ALJDEC decisions subject to certification as final

09F-4209-ROC · Registrar of Contractors · 2009-11-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 5, 2009 at 8:00 a.m. APPEARANCES: Complainant Patrick Murphy appeared through Monica A. Limón-Wynn, Esq., Snell & Wilmer, LLP; Respondent Arizona Springs Pools LLC appeared through Gloria Regensberg, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On December 21, 1999, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC151014, Class KA-05 for dual swimming pool contracting to Respondent Arizona Springs Pools, LLC, a limited liability company. Leta Renee Watson is Respondent’s qualifying party. In December 2007, Respondent contracted to substantially remodel an existing pool at a residence owned by Complainant Patrick Murphy in Tempe, Arizona, at a total contract price of $44,543.10. Complainant does not personally reside at the residence. His daughter lives there and he uses it for entertaining. It may on occasion have been rented to others. Complainant is the head coach of the men’s baseball team at Arizona State University. His job requires him to spend some time away from Tempe. On February 8, 2008, License No. ROC151014 was canceled. On February 8, 2008, the Registrar issued License No. ROC242211, Class B-05 for residential general swimming pool contracting to Respondent. In August 2008, Complainant requested that the Registrar perform a courtesy inspection under the Building Confidence program. Complainant requested that the contractor not be present for the inspection. On September 5, 2008, the Registrar’s Inspector Ted Gerold performed a courtesy inspection, which Respondent did not attend. Inspector Gerold issued a written opinion that the pool remodel did not meet the Registrar’s workmanship standards in the following five respects: (1) Respondent had added a water feature without explaining to Complainant that the water feature would reduce water pressure to the rest of the pool; (2) The pool water was not being circulated; (3) Respondent had covered up the existing pop ups without explaining to Complainant that the modification “changes the dynamics of what the existing equipment can provide”; (4) There was a leak at the pump equipment line that Respondent had installed; and (5) There were “unacceptable repairs of deck cracks & failed coating.” On February 2, 2009, the Registrar received a complaint against Respondent’s license from Complainant, which alleged that Respondent had committed fourteen specific workmanship deficiencies or other statutory violations in the pool remodel. The Registrar assigned the complaint to Inspector Dennis Cook for investigation. Inspector Cook performed a jobsite inspection. Because Ms. Watson had miscalendared the inspection date, no one attended the jobsite inspection on Respondent’s behalf. On March 11, 2009, issued a Corrective Work Order (“CWO”) to Respondent, requiring it to perform the following corrective action within fifteen days Contractor to make the following corrections by appropriate means:

1. Complete the construction of the pool as per the contract documents. 2. Correct the poor water circulation in the pool. 3. Correct the improper operation of the self-cleaning system. 4. Obtain permitting for installation of the gas line to the pool heater and have the line installed by a properly licensed contractor. 5. Complete the installation of the pool heating system. 6. Correct the delaminated areas of the pool deck coating.

No correction is required regarding the following items:

1. Leaks at pool plumbing were corrected by others prior to the jobsite inspection. 2. It is this inspector’s opinion that the cracking of the pool decking was a pre-existing condition and the hairline cracking observed at the jobsite is within workmanship standards. 3. Installation of a barbeque and the adjacent area was not documented in the contract. 4. Pebble sheen issues were not listed in the complaint and there was insufficient evidence to confirm that the pebble sheen surface was improperly installed.

On March 27, 2009, the Registrar received Complainant’s attorney’s request that a citation be issued against Respondent’s license because it had failed to comply with the CWO. On July 15, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging A.R.S. § 32-1154(A)(2), (7), (9), (17), (23), (3) (namely A.A.C. R4-9-108), and (13) (namely A.R.S. § 32-1158). On July 24, 2009, the Registrar received Respondent’s written answer to the Citation and Complaint, which denied any statutory violation and affirmatively alleged that some of the work about which Complainant complained was beyond the scope of the parties’ contract and that Complainant had failed to provide reasonable access for Respondent to comply with the CWO. 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 November 5, 2009. Complainant presented the testimony of four witnesses: (1) Kent Decker, Complainant’s landscaper, who had negotiated the contract with Respondent on Complainant’s behalf; (2) Kenneth Kauffmann, an employee of Rain Dance Pool and Landscape, License No. ROC253237 for residential general swimming pool contracting including solar, who testified regarding the applicable standards in the swimming pool industry and the cost to bring Complainant’s pool into compliance with such standards; (3) Complainant, who testified about the formation of and Respondent’s performance of the contract; and (4) Scott Thompson, an employee of Azul Pool & Spa Services (“Azul”), License No. ROC252235, Class K-06 for dual swimming pool service and repair. Complainant also submitted 26 exhibits. Respondent’s qualifying party Ms. Watson testified on its behalf and Respondent submitted 13 exhibits. Inspector Cook also testified. Hearing Evidence Respondent’s qualifying party never spoke directly to Complainant when the parties negotiated their contract. Instead, Complainant’s landscaper Mr. Decker spoke to Complainant about what he wanted and Mr. Decker conveyed Complainant’s wishes to Ms. Watson. Approximately five years earlier, Complainant had substantially renovated a pool at another property, including the addition of a water feature that was constructed of natural stone. Complainant testified that he wanted a similar renovation to the pool at issue. The pool is large, having approximately 123 lineal feet of perimeter, 765 square feet of surface area, and 1,257 cubic feet of interior area. The pool had been built in the 1970’s. It had a large number of steps, benches, and other horizontal surfaces. Originally, the pool had a pop up cleaning system, which consisted of 29 pop ups that automatically moved water over the various surfaces in the pool to clean it. An undated proposal setting for the proposed scope of work from Respondent was submitted, which Complainant signed to accept, in relevant part as follows: Demolition Drain pool 1 $ 98.25 $ 98.25 Chip out 1,257 $ 1.18 $ 1,482.00 Tile removal 246 $ 6.55 $ 1,622.30

Interior finish: Pebble Sheen 1,257 $ 5.96 $ 7,492.35 Fitting(s) 11 $ 10.48 $ 115.28 Slurry haul 1,257 $ 393.00 $ 393.00 Brown coat 1,257 $ 1.44 $ 1,811.24 Detail on Grotto 1 $ 131.00 $ 131.00 Waterline tile 123 $ 10.74 $ 1,321.27 Skimmer(s) 2 $ 32.75 $ 65.59 Custom tile detail (Solid/1 color) 1 $ 982.50 $ 982.50 Cap/fill pop-ups 29 incl.

Deck work: Lace Cantilever 123 $ 3.60 $ 443.11 Paint existing deck 1,305 $ 2.60 $ 3,419.10 R&R exp. Joints 195 $ 7.86 $ 1,532.70 R&R deco drain 122 $ 19.75 $ 2,397.30

Boulder work 9’ tube slide w/Grotto 1 $12,877.30 $12,877.30 Bobcat access 12 $ 82.53 $ 990.36

Miscellaneous: Start-up Chem/eg. 1 $ 327.50 $ 327.50 Repaid [sic] auto fill 1 $ 131.00 $ 131.00 Supply & install 400k heater 1 $ 2,423.50 $ 2,423.50 Gas line to heater 108 $ 11.14 $ 1,202.68 Set and connect heater 1 $ 655.00 $ 655.00

$41,903.23 tax $ 2,639.90 total $44,543.14

The proposal did not show Respondent’s license number, business address, the jobsite address, Complainant’s mailing address, the date that Respondent had submitted or that Complainant had accepted the proposal, any payment schedule, or any estimated time of completion. No plans or specifications were admitted into evidence. Although Ms. Watson on behalf of Respondent and Complainant signed a written contract in early December 2007, most of the contract language was boilerplate and provided no description of the scope of the renovation work. The signed December 2007 contract did not include Respondent’s business address, Complainant’s home or business address, the estimated date of completion, or any description of the work to be performed. The December 2007 contract set forth the following payment schedule: Payments due:

Demolition $11,200.00 Deck $11,135.00 Interior $11,135.00 Completion $11,138.14

Respondent’s qualifying party testified that the proposal and the formal contract included all of the elements required by A.R.S. § 32-1158(A), except for a completion date. The boilerplate in the contract explained that Respondent does not include completion dates “due to seasonal changes.” Complainant paid Respondent a total of $46,434.71, as follows: (1) $11,200 on December 13, 2007; (2) $11,200.00 on February 21, 2008; (3) $11,200.00 on April 29, 2008; (4) $12,834.71 on July 10, 2008. No reason was given for the parties to have deviated from the payment schedule or to have paid slightly more than the contract amount. Complainant testified that he wrote a check whenever Respondent’s qualifying party asked him to. Incomplete Construction of Pool as per the Contract Documents (CWO#1) and Pebble Sheen (No action #4)

Mr. Decker testified that his pool has Pebble Sheen, which is similar to Pebble Tec in that it is an aggregate product used in pools. Because Pebble Sheen has smaller pieces of aggregate than Pebble Tec, it is easier on feet and other body parts that have been submerged. Pebble Sheen is also more expensive than Pebble Tec. As noted above, Respondent’s proposal included Pebble Sheen. Ms. Watson testified that she showed color samples to Mr. Decker. On behalf of Complainant, Mr. Decker had picked Tahoe Blue, which is only manufactured in Pebble Tec. Respondent installed Tahoe Blue Pebble Tec in Complainant’s pool. No signed change order allowed Respondent to substitute Pebble Tec for Pebble Sheen. Ms. Watson also admitted that she had not installed the custom tile detail on the proposal, which had a line item amount of $982.50, that she had not used a bobcat, which had a line item amount of $990.36, and that she had not refunded these amounts to Complainant. Improper Operation of Self-Cleaning System (CWO#3) Mr. Thompson testified that, in 2007, only about 40% of the pop ups did not work. In June 2007, Complainant had paid Azul approximately $600.00 to repair the actuator valve in the pop up cleaning system. Mr. Thompson testified that the pop up cleaning system worked better after the repair. Mr. Thompson testified that, since Complainant was planning to do a substantial renovation of the pool and pop up valves cost about $70 each, he had recommended that Complainant delay replacement of the broken popup valves until the renovation. Before Respondent started the renovation, the automatic pop up cleaning system had been supplemented with a vacuum in one of the pool’s skimmers. Mr. Decker, Complainant, and Mr. Thompson testified that, when Respondent had started the renovation, the pop ups and skimmer vacuum functioned to clean the pool. Ms. Watson testified that Mr. Decker had told her that the pop up cleaning system did not work and should be removed. Respondent’s proposal therefore included “Cap/fill” the 29 pop-ups. Respondent did not check the pop ups to check if they were functioning. Instead, she broke out most of the pop ups and covered them with plaster. Complainant did not meet Respondent’s qualifying party until she was chipping the plaster out of his pool. Mr. Kauffmann testified that the numerous horizontal surfaces in Complainant’s pool made it a good candidate for a pop up automatic cleaning system. So-called “creepy crawler” systems do not clean edges of steps and benches very well. A pop up system adds between $2,500 and $3,500 to the cost of a new pool. After Respondent covered the pop up system, Complainant’s pool had no automatic cleaning system. In August 2008, Respondent added a dedicated vacuum line, which Respondent installed in the far end of the pool. Currently, Complainant pays Azul to manually vacuum the pool every week. Inspector Cook, Complainant, Mr. Kauffmann, and Mr. Thompson testified that the pool is dirty.. Poor Water Circulation in Pool (CWO#2) Inspector Cook, Complainant, Mr. Kauffman, and Mr. Thompson testified that the pool is cloudy has poor water circulation. Ms. Watson suggested that insufficient chemicals may cause the water to be cloudy. Respondent relied on the existing pool pump for all renovations, including the water feature, the dedicated vacuum line, and circulation from the bottom of the pool. Ms. Watson testified that Mr. Decker had told her that Complainant wanted to use the existing pump. Complainant’s pool cannot run more than one pump application at a time. Either the vacuum line, the water feature, or the circulation can run, but not in combination. Ms. Watson testified that, even if the pool had adequate circulation, water movement would not be visible on a pool the size of Complainant’s. She estimated that the pool required three returns. There are four sources of suction in Complainant’s pool: The two skimmers, the main drain, and the dedicated vacuum line. In addition, she had left six pop up heads in the floor and the pool had 2 aerators and 2 waterlines dedicated to the water feature. Circulation should be adequate. Permitting and Installation of Gas Line to the Pool Heater (CWO #4 and #5) Respondent submitted an invoice from Gas Piping Inc, License No. ROC065647, Class C-37R for residential gas piping, in the amount of $1,090.00, which Respondent’s qualifying party indicated had been paid on May 23, 2008. Respondent also submitted a Project Submittal Application to the City of Tempe dated March 10, 2008 and a receipt for $147.34 for the permit. Ms. Watson testified that Complainant needed to call Southwest Gas to hook up the gas line to the meter. Although she had told Complainant to call her after he had contacted Southwest Gas, he had never done so. Mr. Kauffmann testified that, if the pump is used for the water feature, the heater is inefficient. Rather than coming up from the bottom of the pool, the heated water is aerated through the water feature. Delaminated Areas of Deck and Cracks in Deck (CWO#6 and No Action #2) As noted above, the proposal required Respondent to paint the existing deck. Respondent’s qualifying party testified that she agreed that the deck had a bad appearance, but that Complainant had been unwilling to pay for resurfacing the existing deck or repairing the existing cracks. Respondent’s qualifying party testified that the contract amount of $3,410.10 required her to pressure wash and paint the deck with acrylic paint. Although she still needed to add a second coat of paint, the paint would not remedy cracks or delamination. Complainant and Mr. Decker testified that Ms. Watson had promised them a deck that would “look like new.” The proposal required Respondent to “R&R,” which the parties agreed meant “repair and replace,” the expansion joints and deco drains on the deck. Although Respondent had replaced some of the expansion joints and deco drains, it had merely painted others. Access for Corrective Work At about the time the CWO was issued, Complainant sued Respondent in Maricopa County Superior Court Case No. CV2009-003171 for breach of contract and various torts. That action was pending at the time of the hearing in this matter. Numerous letters and e-mails between the parties’ attorneys were submitted on the issue of access. In Ms. Watson’s deposition, she testified that in her opinion, all items of corrective work had been completed, in relevant part as follows: Q. And you have not made any corrections on items 1 through 6; correct?

A. They are all – the complete construction of the pool as per contracted, done.

Correct poor water circulation, that is just like I told you, I don’t know what they were doing. It’s either it goes to the waterfall or it goes to the pool.

Correct improper operation of self-cleaning. He assigned the contract deleting the self-cleaning.

Obtain permitting for installation of gas line, done.

Complete installation of pool heating system, done.

Well, if the homeowner – my part was completed.

Correct the delamination area of the pool deck coating, that was not contracted.

According to the Registrar’s record, on May 6, 2009, Respondent’s License No. ROC242211 was suspended for lack of bond. This is the only complaint pending against the license. 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 such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 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.”[5] Both parties did a very poor job of contract formation in this case. There was no direct negotiation or discussion between the parties before Complainant accepted Respondent’s proposal and signed the contract. Complainant did not read or understand the proposal. He did not monitor Respondent’s work on his pool. Respondent failed to anticipate or to discuss the ramifications of the various items in her proposal with Complainant. The proposal and the contract in combination generally set forth the scope of work, although they did not set forth an estimated date of completion, Respondent’s business address, or Complainant’s address. Complainant has established that Complainant violated A.R.S. § 32-1154(A)(13) (specifically A.R.S. § 32-1158) in these respects.[6] Although Respondent’s proposal indicated it would “cap/fill pop ups,” it does not appear that Complainant understood the ramifications of removing the main automatic cleaning system or agree to this modification. Complainant has established that his pool lacks an effective automatic cleaning system. A large pool that has just undergone a $46,000 major renovation that does not have an effective automatic cleaning system violates industry standards. Complainant established Respondent’s removal of the pop up cleaning system and addition of a water feature and dedicated vacuum line, both of which were to be run by the same pump that provided circulation, compromised circulation in the pool. The lack of adequate circulation violates industry standards. Complainant therefore established that Respondent violated A.R.S. § 32- 1154(A)(3),[7] (7),[8] and (23)[9] in its modification of the cleaning and circulation system. The deck at Complainant’s pool is unsightly and it does not appear that he understood that Respondent was proposing to paint it rather than to perform more substantive repairs. Nonetheless, the condition of the deck was pre-existing and Respondent has established that it only contracted to paint the deck. Complainant therefore has not established that Respondent violated any statute with respect to the painted and delaminating decks. Respondent’s qualifying party admitted that it did not use a bobcat or install a custom tile detail at Complainant’s pool, which the proposal required, and did not refund the monies paid to Complainant. Because the contract does not appear to have been for a lump sum, Complainant therefore has established that Respondent violated A.R.S. § 32-1154(A)(2),[10] (7), and (3) by failing to construct these features. The signed proposal required Pebble Sheen and Respondent installed Pebble Tec, a less expensive and inferior product. Complainant has also established that Respondent thereby violated A.R.S. § 32-1154(A)(2), (7), and (3) by installing Pebble Tec. The issue of access is largely moot because Complainant’s license has been administratively suspended and, in any event, Complainant did not believe that any corrective action was warranted because she had fully and competently performed the parties’ contract. The suspended status of Respondent’s license does not prevent Complainant from pursuing this administrative remedy nor preclude the Registrar from conducting these disciplinary proceedings.[11] If Respondent fails to comply with any condition that the Registrar sees fit to include in his final Decision and Order in this matter, its suspended license will be revoked. If the Registrar accepts this recommendation and, as a result of Respondent’s failure to comply with the Registrar’s final decision in this matter, the Registrar revokes Respondent’s license, in due course will lead to revocation of any other license on which Respondent or its qualifying party may be listed[12] and may prevent any new license from being issued.[13] Respondent’s administratively suspended license does prevent the Registrar from requiring Respondent to take action or to hire others to take action to remedy the statutory violations in this case. The only remedy is for Respondent to resolve the proven statutory violations through payment of monies to Complainant, which Respondent likely will be required to do to resolve Maricopa County Superior Court Case No. CV2009-003171. RECOMMENDED ORDER Based on the foregoing, it is recommended that, on the effective date of the Registrar’s final order, that Respondent Arizona Springs License No. ROC242211, Class B-05 be revoked. It is further recommended that the Registrar shall not revoke Respondent’s license and, instead shall close Case No. 09-4209 if, on or before the effective date of the order, the Registrar receives written proof from Respondent that it has resolved through payment of monies in a mutually acceptable amount to Complainant Patrick Murphy the statutory violations found in this case regarding the absence of an effective automatic cleaning system, lack of adequate circulation, and installation of Pebble Tec rather than Pebble Sheen. 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, November 16, 2009.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [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] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure in any material respect to comply with this chapter.” A.R.S. § 32-1158 provides that contracts entered before December 31, 2007 include the following minimum terms:

1. The name of the contractor and the contractor’s business address and the license number. 2. The name and mailing address of he owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated time of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

[7] 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.” [8] 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.” [9] 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.” [10] 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.” [11] See A.R.S. § 32-1154(C). [12] See A.R.S. § 32-1154(A)(21). [13] See A.R.S. § 32-1122(E).

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