ALJDEC decisions subject to certification as final

09F-2675-ROC · Registrar of Contractors · 2009-10-13

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 6, 2009.

APPEARANCES: >The Complainant appeared in his own behalf. >The Respondent appeared through Alan D. House, its qualifying party and a member of the LLC entity.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. Respondent had commenced construction of a customized residence for individual prospective homeowners and had proceeded to a stage of completion that was somewhat more than 60%.

2. The original prospective homeowners had stopped making payments under their construction loan with a lending bank and the home went into foreclosure. Respondent and its numerous subcontractors were forced to cease further construction work on the jobsite.

3. Complainant purchased the property from the lending bank following the foreclosure action, ultimately occupying the dwelling several months later after causing the completion of the unfinished construction work and also causing the correction of certain code violations identified by the local building authority so as to enable the issuance of a Certificate of Occupancy.

4. On November 5, 2008, Complainant filed his complaint with the Registrar of Contractors, enumerating four separate items alleged to be deficiencies for which Respondent was responsible. However, at the time of filing his complaint and even prior to the jobsite visit by the Registrar’s assigned Inspector on November 24, 2008, Complainant had already corrected three out of the four complaint items at his own expense.

5. The credible testimony tended to indicate that Respondent had been contacted by Complainant for possible further assistance in completing the project, but had communicated its position to Complainant that the foreclosure action had effectively deprived Respondent of its otherwise applicable entitlements under the construction contract with the prior owners and had also terminated any continuing interest or responsibilities of Respondent with respect to completing or correcting items of unfinished or even defective items of construction.

6. Under all the circumstances and in light of the above-described communicated position of Respondent, Complainant is found to have been justified in resorting to other contractors to achieve the full proper use and enjoyment of his property. More specifically, the correction by Complainant of the three complaint items prior to the Inspector’s jobsite visit is not found to have waived any administrative rights or remedies otherwise available to Complainant against Respondent, since two of the three items had reportedly been confirmed as building code violations requiring remedial measures prior to obtaining a Certificate of Occupancy, thereby allowing Complainant to move onto the property.

7. In this action, Complainant is seeking restitution for the incurred expenses in correcting three of the complaint items. The remaining item of complaint related to the functioning and performance of a re-circulating pump to deliver hot water from the heater to the master bathroom.

8. The Registrar’s Inspector was unable to conclude that deficiencies had existed in those items of complaint that had been subjects of the corrective work arranged for by Complainant before the jobsite inspection, but it was determined that Respondent was responsible for the substandard and unacceptable performance of the re-circulating pump that resulted in excessive time of delivery of hot water to the master bathroom and also the pump itself was observed to become and remain excessively hot when operating. The issued written Corrective Work Order directed Respondent to rectify that complaint item by appropriate means.

9. Although Respondent was shown to have disagreed with the Inspector’s directive addressing the re-circulating pump, it did subsequently, although somewhat belatedly, arrange for the performance of appropriate and effective remedial work though a licensed specialty plumbing subcontractor whose charges of $450.00 were fully paid by Respondent. The delay was further shown to have been attributable to Respondent’s legitimate efforts to make contact with and demands upon the originally utilized plumbing subcontractor who had since gone out of business.

10. Construction is not a perfect science, and it is not unusual for items to require attention by way of correction, replacement or adjustment – often even more than once. No finding of a contracting law violation is supportable unless and until, after notice and a reasonable opportunity is given, a licensed contractor fails to rectify construction deficiencies.

11. Under all the circumstances in this case, it must be held that Respondent’s subsequent remedial work efforts with respect to the re- circulating pump operation have

effectively rectified the previously experienced workmanship problems and have also substantially complied with the spirit and intent of the terms contained in the Inspector’s written directive. Nor is Respondent found obligated to reimburse Complainant for any costs incurred with respect to the re-circulating pump problem for the investigation and recommendations by other contractors or inspectors as part of these administrative disciplinary proceedings.

12. The swimming pool installed on the property while Respondent was serving as the project’s general contractor was to and did contain a negative edge feature. However, a secondary fence that was shown on the applicable plans and specifications was not ultimately constructed resulting in a necessity for the inclusion of a barrier negative edge that was to be higher than the standard negative edge actually provided by Respondent through the pool subcontractor.

13. The local building authority determined that a code violation existed and that the pool must contain an appropriate barrier negative edge. Without any form of advance notification to Respondent, Complainant concluded arrangements with the same original pool subcontractor for the demolition of the constructed standard negative edge and the substitution of the required barrier negative edge. Other pool changes and improvements were included within these arrangements, and the portion of the overall cost price attributable to the negative edge remedial work was shown to be in the sum of $5,000.00.

14. The premature termination of the Respondent’s jobsite functions is found to have effectively eliminated any opportunity for Respondent to cause the subsequent construction of the secondary fencing, which if placed near to the pool’s perimeter would have enabled the pool structure to pass local code inspections with the standard negative edge already in place. Under all the circumstances, Respondent is not found to be obligated to pay or share in the costs incurred by Complainant for the demolition and reconstruction work relating to the pool’s negative edge feature.

15. A different result is found appropriate with respect to another item of complaint also rectified by or on behalf of Complainant prior to the Registrar’s jobsite inspection. The view fence placed upon a block retaining wall around the pool was shown to contain approximately five sections of wrought-iron fencing that were three-feet in height, although applicable building code provisions appeared to require a minimum height of four-feet. The credible testimonial and documentary evidence revealed that this potential code violation was brought to Respondent’s attention at the time of the fence’s construction, but that Respondent declined to authorize and complete remedial measures, even confirming such position in a signed document in the nature of an advance disclaimer transmitted by the selected specialty fencing subcontractor who had relayed to Respondent the notice and advice as to the probability of encountering building code violation problems.

16. Motivated once again by a desire and need to clear all code violations and commence occupancy of his home, Complainant concluded arrangements with the fencing specialty subcontractor for the removal of the three-foot high view fencing sections and the replacement of each of such sections with four-foot high view fencing, incurring a total expense of $1,425.00 for such work. Since the charged and paid sum for the fencing corrections was not shown to have been arbitrary or unreasonable, it is further determined that Respondent is obligated to reimburse Complainant for the aforesaid incurred corrective fencing work expenses.

17. The final item of complaint related to the subsequent discovery that a sewage pipe from the home to the City sewer location had a two-foot long missing section, thereby not enabling household wastes to be transported away from the residence as intended, instead to be deposited in the nearby yard and backing up the toilets in the home. This condition with the missing pipe connection was allowed to remain underground and not visible on the property. Although it is possible and even probable that this unacceptable and unhealthy condition may well have been realized

and corrected as part of the completion duties of Respondent if its involvement with the home’s construction had not ceased, it was nevertheless incumbent upon Respondent to assure that all underground piping was properly connected or alternatively to leave any unconnected piping fully visible and identified.

18. Complainant was shown to have incurred expenses to rectify the sewage piping problems in a total amount of $350.00. Respondent is found obligated to reimburse Complainant for these incurred costs.

19. Respondent’s actions or omissions in allowing the view fencing to remain at an impermissible height and in allowing the sewage piping to remain unconnected or not readily visible are found not only to be material and prejudicial deviations from applicable building code requirements but also to reflect adversely upon Respondent’s workmanship. Additionally, the overall course of non-responsive conduct on the part of or attributable to Respondent is further determined to constitute a wrongful (but not fraudulent) act resulting in substantial pecuniary damage to Complainant.

20. It is not a proper function of either the Office of Administrative Hearings or the Registrar of Contractors to adjudicate and award money damages which must be recovered, if at all, through pursuit of a civil court action, the Registrar is empowered by statute to impose reasonable conditions which may serve to reduce or eliminate any otherwise appropriate disciplinary penalties for proven violations of the State’s contracting laws. Whenever the performance of further corrective or remedial measures on a jobsite by the original contractor is no longer warranted or desired, the inclusion of a condition in the nature of restitution, total or partial, is fully appropriate and equitably justified. Such authorization to provide for restitution from a contractor to a prevailing party in an administrative action has been legally upheld in Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (1990), and subsequently was expressly confirmed by the statutory enactment of A.R.S. §32-

1156.01. In this way, a Complainant in an administrative action who has sustained the burden of proving contracting law violations does not have to await the outcome of protracted civil litigation in order to recover at least a portion of a demonstrated loss and, of equal or perhaps greater significance, a licensed contractor/Respondent is given the means to control, to some extent, the severity of any otherwise appropriate disciplinary penalty.

21. In this case, it is found and determined that the inclusion in the Registrar’s Order of a payment condition in the nature of partial restitution is fully warranted, which condition, if timely complied with by Respondent, should wholly eliminate any otherwise appropriate disciplinary penalties against Respondent’s contracting license. The quantum of the monetary condition should be equal to the combined aggregate sum of $1,775.00, representing the total of expenses incurred by Complainant for rectifying the problems experienced with respect to both the view fencing ($1,425.00) and the sewage piping ($350.00).

CONCLUSIONS OF LAW

1. At these administrative hearings, the complaining party generally has the burden of proof, Vazzano v. Superior Court, 74 Ariz. 369, 249 P.2d 837 (1952) and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (1996). See also Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (1985); Utah Construction Company v. Berg, 68 Ariz. 285, 205 P. 2d 367, (1949); Rule R2-19-119, A.A.C. 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). 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.” Black's Law Dictionary, 1220 (8th ed. 1999).

2. The evidence of record, as presented at the administrative hearing, adequately established that Respondent has violated the provisions of §32-1154(A)(2), (7) and (3); namely, Rule R4-9-108. However, no violations by Respondent of the provisions of §32-1154(A)(23) were sufficiently proven hereunder.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order, that Respondent’s Class B- license be suspended until the Registrar receives written proof that Respondent has paid or tendered the amount of $1,775.00 to Complainant.

It is further recommended that if written proof is filed with the Registrar confirming that Respondent has paid or tended the above-described monetary sum to Complainant on or before this Order’s effective date, then no suspension of Respondent’s license shall be imposed, but instead, the entire Citation and Complaint in Case Number 09-2673 shall be closed.

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 will be forty (40) days from the date of that certification.

Dated: October 14, 2009. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

William A Mundell, Director Registrar of Contractors Legal Department 3838 North Central Avenue (Suite 400) Phoenix, AZ 85012 - 1906 -----------------------

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