ALJDEC decisions subject to certification as final

19F-A1919004-ADH · Arizona State Department of Housing · 2019-08-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 12, 2019, at 9:00 a.m. APPEARANCES: Living Easy Lifestyles LLC (“Dealer”) was represented by Barry L. Olsen, Esq., Law Offices of Larry W. Suciu, PLLC; Steven L. Long DBA Three Peaks Mobile Home Service (“Installer”) appeared on his own behalf; Tricia Fordyce (“Homeowner”) was represented by Brandon J. Kavanagh, Esq., Mangum Wall Stoops & Warden PLLC; the Arizona Department of Housing (“the Department”) was represented by Valerie Love Marciano, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. Dealer holds License #8260, Class D-12 issued by the Department. Installer holds License #4153, Class I-10C issued by the Department. 2. On or about February 2, 2018, Homeowner contracted to purchase a home manufactured by Champion Home Builders, Inc. /Redman, Lindsay, California (“Manufacturer”) through Dealer.[1] 3. After the home was built, in approximately April 2018, the home was shipped from California to Homeowner’s real property in Flagstaff, Arizona. Installer installed the home. 4. On or about September 26, 2018, Homeowner filed a complaint with the Department, alleging numerous complaints against Manufacturer, Dealer, and Installer, including numerous items that Homeowner stated that she had ordered, but were not included on the manufactured home that was delivered.[2] 5. The Department assigned the complaint to its Inspector, Guy Kanute. Investigator Kanute performed an inspection on December 14, 2018.[3] 6. Investigator Kanute subsequently issued a Verified Complaint and Sign-Off Form that verified most of the items of complaint against Manufacturer, but also verified other complaints against the Manufacturer and Installer, including drywall cracks, sticking doors, missing flooring and baseboards. Investigator Kanute did not verify some of Homeowner’s complaints that the home that was delivered did not contain the items that she claimed were on the contract because he did not have a copy of her contract with Dealer.[4] 7. On or about January 19, 2019, Homeowner sent an email to the Department, seeking to add two items of complaint that she alleged were uncovered during the inspection, as follows: (1) The home was not level, and had an approximately 2” slant in the front piece of the home, and (2) There was mold developing on two walls and corresponding ceilings, which had spread.[5] 8. On or about January 28, 2019, the Department issued a Revised Verified Complaint and Sign-Off Form that included the additional items.[6] The Revised Verified Complaint and Sign- Off form verified the uneven floor along northeast side of home and the wet area along the marriage line wall in family room against Manufacturer and Installer. 9. On or about February 7, 2019, Dealer appealed the Department’s determination regarding certain items that had been verified against Manufacturer because while Homeowner was negotiating to purchase the home, she changed the original home three times, she signed the purchase agreement that accurately set forth the features on the home that was delivered, and her lender refused to approve the additional cost of the items that she claimed were omitted. Dealer provided specifications sheets and the specification sheet that Homeowner had signed to support its account.[7] 10. On or about February 27, 2019, Installer appealed the Verified Complaints concerning the south side corner finish trim that was different material than the other corners, the uneven floor along the northeast side of the home, and the wet area along the marriage line wall in the family room that had been verified against him. Installer attached photographs to illustrate the items of appeal. Installer indicated that the hot water overflow drain and gas line (Verified Complaint items 2g and 18c) had been repaired.[8] 11. Manufacturer did not independently appeal any of the complaint items that had been verified against it. Homeowner also did not appeal any of the complaint items that Investigator Kanute declined to verify against any of the Department’s licensees. 12. The Department referred the matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing. 13. A hearing was held on July 12, 2019. The Department submitted thirteen exhibits and presented the testimony of four witnesses: (1) Esperanza Padilla, the Complaints Manager for the Department’s Office of Manufactured Housing, who established foundation for its exhibits; (2) Investigator Kanute; (3) Donna Grant, the Department’s Compliance Administrator, and (4) Homeowner. Homeowner’s attorney also presented her testimony and examined the other parties’ witnesses. Installer testified on his own behalf and submitted five exhibits. Dealer presented the testimony of two witnesses: (1) Roger Teesy, an employee of Manufacturer; and (2) Mark Siqueiros, Dealer’s owner. Hearing Evidence 14. Investigator Kanute testified that, in addition to Homeowner, Installer, Dealer’s representative, and Manufacturer’s representative, Homeowner’s boyfriend or partner, Ron Auza, were present at the inspection, along with Manufacturer’s drywall installer/ handyman, Frank Barrios. Because these persons were not listed on the complaint, they were not identified on his report of the inspection for the Verified Complaint Sign-Off Form. 15. Homeowner went to Dealer, who is based in Yuma, because Mr. Auza was friends with Mr. Siqueiros. Dealer hired Installer to install the home.[9] Undisputed Verified Complaint Items 16. Investigator Kanute verified against Manufacturer baseboards that had not been installed throughout the home, drywall issues at the bottom of the walls, and fasteners showing at the bottom of the walls. (Verified Complaint items 1a, b, and c). Investigator Kanute testified that flooring such as vinyl, laminate, wood, tile, or carpet is installed after the home is installed on the site and set up, after which the baseboards are installed. Investigator Kanute testified that flooring had not been installed in the home at the time he performed the inspection and verified these complaint items against Manufacturer. 17. Investigator Kanute testified that he see where the interior paint and touchup paint did not match (Verified Complaint item 1e). Investigator Kanute verified this item against Manufacturer. 18. Homeowner acknowledged Verified Complaint items 1a, 1b, 1c, and 1e had been mostly resolved. 19. Investigator Kanute testified that the south west corner trim in the exterior of the house was different from the other corners (Verified Complaint item 2a). Investigator Kanute verified this item against Installer. Although Installer’s notice of appeal disputed this item, he did not present any evidence or argument at the hearing with respect to it. Investigator Kanute testified that Installer said that he would take care of the mismatched trim. 20. Investigator Kanute testified that the home’s roof bubbled in the front and back dormers (Verified Complaint item 2b), that the exterior hardiback siding was cracked in multiple places, which mainly occurs in transit (Verified Complaint item 2d), that the trim caulk was missing a chunk on the north side (Verified Complaint item 2e). Investigator Kanute verified these items against Manufacturer. 21. Investigator Kanute testified that that there was a hole in the siding under the kitchen window on the west side, the window caulking was missing, joints needed to be fixed and caulked, and the utility door had broken off in transit (Verified Complaint item 2f), but that Manufacturer’s representative Mr. Teesy stated it would address these items.

22. Homeowner testified that she was not sure if 2e had been fixed and that although the utility door had been fixed, the caulking on the siding still needed to be repaired (Verified Complaint item 2f). 23. Investigator Kanute testified that the overflow from the hot water came only to the edge of the exterior trim (Verified Complaint item 2g). Investigator Kanute testified that Installer stated he would address this item. 24. Homeowner testified that Installer had repaired the hot water overflow drain (Verified Complaint item 2g). 25. Investigator Kanute testified that there were drywall issues in walls and ceilings, including cracks, and that the marriage line was not textured (Verified Complaint item 3b). Investigator Kanute verified this item against Manufacturer and Installer. 26. Investigator Kanute testified that the toilet was loose and leaned to one side (Verified Complaint item 4c). Investigator Kanute testified that, once the flooring was installed, the toilet could be more securely affixed to the floor. 27. Investigator Kanute testified that the mirror was missing above the lavatory and that the vanity light was off center (Verified Complaint items 4a and 4b). He verified these items against Manufacturer. 28. Investigator Kanute testified that there was an unfinished plumbing hole under the lavatories and that the inside of cabinets was unpainted particle board (Verified Complaint items 4d and 4e). He verified these items against Manufacturer. 29. Homeowner testified that a mirror had been installed above the lavatory and that the air exchange vent in the master bedroom, the vent above the toilet and the hinge in the master bathroom had been repaired (Verified Complaint items 4a, 4g, 4h, and 4i), even though these items had not been verified. 30. Investigator Kanute testified that the front door in the living room was not sealed and that he could see daylight around the door (Verified Complaint item 6d). He verified this item against Manufacturer. 31. Investigator Kanute testified that in the Laundry room, the pocket door was not functioning and was only painted on one side, there were damaged cabinets with nail holes all along the top trim, there were dents in the drywall on the ceiling, and holes in the wall caused by screws sunk into the drywall (Verified Complaint items 7a, 7b, 7c, and 7e). Investigator Kanute verified these items against Manufacturer. 32. Homeowner testified that in the laundry room, the pocket door had been pretty much repaired (Verified Complaint item 7a), but that it still needed work in her opinion, the damaged cabinets and dented drywall had been fully repaired (Verified Complaint item 7b and 7c). 33. Investigator Kanute testified that there were some dings and marks on the kitchen cabinets (Verified Complaint item 9a(v)). Because this was a new home, the kitchen cabinets should be undamaged. He verified this item against Manufacturer. 34. Investigator Kanute testified that there was light coming in around the back door in the kitchen where the trim was missing caulk (Verified Complaint item 9b). He verified this item against the Manufacturer. 35. Investigator Kanute testified that screw hooks from shelf brackets were sunk into the drywall in the pantry (Verified Complaint item 10a). Investigator Kanute verified this item against Manufacturer. 36. Investigator Kanute testified that there was an unfinished plumbing hole under the lavatories in the hall bathroom (Verified Complaint item 14a). He verified this item against Manufacturer. 37. Investigator Kanute testified that the air exchange vent had been installed upside down in Bedroom 1 (Verified Complaint item 10a). He verified this item against Manufacturer. 38. Investigator Kanute also testified about the complaints that Homeowner added after the December 14, 2018 inspection. Investigator Kanute testified that the closet door to bedroom did not latch and the small closet door in the living room stuck (Verified Complaint items 18a and 18b).[10] Investigator Kanute verified both of these items against Manufacturer. 39. Investigator Kanute testified that Homeowner claimed that the gas test failed with the propane company tried to install the gas tank (Verified Complaint item 18c). Investigator Kanute verified this complaint against Installer. 40. Homeowner testified that Installer fixed the gas line. 41. Investigator Kanute testified that some Verified Complaint items may have been corrected by the time of the hearing. Although Manufacturer’s handyman Mr. Barrios attended the hearing, he did not testify. 42. Mr. Teesy testified that Manufacturer did not appeal the items that the Department verified against it as a gesture of good will and so as not to hold Homeowner up and prevent her from moving in. Mr. Teesy testified that Manufacturer is committed to making Homeowner happy. Verified Complaint Items Regarding Items Allegedly Ordered and Not Included in the Home

43. Investigator Kanute testified that the shelves in the kitchen cabinets were painted particle board, not laminate (Verified Complaint item 1fi), that the shelves in the kitchen cabinets were not adjustable, and the shelves were unfinished (Verified Complaint items 1fi, 1fii, 1fiii, and 1fv). Investigator Kanute also testified that the corner of the walls in the home were square, not bullnose, that the home’s dimensions were 40’ x 60’, not 40’ x 66’, that the window treatments lacked valances, and that the interior paint, carpet colors, and exterior paint were not what Homeowner said she ordered (Verified Complaint items 1g, 1h, 1i(i), and 1i(ii)). Investigator Kanute verified these items Manufacturer. Investigator Kanute acknowledged that he did not know what features Homeowner’s contract with Dealer required to be included in the home. 44. Investigator Kanute testified that Homeowner stated that she had not ordered built-in cabinets for the office (Verified Complaint item 5), that there were wire shelves, not wood shelves, in the laundry room (Verified Complaint item 4d), that the kitchen cabinets were not adjustable and not the quality that Homeowner said she purchased, that the kitchen shelves were painted particle board, not laminate, that there were only four drawers in the kitchen and only seven drawers in the home, and that there was no end wall in the cabinets under the sink (Verified Complaint items 9a(i), 9a(ii), 9a(iii), 9a(iv), and 9a(vi)). Although he verified that these conditions existed, he did not verify these complaint item against any of the licensees because he did not know what Homeowner had ordered. 45. Ms. Grant acknowledged that on February 2, 2018, Mr. Siqueiros sent an email to Mr. Auza and to Homeowner, in relevant part as follows: I will take care of us Tricia and make sure the home is constructed and built the way we had agreed? (now I do know it got confusing from what we had added as additional options at the factory and then we had to take them out because of financing) I just can’t give you any more than what we agreed to but if you look at the floor plan and compare the options to the order we had with the chandler factory we are the same (and then some) [the] only thing I have to do for us FLOOR TILE and I am going to try and get something done for us ok. But you are correct that what is highlighted is what you will get.[11]

Ms. Grant acknowledged that the highlighted options did not include laminated shelving, rather than painted particle board, and that the final contract did not say anything about the number of drawers in the home that Homeowner agreed to purchase. 46. Ms. Grant acknowledged that according to the documents attached to Dealer’s appeal, Homeowner started looking at a home manufactured by Cavco Durango, then looked at a home manufactured by Champion Chandler, and finally ended up purchasing a home manufactured by Manufacturer, which is based in Lindsay, California. Ms. Grant acknowledged that on August 16, 2017, Mr. Siqueiros’ wife Erika sent an email to Homeowner, stating that the options that she had selected would cost an additional $12,000.00 and that Homeowner responded on that same date, “I cannot qualify for anymore so something is going to have to give. Unfortunately we will have to make changes or look at a different floor plan.”[12] 47. Ms. Grant acknowledged that she had reviewed the specifications included on the final quote from Manufacturer dated January 12, 2018, which Homeowner signed on February 2, 2018.[13] Ms. Grant acknowledged that this document superseded any previous specifications provided by other manufacturers that Homeowner did not accept or prior communications with the dealer. Ms. Grant acknowledged that Homeowner appeared to have received accurate information from Dealer about what specifications Manufacturer’s home would include.[14] Ms. Grant agreed that Homeowner got the size of home that she was supposed to. 48. Homeowner testified that she believed that she ordered laminate shelving and that it was obvious the home was 6’ too short. 49. Homeowner testified that the process was confusing because Dealer initiated negotiations with three different manufacturers. Homeowner testified that when she received Manufacturer’s specifications, she went through the specifications, line by line. Homeowner testified that Dealer pressured her to sign Manufacturer’s specifications. 50. Homeowner denied ever changing manufacturers or specifications due to production time or financing. Homeowner testified that the desired features were dropped without her knowledge or approval. 51. Homeowner acknowledged that she signed the specifications to purchase the home manufactured by Manufacturer and that she had received the quote on January 21, 2018, nine days before she signed it on February 2, 2018. She denied that Mr. Siqueiros pointed out or that she saw the size of the home was different than what she had previously considered. 52. Mr. Siqueiros testified that on January 19, 2018, he informed Homeowner that he had sent the order to Manufacturer,[15] on January 30, 2018, he sent Homeowner the final contract for the home that Manufacturer would build,[16] and on February 2, 2018, Homeowner signed the contract.[17] Mr. Siqueiros testified that before Homeowner signed the contract, he answered her questions about what features the home would have and made it clear that the home would not have all the features as other homes that he had discussed with her.[18] 53. Mr. Siqueiros testified that Homeowner’s purchase of the home was a 7 to 8 month process that involved going from factor to factory. Originally, they looked at Cavco – Durango’s Litchfield model, which would take 16 – 18 weeks to build. Homeowner told him that she wanted to duplicate the same home in a home that could be build more quickly. Next, Homeowner and Mr. Auza went to the Champion factory in Gilbert because they were both working in the area, where they saw a beautiful floor plan that a salesman named Adam showed them. However, the next day Adam said that the options that Homeowner wanted, which included laminate wood shelves and other upgrades, would cost an additional $12,000.00. Homeowner contacted her lender, Countrywide, and was informed that it would not finance the additional amount.[19] When Mr. Siqueiros went to Champion in Gilbert, Adam was no longer working there and another salesman told them there was no order for Homeowner on record and that production would require 14 weeks. Mr. Siqueiros testified that Homeowner and Mr. Auza chose Champion Lindsay because production would take only 8 weeks. 54. Mr. Siqueiros denied that he had pressured Homeowner to sign the contract. Instead, Homeowner was pressured by Jeff Stewart at Countrywide, with whom Homeowner had arranged financing. Mr. Siqueiros testified he tried to work with financing to close the deal. Mr. Siqueiros testified that the specifications from Champion—Lindsay set forth all the features of the home that would be built and that Homeowner signed to accept the specifications on February 2, 2018.[20] These features did not include the items that Homeowner later complained to the Department were omitted. Verified Complaint Items Regarding Levelness of Home or Items Not Completed Due to Levelness Issues

55. Homeowner testified that Mr. Auza did the septic tank and water system. She acknowledged that Mr. Auza agreed to do the stem wall and that she hired local contractor Adam Osorio to build a block wall around the bottom of the home. Homeowner stated that she did not want skirting because she wanted the home to look like a site-built structure. Homeowner testified that the sole purpose of the stem wall was to hide the gap between the ground and the bottom of the home and that the home was not supposed to be connected to the stem wall. 56. Investigator Kanute testified that it appeared that the manufacturer had sent baseboards, but they were not attached to the wall at the time of his inspection. Depending on the type of flooring, the baseboards will cover imperfections at the bottom of the drywall near the floor. Investigator Kanute also testified that a wood subfloor rested on wood joists, resulting in movement and creaking. The OSB subfloor might be loose but creaking was typical in a home without a finished floor. Nonetheless, he verified the creaking subfloor (Verified Complaint item 1d) against Manufacturer. 57. Complainant testified that she had hired her own contractor to fix the floor but that there were still a few areas of creaking floors (Verified Complaint item 1d). 58. Investigator Kanute testified that there were cracks and bubbles in the drywall in the wall above the shower (Verified Complaint item 4f). Investigator Kanute testified that there was a crack in the drywall behind the refrigerator in the kitchen, along with cracks, poorly textured joints, cracked seams, and textured patches in the drywall in the kitchen (Verified Complaint item 9c). Investigator Kanute testified that the drywall ceiling seam was unfinished in the pantry (Verified Complaint item 10b), that there was an unfinished seam and texture patch that did not match the surrounding drywall texture in the hall to the master bedroom (Verified Complaint item 11), that there were cracked drywall joints and patches in the hall to other bedroom that were not textured (Verified Complaint item 12, that there were unfinished seams running down the ceiling and untextured drywall patches in the family room (Verified Complaint item 13), that the hall bathroom had a drywall crack above the toilet and entry door and a bad seam above the linen closet (Verified Complaint item 14b), that Bedroom 1’s drywall had a joint line in the ceiling and unfinished places (Verified Complaint item 15b), that Bedroom 2’s drywall had an untextured corner seam and patch above the window that did not match the surrounding texture (Verified Complaint item 16a), and that Bedroom 3’s drywall had a patch above the window that did not match surrounding texture, as well as nail holes and a dent in the drywall (Verified Complaint item 17). He verified all these drywall issues against Manufacturer. 59. Mr. Siqueiros testified that he was concerned with the long transport of the home after production. Usually drywall cracks are repaired after a home is set up. There is a $3,500 allocation for drywall repairs, but when it was time for drywall repairs, Installer and Mr. Auza were no longer talking. Mr. Siqueiros testified that Dealer and Manufacturer hired handyman Frank Barrios to complete repairs to the drywall in a gesture of good faith.[21] 60. Investigator Kanute testified that when he stepped through the door to Bedroom 2 across the marriage line, he could feel a hump, which should have been levelled (Verified Complaint item 16b). Investigator Kanute verified this item against Manufacturer. 61. Homeowner testified that the uneven floor at the door jamb in Bedroom 2 was in the area of the home that was most out-of- level. 62. Investigator Kanute testified that Homeowner also complained that the floor was uneven along the northeast side of the home (Verified Complaint item 18d) and that there was a wet area along the marriage line wall in the family room (Verified Complaint item 18e). Investigator Kanute testified that Mr. Auza put a straight edge on the floor to show that it was ¾” out of level and that Homeowner pointed out a dark spot on the wall that could have been wet. He verified both complaint items against Manufacturer and Installer. 63. Homeowner testified that Mr. Auza had talked to Installer about leveling the home. Homeowner testified that someone had installed piers beneath the home, but that the leveling issue was more technical. Homeowner testified that she paid $495.00 Superior Mobile Home Service LLC (“Superior”) to level the home to move the project along because Installer was not responsive, but that Superior had reported that it was unable to level the home. Homeowner testified that she gave Superior’s report to her attorney, but not to the Department or its licensees. 64. The Department obtained Superior’s report from Homeowner at the hearing and submitted it. Superior’s undated invoice was on a form with spaces for checkmarks that had the following statements checked: Lifted entire E side of house, lifted about 1” in NE corner. Lifted about ¾” at middle of house and lifted about 1” in SE corner. . . . .

Fixed I-bolt squeaks in metal framing under house. (Other squeaks are loose flooring). This is NOT a re-leveling issue. Floors can be re-screwed down to stop this type of floor squeak. . . . .

We lifted the house as close to level as we could while ensuring outside doors work properly. . . . .

There are existing: cracks in drywall, cracks in walls & ceiling, soft spots in floors, uneven areas in floors, outside wall sagging over i-beam. Re-leveling will not correct these issues.

Superior’s invoice did not check the item that stated, “This house is extremely out of level. We re-leveled as best we could. House can be re- set.”[22] 65. Homeowner testified that although Superior did the best it could, the home was still not level. Homeowner testified that she thinks that Superior worked on the home in June 2019. 66. Ms. Grant acknowledged that the third contract that Dealer prepared for Homeowner to purchase the manufactured home from Manufacturer included a handwritten notations that provided that Mr. Auza would install the home and a division of labor between Installer and Mr. Auza.[23] The division of labor showed skirting crossed out and provided that Mr. Auza would construct the garage, patio, electrical, septic, and water. 67. Homeowner testified that Mr. Siqueiros made the list to show her the cost of various work so that she would know how much money she needed. Homeowner testified that her copy of the list does not have the writing that apportioned different tasks to Installer and Mr. Auza and that Mr. Siqueiros must have added the writing later. 68. Mr. Siqueiros testified that he and Mr. Auza drafted the handwritten list of work to be done and the costs of such work. Mr. Siqueiros testified that Mr. Auza provided the copy of the signed specification and list of work to be done with amounts and assigned responsibility that Dealer provided to the Department.[24] Mr. Siqueiros testified that Mr. Auza referred Dealer to Installer and that the original agreement was that Dealer would transport the home to Flagstaff and that Mr. Auza would be in charge of installing it. 69. Installer submitted the specifications for installing the home, which provided a typed notice that “PERIMETER BLOCKING IS REQUIRED FOR THIS HOME. SEE TABLE 5A PAGE 18 IN SETUP MANUAL.”[25] 70. Installer testified that he blocked and levelled all three components of the home when he installed it.[26] That means he jacked up all three parts, put masonry blocks underneath, and pulled off the wires, wheels, and tongue. Installer testified that he used a tool with water in a tube to level all three portions of the home within 1/8”, then bolted the floors, roofline, and end walls together. He then used a regular level to check the inside of the home. Installer explained that anyone can say whatever they want about the levelness of the inside of a home; the steel beams are the true aspect of leveling. Installer stated that no one complained about the levelness of the home when he installed it. 71. Installer testified that the dispute between him and Mr. Auza about the levelness of the home arose at Investigator Kanute’s December 14, 2018 inspection, when Mr. Auza showed him a level that showed the home dropped 1”, which is why the windows on the home were not closing properly. 72. Installer testified that the stamped plans for the stem wall required that 2” x 4” redwood wedges be installed between the wall and the home to provide support for the home[27] and that Homeowner’s contractor had not installed all the wedges. As a result, the stemwall had not been built to code. Installer noted that he had informed Ms. Padilla of this fact when he filed his appeal with the Department on April 23, 2019.[28] 73. Installer testified that the stemwall was not there when he installed the home. Although Homeowner’s attorney challenged his testimony by referring to a photograph, the photograph was not submitted. Installer stated that he would be surprised to see such a photograph. 74. Installer testified that on April 23, 2019, he had sent an email to Homeowner’s attorney, stating that Installer had asked 4 Site Home Inspections (“4 Site”) to look at the issues on the northeast side of Homeowner’s home and that 4 Site had reported that the house was not level due to the missing 2” x 4” redwood wedges between the stemwall and the frame of the house. Homeowner’s attorney had responded that he had not been contacted about 4 Site’s inspection and that no one should be on Homeowner’s property without her knowledge and consent and, in the future, law enforcement would be called.[29] 75. Installer submitted 4 Site’s report to the Department with his appeal, which concluded that the house was not level because, contrary to the permit and code requirements, 2x4 treated top plate was not installed and bolted to the stem wall, structural OSB trim board was not installed and nailed per specs, but hardiboard belly band was used, perimeter support wedges were installed in most areas, but omitted for the length of the front patio slab, which was the primary area in question, and typical 16 x 16 CMU support pads were installed rather than concrete runners as specified. 4 Site also attached photographs of the conditions observed at the jobsite to its report.[30] 76. Installer testified that on May 7, 2019, Homeowner’s attorney sent an email to him asking him to address the levelling issue with Homeowner’s contractor, in relevant part as follows: I just spoke with Adam Osorio with Osorio Concrete and we discussed the leveling issue with her home. According to Adam, he believes that if you will agree to come out and lift the home with some additional screw jacks at the front of the home, he can get under the home and install a number of shims that he agrees appear to be missing. . . .[31]

Installer explained that, since he had already filed his notice of appeal with the Department, he thought it would be better to wait to agree to perform any work on to level the home until he knew that he would be able to fix the issues. 77. Installer testified that Homeowner did not tell him that she had hired Superior to level the home. He did not know what Superior had done because its invoice did not provide any specifications. Installer stated that he would be willing to help fix the levelness of the home, but he did not know what needed to be done. 78. Installer submitted Homeowner’s attorney’s June 5, 2019 email to Mr. Teesy at Manufacturer, stating that “Reaching back out as we’ve finally been able to get [Homeowner’s] home leveled so now need to start working on the remaining issues so we can get her into the house after nearly 1½ years.”[32] 79. Investigator Kanute testified that based on the information that Installer provided at the hearing, he would not have verified the uneven flooring along the northeast side of the home against the manufacturer and installer. 80. Homeowner testified that Mr. Barrios said that he would fix all the drywall issues, but that he had not done so because the house was still out of level. Homeowner testified that Mr. Barrios stated that the drywall would crack again when the home was level. 81. Mr. Teesy testified that Manufacturer is waiting for whoever is found to be responsible for leveling the home to complete repairs before it completes the drywall repairs on the home. 82. Investigator Kanute testified that in the past, he was not supposed to add items pointed out at his inspection to the Verified Complaint, but that the process had changed. Investigator Kanute testified that Homeowner pointed out a dark spot on the ceiling that she said was wet that he thought could be water (Verified Complaint item 18e). Investigator Kanute acknowledged that the floor was not wet beneath the dark spot on the ceiling, but noted that the carpet was down in that area. Investigator Kanute testified that when he went on the roof with Mr. Auza to look at the bubble, they did not walk the marriage line to see any possible leak in the roof that might be causing the dark spot. Investigator Kanute testified that he did not know if the home had been properly sealed and caulked. Nonetheless, he verified this complaint item against the manufacturer and installer. 83. Homeowner testified that the spot was no longer black, but that it was full of mold, starting to look fuzzy, and causing the wall to buckle and crack. Although Homeowner stated she had taken photographs of the mold spot, her attorney and Installer’s attorney and Mr. Siqueiros were appearing telephonically and OAH did not have the means to reproduce the photographs and transmit them to Homeowner’s and Installer’s attorneys or to provide them to the other parties. Homeowner’s attorney did not request that a further hearing be scheduled to allow him to provide copies of the photographs to the other parties. Homeowner acknowledged that she had not done anything to alleviate the effects of the alleged leak. CONCLUSIONS OF LAW 1. A.R.S. § 41-4004(A)(9) requires the Department to verify written complaints filed within one year of purchase or installation. The Department is reasonably presumed to have certain expertise, experience, and knowledge with respect to those matters the law provides it authority to inspect, because verification upon inspection is a threshold determination by the inspector which then allows the Department to issue an appropriate order pursuant to A.R.S. § 41-4004(A)(10). 2. The Department bears the burden of proof to establish that Dealer and Installer are responsible for the items that were verified against them by a preponderance of the evidence.[33] Parties challenging the Department’s Verified Complaint must establish affirmative defenses by the same evidentiary standard.[34] 3. Manufacturer and Homeowner did not appeal the Department’s Verified Complaint. Nonetheless, the Administrative Law Judge allowed Homeowner’s attorney to make her case and to submit evidence on her behalf. Dealer and Installer appealed and presented evidence to challenge some items that had been verified against Manufacturer. Because no one objected to Homeowner’s defense of her complaints or Dealer’s challenge to contract items that had been verified against Manufacturer, the Administrative Law Judge will make recommendations on all items in dispute among the parties. 4. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[35] 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.”[36] 5. The Department established that the licensee whom the Verified Complaint items described in Findings of Fact Nos. 16 through 42 were verified against are responsible for repairing these items. 6. Investigator Kanute verified some items that Homeowner claimed she had contracted to purchase but that were not included in the home against Manufacturer, but not others. Compare Finding of Fact No. with Finding of Fact No. 43 above. Investigator Kanute acknowledged that he did not have the contract that Homeowner had signed to purchase the home. The record contains no explanation for Investigator Kanute’s apparent inconsistencies, but it is clear that he takes his part in the Department’s role as a consumer protection agency seriously. 7. Dealer established that Homeowner’s contract did not include any of the items that she complained to the Department were missing and that she actually knew or should have known the contents of the contract when she signed it. Therefore, the evidence does not show that any of the licensees should be responsible for any of the Verified Complaint items described in Findings of Fact Nos. 42 and above. 8. Installer established that Homeowner is responsible for the floor in the home not being level (Verified Complaint item 18d) because her contractor failed to build the retaining wall to code or according to the specifications that were submitted to the county. Manufacturer and Installer are therefore not responsible for and should not be required to correct the home being out of level. 9. Although Manufacturer indicated it is willing to repair the drywall, the record indicates that the drywall should not be repaired before the house is leveled because it will only crack again when the house is leveled. Because Complainant is responsible for the house being out of level, the Manufacturer cannot be required to repair the drywall until Complainant has leveled the home. Therefore, the Administrative Law Judge does not recommend requiring Manufacturer to repair the drywall within 30 days of the final order as a condition of keeping its license in good standing. If Manufacturer fails to repair the drywall after Complainant has leveled the house, she may seek a remedy in civil court. 10. With respect to the dark spot that Homeowner claims evidences a leak, she did not complain about this item until Investigator Kanute’s inspection, when she also complained that the home was out of level. The inspection occurred approximately eight months after the home had been installed. Homeowner admitted at the hearing that she has done nothing to mitigate the effects of the alleged leak, but argued the licensees should be responsible for the leak, even though Homeowner’s failure to take responsibility for her contractor’s work that caused the home not to be level delayed the repairs to other areas of the drywall of the home. Although it is not clear on this record that the settlement of the home after Homeowner’s contractor failed to adequately support it caused the roof to shift or leak, it would be unfair on this record to require any of the licensees to correct the dark spot as a condition of keeping their licenses in good standing. When Homeowner has leveled the home, she can seek a remedy in civil court against licensees for their share of responsibility for the dark spot and/or roof leak. 11. Although Homeowner testified that her contractor mostly resolved creaking floor issues and it appears that flooring has mostly been installed, because leveling the home will affect the floor, it would be unfair at this time to require any of the licensees to fully resolve the creaking floor issues. If floor creaking does not fully resolve when Homeowner levels the home and Manufacturer does not respond to her complaint, she may seek her remedy in civil court. 12. Homeowner testified that the uneven floor at the door jamb at Bedroom 2 (Verified Complaint item 16b) was in the area of the home that is most out of level. Because Installer established that Homeowner is responsible for the floor being out of level, the complaint items should not have been verified against Manufacturer. If this complaint does not resolve when Homeowner has the house leveled, she may seek her remedy in civil court. RECOMMENDED ORDER Based upon the foregoing, IT IS ORDERED that, 30 days after the effective date of this order, Installer shall correct the trim at the southwest corner of the home on the exterior of the house to match the other corners (Verified Complaint item 2a). If the Department later verifies that Homeowner has provided reasonable access and Installer has not repaired this item, the Department may take further action against Installer’s license. IT IS FURTHER ORDERED that, 30 days after the effective date of this order, Manufacturer shall correct the items described in Findings of Fact Nos. 16 through 41 that were verified against it and that have not yet been corrected. If the Department later verifies that Homeowner has provided reasonable access and Manufacturer has not repaired these items, the Department may take further action against Manufacturer’s license. 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 five days from the date of that certification. Done this day, August 2, 2019.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Carol Ditmore, Director Arizona Department of Housing ----------------------- [1] See the Department’s Exhibit I at 199. [2] See the Department’s Exhibit A. [3] See the Department’s Exhibit F at 79. [4] See the Department’s Exhibit E at 79 – 84. Exhibit H at 142 – 147. [5] See the Department’s Exhibit H at 133. [6] See the Department’s Exhibit H at 141-147. [7] See the Department’s Exhibit I at 150 - - 205. [8] See the Department’s Exhibit J at 209 - [9] See Installer’s Exhibit 1 at 2. [10] See the Department’s exhibit H at 147. [11] The Department’s Exhibit G at 130. [12] The Department’s Exhibit F at 103. [13] See the Department’s Exhibit I at 194 – 199. [14] See the Department’s Exhibit G at 129. [15] See the Department’s Exhibit G at 125. [16] See the Department’s Exhibit G at 128 [17] See the Department’s Exhibit E at 117 and Exhibit I at 199. [18] See the Department’s Exhibit G at 125 (Homeowner’s January 21, 2018 email); 126 (His response); 129 (Homeowner’s February 1, 2018 email to Mr. Auza about differences in the home that she agreed to purchase on February 2, 20180 [19] See the Department’s Exhibit G at 103. [20] See the Department’s Exhibit I at 194 – 199. [21] See the Department’s Exhibit I at 205 – 205. [22] The Department’s Exhibit 3. [23] See the Department’s Exhibit F at 118 [24] See the Department’s Exhibit F at 117 – 118. [25] Installer’s Exhibit 1 at 1. [26] Installer’s Exhibit 1 at 2. [27] See Installer’s Exhibit 5 [28] See the Department’s Exhibit J at 210. [29] See Installer’s Exhibit 4. [30] See the Department’s Exhibit J at 211 - 212. [31] Installer’s Exhibit 3. [32] Installer’s Exhibit 2. [33] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [34] See A.A.C. 42-19-119(B)(2). [35] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [36] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826