ALJDEC decisions subject to certification as final

2011A-1961-ROC · Registrar of Contractors · 2011-12-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 8, 2011, at 8:00 a.m. APPEARANCES: Complainant George Fritz appeared on his own behalf; Respondent Kodiak Pool and Spa, L.L.C. was represented by Thomas Moring, Esq., Pak & Moring, P.L.C. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In February 2008, the Arizona Registrar of Contractors (“the Registrar”) issued License No. KA-5.241959-D for dual swimming pool contracting to Kodiak Pool and Spa, L.L.C. (“Respondent”). On April 1, 2011, the Registrar received a complaint from George Fritz (“Complainant”) against Respondent, alleging nine specific complaints about the deck, ramada, and fire pit around a pool that Respondent had constructed at Complainant’s residence at 13613 West Cheery Lynn Road in Avondale, Arizona. The Registrar assigned the complaint to its inspector, Rick Oelke, for investigation. On May 2, 2011, Inspector Oelke issued a Corrective Work Order (“CWO”) to Respondent, requiring it to correct certain deficiencies within fifteen days, in relevant part as follows: License # KA-5.241959-D issued to Kodiak Pool and Spa LLC is classification # KA-5 Dual Swimming Pool Contractor and is not appropriate to complete part or all of the work listed below. Work must be completed by an appropriately licensed contractor.

1) The concrete slab has been confirmed to be lifting around the pool steps. Displacement and cracking observed are unacceptable. Contractor should correct the condition by appropriate means.

2) Cracked travertine tiles around the pool deck have been verified. Contractor should correct the cracked tiles by appropriate means.

3) Drain trough grating has been verified to be pinched/ displaced at multiple areas along the run of the drain trough. Contractor should correct the conditions by appropriate means. . . . .

*THE CONTRACTOR IS NOT PROPERLY LICENSED TO CORRECT THIS WORK, OR SUBCONTRACT THE ABOVE WORK.

(Emphasis in original.) On July 1, 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, A.R.S. § 32-1154(A)(13), namely A.R.S. §§ 32-1124(B) and 32-1158, A.R.S. § 32-1154(A)(17), and (23). Respondent filed a timely written answer to the Citation and Complaint, denying that its workmanship was deficient in any respect or that the work at Complainant’s property exceeded the scope of its KA-5 license. Respondent affirmatively alleged that it modified the forms used in its contracting business to conform to the requirements of A.R.S. §§ 32-1124(B) and 32-1158. On August 17, 2011, the Registrar amended Complainant’s complaint to allege five additional workmanship deficiencies and deemed Respondent to have denied the additional complaint allegations, including the following: (1) Deck is lifting around shell of pool; (2) Two travertine tiles in the pool deck were loose; and (3) There were large gaps between tiles. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on December 8, 2011. Inspector Oelke testified. Complainant submitted one exhibit and testified on his own behalf. Respondent submitted seven exhibits and presented the testimony of its qualifying party and managing member, Todd Michael Crane. Hearing Evidence On or about August 20, 2009, Respondent contracted to cover an existing back patio concrete slab and to build a pool with a water feature, pool deck, fire pit, and ramada at Complainant’s house (“the project”). When the parties executed the contract, Complainant’s back yard was not landscaped. Complainant’s house is built on a post-tension slab in an area with moderately to highly expansive soils. Mr. Crane warned Complainant that when he landscaped the back yard, he should take measures to slope the landscaping away from the pool area so that it would not drain onto the deck or into the pool and introduce moisture into the expansive soil under the project. Inspector Oelke testified that constructing the pool deck, submersed bar stools, bar, ramada, and fire pit, and installing travertine tile on the deck were beyond the scope of Respondent’s KA-5 license. Inspector Oelke also testified that Respondent’s KA-5 license did not allow it to subcontract to appropriately licensed subcontractors work that was beyond the scope of its license. Mr. Crane disagreed with Mr. Oelke’s opinion on the scope of Respondent’s KA-5 license. Mr. Crane testified that Respondent was identified as the responsible contractor for the job on all the permits that the City of Avondale Development Services Building Safety Division (“the City”) issued for the project. Mr. Crane argued that since the permits were issued and the project passed all of the City’s inspections, the project was within the scope of Respondent’s license. Because Complainant’s property had expansive soils, Respondent retained Ammtec Consulting, Inc. to provide engineering calculations for Complainant’s project. Respondent also retained JRD Measurement Services, L.L.C. to lay out the perimeter of the pool and the other parts of the project. Respondent started excavation for the pool in October 2009. During the course of construction, Respondent hired licensed contractors to complete parts of the project, including the following: (1) H E C Harshman Excavating Corporation of Arizona, License No. K-2.192711-D performed excavation; (2) Gilbert Tiger Enterprise, Inc. doing business as D and R Construction, License No. KB-2.153083-D poured the pool deck slab and constructed the fire pit; (3) Aquarium Pool and Plastering, L.L.C., License No. C-36.201821-R plastered the pool; (4) Dave’s Pool Tile, Inc., License No. C-48.150183-R installed the water line and tile in the pool; (5) Icon Gas Services, L.L.C., License No. K-37.255024-D plumbed water and gas lines; (6) Chicos Electric, L.L.C., License No. C-11.169237-R performed electrical work; and (7) East Valley Management, Inc., License No. KB- 2.212346-D performed cleanup. Mr. Crane testified that in addition to obtaining engineering calculations, Respondent modified construction of the project to minimize the effect of the expansive soils on site, including installing additional rebar in the concrete slabs. Mr. Crane testified that Respondent constructed the decks to be a total of 5” thick, including a 4”-thick layer of concrete and a 1”-thick layer of grout and travertine tile, to create substantial weight to combat the expansive soils. Mr. Crane testified that Respondent constructed the concrete slab in a continuous pour 360° around the pool. Although the result was a cold joint between the 2”-thick travertine coping around the pool and the pool deck slab, Mr. Crane testified that Respondent poured the portion of the slab adjacent to the bond beam and coping with a “half interlock” joint, in which the bond beam projected into the slab. Mr. Crane explained that the “half interlock” minimized deflection due to expansive soils and prevented moisture from the pool from entering the expansive soils because a portion of the bond beam was directly below the cold joint between the coping and pool deck slab. Respondent completed construction of the pool project in April 2010. Mr. Crane testified that the project was in good condition at the time and that the deficiencies that were at issue at the hearing did not appear until later. At some point after May 2010, Complainant landscaped the back yard around the pool. Although Mr. Crane and Inspector Oelke both requested contact information for the landscaper in an attempt to resolve the complaint against Respondent, Complainant declined to identify the landscaper. Photographs of the landscaping that Mr. Crane took in May 2011 showed gravel-covered mounds that were 1½’ or 2’ higher than the pool deck with landscaping vegetation, including three queen palm trees, directly behind and sloping toward the water feature and deck around the fire pit. Inspector Oelke testified that he performed a prehearing jobsite inspection on December 7, 2011, and verified that the first three items on Complainant’s original complaint still required correction and that the three additional items on Complainant’s amendment noted in Finding of Fact No. 6, supra, did not meet the Registrar’s standards. Inspector Oelke, Mr. Crane, and Complainant all agreed that the remaining deficiencies at the pool project were due to heaving of the expansive soils around the pool and that the upheaval was due to water having been introduced into the soils. The issue at the hearing was who was responsible for the water. Inspector Oelke testified that the problems at the jobsite exemplified why contractors should refrain from contracting beyond the scope of their licenses. Inspector Oelke is certified by the State of Arizona as an expert in the concrete trade on soils preparation and bearing, especially in areas of known expansive soils. Inspector Oelke testified that although he “would like to wring the neck of [Complainant’s] landscaper,” he did not believe that water from the landscaping caused the upheaval at the project. Inspector Oelke explained that the greatest upheaval was not at the perimeter of the slab, near the landscaping, but in the middle of the slab, between the house and the pool and fire pit. Inspector Oelke testified that he inferred that water had entered the soil through the cold joint between the coping around the pool and the pool deck slab. On June 6, 2011, Respondent provided to the Registrar and Complainant copies of a report from Gregory C. Garrett of Applied Materials Technologies, Inc., License No. KA-5.147495-D. The record does not reveal Mr. Garrett’s qualifications to render an opinion on causes for heaving of expansive soils. Mr. Garrett’s report noted that the landscaping in Complainant’s back yard is sloped toward the pool and deck and quoted the Registrar’s Workmanship Standards for Licensed Contractors (February 2009) (“Standards”) that provide that landscaping “should not interfere with established drainage.”[1] Mr. Garrett’s report also quoted the Registrar’s Standards for concrete that provide in relevant part: Settling or heaving of soils under concrete caused by alteration of grades by owner or owner’s agent, which create excessive ponding or moisture adjacent to concrete foundations, walks, drives, slabs, or patios, should not be considered the contractor’s responsibility providing the contractor has met all the conditions called for in the contract, plans, specifications, and all code requirements.

The contractor should be responsible to correct or ensure correction of settling or heaving if compaction is not according to the licensed soils engineer’s report or if no alterations have been made by owner or owner’s agent.[2]

At some point, after Complainant asked Inspector Oelke how to determine the cause of the expansive soils under the project heaving, Inspector Oelke recommended that Complainant contact the geotechnical engineering firm of Foree & Vann, Inc. (“Foree & Vann”). On October 28, 2011, Foree & Vann’s project geologist, Mark E. Smelser, B.S., made an initial site inspection and some time later took two core samples from the concrete slab in the areas between the house and pool and between the house and fire pit. Mr. Smelser prepared a report on November 30, 2011 (“the Foree & Vann report”). Mr. Smelser did not testify at the hearing. The first time Respondent or anyone employed by the Registrar heard of Foree & Vann’s report was when Complainant submitted it at the hearing. Foree & Vann’s report emphasized the need to avoid introducing water into expansive soils underneath slabs and structures and included the following “Landscaping Considerations”: The potential for unwanted slab movements can often times be reduced or minimized by following certain landscape practices. The main goal for proper landscape design should be to minimize fluctuations in the moisture content of the soils surrounding the structure. In addition to maintaining positive drainage away from the structure, appropriate plant/tree selections and sprinkler/irrigation practices are extremely important to the long-term performance of the foundations and slabs.

Foree & Vann’s report included pictures of the pool while it was being constructed. Although the pictures did not show the slab being poured, rebar or lack thereof before the slab pour, or Respondent’s construction of the “half interlock” joint over the bond beam, Foree & Vann’s report noted: At the site, historic photographs showing the construction of the pool shell and pool deck, along with observations made during our field investigation, suggest that a cold joint exists between the pool shell bond beam and the pool deck slab. Further, if the plastic-like form, as discussed and shown in the previous photographs, was left in-place limited bonding would take place between the pool shell and the pool deck. This poorly sealed joint (or bond) between the pool shell and the pool deck slab has created an avenue for water to penetrate the subgrade soils underlying the pool deck slab. Once the subgrade soils become wetted and heave, the displacement or movement of the slab creates an even wider gap for water to seep into the subgrade soils. . . . .

Additionally, water appears to be entering through the joint seal at the location of the pool deck drain due to the noted distress (slab heave and distortion of the drain). Therefore, the distress observed at the location of the pool deck drain can also be attributed to moisture infiltration into the subgrade soils.

It should be noted that no distress to the pool deck was observed along the pool deck edges where it abuts landscaping. . . . .

Whether or not the potential for soil expansion was recognized by the swimming pool contractors, no slab support considerations were used for the design and construction of the pool deck slab (i.e. no thickened slab, no reinforcement, no turn-downs at the slab edge and no low-expansion potential imported soils were detected during this firm’ [sic] investigation.

(Emphasis in original.) Foree & Vann’s report concluded that “the differential movement that has taken place between the pool deck slab and the pool shell bond beam and the pool deck drain is a direct result of soil heave brought on by the introduction of water into the moderate to highly expansive subgrade soils. . . .” Foree & Vann’s report made the following recommendations to remediate the deficiencies that the vertical deflection in the pool deck around the pool caused: The extent of the slab offsets and other distress are too great to remediate through cosmetic-type repairs (i.e. an option for grinding the slab and performing cosmetic repairs to the surface of the pool deck is not recommended because it is unlikely that soil heave is complete, therefore, we do not recommend this as a remedial measure).

We therefore, recommend the removal and replacement of the existing affected slab on grade (pool deck) and either: 1) replace of [sic] the upper 12 inches of slab support soils with lower expansion potential import soils or 2) design and construct a reinforced slab as recommended herein.

Mr. Crane testified that Respondent had attempted to correct all the items on the CWO, including the tiles and drain, on May 23, 2011. Mr. Crane testified that because the drainage from the landscaping had not been addressed, deficiencies caused by heaving due to soil expansion reoccurred. Mr. Crane testified that even if Respondent followed Foree & Vann’s recommendations for remedial action, the problems would recur as long as the landscaping does not conform to the Registrar’s Standards or follow Foree & Vann’s recommendations. According to the Registrar’s electronic record, on the date of hearing, Respondent’s license was current and in good standing. Complainant’s complaint appears to be the only complaint pending against the license. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[3] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[4] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[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] Although neither the parties’ contract nor any other documents that Respondent used in its performance of the contract were submitted, Respondent’s written answer admitted past violations of A.R.S. § 32- 1154(A)(13), namely A.R.S. §§ 32-1124(B) and 32-1158.[7] Respondent asserted as a factor in mitigation of the discipline for its admitted past violations that it has modified the forms it uses to conduct its business to comply with statutory requirements. Under A.A.C. R4-9-104, Respondent’s KA-5 license “allows the scope of work permitted by the commercial A-9 Swimming Pools and the residential B-5 General Swimming Pool licenses.” Under A.A.C. R4-9-102, a commercial A-9 Swimming Pools license allows the licensee to perform the following work: Construction, service, and repair of swimming pools and spas, including water and gas service lines from point of service to pool equipment, wiring from pool equipment to first readily accessible disconnect, pool piping, fittings, backflow prevention devices, waste lines, and other integral parts of a swimming pool or spa.

Also included is the installation of swimming pool accessories, covers, safety devices, and fencing for protective purposes, if in the original contract.

Under A.A.C. R4-9-103, a residential B-5 General Swimming Pool Contractor may perform the following work: Construction and repair of swimming pools and spas. Installation of fencing around the swimming pool or spa and installation of utilities from the point of service to the pool equipment. Construction of other structures or appurtenances is excluded. This scope includes all B-5R subclassifications.

B5R Swimming Pool Covers B5R Fiberglassing of Swimming Pools B5R Reservoir Linings & Covers B5R Factory Fabricated Pools & Accessories

(Emphasis added.) Because license classifications A-9 and B-5 do not allow construction of a pool deck and accessory structures like a ramada and fire pit, Respondent’s construction of these items was beyond the scope of its KA-5 license. “‘Knowingly’ imports only a knowledge that the facts exist which bring the act or omission within the provisions of the statute using such word. It does not require any knowledge of the unlawfulness of the act or omission.”[8] “‘Notice of facts and circumstances which would put a man of ordinary prudence and intelligence on inquiry is . . . equivalent to knowledge of all the facts a reasonably diligent inquiry would disclose.’”[9] Because Respondent should have known that its license does not allow it to construct the pool deck, ramada, or fire pit, Complainant established that Respondent violated A.R.S. § 32-1154(A)(17).[10] The fact that construction of the deck, ramada, and fire pit was beyond the scope of Respondent’s KA-5 license does not establish that Respondent’s or its subcontractors’ workmanship on these portions of the project was deficient. Complainant’s landscaping departs substantially from the Registrar’s Standards and does not come close to following Foree and Vann’s recommendations. Complainant resolutely resisted identifying his landscaper or even considering that the landscaping may have contributed to the problems with expansive soils in his back yard, even though the problems did not appear until after Complainant landscaped his back yard. Foree & Vann’s report was introduced at the last possible moment, the report appears to be based substantially on Complainant’s photographs and accounts to Mr. Smelser of Respondent’s construction of the project, and Respondent was not afforded an opportunity to cross-examine Mr. Smelser about the basis for his opinions. Therefore, Complainant did not carry his burden to establish that the poor appearance of the deck was due solely or even primarily to Respondent’s or its subcontractors’ poor workmanship.[11] Complainant did not establish that Respondent’s workmanship on the project violated A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.[12] Mr. Crane credibly testified that Respondent attempted to comply with the CWO. Complainant’s refusal to modify the landscaping, even though it violated industry and the Registrar’s standards, provides a legal excuse for Respondent’s failure to perform repeated repairs that likely would be futile. Therefore, Complainant did not establish that Respondent violated A.R.S. § 32-1154(A)(23).[13] RECOMMENDED ORDER As a result of the contracting law violations that Complainant George Fritz established in his complaint in Case No. 2011-1961, it is recommended that on the effective date of the Registrar’s final order in this matter, the Registrar suspend Respondent Kodiak Pool and Spa, L.L.C.’s License No. KA-5.241959-D for a period of seven calendar days. It is further recommended that the Registrar not reinstate Respondent’s license, regardless of whether the license is on disciplinary probation or not, until Respondent presents written proof that is satisfactory to the Registrar that Respondent has revised its contract form, invoice form, proposal form, business cards, letterhead, advertising, and any other documents used in its contracting business to comply with the requirements of A.R.S. §§ 32-1124(B) and 32-1158(B). It is further recommended that, in addition to any license suspension that may result from this matter, Respondent’s Class KA-5 license be placed on disciplinary probation for a period of 180 days, commencing on the expiration of the seven-day suspension or the date on which Respondent’s license is reinstated, whichever is later. 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, December 20, 2011. /s/ Diane Mihalsky Administrative Law Judge Transmitted electronically to: William A. Mundell, Director Registrar of Contractors ----------------------- [1] Standards at 18. [2] Standards at 8 (footnote added). [3] See 32-1101 et seq. [4] 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). [5] See A.A.C. R2-19-119(B)(2). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] A.R.S. § 32-1154(A)(13) 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.” A.R.S. § 32-1124(B) requires contractors to include their license number preceded by the acronym “ROC” on written bids, advertising, letterhead, and other documents used in their contracting business. A.R.S. § 32-1158(B) requires contractors to include certain terms in the written contracts that they make with property owners after December 31, 2007. [8] A.R.S. § 1-215. [9] Maricopa Utilities Co. v. Cline, 60 Ariz. 209, 214, 134 P.2d 156 (1943) (quoting Schneider v. Henley, 61 Cal. App. 758, 763, 215 P. 1036, 1038 (1923)). [10] This statutory subsection includes among the grounds for suspension, revocation, and other disciplinary action against a contractor’s license “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.” [11] The legislature has not authorized the Registrar to apportion fault between a homeowner and a contractor for the poor appearance of a project. Cf. A.R.S. §§ 32-2501 to 32-2509 (the Uniform Contribution among Tortfeasors Act authorizes courts in Arizona to determine pro rata liability among potentially responsible parties or non-parties). [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.” [13] 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.”

-----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826