ALJDEC decisions subject to certification as final

2012A-3520-ROC · Registrar of Contractors · 2013-03-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 11, 2013, at 8:00 a.m. APPEARANCES: Complainant Adrian Medina appeared on behalf of himself and his fiancée, Complainant Esmeralda Samano; Respondent Clima Air and Electric LLC appeared through José Cervantes, 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. K- 39.219677-D for dual air conditioning, refrigeration, and heating to Clima Air and Electric LLC (“Respondent”). On or about July 19, 2012, Esmeralda Samano filed a Complaint with the Registrar against Respondent, alleging that the two new air conditioning units that it installed at her house at 11749 West Flanagan Street, Avondale, Arizona failed to adequately cool the house. According to the Complaint, the date of the parties’ contract was October 10, 2011, and Respondent had last performed work on the units on June 30, 2012. The Registrar assigned the Complaint to its inspector, Beau Cruz, for investigation. On August 9, 2012, at 9:30 a.m., Inspector Cruz performed a jobsite inspection. On August 10, 2012, Inspector Cruz issued a Corrective Work Order (“CWO”) that required Respondent within fifteen calendar days to perform certain appropriate corrective action, in relevant part as follows: Complaint 1) Upstairs and downstairs air conditioning units are not cooling the house the way they should: Outside ambient temperature taken via digital probe type and surface thermometers was measured at 102.3° Fahrenheit. Temperature inside structure measured via same thermometers at 83.9° Fahrenheit on main floor and 82.7° on second floor. All measurements taken at approximately 5 feet from the floor and in all accessible areas and both thermostats noted set at 78° Fahrenheit. ROC. ROC Workmanship Standards for Licensed Contractors states the following[:] “Unit should cool structure 30° (32° in Scottsdale) lower than outside air temperature when measured in center of room at 5’ height. Minimum indoor temperature should be 78°.”

Complaint 2) Neither air conditioning unit reaches its temperature: Noted that the temperature in the main floor measured via same thermometers measured at 83.9° Fahrenheit in the living room/dining room areas, 83.6° Fahrenheit [in the] family room and 82.5° Fahrenheit in the Kitchen/breakfast areas. All measurements taken at approximately 5 feet from the floor, ROC Workmanship Standards for Licensed Contractors states the following[:] “Unit should cool structure 30° (32° in Scottsdale) lower than outside temperature when measured in center of room at 5’ height. Minimum indoor temperature should be 78°.”

Complaint 3) Bottom temperature stays at 85°F and top temperature stays at 83°F: Noted that after 1 hr., main floor average temperature was approximate 83.3° Fahrenheit. ROC Workmanship Standards for Licensed Contractors states the following[:] “Unit should cool structure 30° (32° in Scottsdale) lower than outside air temperature when measured in center of room at 5’ height. Minimum indoor temperature should be 78°.”

/ / / / No action required of the following

Complaint 2) Neither air conditioning unit reaches its temperature: Upper floor temperatures measured at 77.6° Fahrenheit in the loft area, 76.8° Fahrenheit in the master bedroom, 75.2° Fahrenheit in the master bathroom, 77.6[° Fahrenheit] in both front bedrooms, 76.1° Fahrenheit in the hall bathroom and 75.3[° Fahrenheit] in the laundry room. All measurements taken at approximately 5 feet from the floor[.] ROC Workmanship Standards for Licensed Contractors states the following[:] “Unit should cool structure 30° (32° in Scottsdale) lower than outside air temperature when measured in center of room at 5’ height. Minimum indoor temperature should be 78°.”

Complaint 3) Bottom temperature stays at 85°F: Noted that upper floor at approximately 77.2° Fahrenheit. ROC Workmanship Standards for Licensed Contractors states the following[:] “Unit should cool structure 30° (32° in Scottsdale) lower than outside air temperature when measured in center of room at 5’ height. Minimum indoor temperature should be 78°.”

Complaint 4) Negligence on the company’s owner[’]s behalf has accrued a really high electric bill: This inspector does not have the authority to charge the contractor with negligence. This allegation should be determined in a different venue.

Complaint 5) A total of $1500 has accrued for the past 2 months for electricity bill: This inspector does not have the authority to instruct or order contractor to reimburse complainant monetary amounts.

Complaint 6) The thermostats are not what the owner and I agreed on. He promised 2 blue back light thermostats which he has not installed: Invoice provided by the complainant shows that contractor fulfilled the terms of the contract by installing 2 digital thermostats.

Complaint 7) On 6/21/12 I called Jose (owner) to fix some bent lines from the AC units and he went off on me cursing and yelling at me because he said that wasn’t going to fix the problem and I’m going to waste his time and money: This inspector cannot dictate to the contractor how he decides to practice customer service.

Complaint 8) Addendum to #5 We would like for the contractor to be responsible for the increase of our (SRP) electric bill: This inspector does not have the authority to instruct or order contractor to reimburse complainant monetary amounts.

Complaint 9) Thus far we have received bills for the months of May, June and possibly others until the solution is resolved: This inspector does not have the authority to instruct or order contractor to reimburse complainant monetary amounts.

After Respondent failed to resolve Ms. Samano’s Complaint to her satisfaction, she requested a hearing. 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, and (23). Respondent’s qualifying party and member, José Cervantes, on its behalf filed a timely written answer to the Citation and Complaint, denying any statutory violations and affirmatively alleging that when Ms. Samano’s fiancé, Adrian Medina, asked him to submit a proposal to install two air conditioning units after Mr. Medina had purchased a house from which the two units had been stolen, Respondent was unable to test the duct work because the heat, ventilation, and air-conditioning (“HVAC”) system was not operational. Mr. Cervantes stated that Respondent did not contract to upgrade or to repair the duct work and that Mr. Medina refused to agree to pay Respondent to perform such work. Mr. Cervantes stated that he was certain that problems in the duct work prevented the HVAC system from adequately cooling the first floor. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held on February 11, 2013. Inspector Cruz testified. Complainants submitted 23 photographs of various parts of the HVAC system at their house and presented the testimony of two witnesses: (1) Mr. Medina; and Ludy Medina, Mr. Medina’s mother. Respondent submitted three exhibits and presented the testimony of Mr. Cervantes. Additional Evidence As noted in Respondent’s written answer, Complainants purchased a distressed property from which the two exterior air conditioning units had been stolen. Because Complainants never ran the HVAC system in their new house before Respondent installed the two new exterior units, they had no way of knowing the house’s power use history or whether the HVAC system had operated efficiently or effectively before the two exterior units were stolen. Respondent contracted to replace the two stolen air conditioning units. Respondent did not obtain a written warranty disclaimer from Complainants that stated that the HVAC system might not adequately cool the house and that additional work to the ducts or other parts of the existing HVAC system might be required to make it run efficiently and effectively. Although Mr. Medina is not a licensed contractor, he testified when he first moved to the Phoenix metropolitan area, he worked for an HVAC company for two years. Mrs. Medina testified that when she went to visit her four-year-old granddaughter at Complainants’ house, the house was too hot. Mrs. Medina testified that she called Mr. Cervantes, but he told her that it was not his fault. Mr. Cervantes testified that when Respondent contracted to install the two units, he consulted the manufacturer to match the size and model of the units to the interior air handlers and other equipment that remained on site. Mr. Cervantes testified that he installed a 3 ton unit for the lower level and a 3½ ton unit for the upper level. Mr. Cervantes testified that although Respondent did not perform a Manual J Load Calculation before it installed the two new units, he knew that the size of the units was appropriate based on the existing equipment and the County Assessor’s records for livable space in the house. Mr. Cervantes testified that although Complainants’ house has large windows, it has eight- foot ceilings and that nothing about the house required a larger load calculation. Mr. Cervantes testified that he was certain that the two units were the right size for the space to be cooled. Mr. Medina testified that the master bedroom on the second level of the house has a vaulted ceiling. Inspector Cruz testified consistently with the CWO. Inspector Cruz testified that although the Registrar does not require HVAC contractors to perform Manual J Load Calculations before installing new air conditioning units, it was incumbent upon Respondent to determine that the units were the right size to cool the space because the former units had been stolen. Inspector Cruz testified that the Registrar requires HVAC contractors to install air conditioning units according to the manufacturer’s specifications and requires that the units cool the structure to the degree stated in the Registrar’s workmanship standards. Mr. Cervantes testified that because the two former units had been stolen, before he installed the new units, Respondent could not test the HVAC system to ensure that it would function properly and could not determine whether the duct work was leaking or impeding air flow. Mr. Cervantes testified that after the weather warmed up and Complainants started complaining about the HVAC system’s inability to cool their house adequately, Respondent went out to the jobsite eight times to attempt various repairs. Mr. Cervantes testified that he checked the installation of the units, the refrigerant in the units, the clearance between the units, and the electrical and mechanical components of the units. Mr. Cervantes testified that he did not find anything wrong. Mr. Cervantes testified that after Respondent failed to resolve Ms. Samano’s and Mr. Medina’s complaints about the adequacy of the HVAC system’s cooling capacity, Mr. Medina hired two air conditioning contractors to check Respondent’s work. Mr. Cervantes testified that one contractor suggested increasing the clearance between the units and the other contractor suggested that a copper line that Respondent had installed was bent or pinched, resulting in an inadequate flow of liquid. Mr. Cervantes testified that although Respondent implemented Mr. Medina’s two contractors’ suggestions, it did not resolve the problem. Mr. Cervantes testified that he hired a third contractor to diagnose the problem. Mr. Cervantes testified that after the third contractor spent 1½ to 2 hours examining the units and measuring various temperatures, the contractor said that it could not find anything wrong, but suggested that Respondent make sure that a piston was installed in one of the units. Mr. Cervantes testified that he undertook the major repair of breaking down the unit to ensure that the piston was installed correctly. It did not resolve the problem. Mr. Cervantes testified that after someone suggested that one of the air returns should be changed to bring it closer to the area to be cooled, the air return was moved. It did not resolve the problem. Mr. Cervantes testified that 90% of Respondent’s business consists of service calls to make repairs to existing HVAC systems. Mr. Cervantes testified that no matter how difficult the repair, Respondent always fixes the problem. Mr. Cervantes testified that it was weird that neither he nor three other HVAC contractors could determine the cause the air conditioning units’ inability to adequately cool the first level of Complainants’ house. Mrs. Medina and Mr. Medina testified that the HVAC system does not adequately cool both levels of Complainants’ house. Mr. Medina testified that when Inspector Cruz performed the initial jobsite inspection, it was not a very hot day. Mr. Cervantes testified that he is now 100% sure that the problem is that Complainants’ ducts needed to be modified to seal any holes and straighten out any kinks that impede air flow. Mr. Cervantes testified that Complainants have refused to authorize or to commit to pay for work on their ducts. Mr. Cervantes testified that if Respondent was allowed to seal, straighten, and otherwise improve Complainants’ duct work, he would provide a warranty that the HVAC system would cool Complainants’ house adequately. Mr. Medina submitted numerous pictures of copper lines that he testified were kinked, ducts that he testified were impinged by copper line that Respondent had installed, copper lines that he testified were inadequately insulated, and other deficiencies that he testified resulted in the HVAC system being unable to cool Complainants’ house adequately. Mrs. Medina and Mr. Medina testified that Mr. Cervantes told them that the air conditioning unit for the lower level of the house was undersized and should be replaced. Mr. Cervantes denied having made that statement. Inspector Cruz testified that he performed a prehearing jobsite inspection shortly before the February 11, 2013 hearing. Inspector Cruz testified that the heat for the split system units was provided by natural gas. Inspector Cruz testified that the temperature in the upper level was 68°. Inspector Cruz testified that the fan in the downstairs air handler did not work. License History Administrative notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website on February 28, 2013. Such prior License record reflects that Respondent’s License No. K-39.219677-D was current and that one complaint was pending against the License. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[2] Complainants bear the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[3] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] As the CWO noted, the Registrar requires that an air conditioning “[u]nit should cool structure 30° (32° in Scottsdale) lower than outside air temperature when measured in center of room at 5’ height. Minimum indoor temperature should be 78°.”[6] The Registrar does not specify the corrective action that contractors should perform to comply with this requirement. Complainants established that the air conditioning unit that Respondent installed for the first level of their house did not cool the first level to the degree required by the Registrar’s workmanship standards. Complainants did not establish that the air conditioning unit that Respondent installed for the second level of their house did not cool the second level to the degree required by the Registrar’s workmanship standards. As a general principle in construction, a contractor who incorporates into his project work performed by another contractor must provide a warranty that the entire finished project will meet the Registrar’s standards. The subsequent contractor should inspect or at least consider whether the work performed by the prior contractor is adequate and should inform the property owner if problems in the prior work might affect the outcome of the project before the subsequent contractor performs the work. If the subsequent contractor finds or suspects that the prior contractor’s work may be unacceptable, the subsequent contractor can call any actual or possible defects to the owner’s attention so that the owner can choose whether to pay the subsequent contractor to inspect and, if appropriate, to correct the prior work. If the owner is not willing to pay the subsequent contractor to inspect or to correct the prior work, the subsequent contractor should obtain an explicit written signed warranty disclaimer from the property owner.[7] Because Respondent did not obtain a signed written warranty disclaimer from Complainants that Respondent had advised them that possible defects in the duct work might affect the HVAC system’s ability to provide adequate cooling to the first level of Complainants’ house, Respondent has not borne its burden to establish that it is not responsible for the failure of the unit to cool the first level of Complainants’ house to the degree required by the Registrar’s standards. Mr. Medina does not have the right to dictate to Respondent how it must perform its corrective action to cause the HVAC system to cool the first level of Complainants’ house to the degree required by the Registrar’s workmanship standards. Because Respondent is a licensed contractor, it is presumed to have the expertise to determine the repairs that are necessary to bring its work into compliance with the Registrar’s standards. Although Respondent may recover from Complainants the cost of the duct work in a court of competent civil jurisdiction, Complainants’ refusal to pay for the work does not excuse Respondent from complying with the Registrar’s standards for the degree of cooling that the HVAC system must achieve in the first level of Complainants’ house. Although under some circumstances, the Registrar may award restitution as a result of a proven contracting law violation,[8] the Registrar cannot award consequential damages.[9] Complainants did not establish that Respondent’s installation of the two air conditioning units caused them to incur extraordinarily high electric bills but even if they had, such additional costs would constitute consequential damages and would not be available in this administrative forum.[10] / / / / RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the final Order, Respondent Clima Air and Electric LLC’s License No. K-39.219677-D shall be suspended until it has corrected the HVAC system on the first level of Complainants Esmeralda Samano and Adrian Medina’s house to cool the house to the degree required by the Registrar’s workmanship standards. It is further recommended that if on or before the effective date of the final Order in this matter, Respondent provides satisfactory written proof to the Registrar that it has corrected the HVAC system on the first level of Complainants’ house so that it cools the home to the degree required by the Registrar’s workmanship standards, the Registrar shall not suspend Respondent’s license but, instead, shall close Complainants’ Complaint in Case No. 2012-3520. It is further recommended that Respondent shall be required to pay the sum of $250.00 as a civil penalty pursuant to A.R.S. § 32-1154(D). If Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s final order, the Registrar shall revoke Respondent’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 Respondent tenders payment of any outstanding prior civil penalty. 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, March 1, 2013.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] At Complainant Esmeralda Samano’s request, the Administrative Law Judge amended the caption to name Adrian Medina as a co-complainant. Mr. Medina is Ms. Samano’s fiancé and a co-owner of the house where the work was performed.

[2] See A.R.S. §§ 32-1151 to 32-1169. [3] 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). [4] See A.A.C. R2-19-119(B)(2). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] The Registrar’s Workmanship Standards for Licensed Contractors at 3 (“Air Conditioning and Heating #6) (June 2009). [7] The principle of accepting the surface is supported by case law from other jurisdictions. A contractor who knew or should have known of a defect in the surface does not perform construction in a workmanlike manner if the contractor fails to notify the owner of the defect and the contractor’s construction fails due to the defective surface. See, Parker v. Thornton, 596 So.2d 854, 858 (Miss. 1992); Lewis v. Anchorage Asphalt Paving Co., 535 P.2d 1188, 1199 (Alaska 1975); Kuhlman v. Talley, 145 So.2d 101, 103 (La. App. 1962). The Supreme Court of Louisiana has recognized that the principle is based on common sense and a need for fair dealings between contractors and property owners:

[T]he requirements of public order and the obligation implicit in every contract that the work will be done in a workmanlike manner would compel us to reject a contention that [a subsequent contractor] is not responsible for building upon a site which he knows to be defective. In such a case, the barest standards of care would require him to bring the defect to the attention of the owner before proceeding. The owner would then have an opportunity to make the indicated adjustment in the contract to provide against the defective soil condition of which he had no prior knowledge.

Wurst v. Pruyn, 202 So.2d 268, 271-72 (La. 1967) (citation omitted). [8] See A.R.S. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990). [9] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (App. 1984). [10] “‘Consequential damages are such as are not produced without the concurrence of some other event attributable to the same origin or cause; such damage, loss, or injury as does not flow directly and immediately from the action of the party, but only from the consequences or results of such act.’” State v. Morris, 173 Ariz. 14, 17, 839 P.2d 434, 437 (App. 1992) (quoting 25 C.J.S., Damages, § 2 at 617).

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