ALJDEC decisions subject to certification as final

09F-H0247-ROC · Registrar of Contractors · 2010-08-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING DATES: May 24, 2010 at 8:15 a.m. and August 3, 2010 at 8:15 a.m. APPEARANCES: Complainant Jack Weidner appeared through Douglas G. Sutherland, Esq., The Sutherland Law Firm; Respondent 2 Cool, Inc., doing business as C David’s Custom Homes, appeared through Jeffrey R. Adams, Esq., Adams & Mull, P.L.L.C. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On March 15, 2005, the Registrar of Contractors (“the Registrar”) issued License No. ROC205389, Class KB-2 for dual residential and small commercial contracting to Respondent 2 Cool, Inc., doing business as (“dba”) C David’s Custom Homes. On January 13, 2009, the Registrar received a complaint from Complainant Jack Weidner against Respondent’s license, which alleged nineteen specific items of complaint regarding Respondent’s work at Complainant’s house at 2720 Calle Marquez in Kingman, Arizona. The Registrar assigned the complaint to its inspector, William Redman, for investigation. Inspector Redman performed a jobsite inspection. On February 9, 2009, Inspector Redman issued a Corrective Work Order (“CWO”), directing Respondent within fifteen days to correct thirteen of the items of complaint by appropriate means. On April 9, 2009, the Registrar received Complainants’ request to issue a citation against Respondent. On August 12, 2009, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(2), (7), (23), and (3) (namely A.A.C. R4-9-108). Respondent timely answered the complaint, denying any statutory violations. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule and to conduct a fair hearing. After two continuances at Respondent’s request, a hearing was held on May 24, 2010 and August 3, 2010. Inspector Redman testified. Complainant presented the testimony of three witnesses and submitted fifteen exhibits. Respondent presented the testimony of six witnesses and submitted five exhibits.[1] According to the Registrar’s records, Respondent’s license is current and in good standing. One complaint against Respondent was closed as resolved, settled, or withdrawn. This is the only pending complaint. Additional Evidence Complainant’s house was built in 1995. On November 6, 2006, the parties entered into a contract under which Respondent was to construct an addition to and substantially remodel Complainant’s house according to the plans Complainant had approved. Complainant agreed to pay Respondent’s “full costs and expenses,” plus 15%. Although the parties’ contract was not for a set price, it included Respondent’s estimates of the anticipated costs for construction. Complainant and his wife lived on site during construction and witnessed Respondent’s and its subcontractors’ daily progress. In early 2008, Complainant and his wife exhausted the funds that they had available for construction, although the remodel and addition were not complete. Complainant and his wife terminated Respondent’s performance of the contract. Inspector Redman performed a prehearing jobsite inspection on May 3, 2010. Inspector Redman testified that Respondent had resolved most, but not all of Complainant’s complaints. The unresolved complaints are addressed below. Respondent’s Deviations from the Plans (The Crawl Space and Plumb Parapet Walls)

The parties’ contract required that any changes to the plans be memorialized by written change orders, signed by Complainant. During the course of construction, Complainant signed only one written change order, dated June 29, 2007, to upgrade the windows. The change order required Respondent to replace an additional three windows and increased the cost of windows from the contract estimate of $14,742.00 to $30,196.59. During the course of construction, the Respondent made an agreement with the Complainant and his wife where the Complainant and his wife verbally agreed to and paid for other changes from the plans, including Respondent’s performance of additional grading, installation of a surround sound system, installation of a central vacuum system, and construction of a new roof on the existing house. The Crawl Space The planned addition to Complainant’s house had two stories, with the first story being partially underground. The plans did not include any crawl space. Respondent’s surveyor, Rand Holmquist, mistakenly placed the stake for the elevation of the addition five feet too low. Mr. Holmquist’s mistake was not noticed until after the excavator had excavated the site and the slab for the addition had been poured. After Mr. Holmquist’s mistake was noticed, Loren Cooley (“Mr. L. Cooley”), Respondent’s construction superintendent on the project, testified that he presented Complainant and his wife with three options: (1) A crawl space between the first and second floors; (2) Higher ceilings on the first floor than were shown in the plans; or (3) A house built according to plan, which would require additional fill dirt, compaction, and repouring of the concrete slab. Mr. L. Cooley testified that Complainant and his wife were excited about the crawl space because it would give them additional storage space, some of which they could use as a wine cellar. Mr. L. Cooley testified that Complainant and his wife also were concerned about the delay that would be caused by the steps necessary to build the addition at the elevation shown on the plan. Respondent constructed the crawl space. On or about July 11, 2007, Mr. Holmquist’s professional errors and omissions insurer paid Respondent $11,204.01. Mr. L. Cooley testified that Respondent used this extra money to construct the crawl space. Complainant admitted that he and his wife agreed that Respondent could build a crawl space and that they stored boxes and, at one time, wine in it. Complainant testified that the crawl space was the only option that Respondent presented. Complainant complained at the hearing that the crawl space smelled musty and was vented into the living room. Complainant also alleged that Respondent failed to install a vapor barrier on the stem wall. Respondent disputed these allegations. Inspector Redman’s CWO directed Respondent to repair the basement so that it conformed to the plans. Inspector Redman testified at the hearing that the crawl space complied with applicable code and industry standards. The Plumb Parapet Walls The addition and remodel were Santa Fe pueblo style, with flat roofs. The plans required the parapet walls to be raked. Respondent constructed the parapet walls to be plumb. Billy Barger is the qualifying party for King Bee Construction, License No. ROC173613, Class KB-2 (“King Bee”), which was Respondent’s framing subcontractor on the project. Mr. Barger testified that he had discussed the parapet walls with Complainant and his wife and that they had agreed that the walls should be constructed to be plumb, rather than raked, to shed rainwater better. Complainant denied having any discussions with Mr. Barger or ever agreeing that the parapet walls should be constructed to be plumb. Inspector Redman’s CWO directed Respondent to repair the parapet walls so that they conformed to plans. The Windows in the Foyer Respondent installed the windows in the foyer such that the window frames extended 1½” or 2” beyond the drywall. Inspector Redman testified that Complainant and his wife arranged for other contractors to construct trim around the windows in other parts of their house after Respondent had left the job. Inspector Redman testified that trim had not been constructed around the windows in the foyer. Respondent’s president and qualifying party, Charles David Cooley (“Mr. C.D. Cooley”), testified that if Respondent had finished building the house, the cabinet installer would have trimmed off excess wood and constructed casement trim around the windows in the foyer, which would have corrected any deficiency. Inspector Redman’s CWO had required Respondent to “[p]roperly trim the windows to be flush with the inside of the wall.” Inspector Redman testified that the foyer windows were not properly trimmed because they stuck out too far. Roof and Skylight Leaks Inspector Redman’s CWO required Respondent to repair the leaks in the roof and six of the eight skylights that Respondent had installed. Complainant admitted that Respondent’s subcontractor, A 2 Z Roofing Supply Co., License No. ROC047835, Class C-42, had repaired the leaks. Although Complainant had not done any water tests and offered no evidence of any continued leaks, he felt that Respondent should be required to repair the other two skylights before they started leaking. Damaged Furniture, Personal Property, and Bag of Cement Inspector Redman’s CWO required Respondent to replace or reimburse Complainant and his wife for furniture, carpet, and other personal property that had been damaged by the roof and skylight leaks in the master bedroom, living room, and office. Respondent did not replace or reimburse Complainant for these items of damaged personal property. Although Complainant provided a list of damaged property to Respondent, he did not provide invoices or any other documentation that would allow Respondent to calculate the amount of reimbursement due. Inspector Redman’s CWO also required Respondent to reimburse Complainant for a bag of concrete that had been left out in the elements. Complainant did not submit evidence to establish that, during the course of Respondent’s performance of the contract, Complainants paid Respondent for the bag of concrete. CONCLUSIONS OF LAW The matter lies within the Registrar’s jurisdiction.[2] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[3] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] 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.”[6] A general contractor should memorialize agreed changes to the contract in written change orders that are signed by the property owner. If the general contractor does not create a written change order, it may establish that the property owner either verbally authorized or acquiesced in a change by allowing the general contractor to make it, after the owner has acquired the knowledge that the change deviated from previously approved plans. Complainant admitted that he acquiesced in Respondent’s construction of the crawl space, knowing that such construction was not in conformance with the plans. Because Complainant’s acquiescence excuses Respondent’s failure to construct the basement according to the plans, Complainant did not establish that Respondent violated A.R.S. § 32-1154(A)(2),[7] (7),[8] (23),[9] or (3)[10] in its construction of the crawl space. A general contractor may not delegate to subcontractors final responsibility for building a project according to the plans. A general contractor who allows a subcontractor to deviate from the plans based solely on the subcontractor’s assurance that the owner has verbally approved the change does so at its own peril. Complainant credibly denied that he knew about or allowed King Bee to deviate from the plans by framing the addition with plumb parapet walls. Therefore, Respondent did not establish that Complainant either verbally authorized or acquiesced in the construction of the plumb parapet walls. Because the plans required the walls to be raked, Complainant established that Respondent violated A.R.S. § 32-1154(A)(2), (7), (23), and (3) in constructing the parapet walls to be plumb. Although Complainant established the windows that Respondent installed in the foyer stuck out too far, Inspector Redman and Mr. C.D. Cooley testified that the deficiency could be remedied at the trim stage of construction. Because Respondent had not reached the trim stage when Complainant terminated Respondent’s performance of the contract, Respondent is not responsible for constructing trim around the windows in Complainant’s foyer. Therefore, Complainant did not establish that Respondent violated any of the charged statutes with respect to its installation of windows in the foyer. Respondent established that it corrected all the other items of deficient workmanship on the CWO in a professional and workmanlike manner. Therefore, Complainant did not establish that Respondent violated any of the charged statutes with respect to the other items of allegedly deficient workmanship on Complainant’s complaint. With respect to the reimbursement that Complainant requested for personal property that the leaks in the roof and skylights damaged, and the bag of concrete that Respondent left out in the weather, the legislature has not empowered the Registrar to adjudicate or award money damages.[11] The reimbursement that Complainant requests is not only unliquidated, but is for consequential damages, which cannot be properly awarded in this administrative forum.[12] RECOMMENDED ORDER In view of the foregoing, on the effective date of the Registrar’s final order, it is recommended that the Registrar suspend License No. ROC205389, Class KB-2 previously issued to Respondent 2 Cool, Inc. dba C David’s Custom Homes, until Respondent corrects the parapet walls to conform to the plans. It is further recommended that the Registrar not suspend Respondent’s license and, instead, close Case No. H09-0247 if, on or before the effective date of the Registrar’s order if Respondent has provided to the Registrar satisfactory written proof that it has corrected, in a professional and workmanlike manner, the plumb parapet walls at Complainant’s house to be raked, as required by the plans. It is further recommended that the Registrar require Respondent to pay the sum of $250.00 as a civil penalty pursuant to A.R.S. § 32-1154(D).

It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s final order, the Registrar suspend Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty. 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, August 19, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] On the second day of hearing, after Inspector Redman had completed his testimony, Respondent presented the testimony of Jimmy Saunders, an apparently unlicensed subcontractor whom Respondent had hired to perform some of the corrections required by the CWO. Complainants did not complain at the hearing about any of the items that Mr. Saunders corrected. Respondent and its attorney argued that the so-called “handyman’s exception” under A.R.S. § 32-1121(A)(14) allows licensed contractors to hire unlicensed subcontractors. [2] See A.R.S. § 32-1101 et seq. [3] 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). [4] See A.A.C. R2-19-119(B)(2). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Black’s Law Dictionary at page 1220 (8th ed. 1999). [7] 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.” [8] This statutory subsection formerly included 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.” The former statute applies to this complaint. [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, “[v]iolation of any rule adopted by the registrar.” The rule cited 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.” [11] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984). [12] See State v. Morris, 173 Ariz. 14, 17, 839 P.2d 434, 437 (Ct. App. 1992) (distinguishing permissible restitution from impermissible consequential damages).

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

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