PDF copy: ALJDEC decisions subject to certification as final

2011A-3422-ROC-res · Registrar of Contractors · 2014-04-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Christel L. Snodgrass No. 2011A-3422-ROC

COMPLAINANT -v-

License No: KB-2.232046-D of Hunter's Home Builders LLC dba ADMINISTRATIVE Hunter's Window and Siding LAW JUDGE DECISION RESPONDENT

HEARING: January 10, 2013 APPEARANCES: Complainant appeared on her own behalf, accompanied by her father Jerry Cox, who is a retired licensed contractor; Respondent was represented by Managing Member and Qualifying Party Darryl Hunter.

WITNESSES: Jim Dimond, ROC Inspector Christel Snodgrass Jerry Cox Darryl Hunter ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________ Complainant brings this action against Respondent based on repair and remodel work done at Complainant’s house after hail storm damage. The Citation and Complaint issued by the Registrar of Contractors (“Registrar” or “ROC”) alleges violations of failure to follow plans, specifications, or building codes; failure to meet workmanship standards; failure to comply with a Corrective Work Order; and failure to complete the job for the stated price. Amendment of the Citation and Complaint was granted upon request of Complainant to include allegations of violations of fraud; contracting beyond the scope of the license; and false, misleading, or deceptive advertising. Respondent denies the allegations.

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826 This tribunal entered the complaint file received from the ROC into the record, along with an Exhibit packet prepared by Complainant, containing Exhibits 1 through 19. Testimony was presented from the witnesses listed above. Based upon the entire

record, the Administrative Law Judge makes the following Findings of Fact,

Conclusions of Law, and Recommended Order finding only that workmanship issues

remain and recommending giving Respondent a chance to finish the corrective work.

FINDINGS OF FACT

1. Respondent is the holder of License No: KB-2.232046-D, a dual residential

and small commercial contractor’s license issued by the ROC. It authorizes

Respondent to perform general residential and general small commercial construction.

As far as the authority for residential work, Respondent is authorized to perform all

contracting “except for electrical, plumbing, air conditioning systems, boilers, swimming

pools, spas, and roofing (except shingles and shakes) which must be subcontracted to

an appropriately licensed contractor.”1 Darryl Hunter is the Qualifying Party on the license. 2. After hail storm damage to Complainant’s house in October 2010, Complainant entered into a contract with Respondent on April 27, 2011, for repairs that included removal and replacement of the foam roof (including replacement of roof jacks, exhaust caps, and all flashing), replacement of a rooftop air conditioning unit, repair of stucco damage, repair of interior drywall, installation of insulation and light fixtures, and replacement of baseboards, among other things.2 The total contract price is clearly stated in the agreement, as well as a payment schedule for three payments of 50%, 25%, and 25% of the total price at designated intervals. 3. The same day as the contract noted above, the parties entered into an Addendum agreement. The Addendum both changed some of the scope of work from the original contract and also added work. With regard to the roof, the Addendum states that it was to be power washed only and “Elastomeric Applied with pebbles.”3 It noted that Respondent would replace all roof jacks and flashing. It further noted that A.A.C. R4-9-103. Exhibit 1. there was an addition of 6 windows and that in one area Respondent would cut out drywall and “treat for mold. (If any exist) [sic]”4 The Addendum did not change the contract price.

4. Respondent worked on the project for several weeks. On June 3, 2011,

Complainant sent a letter to Respondent telling Respondent to “cease and desist” from

the project due to a long list of problems she had with Respondent’s work and

Respondent’s activities with her insurance company. Complainant filed her ROC

complaint on June 13, 2011.

5. On July 11, 2011, ROC Inspector Jim Dimond inspected the jobsite and, on

August 5, 2011, issued a Corrective Work Order (“CWO”) that states the following

(omitting items that are not at issue):

Item 15- Foam Roof- According to the insurance estimate, the whole roof was supposed to be taken off and redone. The contractor Darryl Hunter, said this wasn’t needed and that he could repair the roof with 2 coats of emulsion and use the extra money to do other home improvements. We agreed to this with the understanding that it was approved through the mortgage company. He told us that this is why we were doing the “addendum” and he would take care of all the paperwork, but he did not do that. The insurance claim calls for a complete R&R of the foam roof. A change order was signed authorizing repair only. The Inspector cannot determine what the mortgage company requirements were regarding this claim. As to the foam itself, foam coating got on to the drip edge and should be removed in an appropriate manner. Item 2- Windows- As you will see in the supporting documentation, Darryl state [sic] he gives away free windows, but is charging an enormous price for them. In addition, he’s charging me for a window (living room) that has not been installed. The windows (and sliding glass door) that were installed were not done correctly. They need to be cut loose and re- installed, repair drywall, re-caulk and parch [sic] stucco and interior paint. The windows were set wrong, so now my blinds no longer fit properly in

Id. 4 Id. The italicized portion is a restatement of the complaint, while the bold type is the Inspector’s comments and orders. the windows. We’ve also requested the tax credit documentation on my windows from Darryl, but have not received it. The windows do not appear be completed and are to be completed in accordance with manufacturer specifications. The specs for the windows have not been provided in order to make a determination whether the depth of the windows is correct or not. The interior depth of the windows are not typical (causing the blind issue) but without the specs, the Inspector cannot make a determination. The windows also do not appear to be flashed and the contractor is to correct any resulting damage from water intrusion.

It does appear that a line item for the living room window exists but that window has not been installed. Contractor is to correct this condition in an appropriate manner. As to the ‘free’ aspect of the windows. It does not appear that the contract amount has increased and therefore the homeowner is not out of pocket for the windows.

The sliding glass door did not appear to be functioning properly and the contractor is to correct the condition in an appropriate manner.

***

Item 4- Stucco- Windows were ordered the wrong size (custom instead of standard) which has caused a considerable amount of stucco work needing to be done. Contractor is to correct the condition in an appropriate manner.

Item 5- Drywall in office- They were supposed to remove the sheetrock 2’ high and treat for mold. They only removed a few inches and did not treat for mold. This area needs to be redone-sheetrock removed, treated for mold and replace and refinish sheet rock and paint. The drywall repair is very substandard. There has been no documentation that mold was present. Mold remediation was not a contracted item and if none was present, no further action would be required. Contractor is to correct the drywall in the office in an appropriate manner.

It should also be noted that the existing stucco on the office addition/enclosure is improperly installed as the stucco goes all of the way to the ground and has no code required weep screed. While this is not the respondents contracted responsibility, it could be a contributory factor to moisture intrusion in the structure. ***

Respondent performed much of this work. 6. In August 2011, Complainant filed an addendum to her complaint. It included changes to some of the original items as well as the addition of new items. Inspector Dimond performed another jobsite inspection and issued another CWO on October 18, 2011, with the following findings: THIS IS AN AMENDED AND ADDENDED CORRECTIVE WORK ORDER (CWO). THIS CWO SUPPLEMENTS THE CWO ISSUED ON 8/5/2011. THE FINDINGS ON THE PREVIOUS CWO THAT ARE NOT ADDRESSED HERE REMAIN UNCHANGED.

AMENDED FINDINGS:

Item 1- It appears that the Homeowner stopped the contractor from completing the cleaning of the drip edge. The contractor is to complete the cleaning and painting of the drip edge in an appropriate manner. If the complainant feels that the repair is inappropriate, she can request a citation and address the item at an Administrative Hearing.

Item 2- Windows- A review of the manufacturer spec. for the windows indicate that they are not installed in accordance with specs.- the nailing pattern is not correct, expansive foam was used, vapor barrier was not installed, the office window was trimmed, and weeps have stucco in them. The manufacturer specs. do not appear to differentiate between new construction and retro fits. Contractor is to correct the condition in an appropriate manner. The Inspector cannot determine who damaged the living room blind and no action is required on that item. It appears that the Complainant has not received the paperwork required for tax credits. Contractor is to correct the condition in an appropriate manner. Item 4- Stucco- There is an exposed shim at the office window. However, new stucco work is going to be required after correction of item 2. Contractor is to correct the condition in an appropriate manner after correcting item 2.

Item 5- Office drywall- The repair now meets standard but is unpainted. Contractor is to correct condition in an appropriate manner.

Due to the weep screed condition on the addition, the Inspector will not hold the contractor liable for any future water damage at the base of the office wall. The Inspector also cannot ascertain who caused the new scratches on the floor. No action is required of the contractor.

ADDENDUM ITEMS (note: the previous CWO stopped at item 8)

Item 9- Roof- no granules at Southwest corner of office, coated cables, cut foam at A/C unit and roof jacks. Contractor is to correct the condition in an appropriate manner.

Item 10- Sliding glass door threshold overhang. Manufacturer specs mandate complete support of overhangs. Contractor is to correct the condition in an appropriate manner. Item 11- Baseboards. Water damage Due to the weep screed condition, the Inspector will not hold the Contractor liable for this item. No action is required.

Item 12- Sprinkler system leak at new pipe. It appears that the pipe under the vacuum breaker is leaking below grade. Contractor is to correct the condition in an appropriate manner.

Note: if it is determined that the leak is the result of existing piping, it would be appropriate for a paid change order be executed. Again, Respondent performed some of this work. 7. In November 2011, Complainant requested a hearing. The parties appeared for hearing on March 23, 2012, and entered into a settlement agreement in lieu of hearing. The agreement called for Respondent to complete the corrective work listed in the CWO. In April 2012, Respondent performed corrective work, but the parties had difficulty working with each other. Respondent’s employees felt “harassed” by Complainant because she was taking photographs of them while they were working, interfering with the work. Complainant did not trust Respondent and had concerns about how Respondent was performing the repairs. Even so, the parties continued to

work with each other. Eventually, Respondent felt that the corrective work was complete and Complainant disagreed. This matter was then set for hearing on January 10, 2013.

Workmanship Items

8. Inspector Dimond conducted a prehearing inspection on January 9, 2013,

and testified at the hearing about his findings. He found partial compliance with the

CWOs, but not complete compliance.

Item 1 – Drip Edge

9. More specifically, he testified that Item 1, foam coating on the drip edge, had

been corrected. He pointed out that at the rear patio cover there was some foam on

the drip edge that had not been corrected, but that it had not been part of the CWOs

because it was roof foam and not coating. Respondent had only applied elastomeric

coating to the roof, not foam.

10. Complainant challenged the Inspector’s conclusion that the issue had been

corrected. Complainant’s father, Jerry Cox (“Cox”) is a retired licensed general

contractor who held a license in Arizona for many years. He testified on behalf of

Complainant. This tribunal finds him to be an experienced residential builder who is familiar with the workmanship standards in Arizona. 11. Cox testified that the drip edge is prefinished with an enamel colored coating that was damaged when Respondent sanded off the dried-on roof coating. Respondent then painted over the marks with spray paint. The Inspector found this to be an acceptable fix, but Complainant disagrees because the drip edge was prefinished with a durable coating and not paint. 12. Darryl Hunter (“Hunter”) testified that the drip edge is pre-painted, not coated. He stated that Respondent used the same paint to make the corrections that is already on the pre-painted drip edge. 13. The greater weight of the evidence supports Inspector Dimond’s conclusion that Respondent has corrected the drip edge in an appropriate manner. Therefore, Item 1 has been completed. Item 2 -- Windows 14. With regard to the windows, Inspector Dimond had received a copy of the window manufacturer’s specifications after the initial CWO and found that the windows were not installed in accordance with those specifications in the second CWO. At the

prehearing inspection, the applicable areas were closed in and no longer visible so he

could not tell if there had been compliance. He did note that the “window in the

exercise room had not been corrected” and that there remained some stucco in the

weep screed holes in the windows. He later clarified that the exercise room window

had been trimmed in an unsightly manner at the bottom of the frame so that it no longer

had a straight edge, and that there was still stucco “overspray” on the vinyl frame that

needed to be cleaned.6 Both of these conditions need correction.

15. Complainant and Cox are convinced that Respondent has not installed the

windows in accordance with manufacturer specifications, which they provided as

Exhibit 6. But, their opinion is based on speculation. Hunter testified that the windows

are installed properly and that the specifications provided by Complainant only apply to

new construction, not remodeling.

16. This tribunal finds that Inspector Dimond’s conclusions, as noted above, are

persuasive. Based on Inspector Dimond’s findings, which are the only findings supported by the greater weight of evidence, Item 2 has NOT been completed. Those problems noted in Finding of Fact 14 need correction. Items 4 & 5 17. Inspector Dimond testified that Item 4 had been corrected and that the drywall in Item 5 has been repaired but not yet painted. Item 5, then, needs further work for completion. 18. Complainant raises another issue with Item 5, concerning the office drywall. The evidence shows that, in that area, Respondent cut out a small portion of the drywall at the bottom and visually inspected for evidence of mold. Hunter testified that there was evidence of some water staining on the wood of the bottom plate of the Photographs in Exhibit 16 illustrate the trimmed edge (#93) and the stucco mess (#89). (The photographs in Exhibit 16 that were not numbered by Complainant contain a pink highlighter mark in the lower left corner. After the hearing, the Administrative Law Judge numbered those photographs beginning with #89.) framing, but no visual evidence of mold. Complainant contends that Respondent was contractually obligated to perform tests for mold with an outside expert. 19. The applicable contract provision states that Respondent was to treat for

mold “if any exists.” This language does not preclude a visual inspection and does not

require some specialized testing. Furthermore, there is no evidence that mold is

present such that the contractual obligation to treat it would be triggered. The evidence

does not show that any further corrective work is needed with regard to mold testing.

Item 9 -- Roof

20. Item 9 refers to four parts of the roof work done by Respondent: (1)

granules; (2) coated cables; (3) “cut foam at A/C;” and (4) roof jacks. Inspector Dimond

testified that the granules are in place and the cut foam has been corrected. Thus, 9(1)

and 9(3) are complete. He noted that the cables are still coated and need correction.

Also, he testified that the Addendum appears to call for new roof jacks and Respondent

did not install new roof jacks. Indeed, the Addendum clearly states that roof jacks

would be “replaced.” Therefore, 9(2) and 9(4) are not complete.

Other Items

21. Inspector Dimond testified that the sliding glass door has been supported. He noted that the sliding screen door lock needs an adjustment, but otherwise, Item 10 is complete. Complainant disagrees, and provided photographs in Exhibit 177 to illustrate its condition. The Administrative Law Judge cannot determine this issue based on the photographs, which are inconclusive. 22. Inspector Dimond noted an unpainted area in the interior by the thermostat. He stated that he is not sure who is responsible for painting that area, but it appears to the Administrative Law Judge that it is Respondent. 23. Finally, Inspector Dimond testified that there remains an underground pipe leak as stated in Item 12. 24. The greater weight of the evidence supports Inspector Dimond’s findings and recommendations for correction. The two photographs referenced are not numbered. However, the Administrative Law Judge has marked them with an asterisk in the lower right corner. 25. The evidence shows that the parties each had good faith disputes with the other about some of the workmanship items. Because of those disputes, the CWO items were not completed.

False, Deceptive, or Misleading Advertising

26. Complainant’s allegation of false advertising is based on postings that

Darryl Hunter made to a Facebook page in his personal name.8 The portion that

Complainant takes issue with is a reference to “free windows.” Complainant claims that

the windows she got were not free. Hunter explained that by “free” he means that there

will be no extra expense or out-of-pocket expense to the homeowner; the expense for

windows will be paid with insurance proceeds. For example, in Complainant’s case,

instead of replacing the entire foam roofing, Complainant chose to have Respondent

only re-coat the existing foam roofing, along with a few other corrections. Complainant

received the cost of replacing the roof from her insurance as part of her covered

damages, but she chose a less expensive correction, which then left money for other

improvements to the house, such as new windows. Thus, the cost of the windows was

covered by the “leftover” proceeds from insurance and did not come from

Complainant’s personal funds. In that sense, the windows were “free.” Allegation of Fraud 27. Complainant’s fraud allegation is also based on the “free windows” language. Complainant claims that it is not true, but that she relied on it. In addition, Complainant expressed a suspicion that Respondent had made false misrepresentations to the insurance company. There is no credible evidence to support this assertion, though. Also, there is no credible evidence showing any harm to Complainant as a result of such alleged misrepresentations. Complainant paid only the agreed upon contract price, nothing more. Scope of the License 28. The evidence shows that Respondent applied coating to Complainant’s foam roof. Complainant alleges that this is not within the scope of Respondent’s KB-2 Exhibit 7. Complainant’s reference to an e-mail from Darryl Hunter to her (Exhibit 13, p. 2) is rejected because that e-mail is not an advertisement. license, as that license allows Respondent to do only roofing with shingles and shakes, and not foam roofing. Hunter testified that he is authorized to apply coating to the roof under the KB-2 license. The record reflects that Inspector Dimond was aware of

Respondent’s work on the roof and did not raise the issue of the scope of Respondent’s

license. Also, no one at hearing asked Inspector Dimond whether Respondent was

authorized to apply the coating to the roof.

CONCLUSIONS OF LAW

1. The burden of proof at an administrative hearing is generally upon a

complainant.9 Further, the standard of proof at hearing is by preponderance of the

evidence.10 Therefore, Complainants bear the burden of showing, by a preponderance

of the evidence, that Respondent has violated the statutes cited in the Citation and

Complaint as amended.11 Complainants have met that burden with regard to one of the

allegations.

2. The Citation and Complaint alleges violations of A.R.S. § 32-1154(A)(2) (requiring compliance with plans, specifications, and building codes), A.R.S. § 32- 1154(A)(3) by way of A.A.C. R4-9-108 (prohibiting poor workmanship), A.R.S. § 32- 1154(A)(9) (requiring completion of a contract for the price agreed upon), and A.R.S. § 32-1154(A)(23) (requiring compliance with a CWO). In addition, the allowed amendments cite A.R.S. § 32-1154(A)(7) (doing a fraudulent act that results in substantial injury), A.R.S. § 32-1154(A)(16) (prohibiting false, misleading, or deceptive advertising whereby a member of the public may be misled and injured) and A.R.S. § 32-1154(A)(17) (prohibiting operating outside the scope of a license). 3. The evidence does NOT show a violation of A.R.S. § 32-1154(A)(2). 4. The evidence does show violation of A.R.S. § 32-1154(A)(3) for the items identified by Inspector Dimond based on his prehearing inspection. 5. A.R.S. § 32-1154(A)(7) prohibits “The doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” The

9 Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). 11 Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). statute does not define “fraud,” and, therefore, is presumed to refer to common law fraud. The nine elements of common-law fraud are as follows: "'(1) A representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance on its truth; (8) his right to rely thereon; (9) his consequent and proximate injury.'"12

All nine elements must be shown in order to find fraud. Furthermore, in order that a representation constitute actionable fraud, it must relate to either a past or existing fact. It cannot be predicated on unfulfilled promises, expressions of intention or statements concerning future events unless such were made with the present intention not to perform.13 Finally, common law fraud must be proven by the higher standard of clear and convincing evidence.14 6. Complainant alleges fraud in Respondent’s use of the “free windows” language. However, such language is not fraud as defined above. Complainant also expressed questions about the need for both the contract and the Addendum. The Administrative Law Judge finds that practice to be odd and to raise a potential for fraud. However, the evidence presented is not sufficient to show fraud occurred here. 7. A.R.S. § 32-1154(A)(9) prohibits “Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” There is no evidence that this provision has been violated. 8. A.R.S. § 32-1154(A)(16) prohibits “False, misleading or deceptive advertising whereby any member of the public may be misled and injured.” Again, the “free windows” language is the basis for this claim. However, the evidence does not show that the “free windows” reference was false, deceptive, or misleading. In a very loose Staheli v. Kauffman, 122 Ariz. 380, 383, 595 P.2d 172, 175 (1979) (quoting Carrel v. Lux, 101 Ariz. 430, 434, 420 P.2d 564, 568 (1966); Nielson v. Flashberg, 101 Ariz. 335, 338-39, 419 P.2d 514, 517-18 (1966). Id. (quoting Waddell v. White, 56 Ariz. 420, 428, 108 P.2d 565 (1940); Law v. Sidney, 47 Ariz. 1, 5, 53 P.2d 64 (1936)). sense, it was true, since the plan was to use no out-of-pocket money to pay for the windows. In this way, the windows are “free” in the loosest sense of the term. Nor is the Administrative Law Judge convinced that the Facebook postings constitute

advertising. The evidence does NOT show violation of A.R.S. § 32-1154(A)(16).

9. A.R.S. § 32-1154(A)(17) prohibits “Knowingly contracting beyond the scope

of the license or licenses of the licensee..” The act of applying elastomeric coating to

the already foamed roof does not appear to be outside the scope of Respondent’s

license. Complainant has not shown that Respondent performed work that it was not

authorized to do as a general residential contractor.

10. Finally, A.R.S. § 32-1154 (A)(23) requires licensed contractors to comply

with CWOs unless they have “valid justification” not to do so. Respondent performed

much of the corrective work, but did not complete it. Given the disputes between the

parties and the circumstances involved, this tribunal does NOT conclude that

Respondent violated A.R.S. § 32-1154 (A)(23), even though there remains corrective

work to be done.

11. Only A.R.S. § 32-1154(A)(3) has been violated.

12. Respondent expressed willingness to perform further corrections and Complainant asserted that she is willing to let Respondent do so. Therefore, the Registrar should order that the corrective work be completed. 13. Administrative notice is taken of Respondent’s prior license record as reflected on the ROC’s public website on January 31, 2013. That prior record shows that Respondent has held the license since April 2007 and has not had any disciplinary actions. 14. The appropriate sanction in this matter is to require Respondent to perform the corrective work as described in the two CWOs as supplemented by Inspector Dimond’s testimony at hearing and described above in Findings of Fact 8 through 25. If Respondent does not do so in a timely manner, the license should be suspended. RECOMMENDED ORDER

14 Godwin v. Farmers Ins. Co. of America, 129 Ariz. 416, 418-19, 631 P.2d 571, 573-74 (App. 1981). IT IS RECOMMENDED that License No: KB-2.232046-D, held by Hunter's Home Builders LLC dba Hunter's Window and Siding be suspended beginning the effective date of the Registrar’s Order unless the Registrar receives, and accepts, written proof

that Respondent has made the corrections noted in Conclusion of Law 14.

IT IS FURTHER RECOMMENDED that if Respondent provides such written

proof on or before the effective date of the Registrar’s Order, the license suspension

shall not take place and Case No. 2011-3422 shall be closed.

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, February 1, 2013. /s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors