ALJDEC decisions subject to certification as final

09F-2629W-ROC · Registrar of Contractors · 2009-10-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 14, 2009 at 8:00 a.m. APPEARANCES: Complainant Steven T. Pochmara appeared telephonically on his own behalf; Respondents CHI Construction Company and D.R. Horton Inc. appeared through Robert E. Coltin, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On January 22, 1986, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC064532, Class B- for residential general contracting to Respondent C H I Construction Company (“CHI”), a corporation. On January 31, 1992, the Registrar issued License No. ROC092319, Class B- for residential general contracting to Respondent D R Horton Inc. (“DHI”), a corporation. On November 4, 2008, the Registrar received a complaint against Respondents’ licenses from Complainant Steven T. Pochmara, which alleged that Respondents had failed to pay him $2,694.78 for “[i]nterior cleaning of the walls, ceilings and ductwork as a result of smoke and fire damage.” According to the complaint, Trauma Emergency Clean Services, LLC (“TECS”) had performed work “to clean walls, ceilings and ductwork that were damaged as a result of smoke and fire” on July 4, 2008. The Registrar sent a copy of the complaint to Respondents for their immediate attention. On November 25, 2008, the Registrar received Complainant’s request for hearing. Complainant stated that, “[t]en calendar days have passed and I have not heard from the Respondent.” On May 15, 2009, the Registrar issued a Citation and Complaint against Respondents’ licenses, charging A.R.S. § 32-1154(3), (7), and (11). On May 26, 2009, the Registrar received Respondents’ written answer to the Citation and Complaint, which denied any statutory violation. With respect to Respondent DHI, the answer affirmatively alleged in relevant part as follows: Respondent [DHI] had no involvement whatsoever in the construction or sale of Complainant’s home and should not be party to this Citation and Complaint. Respondents CHI and DHI are both affiliates of Continental Homes, Inc., dba D.R. Horton – Continental Series (“Continental”), which sold the home to Complainant. DHI, CHI and Continental are all separate legal entities. CHI has served at all times as the licensed general contractor responsible for the construction of Complainant’s home. This (including CHI’s ROC license number) was fully disclosed in the purchase and sale documents with Complainant. (See, e.g., top of page 1 and section 13 of Complainant’s Purchase Contract/Escrow Instructions dated November 18, 2007, attached hereto as Exhibit A.) CHI was also clearly identified as the subject contractor in correspondence among the Registrar’s Office, Complainant and CHI prior to the issuance of the Citation and Complaint. . . .

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 October 14, 2009. Complainant presented the testimony of three witnesses: (1) Himself, telephonically; (2) Stefanie Billington, his former tenant at the subject property; and (3) Joseph Trasser, the Director of Operations at TECS. Complainant also submitted 26 exhibits. Respondents presented the testimony of three witnesses: (1) Steve Bedwell, CHI’s Customer Service Representative, who was involved at the early stages of CHI’s investigation and repair of the damage caused by the fire; (2) Terry Brenner, CHI’s Customer Service Representative, who was primarily responsible for CHI’s investigation and repair of the damage of the fire; and (3) Tom Null, CHI’s Customer Service Manager. Respondents also submitted 13 exhibits. At the beginning of the hearing, Respondents moved to dismiss the complaint against DHI based on the grounds contained in their answer. Complainant did not oppose the motion and the Administrative Law Judge informed the parties that she would recommend that Case No. 09-2629W against DHI’s license be dismissed. Hearing Evidence The close of escrow on Complainant’s house was February 8, 2008. After the close of escrow, Complainant rented the house to Ms. Billington, who subsequently moved into the house with her young son. On July 1, 2008, Ms. Billington got home from work at approximately 8:30 or 9:00 p.m. Her garage door opener did not work and, when she entered the house, she realized the house did not have electricity. Ms. Billington also smelled smoke. Ms. Billington had picked up her 9-year-old son at her mother’s on her way home from work. Ms. Billington’s son has severe asthma. Ms. Billington’s son’s asthma attacks require visits to the emergency room about twice a year. She was very concerned about the effect of the smoke on his health. On July 1, 2008, Ms. Billington called Respondent and her landlord, Complainant, and reported the power outage and smell of smoke at the house. Ms. Billington then returned to her mother’s house with her son to spend the remainder of the night. At approximately 7:30 a.m. on July 2, 2008, CHI’s Customer Service Representative Mr. Bedwell, Manager Victor Osborne, and two electricians from New Electric met Ms. Billington at the house. Complainant’s house was in Customer Service Representative Mr. Brenner’s territory, but that morning he was scheduled to perform a one-year warranty inspection with another of CHI’s customers. Mr. Bedwell testified that, at first, he thought the fire had been caused by a faulty electrical outlet. CHI determined later that the fire had been caused by a lathe staple from the exterior stucco that had penetrated the electrical wires. The fire had caused an electrical short, which had tripped the breaker and shut off power to the house. Photographs of the house that CHI’s employees had taken on July 2, 2008 were submitted. The electrical fire had occurred in an outlet on the rear wall of the house, in the family room, underneath a large window. The only visible damages were to four areas, as follows: (1) An interior area approximately 4” long and 3” wide next to the electrical box, where the fire had scorched the interior drywall; (2) A darkened area inside the wall, between the interior drywall and exterior stucco; (3) An exterior area three or four feet long and approximately 18” high, where the fire had scorched the exterior stucco underneath the window; and (4) A small area on the patio. Mr. Bedwell testified the damage was consistent with a “flash fire,” which had “followed the path of least resistance” from the interior to outside, through the metal weep screed plate underneath the stucco. After the breaker shut off electricity, the fire died. Mr. Bedwell testified that, since smoke rises, if there had been a sustained fire, he would have expected fire or smoke damage to the ceiling. There was no visible fire damage to the interior ceiling of the home, the carpet, the wooden studs in the wall, or the couch that had been placed right next to the outlet. The majority of the visible damage was to the exterior of the house. On July 2, 2008, Mr. Brenner also arrived at the house to inspect the damage. He testified that there was “a smoke odor” at the back of the house, which he attributed to the paper on the drywall and the romex in the outlet being scorched by the “flash fire.” Mr. Brenner testified that Ms. Billington told him that her son was asthmatic. On July 2, 2008, Mr. Brenner issued the following work orders to repair Complainant’s house: (1) Electric, to determine the cause of the fire and repair the electrical on July 2, 2008; (2) Drywall, to repair the hole that the electricians had cut to repair the electrical, which Mr. Brenner scheduled to be completed by July 7, 2008; (3) Stucco, to replace the exterior scorched stucco, which Mr. Brenner scheduled to be completed by July 7, 2008; (4) Paint, to paint the interior drywall and exterior stucco repairs, which Mr. Brenner scheduled to be completed by July 9, 2008; (5) Flooring, to tack the carpet back down along the exterior wall because it had to be pulled back to allow the electricians to cut out the drywall, which Mr. Brenner scheduled to be completed on July 9, 2009; and (6) Flooring, to clean the carpet in the family room, where the fire had occurred, which Mr. Brenner scheduled to be completed on July 15, 2008. On July 2, 2008, the electricians cut the sheetrock around the outlet, repaired the electrical line, and restored electrical power to the house. CHI sent copies of the work orders to Complainant. Mr. Brenner testified that he had arranged to provide access to the house to the subcontractors so that Ms. Billington would not have to miss another day of work. CHI compensated Ms. Billington for the day she missed from work to meet with CHI’s employees on July 2, 2008. Mr. Brenner testified that there was no damage to the carpet. It did not need to be replaced. Mr. Brenner testified that Ms. Billington complained that she could not get the smell of smoke out of the sofa and love seat that she had placed in the family room. CHI arranged to have the sofa and love seat cleaned. Mr. Brenner testified that all the work that CHI did at the house was warranty work. CHI did not charge Complainant or Ms. Billington for this work. Mr. Brenner testified that, although the back porch of the house was power-washed, it did not come clean because the fire had caused a small plastic table that had been on the back porch to melt. Respondent paid a subcontractor to apply an epoxy coating to the porch to the cover the burn marks. The epoxy coating has a lifetime warranty. CHI also reimbursed Ms. Billington for the cost of the table. Mr. Brenner testified that he was required to “go through steps” in scheduling the repairs. For example, the drywall repairs required at least two days. CHI did not want to leave the house completely open to the outside, so the interior drywall repairs had to be completed before the exterior stucco repairs were performed. The painting could not be performed until the drywall and stucco repairs were completed. The carpet could not be tacked until the painting was done. Mr. Brenner testified that, because he considered the situation to be an emergency, he attempted to schedule all necessary repairs within five business days. The July 4th holiday complicated scheduling. Even for emergencies, CHI had to “follow procedures.” Mr. Brenner testified that he understood that Ms. Billington was satisfied with the scheduled repairs. Ms. Billington testified that she took her son to the emergency room for an asthma attack on July 2, 2008. On July 3, 2008, Ms. Billington called Mr. Trasser. Mr. Trasser was “a friend of the family” and “the only remediation person” that she knew. On July 4, 2008, Mr. Trasser brought his crew from TECS to clean the house. Mr. Trasser testified that he and his crew wiped down “all hard surfaces” in the house and cleaned the air ducts. Mr. Trasser testified that TECS would have had to get a proposal from a subprovider to clean the upholstered surfaces, beds, carpets, and other “soft surfaces.” Although Mr. Trasser would expect such “soft surfaces” to have absorbed smoke and soot, TECS did not clean the “soft surfaces” due to a “cost issue.” Mr. Trasser showed numerous paper towels, which he testified that he had rubbed on various vertical and horizontal surfaces in Complainant’s house, including various walls, a pot shelf or niche, the upper side of ceiling fan blades, the top of the refrigerator, and floor grout. The towels showed a faint brownish substance. Mr. Trasser testified that soot is darker than the kind of dirt that is found in Maricopa, where the house is located. Moreover, he would not expect a house that was only a few months old to have any buildup of dust or dirt. Mr. Trasser admitted on cross-examination that the substance on the paper towel that had been rubbed on the pot shelf or niche was more likely than not dirt, because it was a lighter brown. Mr. Trasser also showed the air filters, which he testified were from the air conditioning return in the ceiling, which showed some brown substance. Mr. Trasser testified that Ms. Billington told him that she had replaced the filters shortly before the fire. Mr. Trasser also testified that his employees sprayed Bins, a paint designed to absorb smoke, in the hole in the drywall that the electricians had cut out. Mr. Trasser submitted a copy of his note to CHI, as follows: We paint sealed with Bins. We know you’ll pull most of this out, we just wanted to seal up as much odor as possible.

Mr. Trasser prepared an invoice of TECS’ employees’ cleanup of Complainant’s house, which he dated July 4, 2008, which Complainant had attached to his complaint to the Registrar. The invoice totaled $2,694.98, based on the following four items: (1) $2,100.00 for four technicians to spend six hours each on “fire cleanup”; (2) $250.00 for duct cleaning; (3) $210.00 for “10% expense for supplies and overhead”; and $134.78 for sales tax. Ms. Billing showed the invoice to Mr. Brenner. She testified that, originally, Mr. Brenner told her that CHI would repaint the whole house and replace the carpet. She also testified that, when she told Mr. Brenner that she was going to get a cleaning company, he told her CHI would pay the bill. Mr. Brenner testified that, when Ms. Billington showed him TECS’ July 4, 2008 invoice, he thought it was a proposal. He testified that he told Ms. Billington that he did not have authority to hire the cleaning crew that she requested but that he “would turn the estimate into the main office.” Mr. Brenner testified that, after July 4, 2008, CHI wiped rags on the surfaces in the vicinity of where the fire had occurred. Because the rags stayed clean, CHI concluded that no further cleaning was necessary. Complainant and Mr. Trasser both testified that TECS has not been paid for the work done at Complainant’s house on July 4, 2008. Mr. Null testified that, if cleaning is necessary to complete warranty work, CHI will use its own cleaning crew and oversee their work. Based on the scope of work, he believes that TECS’ charges were excessive. Mr. Null testified that CHI uses a cleaning company to clean jobsites three times during construction and once more before the closing. The cost of this service is approximately $300/house. Mr. Null testified that, if there is smoke damage or soot, CHI uses Precision Remediation Services, an environmentalist, “to make sure that the air quality is good.” The cost of this service, “on the high side,” is $1,000 to $1,200. Mr. Null testified that CHI will pay for other accommodations for residents “on a case-by-case basis” if it determines that their houses are not habitable. CHI pays $150/day for alternative accommodations. No evidence was presented that Ms. Billington ever requested or that CHI ever considered providing alternative accommodations in this case. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s contracting law violations by a preponderance of the evidence.[2] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[3] 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.”[4] The legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages.[5] The Registrar may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation can no longer be remedied by corrective work.[6] Restitution may be appropriate when the contractor does not immediately respond to a property owner’s complaint and the workmanship deficiency is such that the property owner is justified in hiring another contractor to remedy a health or safety issue or to mitigate his damages.[7] Ms. Billington’s testimony about extensive smoke damage is not credible in light of the photographs of the minimal visible damage that occurred and Mr. Trasser’s admission that at least one of the paper towels showed the kind of dirt and dust that accumulates quickly in a desert climate. Mr. Trasser’s decision to forego any cleaning of the upholstery, carpets, and other “soft surfaces” in Complainant’s house due to a “cost issue,” even though he would expect such surfaces to absorb soot and smoke, calls into question his motivation to so thoroughly clean the “hard surfaces.” Therefore, Complainant has not established that the rest of the paper towels showed any appreciable amount of soot, as opposed to dirt and dust. Although Ms. Billington’s concern about her son’s health is not unreasonable, the only smoke smell that he had been exposed to when Ms. Billington took him to the emergency room was the brief exposure on July 1, 2008, when she discovered the evidence of fire. Complainant has not established that Ms. Billington’s son was harmed by the brief exposure or that TECS’ cleaning efforts were necessary to prevent further exposure. CHI established that its remediation of the fire damage was timely and appropriate. Complainant has not borne his burden to establish that Respondent CHI violated A.R.S. § 32-1154(A) (3),[8] (7),[9] and (11)[10] its failure to pay TECS’ July 4, 2008 invoice in the amount of $2,694.78. As noted above, no evidence was presented at the hearing to establish Respondent’s DHI’s responsibility for any of the charged statutory violations. 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 Case Nos. 09-2629 and 09-2629W against Respondent CHI Construction Company’s License No. ROC064532, Class B- and Respondent B R Horton Inc.’s License No. 092319, Class B-. 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, October 19, 2009.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

By ___________________________ ----------------------- [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] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [4] Black’s Law Dictionary at page 1220 (8th ed. 1999). [5] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984). [6] See A.R.S. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (Ct. App. 1990). [7] In Sunpower, the Arizona Court of Appeals upheld the Registrar’s power to order a contractor to return to a property owner the cost of a solar heater where, although the contractor had made several attempts to repair the heater, he could not make it provide a habitable degree of heat. See id. [8] 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.” [9] 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.” [10] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay . . . .”

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