ALJDEC decisions subject to certification as final

2010A-475919-ROC · Registrar of Contractors · 2012-04-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

RECOVERY FUND PAYOUT HEARING: March 20, 2012, at 8:00 a.m. APPEARANCES: Complainant Kathy Poscharsky-Pounds appeared telephonically on her own behalf; Respondent R B Long, L.L.C. dba Sedona Cozy Air was represented by Brian Keith Long, its qualifying party and member; the Arizona Registrar of Contractors was represented by Elizabeth A. Campbell, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. In 2006, the Arizona Registrar of Contractors (“the Registrar”) issued License No. C39R.216935-R for air conditioning and refrigeration to R B Long, L.L.C. doing business as (“dba”) Sedona Cozy Air (“Respondent”). 2. On or about September 23, 2009, Complainant filed a complaint to the Registrar against Respondent, alleging that the roof leaked around the air conditioning unit that Respondent installed on her residence at 280 Flaming Arrow Way, Sedona, Arizona. Complainant alleged that as a result of the leak, paint on the ceiling in her home had blistered. The Registrar designated Complainant’s complaint as Case No. F10-0047. 3. The Registrar assigned Case No. F10- 0047 to the inspector in its Flagstaff, Arizona office, Mark Schweiger, for investigation. On or about October 20, 2009, Inspector Schweiger issued a Corrective Work Order (“CWO”) in Case No. F10-0047 that required Respondent within fifteen calendar days to secure a permit for the work performed and to correct by appropriate means the sealant on the roof jack to the duct that was split. 4. The Registrar issued a Citation and Complaint against Respondent in Case No. F10-0047, charging violations of A.R.S. § 32-1154(A)(2),[1] A.R.S. § 32-1154(A)(23),[2] and A.R.S. § 32- 1154(A)(3), namely A.A.C. R4-9- 108.[3] 5. Respondent failed to file a timely written answer to the Citation and Complaint in Case No. F10-0047. 6. The Registrar redesignated Case No. F10-0047 as Case No. 2010-475919. On or about May 25, 2010, the Registrar issued a Decision and Order in Case No. 2010-475919, 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’s Order provided that on the effective date of the Order, Respondent’s License was to be suspended unless it complied with the CWO. The Order further required Respondent to pay a $500.00 civil penalty. 7. On June 30, 2011, Respondent’s license was suspended as a result of Complainant’s complaint in Case No. 2010-475919 (former Case No. F10- 0047). On June 30, 2011, Respondent’s license was revoked as a result of its failure to pay the $500.00 civil penalty. 8. Complainant filed a claim to the Registrar’s Residential Contractors’ Recovery Fund (“the Fund”). On the claim, Complainant stated that she had paid Respondent the full contract amount of $1,750.00 in cash. 9. Complainant requested a total payout in the amount of $4,405.05 to be reimbursed for monies that she paid to various persons to repair damages that Respondent’s statutory violations allegedly caused, as follows: 9.1 $100.00 in cash to unlicensed contractor Bill Henson to repair the roof; 9.2 $173.85 in cash to Home Depot for an attic ladder kit; 9.3 $600.00 in cash to unlicensed contractor Alton Lightfoot to install the attic ladder; 9.4 $588.00 by check to Arthur David Ortiz doing business as (“dba”) Art’s Painting, License No. C-34.113614-R (“Art’s Painting”), to paint and repair the damage to the ceiling that the leak caused; 9.5 $275.00 by check to Wizard’s Hearth and Home, Inc., License No. K-61.227884-D (“Wizard’s Hearth”), to clean the ductwork; and 9.6 $2,668.20 to T & T Refrigeration, Inc., License No. C-11.041472- R (“T & T”), to replace the ductwork. 10. On November 21, 2011, the Registrar issued a Notice of Denial of Recovery Fund Claim because Complainant’s evidence did not establish to the Registrar’s satisfaction that she had paid $1,750.00 in cash to Respondent. 11. Complainant requested a hearing. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 12. A Recovery Fund Eligibility/Payout hearing was held on March 20, 2012. Complainant testified. Respondent presented the testimony of its qualifying party and member, Brian Keith Long. The Registrar presented the testimony of Doug Ulmer, the Fund’s claims reviewer assigned to Complainant’s claim, and submitted three exhibits. Additional Evidence 13. On October 15, 2008, Respondent replaced the heat exchanger on Complainant’s air conditioning unit pursuant to her home warranty contract with First American. Because the unit needed to be moved and First American’s policy did not cover the new roof jack and related costs, Complainant agreed to pay Respondent $1,750.00 for the work that her home warranty contract did not cover. 14. Mr. Long acknowledged at the hearing that Complainant had paid $1,750.00 in cash to Respondent. 15. Mr. Long testified that Respondent performed appropriate corrective action to comply with the CWO. Mr. Long also testified that Respondent had to make a second roof penetration for the new air conditioning unit and that he instructed Complainant to hire a licensed contractor to repair the roof penetration for the unit that was removed. Mr. Long testified that Complainant hired an unlicensed contractor to repair the penetration and that the leak resulted from the unlicensed contractor’s poor repair. 16. Complainant testified that Respondent did not comply with the CWO and that the leak resulted from the new penetration that Respondent made for the new air conditioning unit. 17. Complainant testified that as a result of the leak, water pooled in the attic. Complainant testified that after she noticed a musty smell, she hired Wizard’s Hearth to clean the ductwork. Complainant testified that Wizard’s Hearth’s employees told her that Respondent had failed to seal where the new unit tied into the existing ductwork, resulting in musty air being drawn into the ductwork. 18. Mr. Long denied that Respondent’s transitional ductwork was deficient. Mr. Long testified that duct-cleaning companies are known for knocking ductwork apart. 19. Complainant testified that Wizard’s Hearth cleaning did not solve the problem because the musty air had infused the ductwork. Complainant testified that she then hired T & T to replace the ductwork. 20. Mr. Long testified that the ductwork in Complainant’s house was fiberboard, which is fiberglass with a foil backing. Mr. Long testified that fiberboard ductwork was commonly used at least 30 years ago. Mr. Long testified that most homeowners replace fiberboard ductwork with modern sheet metal because the fiberglass breaks down over time and may cause respiratory issues when it is inhaled. 21. Mr. Ulmer acknowledged that since Complainant’s payment to Respondent was no longer at issue, Complainant was entitled to recover from the Fund the $588.00 that she paid to Art’s Painting to repair collateral damage from the leak. 22. Mr. Ulmer testified that the Fund could not reimburse Complainant for the $100.00 that she paid to Bill Henson to repair the leak because the total cost of the project was greater than $1,000.00 and Mr. Henson was not a licensed contractor. 23. Mr. Ulmer testified that the Fund could not reimburse Complainant for the $600.00 that she paid to Alton Lightfoot because he was unlicensed and the attic ladder was not within the scope of the CWO. Mr. Ulmer testified that the Fund could not reimburse Complainant for the $173.00 that Complainant paid to Home Depot for the ladder kit because it was beyond the scope of the CWO. 24. Mr. Ulmer testified that the Fund could not reimburse Complainant for the $275.00 that she paid to Wizard’s Hearth for duct cleaning or the $2,668.20 that she paid to T & T for duct replacement because these items were beyond the scope of the CWO. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[4] 2. Complainant bears the burden of proof to establish the amount that she is 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 Order in Case No. 2010-475919 (former Case No. F10-0047) established that Respondent violated the charged statutes. 4. The legislature has limited awards from the Fund to “the actual damages suffered by the claimant as a direct result of the contractor’s violation” and provided that such award “shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines. . . .”[7] Complainant did not establish that the attic ladder or the duct cleaning and duct replacement were within the scope of Respondent’s contract or the scope of the CWO. Because the attic ladder, duct cleaning, and duct replacement were upgrades, they were not necessary to repair damages caused by Respondent’s proven statutory violations, and the Fund may not reimburse Complainant for these expenses. 5. The legislature also has required that “[a]ctual damages shall not be established by . . . the value of work performed by a person or entity that is not licensed pursuant to this chapter and that is required to be licensed pursuant to this chapter.”[8] The legislature has required anyone who performs construction to be licensed,[9] but has provided an exception to the licensure requirement if the aggregate cost of a project, including labor and materials, is less than $1,000.00.[10] Although the cost of repairs was less than $1,000.00, because the value of Respondent’s project at Complainant’s house was at least $1,750.00,[11] a license was required to repair Respondent’s work on the project. Therefore, the Fund may not reimburse Complainant for the $100.00 that she paid to unlicensed contractor Mr. Henson to repair the roof. 6. Complainant established that she is entitled to a payout from the Fund to reimburse her for the $588.00 that she paid to licensed contractor Art’s Painting to repair the collateral damage caused by the leak that resulted from Respondent’s proven statutory violations. 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 $588.00 to Complainant Kathy Poscharsky- Pounds when 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, April 9, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] 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.” [2] 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.” [3] 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.” [4] 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). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] A.R.S. § 32-1132(A) (emphasis added). [8] Id. (emphasis added). [9] See A.R.S. §§ 32-1101(A)(3) (definition of “contractor”) and 32-1151 (prohibiting engaging in contracting without a license). [10] See A.R.S. § 32-1121(A)(14) (so-called “handyman’s exemption”). [11] The record does not contain the value of the materials and labor that Complainant’s homeowner’s warranty covered on the project.

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