ALJDEC decisions subject to certification as final

06F-G1827-ROC · Registrar of Contractors · 2007-03-01

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 22, 2007.

APPEARANCES: >The Complainants appeared in their own behalf. >The Respondent appeared through its Vice-President in charge of Construction and its authorized employee, Jeffrey Middleton.

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. At the outset of the administrative hearing, Complainants stated that only four of the complaint items that had been enumerated in their filed complaint were presently in issue between the parties, and those items are more fully discussed below. In light of such statement by Complainants, a finding is warranted that all other enumerated items of the complaint were either corrected, do not presently constitute prejudicial deviations from plans and specifications, do not presently constitute workmanship

deficiencies, or are matters that Complainants no longer desire to pursue in these proceedings.

2. Respondent agreed to and did construct and sell a residence to Complainants pursuant to a written contract. Credible testimony tended to indicate that Complainants had selected a lot located in a Cul de Sac on which to have their selected model constructed. The Complainants’ primary motivation in selecting such a lot location, for which a lot premium payment was applicable and paid as part of the purchase agreement, was to secure a measure of privacy and safety for Complainants and their youthful family members.

3. The documentary evidence also revealed that Complainants had elected to have included in their home’s construction several extra-cost options made available by Respondent either in the original contract agreement or through a separate addendum to such contract. One such option related to the inclusion of a corner gas fireplace feature and another selected option related to a kitchen cabinetry upgrade.

4. Complainants had elected to have the gas fireplace option included as part of their purchase. The specified added cost of $5,200.00 was agreed to and ultimately paid by Complainants to Respondent as part of the overall purchase price. However, Respondent’s private, uncommunicated intention was not to produce and deliver an operable fireplace unit. Instead, only stub-outs would be provided and the ultimate homeowner would be required to complete the installation at additional cost for the necessary start-up of the fireplace unit.

5. Although the costs for propane tanks and fuel for operating this household feature may be and are properly viewed as a legitimate obligation of any homeowner, the balance of costs for connections to stub-outs and start-up charges are determined to have been inappropriate and unwarranted in the absence of express advance

exclusions or limitations. Homeowners, such as Complainants may reasonably rely upon their receiving a feature that is ready to be utilized when fuel is obtained, and that any and all costs for making the system ready for such use had been included in the $5,200.00 specified extra cost for this available option.[1]

6. When Respondent declined to arrange for the completion of the connections and the start-up details so as to enable the fireplace unit to be functional, Complainants were shown to have expended over $500.00 to achieve an operable, hooked-up fireplace unit with no more than $100.00 being attributable to the propane tanks and fuel cost. Despite having incurred approximately $400.00 or more in additional costs for which Complainants felt and claimed were the responsibility of Respondent, the testimony revealed that, at a jobsite meeting conducted by the Registrar’s assigned Inspector on July 31, 2006, Respondent’s representative expressly promised verbally to arrange for a credit to Complainants in the sum of $100.00 towards Complainants’ ultimate overall costs for completing the fireplace installation and the start-up. Complainants, induced by Respondent’s promised credit or payment to reduce their higher claim, were shown to have agreed to accept such offered amount applicable to this complaint item, thereby resulting in an agreement of accord between the parties.

7. The above-described attempt by the parties to resolve one of the pending items in issue was never reduced to writing, and the credible testimony further revealed that there was never any effective satisfaction by Respondent of the parties’ agreement of accord that had been entered into over six months prior to the hearing date. The promised monetary contribution amount was never transmitted to Complainants by Respondent either by any effective credit or by separate payment, thereby breaching the parties’ agreement. Since such breach by Respondent would and did constitute a

failure of consideration to support the concluded agreement of accord, the Complainants, as the non-breaching party who had been induced to lower their initial claim for reimbursement of the costs expended to make the fireplace operational, should be and are held to be entitled at this time to seek and obtain reimbursement of the added monies so expended, which at the very minimum totaled the sum of no less than $400.00. Since the evidence further supports a finding that Complainants were entitled to receive from Respondent a fully functional fireplace unit as part of their home construction, and they did not, Respondent is found to be obligated to pay or tender the monetary amount of $400.00 to Complainants.

8. With respect to the kitchen cabinetry upgrade option selected by Complainants on an addendum to the original construction contract between the parties at an extra cost of $300.00, the express wording in the document, authored by Respondent, provided as follows: “Optional Stagger Upper Kitchen Cabinets (Like Model)”

9. It was not disputed that the Model Home, utilized by Respondent as a form of advertising at the point of sale, contained kitchen cabinets that reflected a different or staggered upper height at every other cabinet section. As utilized by Respondent, the Model became the substantial equivalent of a construction specification under all the circumstances. It was similarly undisputed that such Model Home was shown with a double oven upgrade or a gourmet kitchen option, and one of the higher upper cabinets existed over the cabinet housing the double oven feature.

10. Complainants did not select the double oven or gourmet kitchen upgrade option for their home. Although a substantial portion of Complainants’ kitchen cabinets do reflect a differing or staggered upper height level, two adjacent cabinet sections do not. The upper height of the cabinet section that would have housed the double oven feature, if selected, is identical to the height of the adjacent cabinet.

11. Ambiguities, if any, in the applicable written document must be construed against Respondent as the author of the document. If Respondent had intended to apply a special uncommunicated definition to the wording it used in the preprinted addendum it had prepared, then any and all applicable restrictions or exceptions must be expressly and clearly set forth. In this case, Respondent contended that the high-low cabinetry feature at each adjacent section would apply only to those kitchens in homes that had also included a selected option consisting of a double oven or gourmet kitchen feature, as shown in the model, and not to homes without such additional selections. The addendum language is found not to support such limitation, and it is further found that Complainants entertained a reasonable expectation that their agreement to include the selected option at the stated additional cost would generate an entitlement for them to receive cabinetry with alternating sections of differing heights, as displayed in the model home.

12. Absent the advance communication of some form of adequate clarification or limitation from Respondent to Complainants as to any exceptions or differences in the alternating high-low cabinetry configurations in homes where a double oven feature or a gourmet kitchen selection was ordered, Complainants could and did reasonably rely upon and expect to receive staggered cabinets that were not level at the top of every other section.

13. The configuration of the upper cabinets in Complainants’ kitchen is found to be materially different from that of the Model Home cabinetry; more specifically, the upper cabinet section in the location where the Model had the double oven feature was no higher than the adjacent upper cabinet section. Respondent is found obligated to remove and replace such cabinet section with one that is higher so as to match the configuration and appearance of the upper cabinetry displayed in the Model Home.

14. Complainants had accepted the front landscape package that had been made available by Respondent, through its selected specialty subcontractor. The

contents of such landscape package were outlined in a brochure given to prospective homeowners that set forth various items to be included; namely, trees, shrubs manual irrigation and decomposed granite for the front yard and driveway.

15. Respondent had previously concluded arrangements with its specialty subcontractor to include 48 tons of granite materials in every front landscape package, irrespective of the size of any lot. The evidence was inconclusive as to whether or not Complainants even knew of the exact quantity or tonnage of granite materials set forth in Respondent’s subcontract with the landscaper at the time the package was selected. More significantly, there was no evidentiary indication that Complainants knew or reasonably should have known whether or not the quantity of decomposed granite that was specified in the subcontractual agreement between Respondent and its selected landscaper, without regard for differing lot sizes, would be sufficient to generate a satisfactory minimum depth or even adequate ground coverage on their selected Cul de Sac lot.

16. Credible evidence tended to indicate that the quantity of granite materials delivered to and applied on Complainants’ property was insufficient to result in full and adequate coverage of all areas of the ground surface. Even in the absence of any applicable standard for the measured depth of granite materials, it is found that prevailing industry standards and tolerances would require that the materials be at least fit for their intended coverage purposes, and in this case they were not. It is further observed that the applicable provisions of the rules of the Homeowners Association, formulated by or on behalf of Respondent, expressly stated that “all bare earth must be covered” by the decomposed granite covering materials.

17. In point of fact, the testimonial and photographic evidence, including the observations of the Registrar’s Inspector, tended to establish that the decomposed granite materials failed to adequately and completely cover the visible underlying dirt on

the ground surface at numerous and scattered locations. It is found and determined that the quantity of materials delivered and applied onto Complainants’ lot was not fit for its intended purposes, thereby reflecting adversely upon Complainant’s workmanship. Respondent must furnish and install additional decomposed granite materials that provide sufficient coverage over the underlying ground surfaces on the front of Complainants’ lot.

18. At time of contract, Complainants were shown and required to initial a plot plan depicting locations, measurements and other indications of the placement of block wall fencing on their selected lot. Such plot plan expressly reflected that a total of 690 linear feet of fencing was to be provided. It is found and determined that the presented plot plan constituted a contractual specification hereunder.

19. The filed complaint with respect to the fencing was that a section of the block fence or wall indicated on the plot plan, which was to have run along one side of the front yard up to the property line, was wholly omitted. It appeared that such omitted fencing would have measured approximately 60 feet, if built. It further appeared that the combined total of the constructed walls around Complainants’ lot measured approximately 625 linear feet. The providing of the omitted 60 linear feet would have resulted in a total measurement for the fencing or walls very close to the 690 linear feet indicated on the plot plan.

20. As previously stated, Complainants had selected a lot that was located on a Cul de Sac, paying a significant lot premium. The ostensible motivation for such selection was to maximize privacy and restrict any through traffic onto their property. By omitting to construct the front side portion of fence designated on the plot plan presented to and approved by Complainants, Respondent has materially and prejudicially departed from applicable plans and specifications not only as to the linear feet measurements but also by failing to construct a visible barrier across a front portion

of the property, thereby enabling foot, bicycle and vehicle traffic over Complainants’ front yard leading to or from another Cul de sac to the rear of the property. In point of fact, Respondent’s omitting the continuation portion of the depicted fencing along the side front of the lot has effectively frustrated the intention and purpose of Complainants’ selection of their Cul de Sac lot location.

21. It appeared that a wash for water drainage existed and still exists between the Complainants’ lot and the lot to the immediate West. It was in this location that the continuation of the fencing was omitted by Respondent. The evidence at the hearing tended to indicate that fencing or walls were capable of being designed and constructed so that drainage would not be significantly restricted or impeded. Additionally, since the dominant purpose of the fencing continuation was to restrict traffic onto and through Complainants’ property, the height of the continuation fencing need not have been equal to the six foot measurement for the rest of the fencing but could have been substantially lower without being deemed a material and prejudicial from applicable plans and specifications. The design and construction of the continuation of the fencing or wall could and would have considered the necessity of enabling adequate drainage of water entering and flowing through the wash.[2]

22. Respondent attempted to demonstrate that certain engineering plans had been used in the construction of all lots in the subdivision and those plans may have differed from the individual plot plans presented to homebuyers. However, the engineering plans did not clearly reflect the elimination of any continued fencing across the wash area between the Complainants’ lot and the adjacent lot to the West. The failure of such engineering plans to have included any indication of fencing along the rear property line generates an ambiguity with respect to whether or not fencing

continuations along the front side property line had been deleted. In any event, the plot plan presented to and initialed by Complainants at the express request of Respondent appeared to have been subsequent in time to the preparation and filing of the engineering plans with the municipality, and such plot plan clearly reflected the existence of fencing up to the lot line and also that 690 linear feet of block fencing would be provided on Complainants’ lot.

23. Under all the circumstances, it is found and determined that Respondent remains obligated to undertake and complete the installation of the omitted continuation fencing along the side front of Complainants’ lot as expressly indicated on the presented and initial plot plan.

24. Following a jobsite visit, the Registrar’s assigned Inspector issued a written Corrective Work Order to Respondent identifying various items of complaint that were determined to constitute responsibilities of Respondent and that were to be remedied by appropriate means. As to the above-discussed items of complaint presently in issue between the parties, the Inspector confirmed that most all such items required appropriate remedial action on the part of Respondent. The one exception related to the claim for reimbursement of the start-up costs to make the fireplace unit functional, but the Inspector had memorialized the jobsite agreement of accord reached by the parties, thereby at least implicitly ordering the Respondent to pay or credit Complainant with the agreed monetary amount. The evidence presented at the hearing demonstrated that Respondent did not substantially comply with the terms of the issued directive by the Inspector, and in most cases had not even commenced performance of any corrective measures. ……. ……. …….

CONCLUSIONS OF LAW

1. The Respondent’s failure to furnish and install a kitchen cabinet to match the height of the cabinet in the Model Home and its failure to construct a continuation of the front yard fencing as shown on the initialed plot plan are found to constitute material and prejudicial deviations by Respondent from applicable plans and specifications. Moreover, the failure to provide and install a quantity of decomposed granite material that acceptably covered the underlying dirt surfaces in the front of the home was indicative of substandard workmanship on the part of or attributable to Respondent. Additionally, the prolonged period of inaction on the part of or attributable to Respondent in addressing the valid items of complaint presently in issue, as well as Respondent’s failure to assure that a promised monetary credit or payment was timely received by Complainants, are found to constitute a wrongful (but not fraudulent) acts by Respondent resulting in substantial detriment to Complainants within the meaning of one of the contracting law provisions charged herein as having been violated by Respondent.

2. The totality of the evidence of record sufficiently established that Respondent had violated the provisions of A.R.S.§32-1154(A) (2), (7), (23) and (3); namely, Rule R4-9-108, A.A.C., as charged in the issued Citation.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s order that Respondent’s Class B license be suspended until written proof is filed with the Registrar that Respondent has paid or tended the sum of $400.00 to Complainants, as set forth in Finding of Fact Number 7, and also has accomplished appropriate corrective action on the kitchen cabinetry, the decomposed granite ground

covering and the front side fencing continuation, as set forth in Findings of Fact Numbered 13, 17 and 23, or alternatively, that Respondent has concluded other “mutually” agreed written arrangements with Complainants.

It is further recommended that if the Registrar receives written proof that Respondent has properly complied with the above-described payment and corrective work conditions on or before this Order’s effective date, then no active license suspension shall be imposed.

It is further recommended, in addition to the above-provided penalty, if any, that Respondent pay the sum of $350.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. §32-1154(D). The failure by Respondent to pay the entire amount of the aforesaid civil penalty, on or before 30 days following the effective date of the Order entered in this matter, shall result in the automatic revocation of Respondent’s contractor’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. §32-1101A(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 will be forty (40) days from the date of that certification.

Dated: March 1, 2007. 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] A portion of the specified extra cost for the available option that would provide for a corner gas fireplace unit was shown to have also been attributable to the construction of an adjacent entertainment center. [2] Credible evidence at the hearing indicated that drainage of water entering the wash could be addressed as part of the continuation wall’s construction either by providing drain blocks on the bottom of the wall, utilizing piers or substituting view fencing.

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