ALJDEC decisions subject to certification as final

2011A-234-ROC · Registrar of Contractors · 2011-09-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING DATES: July 8, 2011, at 1:00 p.m. and September 7, 2011, at 8:00 a.m. APPEARANCES: Complainant Jennifer Webber appeared on her own behalf; Respondent Richmond American Construction, Inc. was represented by Tyler Q. Swenson, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In April 2005, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC206612, Class B for residential general contracting to Richmond American Construction, Inc. (“Respondent”). On or about December 23, 2008, the Registrar received a complaint from Jennifer Webber (“Complainant”) regarding Respondent’s construction of a new house at 3763 East Santa Fe Lane in Gilbert, Arizona. According to the complaint, Complainant closed escrow on the purchase of the house on December 27, 2006, and moved into the house on January 7, 2007. The Registrar designated Complainant’s complaint as Case No. 09-3582. Complainant attached to her complaint in Case No. 09-3582 a list of 29 specifically enumerated complaints. Complaint Item No. 17 was that “[u]pstairs [master bedroom] door slams shut when AC/Heat turns on. Balance AC.” The complaint did not specifically mention that the heating, ventilation, and air conditioning (“HVAC”) system failed to provide adequate heat or cooling, that the temperatures in the upstairs and downstairs of the house were not uniform, or that Respondent had not constructed the HVAC system according to plan. The Registrar assigned Case No. 09-3582 to its inspector, Ted Gerold, for investigation. Inspector Gerold performed a jobsite inspection.[1] The Registrar referred Case No. 09-3582 to the Office of Administrative Hearings (“the OAH”), an independent state agency, for an evidentiary hearing. The Registrar scheduled a hearing to be held before Administrative Law Judge (“ALJ”) Brian E. Smith of the OAH to be held on September 14, 2009. On September 8, 2009, Complainant moved for a continuance to allow Respondent additional time to address all items of complaint per the parties’ jobsite agreement in Case No. 09-3582. On September 9, 2009, ALJ Smith denied Complainant’s motion to continue the hearing as untimely under A.A.C. R2-19-106(C). On September 9, 2009, Complainant moved to vacate the hearing in Case No. 09-3582 pursuant to the parties’ settlement agreement. According to Complainant’s motion to vacate, the parties’ settlement required Respondent to take three actions, as follows: (1) To replace the 3½-ton air conditioning unit with a 4-ton unit; (2) To reinstall the original recessed light in the downstairs closet; and (3) To replace the three-panel front door. ALJ Smith vacated the hearing in Case No. 09-3582 pursuant to the parties’ settlement and recommended that the Registrar close the complaint as resolved, settled, or withdrawn. On October 6, 2009, the Registrar adopted ALJ Smith’s recommendation. On January 13, 2011, the Registrar received a second complaint from Complainant regarding her house on East Santa Fe Lane in Gilbert, Arizona. The Registrar designated Complainant’s second complaint as Case No. 2011- 234. Complainant attached to her complaint in Case No. 2011-234 a copy of a letter dated January 12, 2011, signed by her uncle, James M. Muth, who claimed to be the owner of “Premier Air Solutions.” According Mr. Muth’s letter, Respondent failed to comply with the settlement agreement because it failed to install an air return in the downstairs of Complainant’s house. The Registrar’s electronic record does not show that it has ever issued a contractor’s license to Mr. Muth or to Premier Air Solutions.[2] According to Complainant’s complaint in Case No. 2011-234, “Phillip” at Leading Edge Air Conditioning and Heating, a subcontractor that Respondent had sent out in December 2010 to inspect Complainant’s new 4-ton air conditioning unit, told her that the unit was “running too hard and at the highest operating levels,” contrary to his expectations for a new unit, and that the unit “could go out any time.” Complainant stated that “Phillip” told her “Uncle Jim” that “the unit was slugging due to no return air downstairs to balance the flow of air throughout” the house. Complainant also alleged in her complaint in Case No. 2011-234 that the door to the master bedroom was still slamming when the air conditioner turned on, that the doorbell was broken, and that roof tiles had fallen off the roof and broken. The Registrar assigned Case No. 2011-234 to Inspector Gerold for investigation. On February 2, 2011, Inspector Gerold sent a letter to the parties, informing them that the Registrar had determined to close the complaint in Case No. 2011-234 for the following reasons: 1) In regards to the doorbell button: In the original complaint only the lighting, or lack of, was addressed but not proven that the doorbell should be lit up in the first place. Also, on 09/09/2009 the complainant sent a letter to Judge Smith vacating the hearing due to a settlement reached with Richmond American that did not include the doorbell issue as part of the settlement.

2) In regards to the A/C air return issue, in this inspector’s opinion, there is a stalemate between both parties and their evidence presented to me, and therefore I cannot make a decision as to the obligation of the respondent.

Inspector Gerold’s letter also informed Complainant that the Registrar would perform further review of her complaint if she made a written request. Complainant requested further review of her complaint in Case No. 2011- 234. On March 1, 2011, the Registrar issued a Citation and Complaint in Case No. 2011-234, charging Respondent with a violation of A.R.S. § 32- 1154(A)(3), namely A.A.C. R4-9-108. Respondent filed a timely written answer to the Citation and Complaint in Case No. 2011-234, denying any statutory violation. The Registrar referred Case No. 2011-234 to the OAH for an evidentiary hearing. A hearing was held on July 8, 2011, and September 7, 2011. Inspector Gerold testified on both hearing dates. Complainant submitted six exhibits and presented the testimony of two witnesses: (1) Herself; and (2) Eric Spencer, an employee of Deer Valley Mechanical, License No. ROC247567, Class K-39, who inspected Complainant’s HVAC system and testified as Complainant’s expert. Respondent submitted fifteen exhibits and presented the testimony of two witnesses: (1) Chris Willaby, Respondent’s Director of Home Care, who was responsible for addressing Complainant’s complaints; and (2) Charles Coates, an employee of Environmental Conditioning, Inc., doing business as Parker and Sons, License No. ROC152656, Class K-39 (“Parker and Sons”), who inspected Complainant’s HVAC system and testified as Respondent’s expert. Mr. Muth attended the hearing but did not testify. Mr. Spencer is not listed on Deer Valley Mechanical’s license. He testified that he owned his own company for twelve years and considers himself to be an HVAC expert. According to the Registrar’s records, the Registrar issued License No. 157305, Class K-39 to Breathe Easy Air Conditioning Heating and Refrigeration, L.L.C. (“Breathe Easy”), on which Mr. Spencer was listed as qualifying party and member. According to the Registrar’s record, on March 14, 2008, the Registrar revoked Breathe Easy’s license as a result of its failure to pay a $1,000.00 civil penalty in Case No. 07-1411. Mr. Spencer testified that the Registrar revoked Breathe Easy’s license after he sold the business. Mr. Coates is not listed on Parker and Sons’ license or on any other license that the Registrar has issued to any entity. Mr. Coates testified that he has worked in the HVAC industry in Arizona for 20 years and presently is employed by Parker and Sons in sales, consulting, and system design. Hearing Evidence Both parties agreed at the hearing that Respondent had replaced the front entry door, installed a recessed light in the downstairs closet, and replaced the 3½-ton unit with a 4-ton unit. In addition, Respondent issued a check in the amount of $500.00 to Complainant to comply with the parties’ settlement agreement, although Complainant declined to cash the check or to sign a written settlement agreement that Respondent drafted. Complainant acknowledged that the 4-ton unit was installed at the recommendation of her uncle, Mr. Muth. At the July 8, 2011 hearing date, Inspector Gerold testified that he performed a jobsite inspection on January 26, 2011, that Complainant, Mr. Muth, and Mr. Willaby attended. Inspector Gerold testified that at his first jobsite inspection in Case No. 09-3582, the master bedroom door closed when the air conditioner came on if the door was left open 12” or less. Inspector Gerold testified that at his January 26, 2011 inspection, the door still closed when the air conditioner came on, but only if it was left open 4” or less, and that the door did not close as hard as it did during his initial jobsite inspection in Case No. 09-3582. Inspector Gerold did not testify that there was a temperature differential between the upstairs and downstairs of Complainant’s house. At the first hearing date, Inspector Gerold testified that the HVAC system was constructed according to plan. Inspector Gerold testified that he had no opinions regarding Mr. Spencer’s expressed opinions about the efficiency of Complainant’s HVAC system because Inspector Gerold was not a mechanical engineer or experienced in analyzing HVAC systems. Mr. Spencer testified that there was a 9° difference between the temperatures upstairs and downstairs at Complainant’s house, that there was too little air flow at Complainant’s house due to a lack of registers, that there was insufficient static pressure in most areas, but excessive pressure at the filter, and that someone had bent the louvers at the grills, which further reduced air flow. Mr. Spencer testified that when he stood in the upstairs hallway, he heard the air conditioner motor making a “huffing” or “slugging” noise, indicating that the motor was working too hard and wearing out. Mr. Spencer made five recommendations to improve air flow, reduce the temperature differential, and improve the efficiency of the HVAC system at Complainant’s house: (1) Install an air return downstairs, at the bottom of the staircase; (2) Install additional ductwork that Mr. Spencer acknowledged would be expensive, since such installation would damage walls and floors; (3) Change all the registers to OBD that had a damper, allowing easier adjustments;[3] (4) Install new plenums at the air handlers; and (5) Install a third air conditioning unit with a new condenser and a second air handler because these components had been damaged by all the “huffing” and “slugging” that he heard. Mr. Spencer initially made these recommendations on March 17, 2011, when he inspected Complainant’s HVAC system as an employee of Precision Air and Heating, Inc., License No. ROC126405, Class C39R. Mr. Coates testified that the design of Complainant’s HVAC system complied with industry standards and applicable codes. Mr. Coates testified that the air return for Complainant’s system was at the top of the stairs, the highest point of the system, as it should be. Mr. Coates testified that the air flow in Complainant’s master bedroom was balanced by a “jump duct” and that there was no imbalance between the air handler and condenser in the outside unit. Mr. Coates testified that because the air handler provides air flow and the condenser provides refrigerant flow, replacing the condenser would not affect air flow. Mr. Coates testified that the static pressure in the HVAC system in Complainant’s house was within factory specifications for the system. Mr. Coates testified that the air flow in Complainant’s house exceeded 1 cubic foot/square foot of interior space, as is considered acceptable in the HVAC industry. At the second hearing date on September 7, 2011, Inspector Gerold testified that he had performed another inspection at Complainant’s request on September 6, 2011, and that although he sent a letter announcing the inspection, Respondent’s representatives did not attend.[4] Inspector Gerold testified that Complainant again showed him the mechanical plans on file for her floor plan, and that his inspection revealed that the construction of Complainant’s HVAC system did not comply with the plan in several respects, as follows: (1) A register was missing downstairs towards the front of the house; (2) The master bedroom and second and third bedrooms upstairs did not have return air filter frames, as shown on the plans; and (3) The upstairs return air grill in the hallway was 20”x30”, rather than 20”x20” shown on the plan. Inspector Gerold testified that although the Citation and Complaint did not charge Respondent with failing to construct the HVAC system in conformance with plans in violation of A.R.S. § 32-1154(A)(2),[5] he believed that Respondent’s failure to construct the system according to plan evinced poor workmanship, in violation of the A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108,[6] the violation that the Citation and Complaint charged. Inspector Gerold testified that he believed that Respondent’s departure from plans caused the master bedroom door to slam when the air conditioner turned on. Inspector Gerald acknowledged that he is not an expert on the design of HVAC systems. Inspector Gerold also acknowledged that the Registrar’s and industry standards allow contractors to modify plans if the modifications do not affect the performance of the system and the homeowner agrees to the modifications. Respondent submitted the contract to purchase the house that Complainant signed on or about April 20, 2006. Complainant initialed to indicate her acceptance of the following contact provisions: 4. Construction. The Improvements shall be constructed upon the Property by Builder in substantial conformance with the requirements of the Arizona Registrar of Contractors, and with Plan No. 2410, the plans and specifications for which have been approved by the applicable governmental authority in which the Property is located (the “Plans”). Copies of the Plans are on file at Seller’s office address . . . . Purchaser acknowledges and agrees that Seller and Builder reserve the right to make changes or substitutions in the construction of the Property: (i) as may be required, authorized, or approved by any governmental or quasi-governmental entities or agencies having jurisdiction thereover, including, but not limited to, the VA; . . . or (iii) as Seller and Builder may deem appropriate, provided such changes do not materially impair the quality of construction. . . . . . . .

16. Construction of Improvements by Builder. Seller and Builder have entered into a separate agreement whereby Builder has agreed to construct and/or complete the Improvements on the Property on behalf of and for the account of Seller as the purchaser of the Property, for resale by Seller, in substantial compliance with plans and specifications agreed to and on file with the Seller and Builder and with the city/county. . . . Builder is obligated to Seller to construct the Improvements in compliance with any applicable requirements of the appropriate FHA/VA/Conventional Lender and pertinent city/county regulations, and the final inspection and acceptance of the Improvements by any of such entities or agencies shall constitute conclusive proof of completion of the Improvements in substantial accordance with the plans and specifications . . . .

[Emphasis added.] Mr. Willaby testified that Complainant’s house passed final inspection and a certificate of occupancy was issued. Mr. Willaby testified that, therefore, under the contract, Complainant’s house was constructed in substantial compliance with the plans and specifications. Mr. Coates testified that the change from the plans to have only one return air filter rather than four was for the homeowner’s convenience, so she would not have to change multiple air filters. Mr. Coates testified that all three upstairs bedrooms had air supply registers and instead of air filter frames, had “jump ducts” to provide passive air circulation. Mr. Coates testified that he saw the register that the plans showed in the living room in a slightly different location, closer to the middle of the room. Mr. Coates testified that a few weeks after the first hearing date, he inspected Complainant’s HVAC system with Parker and Sons’ senior technician, David Axelrod. Mr. Coates testified that Mr. Axelrod inspected Complainant’s system, including the refrigerant level, temperatures, and capacitors. Mr. Coates testified that according to Mr. Axelrod’s measurements, the HVAC system in Complainant’s house functioned as intended, cooling the upstairs and downstairs uniformly and providing sufficient air flow. Mr. Coates testified that the condenser did not “slug.” Mr. Coates testified that the HVAC system in Complainant’s house was well laid out. CONCLUSIONS OF LAW A.R.S. § 32-1155(A) allows the Registrar to investigate a written complaint of an act by a licensed contractor that was committed within two years prior to the date of filing the complaint. The two-year period commences when a homeowner closes escrow on the purchase, moves into the house, or the contractor last worked on the house, whichever is later.[7] The timely filing of a complaint is a jurisdictional prerequisite.[8] A claim that Respondent failed to fully perform the September 9, 2009 settlement agreement is timely, because the settlement agreement was made less than two years before Complainant filed the January 13, 2011 complaint against Respondent. Any other claim would not be timely because the January 13, 2011 complaint was filed more than two years after Complainant moved into the house on January 7, 2007. With respect to the claims that are not time-barred, Complainant bears the burden of proof and must establish Respondent’s statutory violation by a preponderance of the evidence.[9] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[10] In their settlement agreement in Case No. 09-3582, Respondent and Complainant agreed that Respondent’s replacement of the 3½-ton unit with a 4-ton unit on Mr. Muth’s recommendation would resolve Complainant’s Complaint Item No. 17 regarding the master bedroom door slamming when the air conditioner turned on and any problem with “balance.” Respondent performed the agreement by replacing the air conditioning unit. Respondent did not agree to repair the system so that the master bedroom door no longer closed when the air conditioner turned on or to repair the HVAC system to Complainant’s satisfaction. The first notice of Complainant’s complaint that the HVAC system was not constructed according to plans was at the second hearing date on September 7, 2011, on her second complaint against Respondent in Case No. 2011-234. Therefore, these additional complaints are untimely and the Registrar lacks jurisdiction to consider them. Even if Complainant’s complaints about Respondent’s alleged departure from plans or persistent malfunctions in the HVAC system were timely, Complainant’s evidence at hearing did not establish that Respondent’s installation of the HVAC system violated A.R.S. § 32-1154(A)(3) or A.A.C. R4-9-108. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order in this matter, Complainant Jennifer Webber’s complaint in Case No. 2011-234 against Respondent Richmond American Construction, Inc.’s License No. ROC206612 be dismissed. 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, September 27, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The record in this matter does not show whether Inspector Gerold issued a Corrective Work Order in Case No. 09-3582 or, if so, the requirements of the Corrective Work Order. [2] The Registrar’s electronic record shows that the Registrar issued License Nos. ROC257613, Class C-39R, ROC257614, Class L-39, and ROC251823, Class L-45 to Premier Air Solution, Inc., doing business as Quality Air Solutions, but Mr. Muth is not listed on those licenses. [3] The record does not contain the acronym for which “OBD” stands. [4] Inspector Gerold sent notice of the inspection to Respondent’s corporate office, rather than to Respondent’s attorney. [5] 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.” [6] 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.” [7] See Attorney General Opinion I79-088 (March 28, 1979) (citing Lyon v. Great American Ins. Co., 4 Ariz. App. 596, 599, 422 P.2d 724, 727 (App. 1967)). [8] See Harrelson v. Industrial Commission of Arizona, 144 Ariz. 369, 371, 697 P.2d 1119, 1121 (App. 1985) (untimely filed administrative claim deprived agency of jurisdiction to consider merits of claim); Attorney General Opinion I79-088 (Registrar must act on and issue citation in complaints that meet “jurisdictional requirements” of A.R.S. § 32-1155(A)). [9] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [10] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

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