ALJDEC decisions subject to certification as final

06F-M2075-ROC · Registrar of Contractors · 2007-01-16

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 9, 2007.

APPEARANCES: >The Complainant appeared in her own behalf. >The Respondent appeared through Bradley Edward Holmes, the managing member of the LLC entity.

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. Respondent had served as the selected concrete subcontractor for a general contractor, Cornerstone Homes and Development, Inc. (herein called “Cornerstone”), agreeing to perform and thereafter performing work during the early phases of the construction of a residence that was to be and ultimately was purchased and occupied by Complainant.

2. The actual concrete work was performed by Respondent on or about May 31, 2005, although a showing was made that such work was not to have started until a

month later. The credible testimonial and documentary evidence further indicated that a required pre-treatment for termites was not performed on the soils underlying the slab at the time Respondent poured the concrete slab for the home. Additionally, it appeared that Respondent did not possess any form of contractor’s license until its present license was issued by the Registrar on December 8, 2005.

3. The condition and appearance of the concrete floor slab poured and finished by Respondent in a substantial portion of the dwelling at numerous and scattered locations, as well as the floor of the garage and several sections of the exterior driveway, became the subjects of communicated complaints by Complainant even prior to her closing of title on the home. These complaints were first voiced by Complainant prior to her closing of title on the purchased home at a time when the overall construction had not been completed to any appreciable extent.

4. Relatively soon after the aforesaid concrete work by Respondent had been performed, a significant degree of cracking had become evident, together with a visible extent of surface deflection. Although the formal complaint by Complainant against Respondent was not filed with the Registrar until April 20, 2006, a prior complaint that included the experienced concrete slab problems had been filed by Complainant against the project’s general contractor, Cornerstone, in mid-August, 2005. As part of that previous complaint, the parties had agreed to participate in the Registrar’s Building Confidence Program, which included a jobsite viewing by an Inspector from the Registrar’s office.

5. The somewhat informal courtesy inspection visit resulted in a determination by the Inspector that, in all but a few bedrooms, the extent of observed cracking was excessive, compound and unacceptable. In the opinion of the Inspector, the removal and replacement of almost the entire slab in the home, as well as the slab in the garage and two of the driveway sections, was deemed necessary so as to conform with

prevailing industry standards. During that jobsite meeting, it was also revealed that, at the time of undertaking and performing the concrete work, Respondent did not possess any contracting license, as required under applicable State law.

6. Cornerstone declined to undertake corrective action that would consist of a complete removal and replacement of the floor slab. Instead, after having previously obtained purportedly supporting opinions by engineering professionals and informing the assigned Inspector, Cornerstone concluded arrangements with Respondent for the performance of remedial measures on the slab that consisted of some grinding down of the slab where a degree of deflection existed, the cutting of “V” notches in the cracked portions of the slab and the filling of the voids with an epoxy material. Additionally, pursuant to another engineering opinion, Cornerstone caused Respondent to pay for the installation of a Schluter-DITRA polyethylene membrane above the repaired concrete slab and below the ceramic porcelain tile materials to be used as flooring in the home.

7. The construction of the home ultimately sold to and occupied by Complainant moved forward, as did the complaint by Complainant against Cornerstone after the courtesy inspection and the performance of the above- described corrective actions. Cornerstone was subsequently issued a written Corrective Work Order by the assigned Inspector on December 28, 2005. Such directive to Cornerstone required the appropriate correction of the cracked slab areas in accordance with the obtained professional engineering reports containing recommendations for remedial measures short of removal and replacement, the furnishing of copies of such report, the production of a termite pre-treat certificate plus the removal and replacement of the garage slab and the two excessively cracked driveway sections. The evidence revealed that arrangements between Cornerstone and Respondent were concluded pursuant to which Respondent did acceptably remove and replace the garage floor as well as the two excessively cracked driveway sections.

8. It was not disputed that no separate written Corrective Work Order was ever issued directly to Respondent by the Inspector. Consequently, no valid basis would exist for any finding that Respondent has violated the terms of any written agency directive as charged under one aspect of the Citation issued in this matter.

9. The Complainant continued to seek information and to obtain further testing of the concrete slab installed by Respondent. Engineering reports and the results of testing tended to indicate that the strength of the poured concrete (P.S.I.) was suspiciously low in various tested locations and that the minimum strength requirements called for under the applicable local building codes may not have been met. Moreover, the contents of several previously obtained reports, even including the one obtained and relied upon by Respondent, suggested that remediation of the excessively cracked and heaving concrete by removal and replacement should be strongly considered. It appeared, therefore, that the measures short of replacement selected by Cornerstone, although potentially permissible, were, at best, of questionable wisdom. However, Respondent deferred to and joined in the repair choices made by Cornerstone as the project’s general contractor, although expressing at the hearing its prior willingness and readiness to undertake and complete the slab’s removal and replacement with the reported cooperation and assistance of its materials supplier. At the present time, it was not effectively disputed that a removal and replacement of the floor slab in the home is economically unfeasible and unwise.

10. Construction is not a perfect science, and it is not unusual for items to require attention by way of correction, replacement or adjustment – often even more than once. No finding of a contracting law violation is generally supportable unless and until, after notice and a reasonable opportunity is given, a licensed contractor fails to rectify construction deficiencies.

11. A contractor is generally left free to determine the type and manner of accomplishing necessary corrective work. However, if any such contractor elects to

undertake and perform less expensive or less extensive treatments, it remains at its peril to achieve acceptable end results as tested by prevailing industry standards and tolerances.

12. With respect to subsequently experienced deficiencies with the floor tile or grout placed above the slab installed and subsequently repaired by Respondent, the evidence at the hearing failed to sufficiently demonstrate that such tile or grout problems were proximately traceable to any presently existing concrete slab conditions.[1] The concrete slab, as subsequently corrected, did not appear to be incapable of performing its structural functions and was not shown to have failed or caused the failure of any other household features. To hold otherwise as to the slab’s future condition or performance, or to hold that the manner and extent of sub- surface compaction of the underlying soils are deficient, would be to impermissibly indulge in mere conjecture.

13. It appeared that Respondent undertook no reasonable or effective attempts to ascertain whether or not the admittedly required termite pre- treatment had been performed on the jobsite prior to its pouring of the concrete slab. A specialty subcontractor remains responsible for assuring that all necessary preliminary preparation work has been accomplished before proceeding with its construction work and, by going forward with such work, is held to have accepted the surface as being adequate in all respects, including the underlying soils compaction.

14. The evidence did reveal that the exterminating company that was to have performed the termite pre-treatment work subsequently completed a post-treatment by drilling and injecting appropriate materials under and through the slab. Although the credible evidence tended to suggest that the alternative drilling treatment may not always prove to be as effective as a proper pre-treatment of the soils that formed the underlying pad, and also that Complainant has, in fact, experienced several termite infestations since her occupancy of the residence, the exterminating company has issued and has honored its five- year warranty on each reported instance. For the purposes of evaluating Respondent’s compliance with its applicable duties arising under the State’s contracting laws, the alternative remedial measures, the repeated jobsite treatments and the issued warranty certifications must be held to have constituted an appropriate discharge of any such applicable responsibilities. To the extent that the installation of a slab over soils that were not pre-treated may generate a decrease in the present or future value of the home, recovery for any provable diminution in monetary value must be sought and obtained, if at all, in another more appropriate forum.

15. Similarly, the Respondent’s allowing the installed concrete slab to remain in place, without replacement, when the demonstrated P.S.I. strength of such slab may be inadequate or only marginally adequate, may well possibly and even probably serve to generate a lessening of the present or future value of the residence. To the extent that a full disclosure of the deficiencies that were not eliminated by the remedial measures authorized by Cornerstone may have to be disclosed to a future prospective purchaser, this Complainant is likely to ultimately sustain a perhaps substantial monetary loss. However, the Registrar of Contractors is not empowered to adjudicate and award monetary damages for these types of consequential losses, albeit realistic, which award must be obtained by Complainant, if at all, by resorting to available civil remedies in a more appropriate judicial forum.

16. The overall actions or omissions of Respondent, whose lack of a proper license should never have prompted the performance of the concrete construction work on Complainant’s home, are found and determined to reflect adversely upon Respondent’s workmanship, to have deviated from applicable local code requirements

as to the strength of materials used, to have resulted in the impermissible installation of its slab over soils that were not appropriately pre- treated, to have consisted of the engaging in contracting activities while unlicensed and to have constituted the commission of a wrongful (but not fraudulent) act resulting in financial detriment to Complainant within the meaning of the provisions of the State’s contracting laws charged herein to have been violated by Respondent.

17. Notice is taken of the Registrar’s license records which reveal that Respondent’s Class KB-02 license has been and still remains suspended by operation of law since August 1, 2006 for lack of a qualifying party. The presently suspended license status of Respondent does not preclude the conducting of these disciplinary proceedings on behalf of the Registrar of Contractors nor the pursuit by Complainants of her administrative remedies.

CONCLUSIONS OF LAW

1. At these administrative hearings, the complaining party generally has the burden of proof, Vazzano v. Superior Court, 74 Ariz. 369, 249 P.2d 837 (1952) and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (1996). See also Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (1985); Utah Construction Company v. Berg, 68 Ariz. 285, 205 P. 2d 367, (1949); Rule R2-19-119, A.A.C. A "preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not." Morris K. Udall, Arizona Law of Evidence, §5 (1960). It is evidence which is of greater weight or more convincing than the 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." Black's Law Dictionary, 1182 (6th ed. 1990). ….. …..

2. The evidence of record sufficiently established that Respondent has violated the provisions of A.R.S.§32-1154(A)(2), (7), (22) (3); namely, Rule R4-9-108, A.A.C. and (13); namely A.R.S. §32-1121(14)(a)(b)(c), as set forth in Finding of Fact Number 16 and as charged in the issued Citation. However, no violation by Respondent of A.R.S. §32-1154(A) (23) was adequately proven hereunder.

3. Nothing in this decision is intended to eliminate or diminish any rights and remedies otherwise available to Complainant to seek and obtain monetary recovery from Respondent in another, more appropriate civil forum with respect to the existence and quantum of provable losses in the value of her home resulting in whole or in part from the repaired but not replaced concrete slab work.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order that Respondent’s Class C-09 license shall be actively suspended for a period of 45 days, followed immediately by a period of disciplinary probation for a period of 90 days.

It is further recommended, as an express condition for the next renewals of Respondent‘s license, notwithstanding the existence or absence of any uniform assessment by the Registrar of Contractors then in effect, Respondent shall be required to pay an additional $250.00 into the Contractors’ Recovery Fund, as authorized by A.R.S. §32-1132(B). Failure to pay such additional deposit into the fund shall result in the rejection of any renewal application and a suspension of Respondent’s license until payment is made and the renewal issued. ……. …….

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: January 17, 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] The evidence at the hearing indicated that arrangements have been made for a near-future accomplishment of further work by or on behalf of Cornerstone, through a specialty subcontractor, to remove and replace all cracked grout used as part of the tile installation throughout the Complainant’s home.

-----------------------

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