ALJDEC decisions subject to certification as final

06F-2246-ROC · Registrar of Contractors · 2006-12-19

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 12, 2006.

APPEARANCES: >The Complainant was represented by her attorney, Gordon E. Dudley, Esq. >The Respondent was represented by its attorney, Patrick J. Davis, Esq.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

Evidence and testimony were presented, and based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. Very shortly prior to the convening of the hearing and also at the outset of the scheduled hearing, Respondent re-asserted its previously denied motion to dismiss based upon the purported expiration of the Statute of Limitations period. This same issue had been litigated between these same parties as part of a prior administrative action wherein it was determined that the said Statute commenced to run from the date

of this Complainant’s initial occupancy, which was in mid-November, 2004. Both the complaint in the prior case and the complaint in the instant case were timely filed within the two year period following Complainant’s initial occupancy date. The decision and Order in the prior case was allowed to become final in the absence of any further appeal, thereby effectively precluding Respondent from collaterally attacking such determination in this proceeding. The re-asserted motion to dismiss was again denied by the Administrative Law Judge.

2. Prior to the introduction of any evidence or testimony, both parties effectively resolved all issues relating to water leakage into the garage and the kitchen areas of Complainant’s home by their entry into a stipulation or agreement pursuant to which Respondent was to perform necessary testing, to communicate to Complainant the details of the recommended remedial work to be tendered, and if not rejected by Complainant, to cause the completion of the specified corrective work on or before a stated deadline date.[1]

3. The sole remaining matter in issue at the instant hearing consisted of the allegedly deficient and substandard condition of the wood flooring installed throughout the residence, to include the proximate cause for such condition as well as the nature and extent of any appropriate effective remedial measures.

4. It was not effectively disputed that the wood flooring hardwood materials are presently exhibiting a significant degree and extent of gapping and cupping. The credible evidence presented at the hearing tended to reveal that, although some gapping between the wood boards or planks may be normally anticipated, the gapping on the flooring in Complainant’s home, as well as the cupping condition, was excessive and unacceptable at numerous and scattered locations throughout the residence,

5. The Registrar’s assigned Inspector was shown to have issued a written Corrective Work Order to Respondent on June 6, 2006 following an on- site visit, one portion of which had determined that Respondent was obligated to correct the gaps between the planks or boards as well as the cupping of the wood flooring by appropriate means.

6. Although Respondent was shown to have communicated requests and demands upon both the materials supplier and the installer, and to have ultimately filed an administrative complaint against the installer and a civil lawsuit against both entities, no corrective work has been accomplished or even commenced by or on behalf of Respondent for over six months after the issuance of the written directive. It must be determined that Respondent has not substantially complied with the terms and conditions of the Inspector’s Corrective Work Order.

7. A licensed general contractor does not appropriately discharge its applicable duties and responsibilities under the State’s contracting laws by merely making repeated demands for corrective action directed to its selected subcontractors or suppliers or even by initiating administrative complaints or civil lawsuits against such entities or individuals. At some point in time, after it has become evident that no remedial actions are forthcoming, it is incumbent upon the general contractor to cause the undertaking and the accomplishment of corrective measures through other specialty subcontractors or suppliers.

8. It is further found that the present condition and appearance of the wood flooring has rendered the installation unfit for its intended aesthetic and functional

purposes, thereby depriving the Complainant/homeowner of the full use and enjoyment of the flooring to which she is entitled. In this case, not only does the installed flooring reflect adversely upon Respondent’s workmanship, but also the prolonged failure of Respondent to have accomplished the performance of appropriate corrective work on the wood flooring is found to constitute a wrongful (but not fraudulent) act resulting in detriment to the Complainant/homeowner within the meaning of one of the contracting law provisions charged herein as having been violated by Respondent.

9. The credible evidence demonstrated that the specifications contained in the written bid from the materials supplier obtained by and subsequently accepted by Respondent for the wood flooring materials and for their installation were not followed by the selected installer. The disregarded specifications had mandated the use of two separate layers of a cold bond adhesive that would surround a moisture barrier to be placed between the concrete slab and the plywood that was used for the subsurface and that was to be nailed to such slab. Instead, the installer elected to utilize as a moisture barrier only a product marketed under the trade-name of “TopCoat.” The properties of that material were shown to be of questionable propriety and effectiveness to act as a required moisture barrier, especially where, as here, the surface was to be penetrated by nailing.

10. The evidence further indicated that the uncontained moisture emanating from the concrete slab would tend to either allow excessive moisture to enter the wood boards or, alternatively, to allow the wicking down of moisture from the wood. Both such results could and did primarily and proximately contribute to the substandard gapping and cupping condition of the wood flooring installed by Respondent. Despite a showing that the relative humidity maintained inside of the home may exert some impact upon the performance and condition of the wood materials used for the flooring, it is found that the ongoing use of the premises by Complainant was not unusual, unanticipated or abnormal, certainly not when compared to the absence of an appropriate moisture barrier below the flooring.

11. Although a contractor is generally left free to determine the manner and extent of corrective work to be performed, in the event any contractor elects to perform less expensive measures or to utilize a less extensive treatment, such contractor remains at its peril to achieve acceptable end results, as tested by prevailing industry standards and tolerances. Under the evidence adduced at the hearing, it is found and determined that appropriate corrective measures at the present time must encompass the complete removal of the installed wood flooring and plywood subsurface, the placement of a proper and effective moisture barrier below the plywood, and the replacement of the wood materials above the plywood as well as of the plywood itself.

12. Notice is taken of the Registrar’s license files which reveal that Respondent’s Class B license has been suspended by operation of law since September 1, 2006 for non-renewal. Such license suspension does not prevent the Registrar from conducting these administrative disciplinary proceedings which are expressly authorized by statute.[2] Moreover, since little or no motivation would exist for any entity to undertake and accomplish remedial actions, whether of a construction or restitutionary nature, to avoid the imposition of a suspension of an already-suspended license, the Registrar must necessarily consider a inclusion of a provisional license revocation when formulating reasonable conditions as part of any Order to be entered in this case.

13. The nature of the current license suspension precludes the performance of construction work by Respondent either by itself or through other licensed specialty subcontractors until and unless the suspension is removed. Consequently, the Registrar’s Order in this matter must be formulated in the alternative depending upon whether or not Respondent causes the removal of the non-renewal suspension of its license. If such suspension is timely removed before the arrangements for corrective

work performance are concluded, the provisional license revocation should be conditioned upon the accomplishment of appropriate corrective work prior to the Order’s effective date. If the suspension is not timely removed, then the license revocation must be conditioned upon the payment by Respondent to Complainant of a monetary amount equal to the lowest of several (at least three) valid bids for the performance of the corrective work or the concluding of other mutually agreed financial arrangements between the parties.

CONCLUSIONS OF LAW

1. The evidence of record adequately established that Respondent has violated the provisions of A.R.S. §32-1154(A), (7), (23) and (3); namely, Rule R4-9-108, A.A.C.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class B license be revoked on the effective date of the Registrar’s Order.

It is further recommended that if, on or before this Order’s effective date, the Registrar receives written proof that Respondent has caused its present non-renewal license suspension by operation of law to be removed and thereafter has caused the proper removal and replacement of the installed wood flooring installed throughout Complainant’s home, utilizing appropriate materials, or alternatively, if such license suspension is allowed to remain in effect, and Respondent either pays or tenders to Complainant a monetary amount equal to the lowest valid bid obtained by Complainant or if the parties have concluded other “mutually” agreed arrangements, then no

license revocation shall be imposed, but instead the entire Citation and Complaint in Case Number 06-2246 shall be closed.

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 will be forty (40) days from the date of that certification.

Dated: December 20, 2006. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Fidelis V. Garcia, Acting Director Registrar of Contractors Legal Department 800 West Washington Street (6th Floor) Phoenix, AZ 85007 ----------------------- [1] As set forth in a subsequent Finding of Fact taking notice of applicable agency records, since September 1, 2006, Respondent’s residential contracting license has been and is presently under a suspension by operation of law for non-renewal. Such suspended status will effectively render impermissible any construction work by or on behalf of Respondent, even through a specialty subcontractor, until or unless the non- renewal suspension is removed, which may be accomplished unilaterally by Respondent. Consequently, under these circumstances, the prior removal of the current suspension becomes a necessary condition precedent to any performance by Respondent under the concluded settlement agreement relating to further work to rectify the garage and kitchen leaking conditions. [2] See A.R.S.§32-1154(C).

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