ALJDEC decisions subject to certification as final

08F-3919-ROC · Registrar of Contractors · 2009-12-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 2, 2009 at 8:00 a.m.; the record was held open until December 1, 2009 to allow the parties to attempt to negotiate a settlement. APPEARANCES: Complainant Ballard Properties LLC appeared through Ron Ballard, its Managing Member; Respondent Logos Construction Inc. appeared through John Cavness, its President and Qualifying Party. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On December 4, 1987, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC071261, Class B-01 for commercial contracting to Respondent Logos Construction Inc., a corporation. On April 23, 2008, the Registrar received a complaint against Respondent’s license from Complainant Ron Ballard of Ballard Properties, LLC, which alleged the following specific deficiencies in Respondent’s construction of a commercial building that Complainant had purchased: #1: Stucco cracks around various areas of the building have yet to be completed #2: Weep holes in the window system have yet to be addressed

According to the complaint, Respondent had completed construction of the building on June 30, 2006. The Registrar sent a copy of the complaint to Respondent for its immediate attention. The Registrar assigned the complaint to Inspector Phil Coscia for investigation. Inspector Coscia performed a jobsite inspection and, on May 22, 2008, issued a Corrective Work Order (“CWO”) directing Respondent within fifteen days to correct the following deficiencies by appropriate means: While no additional areas of excessive cracking or cracks exceeding 1/16” in the stucco were found, Logos Builders should take appropriate action to correct the following:

• Properly prep and complete the repairs to cracks in the stucco, and repaint the affected surfaces to within industry standards. It was agreed that Mr. Ballard would supply the new paint for the building.

• Visible openings in the stucco around wedge supports for the upper roof to the entry.

• Wire lath is visible in the in the stucco finish at the outer edge of the cornice extension to the North (rear) wall.

• Peeling stucco is present on the underside of the soffit at NE corner of the upper roof to the entry.

• Weep holes at the base of some window frames allow water to enter in and behind the stucco at the juncture of the frame and sill. Water should drain primarily to the exterior of the building, and sills should not slope or drain back toward the windows. Correct as required.

• Weep screed at the base of the rear wall terminates at the same level or below the surface of the asphalt paving. The 2006 Phoenix Building Code, “2512.1.2 Weep Screeds”, in part, reads: The weep screed shall be placed a minimum of 4 inches (102 mm) above the earth or 2 inches (51 mm) above paved areas and be of a type that will allow trapped water to drain to the exterior of the building…..

[Emphases in original.] Complainant later contacted Inspector Coscia about Respondent’s alleged failure to comply with the CWO. Respondent also contacted Inspector Coscia about Complainant’s alleged denial of reasonable access and demands for repairs that the CWO did not require. By August 7, 2008, both parties had informed Inspector Coscia that the matter should proceed to hearing. On December 31, 2008, the Registrar issued a Citation and Complaint against Respondent’s license. On July 9, 2009, the Registrar quashed the Citation and Complaint because the Registrar had determined that it had been mailed to an incorrect zip code for Respondent’s address of record. On July 14, 2009, the Registrar reissued the Citation and Complaint, charging A.R.S. § 32-1154(A)(2), (7), (15), (23), and (3) (namely A.A.C. R4- 9-108). On July 20, 2009, the Registrar received Respondent’s written answer to the Citation and Complaint, which denied any statutory violation and affirmatively alleged that the parties had agreed that Respondent would resolve Complainant’s complaint about the slope of the weep screeds at the windows of the building through application of a wet seal, but that Complainant then refused to allow Respondent’s subcontractor to perform the work because the subcontractor allegedly lacked liability insurance. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, to schedule and to conduct a fair hearing. A hearing was held on November 2, 2009. Inspector Coscia testified. Complainant’s managing member Mr. Ballard testified and submitted three exhibits. Respondent presented the testimony of four witnesses: (1) Jay Cavness, its superintendent; (2) Bob Winton, the building’s architect; (3) Matthew Dowis, Respondent’s project manager for construction of the building; and (4) John Cavness, Respondent’s president and qualifying party. Respondent also submitted eight exhibits. Hearing Evidence After Respondent completed construction of the commercial building, the owner for whom Respondent had constructed the building went out of business and Complainant purchased the building. Complainant’s managing member Mr. Ballard is also qualifying party and managing member of A K and J Sealants LLC, License Nos. ROC196113, Class L- for commercial glazing and sealants and ROC196099, Class C-05 for residential glazing and sealants (“A K and J Sealants”). Mr. Ballard purchased the building to house his contracting business. Inspector Coscia performed a prehearing jobsite inspection on October 30, 2009. Inspector Coscia testified the stucco cracks had been repaired and the building had been repainted. The visible openings in the stucco around the wedge supports for the upper roof to the entry had been repaired. He could not see whether the wire lath that was visible in the stucco finish at the outer edge of the cornice extension to the north or rear wall had been repaired because he did not go on the roof. Inspector Coscia testified that the peeling stucco had been repaired. Complainant did not allege or present any evidence that Respondent had not corrected in a professional and workmanlike manner the first four items on Inspector Coscia’s CWO. Weep holes at the base of some window frames Inspector Coscia testified that, at his prehearing inspection, he checked the weep holes and all appeared to be open. He did not perform a water test at the prehearing inspection. In response to Respondent’s questions, Inspector Coscia testified that stucco is not a waterproof veneer; there should be an underlayment under the window flanges that protects against water infiltration. Inspector Coscia did not do any destructive testing and could not say what was under the stucco. Mr. Ballard testified that the windows leak. The weep holes were higher than the ledges and the ledges had gullies next to the window frame, where water could sit. Mr. Ballard felt that Respondent should remove and replace the ledges to eliminate the gullies. Inspector Coscia testified that he did not see any damage to the interior of the building. Inspector Coscia testified that a few of the weep holes would have to drain uphill. A remedy would be to wetseal the window. The substrate beneath the stucco should be sufficiently wrapped to avoid water infiltration. Another remedy would be to seal the juncture between the stucco and window. Inspector Coscia testified that the building had five recessed windows with sills. Typically recessed windows do not get a lot of rain. Heavy windblown rain will infiltrate any window. Inspector Coscia testified that the Registrar allows a property owner to refuse access to a contractor to comply with a CWO if the contractor lacks current workmen’s compensation insurance. The property owner may not refuse access if the contractor lacks liability insurance or a bond, if the license is current and active. Mr. Ballard admitted that Respondent had sent out Superior Sealants and Waterproofing LLC, License No. ROC190010, Class K-05 for dual waterproofing and joint sealing (“Superior Sealants”) to apply wetseal to the building to address concerns about water infiltration. But Mr. Ballard had sent Superior Sealants away because Respondent did not provide a current insurance certificate. Respondent submitted a certificate of liability insurance for Superior Sealants dated October 27, 2009. According to the Registrar’s record, Superior Sealants’ license has been current and in good standing at all times relevant to this dispute. Respondent’s president Mr. Cavness testified that Complainant wanted Respondent to indemnify A K and J Sealants for the work to wetseal the windows, but Superior Sealants’ price had been about one-third A K and J Sealants’ price. The building’s architect Mr. Winton testified that, originally, the building had been designed to be constructed of CMU. Construction had been changed to Premier SIPS panels after a structural engineer had submitted a modified plan to the City of Phoenix inspectors. Respondent’s project manager Mr. Dowis testified that the SIPS wall system consisted of insulated, tongue-and-groove foam panels, which are glued and nailed per specifications. Tolerances are closer under the SIPS system than for CMU construction. Water cannot migrate behind the SIPS system, even if there were no weep holes. The SIPS system is Energy Star and Leeds rated. The tongue-and-groove construction prevents leakage between panels. Weep screed at base of rear walls Inspector Coscia testified that the building interior elevation at the rear wall was the same as the outside ground elevation, which was asphalt. At the prehearing inspection, the weep screed still terminated below the asphalt, which he understood to violate Phoenix City Code. In response to Respondent’s questions, Inspector Coscia testified that his opinion might be different if the City of Phoenix had issued the building permit in 2004 or 2005 if the applicable code had different requirements. The building’s architect, Mr. Winton, testified that the building had been designed to have the asphalt go to the weep screed at the finished floor or below. There was a void at the weep screed and 1¾” below the asphalt to allow water to migrate into the soil. The building had been constructed according to the grading and drainage plan, a copy of which was submitted. The City had approved the plan. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[5] Complainant did not establish that Respondent failed to comply with the CWO, with the exception of the weep screed at the base of the rear wall. Respondent has established that the weep screed at the base of the rear wall complied with the City of Phoenix’ requirements. Respondent has also established that, to the extent that application of wetseal may have been required by the parties’ agreement to remedy possible water infiltration at the windows, the wetseal was not applied solely because Complainant unreasonably refused access to Respondent’s subcontractor. Complainant therefore did not bear its burden to establish that Respondent violated A.R.S. § 32-1154(A)(23).[6] Complainant also has borne its burden to establish that Respondent violated A.R.S. § 32-1154(A)(2),[7] (7),[8] (15),[9] or (3)[10] in its construction of and repairs to the building that Complainant purchased. RECOMMENDED ORDER Based on the foregoing, it is recommended that, on the effective date of the Registrar’s final order in this matter, that the Registrar dismiss the complaint that Complainant Ballard Properties LLC made in Case No. 08- 3919 against Respondent Logos Construction Inc.’s License No. 071261, Class B-01. If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be forty days from the date of certification. Done this day, December 7, 2009.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See 32-1101 et seq. [2] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] This statute includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.” [7] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[d]eparture from or disregard of plans or specifications or any building codes of any state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.” [8] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” [9] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[a]cting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth upon the license.” [10] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar.” The rule violated here was A.A.C. R4-9-108, which requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”

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