ALJDEC decisions subject to certification as final

2010A-1184194-ROC · Registrar of Contractors · 2010-11-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 26, 2010 at 1:00 p.m. APPEARANCES: Complainants Ron and Martha Eisenlord appeared on their own behalf; Respondent L and R A C Service and Repair, L.L.C. appeared through Raymond Bascom, its qualifying party and managing member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On March 2, 2002, the Registrar of Contractors (“the Registrar”) issued License No. ROC171590, Class K-39 for dual air conditioning, refrigeration, and heating to Respondent L and R A C Service and Repair, L.L.C. On February 19, 2010, the Registrar’s Tucson office received a complaint from Complainants Ron and Martha Eisenlord against Respondent, alleging six specific deficiencies in Respondent’s installation of a new heat pump and duct work in their home at 6051 E. Pamela Pl. in Sierra Vista, Arizona. Complainants’ six items of complaint were as follows: (1) Water was leaking from the ductwork, causing stains; (2) Ceiling tiles were pulling away from the joists due to the leaks; (3) The system blew cold air for a long time before providing heat; (4) Mold was growing on ceiling tiles and in the ductwork; (5) Respondent had not pulled a permit before performing the job; and (6) Respondent had failed to install heat strips. The Registrar’s inspector, Mike Nieves, performed a jobsite inspection. On March 19, 2010, Inspector Nieves issued a Corrective Work Order (“CWO”) to Respondent, requiring it within fifteen days to obtain a permit for the job. The CWO did not require Respondent to take any action with respect to the other five complaint items. Inspector Nieves could not determine whether Respondent’s work had caused the leaks or stains, movement of ceiling tiles, or possible mold. In Inspector Nieves’ opinion, the heating system was working efficiently. Finally, the contract did not require Respondent to install heat strips. On April 9, 2010, the Registrar received Complainants’ request for hearing because 20 days had passed, and Respondent had not obtained a permit. On August 11, 2010, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(2), (3) (namely A.A.C. R4-9-108), (13) (namely A.R.S. § 32-1124(B)), and (23). Respondent timely answered the Citation and Complaint, denying any statutory violations and affirmatively alleging that the contract required Complainants to pay for the permit, and that they refused to do so. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held on October 26, 2010. Inspector Nieves testified telephonically. Complainants testified on their own behalf and submitted fifteen photographs of the water damage to the ceiling tiles and other areas in their house. Respondent presented the testimony of its qualifying party, Raymond Bascom, and submitted three exhibits. According to the Registrar’s website, Respondent’s license is current and in good standing. This is apparently the only complaint pending against the license. Additional Evidence On August 5, 2009, Respondent submitted a written estimate to Complainants to remove the evaporative cooler on their house, to install a Ruud 2.5 Ton 14 Seer Package Heat Pump, and to install ductwork consisting of an air return and four air supplies, for a total contract price of $6,184.09. The estimate showed taxes of $228.19. The estimate did not include any price to install heat strips. The estimate also did not show Respondent’s license number, preceded by the acronym “ROC.” The estimate included the note, “Customer to repair roof if not supportive enough for package unit.” Mrs. Eisenlord accepted the estimate, and on August 5, 2009, Respondent submitted a Proposal and Agreement to Complainants. The Proposal and Agreement showed the same total as the estimate and included “estimated permit fees and taxes” in the amount of $228.19. The Proposal and Agreement did not show Respondent’s license number, preceded by the acronym “ROC.” On August 10, 2009, Complainants paid one-half of the contract price, Respondent began the project, and Respondent issued an HVAC Service Order Invoice. The HVAC Service Order Invoice showed Respondent’s license number, preceded by the acronym “ROC.” Some discussion occurred between Mr. Eisenlord and Mr. Bascom when Respondent installed the heat pump about whether the roof over the original house was strong enough to support the unit. At Mr. Eisenlord’s request, Respondent mounted the heat pump on the roof over a newer addition to Complainants’ house. Mrs. Eisenlord testified that she was satisfied with the heat pump until water stains appeared on the ceiling tiles around the air return and air supply ducts after winter rainstorms in December 2009. Mrs. Eisenlord testified that the roof had never leaked before Respondent installed the heat pump and additional ductwork. Mr. Bascom testified that when Respondent first investigated Complainants’ complaint, its technician found that Complainants were still using a gas wall furnace to heat their home, rather than the electric heat pump. According to Mr. Bascom, the inside temperature was 80˚ or 85˚, and condensation was running down the inside of the windows and along the outside of the ducts, causing water damage to the ceiling tiles. On February 9, 2010, Respondent’s technician advised Complainants to “run heater to prevent condensation in duct work.” Respondent’s invoice for the service call showed its license number, preceded by the acronym “ROC.” Mr. Eisenlord admitted that he did not know that the heat pump provided heat, as well as refrigeration, until Mr. Bascom told him so. He also admitted that condensation was running down the inside of the windows when Mr. Bascom was at the home. Mr. Eisenlord denied that he ever heated the inside of the house to 80˚ or 85˚, because gas is expensive. Mr. Bascom testified that heat strips provide emergency heat if the outside temperature drops below 40˚ and the compressor goes out. The contract did not require Respondent to install heat strips because Complainants’ electrical service could not provide enough power to operate the strips. Mrs. Eisenlord testified that the heat pump should have had heat strips, and that Respondent should be required to upgrade Complainants’ electrical service so that it could install heat strips. Mr. Bascom testified that he did not include a permit in Respondent’s estimate because at the time, Cochise County was publicizing a special program under which it would waive permit requirements if residents replaced an older cooling system with a more efficient heat pump. Mr. Bascom testified that Respondent does not normally pay for permits; instead, it requires customers to pay for permits. Respondent submitted a copy of a letter to Complainants dated March 26, 2010, advising them that if they paid $185.94 for the permit, Respondent would pick the permit up. The letterhead did not show Respondent’s license number, preceded by the acronym “ROC.” As of the date of the hearing, Respondent had not obtained a permit from the Cochise County Planning and Zoning Department to replace Complainants’ evaporative cooler with an electric heat pump. CONCLUSIONS OF LAW The matter lies within the Registrar’s jurisdiction.[1] Complainants bear the burden of proof to establish Respondent’s statutory violations and affirmative claims by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[5] Mr. Bascom did not dispute that Respondent did not obtain the permit required by Cochise County before it replaced Complainants’ evaporative cooler with a heat pump, and that it also did not obtain the permit after Inspector Nieves issued the CWO. Because licensed contractors are required to comply with local building codes that regulate construction, they are required to obtain all required permits before beginning a project,[6] regardless of who pays for the permit. Respondent’s Proposal and Agreement showed that it charged $228.19 for permit fees and taxes. Even if the contract did not require Respondent to obtain the permit, a homeowner’s failure to pay for the permit does not excuse a contractor’s failure to obtain the permit before performing construction. Therefore, Complainants have established that Respondent violated A.R.S. § 32-1154(A)(2), (3),[7] and (23)[8] when it did not obtain a permit either before it replaced Complainants’ evaporative cooler with a heat pump, or after the CWO was issued. Complainants also have established that Respondent violated A.R.S. § 32- 1154(A)(13)[9] when it failed to display its license number, preceded by the acronym “ROC,” on the August 5, 2009 estimate, the August 5, 2009 Proposal and Agreement, and the March 26, 2010 letter. With respect to leaks and related damages, the only evidence that Complainants submitted to establish Respondent’s responsibility was Mrs. Eisenlord’s testimony that she had seen no evidence of water intrusion into the interior of her house until after Respondent installed the heat pump and ductwork. Water intrusion may be caused by many things, including roof leaks and condensation, and may occur at any time. Because Complainants did not establish that the leaks or damages to their house that they noticed in December 2009, more likely than not resulted from Respondent’s installation of the heat pump and ductwork in August 2009, Complainants have not established that Respondent violated any statute with respect to the leaks and water damages. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order, the Registrar suspend License No. ROC171590, Class K-39 previously issued to Respondent L and R A C Service and Repair, L.L.C. until Respondent has obtained the permit required to replace Complainants Ron and Martha Eisenlord’s evaporative cooler with a heat pump and has modified all of the documents and forms that it uses in its business to show its license number, preceded by the acronym “ROC.” It is further recommended that the Registrar not suspend Respondent’s license and, instead, close Case No. 2010-1184194 if on or before the effective date of the Registrar’s order, Respondent has provided written proof that is satisfactory to the Registrar that it has done the following:

(1) Obtained the permit required by the Cochise County Planning and Zoning Department to remove Complainants’ evaporative cooler and install a heat pump; and (2) Provided documentary proof that Respondent has revised its letterhead, estimate form, Proposal and Acceptance form, and all other forms or documents used in its contracting business to show its license number, preceded by the acronym “ROC.” 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 revoke 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, November 7, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1101 et seq. [2] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[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.” [7] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” The rule 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.” [8] 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.” [9] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” The specific statute violated is A.R.S. § 32-1124(B), which requires that licensed contractors include their license number, which “shall be preceded by the acronym ‘ROC,’” on “all written bids submitted by the licensee and . . . on all advertising, loan forms, lending institution forms, letterheads and other documents used by the licensee in the conduct of business regulated by this chapter.”

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