ALJDEC decisions subject to certification as final

08F-M0187-ROC · Registrar of Contractors · 2008-10-09

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 29, 2008 APPEARANCES: Complainant appeared pro per; Respondent failed to appear. ADMINISTRATIVE LAW JUDGE: Michael G. Wales _____________________________________________________________________ The question presented by this matter is whether Respondent Cornerstone Homes and Development, Inc. is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154. Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order.

FINDINGS OF FACT 1. Respondent Cornerstone Homes and Development, Inc. (“Cornerstone”) is the holder of a Class B- License No. 130985 (General Residential Contractor) issued by the Registrar of Contractors (“ROC”) on January 17, 1998. 2. In or about June 2004, Complainant Laurie Adams (“Ms. Adams”) contracted with Cornerstone for Cornerstone to construct a home on lot 57 in Salerno Ranch in Mesa, Arizona. A myriad of construction problems developed during and after construction causing Ms. Adams to file several complaints with the Registrar of Contractors. 3. Ms. Adams filed her latest complaint with the Registrar of Contractors on August 6, 2007 wherein she alleged a multitude of complaints in a multi-page attachment. At hearing, however, Ms. Adams informed this tribunal that she was proceeding on only a limited number of the complaints, including the use of unlicensed contractors to perform roofing repair and plumbing repairs; cracking in the garage slab; cracking in the concrete garage approach; water ponding at the inside corner of the garage; the air conditioning system is incorrectly designed and not constructed per plans; exposed wood has not been painted; cracks in the exterior stucco have been repaired but not painted to match existing stucco; and the block boundry fence has some lateral movement. 4. Registrar of Contractors Inspector Beau Cruz (“Cruz”) conducted a jobsite inspection on August 28, 2007. Thereafter, on August 30, 2007, Cruz issued a Corrective Work Order in regards to forty-one (41) allegations set forth in the Complainant’s complaint. As applied to the issues for which Complainant informed this tribunal she was proceeding on, Cruz made the following findings: Licensure Issue Complaints:

Complaint 6) WM Developers did repairs on roof with inappropriate license. WM Developers Registrar of Contractors license# 206471 is classified KB-02, which permits WM Developers to perform repairs as required. No action required.

Complaint 7) Cornerstone customer service representative Adam Frost performed plumbing repairs in both bathrooms and also repaired refrigeration drip lines and is not licensed. General contractor employees can perform work at the direction of the general contractor and it should be noted that repairs that were performed are not subject to licensure. No action required.

Workmanship Complaints:

Complaint 1) Air Conditioning distribution system is incorrectly designed. Ms. [Adams] stated that her son stated that the right side distribution system servicing nine supply registers and one return was not correctly designed. Complainant could not supply or present documentation to support their claim, no action required.

Complaint 8) Garage slab is cracking: Observed compound cracking on the 3-4 inch step-up in the garage at three locations that correspond with the control joints in the garage slab as well as diagonal cracking in the center garage concrete slab. The contractor should determine cause and make necessary [repairs].

Complaint 9) Driveway has cracks: Cracks were well within ROC standards and do not exceed 3/8 of an inch. No action required.

Complaint 13) Ponding and standing water in the garage and patio: Observed water staining in the single car garage at the left of the overhead door and rear patio extension by the master bedroom area that is due to roof water run off from metal valley. Ponding or standing water in the garage is due to the fact that a garage is not a waterproof structure and water infiltration is likely under doors especially during driving rains. No action required in this inspector’s opinion.

Complaint 21) Rebar has not been placed as specified or as required by building code: Due to fence being finished, this inspector is unable to determine if rebar has been used/installed. Complainant could not supply or present documentation to support their claim, no action required.

Complaint 22) Fence moves back and force [forth] when shaken: This fence is a “Post & Panel” fence and some movement is normal. This inspector tested several areas and the movement was nor [not] excessive and is expected in this type of fencing structure. No action required in this inspector’s opinion.

Complaint 23) Painting required as a result of repairs does [does] not match surrounding paint on the north side of the structure: Due to the lighting this inspector could not discern any differences in colors or shades. No action required in this inspector’s opinion.

Complaint 25) Wood trim has not been painted in various areas: Wood trim in question is at the interior of garage overhead doors. The contractor is to correct in accordance with jobsite agreement.

Complaint 26) Leaking showerheads and slow drains were not inspected or repaired by a licensed plumber. Adam Frost performed plumbing repairs in both bathrooms. General contractor employees can perform work at the direction of the general contractor. No action required.

Complaint 27) Roof was not inspected or repaired by a licensed roofer: H/O could not provide documentation of such. No action required.

5. On October 30, 2007, and again on November 4, 2007, Ms. Adams filed correspondence with the Registrar of Contractors wherein she requested a hearing and, inferentially, disputed Inspector Cruz’s no action required findings. 6. On March 26, 2008, the Registrar issued a Citation and Complaint in Case No. M08-0187 charging Cornerstone with possible violations of A.R.S. § 32-1154A (2), (7), (10), (14) (18), (23), (3) (namely A.A.C. R4-9-108), and (13) (namely, A.R.S. § 32-1124 (B)). 7. Cornerstone filed an answer on April 10, 2008, denying the allegations. 8. The commencement of the instant hearing was delayed 15 minutes to allow for the late arrival of an authorized representative or attorney for Cornerstone. Cornerstone failed to appear individually or by proper authorized or legal representative. After the delay, the Administrative Law Judge conducted the hearing in the Cornerstone’s absence. 9. At the hearing, Ms. Adams testified and submitted Exhibits 1 through 7 which were marked, admitted and considered. 10. Inspector Cruz testified on behalf of the Registrar of Contractors and described his observations and conclusions regarding his August 28, 2007 jobsite inspection. 11. From the evidence elicited at the hearing, the following salient facts are important to note: a. In response to a previous complaint by Ms. Adams, Cornerstone hired WM Development to make repairs on Ms. Adam’s roof during the second week of July, 2007. b. Inspector Cruz testified that WM Development has a KB-02 license, No. 2606471 (Dual Residential and Small Commercial). This classification allows the scope of work permitted by the B-2 (General Small Commercial) and the B- (General Residential Contractor) licenses. “A contractor with a B- classification may perform: construction on all or any part of a residential structure or appurtenance, except for electrical, plumbing, air conditioning systems, boilers, swimming pools, spas, and roofing (except shingles and shakes) which must be subcontracted to an appropriately licensed contractor.”[1] c. Evidence was presented that Complainant's roof was not constructed of shingles or shakes. Thus, WM Development was operating outside the scope of its license and Cornerstone, by hiring WM Development to perform roofing repairs, did violate A.R.S. § 32-1154A (14) (knowingly entering into a contract with a contractor for work to be performed for which a license is required with a person not duly licensed in the required classification) by employing WM Development to make the repairs. d. Adam Frost was an employee of Cornerstone. Adam Frost performed plumbing repairs, including removal and replacement of existing showerheads and drains. Inspector Cruz testified that such repairs, albeit minor, constitute plumbing work and are not within the scope of Cornerstone’s B- license, reversing his prior determination set forth on his Corrective Work Order that such repairs were not subject to licensure. Cornerstone’s actions in sending Mr. Frost to make the repairs would be in violation of A.R.S. § 32-1154A (17) (knowingly contracting beyond the scope of the license or licenses of the licensee), but a violation of A.R.S. § 32-1154A (17) was not charged in the Registrar of Contractors’ Citation and Complaint. While contracting outside the scope of one’s license can also be a wrongful act pursuant to A.R.S. § 32-1154A (7), no evidence of a substantial injury to Ms. Adams, arising from this violation, was presented. e. Undisputed testimony was presented that an agent of Cornerstone admitted that the architectural plans for Ms. Adam’s residence called for a 4-ton air conditioner and a 2 ton air-conditioner to be matched up to the existing air distribution system, yet Cornerstone installed two 3-ton units without the knowledge and consent of Ms. Adams. Ms. Adams testified that Cornerstone’s actions have caused an unbalanced air flow throughout the home resulting in disparities in temperatures in various rooms. This tribunal concludes that Cornerstone’s actions are in violation of A.R.S. § 32-1154A (2). f. Ms. Adams testified that her garage slab is cracking. Inspector Cruz, during his jobsite inspection, observed compound and diagonal cracking. In his Corrective Work Order dated August 30, 2007, Inspector Cruz ordered Cornerstone to “determine cause and make necessary [repairs].” Ms. Adams testified Cornerstone has not taken any corrective action. This tribunal finds Cornerstone failed to take corrective action in violation of A.R.S. § 32-1154A (23). g. Ms. Adams testified her driveway has cracks. Inspector Cruz testified that the cracks are within acceptable workmanship tolerances and required no action by Cornerstone. No further evidence regarding the cracks was presented by Ms. Adams. This tribunal finds no violation of A.R.S. § 32-1154A as it pertains to cracks in the Ms. Adams’ driveway. h. Ms. Adams testified she has observed water ponding in the garage and on the patio. Inspector Cruz testified that he observed water staining in the single car garage at the left of the overhead door and rear patio extension by the master bedroom area that is due to roof water run off from the metal valley. Inspector Cruz testified that the ponding or standing water in the garage is due to the fact that a garage is not a waterproof structure and water infiltration is likely under doors especially during driving rains. Inspector Cruz did not require any action by Cornerstone. Ms. Adams presented no further evidence regarding the ponding water. This tribunal finds no violation of A.R.S. § 32-1154A as it pertains to ponding water. i. Ms. Adams testified that reinforcing steel bar (“rebar”) has not been placed in the block property-line fence as specified or as required by building code. Ms. Adams also testified that the fence moves back and forth when shaken. Inspector Cruz testified that due to the fence being finished, he was unable to determine if rebar had been installed. Inspector Cruz also testified that the fence is a post and panel fence and some movement is normal. Inspector Cruz testified that he tested several areas and the movement was not excessive. Ms. Adams presented no further evidence regarding the fence. This tribunal finds no violation of A.R.S. § 32-1154A as it pertains to the fence. j. Ms. Adams testified that as a result of one of her earlier complaints through the Registrar of Contractors, Cornerstone had been ordered to repair cracks in the exterior stucco finish of her house. Ms. Adams testified that Cornerstone’s workers filled the cracks with an epoxy- like substance, but failed to repaint the walls after making repairs. Inspector Cruz testified that when he made his jobsite inspection, due to the lighting he could not discern any differences in colors or shades. This tribunal finds that Cornerstone’s failure to paint the exterior walls where cracks were repaired is a violation of A.R.S. § 32-1154A (3) (namely, A.A.C. R9-4-108). k. Ms. Adams testified that exterior exposed wood trim has not been painted in various areas of the home. Inspector Cruz testified that the unpainted wood trim is at the interior of Ms. Adams’ garage overhead doors. Inspector Cruz, in his Corrective Work Order dated August 30, 2007, ordered Cornerstone to “correct in accordance with jobsite agreement.” Ms. Adams testified Cornerstone has not taken any corrective action. This tribunal finds Cornerstone failed to take corrective action in violation of A.R.S. § 32-1154A (23).

CONCLUSIONS OF LAW In this proceeding, Ms. Adams bears the burden to prove, by a preponderance of the evidence, that Cornerstone is subject to discipline for violations of A.R.S. § 32-1154A(2), (7), (10), (14), (18), (3), (13) and/or (23) as charged by the ROC in its March 26, 2008 Citation and Complaint. See Arizona Administrative Code (“A.A.C.”) R2-19-119. 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). The Administrative Law Judge concludes that Ms. Adams met her burden of proof as to A.R.S. § 32-1154A (2), (7), (14) (3) (namely A.A.C. R4-9- 108) and (23). The Administrative Law Judge concludes that Ms. Adams has not presented evidence pertaining to, and has not met her burden of proof as to, the alleged violations of A.R.S. § 32-1154A(10), (18) and (13) (namely A.R.S. 32-1124(B)). Under A.R.S. § 32-1154(A)(2), a contractor is subject to discipline for “departure from or disregard of plans or specifications . . . in any material respect which is prejudicial to another without consent of the owner . . .” The probative, substantial, and credible evidence of record established that Cornerstone departed from plans and specifications by installing the two 3-ton air conditioning units in contravention to the plans and specifications for the home resulting in an unbalanced air flow. Therefore, the Administrative Law Judge concludes that Cornerstone violated A.R.S. § 32-1154(A)(2). Under A.R.S. § 32-1154(A)(3), a contractor is subject to discipline for “violation of any rule adopted by the registrar.” In this case, the ROC charged Cornerstone with a violation of A.A.C. R4-9-108, which, among other things, requires contractors to perform work in a professional and workmanlike manner and in accordance with any applicable building codes and professional industry standards. The Administrative Law Judge concludes, based upon the credible evidence of record, that Cornerstone failed to perform its work at Ms. Adams’ home in a professional and workmanlike manner as evidenced by the cracking in the concrete garage slab; exposed unpainted wood, and failure to repaint walls where stucco cracks have been repaired. Therefore, the Administrative Law Judge concludes that Cornerstone violated A.R.S. § 32-1154(A)(3). Under A.R.S. § 32-1154(A)(23), a contractor is subject to discipline for “failure to take appropriate corrective action . . . without valid justification within a reasonable period of time after receiving a written directive from the registrar.” The evidence demonstrated that a jobsite inspection by the appointed inspector for the ROC was held, pursuant to which the ROC issued Cornerstone a CWO directing it to accomplish specified remedial work within a stated period of time. The credible evidence of record established that Cornerstone failed to perform the required corrective work pursuant to the CWO without valid justification, as Cornerstone failed to “determine cause and make necessary [repairs]” to the cracks in the garage floor slab and failed to “correct [the unpainted exposed wood] in accordance with jobsite agreement.” Therefore, the Administrative Law Judge concludes that Cornerstone violated A.R.S. § 32- 1154(A) (23). Under A.R.S. § 32-1154(A)(14), a contractor is subject to discipline for “knowingly entering into a contract with a contractor for work to be performed for which a license is required with a person not duly licensed in the required classification.” The probative, substantial, and credible evidence of record established that Cornerstone hired WM Development, who Inspector Cruz testified is not properly licensed to do roof repairs, to perform roof repairs on Ms. Adams’ roof. Therefore, the Administrative Law Judge concludes that Cornerstone violated A.R.S. § 32- 1154(A) (14). 9. Under A.R.S. § 32-1154(A) (7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The Administrative Law Judge concludes, based on the weight of the credible evidence presented at hearing, that Cornerstone committed wrongful acts that substantially injured Ms. Adams by failing to properly perform the concrete work pertaining to Complainant’s garage floor in a professional and workmanlike manner; by failing to comply with the CWO; and by departing from plans and specifications for air conditioning system. Thus, this tribunal concludes that Ms. Adams established that Cornerstone violated A.R.S. § 32-1154(A) (7). 10. Based on the foregoing, it is appropriate for the ROC to impose discipline against Cornerstone’s Class B- license. 11. A review of the Registrar of Contractors' licensing database shows nine other open complaints pending against Cornerstone. Several of these complaints have recently come before the Office of Administrative Hearings for hearing. They have been adjudicated and suspensions and revocations have been recommended to the Registrar of Contractors in those cases. 12. Upon consideration of all of the facts and circumstances presented by this case, the Administrative Law Judge concludes that the ROC should revoke Cornerstone’s Class B- license. RECOMMENDED ORDER[2] Based on the foregoing, the Administrative Law Judge makes the following Recommended Order: On the effective date of the Order entered in this matter, Cornerstone’s Class B- license (No. 130985) shall be REVOKED. It is further recommended, in addition to the above-provided discipline Cornerstone shall pay the sum of $500.00 to the ROC by way of a civil penalty pursuant to A.R.S. § 32-1154(D). No future license shall be issued to any entity consisting of persons associated with Cornerstone, as defined in A.R.S. § 32-1101A(5), unless payment of any outstanding prior civil penalty is tendered.

Done this day, October 9, 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, Acting Director 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________

----------------------- [1] See A.A.C. R9-4-103 and R9-4-104 [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.

-----------------------

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