ALJDEC decisions subject to certification as final

2011A-6304-ROC · Registrar of Contractors · 2012-06-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 5, 2012, at 8:00 a.m. APPEARANCES: Complainant appeared through his attorney, Michael W. Thal, Esq., Lang, Baker & Klain, PLC. Respondent appeared through its attorney, Richard C. Gamlich, Esq., Carmichael & Powell, P.C. . ADMINISTRATIVE LAW JUDGE: M. Douglas

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. Respondent is the holder of License No. C-42.220945-R issued by the Registrar of Contractors. 2. This is a residential matter where Complainant suffered storm damage to his roof and Respondent contracted to install a new roofing system on Complainant’s residence.[1] 3. When the old roof was removed Respondent discovered that much, if not all, of the plywood sheathing would have to be replaced and the parties entered into a contract addendum for the removal and replacement of the plywood sheathing.[2] 4. Respondent completed the installation of the new roof and Complainant was very dissatisfied with Respondent’s workmanship. Complainant retained Western Roof Evaluation Corporation (“Western”) to inspect the new roof. 5. Western inspected the new roof and provided Complainant with a written evaluation wherein Western recommended that the new roof be torn off, all of the wood sheathing removed and replaced and a new roof installed as per the parties’ contract and invoice.[3] 6. Complainant then filed a formal complaint against Respondent with the Registrar of Contractors based upon the written report provided by Western. 7. Pursuant to the filing of the formal Complaint, an assigned Agency Inspector conducted an on-site inspection of Complainant’s residence. On December 14, 2012, the Agency Inspector issued a written Corrective Work Order directing the Respondent to perform designated corrective work on the Complainant’s roof. 8. The Corrective Work Order provides, in pertinent part, as follows: Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufacturer's installation instructions. 1. See attached WRE Corp Report dated 10/27/2011 1) Not complaint 2) Not complaint 3) Sheathing has not been replaced per contract i. Insurance / contract details 1/2” CDX Plywood. ii. Respondent replaced sheathing (visible from attic access opening) with 19/32 (oriented strand board- OSB type) engineered sheathing. iii. Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufacturer's installation instructions.

iv. Respondent shall correct by appropriate means.

4) see 3 5) see 3 6) see 3 7) see 3 8) see 3 9) see 3 10) see 3 11) see 3 12) see 3 13) see 3 14) see 3 15) see 3

16) View of existing wood that is deteriorated and has not been replaced

i. Per jobsite agreement, the Respondent will correct by appropriate means.

ii. Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufacturer's installation instructions. iii. Respondent shall correct by appropriate means.

17) Deteriorated rafter that has not been replaced (complainant identifies end of 1”x 6” “gingerbread” barge at North West corner of roof.) i. No written record provided at time of inspection showing this as scope.

ii. No action required by the Respondent.

18) see 16 DUPLICATE 19) Roof jack flashing at the furnace vent is too large for pipe and sealant use [sic] has crack [sic] and will allow water entry into the structure. i. Per jobsite agreement, the Respondent will correct by appropriate means. ii. Respondent shall correct by appropriate means.

20) Air conditioning duct with improper application of sealants, water can enter at the structure. i. Per jobsite agreement, the Respondent will correct by appropriate means. ii. Respondent shall correct by appropriate means.

21) See #20 DUPLICATE 22) Sealants have not been installed at or under the vent hood flashing. i. No deficiency demonstrated or observed at time of inspection. ii. No action required by the Respondent.

23) Incompatible solvent-based sealant used with rubber topped pipe flashing. i. Per jobsite agreement, the Respondent will correct by appropriate means. ii. Respondent shall correct by appropriate means.

24) Valley cut line is not far enough out of the valley and the shingles have not been trimmed correctly i. Per jobsite agreement, the Respondent will correct by appropriate means. ii. Respondent shall correct by appropriate means. iii. 9. The Inspector testified that he conducted a pre-hearing inspection and observed that Respondent had not replaced the 5/8” OSB sheathing with ½” CDX plywood sheathing as required by the Corrective Work Order. The Inspector stated that all other items of the Corrective Work Order had been corrected.[4] 10. The Inspector testified that he based the requirement to remove the OSB sheathing and replace it with Plywood sheathing based on the Farmers Insurance Company of Arizona’s (“Farmers”) claim estimate of March 15, 2011, which specifies the removal of 2,765 square feet of existing sheathing and the installation of 2,765 square feet of new ½” CDX plywood sheathing.[5] 11. The Inspector testified that the 5/8” OSB sheathing meets local code requirements but does not comply with the specifications of the Farmers’ claim estimate. The Inspector stated that Respondent’s email of August 15, 2011, confirmed that Respondent’s revised invoice estimate was based on Farmers’ scope of work including the installation of ½” CDX plywood sheathing.[6] 12. The parties’ written construction contract provides that “both parties also agree that the work will be completed to the insurance company’s specifications and above stated specifications.”[7] 13. Complainant testified that he contacted local lumber yards and was informed that ½” CDX plywood is $21.00 to $31.00 dollars per sheet and that 5/8” OSB Board is $4.00 per sheet.[8] 14. Complainant stated that he would prefer not to have Respondent back on his property to perform any further corrective work.[9] 15. Complainant testified that the authorization and payment from the insurance company was not made until March 15, 2011.[10] 16. Complainant stated that he provided the March 15, 2011, revised insurance estimate, containing the specification for the installation of ½” CDX plywood to Respondent on March 15, 2011, and that Respondent resumed its work on his roof within two or three days.[11] 17. Complainant testified that on March 15, 2011, the decking for his roof was on a pallet in his back yard, and that the construction of his new roof was not completed by Respondent until March 18 or March 19, 2011.[12] 18. Complainant acknowledged that ½” CDX plywood was not specified in the parties’ original contract and stated that he would not have known what ½” CDX Plywood was at that time.[13] 19. The August 15, 2011, email from Respondent to Complainant provides, in pertinent part, as follows: Attached is the estimate from Farmers from which we are basing our final invoice figures from. The original estimate dated 12/27/11, is null and void due to the sheathing supplements being approved by Farmers. My recent invoice estimate is based off the 3-15-11 scope. I have deducted the fence painting, window glaze in addition to the Aluminum coating.[14] 20. John Anthony Angelone testified that he reviews contracts and he schedules work for Respondent. He stated that ½” CDX plywood was not specified in the parties’ original contract and that the use of 5/8” OSB Board was fully code compliant and accepted for use for structural purposes by the local building authority.[15] 21. Mr. Angelone stated that the 5/8” OSB Board was ordered and delivered to the jobsite on January 31, 2011, and that the 5/8” OSB Board would normally have been installed within a few days of the date of delivery.[16] 22. Mr. Angelone testified that there was only a nominal price difference between ½” CDX plywood and 5/8” OSB Board.[17] 23. Mr. Angelone stated that Respondent had revised its written forms in order to fully comply with the applicable provisions of A.R.S. § 32- 1158.[18] 24. The hearing record fails to support a finding that Respondent abandoned or refused to perform the construction project at issue. 25. The hearing record fails to support a finding that Respondent failed to comply with statutes or rules governing social security, worker’s compensation or unemployment insurance. 26. There was no credible evidence that Respondent committed a fraudulent act. 27. There was no credible evidence that Respondent aided or abetted a licensed or unlicensed person to evade the provisions of A.R.S. § 32- 1154(A). 28. The hearing record fails to support a finding that Respondent knowingly entered into a contract with a contractor for work to be performed for which a license is required with a person not duly licensed in the required classification. 29. There was no credible evidence presented to establish that Respondent violated the charged provisions of A.R.S. § 32-1154(A)(3), namely, A.A.C. R4-9-109 (a licensee shall do business under the name on the license). 30. The instant record failed to establish any grounds to justify a departure from a long-standing policy of the Registrar of Contractors to allow a contractor a reasonable opportunity, after a hearing, to correct any determined deficiencies in its work. 31. Administrative notice is taken of Respondent’s prior license record as reflected on the Registrar of Contractors’ public website on June 22, 2012. Such prior license record reflects that License No: C-42.220945- R is current and in good standing. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. Credible testimony and evidence supported findings which establish that the requirement to install ½” CDX plywood sheathing on Complainant’s roof is based on the Farmers’ claim estimate of March 15, 2011, which specifies the removal of 2,765 square feet of existing sheathing and the installation of 2,765 square feet of new ½” CDX plywood sheathing. The parties’ construction agreement was based on the Farmers Insurance Company of Arizona’s claim estimate of March 15, 2011. This tribunal concludes that Respondent departed from or disregarded the terms and specifications of the parties’ construction agreement by installing 5/8” OSB Board as sheathing on Complainant’s roof rather than the specified ½” CDX plywood and therefore, that Respondent violated the charged provision of A.R.S. § 32-1154(A)(2) (departure from or disregard of plans or specifications). 4. Credible testimony and evidence supported findings which establish that Respondent violated the charged provision of A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32-1158 (minimum elements of a contract) but that Respondent has now corrected its form contracts as per the statute. 5. Credible testimony and evidence supported findings which establish that Respondent failed to fully comply with the terms of the Corrective Work Order issued in this matter. This tribunal concludes that Respondent violated the charged provision of A.R.S. § 32-1154(A)(23) (failure to take appropriate corrective action). 6. Credible evidence of record failed to support a finding that Respondent violated the charged provisions of A.R.S. § 32-1154(A)(1) (abandonment), A.R.S. § 32-1154(A) (3), namely, A.A.C. R4-9-109. (name on license), A.R.S. § 32-1154(A)(9) (failure to complete for price stated in contract or any modification of the contract), A.R.S. § 32-1154(A)(10) (aiding or abetting a licensed or unlicensed person to evade this chapter), A.R.S. § 32-1154(A)(14) (knowingly entering into a contract with a contractor for work to be performed for which a license is required with a person not duly licensed). RECOMMENDed order In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order that License No: C-42.220945-R of Teca Roofing Systems LLC shall be suspended until the Registrar of Contractors receives and accepts written proof that the Respondent has fully complied with the terms and conditions of the written Corrective Work Order issued in this matter. It is further recommended that if the Respondent properly accomplishes the above described corrective action, on or before the effective date of this Order, then the above provided License suspension shall not take place and that this matter shall be closed. It is further recommended, in addition to the above-provided penalties, if any, that Respondent pay the sum of $500.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. § 32-1154(D). The failure by Respondent to pay the entire amount of the aforesaid civil penalty, on or before 30 days following the effective date of the Order entered in this matter, shall result in the automatic revocation of Respondent’s contractor’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 payment of any outstanding prior civil penalty is tendered. In the event of certification of this 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 the certification. Done this day, June 25, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] Exhibit No. C-1. (Contract). [2] Exhibit No. K. (Addendum to Contract). [3] Exhibit No. C. (Western Roofing Evaluation Corporation Report). [4] 6/5/12 Hearing Record (hereinafter “H.R.”) at 10:38-18:48. [5] Exhibit No. S. (3-15-11 Farmers Insurance Company of Arizona claims estimate). [6] Exhibit No. CC (8/15/11 Email). [7] Exhibit No. R-1 (Contract). [8] 6/15/12 H.R. at 1:16:20-1:16:33. [9] 6/15/12 H.R. at 1:29:50-1:30:00. [10] 6/15/12 H.R. at 59:01-1:00:02 and Exhibit R (3/15/11 Email from Farmers Insurance Company). [11] 6/5/12 H.R. at 1:00:02-1:00.52. [12] 6/5/12 H.R. at 1:34:35-1:36:35. [13] 6/5/12 H.R. at 1:39-35-1:40:26. [14] Exhibit No. CC (8/15/11 Email). [15] 6/5/12 H.R. at 2:31:01-2:35:10. [16] 6/5/12 H.R. at 2:35:20-2:36:26. [17] 6/5/12 H.R. at 2:37:14-2:38:55. [18] 6/5/12 H.R. at 2:44:00-2:44:20 and Exhibit No. 14 (Revised contract form).

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