ALJDEC decisions subject to certification as final

2010A-308477421-ROC · Registrar of Contractors · 2011-08-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 22, 2011, at 8:00 a.m. APPEARANCES: Complainant Michael Wolfe appeared on behalf of himself and his wife, Judy Wolfe; Respondent Valley Wide Restoration, Inc. appeared through Johnny J. Sorensen, Esq., the Sorenson Law Firm, L.L.C. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In October 2007, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC238482, Class B-3 for residential general remodeling and repair contracting to Valley Wide Restoration, Inc. (“Respondent”). On or about December 2, 2010, the Registrar received a complaint from Michael and Judy Wolfe (“Complainants”) against Respondent regarding its restoration of portions of the Saltillo tile floor in their residence at 4804 South Elm Street, Tempe, Arizona. Complainants’ specific complaint was that “our floor is full of holes. Not lime pops but holes!” (Emphasis in original.) The Registrar assigned the complaint to its inspector, Geoff Galgan, for investigation. Inspector Galgan performed a jobsite inspection. On January 6, 2011, Inspector Galgan sent a letter to the parties, informing them that the Registrar would not issue a citation against Respondent for the following reasons: This inspection report addresses the fact that the work in question that was originally attempted (restoration of an existing Saltillo tile floor) by the respondent was redone by another contractor, the inspector not having seen the tile before work was done by either party [sic] cannot affirm or deny who is responsible, if anyone, or if the condition of the tile is the result of use and age.

(Emphasis in original.) Inspector Galgan also informed Complainants that they could request in writing further review of their complaint. On or about February 22, 2011, the Registrar received Complainants’ written request for a hearing. On March 21, 2011, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(2) and (3), namely A.A.C. R4-9-108. Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violations. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. On May 31, 2011, Respondent submitted a Motion to Vacate Citation and Dismiss Complaint based on A.R.S. § 32-1155(C)(2) because Respondent alleged that Complainants, not Respondent, had selected and supervised Valleywide Stonecare (“Stonecare”), an unlicensed entity, to restore the Saltillo tile after Respondent had completed its work. Complainants filed a written opposition to Respondent’s Motion to Vacate Citation and Dismiss Complaint. A prehearing conference was held on June 21, 2011, for oral argument on Respondent’s Motion to Vacate Citation and Dismiss Complaint. At the prehearing conference, Complainants denied that they hired Stonecare to repair Respondent’s work, and Respondent acknowledged that it paid Stonecare for its work at Complainants’ home. The Administrative Law Judge scheduled a continued hearing on the merits to allow her to make recommendations to the Registrar on all items in dispute. The Administrative Law Judge requested that Inspector Galgan render an opinion on whether Stonecare’s work complied with the Registrar’s standards in the event that Respondent was found to be responsible for Stonecare’s work. A hearing on the merits was held on August 22, 2011. Inspector Galgan testified. Complainant Mr. Wolfe submitted two exhibits and testified on Complainants’ behalf. Respondent submitted eleven exhibits and presented the testimony of two witnesses: (1) Darrel Luth, Stonecare’s owner; and (2) Bryan Lewis, Respondent’s qualifying party and officer. Hearing Evidence In approximately January 2010, Complainants’ hot water heater burst, causing water damage to the interior of their home. Their homeowner’s insurer hired Respondent to repair the damage, and Complainants authorized Respondent to begin repairs. Complainants’ house has substantial areas where Saltillo tile has been installed, including the hallway, kitchen, and bathroom. Mr. Lewis testified that the water damage did not extend to the Saltillo tile in the hallway, bathroom, and kitchen. However, because the floors in these rooms could be seen through the doorways of rooms whose floors Respondent cleaned and repaired, Complainants’ homeowner’s insurer authorized Respondent to strip, clean, and reseal the Saltillo tile in the hallway, bathroom, and kitchen so that these floors would match the repaired floors in adjoining rooms. The Saltillo tile in Complainants’ home is between 12 and 30 years old. Complainants purchased the house in 1986, and had not stripped and resealed the Saltillo tile since their purchase, although Mrs. Wolfe regularly mops the Saltillo tile with water. Complainants’ kitchen is galley style, with cabinets on either side of an approximately 4’-wide aisle that connects the living room, hallway, bathroom, and bedrooms on one side of the kitchen to the family room on the other side. In addition, Complainants have six dogs that have the run of the house, including a 70-pound Rottweiler. Mr. Lewis testified that water without a degreaser would not have removed oil from the animals’ fur and grime from many years of use, especially in such a high-traffic area as Complainants’ kitchen. Mr. Lewis testified that over the years, the Saltillo tile and grout had darkened. Existing Saltillo tile floors may have been sealed by many different kinds of sealers, which may be oil-based, acrylic-based, or contain other substances. Inspector Galgan and Mr. Lewis testified that if a contractor does not know the sealer that was last applied to a Saltillo tile floor, the contractor must use trial and error to discover a way to strip the sealer off the floor. Mr. Luth testified that the Saltillo tile in the hallway and bathroom of Complainants’ house is a “super Saltillo” that is machine-pressed and sold through Lowe’s or Home Depot. Mr. Luth testified that in contrast to “super Saltillo,” the Saltillo tile in Complainants’ kitchen is older, traditional Saltillo tile that is hand-pressed, allowed to dry in the sun, and imported from Mexico. Mr. Lewis testified that the Saltillo tile in the hallway and bathroom is fairly new. Mr. Lewis testified that the product that Respondent chose to strip the Saltillo tile in the bathroom and hallway “worked perfectly,” but that when Respondent applied it to the kitchen floor, the product did not work. Mr. Lewis testified that the tiles in the kitchen looked like they were at least 30 years old and had a substantial buildup of grime. Mr. Lewis testified that Complainants identified the product that had been used to seal the kitchen floor, but that after Respondent purchased stripper from the sealant manufacturer in Tempe and applied the stripper to the kitchen floor, it did not work. Finally, Mr. Lewis testified that Respondent found a stripper that would remove the sealer, but because the stripper would not liquefy, Respondent’s workers had to let it sit on the Saltillo tile in the kitchen for 15 or 20 minutes, then had to scrape the tile with plastic scrapers, buff, and reseal the tile. Approximately three weeks after Respondent finished resealing the Saltillo tile in Complainants’ kitchen, Mrs. Wolfe called Mr. Lewis to complain about the streaky appearance of the tile. To keep Complainants happy and to maintain Respondent’s reputation with their homeowner’s insurer, Mr. Lewis told Mrs. Wolfe to obtain proposals from other contractors to strip, clean, and reseal the kitchen floor, and offered to have Respondent pay Complainants’ chosen contractor to perform this work. Mrs. Wolfe presented Respondent with two proposals to strip, clean, and reseal the Saltillo tile floor in her kitchen: (1) A proposal dated March 8, 2010, from Stonecare, in the total amount of $3,472.00, $1,389.04 down and $1,810.96 at the completion of the work; and (2) A proposal dated March 3, 2010, from Mexican Tile Restoration, Inc., License No. ROC139742, Class C-5 for residential floor refinishing (“Mexican Tile”), in the total amount of $3,400.00. Both proposals were addressed to Complainants. Mr. Lewis testified that he recommended that Mexican Tile be hired because Respondent had worked with it in the past, Respondent had no experience with Stonecare, and Stonecare was unlicensed,[1] but that Mrs. Wolfe said that she did not like Mexican Tile’s attitude and she felt much more comfortable with Stonecare. Mr. Luth testified that he submitted Stonecare’s proposal to Mrs. Wolfe, and started the job at Complainants’ home at Mrs. Wolfe’s request. Mr. Luth testified that after he discussed with Mrs. Wolfe what Complainants wanted and when they wanted the job done, Stonecare worked on the floor for a day and a half, and that he did not notice any damage to the floor. Mr. Luth testified that he expected Complainants to pay for Stonecare’s work. Mr. Luth testified that he first heard about Respondent’s involvement when Mrs. Wolfe told him that Respondent would pay for the job, and if Respondent had not paid, he would have looked to Complainants for payment. Respondent gave a check dated March 29, 2010, in the amount of $1,389.04 to Complainants for the first payment to Stonecare. Mr. Lewis testified that Respondent did not discuss the scope of work, supervise, or schedule Stonecare’s work, and that Respondent paid for Stonecare’s work out-of- pocket and did not add any markup to Stonecare’s proposal for Respondent’s profit or overhead. Mr. Lewis testified that his first direct contact with Stonecare was when Mrs. Wolfe called him to say that Stonecare would finish the job in an hour and that he should look at its work. Mr. Lewis testified that he went to Complainants’ house, handed Respondent’s second check to Stonecare, dated April 6, 2010, in the amount of $1,810.96 to Mrs. Wolfe, and told her to give it to Stonecare when she was satisfied with its repairs. Approximately nine months after Stonecare stripped, cleaned, and resealed the Saltillo tile floor in Complainants’ kitchen, they complained that the floor was pitted in front of the refrigerator. Mr. Wolfe testified that he believes that the pitting was caused by Respondent’s use of plastic scrapers to strip the floor. Complainants submitted an unsigned, undated letter from Kerri McCoy, Project Manager with Sheahan Tile and Stone, L.L.C., License No. ROC251026, Class K-48 for dual floor covering, in relevant part as follows: I have inspected the Saltillo at the Wolfe residence and have found the flooring to have damage due to the strip and reseal that was done.

The kitchen area is the most heavily damaged. It is displaying signs of excessive lime pops and pitting. It is my belief that a stripping agent, other than what is recommended, has been used. This floor was installed over 10 years ago and should not have had new lime pop or pitting issues. Damage caused by using a [sic] “other than recommended” stripper would be the cause of this. . . .

Mr. Luth and Mr. Lewis testified that thin layers of clay over air bubbles in the older, hand-pressed Saltillo tile in Complainants’ kitchen chipped over time, forming pits or “lime pops” on the surface of the tile. Mr. Luth and Mr. Lewis testified that the pitting that Complainants complained about in front of the refrigerator was caused by years of traffic, not Respondent’s or Stonecare’s stripping, but that Complainants did not notice the pitting until the tiles were cleaned because the pitting was masked by years of grime. Inspector Galgan performed a prehearing jobsite inspection on August 5, 2011. Based on his inspection, Inspector Galgan issued a Prehearing Jobsite Inspection Report, in relevant part was follows: The problem this inspector encountered is that this was not a new tile installation but a restoration of an existing Saltillo tile floor of (approximately) fifteen to twenty years of age and without knowing the condition of the floor tile prior to the remedial work being performed the inspector is forced to make assumptions of how age, wear and use have affected the condition of the tile.

Although pitting is evident, predominantly in the kitchen area, on the surface of some of the tile, it is the opinion of this inspector that this would not be unusual when all the factors are considered. It is also the opinion of this inspector that the current condition of the floor would meet industry standards.

Inspector Galgan testified consistently with the Prehearing Jobsite Inspection Report. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[2] Complainants bear the burden of proof to 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] Stonecare modified Respondent’s work on the Saltillo tiles in Complainants’ kitchen. Respondent established at the hearing that Complainants selected, retained, scheduled, and supervised Stonecare. Because Respondent did not control Stonecare’s work, it was not Respondent’s agent or subcontractor.[6] Therefore, Complainants’ complaint against Respondent must be dismissed under A.R.S. § 32-1155(C)(2).[7] Even if Stonecare were Respondent’s subcontractor, Complainants have not established that Respondent’s or Stonecare’s work violated applicable workmanship standards. Ms. McCoy did not testify at the hearing, and the record contains no evidence of her qualifications. Ms. McCoy’s statements in the letter appear to be based on Complainants’ statements to her. Moreover, the statements in Ms. McCoy’s unsigned letter are hearsay,[8] and although hearsay may be admitted in an administrative hearing,[9] it should not be relied upon if it is not the kind of evidence upon which reasonable persons would rely in serious matters.[10] Ms. McCoy’s hearsay statement that the pitting resulted from Respondent’s or Stonecare’s stripping, as opposed to being a preexisting condition that was masked by years of accumulated grime, was contrary to Inspector Galgan’s, Mr. Lewis’, and Mr. Luth’s testimony, and it is not the kind of evidence upon which reasonable persons would rely to penalize a contractor’s license. Therefore, Complainants did not establish that Respondent violated applicable code or contract specifications, in violation of A.R.S. § 32-1154(A)(2),[11] or that Respondent failed to comply with the Registrar’s or industry workmanship standards, in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.[12] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order in this matter, the Registrar dismiss Case No. 2010-[number redacted] against Respondent Valley Wide Restoration, Inc.’s License No. ROC238482. 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, August 31, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Mr. Luth testified that because stripping, cleaning, and resealing Saltillo tile floor is very similar to the work that janitors perform in cleaning and waxing linoleum and other floors, no license is required. The Administrative Law Judge does not address the issue of whether a license is required to strip, clean, and reseal Saltillo tile floors because Stonecare’s license status is not relevant to the recommendation and in any event, the Citation and Complaint did not charge Respondent with aiding and abetting an unlicensed person to evade contracting laws in violation of A.R.S. § 32-1154(A)(10). [2] See 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] See, e.g., Urias v. PC Health System, Inc., 211 Ariz. 81, 88 ¶ 38, 118 P.3d 29, 36 (App. 2005) (“In determining whether an agency relationship existed between two parties, a court must find that the principal had the right to control the purported agent's conduct for the transaction at issue.”); Nava v. Truly Nolen Exterminating, 140 Ariz. 497, 500, 683 P.2d 296, 299 (App. 1984) (“Reservation by the asserted ‘principal’ of the right to control the transaction is essential to the existence of an agency relationship.”); State v. Superior Court in and for Pima County,120 Ariz. 501, 504, 586 P.2d 1313, 1316 (App. 1978) (“A person is not an agent for another unless the other had a right to control the transaction in question and to have it done for his benefit.”). [7] A.R.S. § 32-1155(C)(2) provides that “[t]he registrar shall not issue a citation for failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards if . . . [t]he contractor's work has been subject to neglect, modification or abnormal use.” [8] See Ariz. R. Evid. 801(c) (“‘Hearsay’ is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.”). [9] See A.R.S. § 41-1092.07(F)(1). [10] See Plowman v. Arizona State Liquor Board, 152 Ariz. 331, 337, 732 P.2d 222, 228 (App. 1986) (citing Begay v. Arizona Department of Economic Security, 128 Ariz. 407, 626 P.2d 137 (App. 1981)). [11] A.R.S. § 32-1154(A)(2) 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.” [12] A.R.S. § 32-1154(A)(3) 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.” A.A.C. R4-9-108 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.”

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