ALJDEC decisions subject to certification as final

05F-2252-ROC · Registrar of Contractors · 2007-02-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 21, 2006, November 2, 2006 and January 30, 2007. APPEARANCES: Diversified Roofing Corporation was represented by its attorney, Ernest Collins, Jr., Esq. Tuscany Builders, Inc. did not appear. Rich Moses, the former president and qualifying party for Tuscany Builders, Inc., was represented by his attorney, Scott Hulbert, Esq. ADMINISTRATIVE LAW JUDGE: Administrative Law Judge Maryanne T. Bayardi conducted the hearing on August 21, 2006 and November 2, 2006. The case was later assigned to Administrative Law Judge Brian Brendan Tully due to Judge Bayardi leaving the Office of Administrative Hearings to become a Phoenix Municipal Court Judge. Judge Tully listened to the audio recordings for the previous hearing dates, as well as reviewed the exhibits and Judge Bayardi’s notes, prior to conducting the further hearing on January 30, 2007. _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order:

FINDINGS OF FACT

1. Diversified Roofing Corporation (“Complainant”) is the holder of License No. 076746, a Class C-42 residential roofing contracting license issued by the Registrar of Contractors. 2. Tuscany Builders, Inc. (“Respondent”) is the holder of License No. 132806, a Class B- residential general contracting license issued by the Registrar of Contractors. That license has been cancelled. 3. Respondent undertook the construction of a custom home as the general contractor for Senn Moses, the brother of Respondent’s former president and qualifying party, Rich Moses. 4. Respondent entered into negotiations with Complainant for subcontracting the roofing scope of work. Respondent presented Complainant with a written agreement for its review and consideration. Complainant notified Respondent by telephone that it was making handwritten amendments to the contract. Respondent acknowledged and encouraged Complainant to do so. 5. On or about November 17, 2004, Complainant returned a signed copy of the written agreement with its modifications to Respondent. 6. On or about November 22, 2004, Rich Moses executed the written agreement with Complainant’s modifications, but added the following language in the blank space above the signature lines in the contract:

NOTE: THE HANDWRITTEN CHANGES AND OR MODIFICATIONS INSERTED INTO THE TEXT OF THIS SUBCONTRACT AGREEMENT BY DIVERSIFIED ROOFING, INC. ARE NOT PART OF THIS AGREEMENT AND ARE NOT AGEED TO BY TUSCANY. COMMENCEMENT OF WORK BY DIVERSIFIED WILL CONFIRM THIS STATEMENT AND DEMONSTRATE THAT DIVERSIFIED AGREES TO THE SAME.

7. There is credible evidence that Respondent never returned a copy of the fully executed agreement, with the modifications by both parties, to Complainant. As a result, Complainant had no notice of Respondent’s modification, which eviscerated Complainant’s proposed modifications, or that commencement of work by it would demonstrate that it agreed to Respondent’s modification. 8. Under all the circumstances as shown by the credible evidence presented at the hearing, it is found that Complainant’s commencement of work does not demonstrate that it agreed with Respondent’s modification of the contract. 9. The typed contract price in the contract was $61,301.00. Complainant’s handwritten modification read “$68,014.” 10. Complainant’s scope of work under the contract was as follows:

The work under this subcontract includes but it not limited to the following items and description. It is not the intention of this specification to mention specifically each and every item shown on plans and, therefore, does not excuse the roofing subcontractor (Diversified Roofing Corporation) from the responsibility of furnishing and installing such items without extra cost to Tuscany or the owner. All codes of the local and state jurisdiction shall be applied and shall take precedence over any item mentioned in this specification.

1. Subcontractor shall provide labor, materials, equipment and services in accordance with all other provisions of this subcontract and necessary for and incidental to the installation of all roof systems as indicated on the plans and specified herein. 2. Provide all layout and confirmation of plan dimensioning as related to the work of this contract. 3. Provide and install complete roof systems including all metal flushings (sic), copper drip edge O’Hagen (sic) roof vents model “S” in aluminum. 2 piece clay roof tiles manufactured by MCA in Santa Barbara Dark-CC 16D color. Diversified Roofing Corporation assures Tuscany to deliver proper quantities of all materials. 4. The quantity of O’Hagen (sic) roof vents shall be determined by the square footage of ventilation required and shown on plans. 5. All sheet metal flushings (sic) – wall, hip, valley and chimney are included in this subcontract. Valley flushings (sic) shall be 24” triple crown hemmed, side wall flushings (sic) shall be 7” channel plus 4”x5” L metal. All metal flushings (sic) shall be 26 gauge galvanized metal.[1] 6. Drip edge shall be 20 gauge copper and 2”x4”, profile to be approved by Tuscany prior to installation. 7. Roofing underlayment shall be GAF Rubiroid APP. 8. All labor, workmanship and materials shall be at a minimum of what is specified on the manufacturer’s “suggested architectural specifications” sheet (See attached Exhibit “A”). These specifications of Maruhachi Ceramics of America, Inc. are part of this subcontract as well as the two additional pages attached as Exhibit “A” from MCA. 9. The balcony area shall have a GACOFLEX system installed complete with metal flushings (sic) and counterflushings (sic) for walls and columns. 10. The four page “Application Specification” attached and labeled Exhibit “B” is part of this subcontract agreement and shall be strictly adhered to. 11. All aluminum jacks and T-tops to be provided and installed by Diversified Roofing Corp. 12. Hip and ridge files are to be mudset, first course of tile roof shall be stocked to accommodate hips.

11. Senn Moses wanted a Tuscan-style villa with an Old World appearance. 12. Senn Moses wanted a roof similar to the tiled roof at the Blue Wasabi restaurant. Rich Moses faxed a photo of the roof to Complainant. 13. Senn Moses’ first choice of tile was manufactured by Redlands. However, he decided against that product because it would take between to 26 weeks to receive it. 14. Senn Moses selected a two piece Santa Barbara Blend dark clay tile product manufactured by MCA and purchased through ABC Supply, a distributor. 15. There is credible evidence that Complainant advised Respondent that the selected tile would take 18 to 20 weeks to be manufactured and delivered. Rich Moses’ testimony that Respondent was told that it would take five to six weeks for delivery is found not to be credible. 16. ABC Supply placed an order for the tile, but ordered the wrong clay tile. On or about February 2, 2005, Santa Barbara Blend, rather than Santa Barbara Blend dark, was delivered of light, medium and dark clay tiles, instead of just the dark tiles. The Santa Barbara Blend was delivered to the jobsite earlier than projected. 17. The Santa Barbara Blend tiles delivered were unacceptable to Senn Moses and Respondent. 18. ABC Supply acknowledged its error and reordered the specified tile on February 9, 2005. MCA confirmed the reorder on February 10, 2005. 19. Complainant offered to pick up the Santa Barbara Blend tiles and deliver junk tiles so that the roof could be loaded for inspection while the reorder was fulfilled at no additional cost to Respondent or Senn Moses. 20. ABC Supply sent a driver to the jobsite with junk tiles, which were intended to be switched out for the wrong tiles delivered. The driver sat on the jobsite for approximately four hours, before being told that he could not take the wrong tiles away. 21. Despite Complainant’s offer to load the roof with junk tiles at no additional cost so that the roof could be inspected and construction could continue, Respondent subsequently had the roof loaded with sand bags and back charged Complainant for doing so. Complainant subsequently unloaded the sand bags. Complainant objected to the back charge since it had offered to do it at no cost to Respondent. 22. Complainant had the specified Santa Barbara Blend dark two piece clay tiles delivered to the jobsite on or before the original projected delivery date. 23. There were no specifications for the installation of the clay tiles and mud. 24. Respondent insisted that Complainant complete the installation of the roof before other trades, such as the stucco subcontractor, completed their work. This resulted in damage to the roof installed by Complainant. 25. After Complainant installed the roof, there were no reports of leaks in the roof. 26. Respondent later filed a complaint against Complainant with the Registrar of Contractors in Case No. 06-0088. 27. As a result of the filed complaint, the Registrar of Contractors’ assigned inspector, Bob Davies, performed a jobsite inspection to view Complainant’s workmanship. That inspection resulted in the issuance of a Corrective Work Order dated August 4, 2005, which required Complainant to timely perform remedial work as follows:

Complaint # 1 Defective installation of O’Hagin vents is restricting air flow. Complainant indicated that the tile that is presently installed must be removed regardless of the complaint process through The Registrar of Contractors. Because of this, the O’Hagins were not inspected. Diversified Roofing Inc. shall insure that existing O’Hagins (if roof is not removed) and any future O’Hagins (if Diversified continues on the project) are installed in accordance with manufacturer’s instructions and in accordance with code and professional industry standards.

Complaint # 2 Mud is not colored, mud is placed under all tiles rather than approximately 30% random, and tiles are set in a pattern unlike the roof that complainant instructed Diversified to replicate. Contract documents that are signed between the two parties appear to have been prepared by Tuscany Builders Inc. and after review by the inspector it was evident that all relevant matters and seemingly every possible contingency was covered except for the manner in which the roof tile was to be layed (sic). No properly executed addendum has been provided to the inspector to show that verbal agreements and/or the contents of faxes between the parties have been made to be part of the written subcontract agreement. Diversified Roofing Inc. shall complete the roofing in accordance with the properly executed written subcontract agreement and shall do so by installing the tile in a manner reasonably in accordance with that which is installed at The Blue Wasabi location that was visited by the inspector and representatives of both parties. Exact mortar color and percentages of mud placement should be agreed to in writing, properly executed form prior to continuance of work. The process or expense for removal of the presently layed (sic) tile will be the responsibility of Tuscany Builders Inc. including the replacement of or repairs to the under layment as necessary to provide necessary integrity. Diversified Roofing Inc. shall be responsible for the labor to lay up the tile in the removed areas in a manner as noted above (to be written into subcontract agreement prior to start). Tuscany Builders Inc. shall be responsible for the expense of additional tiles required as a result of damage, breakage, or otherwise unusable tiles that are removed from existing roof.

Complaint # 3 Hip cap tiles are not set straight, are crooked and wave up and own (sic), and tiles are not set in straight columns from top to bottom as they are at The Blue Wasabi. The hip and field tile were viewed by the inspector to be generally in accordance with industry standard for 2 piece clay tile with the exception of the hip by garage, several rows of field tile on East side and at hip by fireplace and over breakfast area all of which would require correction by appropriate means if present roof were to remain.

Complaint # 4 Diversified waited six months to install tiles and stringers are now warped. Diversified shall insure that hips and ridges are installed in a manner consistent with workmanship standards of The Registrar of Contractors.

Complaint # 5 Diversified agreed to install copper drip edge on the Ramada and BBQ roofs and did not. Diversified agreed to install roof tile and complete roof system on Ramada and BBQ and has not. Diversified agreed to install metal flashings and clay tile on all awnings and did not. Diversified shall complete per contract documents.

28. On September 9, 2005, Inspector Davies issued a second Corrective Work Order as an addendum to his August 4, 2005 Corrective Work Order. The second written directive provided for the following:

Complaint # 1 Failure to provide workman’s comp. and general liability insurance certificates as required by contract. Contractor (Diversified Roofing Inc.) shall comply with contract requirement with respect to this issue.

29. Complainant is found to have complied with the two Corrective Work Orders issued by the Registrar of Contractors. The parties never did enter into an agreement specifying how the tiles and mud were to be installed. 30. Rick Moses presented evidence of an inspection of the subject roof by Rodney D. Walker, an inspector for Rooftop Consultants, Inc. There is no evidence that either Mr. Walker or Rooftop Consultants, Inc. is licensed by the Registrar of Contractors, as a building contractor, or the Board of Technical Registration, as a licensed home inspector. Mr. Walker opined that there were deficiencies with the roof, which he set forth in a report dated September 19, 2006. Mr. Walker completed a two day course on concrete and clay tile roofs presented by the Tile Roofing Institute in Spring 2006. He never installed a two piece clay tile roof. 31. Complainant subsequently filed a complaint against Respondent with the Registrar of Contractors alleging Respondent failed to pay Complainant for work performed on the jobsite. 32. Respondent has paid Complainant the sum of $23,562.48 by check dated May 5, 2005. Although Respondent agreed to pay Complainant an additional undisputed amount of approximately $19,000.00, Respondent instead tendered a check in the amount of $10,360.39 as payment in full. Complainant did not accept that amount as the final payment. 33. Complainant has obtained a civil court default judgment against Respondent for its claim of nonpayment of the balance owed to it for the project. There is no evidence that the judgment has been set aside. 34. Rich Moses’ claim that Respondent was injured by Complainant, thereby justifying back charges and damages totaling $94,482.86, is not credibly supported by the totality of the evidence presented. 35. Rich Moses resigned as Respondent’s qualifying party and president. Respondent’s assets have been sold. 36. In November 2006, a trust purchased the subject property from Senn Moses for $3.5 million. Rich Moses is member of the trust. The property was later listed for sale at $5.2 million. 37. On or about November 21, 2006, Headlee Roofing Co., Inc., a licensed roofing contractor, submitted a Roofing Estimate to Rich Moses for the subject property. That estimate provided for the following scope of work:

Remove the existing MCA 2 piece tile and stack on roof. Move the tile and clean the roof deck, Inspect (sic) the underlayment for deficiencies and respond as necessary.

Install the existing tile over the existing underlayment with one nail per top, boost 1 out of every 20 tops with cement mortar mixed with dye to darken the mixture. Use cement mortar with dye to mortar the hip and ridge.

Includes: Aluminum jacks and T-tops; valley metal if needed; paint jacks in tile to match as needed; haul away all roofing trash; sales/privilege tax.

Excludes: Lead or galv. Dormer vents; birdstop; replacement tile. Wood replacement. Any options, additions or changes not specifically listed.

Roofing $21,252.00 Mud on tile with dye in the mortar $2,400.00 layer of modified underlayment, if needed $6,681.00 Barbeque and Cabana $1,280.00

Replacement tile is billed at $2 per tile for handling and tax. 10% replacement tile would be 1050 tiles.

38. On or about December 11, 2006, Headlee Roofing Co., Inc. submitted a written contract to Rich Moses for the new roofing work on the subject property. The contract contained the following “Clarification of Estimate:”

Mud on tile with dye in mortar $2,400.00 This line refers to mud being placed under every tile in lieu of mud under “one out of every 20 tops.” This would be additional work and would require a written and approved change order.

39. Rich Moses, individually, signed the Headlee Roofing Co., Inc. contract on December 12, 2006, including his initialing the first of two pages. 40. Rich Moses’ contract with Headlee Roofing Co., Inc. is going to provide a roof as suggested by Inspector Davies’ August 4, 2005 Corrective Work Order under Complaint # 2. 41. Respondent’s failure to pay Complainant the agreed upon final payment is a wrongful act that substantially injured Complainant. 42. The monetary amount past due, owing and unpaid is equal to the amount of the civil default judgment. 43. A review of the official records of the Registrar of Contractors reveals that Respondent’s License No. 132806 had been suspended from May 9, 2004 to May 11, 2004 for lack of bond, and that Richard Joseph Moses resigned as the qualifying party on February 16, 2006. The license was cancelled on February 17, 2006. The present action is the only complaint listed against Respondent.

CONCLUSIONS OF LAW

1. The Registrar of Contractors has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.R.S. § 32-1154(C),the cancellation of Respondent’s License No. 132806 does not deprive the Registrar of Contractors of jurisdiction over that contracting license for proven statutory and/or regulatory violations by the licensee while the license was active. 3. Respondent’s former president and qualifying party, Rich Moses, has a protectable interest in this matter because the imposition of disciplinary penalties in this matter could prevent him from being named on another contracting license, pursuant to A.R.S. § 32-1122(E). 4. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 5. The conduct and circumstances described in the above Findings demonstrate that Respondent violated the provisions of A.R.S. § 32- 1154(A)(7), as cited in the Citation and Complaint issued by the Registrar of Contractors. 6. The conduct and circumstances described in the above Findings demonstrate that Respondent violated the provisions of A.R.S.§ 32- 1154(A)(11), as cited in the Citation and Complaint issued by the Registrar of Contractors.

RECOMMENDED ORDER

Respondent’s License No. 132806 shall be revoked on the effective date of the Order entered in Case No. 05-2252. It is further recommended that if Respondent provides the Registrar of Contractors with written proof that the civil default judgment obtained by Complainant against Respondent has been satisfied by payment in full, then the above-provided license revocation shall not take place, but instead the Citation and Complaint in Case No. 05-2252 shall be closed and License No. 132806 shall be deemed to have been cancelled in good standing. 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 is 40 days from the date of that certification.

Done this day, February 20, 2007

______________________________________ Brian Brendan Tully Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2007, to:

Fidelis V. Garcia, Acting Director Registrar of Contractors Legal Department 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] The “26” gauge was a handwritten modification by Complainant. Because of the modification, the originally typed gauge cannot be read. This was the only modification to the scope of work set forth in page 9 of the contract.

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