ALJDEC decisions subject to certification as final

2012A-624-ROC · Registrar of Contractors · 2012-12-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 20, 2012, at 8:15 a.m. APPEARANCES: Complainant Karen D. Rider appeared telephonically on her own behalf; Respondent Foster’s Construction LLC appeared through William Ben Foster, its qualifying party and member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT The Arizona Registrar of Contractors (“the Registrar”) issued License No. KB-2.196917-D to Foster's Construction LLC (“Respondent”). The Registrar received a Complaint from Karen D. Rider (“Complainant”) that alleged 39 specifically enumerated items of complaint regarding Respondent’s repair of extensive water damage and “some owner-requested changes” at her vacation home at 884 East First Lane, Eager, Arizona. The Registrar assigned the Complaint to its inspector, Tom Sandoval, for investigation. Inspector Sandoval performed a jobsite inspection. On March 7, 2012, Inspector Sandoval issued a Corrective Work Order (“CWO”) that required Respondent to rectify certain workmanship deficiencies, in relevant part as follows: 1] Wall oven control panel and oven damaged by mis-wiring (control) and improper installation (oven). This oven is 4 to 5 years old and it was removed by one ctr. and reinstalled by this ctr. It could not be shown who actually did the damage or why it does not work properly. It could be due to old age, removal, or wiring, I could not determine. No action required. . . . .

9] Contractor installed new windows in the living room, master bedroom, & master bath but did not replace the old frames that have rust & mold spots. 2 of the new windows do not seal properly and 1 new frame damaged. Need to replace old frames with new. Not installing the new frames was accepted by the Homeowner prior to the installation. No action required.

Windows do not seal properly now. Contractor to correct by appropriate means.

No rust or mold was shown at time of jobsite. No action required. . . . .

11] Flooring between living room & family room + at the bottom of stairs sags noticeably when stepped on because contractor did work himself and did not level the underlying sub base. Base needs to be leveled and flooring replace[d] by a flooring subcontractor. The floor was buckling and ctr. needs to correct. It was not shown that it was a base issue. Contractor to correct by appropriate means.

12]Flooring in the hallway & master bedroom put down by [general] contractor with pieces were not staggered, included yellowed wood that should not have been used, and with pieces not mixed for color variation. Flooring subcontractor need[s] to be hired to repair. The Homeowner agreed to let the ctr. use the existing wood and the color match will be different even if using new wood next to year old flooring. In the opinion of this inspector the flooring looked to be installed correctly. No action required.

13] Flooring in the office was laid by general contractor using 6-year old flooring that owner had for part of the floor and new flooring for the remainder, leading to noticeable color differences. Qualified flooring subcontractor needs to be hired to repair. Again the Homeowner was the one to tell the ctr. that she had extra flooring and the ctr. used it up to that point. No action required. . . . .

Complainant subsequently requested a hearing. The Registrar issued a Citation and Complaint against Respondent, charging possible violations of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32- 1154(A)(23). Respondent’s qualifying party and member, William Ben Foster, filed a timely written answer to the Citation and Complaint on its behalf, denying any statutory violations. Respondent affirmatively alleged that it had corrected all the items that the CWO required it to correct, with the exception of the warped flooring on the first level of Complainant’s vacation home (CWO #11). Mr. Foster stated in Respondent’s written answer that after consulting several flooring subcontractors, he determined that the floor that Complainant had selected for the first level was designed to be installed over a wooden subfloor and that it would not lay flat if it were installed over a concrete subfloor like the one on the first level of Complainant’s vacation home. Mr. Foster stated that he advised Complainant to select another floor, but she insisted that she wanted to replace the floor with the same kind of floor that had been on the first level of the vacation home when the damage occurred. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A videoconference hearing was held from the Registrar’s office in Show Low, Arizona on November 20, 2012. Inspector Sandoval testified. Due to health issues, Complainant appeared telephonically from her primary home in Cave Creek, Arizona. Complainant submitted 25 exhibits, testified on her own behalf, and presented the testimony of Robert L. Wagner, her husband,[1] and Ronald (“Ronnie”) Dean Gibbons, whom Complainant employs to take care of her horses and vacation home in Eager. Mr. Foster testified on Respondent’s behalf. Additional Evidence Complainant’s vacation home in Eager was severely damaged when a water heater burst in the attic above the master bedroom when the temperature was 28°, no one was at the home, and the leak was not detected for over two weeks. Respondent started working on the repairs on March 13, 2012, removing damaged walls and floors to allow Complainant’s homeowner’s insurer to gauge the extent of the damage. Mr. Foster testified that in May 2012, the insurer issued a final revised estimate for repairs in the amount of a little over $103,000.00. Inspector Sandoval performed a prehearing jobsite inspection on November 19, 2012, with Mr. Foster on behalf of Respondent and Mr. Gibbons on behalf of Complainant in attendance. Inspector Sandoval testified that all of the items that the CWO had required Respondent to correct had been corrected, with the exception of the floor on the first level and the locks on the windows on the south side of Complainant’s vacation home. Complainant presented evidence at the hearing on only four alleged workmanship deficiencies: (1) The wood floor on the first level of Complainant’s vacation home (CWO Item #11); (2) The wood floor on the second level of Complainant’s vacation home (CWO Items #12 and 13); (3) The windows on the south side of the house (CWO Item #9); and (4) The wall oven control panel (CWO Item #1). The Wood Floor on the First Level (CWO Item #11) Inspector Sandoval testified that at the prehearing jobsite inspection, he saw that additional areas of the wood floor had separated on the first level of Complainant’s vacation home. Inspector Sandoval testified that the floor was still bulging, buckling, and separating in the areas from the kitchen to the outside, between the kitchen and the bedroom, and between the den and the living room near the double doors. Inspector Sandoval testified that these areas also felt spongy. Complainant testified that the original wood floor was a floating floor and that she had no problem with the floor. Complainant believes that Respondent did not follow the manufacturer’s instructions for installing the floor, including allowing the floor to acclimate and gluing all sides, not just the ends of the planks. Complainant submitted a CD of the manufacturer’s instructions for installing the floor.[2] Mr. Foster testified that Complainant and other persons in the community told him that the wood floor on the first level of the home squeaked and had a poor appearance before the flood event that damaged the vacation home. Complainant submitted a letter dated May 25, 2012, to Respondent from Aaron Prestwich of High Country Floor Covering Inc., License No. K-8.227730- D (“High Country”), in relevant part as follows: This letter outlines our findings in regards to the wood floor installed using the “Solid Strip Clip – floating hard wood floor” method. The intent of this letter is [to state] our opinion as to why there are several bouncy spots and humps in the floor.

In the instruction video it is stated that the sub floor is not to vary greater than 3/16 inch per 10’ span. It is questionable as to how much variation exists in the subfloor. The various hollow spots over the wood floor could indicate that the variation exceeds the allowable limit.

Also, it is our opinion that the underlayment is not a sufficient moisture barrier from the concrete. Concrete gives off moisture which causes hardwood to warp/expand/shrink. The moisture variation in the home (cooling/heating systems) also affects the wood flooring. A moisture test is required before any wood installation over concrete. Our recommendation is to remove the flooring in an inconspicuous place and perform a calcium chloride moisture test. Because the home was recently flooded, it is likely that there is excessive moisture under the home, coming through the concrete.

In our opinion, the “Solid Strip Clip – floating hardwood floor installation method” is NOT a recommended installation method. The recommended installation is to nail the hardwood to a wooden subfloor. In your application, an engineered wood floor could be adhered to the concrete subfloor. If not attached to the subfloor, hardwood will warp, twist, shrink, and expand as it pleases due to the natural wood grain in it.

The installation appears to have been done correctly. Gluing all the edges was recommended by several salesmen. The perimeter appeared to be spaced correctly to avoid binding. Our conclusion is that the uneven subfloor and moisture content (either from the concrete or in the air) has caused the wood to warp, twist, shrink, and expand.

We regret the troubles you have had. Sounds like a frustrating situation. Because of the above issues, High Country Floor Covering will not do any repairs to the existing hardwood floor. We don’t want to be liable for this type of flooring installation method.[3]

Mr. Foster testified that he does not personally know High Country’s employees or principals, but stated that he has worked with High Country in the past on other jobs. Mr. Gibbons testified that Mr. Prestwich was not the High Country employee who inspected the floor at the vacation home. Mr. Wagner testified that the employee who inspected the floor said that the floor was not meant to be glued together and that the whole floor would need to be redone. Mr. Gibbons testified that the floor on the first level is spongy, even though the weather was colder and drier than it had been when the floor was installed. Mr. Gibbons testified that although he is not a licensed contractor, he has been told that increased heat and humidity will cause the floor’s appearance to further deteriorate. Mr. Foster testified consistently with Respondent’s written answer. He recommended that Complainant not require Respondent to install the wood flooring that she had selected for the first level of her vacation home, but she insisted. Mr. Foster acknowledged that the floor on the first level “was a mess.” Mr. Foster testified that he spoke to three installers and a salesman at the store that distributed the floor. All recommended that it not be installed over concrete, especially if the elevation of the concrete varied more than 3/16” over 10’. Mr. Foster testified that if the floor were installed over concrete, the installer should glue all four sides, even though normally only two sides were glued. Mr. Foster testified that he installed the moisture barrier that the manufacturer provided and that the installer recommended. Mr. Foster acknowledged that Respondent did not perform a moisture test of the concrete slab before it installed the flooring on the first level of Complainant’s vacation home. Mr. Wagner testified that Tim Groom of Tim Groom Builders[4] and John Henry of John Henry Builders[5] both told him that the floor on the first level of the vacation home was installed improperly. Mr. Groom and Mr. Henry did not testify at the hearing. Mr. Foster acknowledged that he did not have Complainant sign a written warranty disclaimer that stated that she had been informed that the floor that she selected was unsuitable for installation in the first level of her vacation home and that she agreed that Respondent would not provide a warranty for the floor. The Wood Floor on the Second Level (CWO Item #12 and #13) Inspector Sandoval stated that Mr. Foster informed him at the initial jobsite inspection that Complainant had permitted Respondent to use extra flooring that was left in the barn for the second level. Inspector Sandoval testified that he did not think that the floor looked bad and that in his opinion, the floor on the second level complied with the Registrar’s standards. Complainant testified that she did not give Respondent permission to use the old flooring that was stored in the garage. Complainant testified that she told Mr. Foster that there was a sample of the kind of flooring that she wanted in the barn, but that because some of the flooring had sat in the sun and faded, she did not want Respondent to use it. Complainant submitted numerous photographs of the floor showing variance between adjacent planks. Complainant did not identify where the photographs were taken or under what lighting conditions. Mr. Foster testified that the floor did not look like what was shown in the photographs. Complainant testified that several flooring contractors have told her than Respondent should have culled the flooring that it used to remove extreme variations in color before it installed the floor. The Windows on the South Side (CWO Item #9) To avoid damaging the siding, Respondent installed replacement windows with the same manufacturer and model into the existing frames. Inspector Sandoval testified that Complainant had informed him that she had consented to Respondent not replacing the window frames. Inspector Sandoval testified that he could not see any rust or mold on the windows and agreed that Respondent could replace the windows without replacing the frames without violating the Registrar’s workmanship standards. Mr. Wagner testified that although in theory the replacement windows were exactly the same as the windows that Respondent removed, the windows on the south side of the first level of the vacation home do not close properly. Mr. Wagner testified that the windows leaked when the wind blew hard and that the wind frequently blows hard in Eager. Mr. Wagner testified that the windows on the south side of the second level are difficult to close. Mr. Wagner testified that if Respondent replaced the windows, it should have replaced the frames. Complainant testified that the window on the south wall of the living room does not close all the way. Inspector Sandoval testified that at the prehearing jobsite inspection, he did not see any separation in any of the windows or any windows that did not close properly. Inspector Sandoval testified that at the prehearing jobsite inspection, Mr. Gibbons stated that he could feel leakage through the windows. Inspector Sandoval testified that when he performed the initial and prehearing jobsite inspections, the wind was not blowing hard enough to feel any wind through the windows. Inspector Sandoval testified that at the prehearing jobsite inspection, he could see that Respondent had adjusted the windows. Inspector Sandoval testified that there was still an issue with the window locks in that when the windows were locked, the frames around the lock mechanism popped out. Inspector Sandoval testified that Respondent should have adjusted the lock mechanism. The Wall Oven Control Panel (CWO Item #1) Inspector Sandoval’s CWO noted that he was not able to determine the cause of damage to the wall oven control panel. Complainant testified that as part of the repairs, another contractor removed and Respondent reinstalled the wall oven. Complainant testified that the plastic panel later was damaged by excessive heat caused by Respondent crossing two wires to the panel when it installed the oven. Complainant testified that she contacted the Home Depot in Show Low to send a contractor out to her home to inspect the wall oven control panel. Complainant testified that Home Depot sent out its contractor, E N D,[6] and its service technician stated that Respondent had crossed the two wires, causing the oven to overheat and warp the plastic control panel. The service technician did not testify at the hearing. Mr. Foster denied that Respondent had damaged the wall oven control panel. Administrative notice is taken of the prior record of Respondent’s License No. KB-2.196917-D as reflected on the Registrar’s public website on December 10, 2012. Such prior License record reflects that Respondent’s license was current with one complaint was pending against the license. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[7] Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[8] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[9] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[10] As a general principle in construction, a contractor who performs work on top of a surface prepared by another accepts the surface. If the contractor finds the surface to be unacceptable, he should call any defects to the owner’s attention so that she may choose whether to pay for the defective surface to be corrected or if she is not willing to pay to correct the surface, the contractor may obtain a warranty disclaimer.[11] Mr. Foster credibly testified that he warned Complainant that the flooring that she selected for the first level of her vacation home was not suitable for installation over a concrete subfloor, but she insisted that Respondent install the flooring. Another general principle in construction is that a contractor must provide a warranty that the materials that it installs are suitable for their intended purpose. If a property owner insists that the contractor install materials that he knows are unsuitable, the contractor must obtain an explicit warranty disclaimer or decline to perform the work.[12] Because Respondent did have Complainant sign an explicit written disclaimer regarding the unsuitability of her selected flooring for installation over a concrete subfloor, Respondent has not borne its burden to establish that it is not responsible for the poor appearance of the floor that it installed on the first level of Complainant’s vacation home. All of the witnesses agreed that the wood floor on the first level of Complainant’s vacation home has a poor appearance and does not comply with the Registrar’s or industry standards. Therefore, Complainant has borne her burden to establish that Respondent violated A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108,[13] and A.R.S. § 32-1154(A)(23)[14] in its installation of and failure to repair the wood floor on the first level of at Complainant’s vacation home. Complainant did not establish that Respondent failed to follow the manufacturer’s directions when it installed the wood floor on the first level of her vacation home. Complainant does not have the right to dictate to Respondent how it should perform its work. Respondent is responsible for determining how to correct the floor in a professional and workmanlike manner and if it fails to do so, its license will be suspended. Complainant also established that Respondent violated A.R.S. § 32- 1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(23) when it installed and failed to fully correct the lock mechanism in the windows on the south side of Complainant’s vacation home that bulged when it was engaged. Complainant did not establish that Respondent violated any statute with respect to the wood floor on the second level, the wall oven control panel, or any aspect of the windows on the south side of Complainant’s vacation home other than the lock mechanism. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s Order, Respondent Foster's Construction LLC’s License No. KB-2.196917-D shall be suspended until it has repaired or replaced the wood floor on the first level and the lock mechanism of the windows on the south side of Complainant’s vacation home. It is further recommended that if on or before the effective date of the Registrar’s Order, Respondent has provided written proof that Respondent has repaired or replaced the wood floor on the first level and the lock mechanism of the windows on the south side of Complainant’s vacation home in a professional and workmanlike manner and the Registrar has accepted such proof, the Registrar shall not suspend Respondent’s license but, instead, shall close Case No. 2012-624. It is further recommended that the Registrar require Respondent to pay the sum of $250.00 as a civil penalty pursuant to A.R.S. § 32-1154(D).

It is further recommended that 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, December 10, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Mr. Wagner does not share ownership of the vacation home where Respondent performed the work. [2] See Exhibit C-22. [3] Complainant’s Exhibit C-16 at 4. [4] The Registrar’s public website does not show a license for Tim Groom Builders. Timothy Jay Groom dba Tim Groom Framing holds License No. B.066679-R for residential general contracting. [5] The Registrar’s public website shows that John Henry Builders Inc. holds License No. B.114489-R for residential general contracting, with John James Henry as the qualifying party and officer. [6] The Registrar’s public website does not contain a record for a contractor called E N D. [7] See A.R.S. §§ 32-1151 to 32-1169. [8] 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). [9] See A.A.C. R2-19-119(B)(2). [10] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [11] No Arizona authority addresses the Registrar’s policy that a contractor who accepts a surface also accepts full responsibility for the outcome. The policy is supported by case law from other jurisdictions. See generally cases cited at “Duty of Contractor to Warn Owner of Defects in Subsurface Conditions,” 73 A.L.R.3d 1213 (1976). The principle is based on common sense and a need for fair dealings between contractors and property owners: For the requirements of public order and the obligation implicit in every contract that the work will be done in a good and workmanlike manner would compel us to reject a contention that an undertaker is not responsible for building upon a site which he knows to be defective. . . . Wurst v. Pruyn, 202 So. 2d 268, 271-72 (La. 1967) (citation omitted). [12] See Nastri v. Wood Bros. Homes, Inc., 142 Ariz. 439, 441-42, 690 P.2d 158, 160-61 (App. 1984) (citing Darner Motor Sales, Inc. v. Universal Underwriters Insurance Co., 140 Ariz. 383, 682 P.2d 388 (1984) and Peterson v. Hubschman Construction Co., Inc., 76 Ill. 2d 31, 389 N.E.2d 1154 (1979)). With respect to warranty disclaimers or waivers, Although the implied warranty of habitability is a creature of public policy, we do not consider a knowing disclaimer to be against the public policy of this State. However, we do hold that any such disclaimer must strictly be construed against the builder- vendor. . . . We refer to the well-reasoned opinion of the Supreme Court of Missouri in Crowder v. Vandendeale (Mo. 1978), 564 S.W.2d 879, where it was held that “boilerplate” clauses, however worded, are rendered ineffective in such a disclaimer (564 S.W.2d 879, 881), and the court further stated:

“[O]ne seeking the benefit of such a disclaimer must not only show a conspicuous provision which fully discloses the consequences of its inclusion but also that such was in fact the agreement reached. The heavy burden thus placed upon the builder is completely justified, for by his assertion of the disclaimer he is seeking to show that the buyer has relinquished protection afforded him by public policy. A knowing waiver of this protection will not be readily implied.” (Emphasis in original.) Crowder v. Vandendeale (Mo. 1978), 564 S.W.2d 879, 881 n.4.

Petersen, 76 Ill. 2d at 43, 389 N.E.2d at 1159 (1979) (some authorities omitted; emphases added and in original). [13] 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.” [14] 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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