ALJDEC decisions subject to certification as final

04F-2018-ROC · Registrar of Contractors · 2004-09-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 5, 2004 APPEARANCES: Edwin Shaufler (“Complainant”) was represented by William Kozub, Esq. Paul Newman, President of Premiere wood Floors, Inc. (“Respondent”), appeared on behalf of Respondent. ADMINISTRATIVE LAW JUDGE: Michael L. Barth ____________________________________________________________________ FIndings of Facts 1. The purpose of the hearing was to determine whether Respondent violated A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, (7), (13), namely A.R.S. §32-1124(B) and/or (23). 2. Respondent admitted that it violated A.R.S. § 32-1124(B). 3. It was undisputed that Respondent had been originally contracted to install walnut plank flooring at Complainant’s residence of 5700 E. Cheney Drive, #14, Paradise Valley, Arizona on or about January, 2002, for the price of $41,991.00 which included application of a commercial grade finish, called Traffic for the price of $1,250.00 4. It was further uncontroverted that the value of the residence exceeded $3,000,000.00. 5. It was undisputed that Complainants had also contracted another contractor to install mill work--cabinetry, paneling, built in furniture and baseboards-- throughout the house. 6. When the parties entered into the original contract it was with the understanding that the walnut plank flooring would be installed before the above described mill work was installed. 7. It was undisputed that subsequent to the parties entering into the original contract, extensive mill work was installed prior to the wood floor being sanded and finished. 8. It was undisputed that the parties entered into a subsequent contract on or about April, 2002 incorporating change orders made by Complainant since the original contract had been entered into by the parties for a revised total price of $50,092.00 including the following change order: “Add wood flooring (no additional cost for wood flooring) to elevator (others to install trim after flooring is complete)…$340.00. Add for additional sanding labor due to baseboard installation (repairs may be necessary at bottom of base due to sanding marks-repairs by others)…$1,440.00.” 9. It was undisputed that an unintended but possible risk of application of Traffic to the walnut plank flooring after installation of the mill work was that Traffic would also be inadvertently applied to the above described mill work. 10. It was undisputed that the mill work was not protected from inadvertent application of Traffic during application of Traffic to the wood flooring, thereby causing the mill work to be discolored by the inadvertent application of Traffic from the floor level up to ¾ to 1” above floor level through out the house. 11. It was undisputed that a Corrective Work Order was issued on December 31, 2003 by Registrar of Contractor Inspector Warren Duncan, directing Respondent to correct the foregoing discoloration of the mill work by appropriate means. 12. It was undisputed that Respondent did not comply with the foregoing Corrective Work Order. 13. Inspector Duncan, a neutral witness, testified that Respondent was required by minimum workmanship standards to protect the mill work from inadvertent application of the finish unless the Respondent had effectively disclaimed responsibility for doing so, and that in his opinion, Respondent had failed to effectively disclaim responsibility for doing so. 14. Given that Inspector Duncan was a neutral witness, this tribunal finds him to be a credible witness. 15. Respondent failed to controvert with sufficient probative evidence Inspector Duncan’s testimony regarding the minimum workmanship standard for applying finish to a floor. 16. Instead, consistent with Inspector Duncan’s testimony regarding the minimum workmanship standard for application of finish to a wood floor, Respondent presented evidence that although applying Traffic after the mill work had been installed was not a violation of industry standards it was contrary to industry recommendations due to difficulty in protecting the mill work from inadvertent application of the Traffic finish. 17. Based on the credibility of Inspector Duncan, the absence of sufficient evidence controverting his testimony on the minimum workmanship standard for application of finish to wood flooring, this tribunal finds that Respondent’s failure to protect the mill work from inadvertent application of Traffic during its application to the flooring was below minimum workmanship standards and caused substantial injury to Complainant.

18. Respondent asserted that it, nevertheless, had not violated the minimum workmanship standard and was justified in not complying with the Corrective Work Order because it had effectively disclaimed responsibility for the alleged workmanship deficiency (inadvertent application of the Traffic finish to the mill work) with the following contract language: “(repairs may be necessary at bottom of base due to sanding marks-repairs by others).” 19. In support of its assertion that it had effectively disclaimed responsibility for the alleged workmanship deficiency, Respondent presented the testimony of Bill Dipple, Complainant’s general contractor on the project, who testified that his understanding of the foregoing language was that Respondent was disclaiming any responsibility for poor workmanship in the entire finishing process and not just sanding. 20. This tribunal finds that while Respondent disclaimed responsibility for damage due to the mill work from sanding it did not disclaim responsibility for damage to the mill work caused by substandard application of finish to the wood flooring.

21. The disclaimer does not make any reference to application of finish or Traffic and only disclaims responsibility for damages due to “sanding.” 22. The term “sanding” is unambiguous and can not be reasonably interpreted to mean application of a finish or Traffic. 23. Inasmuch as the term sanding is unambiguous, neither the testimony of Inspector Duncan nor Mr. Dipple regarding validity of the disclaimer for purposes of excluding responsibility for damages caused by application of finish to the flooring carried any weight. 24. Furthermore, even if the term “sanding” was ambiguous, Mr. Dipple’s testimony was without sufficient foundation to establish the parties’ intent with respect to the use of that term. By his own admission, Mr. Dipple was not involved in negotiating the terms of the contract in which the disclaimer appeared. 25. In the absence of a clear and unambiguous disclaimer of responsibility for substandard workmanship, a contractor can only avoid culpability for substandard workmanship by either not performing the work or performing the work within minimum workmanship standards. 26. Given the absence of language conspicuously and unambiguously disclaiming responsibility for substandard application of Traffic under the circumstances of this case, Respondent’s substandard application of the Traffic was actionable. 27. Having failed to effectively disclaim responsibility for substandard application of the finish to the wood flooring, Respondent’s failure to comply with the Corrective Work Order to correct the damage caused by said substandard application was unjustified. Conclusions of Law 1. Interpretation of contract is a question of law for court, and where language in a contract is clear and unambiguous, it must be given effect as written. Dixon v. City of Phoenix, 173 Ariz. 612, 616, 845 P.2d 1107, 1111 n.2 (App. 1992). Language used in a contract is ambiguous only when it can reasonably be construed to have more than one meaning. Cardon v. Cotton Lane Holdings, 173 Ariz. 203, 841 P.2d 198 (1992). Fact that parties disagree over the meaning of contract language does not establish its ambiguity. Shanks v. Davey Tree Surgery Co., 173 Ariz. 557, 845 P.2d 483 (App. 1992). In the event of an ambiguity, an instrument is to be most strictly construed against the party who prepared it. Polk v. Koerner, 11 Ariz. 493, 533 P.2d 660 (1975). 2. Although the implied warranty of habitability is a creature of public policy, a knowing disclaimer of same is not contrary to the public policy of this State. However, any such disclaimer must strictly be construed against the builder/vendor. In order for a builder/vendor to benefit from such a disclaimer, he must not only show a conspicuous provision which fully and unambiguously discloses the consequences of its inclusion but also that such was in fact the agreement reached. The heavy burden therefore imposed upon the builder/vendor is entirely justified, inasmuch as by his assertion of the disclaimer he is seeking to show that the buyer has relinquished protection afforded by public policy. In short, a knowing waiver of this protection will not be readily implied. See Nastri v. Wood Brothers Homes, Inc., 142 Ariz. 439, 441-42, 690 P. 2d 158, 160-61(App. 1984). 3. The agency of the Registrar of Contractors was created by Arizona’s legislature primarily for the purpose of protecting the public from incompetent, inexperienced and unscrupulous contractors.[1] By statute, a licensed contractor is required to comply with rules promulgated by the Registrar of Contractors which includes Rule 4-9-108 of the Arizona Administrative Code requiring licensed contractors to perform work within minimum workmanship standards. See A.R.S. § 32-1154(A). A contractor remains responsible for any failure to do so for 2 years from the time of the failure. A.R.S. § 32-1155. In essence, the legislature created a two year warranty against workmanship deficiencies. Because the purpose of this statutory warranty is the same as the purpose of the implied warranty of habitability, that is, to protect the public from builders, the aforesaid restrictions on disclaiming the implied warranty of habitability are equally applicable to disclaiming the statutory warranty against workmanship deficiencies afforded the public by the legislature. 4. Because the term “sanding” could not be reasonably interpreted to mean finish or Traffic, it was unambiguous and it had to be given effect as written. The effect of the purported disclaimer as written did not exclude, let alone, conspicuously exclude responsibility for damage to the mill work caused by substandard application of finish or Traffic. Having failed to conspicuously exclude any deficiencies relative to the substandard application of finish or Traffic, the purported disclaimer was ineffective for that purpose. 5. Having failed to apply the Traffic within minimum workmanship standards, Respondent violated A.A.C. R4-9-108, and in turn violated A.R.S. § 32-1154(A)(3) which requires compliance with rules adopted by the Registrar of Contractors. 6. Not having complied with the Corrective Work Order without valid justification, Respondent violated A.R.S. § 32-1154(A)(23). 7. A civil penalty not to exceed $500.00 may be imposed on a contractor for each violation of A.R.S. § 32-1154(A)(23). A.R.S. § 32- 1154(D). 8. Having committed the foregoing violations of the contracting laws, Respondent committed wrongful acts causing Complainant substantial injury in violation of A.R.S. § 32-1154(A)(7). 9. Having by its own admission failed to comply with A.R.S. § 32- 1124(B), Respondent violated A.R.S. § 32-1154(A)(13), which prohibits non- compliance with Chapter 10 of the Arizona Revised Statutes. Recommended Order Commencing on the effective date of the Order entered in this matter by the Registrar of Contractors, Respondent’s Class C-08R license shall be suspended until the Registrar of Contractors receives proof that Respondent complied with either of the following conditions: 1. Respondent has performed the work set forth in the above- referenced Corrective Work Order in a workmanlike and professional manner; or 2. Respondent has entered into other mutually acceptable arrangements to resolve the foregoing dispute with Complainant. If the Registrar of Contractors receives proof that Respondent has complied with either of the foregoing conditions on or before the deadline identified above, then the above-ordered suspension of Respondent’s Class C- 08R license shall not be imposed and Case No. M04-2018 shall be closed. In addition to the above-recommended discipline, Respondent shall pay to the Registrar of Contractors, on or before the effective date of the Order entered in this matter, the sum of $500.00 by way of civil penalty pursuant to A.R.S. § 32-1154(A)(D). The failure by Respondent to pay the Order entered in this matter shall result in the automatic revocation of Respondent’s license, effective on such deadline date. No future license shall be issued to an entity consisting of any person associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless payment of any outstanding prior civil penalty is tendered. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order shall be 35 days from the date of said certification.

Done this day, May 25, 2004

______________________________________ Michael L. Barth Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2004, to:

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

By ___________________________

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[1] See Laws 1985, Ch. 334, § 1 (“The goals and objectives of the registrar of contractors are to protect the public health, safety and welfare by licensing, bonding and regulating contractors engaged in residential construction . . . .”); Burrows v. Taylor, 129 Ariz. 212, 214, 630 P.2d 35, (App. 1981) (“[T]he Registrar is charged with the overall responsibility of protecting the welfare of the public dealing with persons engaged in the building contracting vocations and afford the public protection against incompetent, inexperienced, unlawful and fraudulent acts of building contractors.”).

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