ALJDEC decisions subject to certification as final

07F-S0019-ROC · Registrar of Contractors · 2007-04-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 12, 2007, at 1:30 p.m. APPEARANCES: The Complainants appeared through Andrew Titche. The Respondent appeared through its authorized representative, Garet Konigsfeld. ADMINISTRATIVE LAW JUDGE: M. Douglas

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 is the holder of a Class KB-02 License issued by the Registrar of Contractors. 2. The Complainants purchased a residence located at 19 Cattle Ranch Lane, Elgin, Arizona. Shortly after occupying the residence the Complainants experienced a water leak in a bathroom in the residence. 3. The Complainants notified Fidelity National Home Warranty of the problem and the warranty company retained a plumber to perform an onsite inspection of the Complainants’ bathroom. 4. The plumbing inspector found as follows: “DrainWorks Plumbing was dispatched by Fidelity Home Warranty to the property address of 19 Cattle Ranch Ln, Elgin, AZ 85611. The service call was dispatched as a leaking pipe was 2” PVC drain line from the lavatory sink waste. The 2” PVC drain line was found to have a hole broken into the pipe with duct tape wrapped over the pipe to conceal the leak. It is my professional option that this pipe was broken at some point before the wall was closed and finished.” 5. The Home Warranty Company then declined to pay for any repair to the broken pipe or any damage caused by the broken pipe on the following basis: “Pursuant to “Limits of Liability” #1 and #5, FNHW liability is limited to failures that are due to normal wear and tear and does not cover for improper previous repairs or installations. As a result, the claim was denied under the terms and conditions of the Contract.” 6. The Complainants then retained the services of licensed contractors and caused the broken pipe and damages caused by the broken pipe to be corrected at a total cost of $2629.92. 7. The Complainants then contacted the Respondent anddemanded the Respondent reimburse the Complainants for their cost of corrected the broken pipe and the damages caused by the broken pipe. 8. The Respondent declined any responsibility for the problem and refused to pay for the correction of the problem. 9. On July 25, 2006, the Complainants filed the Complaint at issue complaining as follows: “Original owners, Sadie and Jeffrey Lund contracted with Red Star Construction and Garet Konigsfeld to build (a) new home at 19 Cattle Ranch Lane. They took occupancy 9/04. Andrew and Megan Titche purchased home from seller in 5/06. Water leak found in master bathroom and found by plumber. Plumber discovered when wall was opened up the (plumber) found a hole in drain pipe was covered up with duct tape. Mold and water damaged bathroom walls and cabinets. Total cost of cabinets $2,629.92.” 10. The broken pipe and the damages caused by the broken pipe had already been corrected when the Complaint was filed so no onsite inspection was performed. 11. The Respondent refused any responsibility on the basis that (1) it was not the general contractor for the construction of the residence at issue and (2) the applicable statute of limitations had expired before the Complainants filed the Complaint at issue. 12. Credible testimony and evidence, presented at hearing, established that during a telephone conversation with Complainant, Andrew Titche, the Respondent’s representative stated that while it did not build the Complainants’ residence the Respondent had allowed the original owners of the residence to utilize the Respondent’s license number because Mr. Lund could not file for his own license due to issues with another house he built previously. 13. There was no dispute the certificate of occupancy for this residence was issued on July 2, 2004, and that the Complaint at issue was not filed until July 25, 2006. 14. Credible testimony and evidence, presented at hearing, established the Complainants first noticed the problem with broken pipe and the damage caused by the broken pipe on or about July 10, 2006 and the Complaint at issue was filed July 25, 2006. 15. The Complaint is found to have been filed after the applicable two (2) year statute of limitations had expired. 16. The credible testimony and evidence presented at hearing failed to disclose any conduct by the Respondent which would preclude or estop the Respondent’s assertion of the expiration of the applicable two year statute of limitations in this matter. CONCLUSIONS OF LAW 1. The seminal case regarding the beginning of the two year statute of limitation and when the statute of limitations begins to run is Lyon’s v. Great American Insurance Company. 4 Ariz. 596, 422 P.2d. 724 (Ariz. App. 1967). This case states: ‘We hold that the one year statute of limitations began to run in favor of the surety and against the building contractor upon the contractor’s occupancy of the structure or upon the contractor’s discovery of the breach of the contract whichever event shall first occur.” (Emphasis added). 2. The Office of the Attorney General in a published opinion at 1979 WL 23188 (Ariz A.G.) discussed and interpreted the Lyon case. The opinion states while discussing the Lyon case specifically: “The court implied that this critical point occurs when the structure is tendered for occupancy or when the homeowner discovers the defect. Significantly, the Court made no reference to the close of escrow.” The opinion goes on to state: “Therefore, a homeowner’s complaint is timely if filed within two years of the occupancy or discovery of the defect, whichever event first occurred.” (Emphasis added). 3. The acts giving rise to the instant Complaint consisted of workmanship which must necessarily have been committed, if at all, on or prior to July 2, 2004. The Complaint at issue was filed more than two years thereafter and the Complainants’ right of action before the Registrar of Contractors is effective barred by the provisions of the applicable statute of limitations which has been timely and affirmatively, asserted by the Respondent.

RECOMMENDed order In view of the foregoing, it is recommended the Respondent’s Motion to Dismiss be granted and this matter be dismissed based upon the expiration of the applicable two year statute of limitations. It is further recommended the Registrar of Contractors conduct an investigation of the Respondent’s actions in possibly allowing its contractor’s license to be utilized by an unlicensed person and in possibly aiding or abetting an unlicensed person to evade this State’s contracting laws. In the event of certification of this Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of the certification. Done this day, March 29, 2007.

______________________________________ M. Douglas 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 ___________________________ -----------------------

Office of Administrative Hearings 100 North Stone Avenue, Suite 704 Tucson, Arizona 85701 (520) 628-5488