ALJDEC decisions subject to certification as final

07F-G2038-ROC · Registrar of Contractors · 2009-02-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 28, 2009 APPEARANCES: Rob Dyer, Esq. appeared fro the Complainant. Joseph Estes, Esq. appeared for the Respondent. ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________ Findings of Fact 1. In July, 2005 the parties entered a contract whereby the Respondent would install (apply) a polyurethane floor of 1,457 square feet at the Complainant’s business[1] location, in Phoenix, Arizona. The cost was $5,517.92. 2. The contract excluded moisture testing of the concrete floor that was to receive the polyurethane coating. The concrete slab was a year to a year and a half old. The coating is described as “impervious” in that it acts as sealant which does not allow for the transmission (escape) of moisture vapor which may be present or become present in the underlying concrete. Stated another way, the underlying concrete cannot “breathe”. 3. The floor coating application included color acid staining of the floor giving it a distinctive reddish brown “cola” color. The coating was to be matte finish to obscure anticipated scratches. 4. The initial application was in approximately August, 2005, certain areas were overlooked. Upon returning to complete the missed areas, the Respondent applied a high gloss rather than a matte coating and the floor was not consistent There was also some high gloss spotting in matte areas. As a consequence, in approximately October 2005, the Respondent had to redo all of what had been previously accomplished. 5. Within a view weeks after the second application, the floor began “bubbling”[2]. According to the Complainant, the Respondent initially declined to take responsibility claiming the problem was due moisture in the concrete. However, the Respondent performed additional work in the tenant suite and entry area but not the rest of the floor. 6. On June 29, 2007, the Complainant filed the Complaint with the Registrar of Contractors (ROC). The Complaint alleged the Respondent made only a partial repair to one room and failed to make further repairs to the floor. 7. On July 27, 2007 ROC Inspector Jim Dimond (Dimond) performed a jobsite inspection. 8. On August 15, 2007, Dimond issued a Corrective Work Order (CWO) which required the Respondent to determine the cause of the floor “bubbling” and to correct the problem in an appropriate manner. 9. The Respondent made attempts to correct the floor condition, but according to Jim Livingston (Livingston), testifying on behalf and as the Complainant, the noise, the fumes and dust were a problem for his employees one of whom was pregnant, another had cancer, and interfered with the Complainant’s business. The Complainant limited access to certain times, basically two weekends (Exhibit Respondent’s 15). 10. The Respondent suggested using acrylic coating[3] because it allows the floor to “breathe” (the moisture vapor can escape through the acrylic). A portion of the floor was done with acrylic but the Complainant declined this remedy for completion of the work because it removed the color and acrylic was not compatible with an acid stain[4]. An earlier proposal, to install a moisture vapor barrier, was unacceptable because of the cost of $16,450.00. 11. Dimond performed a prehearing inspection on January 27, 2009. Dimond testified the Respondent has not corrected the floor as required by the CWO. Photographic evidence confirms the condition of the floor and there is no dispute but that the floor coating failed and requires some type of correction. 12. The Respondent asserted two defenses. The first is that the parties entered a binding settlement and the Complainant reneged on this agreement. The second is that the moisture testing was specifically excluded from the contract and the bubbling of the floor coating is the consequence of water vapor build up in the concrete slab and the lack of a vapor barrier. 13. The asserted settlement of the case is based on a written exchange (Exhibits R-2- and R-21) between the parties in September, 2007. The Respondent offered to refund the Complainant $5,017.92 of the floor installation cost. The Complainant responded with a counter offer to accept full reimbursement of $5,517.92 and upon receipt of a check in that amount, to dismiss the Complaint. The Complainant withdrew the counter offer before the Respondent issued a check because of the Complainant did not know the cost of repairing the floor. Under these facts, the terms of the agreement were not fulfilled (the check was not issued by the Respondent or accepted by the Complainant) prior to the withdrawal of the counter offer. Therefore, the matter was not settled so as to keep the issues raised by the Complainant from being adjudicated. 14. The provider of the polyurethane, Arizona Polymer Flooring, Inc. sets forth in its product literature (Exhibits 3 and 4), the disclaimer that it is not responsible for “damages caused by application of its products over concrete with excessive moisture transmission or alkalinity”. 15. Jesse Wyatt (Wyatt) is a structural and civil engineer with 43 years experience in cementitious materials. Wyatt testified moisture testing of the concrete which is to receive the coating is important at the time of application of the coating because some coatings are sensitive to moisture and may not cure properly if the surface is not dry enough. Additionally, polyurethane can be sensitive to alkalinity (pH levels), calcium hydroxide, sodium and potassium which is normally in concrete, depending on the level of the substances. According to Wyatt, an Alkali Silica Reaction may be triggered by moisture causing “pop outs” in the surface. However, Wyatt went on to testify that when the (a) polyurethane coating is properly mixed, (b) the concrete floor is properly prepared, and (c) the coating is properly applied and allowed to cure and bond, that the problems manifest in the Complainant’s floor should not occur. He has come to the conclusion over the past 10 years that the above factors (a-c) are more critical in avoiding the Complainant’s problem, than the water vapor in the concrete. In the instant case Wyatt concluded that to correct the floor, it needed to be stripped and recoated. 16. Joe Hook (Hook) of Veron Concrete Coatings, testified he has been in the concrete coating business for 20 years and is familiar with polyurethane coatings. According to Hook, the “blistering” of the coating is caused by water vapor which can arise by the absorption of moisture in the ground beneath the concrete. Hook testified air conditioning and heating can also impact water pressure in the concrete[5]. According to Hook, he saw no evidence of improper coating application. He last saw the floor over year ago.[6] Based on Complainant’s Exhibit 8[7], bubbling may occur when a coating is applied too soon, extra catalyst, product is applied too heavily, excessive agitation, temperature is too high and a number of other reasons[8]. However, Hook testified the “bubbling” would manifest itself almost immediately upon application, which is not what transpired in the instant case[9]. According to Hook, a moisture vapor test is costly and whether to have a test should be decided by the contractor and the customer. 17. Livingston testified that the Respondent did not inform him of the potential for floor failure nor did the Respondent recommend any testing of the concrete. 18. The Respondent’s sales manager, Dave Sweetland (Sweetland) testified there are two possible remedies. One is to clean the floor to (leaving) the stain[10] and coat it with acrylic. The other is to strip the floor to the cement, add an epoxy vapor system, then acid stain and polyurethane. 19. The Complainant seeks the complete removal of the floor coating and reapplication of a polyurethane coating. 20. The Respondent’s witness, Tom Lemons (Lemons), testified that moisture testing is not the norm in the industry and that he cannot satisfy the Complainant under the circumstances of this case. Lemons considers the acrylic solution as the most reasonable alternative[11]. 21. Counsel for the Respondent raised a Statute of Limitations issue with respect to testimony relating to the sheen and color of the floor. The question is irrelevant in that color and sheen is subsumed by the bubbling issue. To the extent that the floor coating requires replacement it will necessarily eliminate any current color or sheen issues. Conclusions of Law The Citation and Complaint alleges violation of A.R.S. §32- 1154(A)(3)/A.A.C. R 4-9-108, workmanship standards; (A)(7), a wrongful act resulting in substantial injury; (A)(15), acting in the capacity of a contractor in a name other than as set forth on the license; (A)(23, failure to take appropriate corrective action; and (A)(13)/A.R.S. §32- 1124(B). 1. The Complainant has the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Vazzano v. Superior Court, 74 Ariz. 369, 249 P.2d 837 (Ariz. 1952); Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996). 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 in an administrative hearing must be “substantial, reliable and probative” (A.R.S. §41-1092.07(F)(1)). This means the Complainant has the affirmative responsibility to present sufficient competent evidence to meet the preponderance standard. 3. “Substantial evidence is evidence possessing something of substance and relevant consequence and which furnishes substantial basis of fact from which issues tendered can be reasonably resolved.” Black’s Law Dictionary, Special Deluxe Fifth Edition, (St. Paul Minn.: West Publishing Co., 1979) p. 1281, citing State v. Green, 218 Kan. 438, 544 P. 2d 356, 362. 4. Since there is no dispute regarding the current condition of the floor, the primary question to be answered is: What caused the bubbling of the polyurethane coating? The two main theories are, excess moisture in the concrete pad and alternatively, improper coating mixture and/or application. It the latter, it is the Respondent’s responsibility and a violation of A.R.S. §32-1154(A)(3)/ A.A.C. R4-9-108. If the cause is excess moisture in the pad, what is the responsibility of the Respondent, in light of the exclusion of moisture testing of the concrete pad in the contract? 5. It is evident the floor has failed. There are two explanations for the failure. According to Wyatt the failure is most likely due to improper mix, application, and/or curing. According to the Respondent, the failure is due to moisture vapor in the concrete. Moisture testing was specifically excluded from the contract. However, the Complainant was never made aware of its significance in order to make an informed decision. 6. The “acceptance of the surface doctrine” essentially provides that a contractor is responsible not only for the suitability of the work done by the contractor (primary work) but also the suitability of any supportive work upon which the primary work rests or is dependent, to maintain its viability and integrity. The doctrine has its limitations to the extent that it must be reasonably applied. Such application looks to the ability of a contractor performing the primary work to reasonably determine or assess the suitability of the supportive work. In excluding the moisture testing and yet claiming the moisture in the concrete is the cause of the failure, the Respondent essentially is stating it specifically excluded, failed to perform, (and as set forth in the following paragraph, failed to inform the Complainant of) a reasonably related test or inquiry regarding the suitability of the concrete to accept the polyurethane coating. A.A.C. R4-9-108 requires work to be performed in a “professional and workmanlike manner”. Although ROC has specific standards for specific work, the general standard that the work shall be professional and workmanlike requires that it be performed so that it does not fail. In this case the failure of the work is evident. If it was from a poor mix or application, the Respondent is responsible. If it was from failure to perform a moisture test of the concrete or to inform the Complainant of the potential for failure, again the Respondent is responsible[12]. The fact that the Respondent excluded the test without fully and clearly informing the Complainant of the potential consequences, places the Respondent in an “acceptance of the risk” of failure situation. The (A)(3) violation is proven by substantial evidence. 7. The Respondent’s principal (Lemons) acknowledged he did not inform the Complainant about issues regarding moisture testing because he did not believe it was his responsibility. This places the Respondent in a rather novel position. On the one hand, the Respondent’s defense is that the moisture in the Complainant’s concrete, and not anything in the coating mix or application, caused the bubbling. The Respondent specifically excluded moisture testing from its proposal even though the product warranty information sets forth a disclaimer for excessive moisture vapor transmission (Complainant’s Exhibit 3). Yet the Respondent (Lemons) believes the Respondent had no responsibility to inform the Complainant of potential problems of which the Respondent is aware but of which the Complainant who is relying on the Respondent’s expertise, is not aware. The Respondent’s position is difficult to accept. When a consumer relies on a specialty contractor to perform a specialized function, it is anticipated the contractor will not only perform the function in a workmanlike manner, but advise the consumer of sufficient relevant information to allow for an informed decision regarding the work to be accomplished. It is certainly not anticipated that a contractor would not disclose potentially significant information about certain procedures (such as the utility of moisture testing) which may avoid certain problems, while at the same specifically excluding the procedure from the contract and then claiming the failure was caused by something that might have avoided the failure had the Respondent made complete disclosure or not excluded the procedure. This conduct is considered wrongful within the meaning of the statute. The substantial damage is apparent. The Complainant paid for a floor that failed. The violation of A.R.S. §32-1154(A)(7) is proven. 8. The Respondent offered to correct the floor by using an acrylic coating. The Complainant declined this remedy. The other alternative requires removal of the polyurethane and current stain, the application of an epoxy vapor barrier[13], and the reapplication of the acid stain and polyurethane. The additional step of adding the epoxy vapor barrier is not part of the original contract. In light of the Complainant’s refusal to accept an acrylic stain and to the extent that the CWO could not be complied with absent adding a significant item to the original contract which was not part of the contract, it is concluded the Respondent has not violated (A)(23). 9. The parties failed to reach a post hearing agreement. The following recommendation is made in view of the fact that satisfactory correction of the condition of the floor is speculative. The Order is not intended to provide full satisfaction to the Complainant who may pursue further remedy in a more appropriate (civil) forum[14]. Recommended Order It is recommended commencing the effective date of the Order issued in this matter that the Respondent’s Class L-05 license shall be suspended until the Respondent pays or tenders payment to the Complainant the amount of Five Thousand-Five Hundred-Seventeen and 92/100”s ($5,517.92) Dollars by way of (partial)[15] restitution under A.R.S. §32-1156.01. In the event of certification of the Administrative Law Judge by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the dated of that certification.

Done this day, February 17, 2009

______________________________________ Allen Reed Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2009, to:

William A. Mundell, Registrar Registrar of Contractors 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________

----------------------- [1] The Complainant is an alarm system contractor. [2] The bubbles, described as “Chicken Pox” like or blisters, are formed by water vapor and according to Dave Sweetland, the Respondent’s Sales manager, contain liquid water. The floor coating is also peeling in certain areas. [3] An area was done with acrylic but in the evidentiary the photographs, the color appears to be significantly muted. [4] The photographic evidence indicates a significant color variation between the acid stain with polyurethane and the acrylic. However, the Respondent contends the difference is not as severe as shown in the photographs. [5] The foundation for this testimony relative to the instant case is meager. [6] Hook’s conclusion is rather general due to the lack of foundation of how thorough his inspection was. [7] Veron Systems Technical Data Sheet for Solvent Chemical Resistant Polyurethane. [8] Different size bubbles may have different causes. [9] The problem manifested itself some weeks after the second application. [10] Based on the evidence, the stain would not be left unscathed, and the color would be diminished and not uniform. [11] If as asserted by the Respondent, moisture in the underlying concrete is the problem, it makes no sense to reapply the same coating which has failed. Nor can the Complainant necessarily expect to have the additional benefit of a free vapor barrier if the current application is to be attempted again. [12] Whether a Respondent could avoid responsibility if a knowing and complete waiver was executed by a Complainant, is not an issue in this case. [13] This extra item would be required to avoid the potential for the same problem as currently exists. The Complainant is not necessarily entitled to receive this additional item without additional cost. This would be more akin to damages (subsequent or consequential) than restitution. [14] The Registrar’s primary function is to regulate the contracting industry. A secondary function when practicable, is to attempt to make a Complainant whole by requiring satisfactory completion of a project or awarding restitution. However, in cases such as this, practicable total satisfaction cannot be readily ascertained. [15] As indicated in the above footnote, the Order in this case does not necessarily constitute full satisfaction for the Complainant.

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