ALJDEC decisions subject to certification as final

08F-4825-ROC · Registrar of Contractors · 2009-07-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 16, 2009 APPEARANCES: John Rooney, Esq. appeared for the Complainant. Dennis Sever, Esq. appeared for the Respondent. ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________ Findings of Fact 1. In February 2008, the Complainant’s home in Mesa, Arizona experienced extensive fire damage. 2. Farmers Insurance (Farmers) was the Complainant’s insurer. Lisa Pembrook was the adjuster for Farmers. 3. The Complainant contracted with Brown O Haver, Public Adjusters, for the services of William Young (Young) a licensed public adjuster. 4. Young recommended the Respondent to the Complainant. The parties entered an agreement on February 19, 2008. The agreement provided for restoration “according to the agreed insurance scope”. 5. On March 6, 2008, Farmers issued its Scope of Loss in the amount of $86,999.15 including recoverable depreciation. 6. The Respondent began work on approximately April 19, 2008. The initial phase of the work included damage assessment, demolition, debris removal, city inspection and permits. 7. The April 28, 2008 Mesa Fire Damage Inspection Report required an engineering report on certain trusses. West Point Engineering prepared an engineering report. 8. Reconstructive work began in May, 2008. Upon noting the work accomplished by the Respondent, the Complainant was dissatisfied with various aspects and discussed this with the Respondent’s representative Mark Riggs (Riggs). 9. The Complainant testified that the Respondent claimed that a number of items which were of concern to the Complainant, were outside the Scope of Loss established by Famers. The Complainant acknowledged that the Respondent’s representative had stated some of the items raised by the Complainant would be repaired. The Complainant also acknowledged that there were certain tasks which he wanted the Respondent to perform which were not attributable to any loss from the fire. The Complainant testified he would have paid for this extra work but he considered the Respondent’s cost estimate too high. 10. According to Young[1], he and Pembrook were working on a supplement to the initial Scope of Loss, in order to address additional items which required repair or replacement. 11. By letter date May 17, 2008, the Complainant terminated the contract with the Respondent. The Complainant did not submit to the Respondent a list of items he believed required correction. Nor did the letter cite workmanship as the cause of the termination. Rather, the letter cited the Respondent’s failure to fully explain its work authorization. At the time of termination, the Respondent had at most, accomplished 10% of the work to be performed. 12. On May 28, 2008, Famers issued a Scope of Loss supplement in the amount of $25,409.50 of which $15,500.00 was for asbestos abatement. 13. On June 16, 2008, the Complainant filed his Complaint with the Registrar of Contractors (ROC). 14. The Complainant has also filed a civil action in Maricopa County Superior Court. 15. On July 11, 2008, ROC inspector Jack Clark (Clark) performed a jobsite inspection. 16. Clark issued a Jobsite Inspection Report in which he required no action on any of the items raised by the Complainant in large part because little actual reconstruction had occurred prior to the termination by the Complainant. 17. Photographic and testimonial evidence shows that at the time of termination of the contract, there were cracked ceiling rafters (Exhibits 1 and 2)[2], a charred top plate which had not been replaced (Exhibit 3), trusses had been reinforced rather than replaced and openings remained in the roof where firefighters had cut through the roof (Exhibit 4)[3], damage to a top plate and damaged masonry (Exhibit 5), crack in masonry block (Exhibit 6), a stud which is slightly too short (Exhibit 7), improperly or incomplete reconstructed truss (Exhibit 8), charred 2 x 6 (Exhibit 9), and charred studs (Exhibit 10). 18. Thomas Franklin (Franklin) is the successor contractor to the Respondent. Franklin performed and continues to perform restorative work on the Complainant’s home. The slow progress is due to difficulties in obtaining payment from the Complainant’s lender which is disbursing the insurance proceeds. 19. According to Franklin, trusses showing smoke damage need to be replaced (Exhibit 11), a patio rafter should have been removed before work was done on the roof (Exhibit 12), a freeze board shows poor workmanship (Exhibits 13, 14 and 15), truss tails need replacement (Exhibit 16), cracked block should have been replaced (Exhibits 17, 5, and 6), exterior wood area should have been cleaned before application of KILZ (Exhibit 18), an interior masonry arch needs to be secured and requires support (Exhibit 19), KILZ spray over some plywood areas which should have been replaced (Exhibit 20), cracked L mold (Exhibit 21), spray over charred top plate (Exhibit 22), and spray over charred areas of the laundry room that should have been replaced (Exhibit 22).

20. Dahl Willis (Willis) testified on behalf of the Respondent. According to Willis the Respondent submitted its initial proposal to the Complainant based on the initial Scope of Loss. In addition, Willis testified the Complainant did not afford the Respondent an opportunity to address any of the issues raised by the Complainant, prior to being terminated by the Complainant. Willis acknowledged that many of the KILZ covered areas need replacement but that the areas could be identified and the wood replaced after the KILZ application, Willis testified the condition shown in Exhibit 19 (archway) was as depicted was because the Complainant had not determined if the archway should be retained. In addition, the Respondent could correct the block wall without removing portions of the roof, would have replaced “alligatored” wood and repaired holes made in the roof by firefighters. Conclusions of Law The Citation and Complaint alleges violations of A.R.S. §32- 1154(A)(2), departure from plans, specifications or building codes; (A)(3)/A.A.C. R4-9-108, workmanship; and (A)(7), a wrongful act resulting in substantial injury. 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. Although the evidence shows numerous items which would not meet minimal workmanship standards at the time the photographs were taken, it is generally accepted that barring circumstances not evident in this case[4], a contractor is normally given an opportunity to correct or otherwise address issues relating to the scope of work to be performed and the quality of work to be accomplished. The law requires good faith effort on the part of both parties to a contract to resolve or negotiate terms or conditions which may be unclear. 5. In the instant case the contract was limited to the scope of loss established by the insurance company (with supplements available). The Complainant terminated the Respondent before a supplemental scope of loss was even submitted to the insurer. The Complainant did not specifically set forth in writing to the Respondent the matters believed to be unsatisfactory and how they should be corrected. The Respondent was not given an opportunity to respond or address the items complained of by the Complainant. Under the facts of this case, the Complainant presented no compelling reason for almost spontaneous termination of the Respondent approximately only two weeks after the Respondent’s had begun any reconstruction. 6. Under the facts of this case it is concluded the Complainant acted precipitously and prematurely in terminating the Respondent when he did. In view of this, none of the charged violations have been proven because it is unknown what items the Respondent would have corrected to be within workmanship standards and which items would not have been so corrected.

Recommended Order It is recommended the Citation and Complaint upon which it is based be dismissed. The Order in this case is effective forty (40) days from the date of the Order or from the date of certification if certified by the Director of the Office of Administrative Hearings.

Done this day, July 21, 2009

______________________________________ Allen Reed Administrative Law Judge

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

William A. Mundell, Director Registrar of Contractors c/o Legal Department 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________

----------------------- [1] It is noted that the Complainant apparently had disagreements with Young with respect to this case. [2] There is a question as to whether this damage was related to the fire.

[3] According to the Respondent, this is acceptable based on the engineering report. [4] The contractor is unable or unqualified to perform the work as required.

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