ALJDEC decisions subject to certification as final

08F-L0216-ROC · Registrar of Contractors · 2008-11-24

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 18, 2008 APPEARANCES: Attorney H. Paul Honsinger appeared for Complainants; Corporate Officer and Qualifying Party Christopher Lay appeared for Respondent. ADMINISTRATIVE LAW JUDGE: Michael G. Wales _____________________________________________________________________ Evidence and testimony were presented and, based on the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT 1. The matter convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated October 15, 2008. 2. At all times here relevant, Complainants Lee and Rebecca Pierce (“Complainants”) were the owners and occupants of a residence located at 635 Jones Drive in Lake Havasu City, Arizona. 3. Respondent Laydon Leasing, Inc. dba Custom Pools of AZ, (“Respondent”) is an Arizona corporation which holds Arizona Contractor’s License No. 093833, Class B-05 (Residential General Swimming Pool Contractor) issued by the Registrar of Contractors (“ROC”) on June 12, 1992. Christopher Charles Lay (“Mr.

Lay”) is a corporate officer and is the qualifying party for the license. 4. Complainants filed a complaint with the ROC on December 23, 2007, wherein they alleged, inter alia, that the swimming pool constructed in their backyard by Respondent began to crack in December, 2006, and reached structural failure on July 10, 2007, when 2,000 gallons of water were lost. The next morning, alleged the Complainants, structural damage to their home’s foundation and exterior wall was revealed. 5. Registrar of Contractors Inspector Cliff Corlett (“Corlett”) conducted a jobsite inspection on January 11, 2008. Thereafter, on January 11, 2008, Corlett issued a Corrective Work Order as follows: “The only known “fact” in this complaint is that the pool shell has had a major failure. Respondent should determine cause and correct all related damage by appropriate methods.”

6. On January 14, 2008, Respondent filed a correspondence with the Registrar of Contractors wherein it requested a hearing and, inferentially, disputed Inspector Corlett’s Corrective Work Order. 7. On June 17, 2008, the Registrar issued a CITATION AND COMPLAINT in Case No. L08-0216 charging Respondent with possible violations of A.R.S. §32-1154A (7), (23)and (3)(namely, A.A.C. R4-9-108). 8. Respondent filed an answer on June 23, 2008 denying the allegations. 9. At the hearing, Complainant Lee Reece testified and submitted Exhibits C-1 through C-12 which were marked, admitted and considered. 10. Christopher Lay testified on behalf of Respondent and submitted numerous exhibits which were marked, admitted and considered. 11. Inspector Corlett testified on behalf of the Registrar of Contractors and described his observations at the January 11, 2008 jobsite inspection and testified to the issuance of the subsequent Corrective Work Order. 12. From the evidence elicited at the hearing, the following salient facts are important to note, listed here in chronological order: a. On or about July 29, 2005, the interior drywall portion of Complainants’ new home construction at 635 Jones Drive was completed. (Exhibit R-1). b. On February 6, 2006, Complainants contracted with Respondent to build a swimming pool in Complainants’ backyard at 635 Jones Drive. (Exhibit R-2A&B). The contract contained the following material clauses:

“Seller guarantees that the pool structure will remain structurally sound for the period of time that the pool is owned by the Buyer. The term structurally sound means that the swimming pool is capable of retaining water, and in the event of failure to do so Seller will within this period repair the pool structure so that it will retain water.”

…

“…Buyer does hereby represent and warrant that the following conditions do not exist. a. …inadequate soil bearing capacity of the Buyer’s property;

…

c. Underground or surface water conditions which will interfere with the construction of the work or operation of the completed pool.”

c. On February 17, 2006, the Lake Havasu City Water Department recorded 99,985 gallons of irrigation water used at 625 Jones drive, the property adjacent to, and uphill from, Complainants’ residence. (Exhibit R- 4). d. On February 22, 2006, the pool was excavated by Respondent. e. On March 15, 2006, the pool shell was gunited by Respondent. f. On June 1, 2006, the pool plaster was applied in the morning and Respondent began filling the pool. The pool was completely filled with water by noon on June 2. (Exhibits R-7 and C-3). g. On June 16, 2006, the Lake Havasu City Water Department recorded 33,997 gallons of irrigation water used at Complainants’ property. (Exhibit R-3). h. In late June or early July, 2006, a wet spot was noted on the exterior retaining wall of Complainants’ property. (This wet spot was later determined to be directly behind the area of pool failure. The wet spot remained, and on July 13, 2007, Complainant Rebecca Pierce informed Respondent’s employee the wet spot was from an irrigation bubbler leak). i. On July 20, 2006, the Lake Havasu City Water Department recorded 35,986 gallons of irrigation water used at Complainants’ property. (Exhibit R-3) j. On August 18, 2006, the Lake Havasu City Water Department recorded 99,985 gallons of irrigation water used at 625 Jones drive, the property adjacent to, and uphill from, Complainants’ residence. (Exhibit R- 4). k. On October 18, 2006, Alamo Drywall spent 26.0 man-hours repairing drywall cracks at Complainants’ home. (Exhibit R-1). l. On October 20, 2006, the Lake Havasu City Water Department recorded 73, 244 gallons of irrigation water used at 625 Jones drive, the property adjacent to, and uphill from, Complainants’ residence. (Exhibit R- 4). m. On December 1, 2006, Complainants observed a hairline crack in the pool shell. A window in the master-bedroom also cracked. Complainants notified Respondent of the crack in the pool shell. n. In late December, 2006, Respondent performed a “bucket test” and determined no water was leaking from the pool. o. In February, 2007, Lee Pierce observed that either the west end of pool has settled or the east end of pool has risen, because water level against tile appears one inch higher on west end. p. On March 14, 2007, Alamo Drywall spent 57.5 man-hours repairing drywall cracks at Complainants’ home. (Exhibit R-1). q. On June 20, 2007, Alamo Drywall spent 6 more man-hours repairing drywall cracks at Complainants’ home. (Exhibit R-1). r. On July 10, 2007, Rebecca Pierce awoke to find substantial cracks in the east end of the pool shell, adjacent to the slope leading up to 625 Jones, and that the 15,000 gallon pool has lost approximately 2,000 gallons of water into the surrounding soils. The walls in the master bedroom, adjacent to the pool, and to the slope, have also suffered substantial drywall cracking. A trench, initially dug near the master bedroom wall to carry plumbing lines to the pool, is now wet. s. On July 16, 2008, Respondent pressure tested the pool plumbing and found no leaks. t. On July 31, 2007, Respondent dug a test pit in the yard approximately 30’ from the pool. Lee Pierce testified the soil removed from the test pit was dry. Brian Querry, however, of Querry & Querry, the excavation company engaged by Respondent to dig the test pit submitted a notarized letter stating the following: “The six foot deep and approximately 30 inches wide hole was located approximately 25 to 30 feet away from the pool on the uphill side of the property. There were no irrigation bubblers near the test hole. In my 35 years of experience in Lake Havasu City, Arizona, soil conditions that are not near any water sources are normally very dry…It was obvious to everyone present that the soil was quite damp throughout the six foot depth and mud balls could be made from it.”

u. On August 1, 2007, the engineering firm Western Technologies, Inc. conducted a manometer survey of Complainants’ interior floor slab. Western Technologies established a set point of 10.1 at the center of the home and recorded deviations up to 2.8” of lift from that set point at the exterior of the master bedroom near the east end of the pool and adjacent to the uphill slope leading to 625 Jones. (Exhibit R-25). v. On August 22, 2007, Michele Bogdon, P.E., opined in a written report, that based on her visual observations of the pool shell and lot, and information provided by the home builder and Complainants, including information that the test pit was dry, and her elimination of expansive or poorly compacted soils, as well as the elimination of plumbing leaks as causes or contributing factors to the failure, that: “…the leaks in the swimming pool were caused by a construction and/or a material defect. Further destructive testing is required to determine if the concrete flash set, the reinforcing steel amount is less than required, and/or the reinforcing steel is improperly located.”

w. On October 16, 2007, Respondent employed Accurate Professional Land Surveying to complete a topographical survey of Complainants’ lot and pool area. The survey notes 3.96” of lift of the east end of the pool as compared to the west end and as compared to the original finished elevations of both ends of the pool. (Exhibits R-18 and 18A). X. On October 20, 2007, four core samples were taken from the pool shell. All samples indicate proper thickness of gunite and proper placement of reinforcing steel. (Exhibit R-26). 13. The parties agreed that the soil at or near the pool and home is not expansive. Neither party presented any evidence that the original lot developer or home builder failed to properly compact any fill or native soils. It was not disputed that 635 Jones is approximately 16 feet lower in elevation than 625 Jones.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. L08-0216 charged Respondent with possible violations of A.R.S. §32- 1154A (7), (23) and (3) (specifically A.A.C. R4-9-108). Those statutory sections require that the holder of a license or person listed on the license shall not commit the following:

7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. … 23. Failure 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 written directive from the registrar. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for violation of this paragraph until after a hearing has been held pursuant to the provisions of this article. …

3. Violation of any rule adopted by the Registrar.

A.C.C. R4-9-108 is named as the rule violation charged pursuant to A.R.S. § 32-1154A (3). Rule R4-9-108 provides that all work shall be done in a professional and workmanlike manner and in accordance with any applicable building codes and professional industry standards. . . .

. . . CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over this matter pursuant to A.R.S. § 32-1101, et. seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. To warrant such sanctions by the Registrar, Complainants must demonstrate by a preponderance of the evidence that Respondent violated any one, or more, of the statutory sections cited. Proof by a “preponderance” means that “the evidence is sufficient to persuade the finder of fact that the proposition is more likely true than not.” In re Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994). See also, Culpepper v. State of Arizona, 187 Ariz. 43, 930 P.2d 508 (App. 1996). 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 1186 (Rev. 6th ed. 1990). 3. The purpose of licensing Arizona contractors is to regulate the conduct of contracting and protect the public from unscrupulous acts. Beazer Homes Ariz., Inc. v. Goldwater, 196 Ariz. 98, 101, 993 P.2d 1062, 1065 (App. 1999); Better Homes Constr. v. Goldwater, 203 Ariz. 295, 300, 53 P.3d 1139 (App. 2002). The statutory purpose is to prevent unscrupulous or financially irresponsible contractors from deceiving and taking advantage of those who engage them to build. Sobel v. Jones, 96 Ariz. 297, 394 P.2d 415 (1964). 4. This tribunal determines and concludes that Complainants failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (3) as pertains to the construction of Complainants’ pool by Respondent. Complainants, citing no violation of any building code or deviation from any accepted standard of workmanship, allege that the pool would not have cracked, but for a defect in construction, citing the doctrine of res ipsa loquitor[1]. Complainants’ theory of causation based on res ipsa loquitor, however, was met with an alternative explanation of causation by Respondent sufficiently plausible to overcome and rebut Complainants’ assertion of res ipsa loquitor. Respondent’s plausible explanation is based on the following evidence: A. The soils are not expansive, thus some force, other than expansive soils must have caused the 3.96 inch lift in elevation of the east end of the pool deck. Likewise, some force, other than expansive soils, must have contributed to the significant 2.8” rise in elevation in the Complainants’ home floor slab near the pool. B. The evidence of record supports the contention, by way of the bucket test, that the pool cracked before it leaked. Evidence of record also supports the contention that the pool failed structurally before the 2,000 gallons of water leaked form the pool to the surrounding soils. C. The evidence of record shows Complainants' home and pool to be approximately 16 feet lower in elevation than an adjacent home at 625 Jones, which, in February, August, and October, 2006 used extraordinary amounts of water to irrigate 625 Jones and/or neighboring lots owned by the residents of 625 Jones. D. The evidence of record supports the contention that Complainants' home has poor lot drainage and in June and July of 2006, Complainants also used a substantial amount of water for irrigation and had an irrigation leak at the retaining wall near the east end of the pool. E. The evidence of record supports the contention that in late June or early July, 2006, four months after the pool was constructed, a wet spot appeared in the Complainants’ retaining wall directly behind the area of the swimming pool that ultimately fractured. Likewise, the record of extensive drywall repairs supports the contention that forces were slowly building against the house and pool leading up to the ultimate failure on July 10, 2007. F. Engineer Bogdon’s report and opinion are based solely on her visual inspections of the cracks and on information provided by Lee Pierce that the test hole as dry. Bogdon performed no destructive testing and did not have any information as to the drywall repair history, or the amounts of irrigation water used at 625 or 635 Jones Drive, and did not consider the possibility of earth movement. Bogdon’s opinion is speculative at best. These contentions lead this tribunal to find that Respondent’s theory of causation plausible, i.e., that water soaked soils exerted a force down the adjacent slope into the soils at and around the pool and master bedroom, and caused the east end of the pool and the adjacent master bedroom to rise. Because Respondent’s theory of causation is plausible, Complainants’ use of the doctrine of res ispa loquitor as circumstantial evidence of the likely cause of the structural failure, or as a presumption of defective workmanship, is rebutted. In other words, while it is possible there was some defect in excavation, compaction or construction, it is not probable. The more probable cause of the structural failure is earth movement from the adjacent slope resulting from substantial wetting of the slope’s soils, and the soils surrounding the pool, over a period of several months. Hydraulic pressure does not arise on its own without some force to exert the pressure. The hydraulic pressure which lifted the east end of the pool and which lifted the master bedroom slab could not have been caused by expansive soils or mere water saturation. This hydraulic pressure may well have been the result of the pressure that a saturated mass of earth from the adjacent and proximate slope exerted on the soils at, or near, the master bedroom and east end of the pool. Therefore, because Respondent’s theory of causation is plausible, and probable, Complainants have failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (3). 5. For the reasons described above, it is further determined and concluded that Complainants failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (23). Respondent was justified in declining to abide by the Corrective Work Order issued by Inspector Corlett. 6. This tribunal also determines and concludes, for the reasons set forth above, that Complainants failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (7). . . . . . .

RECOMMENDED ORDER On the basis of the foregoing, IT IS RECOMMENDED that the entire Citation and Complaint in Case No. L08-0216 be dismissed in its entirety.[2]

Done this day, November 24, 2008.

Office of Administrative Hearings

__________________________ Michael G. Wales Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2008, to:

Registrar of Contractors Armando Contreras 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________

----------------------- [1] The phrase ‘res ipsa loquitor’ is a symbol for the rule that the fact of an occurance of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for a defendant to meet with an explanation. Black’s Law Dictionary 1336 (Rev. 8th ed. 2004). [2] 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 in this matter will be forty (40) days from the date of that certification.

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