PDF copy: ALJDEC decisions subject to certification as final

2009A-19636023-ROC · Registrar of Contractors · 2014-11-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Elonica Saville and Scott Saville, No. 2009A-19636023-ROC

COMPLAINANTS, ADMINISTRATIVE -v- LAW JUDGE DECISION License No. KB-1.194156-D of Southwest Commercial Services, Inc., RESPONDENT.

RECOVERY FUND PAYOUT HEARING DATES: January 24, 2012, at 8:00 a.m. and February 17, 2012, at 9:00 a.m. APPEARANCES: Complainants Elonica Saville and Scott Saville appeared on their own behalf; Respondent Southwest Commercial Services, Inc. was represented by William E. Moore, Esq., Law Office of William E. Moore; the Arizona Registrar of Contractors was represented by Seth T. Hargraves, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT BACKGROUND AND PROCEDURE 1. In March 2004, the Arizona Registrar of Contractors (“the Registrar”) issued License No. KB-1.194156-D for dual building contracting to Southwest Commercial Services, Inc. (“Respondent”). 2. On October 3, 2008, the Registrar received a Complaint against Respondent from Scott and Elonica Saville (“Complainants”) concerning Respondent’s performance of its contract to improve drainage and to construct certain hardscape at Complainants’ residence at 41111 North 54th Street in Cave Creek, Arizona. The Registrar designated the Complaint as Case No. 09-1963. 3. Complainants stated in their Complaint in Case No. 09-1963 that they had paid Respondent the entire contract price of $26,770.00 and that Respondent had last performed work on the project on an unspecified date in 2008. Complainants’ October

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826 3, 2008 Complaint to the Registrar alleged four specific workmanship deficiencies: (1) “Drainage problems”; (2) “Cracking of cement & stone”; (3) “Failure to cut back drain pipe”; and (4) “Paint on wall.”

4. The Registrar assigned Case No. 09-1963 to its inspector, Jim Dimond, for

investigation. Inspector Dimond performed a jobsite inspection on October 23, 2008.

Because Respondent’s representative was working in Flagstaff at the time, no one

attended the jobsite inspection on Respondent’s behalf.

5. At the jobsite inspection in Case No. 09-1963, Complainants pointed out to

Inspector Dimond the problems that they alleged in Respondent’s construction of the

specific Complaint items. In addition, Complainants amended their Complaint to allege

two additional Complaint items.

6. On December 2, 2008, Inspector Dimond issued a directive (“Corrective

Work Order” or “CWO”) that required Respondent to perform the following corrective

work within fifteen calendar days:

Item 1 – Drainage problems: Front – Planter to North should have at least one more weep hole installed[.] Contractor shall correct in an appropriate manner. Rear – Landscape contractor installed grass to include grading and no action is required of this contractor. Item 2 – Cracking of cement & stone Actual concrete surface is not visible and tile contractor has accepted this surface. No action is required of this contractor. Item 3 – Failure to cut back drain pipe. Landscaper has run irrigation through the deco drain thusly inhibiting the function of the deco drain. Upon removal of the irrigation pipe by installing contractor, this contractor is to correct the condition in an appropriate manner.

Item 4 – Paint on wall.

Paint is commonly used to indicate finished dirt grade. This inspector cannot determine who put the paint on the wall and no action is required of the contractor.

The following items were added at the jobsite inspection and the contractor was not present to object:

Item 5 – Contractor did not install rock veneer on entry columns to dirt grade. Contractor is to correct the condition in an appropriate manner. Item 6 – Contractor installed North driveway column outside of property line. Contractor is to correct the condition in an appropriate manner.

(Emphasis in original.)

7. The Registrar issued a Citation and Complaint in Case No. 09-1963 against

Respondent, charging violations of A.R.S. § 32-1154(A).

8. Respondent failed to file a timely written answer to the Citation and

Complaint in Case No. 09-1963. On November 16, 2009, the Registrar issued a

Decision and Order, deeming Respondent’s failure to answer the Citation and

Complaint to be an admission of the charges contained therein under A.R.S. § 32-

1155(B). As a result of Respondent’s admitted statutory violations, the Registrar

revoked Respondent’s license and required it to pay a $500.00 civil penalty. The

effective date of the Decision and Order was December 26, 2009.

9. The Registrar’s November 16, 2009 Decision and Order in Case No. 09-1963 advised Respondent that it could avoid revocation of its license by taking certain action, in relevant part as follows: If Respondent accomplishes the corrective work set forth in the filed Complaint and in the Agency’s written directive on or before this Order’s effective date, then the revocation of Respondent’s license shall not take place and this Citation and Complaint shall be closed.

The Registrar’s November 16, 2009 Decision and Order did not advise Complainants what they needed to do if they disagreed with the portions of the December 2, 2008 CWO that did not require Respondent to take any corrective action on Complaint item

nos. 1, 2, and 4.

10. After Respondent filed a written request to the Registrar for rehearing or

reconsideration of the November 16, 2009 Decision and Order, the Registrar denied

the request.

11. On or about January 19, 2010, the Registrar revoked Respondent’s license

as a result of its failure to comply with the Decision and Order in Case No. 2009-

19636023 (former Case No. 09-1963). On or about January 19, 2010, the Registrar

revoked Respondent’s license after it failed to pay the civil penalty.

12. On February 17, 2011, the Registrar received Complainants’ claim to the

Residential Contractors’ Recovery Fund (“the Fund”) in Case No. 2009-19636023

(former Case No. 09-1963) in the amount of “approx. $46,000.” Complainants attached

to their claim bids from three contractors: (1) Four bids from William T. Jenkins, Inc.,

License No. C-21.066939-R for residential landscaping and irrigation systems

(“Jenkins”), all dated December 8, 2010; (2) A bid from Mak Construction Enterprises, Inc., License No. KB-2.200754-D for dual residential and small commercial contracting (“Mak”), dated February 16, 2011; and (3) A bid from Exterior Elements, L.L.C., License No. K-21.217301-D for landscaping and irrigation systems (“Exterior”) dated January 7, 2011. 13. The Registrar’s Claim Reviewer, Doug Ulmer, reviewed Complainants’ documents to determine their eligibility for a payout from the Fund and the total amount of their payments to Respondent under the contract. Inspector Dimond analyzed the bids that Complainants submitted to determine whether the bids were for work that the Registrar’s November 16, 2009 Decision and Order had determined required correction. 14. Mr. Ulmer determined that Complainants were eligible for a payout from the Fund. Mr. Ulmer also determined that the evidence that Complainants submitted with

their claim showed that they had paid Respondent only $24,875.77 of the $27,175.79 contract amount and still owed $2,300.02 under the contract. 15. On October 21, 2011, Inspector Dimond issued a Recovery Fund Claim

Report that opined that the bids that Complainants submitted with their claim to the

Fund were inadequate because they were not itemized, did not address the action

items on the December 2, 2009 CWO, or included items that were significantly beyond

the scope of the CWO. After Inspector Dimond deducted the amount that Mr. Ulmer

had determined that Complainants still owed on the contract, Inspector Dimond

calculated that the proper amount of the payout that Complainants should recover from

the Fund in Case No. 2009-19636023 was $627.06.

16. On October 21, 2011, the Registrar issued a Notice of Claim for

Administrative Payout in the amount of $627.06 in Case No. 2009-19636023.

17. On or about November 16, 2011, Complainants requested a hearing on the

amount of the proposed payout in Case No. 2009-19636023. The Registrar referred

the matter to the Office of Administrative Hearings (“the OAH”), an independent

agency, for an evidentiary hearing.

18. On January 14, 2012, and February 17, 2012, a Fund payout hearing was held in the OAH. Complainants submitted ten exhibits and presented the testimony of two witnesses: (1) Complainant Elonica Saville; and (2) Complainant Scott Saville. The Registrar submitted sixteen exhibits and presented the testimony of two witnesses: (1) Mr. Ulmer; and (2) Inspector Dimond. Respondent appeared through its attorney and submitted four exhibits. Although Respondent’s officer, Travis Breinholt, attended the first hearing date, because Complainants and the Registrar did not complete presentation of their cases-in-chief or call him as a witness, he did not testify. Mr. Breinholt did not attend the second hearing date because he had obtained employment in Payson, Arizona, according to Respondent’s attorney. Therefore, Respondent did not present the testimony of any witness. HEARING EVIDENCE 19. Respondent’s November 1, 2007 contract required it to perform grading and to construct retaining and planter walls, four columns, two driveway entries, a walkway, and yard drains on Complainants’ property. Respondent did not contract to install grass, landscaping, tile, the irrigation system, or the pool at Complainants’ property. 20. At the Fund payout hearing, Complainants disputed that they owed

Respondent any money under the contract. Complainants also disputed Inspector

Dimond’s opinion that Respondent was not responsible for the drainage problems in

the backyard, the cracked cement, or the paint on the wall.

21. Inspector Dimond testified that Exterior’s bid did not address any of the

items on the CWO and that Mak’s bid listed a couple of the items on the CWO, but was

for a lump sum without individual line items.

22. On July 12, 2011, Mr. Ulmer sent a letter to Complainants requesting that

they provide additional bids to address the items in the CWO, in relevant part as

follows:

After submitting your claim to Inspector Dimond for review the Fund at this time cannot make a determination on a payout. Based upon Inspector Dimond’s construction experience and knowledge of the industry it is his opinion that the three bids you have submitted do not address the [CWO], issued on December 2, 2008, or address it completely, and that the bids are excessive for the repair work that needs to be done. Therefore, Inspector Dimond is requesting you submit three new bids that address items 1 (front yard only), 3, 5, and 6 from the December 2, 2008, [CWO].

Mr. Ulmer requested that Complainants provide the additional bids before August 12, 2011. 23. Complainants did not provide any additional bids until the payout hearing. At the hearing, Complainants provided an updated bid from Exterior dated February 7, 2012, that still did not address any items on the CWO, and an updated bid from Jenkins dated February 8, 2012, that had the same amounts for the line items that Inspector Dimond used in his calculation of damages in the Recovery Fund Inspection Report. Complainants also provided bids from Shada, Inc. doing business as Benchmark Construction, License No. A.123855-C for commercial general engineering

(“Benchmark”) dated December 2, 2010,1 and from Horton Electric, L.L.C., License No. K-11.237366-D for dual electric (“Horton”), dated January 20, 2012. These additional bids are addressed below.

Complainants’ Payments to Respondent

24. Complainants attached to their claim to the Fund their contract with

Respondent dated November 1, 2007, in the amount of $27,770.00. Complainants also

attached Respondent’s change order dated November 5, 2007, for the additional cost

of $405.79 to upgrade the fence block. Complainants did not dispute Mr. Ulmer’s

calculation that the total amount of Respondent’s contract was $27,175.79.

25. Complainants also attached to their claim the estimates and proposals,

some of them signed, that evidenced their negotiations with Respondent, including a

proposal dated October 18, 2007, in the amount of $7,825.00 that Mrs. Saville signed,

a proposal dated October 24, 2007, in the amount of $21,049.00 that Mrs. Saville also

signed, and a proposal dated November 1, 2007, in the amount of $26,679.23 that was unsigned. Complainants also attached Statements of Account dated November 9, 2007, December 17, 2007, and December 19, 2007, and e-mails between Mrs. Saville and Respondent’s employee, “Matt,” dated January 8 and 22, 2008, regarding remaining work. 26. Mr. Ulmer’s calculation of Complainants’ payments to Respondent was based on the following documents: (1) A notation on the November 1, 2007 contract of “RCVD $10,700.00 cash,” signed by Respondent’s employee, Tim Leichtnam, that was also reflected on Respondent’s November 9, 2007, December 17, 2007, and December 19, 2007 Statements of Account; (2) A second cash payment of $8,700.00 on November 19, 2007, that was shown on Respondent’s December 17, 2007, and December 19, 2007 Statements of Account; and (3) Complainants’ check no. 581 dated December 27, 2007, in the amount of $5,475.77 to Respondent. Based on this evidence, Mr. Ulmer testified that Complainants had paid Respondent a total of $24,875.77, and still owed Respondent $2,300.02 under the contract. Although Complainants obtained Benchmark’s bid before they filed their claim to the Fund, they did not provide a copy of the bid to the Registrar until the hearing on their claim. 27. Complainant Mr. Saville pointed out that the Statements of Account showed that Complainants paid round numbers rather than the exact amount due and that after the $8,700.00 cash payment, Complainants had a small credit. Mr. Saville also pointed

out that after the second cash payment, the December 17, 2007 Statement of Account

showed a balance due of $7,975.77. Mr. Saville testified that on December 19, 2007,

Complainants gave Respondent’s representative, Shane, a third cash payment in the

amount of $3,000.00. Mr. Saville pointed out that the December 17, 2007 Statement of

Account showed a faint handwritten notation, “$3,000 cash given to Shane 12/19/07,”

and Shane’s signature. Mr. Saville testified that after the third cash payment, because

Complainants only owed Respondent $3,975.77, the December 27, 2007 check for

$5,475.77 included an overpayment.2

28. Respondent’s December 19, 2007 Statement of Account did not show a

printed credit for the $3,000.00 cash payment, but only a handwritten deduction in the

amount of $3,000.00. The handwriting appears to be by the same hand as the entry on

the December 17, 2007 Statement of Account for the $3,000.00 cash payment.

29. Complainants did not allege that Respondent owed them money, but

disputed that they owed Respondent money. Mrs. Saville testified that Respondent had not filed a lien or otherwise attempted to collect the $2,300.02 that the Registrar calculated was owed under the contract. 30. As noted above, Mr. Breinholt was not available to testify in Respondent’s case-in-chief. Respondent did not submit a final accounting or any documents that showed that Complainants owed Respondent money under the contract. 31. Mr. Ulmer testified that the Registrar usually does not contact the Respondent to determine payments made under a contract to calculate a payout from the Fund. Mr. Ulmer testified that he credited the first two cash payments because they appeared on Respondent’s printed statements of account and he credited the check because he had a copy of it. Mr. Ulmer’s calculations in the spreadsheet and Respondent’s calculations in the December 17, 2008, and December 19, 2008 Statements of Account differ by 2¢ because the original contract amount on the Statement of Accounts was $26,769.98, rather than the $27,770.00 shown on the signed contract that Complainants submitted. The record does not contain an explanation for the disparity. 32. The record does not include any later statements of account after Respondent’s December 19, 2007 Statement of Account. E-mails to Respondent that Complainants submitted with their claim indicated that after January 22, 2008,

Respondent ordered the capstones for a block wall and continued to work on the

project.

Drainage (Item No. 1 on the CWO)

33. Inspector Dimond’s October 21, 2011 Recovery Fund Claim Report

recommended that Complainants be awarded $686.85 to drill two weep holes in the

north planter in the front yard based on Jenkins’ bid “to core drill two holes for front

retaining wall, patch stucco, paint, touch-up excavated dirt from back side of wall, and

add 1 ton of gravel to allow for water drainage.”

34. Benchmark’s bid included a line item of $975.00 to drill two 5” holes in the

front planter, install 6” drain pipes with grates, and patch the stucco.

35. The December 2, 2008 CWO did not require Respondent to install drain pipes in the front yard. Moreover, Benchmark’s commercial Class A license would not allow it to perform work on Complainants’ residential project. 36. Benchmark’s bid also included a line item of $6,775.00 to re-grade the backyard, excavate three ditches, and install a 6” drain pipe in the ditches, backfill, and install rip-rap at the outlet of the pipe. Jenkins’ bid, Mak’s bid, and Exterior’s bid all exceeded $45,000.00 and involved removal of landscaping and the irrigation system, demolition of Respondent’s work, re-grading the back yard, re-installing hardscape, and replacing the landscaping and irrigation system. 37. Complainants submitted photographs of their back yard that showed ponding water up to the back patio slab. Mr. Saville testified that after every rainfall, he and his son must dig a ditch in the backyard to prevent water from entering the residence. Mrs. Saville testified that Respondent was the only contractor that Complainants hired to perform grading to address drainage problems at their residence. 38. Inspector Dimond acknowledged that Complainants’ backyard had drainage problems. Inspector Dimond testified that at his jobsite inspection he saw that other contractors had installed grass and landscaping, an irrigation system, and a pool in Complainants’ backyard. 39. Inspector Dimond testified that the purpose of a jobsite inspection is to

ascertain a respondent’s workmanship issues. Inspector Dimond testified that if a

subsequent contractor has performed work over a respondent’s work, the subsequent

contractor accepted the surface and would be responsible for all deficiencies.3 After a

subsequent contractor accepts a surface prepared by an earlier contractor, the

Registrar does not attempt to apportion fault because the subsequent contractor’s work

may have caused or exacerbated workmanship issues. Inspector Dimond testified that

because other contractors performed work over Respondent’s drainage work in the

backyard, the CWO did not require Respondent to take any corrective action with

respect to poor drainage.

40. Inspector Dimond’s handwritten notes of his jobsite inspection indicated that

he had a telephone conversation with the Respondent’s representative in which he

stated that Complainants directed placement of the drain grates and pipes. Inspector

Dimond testified that he did not require Respondent to correct the drain pipes or the

grade because he could not determine Respondent’s responsibility for the grade after other contractors accepted the surface, not because Respondent said that Complainants had directed its work. 41. Complainants requested a payout in the amount of at least $4,300.00, the amount of Exterior’s bid to correct drainage issues. Cracking of Cement and Stone (Item No. 2 on the CWO) 42. Inspector Dimond testified that at the jobsite inspection, he saw that another contractor had installed stone tiles over the front walk and the walk was covered in thinset. Inspector Dimond testified that he could not confirm whether Respondent’s slab had control joints. Inspector Dimond provided the example of a painter who paints over a poor drywall patch. Inspector Dimond testified that although the drywall contractor may have been responsible for the poor patch before it was painted, by painting over the patch, the painter accepted responsibility for the poor patch. On cross-examination, Inspector Dimond testified that if a house fell down after it was built over a deficient foundation, the Registrar would hold the framer and subsequent contractors responsible, not the contractor who constructed the foundation. 43. Inspector Dimond testified that in addition, because another contractor had laid tile over Respondent’s slab, he did not require Respondent to perform repairs because the tile contractor accepted the surface.

44. Inspector Dimond acknowledged that Mrs. Saville told him at the jobsite

inspection that the tile contractor put a membrane over the control joint. Inspector

Dimond also acknowledged that he did not put his finger under the tile to see if he

could feel a control joint.

45. Complainants requested a payout in the amount of Jenkins’ $758.13 bid to

correct the cracking cement and stone.

Failure to Cut the Back Drain Pipe (Item No. 3 on the CWO)

46. Inspector Dimond testified that Respondent installed an over-sized deco

drain between the sidewalk and patio at the back of Complainants’ residence.

Inspector Dimond testified that the landscape contractor installed the sprinkler line

through the deco drain instead of under the sidewalk, impairing the drain’s function. Inspector Dimond testified that because the Registrar does not require contractors to alter another contractor’s work, the CWO required Respondent to shorten the deco drain after the landscape contractor removed the sprinkler line from the drain. 47. Inspector Dimond testified that none of Complainants’ bids included an amount for cutting the drain pipe. Based on his experience in construction, Inspector Dimond testified that if the sprinkler line was removed, it would take about ten minutes to cut the drain. Inspector Dimond calculated that correction of this item might cost $100.00 because Complainants live in a remote location. 48. Complainants accepted Inspector Dimond’s calculation of the cost to repair Item No. 3 on the CWO. Paint on the Wall (Item No. 4 on the CWO) 49. Inspector Dimond testified that small daubs of paint frequently are used to mark finished grade on buildings. Because he could not ascertain Respondent’s responsibility for the paint, the CWO did not require Respondent to correct the paint.

50. Complainants requested a payout from the Fund in the amount of $75.00 for Item No. 4 on the CWO, including $30.00 for a can of paint. Complainants did not present evidence of Respondent’s responsibility for the paint.

Rock Veneer on the Entry Columns (Item No. 5 on the CWO)

51. Inspector Dimond testified that the entry columns required another course of

rock veneer. Inspector Dimond testified that none of Complainants’ bids included a line

item for this amount.

52. Inspector Dimond testified that based on his experience in construction, he

calculated that installing the additional course of rock veneer would cost $300.00.

53. Complainants did not contest Inspector Dimond’s estimate of the cost to

complete the last course of rock veneer on the entry columns. Mrs. Saville testified that

she was unable to obtain any bids for this item of workmanship.

Moving North Driveway Column (Item No. 6 on the CWO) 54. Inspector Dimond testified that because Respondent installed one of the driveway columns in an easement, the CWO required Respondent to move the column to the right side of the easement. 55. Inspector Dimond’s Recovery Fund Inspection Report calculated that it would cost $1,840.23 to correct Item No. 6 on the CWO based on Jenkins’ bid to demo the column, salvage the light fixture, relocate the electrical supply for the column, and install a new column. 56. Horton’s bid was in the amount of $3,600.00 to remove and reinstall wiring and retrench a conduit for the column. Mrs. Saville testified that Respondent installed the column over a conduit that needed to be relocated. 57. The Benchmark bid included a line item of $2,000.00 to demo the north driveway column and install a new column inside the property line. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.4 2. Complainants bear the burden of proof and must establish the amount that they are entitled to recover from the Fund by a preponderance of the evidence.5 “A

preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”6 3. The Registrar’s final decision in former Case No. 09-1963 (currently 2009-

19636023) established that Respondent violated A.R.S. § 32-1154(A). The Registrar

and Respondent acknowledged at hearing that Complainants are “persons injured” as

defined by A.R.S. § 32-1131(3) and eligible for a payout from the Fund.

4. The Registrar owes a fiduciary duty to the Fund to maintain its balance at a

level that is sufficient to pay operating costs and anticipated claims and to ensure that

payouts are made only after claimants have satisfied all statutory requirements.7

5. The legislature has imposed the following limitations on awards that the

Registrar can make from the Fund:

An award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor’s violation but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines. . . .

A.R.S. § 32-1132(A). If a claimant has not paid the contractor the full contract price,

any amounts owed would have to be deducted from the cost to repair and complete the

project to avoid a net gain for the claimant.

6. Mr. Saville’s testimony about the amounts paid to Respondent at the hearing was credible. Complainants claimed in their workmanship complaint to the Registrar and in their claim to the Fund that they had fully paid Respondent. Respondent apparently did not issue any statements of account that could have shown the $3,000.00 cash payment after December 19, 2007, the date that Mr. Saville testified that he made the payment. Although generally people do not pay creditors more than is owed, it appears that the parties’ negotiations on the price and scope of work was ongoing and that in November 2007, Complainants paid cash to Respondent for more than the amount that was owed. Complainants established that they paid an additional See 32-1101 et seq. 5 See A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). Morris K. Udall, ARIZONA LAW OF EVIDENCE § 5 (1960). 7 See A.R.S. § 32-1134(A)(1). $3,000.00 to Respondent, more than the amount owed under the contract, and that $2,300.02 should not have been deducted from their Fund payout. 7. Although Complainants were not given an opportunity to contest the

complaint items on the CWO that Respondent was not required to correct before the

Registrar issued the November 16, 2009 Decision and Order, they were given such

opportunity at the Fund payout hearing. For the reasons stated below, Complainants

did not establish at the hearing that Respondent was responsible for any of the

complaint items that the CWO did not require it to correct.

8. As a general principle in construction, a contractor who performs work on top

of a surface prepared by another contractor accepts the surface. The second

contractor should have inspected the surface for any flaws or defects that would affect

the work he proposes before performing the work. If he found the surface to be

unacceptable, he should have called any defects to the owner’s attention so that the

owner can choose whether to pay for the defective surface to be corrected or if the

owner is not willing to pay to correct the surface, the subsequent contractor may obtain

an explicit warranty disclaimer.8 In addition, after a second contractor has covered the

8 No Arizona authority addresses the Registrar’s policy that a subsequent contractor who accepts a surface prepared by an earlier contractor also accepts full responsibility for the outcome. The policy is supported by case law from other jurisdictions. See generally cases cited at “Duty of Contractor to Warn Owner of Defects in Subsurface Conditions,” 73 A.L.R.3d 1213 (1976). A contractor who knew or should have known of a defect in the surface does not perform construction in a workmanlike manner if the contractor fails to notify the owner of the defect and the construction later fails due to the defective surface. See, e.g., Parker v. Thornton, 596 So. 2d 854, 858 (Miss. 1992); Lewis v. Anchorage Asphalt Paving Co., 535 P.2d 1188, 1199 (Alaska 1975). The principle is based on common sense and a need for fair dealings between contractors and property owners:

For the requirements of public order and the obligation implicit in every contract that the work will be done in a good and workmanlike manner would compel us to reject a contention that an undertaker is not responsible for building upon a site which he knows to be defective. In such a case, the barest standards of care would require him to bring the defect to the attention of the owner before proceeding. The owner would then have an opportunity to make the indicated adjustment in the contract to provide against the defective soil condition of which he had no prior knowledge. . . . Wurst v. Pruyn, 202 So. 2d 268, 271-72 (La. 1967) (citation omitted). original contractor’s work, the Registrar cannot apportion fault because the second contractor’s work may have exacerbated or even caused the observed deficiency.9 9. Complainants did not dispute that grass, landscaping, a pool, and sprinkler

system were installed in the backyard after Respondent graded and installed retaining

walls and drainage pipes there. Complainants also did not dispute that tile was laid

over the walkway that Respondent poured. Therefore, in this administrative complaint

to the Registrar, Respondent is not responsible to Complainants for the cracked

cement and stone on the walkway and the poor drainage in their backyard (CWO Items

Nos. 1 and 2).

10. Complainants did not establish that Respondent is responsible for the paint

on the wall (CWO Item No. 4).

11. Complainants did not establish that the low bids or Inspector Dimond’s

estimates for installing the weep holes in the front planter, cutting the drain pipe,

installing the last course of rock veneer on the entry columns, or moving the north

driveway column (CWO Item Nos. 1, 3, 5, and 6) were inadequate.

RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order, the Registrar order the Residential Contractors’ Recovery Fund to pay $2,927.0810 to Complainants Elonica Saville and Scott Saville when such funds are available. 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 40 days from the date of that certification. Done this day, March 6, 2012. /s/ Diane Mihalsky Administrative Law Judge

Courts in Arizona may apportion fault for construction defects among parties and non-parties under the Uniform Contribution Among Tortfeasors Act, A.R.S. §§ 12-2501 to 12-2509. The Registrar has no such statutory authority to apportion fault among homeowners and various contractors. $686.85 (CWO Item 1) + $100.00 (CWO Item 2) + $300.00 (CWO Item 5) + $1,840.23 (CWO Item 6) = $2,927.08. Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors