ALJDEC decisions subject to certification as final

2012A-1896-ROC · Registrar of Contractors · 2012-11-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 5, 2012, at 8:15 a.m. APPEARANCES: Complainant Sharon Giuliano appeared on behalf of herself and her husband, Michael V. Giuliano; Respondent P V Contracting LLC appeared through Ronald William Polder, its qualifying party and member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure The Arizona Registrar of Contractors (the Registrar) issued License No. KB- 2.264179-D for residential and small commercial contracting to P V Contracting LLC (“Respondent”). Ronald William Polder is the qualifying party, member, and the only person listed on Respondent’s license. On or about April 12, 2012, the Registrar received a Complaint from Michael V. Giuliano alleging thirteen specific items of complaint against Respondent in its repair of damage caused by ice at Mr. Giuliano’s house at 4020 East Longley Drive, Flagstaff, Arizona. According to the Complaint, the date of the parties’ contract was March 12, 2011, the amount of the parties’ contract was $18,790.00, and Mr. Giuliano paid Respondent a total of $19,800.00. The Complaint left blank the spaces for the dates when Respondent last performed work at or completed the project. Mr. Giuliano attached to the Complaint Respondent’s proposal dated March 11, 2011, in the amount of $18,790.00, for the following scope of work: * Remove existing roof shingle – underlayment, etc. and haul from job site. * Replace roof – 30 yr. arch. High profile Z ridge shingles. Ice and water shield – vents—drip edge. Apply ridge vent. * Replace any damaged plywood. * New gutters at damaged areas. * Remove [windows] and replace with proper sealing. * Make all needed repairs to soffit and [fascia] – siding * Prime and paint * Remove and replace all needed drywall insulation etc. Hang, tape, texture and paint. * Install new soffit vent * All permits included * Turn-key [construction] * All warranties apply

Thomas R. Blacketer signed the proposal on behalf of Respondent. Mr. Giuliano signed the proposal to accept it on March 12, 2011 (“the March 12, 2011 contract”). The Registrar assigned Mr. Giuliano’s Complaint to its inspector, Rick Emry, for investigation. Inspector Emry performed a jobsite inspection and on May 2, 2012, issued a Corrective Work Order (“CWO”) that required Respondent to perform certain corrective actions within fifteen calendar days, in relevant part as follows: #1 Overpayment Original Invoice $18,790.00 total amount paid $19,800.00 Not a workmanship issue[;] Inspector has no first hand knowledge.

#2 Work was not completed as per contract The statement does not specifically address a workmanship issue. It was apparent that work was still in progress or otherwise not completed as per supplied contract. Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufacturer's installation instructions.

#3 Windows were not installed with proper sealant (sealing) 6 of windows installed, 1 window damaged The windows in question have been corrected by others prior to jobsite inspection. No action required by the Respondent

#4 Gutters were not installed No gutters were in place or otherwise on site. Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufacturer's installation instructions.

#5 Soffit was not installed properly; soffit was wavy due to lack of nailers behind it (throughout) The rough sawn soffit was corrected by others prior to jobsite inspection. No action required by the Respondent

#6 Vents were not installed properly due to wavy soffits (throughout) Vents were corrected by others prior to jobsite inspection No action required by the Respondent

#7 Prime and paint not started or completed throughout The entire exterior of the house was sided with unpainted cottage lap siding. The replaced rough sawn [fascia] and rough sawn trim was not primed or painted. Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufacturer's installation instructions.

#8 Drywall was not removed and installed, no tape, texture or painted, holes cut out of drywall in master bedroom, master bathroom not patched The holes in the wall of the bedroom had not been patched. The hole in the bathroom had been taped and textured back into the wall but not painted. Respondent shall correct by appropriate means

#9 Verbal to inspect for mold, remove and replace down to studs, only small sections cut out of office wall, only lower half of kitchen wall removed, siding, OSB, and black fiber board not installed I was unable to determine at time of inspection. The north exterior kitchen wall was corrected by others prior to jobsite inspection. No action required by the Respondent

#10 Side wall at office was to be inspected for mold, water damage and replace down to studs, only two sections removed I was unable to determine at time of inspection. No action required by the Respondent

#11 Office wall at rear and patio never opened or exposed I was unable to determine at time of inspection. No action required by the Respondent

#12 No window ledges installed upon removal All interior windows (x8) did not have window ledges in place. Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufacturer's installation instructions.

#13 Garage side vent not completed The ridge vent did not intersect with the perpendicular ridge line. No deficiency demonstrated or observed at time of inspection, no action required by the Respondent.

On or about May 24, 2012, Mr. Giuliano asked the Registrar to issue a citation against Respondent because although Respondent had painted the fascia and soffit, the exterior walls of the house had not been painted and walls at the far side of the house were not completed. The Registrar issued a Citation and Complaint against Respondent charging possible violations of A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(23). Mr. Polder filed a timely written answer to the Citation and Complaint on Respondent’s behalf, denying any statutory violations. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A videoconference hearing was held on November 5, 2012. At the hearing, the Administrative Law Judge added Mr. Giuliano’s wife, Sharon Giuliano, as an additional party Complainant. Inspector Emry testified. Mr. and Mrs. Giuliano (hereinafter, “Complainants”) submitted 31 exhibits and presented the testimony of two witnesses: (1) Mrs. Giuliano; and (2) Byron Hayes, Complainants’ friend who performed work on the repair project. Respondent submitted two exhibits and presented the testimony of two witnesses: (1) Mr. Polder; and (2) Tucker McGregor, Complainants’ personal insurance agent and Respondent’s business insurance agent. Additional Evidence Mr. Polder testified that Mr. Blacketer was his friend. Mr. Polder testified that he has a masonry license[2] and that after Mr. Blacketer went though an ugly divorce, Mr. Polder formed Respondent to provide his friend with employment.[3] Mr. Polder testified that Mr. Blacketer was Respondent’s managing member and that Mr. Polder did not know about all the contracts that Mr. Blacketer made on behalf of Respondent. Water from ice dams damaged the roof, exterior, and interior of Complainants’ house. Complainants contacted Mr. Blacketer to obtain a bid to submit to their homeowner’s insurance company to support their claim for repairs. Mr. Blacketer on Respondent’s behalf started the work required by the March 12, 2011 contract. Complainants paid Respondent $3,800.00 on March 12, 2011, $7,000.00 on March 25, 2011, and $9,000.00 on an unspecified date,[4] for a total of $19,800.00. Mr. Blacketer passed away on March 30, 2012. Until Mr. Polder received Complainants’ Complaint, he did not know about Respondent’s contract to perform repairs at their house. Mr. Polder testified that initially, he thought that the amount of the March 11, 2011 contract seemed too low for what the cost should have been for Respondent to perform the repairs that were described in Complainant’s Complaint. Mr. Polder testified that after a structure is severely damaged by water, contractors usually submit a preliminary bid to expose damage inside walls so that they can prepare a second bid to allow the homeowner’s insurer to fully evaluate the insurance claim. Mr. Polder testified that after the contractor determines the extent of damage inside walls, he prepares a second proposal to complete the repairs that are necessary to fully repair the structure. Mr. Polder testified that after he received the Complaint, he located a second proposal that Mr. Blacketer had prepared for the full repair of Complainants’ house that was dated May 11, 2011, in the amount of $21,157.00, that provided in relevant part as follows: * Remove and replace 128 [square feet] of drywall + 16’ of baseboard Replace insulation and paint to match – 1280 * Remove and replace molded drywall in front bedroom 14’ x 8’ + 14’ baseboard – tape – texture -- Paint + new wet insulation – 112 [square feet] – 1120 * (1) Replace 3 more windows with broken seals – sill seal – insulate – exterior trim and interior sills 2598 * Remove and replace 1151 [square feet] of cottage lap siding along soffit and [fascia] – new insulation – shear and vapor barrier -- $9.00 [per square foot] = 10,359 * (2) Paint entire exterior of house – Base and Trim – 5800 * All Permits included * All Warranties apply * Taxes and Profits included * Haul all debris

Complainants were familiar with Respondent’s May 11, 2011 proposal but pointed out that they did not sign the proposal. Mrs. Giuliano testified that she understood that the March 12, 2011 contract included all repairs. Complainants’ friend, Mr. Hayes, is not a licensed contractor, although he worked in construction between 1979 and 1986. After Respondent performed work on the house pursuant to the March 12, 2011 contract, Complainants hired Mr. Hayes and another unlicensed contractor to perform repair at their house. Mr. McGregor testified that Complainants’ insurance company requires insured homeowners to provide bids from licensed contractors to establish the amount of claims for damages to their houses. Mr. McGregor testified that after the insurance company authorizes payment on a claim, the insured homeowner is not required to hire the contractor that submitted the bid. Mr. McGregor testified that the homeowner has discretion to perform the repair work himself or to hire someone else to perform the repair work. Mr. McGregor testified that the insurance company’s primary concern is that repair work be done right. Mr. McGregor testified that Complainants’ insurance company paid them a total of $47,894.00 on their claim for the damage to their residence caused by the ice dams based on Respondent’s March 11, 2011 proposal, evidence of additional damage that Respondent discovered during performance of the work described in the March 12, 2012 contract, and another contractor’s estimate for mold remediation, for which Complainants’ policy provided limited coverage. Mr. McGregor testified that Complainants were paid less for recoverable depreciation as a penalty for using unlicensed contractors to perform repairs. Mr. Polder testified that after he received the CWO, he replaced the damaged gutters at Complainants’ residence and painted the soffit and fascia and put in window sills on the windows that were included in the March 12, 2011 contract. Mr. Polder testified that one window that he did not put a sill on was included in the May 11, 2011 proposal that Complainants did not accept. Mrs. Giuliano testified that Respondent abandoned the job and requested that the Registrar require Respondent to pay to close up the house and to complete the painting of the new siding. Mr. Polder testified that the “prime and paint” in Respondent’s March 11, 2011 proposal referred to the soffit and fascia. Mr. Polder testified that Respondent’s May 11, 2011 proposal provided for replacing 1151 square feet of cottage lap siding at a cost of $10,359.00, painting the entire exterior or Complainants’ house at a cost of $5,800.00, and repairing interior drywall and baseboard at a cost of $1,120.00, but that because Complainants did not accept the May 11, 2011 proposal, Respondent did not contract to close up or to paint the exterior of Complainants’ house or to complete interior drywall repairs. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[5] Complainants bear the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[6] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[7] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[8] The scope of work in the parties’ March 12, 2011 contract was somewhat ambiguous. Mr. Polder’s and Mr. McGregor’s credible testimony and Respondent’s May 11, 2011 proposal resolved the ambiguity and established that the scope of the March 12, 2011 contract included replacement of the roof, soffit and fascia, and exploration of the extent of damage inside but not complete repair of interior and exterior walls. Although in some circumstances, ambiguity in a contract is construed against the drafter, courts in Arizona resort to that rule only when evidence of the transaction as a whole does not resolve the ambiguity.[9] Respondent established that Complainants received money from their insurance company for their insurance claim based primarily on Respondent’s March 11, 2011 proposal and May 11, 2011 proposal, but that Complainants did not accept Respondent’s May 11, 2011 proposal. Respondent established that, instead, Complainants hired unlicensed contractors to complete the repairs that were the subject of the unresolved items on Complainants’ Complaint with the Registrar against Respondent. Therefore, Complainants did not establish that Respondent abandoned its contract in violation of A.R.S. § 32-1154(A)(1)[10] or failed to perform its work in a professional and workmanlike manner, in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.[11] The CWO required Respondent to complete the contract. Mr. Polder credibly testified that Respondent replaced damaged gutters and painted the soffit and fascia. Respondent established that the parties’ contract did not require Respondent to perform the unresolved items on Complainants’ Complaint. Therefore, Complainants did not establish that Respondent violated A.R.S. § 32-1154(A)(23)[12] by failing to comply with the Registrar’s written directive. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s Order, the Registrar dismiss Complainants Michael V. Giuliano and Sharon Giuliano’s Complaint in Case No. 2012-1896 against Respondent P V Contracting LLC’s License No. KB-2.264179-D. 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, November 9, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] At Complainants’ request, the Administrative Law Judge amended the caption at the hearing to add as a party Complainant Sharon Giuliano, Michael Giuliano’s wife and a co-owner of the property where Respondent P V Contracting LLC performed the work, to allow Mrs. Giuliano to represent Complainants.

[2] According to the Registrar’s public website, Mr. Polder is the qualifying party and officer on License No. B.168993-R issued to R P M Masonry and General Contracting Inc. [3] According to the Registrar’s public website, Mr. Blacketer was the qualifying party and a member on License No. B.122781-R issued to Peaks View Contracting LLC. That license was suspended for non-renewal on April 1, 2011, and expired on April 1, 2012. [4] The imprint of the check that Complainants submitted was not dated. [5] See A.R.S. §§ 32-1151 to 32-1169. [6] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [7] See A.A.C. R2-19-119(B)(2). [8] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [9] See First American Title Ins. Co. v. Action Acquisitions, LLC, 218 Ariz. 394, 397-98 ¶¶ 8-10, 187 P.3d 1107, 1110-11 (2008). [10] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [11] 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.” [12] 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