ALJDEC decisions subject to certification as final

09F-2748-ROC · Registrar of Contractors · 2009-10-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 22, 2009 at 8:00 a.m. APPEARANCES: Complainant Iver Sondrol appeared on his and his wife’s behalf; Respondent Carlson Homes Construction LLC appeared through Gary Carlson, its Qualifying Party and Managing Member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On January 19, 2002, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC171734, Class B- for general residential contracting to Respondent Carlson Homes Construction LLC, a limited liability company. Gary Leslie Carlson is Respondent’s qualifying party. On November 7, 2008, the Registrar received a complaint against Respondent’s license from Complainants Iver and Karen Sondrol, which alleged five specific workmanship deficiencies in the house that Respondent had constructed for them in north Scottsdale. According to the complaint, Respondent had contracted to construct the house on March 15, 2004, Complainants had moved into the house on December 19, 2006, and the contract amount, which Complainants had paid in full, was $1,083,196.00. The Registrar assigned the complaint to Inspector Scott Deering for investigation. Inspector Deering performed a jobsite inspection and, on January 14, 2009, issued a Corrective Work Order (“CWO”) to Respondent, which quoted Complainants’ specific complaints followed by Inspector Deering’s opinions on the specific items of workmanship, in relevant part as follows: Complaint # 1 – Kitchen ceiling over island finished poorly. You can see the outline of the sheetrock. The entire ceiling may need to be replaced instead of another patch job.

At the time of the jobsite inspection the kitchen ceiling drywall appeared to be within the Registrar of Contractors workmanship standards. No action required of contractor.

Complaint # 2 – Wall in hallway from living room to powder room on left side has bumps where contractor cut holes to install outlets under kitchen cabinets. The patches to the wall were not smoothed out properly and need to be fixed. After seeing the result in the kitchen, this wall may need to be redone. There is also a spot in the curved wall in the living room between the kitchen entryway and the hutch in the dining area. Because of the mess with the drywall, after these repairs are complete we expect all dust to be cleaned from the windows.

No action required by the contractor.

Complaint # 3 – Stone that was used for the window sills under all windows prevents the removals of the windows if they need to be replaced due to breakage, fogging, etc. This was a design flaw that was overlooked by the contractor. The sills need to be re-engineered and redone so the windows can be removed. We received a letter from Carlson Homes stating that they would cover the cost of removing and replacing the stone that was signed by their service representative, not an officer of the company. Because Carlson Homes has lost our confidence and trust the only solution is to solve the problem now instead of relying on any of Carlson Homes promises, representations that could be unenforceable if the company is sold, the owner dies, retires or is no longer in service.

Contractor to correct by the appropriate means.

Complaint # 4 – Carlson built a mechanical room for one of our air handlers. The problem is that it couldn’t be used because through their design error there was no room for a 24” duct to come into the house. Gary Carlson told us we could now have “outside storage.” Because the door to this room was outside the walls surrounding our house we came up with the idea of cutting a hole in an inside wall by a closet area. This room was unnecessary and the extra space was not needed, so we have asked to be reimbursed for the additional cost we have incurred due to Carlson Homes [sic] mistake. We paid for unnecessary footings and foundation, outside walls and tile roof.

No action required by the contractor.

On March 12, 2009, the Registrar received Complainants’ request for hearing on complaint item nos. 1, 2, and 4. On June 17, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging A.R.S. § 32-1154(A)(2), (7), (9), (23), and (3) (namely A.A.C. R4-9-108). Respondent timely answered the Citation and Complaint, denying any statutory violation. Respondent attached to its answer Option Selection Amendment #16, which had credited Complainants $500.00 for “storage (no door, stoop or light).” Complainant Mr. Sondrol had signed Option Selection #16 on April 27, 2006. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, to schedule and to conduct a fair hearing. On August 4, 2009, the Registrar issued a Notice of Hearing on Complainant’s complaint against Respondent’s license. A hearing was held on October 22, 2009. Complainant Mr. Sondrol testified and submitted three exhibits. Respondent presented its qualifying party Mr. Carlson’s testimony. Inspector Deering also testified. Additional Hearing Evidence Inspector Deering performed a prehearing inspection on October 20, 2009. Inspector Deering testified that Complainant Mr. Sondrol stated at the prehearing inspection that Respondent had corrected to his satisfaction Complaint item #3, the stone window sills. No further evidence was presented with respect to this item. The Drywall in the Kitchen Ceiling and in the Hall Mr. Sondrol submitted a photograph of the kitchen ceiling. The Administrative Law Judge could not discern the outline of the 4’ x 8’ drywall panel in the photograph. Inspector Deering testified that he could see the outline of the drywall panel above the kitchen island. Mr. Sondrol had wanted to illuminate the panel with a flashlight, but the Registrar does not allow illumination of imperfections with artificial light, which may exaggerate the extent of the imperfections. Mr. Sondrol testified that he and his wife had spent more than $1 million for a custom home. He had expected higher standards than were evidenced by the house that Respondent had constructed. Inspector Deering testified that the Registrar’s standards for custom houses are the same as for tract houses. Inspector Deering testified that, although the outline of the drywall panel is visible, in his opinion it complies with the Registrar’s standards. Mr. Sondrol submitted a photograph of the hallway. A bright light appears to have been directed at the drywall down the hallway, which illuminated four slightly concave areas. The shadow cast by the light switch on the end of the hall nearest the light source appeared to extend four or five feet down the hallway. Inspector Deering testified that the photograph showed the hallway “painted by light.” Inspector Deering admitted that it was possible that the concave areas of the hallway had been caused by repairs to the drywall. Inspector Deering testified that, in his opinion, the drywall in the hallway complied with the Registrar’s standards. Mr. Carlson testified that it was unreasonable for Mr. Sondrol to require Respondent to repair the drywall “beyond what can be done.” The standard was whether repairs would be visible to a “casual look.” Although the drywall panel in the kitchen ceiling and the repairs to the drywall in the hallway might be visible to a hard look, the drywall met standards.

The Mechanical Room The layout of the model that Complainants had chosen as the basis for their house had a mechanical room in the front. Over the course of construction of Complainants’ house, changes had been made to the floor plan at the request of Complainants and of the homeowners’ association for Mirabel, where the house was located. For example, Complainants wanted the house to be larger than the model. Mr. Carlson testified that what distinguished a custom home from a tract home was the making of architectural changes, rather than the choice of finishes. Mr. Carlson testified that the mechanical room was in the original plan for the house. It did not raise the price of the house. Having a mechanical room for HVAC equipment makes it more accessible than having the equipment on the roof. Mr. Carlson testified that he did not know where the optimal placement of the HVAC system would be when Respondent constructed the house to have a mechanical room. At the beginning of construction of Complainants’ house, Mr. Carlson thought the mechanical room would be functional. Mr. Carlson testified that, when the house was ready for the installation of the HVAC system, Respondent consulted its HVAC subcontractor Chas Roberts about the functioning of the HVAC system. When Chas Roberts reviewed the plan, it determined that the HVAC system would be more efficient if it were placed on the roof. Mr. Sondrol testified that Respondent could not put the HVAC equipment in the mechanical room due to a design flaw. According to Mr. Sondrol, there is no room in the attic for a 2’ square duct and the duct would have to go over a parapet wall. After the decision was made to place the HVAC system on the roof, Complainants or Respondent decided to convert the mechanical room into a storage room. The mechanical room is adjacent to a linen closet, at the back of which an interior door was placed that provided access to the space that had been planned to be the mechanical room. Mr. Sondrol testified that he has no use for exterior storage or for additional interior storage. Mr. Sondrol calculated that Complainants should have been given at least a $3,000 credit for the loss of the planned mechanical room and addition of unnecessary storage, based on the cost of the roof tile, the additional slab, and other materials. Mr. Carlson testified that Complainants had been given a credit for the exterior door, vent, and exterior light when the decision had been made to place the HVAC system on the roof because it would be more efficient under that configuration. Mr. Carlson testified that it is possible that the house would have been more expensive to build if the trusses had to be modified and other changes had to be made to eliminate the mechanical room.

Mr. Carlson testified that the mechanical room provided an additional popout and additional articulation to the exterior of the front of Complainants’ house. It is possible that the Mirabel Homeowners’ Association would not have approved the plans without the mechanical room. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[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] Complainants admitted that Respondent timely complied with the CWO with respect to repair of the stone window sills, which was the only item of complaint that the CWO directed Respondent to take action to correct. Therefore Complainants have not borne their burden to establish that Respondent violated A.R.S. § 32-1154(A)(23).[5] The portion of the plans that Complainants submitted showed a small room, which could have been for storage or for the HVAC equipment. Complainants did not argue that the mechanical room should not have been built, only that they should have been charged less for the house or credited once it had been built and was not used for the HVAC equipment. The legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages.[6] The Registrar may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation cannot or can no longer be remedied by corrective work.[7] Complainants have not established that the house could have been built more cheaply or at all without the area that was planned for the mechanical room but later became storage. Complainants have not established that the placement of the HVAC system on the roof, rather than in the mechanical room, resulted from Respondent’s error, as opposed to a considered decision based on greater efficiency, as Mr. Carlson testified. Complainants therefore have not borne their burden to establish that Respondent violated A.R.S. § 32-1154(A)(2)[8] in the placement of the mechanical room or A.R.S. § 32-1154(A)(9)[9] in failing to provide any additional refund based on the nonfunctional mechanical room. The Registrar’s standards do not require perfection but merely construction within allowable tolerances. Complainants have not established that the drywall ceiling above the kitchen island or the drywall down the hallway does not comply with the Registrar’s workmanship standards. Complainants therefore have not borne their burden to establish that Respondent violated A.R.S. § 32-1154(A)(7)[10] and (3)[11] in its construction and repairs to these areas of drywall in Complainants’ house. 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 No. 09-2748 against Carlson Homes Construction LLC’s License No. ROC171734, 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 30, 2009.

______________________________________ Diane Mihalsky 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] 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] See A.A.C. R2-19-119(B)(2). [4] Black’s Law Dictionary at page 1220 (8th ed. 1999). [5] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure 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 a written directive from the registrar.” [6] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984).

[7] 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).

[8] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[d]eparture from or disregard of plans or specifications or any building codes of any state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.” [9] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” [10] 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.” [11] 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.”

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

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