ALJDEC decisions subject to certification as final

07F-1225-ROC · Registrar of Contractors · 2007-09-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 18, 2007 APPEARANCES: Complainant appeared on his own behalf and Respondent was represented by its attorney, Christopher Ippoliti. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

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

FINDINGS OF FACT

1. Pursuant to written contract, Complainant contracted with Respondent for the construction of a new home. Complainant alleges that Respondent failed to provide two significant features of the new home. The issues surrounding this claim are discussed in the findings below.

2. The following salient facts were adduced at the hearing and are important to note:

a. Complainant is a former employee of Respondent. During his period of employment, he was able to participate in a one day only special sale of homes for Respondent’s employees. This event occurred in April 2005. b. Evidence of record showed that Complainant and his wife considered several of Respondent’s homes and ultimately elected to purchase a home designated as a 2651 plan. Although there was no model home available for Complainant to inspect, he was shown a floor plan and plans and specifications. These documents showed that the 2651 plan was a home with two (2) air conditioner units. c. Complainant and his wife believed that having two air conditioner units was a definite advantage in a home, since if one of the air conditioners broke down, they would at least have cooling in the other section of the home. d. Complainant and his wife also testified that they reviewed a floor plan document, which was entered into evidence as Complainant’s exhibit no. 4. Complainant contends that this document showed that a standard feature of the plan 2651 home included a laminate top desk table (“table”) in a niche adjacent to the utility room. e. Uncontroverted evidence of record established that the home Complainant received only has one air conditioner unit and does not have the table installed in the niche area adjacent to the utility room. f. Complainant signed the applicable purchase agreement on or about April 8, 2005. Evidence of record showed that the applicable plans and specifications, in existence at that time for the model 2651 home, showed two air conditioner units for the home. These plans were entered into evidence as Complainant’s exhibit no. 7 and the evidence of record showed that these were the plans that Complainant examined before entering into the purchase agreement. g. It was undisputed that sometime prior to commencement of construction on Complainant’s home, the plans and specifications for the model 2651 home were changed by Respondent to include only one air conditioner. Apparently, Respondent and its mechanical HVAC contractor determined that one upgraded air conditioner was more than adequate for the size home in question. h. The final plans and specifications, filed with the local building authority prior to commencement of construction, showed only one air conditioner for the model 2651 home. i. Construction of the home was commenced in early 2006 and once Complainant became aware of the fact that his home was not being constructed with two air conditioners, he immediately began complaining to Respondent’s representatives about the missing air conditioner. j. Notwithstanding the absence of one air conditioner, Complainant ultimately closed on his new home. Although, he participated in a final walk-through before closing, Complainant failed to mention the lack of the second air conditioner on the final walk-through report. k. Respondent relies on “boilerplate” language contained in the applicable purchase agreement, as allowing it to delete the second air conditioner , which Complainant believed he would receive with a model 2651 home. The contract between the parties was entered into evidence as Respondent’s exhibit A. On page 5 of said document, in paragraph no. 12, it states in section (iv) that “Seller reserves the right to make changes to the design of the subdivision and in the Plans for all subdivision improvements, including but not limited to Plans of Units hereafter constructed…” l. Subsequent to receipt of the filed Complaint, the matter was assigned to one of the Registrar of Contractors’ inspectors. The inspector appeared at the instant hearing and provided testimony regarding his findings at a jobsite inspection. m. The inspector was shown to have an extensive background in construction, including having acted in the capacity of a general contractor for a number of years. n. According to the inspector, he considered all of the information regarding the documents reviewed by Complainant prior to executing the purchase agreement and determined that Complainant was entitled to the second air conditioner and the table. He indicated that in his mind the loss of a second air conditioner was a major issue. He did not comment on whether or not the absence of the table was a major issue. However he did review the above-described preliminary floor plan and was convinced from said review that the floor plan showed that the table was a standard feature of the plan 2651 home and not merely an option. o. Based on his findings, the inspector issued a Corrective Work Order (“CWO”), requiring Respondent to correct by appropriate means the issue of the omitted air conditioner and the missing table.[1] Based on Respondent’s disagreement with the inspector’s findings, it refused to take any action on these two issues.

3. Although the above-described contract language, cited by Respondent as allowing it to remove the installation of a second air conditioner from Complainant’s new home, may be adequate to permit minor or less significant type changes, a reasonable interpretation of such language does not appear to allow for major or significant feature deletions of a new home purchase, when such features may have been serious factors in a buyers home purchase selection. By example, the language in question would not be sufficient to allow a contractor to change the overall square footage of a home by several hundred square feet after a sale was made showing the higher square footage to the buyer and nor should it allow a contractor to delete a major item, such as a second air conditioner unit.

4. The facts and circumstances presented herein showed that the installation of the second air conditioner was a material inducement in Complainant’s selection of the home in question and thus, by signing the contract after viewing Respondent’s plans and specifications providing for said second air conditioner, he was entitled to receive this significant aspect of his new home construction. Respondent’s failure to provide the second air conditioner is found to be a material and prejudicial breach of the contract and, as such, is determined to also constitute a wrongful act, within the meaning of the applicable charged section of the State’s Contracting laws.

5. Notwithstanding the foregoing finding on the air conditioner, it is determined and held that the deletion of the table was more of a minor issue which would be reasonable encompassed within the above-cited language. Therefore, no contracting law violation can be found in regard to this aspect of the filed Complaint.

CONCLUSIONS OF LAW

Respondent violated the provisions of A.R.S. § 32-1154A (23), (7), (2), and (3); namely Rule R 4-9-108.

RECOMMENDED ORDER

In view of the foregoing, it is recommended, commencing on the effective date of the Order entered in this matter, that the Class B license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has complied with either of the following conditions:

a. Installs a second air conditioner for Complainant’s home, or b. Concludes other mutually acceptable arrangements with Complainant.

It is further recommended that if Respondent complies with one of the above-described conditions on or before the effective date of the Order entered in this matter, then the aforementioned license suspension shall not take place. It is further recommended, in addition to the above-provided penalties, 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. §32-1154D. 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 in this matter will be forty (40) days from the date of that certification.

Done this day, September 24, 2007.

______________________________________ Mark A. Silver Administrative Law Judge

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

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

By ___________________________

----------------------- [1] There was a third issue listed on the CWO but it was uncontroverted that said issue had been resolved and therefore, was not an item discussed at the instant hearing

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