ALJDEC decisions subject to certification as final

2012A-6070-ROC · Registrar of Contractors · 2013-07-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 13, 2013, at 1:00 p.m. APPEARANCES: Complainant Alexander Brandt appeared on his own behalf; Respondent Century Roofing, Inc. appeared through Anthony Urso, its Chief Executive Officer. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure The Arizona Registrar of Contractors (“the Registrar”) issued License No. C- 42.136537-R for residential roofing to Century Roofing, Inc. (“Respondent”). On or about December 17, 2012, Alexander Brandt (“Complainant”) filed a Complaint with the Registrar against Respondent for its alleged misconduct in performing a contract to replace the roof on Complainant’s property at 8748 East Terrace Drive, Scottsdale, Arizona 85251. According to the Complaint, Complainant had paid the full contract price of $8,727.92. The Complaint alleged specifically that Respondent had assessed an unsubstantiated charge of $359.78 for replacing plywood and that Respondent had installed black shingles on the house, rather than the Owens Corning, Oakridge Series, “Estate Grey” shingles that the contract specified. To resolve the Complaint, Complainant requested that the Registrar require Respondent to reimburse him for the $359.78 charge and to compensate him no less than $3,750.00 for the loss in market value caused by Respondent’s installation of the darker roof. Complainant attached several documents to the Complaint, including the following: 1. A contract that the parties signed on October 16, 2012, for a total contract price of $8,368.14 (the relevant provisions of the contract were summarized in the January 11, 2013 Corrective Work Order (“CWO”), quoted at Finding of Fact No. 5 below); and 2. Respondent’s invoice number 53973 dated October 30, 2012, in the amount of $340.00 for “4 SHEETS OF 3/4” PLYWOOD AT $85 EA,” for a total of $359.78 with tax. The Registrar assigned the Complaint to its inspector, Jeff Fleetham, for investigation. Inspector Fleetham performed a jobsite inspection and on January 11, 2013, issued a CWO that required Respondent to correct certain deficiencies within fifteen calendar days, in relevant part as follows: Complainant’s allegations follow – numbered in italics 1. Failed to substantiate extra charges for 4 sheets of Plywood ($359.78) o Sheathing billed at $85.00 per sheet for ¾” AC (one side good) plywood. Only one sheet of AC visible at time of inspection. o Contract reads as follows: ▪ INSPECT SUBSTRATE FOR DAMAGE. DAMAGED WOOD TO BE REPLACED AT THE FOLLOWING RATES: ▪ *OSB Plywood: $55.00/sheet or $75.00/sheet (one side good). . . . o Respondent shall complete project per original contract agreement and properly executed change orders ▪ Note: No “thickness” specification in the written contract . . . .

2. Installation of Black shingles for roofing rather than “Estate Grey”. o Existing shingles match manufacturer’s sample board. o Contract states: . . . ▪ INSTALL NEW 30 YEAR LAMINATED ASPHALT SHINGLES OVER 15lb UNDERLAYMEN[T] COLOR TO BE: SHINGLES TO BE OWENS CORNING, OAKRIDGE SERIES – ESTATE GREY. o No deficiency demonstrated or observed at time of inspection. o No action required by the Respondent.

Inspector Fleetham explained in the CWO that “AC (one side good) plywood’s two letters (A and C) stand for the grade of each side. The ‘A’ is for one side of the plywood, which is finished and sanded. The other side of the plywood is graded ‘C,’ which means that it is not sanded and therefore isn’t intended to be seen.” Inspector Fleetham further explained that “OSB sheathing is a structurally engineered type of board that is composed of strands of wood that have been pressed together and bonded with resin.” After Respondent did not resolve the Complaint to Complainant’s satisfaction, he requested that the Registrar issue a citation against Respondent. The Registrar issued a Citation and Complaint against Respondent, charging possible violations of A.R.S. § 32-1154(A)(2) and A.R.S. § 32-1154(A)(23). Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violations. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on June 13, 2013. Inspector Fleetham testified. Complainant submitted five exhibits and testified on his own behalf. Respondent submitted four exhibits and presented the testimony of three witnesses: (1) Robert Cuddie, Respondent’s salesman/estimator who wrote and entered the contract on Respondent’s behalf; (2) Steve Vidana, Respondent’s superintendent on Complainant’s job; and (3) Anthony Urso, Respondent’s chief executive officer. Hearing Evidence Complainant’s house on East Terrace Drive is a rental property. The roof on the rental property was damaged in a hailstorm in October 2010. Complainant made a claim to his property insurance company for the damage. Although the insurance company approved the claim, the terms of the policy required repairs to be completed by the end of October 2012, for the claim to be paid. In October 2012, several weeks before the insurance company’s deadline for the repairs to be completed, Complainant began negotiating with Mr. Cuddie for Respondent to replace the roof on the rental property. Complainant and Mr. Cuddie conducted all of the negotiations and discussions that led to the parties’ contract through e-mail and telephone calls. Before the hearing, Complainant and Mr. Cuddie had never met face- to-face. The existing roof on the rental property was a very light-colored asphalt shingle. Although Complainant requested that Respondent replace the roof with the same color of asphalt shingles, Mr. Cuddie informed Complainant that Respondent could not take responsibility for choosing the color of the shingles because Mr. Cuddie’s opinion on the match might differ from Complainant’s opinion. Instead, Mr. Cuddie sent to Complainant via e-mail an Adobe Acrobat copy of Owens Corning’s color chart. From that color chart, Complainant selected the color “Estate Grey.” Inspector Fleetham testified that Owens Corning’s color chart on its website included a disclaimer that because the actual color of the shingles may vary from the color on the computer screen, customers should view an actual roofing sample before choosing a color. Inspector Fleetham testified that at the jobsite inspection, Respondent provided a sample of the “Estate Grey” shingles. Inspector Fleetham testified that he placed the sample on the roof of Complainant’s rental property and that it matched perfectly the roof that Respondent had installed. Inspector Fleetham testified that there were no structural or workmanship deficiencies in the roof that Respondent had installed. Inspector Fleetham testified that the Registrar does not regulate what contractors may charge property owners for materials, but that the Registrar does require contractors’ material charges to conform to the amounts specified in their contracts with property owners. Inspector Fleetham testified that he issued the CWO because it appeared that Respondent had charged Complainant $85.00 per sheet for plywood rather than the $75.00 per sheet that the contract specified. Mr. Urso testified that at the jobsite inspection, he offered to pay Complainant the $40.00 difference between the prices of plywood specified in the contract and stated in Respondent’s invoice, but that Complainant refused the offer. Inspector Fleetham testified that the Registrar does not have jurisdiction to order Respondent to pay Complainant $40.00.[1] Inspector Fleetham testified that he did not go into the attic of Complainant’s rental property to investigate the number of plywood sheets that had been replaced on the sheathing. Inspector Fleetham testified that the Registrar’s workmanship standards do not require roofing contractors to keep deteriorated sheets of plywood for the owner to inspect and that the parties’ contract did not include such a requirement. Mr. Vidana testified that Respondent’s crew started tearing off the existing roof of Complainant’s rental property on October 29, 2012. Mr. Vidana testified that industry standards and code require solid sheathing on asphalt shingle roofs that is sufficient to hold nails. Mr. Vidana explained that until the existing roof was removed, Respondent could not know the condition of the sheathing. Mr. Vidana testified that after Respondent’s crew removed the existing roof at Complainant’s rental property, he saw that at one time, the house’s roof had been wooden shake shingles. Mr. Vidana testified that because the shake shingles had been installed over skip sheathing, Respondent needed to install more than one sheet of plywood or OSB to make up the difference in thickness in the sheathing on the four-sheet area that needed to be replaced. Mr. Vidana testified that roofing contractors must do a dry-in every night on a roof under construction in the event of rain. Mr. Vidana testified that to expedite roof construction and to avoid collateral damage to a structure from rain, it is a standard practice among roofing contractors to call the client to obtain verbal approval of the number of sheets to be replaced on the sheathing after the existing roof is removed. Mr. Vidana testified that he called Complainant after the existing roof on the rental property was removed to request Complainant’s approval of replacement of four sheets of sheathing and to explain that to make up for additional thickness, additional sheets would be needed. Mr. Vidana testified that Complainant verbally agreed to and paid a charge of $85.00 per sheet for the four-sheet area. Complainant denied that he ever agreed to pay $85.00 per sheet for the four-sheet area and testified that he only paid the $359.78 charge because Respondent threatened to file a lien against the property if he did not pay the charge. In response to the CWO, Respondent provided a receipt from Home Depot for four sheets of OSB and three sheets of ¾” thick plywood, one side good, that were used to replace sheathing on Complainant’s job. Respondent issued a credit to Complainant in the amount of $359.78 for Invoice No. 53973 and issued a new invoice for four sheets of OSB at $55.00/sheet, for a total of $220.00, three sheets of plywood at $75.00/sheet, for a total of $225.00, and taxes in the amount of $25.89, for a total amount due of $470.89, or $111.11 more than Complainant had already paid. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[2] Complainant bears 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] Respondent installed the Owens Corning, Oakridge series, “Estate Grey” shingles that the contract specified. Mr. Cuddie credibly testified that Complainant verbally approved the $85.00 charge for four sheets of plywood to compensate Respondent for the additional OSB sheets that were necessary to make up the thickness of the sheathing on the four-sheet area that needed to be replaced on the roof of the rental property. Therefore, Complainant did not establish that Respondent departed from the contract specifications in violation of A.R.S. § 32-1154(A)(2) in the shingles that it installed or in the price it charged Complainant for the replacement of sheathing on the roof of the rental property. The evidence at the hearing established that Complainant had approved and that the cost to Respondent justified the amount charged on Respondent’s Invoice No. 53973. Because this evidence provides legal justification for Respondent’s failure to comply with the CWO, Complainant did not establish that Respondent violated A.R.S. § 32-1154(A)(23).[6] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the final Order in this matter, Complainant Alexander Brandt’s Complaint in Case No. 2012-6070 against Respondent Century Roofing Inc.’s License No. C-42.136537-R shall 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, July 2, 2013.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1154(A)(11). That statute includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor . . . .” (Emphasis added.) [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] 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.”

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