respondent’s construction, both bids included the cost of installing new tile and plaster and installing a new filtration system, which work Respondent did not contract to perform. 22. The Registrar’s disciplinary record of final agency orders against Respondent’s license shows that its license was suspended on February 20, 2003 as a result of the Registrar’s final order in Case No Y02-0135 and that the license was canceled on April 23, 2003. Respondent’s prior record is considered as a factor in aggravation of the recommended penalty in this case. CONCLUSIONS OF LAW The canceled and suspended status of Respondent’s license neither precludes Complainant from pursuing her administrative remedy nor prevents the Registrar from conducting these disciplinary proceedings.[1] If Respondent fails to comply with any condition that the Registrar sees fit to include in the final Decision and Order in this matter, its canceled and suspended license will be revoked, which in due course will lead to revocation of any other license on which Respondent may be listed.[2] Complainant bears the burden of proof and must establish statutory violations by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “evidence which is of greater weight or more convincing than 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.”[5] A.R.S. § 32-1154(A)(17) allows the Registrar to suspend, revoke, or take other disciplinary action against the license of a contractor for “[k]nowingly contracting beyond of the scope of the license or licenses of the licensee.” “’Knowingly’ imports only a knowledge that the facts exist which bring the act or omission within the provisions of the statute using such word. It does not require any knowledge of the unlawfulness of the act or omission.”[6] It has long been the law in Arizona and elsewhere, that “’[n]otice of facts and circumstances which would put a man of ordinary prudence and intelligence on inquiry is . . . equivalent to knowledge of all the facts a reasonably diligent inquiry would disclose.’”[7] If A.R.S. § 32-1154(A)(15) is construed consistently with the general rules quoted above, it only requires that a licensed contractor reasonably should have known that he was contracting beyond the scope his license before penalties may be imposed. The distinction between a landscaping pond that Respondent’s C-21 license[8] might have allowed it to construct and a swimming pool or “pond” for humans to immerse themselves in, which required a B-5 license[9] should have been clear to Respondent. The evidence therefore establishes a violation of A.R.S. § 32-1154(A)(15). Nor does Respondent’s alleged telephone call to an unnamed Registrar’s employee estop[10] the Registrar for penalizing Respondent’s license for this statutory violation. “[E]stoppel may apply against the state only when the public interest will not be unduly damaged and when its application will not substantially and adversely affect the exercise of government powers.”[11] Estoppel should not apply if its application “would frustrate the purpose of . . . licensing requirements, which is to promote uniform standards of quality.”[12] Under the contractors’ licensing statutes, uniform standards are at least in part achieved requiring a contractor to contract within the scope of his license. In addition, for estoppel to lie against a state agency, the agency’s communication giving rise to the estoppel must be formal, usually in writing, and made by “a person authorized to act in the area under consideration.”[13] “In general, the state may not be estopped due to the casual acts, advice, or instructions issued by nonsupervisory employees.”[14] Complainant also has established that Respondent violated A.R.S. § 32- 1154(A)(7),[15] (3),[16] and (23)[17] in his refurbishment and failure to repair her swimming pool. Complainant finally has established that the “swimming pond” is not fit for its intended purpose and that no properly licensed contractor can make it fit for its intended purpose. Under the circumstances, restitution of the purchase price is an appropriate condition for the penalty that should be imposed on Respondent’s license for the proven statutory violations in this case.[18] RECOMMENDED ORDER In view of the foregoing, it is recommended that, on the effective date of the Registrar’s order in this matter, the Registrar revoke Respondent Dennis Alexander Mundell dba The Company’s License No. 954625, Class C-21 until he has provided proof in writing that he has paid Complainant the purchase price of the “swimming pond,” or $7,785.00. It is further recommended that if, on or before the effective date of the order, the Registrar receives proof in writing from the Respondent that he has paid Complainant $7,785.00, the Registrar should not revoke Respondent’s license but, instead, should close Case No. Y03-0118. Done this day, September 17, 2003.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of September, 2003, to:

Registrar of Contractors Israel G. Torres, Director ATTN: Jennifer Brown 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________ ----------------------- [1] See A.R.S. § 32-1154(C). [2] See A.R.S. § 32-1154(A)(21).

[3] See A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952).

[4] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

[5] Black’s Law Dictionary at page 1182 (6th ed. 1990).

[6] A.R.S. § 1-215.

[7] Maricopa Utilities Co. v. Cline, 60 Ariz. 209, 214, 134 P.2d 156 (1943) (quoting Schneider v. Henley, 61 Cal. App. 758, 215 P. 1036, 1038).

[8] This license allowed Respondent to do the following: “Preparation and alteration of the land for horticulture and arboriculture. Installation of irrigation systems and controls. Carpentry is limited to decorative fences and screens, planter boxes, and plant tubs common to the industry. Excluded are retaining walls over 3 feet, decorative walls or fences over 6 feet, perimeter walls, fences, and load bearing slabs and walkways.” A.A.C. R4-9-103(A).

[9] A B-05 General Swimming Pool Contractor may perform “[c]onstruction and repair of swimming pools and spas. . . .” Id.

[10] “Estop” means “[t]o stop, bar, or impede; to prevent; to preclude.” Black’s Law Dictionary, supra, at 551. “‘Estoppel’ means that a party is prevented by his own acts from claiming a right to detriment of other party who was entitled to rely on such conduct and has acted accordingly. Id. (citing Graham v. Asbury, 112 Ariz. 184, 186, 540 P.2d 656, 658 (1975)).

[11] Valencia Energy Co. v. Arizona Dept. of Revenue, 191 Ariz. 565, 578, 959 P.2d 1256, 1269 (1998).

[12] Hansson v. State Board of Dental Examiners, 195 Ariz. 66, 70, 985 P.2d 551, 555 (App. 1999).

[13] See Valencia Energy Co., 191 Ariz. at 577, 959 P.2d at 1268.

[14] Id. [15] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

[16] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar.” The rule violated here was A.A.C. R4-9-108, which requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”

[17] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure 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.”

[18] See A.R.S. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (Ct. App. 1990). In Sunpower, the Arizona Court of Appeals upheld the Registrar’s power to order a contractor to return to a property owner the cost of a solar heater where, although the contractor had made several attempts to repair the heater, he could not make it provide a habitable degree of heat. See id.

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