ALJDEC decisions subject to certification as final

07F-RF0519-ROC · Registrar of Contractors · 2008-02-28

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 25, 2008.

APPEARANCES: >The Plaintiffs appeared in their own behalf. >The Defendant was represented by its attorney, Jason M. Venditti, Esq. >The Registrar’s Recovery Fund was represented by Assistant Attorney General Mona Baskin, 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. Plaintiffs have filed a written claim for an award from the Residential Contractor’s Recovery Fund (herein called the “Fund” or the “Recovery Fund”) for provable damages sustained as a result of Defendant’s acts or omissions.

2. An administrative disciplinary complaint had previously been filed by Plaintiffs with the Registrar based upon alleged deficiencies in and around their pool and decking

that had been installed by Defendant as part of a remodeling project with respect to Plaintiff’s existing pool. The filed complaint resulted in a jobsite visit by the Registrar’s assigned Inspector.

3. A determination was made by the Registrar’s Inspector that the enumerated items of complaint, as tested by prevailing industry standards and tolerances, were either not indicative of substandard workmanship or were adequately rectified prior to the jobsite viewing. No written Corrective Work Order was issued to Defendant requiring the performance of any corrective measures

4. Notwithstanding the absence of any issued Corrective Work Order by the Inspector, Plaintiffs disagreed with such results and requested a hearing. A formal Citation was issued. However, Defendant failed to timely file a written answer to the issued Citation, and its contracting license was revoked following the entry of a default Order, recognizing that the complaint allegations were statutorily deemed to have been admitted pursuant to A.R.S. §32-1155(B).

5. The above-described revocation of Defendant’s license entitled Plaintiffs to file an administrative claim for an award from the Fund. Written notice of their claim in the total sum of $16,649.50 was filed with the Recovery Fund and also was ultimately sent to Defendant. It was not disputed that this total monetary amount was equal to the full contractual cost price for the contemplated pool remodeling work by Defendant, all of which had been fully paid by Plaintiffs. The Registrar’s Recovery Fund, as well as the Defendant’s named corporate entity, have objected to the claim for payment of any Fund award to Plaintiff both on the basis of entitlement and amount.

6. During the course of the instant hearing, Plaintiffs stated, and the documentary evidence reflected, that the average cost of the three separately obtained and submitted bids or proposals for remedial work on the pool structure and deck was

equal to the approximate amount of $12,500.00 and further that the total cost reflected in the lowest obtained bid was in the sum of $11,898.00. Each such bid effectively contemplated the complete or at least the substantial removal and replacement of all of the pebbled interior pool surface and the surrounding Kool-deck materials previously applied by Defendant.

7. Neither the previously entered default revocation Order nor the statutory admissions resulting from the failure to timely answer the Citation is found to preclude this Defendant from subsequently opposing the payment of a Fund award to Plaintiffs, since any such payment would generate an adverse impact upon the ability of Defendant or its listed personnel to retain any other license or to obtain any new license in the future without replenishing the Fund for all monies paid out and also would generate an exposure to collection efforts on behalf of the Fund for replenishment by way of subrogation rights. The Recovery Fund, pursuant to its applicable duties and responsibilities to monitor and administer the Fund payout process, is also found entitled to intervene and pursue objections to all or part of any claims for payout awards irrespective of the prior agency actions under its police powers to impose disciplinary penalties against any licensee.

8. Although the previously filed disciplinary complaint had not included allegations of widespread excessive deck surface cracking, except in certain identified locations, Plaintiffs were nevertheless permitted to present testimonial and photographic evidence with respect to such claimed deficiencies. In point of fact, certain of the cracking was in the vicinity of prior repairs made by Defendant to the aerators, therefore effectively encompassing those areas and their cracking issues within the scope of complaint’s allegations with respect to aerator problems. The within Fund claim, as well as the originally filed complaint, also included asserted deficiencies in the color consistency of the pebble finish applied to the interior of the pool’s surface.

9. The present claim is largely based upon the visible extent of cracking throughout the Kool-deck surface applied by Defendant, especially at each of six corners of the pool structure after Defendant’s remodeling work on Plaintiff’s existing pool. Except for a few locations where the remodeling design had required newly poured concrete, the deck coating had been placed directly over a pre-existing concrete deck slab that was shown to have already contained some degree of visible cracking. Additionally, the claimed damages or improper work results extended to some degree of asserted discoloration or inconsistency in the appearance and texture of the pebble materials placed by Defendant on the interior surface of the actual pool structure. It is noted that the further allegation of an excessively rough pebble surface in one or both seating areas of the pool was not part of the originally filed complaint.

10. The credible evidence adduced at the hearing revealed that numerous hairline cracks of varying lengths had developed and were visible on the coated Kool-deck surface. It further appeared that none of these cracks were capable of being filled or otherwise treated since none exceeded a width of 1/16-inch which was shown to constitute the allowable tolerance for acceptability with respect to such installations. The evidence also tended to indicate that the extent of color variations in the pebbled surface of the pool’s interior was not excessive or otherwise unacceptable.

11. Of some evidentiary significance was the showing that, at the time of the original contract entered into between the parties, an express provision had been included therein specifically alerting the potential consumer to the possibility, if not the probability, of experiencing future deck cracking resulting from movement of the underlying concrete for which the contractor would not be responsible. Although such purported disclaimer may well be of doubtful effectiveness in situations where subsequent cracking could be shown to have exceeded allowable standards and tolerances, or when the cracking produced a potential tripping hazard, in this case where the extent of cracking was minimal and within acceptable tolerances, the

aforesaid contract provisions outlining certain limitations on expectations and entitlements may properly be accorded some quantum of consideration when evaluating the end results of the described construction activity.

12. The Recovery Fund communicated its position denying payment of any award based upon the results of a subsequent jobsite Inspection by another assigned agency Inspector who determined that Plaintiffs did not qualify under the applicable statute as an “injured person” since the resulting work by Defendant was found to have been and to still be within industry standards. In effect, such successor Inspector, who did examine the condition of the deck and pool surfaces after the filing by Plaintiffs of their claim for a Fund award, agreed with the determination of the original Inspector with respect to whether or not the work performance by Defendant met prevailing industry standards and tolerances.

13. Plaintiffs’ testimony tended to establish a strong personal dissatisfaction with the extent and visibility of the cracking on the Kool- deck surfaces as well as the degree of color variations and texture of the pools’ pebbled surface, both such conditions leading to their shared belief as to an overall unaesthetic present appearance of the pool and deck areas. Conversely, the testimony, considered together with the written field notes, of other witnesses having experience and familiarity with viewing and evaluating construction standards, including that of two separate assigned Inspectors for the Registrar, indicated that the resulting appearance of the pool and the abutting Kool-deck surface were well within acceptable tolerances prevailing in the industry, thereby confirming that the extent of cracking or color variations was not excessive, uncommon or unacceptable according to comparisons with other installations. The original Inspector decided not to issue any directive or Corrective Work Order requiring any remedial action on the part of the contractor, having concluded that the Defendant’s work, as corrected in part prior to his jobsite visit, did not fall below any applicable workmanship standards and did not warrant the undertaking and completing of

replacement work or other forms of corrective measures. Similarly, the successor Inspector viewing the overall conditions of the pool and deck, determined that no substandard or unacceptable work existed and that Plaintiffs did not qualify as an “injured person,” as statutorily defined, so as to gain entitlement to any Fund award.

14. It must be held, under all the evidence and testimony of record, that, irrespective of a high degree of personal dissatisfaction on the part of Plaintiffs, they did not sustain their burden of proof, applicable in these administrative Recovery Fund proceedings, by sufficiently establishing that the present condition and appearance of either the Kool- decking or pool surface installed by Defendant was deficient or unacceptable according to prevailing industry standards and tolerances.

15. To impose an obligation upon a contractor to insure that the final appearance of its resulting construction work will meet an individual property owner’s own personal aesthetic standards would be an impractical and unduly onerous burden in view of the extremely high degree of subjectivity involved. The workmanship provisions of the State’s contracting laws were not intended to subject the license of any contractor to disciplinary action or to any administrative Fund payout for failure to satisfy the individual tastes of all potential and actual customers. In this case, the additional remedial work set forth in each of the obtained bids from other contractors was not shown to have been either necessary or otherwise appropriate.

CONCLUSIONS OF LAW

1. The Registrar of Contractors is empowered by statute to determine the propriety and the amount, if any, of a claimed award from the Contractor’s Recovery Fund pursuant to A.R.S. §32-1154(E).

2. “Persons injured” for the purposes of coverage or entitlement to claims for benefits by way of Fund awards are defined in A.R.S. §32-1131(3) as owners of

residential real property … who are damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance on that real property… (emphasis added).

3. At these administrative hearings, the complaining party or the party seeking the benefits of receiving a Fund award 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).

4. While the overall resulting aesthetic appearance of most all visible construction work will generally have an impact in the determination of what constitutes proper, acceptable workmanship, the Plaintiffs in this administrative Recovery Fund case failed to sustain their requisite burden of proving by a preponderance of reliable, substantial and probative evidence that the resulting condition and appearance of the decking and pool surface installed by Defendant was substandard and deficient to an extent that would adversely reflect upon Defendant’s workmanship or upon its discharge of applicable contractual construction responsibilities. Consequently, it must be held that Plaintiffs were unable to demonstrate that they had been damaged by acts or omissions of a license contractor so as to qualify as injured persons under applicable statutory provisions.

5. In the absence of adequate proof that the present conditions and appearances of portions of the pool decking and interior surface exceeded prevailing allowable industry standards and tolerances, it follows that the proposed work encompassed under the bids obtained by Plaintiffs and submitted as part of the Fund claim was not sufficiently shown to be necessary or otherwise required to rectify construction errors or results with respect to the decking and pool surface conditions.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that no payment of any award from the Recovery Fund be made to Plaintiffs and that the Registrar of Contractors enter an Order confirming the Fund’s prior denial action and dismissing the Recovery Fund claim filed by Plaintiffs in its entirety.

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: February 29, 2008. OFFICE OF ADMINISTRATIVE HEARINGS

_____________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Fidelis V. Garcia, Director Registrar of Contractors 3838 North Central Avenue (Suite 400) Phoenix, AZ 85012 - 1906 -----------------------

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