ALJDEC decisions subject to certification as final

2010A-308477507-ROC · Registrar of Contractors · 2011-06-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 9, 2011, at 8:00 a.m. APPEARANCES: Complainant North Scottsdale Out Patient Surgery Center appeared through Bryan Gawley, M.D., its owner; Respondent Commercial Flooring and National Flooring Systems, L.L.C. appeared through Daren Lasky, Vice President, Executive Board Director. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT In May 2007, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC233600, Class L-8 for commercial floor covering to Commercial Flooring and National Flooring Systems, L.L.C. (“Respondent”). On December 7, 2010, the Registrar received a complaint from Bryan Gawley, M.D., regarding Respondent’s installation of vinyl flooring at Dr. Gawley’s business, North Scottsdale Out Patient Surgery Center (“Complainant”). According to the complaint, the floor exhibited moisture damage because Respondent had failed to install a vapor barrier. The Registrar assigned the complaint to its inspector, Beau Cruz, for investigation. Inspector Cruz performed a jobsite inspection. On December 29, 2010, Inspector Cruz issued a Corrective Work Order (“CWO”) that required Respondent to rectify certain problems with Complainant’s floor, in relevant part as follows: License # 233600 issued to Commercial Flooring and National Flooring Systems, LLC is/was/has Expired on 5/31/09 and was Suspended on 6/1/2009 and cannot do nor subcontract the recommended corrective work listed in this directive. The only available remedy under this license status, if appropriate, would be financial settlement.

Complaint 1) The flooring in the entire surgery center is coming up (vinyl) – Moisture damage: Noted that entire vinyl sheeting flooring in surgery center and attached rooms with same flooring is excessively bubbled with failed heat weld seams in the surgery room as well as adhesive seepage noted in the post surgery area most notably on the south wall.

Complaint 2) In-effective laying of floor (barrier, epoxy, etc.): Contractor indicated that if proper vapor barrier had been in place, it could have prevented problem, yet he was not aware if vapor barrier was present, even though according to his comments, he observed open trenching in the structure prior to installation of product and that he had alerted general contractor of such. Even though in [sic] is not the flooring contractors [sic] responsibility to install vapor barrier under substrate, he is responsible for accepting surface and even if he was not aware if proper barrier was in place, it is incumbent upon him to ensure that vapor barrier was installed, prior to installation of product.

No action required of the following due to other contractor performing remedial work prior to jobsite inspection

Complaint 1) The flooring in the entire surgery center is coming up (vinyl) – Moisture damage: Areas in surgical room covered with tape on radial perimeter. Complainant hired another company (RA Peel and Sons) to attempt repairs of seams in the surgical room by applying silicone sealant in several areas of heat weld failure.

(Emphasis in original.) Complainant subsequently requested a hearing. On February 14, 2011, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and (23). Respondent timely answered the Citation and Complaint, denying any statutory violations and affirmatively alleging that it tested the floor for excess moisture in 2009, and found the moisture level to be acceptable for installation of the floor. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held on June 9, 2011. Inspector Cruz testified. Complainant submitted one exhibit and presented the testimony of two witnesses: (1) Dr. Gawley; and Wade Miller, the qualifying party and managing member of L C Peterson Building and Construction, L.L.C. doing business as (“dba”) Woody Brothers (“Woody Brothers”), License No. ROC194451, Class KB-1.[1] Respondent submitted one exhibit and presented the testimony of Daren Lasky, its Vice President and Executive Board Director. Additional Evidence The original general contractor in the construction of Complainant’s medical office, Kam General Contractor, Inc. dba Kam Construction (“Kam Construction”), License No. ROC213750, Class KB-1,[2] instructed Respondent not to install a vapor barrier between the vinyl floor and concrete substrate to save money. Neither Kam Construction nor Respondent obtained a signed, written disclaimer of warranty from Complainant that agreed to accept moisture problems that could result from the failure to install a vapor barrier under the substrate or the vinyl floor. Respondent installed the vinyl floor in approximately July 2009. Dr. Gawley started noticing rippling in the floor in December 2009. The rippling continued to worsen as time passed. Inspector Cruz testified consistently with the directives contained in the CWO. Inspector Cruz testified that contractors in Arizona are required to warranty their work for two years, and that the movement in the floor indicated excessive moisture in the substrate. Inspector Cruz testified that if a contractor installs a product on a surface, it is responsible for any inadequacies in the surface unless it obtains a signed warranty disclaimer from the property owner. Therefore, Respondent was responsible for the problems in Compainant’s floor. Inspector Cruz testified that he performed a prehearing jobsite inspection on June 8, 2011. At that time, due to the requirements of Dr. Gawley’s medical practice, another contractor had repaired Complainant’s floor. Complainant submitted an invoice from Shaw Contract Flooring Service, Inc. dba Spectra Contract Flooring, License No. ROC122975, Class L-8, dated May 26, 2011, in the amount of $44,030.02 for repairing and replacing the vinyl floor that Respondent installed. According to the Registrar’s record, on June 1, 2009, Respondent’s license was administratively suspended for non-renewal, and on June 1, 2010, Respondent’s license expired. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[3] The expired status of Respondent’s license does not deprive Complainant of its right to prosecute its complaint against Respondent or prevent the Registrar from determining the merits of Complainant’s complaint.[4] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[5] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[6] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[7] As a general principle in construction, a contractor who performs work on a surface constructed or prepared by another contractor accepts the surface. The subsequent contractor should inspect the surface for any flaws or defects that could affect the proposed work before performing the work. If the subsequent contractor finds the surface to be unacceptable, it should call any defects to the owner’s attention, so that the owner can choose whether to pay for additional safeguards to correct the surface or if the owner is not willing to pay to correct the surface, the subsequent contractor should obtain an explicit warranty disclaimer.[8] Because no such written disclaimer regarding the excess moisture in the substrate or lack of a vapor barrier was produced in this case, Respondent has not borne its burden to establish that it is not responsible for the poor appearance of the vinyl floor it installed at Complainant’s business. Mr. Lasky did not dispute that the floor had a poor appearance and that Respondent did not comply with the CWO. Therefore, Complainant has borne its burden to establish that Respondent violated A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108,[9] and (23)[10] in its installation of and failure to rectify the vinyl floor at Complainant’s business. Because Respondent’s expired license status prevents it from performing or from hiring others to perform any further corrective work,[11] Complainant is entitled to an order requiring Respondent to pay restitution under A.R.S. § 32-1156.01 for the cost of repairs to the areas of Complainant’s floor that the CWO ordered Respondent to rectify. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order, Respondent Commercial Flooring and National Flooring Systems, L.L.C.’s License No. ROC233600 be revoked. It is further recommended that if Respondent provides satisfactory written proof to the Registrar that it has paid Complainant North Scottsdale Out Patient Surgery Center the sum of $44,030.02 by certified or cashier’s check, the Registrar not revoke Respondent’s license but, instead, close Case No. 2010-[number redacted]. It is further recommended that the Registrar require Respondent to pay the sum of $500.00 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. 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, June 28, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] According to the Registrar’s record, Woody Brothers’ license expired on May 1, 2011. [2] According to the Registrar’s record, Kam Construction’s license was revoked on May 4, 2009. [3] See A.R.S. § 32-1101 et seq. [4] See A.R.S. § 32-1154(C). That statute provides that “[t]he expiration, cancellation, suspension or revocation of a license . . . shall not deprive the registrar of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such license, or to render a decision suspending or revoking such a license . . . .” [5] 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). [6] See A.A.C. R2-19-119(B)(2). [7] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [8] The principle of accepting the surface is supported by case law from other jurisdictions. 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 contractor’s construction fails due to the defective surface. See, Parker v. Thornton, 596 So.2d 854, 858 (Miss. 1992); Lewis v. Anchorage Asphalt Paving Co., 535 P.2d 1188, 1199 (Alaska 1975); Kuhlman v. Talley, 145 So.2d 101, 103 (La. App. 1962). The Supreme Court of Louisiana has recognized that the principle is based on common sense and a need for fair dealings between contractors and property owners:

[T]he requirements of public order and the obligation implicit in every contract that the work will be done in a workmanlike manner would compel us to reject a contention that [a subsequent contractor] 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). [9] 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.” [10] A.R.S. § 32-1154(A)(23) 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.” [11] It is unlawful for anyone without a contractor’s license in good standing to engage in contracting. See A.R.S. § 32-1151. “Contractor” is defined as anyone who “does himself or by or through others” performs construction. A.R.S. § 32-1101(A)(3) (emphasis added).

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