ALJDEC decisions subject to certification as final

2012A-970-ROC · Registrar of Contractors · 2013-02-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 31, 2012; September 21, 2012; and October 26, 2012 (record held open to January 11, 2013)

APPEARANCES: Complainants appeared on their own behalf; Respondent was represented by attorney Karen A. Palecek, Esq., accompanied by corporate President and Qualifying Party Craig Krisel.

WITNESSES: Dennis Cook, ROC Inspector (retired) Ted Gerold, ROC Inspector Matthew Burke, Under Pressure Plumbing LLC Robert Mully, ACM Electric LLC David Holt, framer James Nieman, Nieman Painting LLC Gilbert Martin, Power Pools LLC dba Above & Beyond Pool Remodeling Robert Kalis Amy Kalis Juan Acosta, Acosta Plastering, Inc. Tom Russo, Division Nine Contracting, Inc. Craig Krisel

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainants bring this action against Respondent alleging abandonment, poor workmanship, and failure to comply with a Corrective Work Order. The complaint concerns remodeling work done by Respondent in adding an addition onto Complainants’ house. Respondent denies abandonment, does not dispute that there are still a few workmanship issues, and asserts that Complainant has prevented Respondent from correcting those problems. This tribunal entered the complaint file received from the Registrar of Contractors (“Registrar” or “ROC”) into the record. The parties presented evidence and testimony from the witnesses above at the hearing, including Complainants’ Exhibits A through F, G1 and ZP-119,[1] H2a and H3b & H3c,[2] K1,[3] M1 through M5, N1 through N3, P, Q, S, T, and U; and Respondents Exhibits 1, 2, 6, and 8 through 18 (including both 18A and 18B). Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding workmanship issues that need correction but not abandonment or failure to comply with the CWO. FINDINGS OF FACT 1. Respondent is the holder of License No. License No: B.264536-R, a general residential contracting license issued by the Registrar. The license authorizes Respondent to operate as a general contractor for residential projects. The Qualifying Party on the license is Craig Krisel. 2. In September 2011, the parties entered into a contract to build an addition onto Complainants’ house. The contract listed items that Respondent was responsible for, such as pouring concrete, framing, window installation and much more, and items that Complainants were responsible for, such as flooring materials and installation, lighting and plumbing fixtures, and painting interior and exterior. The written contract shows something of a joint venture in the building of the addition, as Complainants retained much of the work for themselves. The project was to be built according to a set of plans, and progress payments were set by the contract. The contract did not provide a start or completion date. It was signed by both parties on September 6, 2011. On the contract, there are handwritten notations, made at a later time, showing two change orders the parties made later on in the project.[4] 3. The evidence shows, and the parties do not dispute, that many verbal changes were made by the parties. This eventually formed the basis of their dispute, which is being litigated in both the ROC forum and the courts. 4. Complainants filed their ROC complaint on February 21, 2012. On March 13, 2012, ROC Inspector Dennis Cook performed a jobsite inspection, looking at items raised in Complainants’ complaint, and found the following, as stated in a Corrective Work Order (“CWO”): Contractor to make the following corrections by appropriate means:

1) Properly complete all work specified in the contract documents. 2) At the front of the new addition, where the eaves wrap around each corner, the roof pitch is not the same on each side, creating an asymmetry that is unsightly and in need of correction. 3) The drywall transition from the Kitchen to the new addition is not smooth, having unsightly humps and dips. Contractor should correct by appropriate means. 4) The contractor should complete all drywall installation as per the contract, leaving the walls ready for trim and paint. The homeowners are responsible for caulking and paint prep normally performed by painting contractors. Note: Shelving and clothes rods in closets are not normally considered to be label as "trim") 5) Contractor should install the mirror as per the contract. 6) Install blocking of the proper size and location to accommodate the medicine cabinetry supplied by the complainants. 7) Fill the stucco crack at the transition between the new and existing structure adjacent to the electrical service panel. 8) Correct the incomplete stucco and gaps beneath the eaves where they exist. 9) Correct the metal drip edge where it is imbedded in the stucco and not serving its intended function. 10) Correct the unstable threshold at the front door

No correction is required at this time regarding the following items listed in the complaint:

1) At the front picture window, the framing was approved by the local building authority and the window was installed at the highest possible elevation without having major structural changes to the approved plans. 2) In regard to the condition of the floor slabs at the bathroom floors, it was not shown that the slabs did not meet the standard for flatness. The homeowners are responsible for tile installation and the flooring prep normally associated with tile installation. 3) Electrical issues were corrected to the homeowner's satisfaction prior to the jobsite inspection. 4) The contract stipulated wood blocking for a fireproof safe. The complainants decided against a wall safe and no blocking was installed per their agreement at the time. 5) There was insufficient evidence for this inspector to determine if the Complainants are entitled for compensation for "sound board" installation. 6) This inspector was unable to confirm whether there was an agreement between the parties to install crown molding. 7) Insufficient evidence to confirm issues regarding cementitious backer board. 8) Stucco cracking was less than 1/16" in width and no correction is required in regard to cracking, except for item #7 above. Stucco is incomplete in some areas just below the eaves and should be properly completed. ( see items 8 & 9 above). 9) Stucco at the doorbell was corrected prior to the jobsite inspection

This inspector was unable to determine the scope of the contractor's responsibility in the existing laundry room. The contractor does not appear to be responsible for mold remediation in the laundry room. There were many verbal changes to the signed contract and this inspector cannot confirm exactly what the agreements were since they are now in dispute between the parties.

The CWO was issued April 2, 2012. 5. On April 14, 2012, an addendum to the complaint was filed by Complainants, listing another 21 items alleged to be deficient. Inspector Cook went back out to the jobsite on May 9, 2012. He did not issue another CWO, but verbally informed Respondent of his findings. Respondent did not participate in the inspection because Complainants would not allow Respondent on the property. Inspector Cook testified that he found all but three items completed from the CWO and several other corrections that were needed based on the addendum complaint. Inspector Cook retired from the ROC on June 30, 2012. 6. The case was then assigned to ROC Inspector Ted Gerold, who performed a pre-hearing jobsite inspection on August 14 and 15, 2012. Again, Complainants did not allow Respondent on the property for the inspection. Inspector Gerold testified at hearing about his findings. 7. He found that many of the items had been corrected by Complainants. Of the CWO items that were not corrected by Complainants, he found that Respondent had corrected item 2 (wrap around eaves above front window) and item 6 (medicine cabinet blocking). Although correction attempts had been made, he found the there was still work to be done on item 3 (drywall transition – not well done), item 7 (stucco crack at transition – still excessive, by breaker panel), and item 10 (front door threshold). He also found that the “bird block” beneath the eaves (related to item 8 on both CWO and addendum complaint) needed to be vented. Complainants had done some work themselves with the stucco and blocking. 8. Inspector Gerold also testified about some of the “no action” items in the CWO. Specifically, he noted that with regard to the stucco, there were several areas where the texture was not good and areas with excessive small cracking. In addition, there were stucco spills on the front stoop that needed to be cleaned. 9. With regard to the addendum items,[5] he found that some of the work was completed at the time of the pre-hearing inspection, either by Respondent or Complainants. This includes item A1 (wrap around eaves over garage), and items A9, A11 through A18 and A20, which were completed by Complainants themselves. 10. He also found more work needed on item A2 (sloppy repair), A3 through A5 (trim work not done), A6 (stucco spills on front stoop area), A7 (block wall partly corrected), A8 (bird block issue), A10 (some grading not done), A19 (gaps between wrap around fascia board and roof are too big, they are outside ¾ inch tolerance), and A21 (stucco cracking as noted above in CWO discussion). 11. With regard to item A7, Inspector Gerold elaborated that there was a loose top piece and that there must be a column at the point where the returns from Complainants’ house and the neighbors’ house meet the block wall running along the property line.[6] 12. With regard to the stucco, Complainants called witness Juan Acosta, principal of Acosta Plastering, Inc. (“Acosta”), a licensed Arizona contractor. Acosta gave a bid to Complainants to redo the entire stucco job. Juan Acosta testified that the method of correction that Acosta would use would be to put mesh over the existing stucco and re-stucco the whole house. 13. The evidence shows that the stucco has not been painted. Exterior painting is Complainants’ responsibility under the contract. All witnesses experienced in homebuilding testified that failure to paint stucco within a reasonable amount of time can contribute to cracking. 14. Complainants challenge several of the “no action” workmanship items made by the ROC Inspectors. This includes the front picture window framing (Item NA1)[7] and the flatness of floor slabs (Item NA2).[8] In addition, Complainants raised workmanship issues with regard to many of the items that they have corrected themselves, including the walk in tub and water pipe in the new master bedroom closet. Finally, Complainants submitted evidence about the many contractually-based disputes between the parties, such as the floor safes (Item NA4), crown molding (Items NA6 and A9), trash removal (A11), mirror installation (A18) and closet shelves and poles (A16), all of which are disputes about the scope of the contract. 15. Other than the ROC Inspectors and Acosta, Complainants relied on themselves to make their case for workmanship issues. However, the Administrative Law Judge does not find that Complainants are trustworthy witnesses in this matter because they exhibited unreasonable views of the evidence. This is best illustrated with regard to the front window framing issue (Item NA1). 16. With regard to the front window, in their complaint and throughout the case Complainants have been insistent that Respondent is in violation because the as-built window is not according to plan. Respondent admits that the window is not built according to plan. David Holt (“Holt”),[9] the framer on the job, testified that “field adjustments” had to be made because of a conflict between the height of the window and the framed wall and roof trusses. That conflict could be resolved by either (1) altering the engineered roof trusses or (2) lowering the window height.[10] Both of these options deviated from the plans. Holt testified that Complainant Robert Kalis was informed of this and told Respondent and Holt to “do what you have to do” to make it work.[11] During his testimony, Robert Kalis acknowledged that Holt told him about the problem with the front window and that the window plans “did not work.”[12] Holt laid out the options with both Craig Krisel and Robert Kalis present. Robert Kalis acknowledged that he told Holt to “do whatever you have to do to make it work.”[13] He stated that his exact words were “do whatever you have to do to make it right” but he meant to make it work.[14] When asked whether Holt’s solution (to set the window lower) was reasonable in light of the instructions he had been given, Robert Kalis acknowledged that it was, but stated that he had hoped for a different outcome.[15] When then asked if Holt was given permission to deviate from the plans (the obvious conclusion based on the testimony), Complainants refused to admit it.[16] That refusal was unreasonable. 17. The Administrative Law Judge finds that the evidence supports the findings and conclusions of Inspector Ted Gerold as stated in his testimony. Inspector Gerold was an unbiased and trustworthy witness and his testimony is given more weight than any other witness, including Complainants. 18. Apart from the workmanship issues, Complainant put forth evidence in an attempt to show abandonment of the contract. However, given the joint nature of the project and the many verbal changes that were made to the contract, the evidence shows only a good faith contractual dispute that is not abandonment. 19. On February 28, 2012, after Complainants had filed their ROC complaint, Respondent sent Complainants an email stating that it was clear that Complainants did not want Respondent to finish the job by finishing the plumbing, and offering to settle the account with credits for unfinished work and a reduced final payment. Complainant posits this as abandonment. However, this is not abandonment, but an attempt to resolve the differences of the parties. 20. The evidence does not show abandonment. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[17] Further, the standard of proof at hearing is by preponderance of the evidence.[18] Therefore, Complainants bear the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[19] Complainants have met that burden for the workmanship items only. 2. The Citation and Complaint alleges violations of A.R.S. § 32- 1154(A)(1) (prohibiting abandonment of a project without legal excuse), A.R.S. § 32-1154(A)(3) by way of A.A.C. R4-9-108 (prohibiting poor workmanship), and A.R.S. § 32-1154(A)(23) (requiring compliance with a CWO). Only the workmanship violation has been shown. 3. At best, the evidence shows only a good faith contractual dispute between the parties that does not warrant finding a violation of the abandonment provision. This tribunal cannot find abandonment on the basis of a good faith contractual dispute. The ROC, acting through an administrative disciplinary hearing, is not empowered by law to adjudicate mere contractual disputes when a contractor holds its position in good faith. Such disputes can be taken to the court system for resolution. Abandonment has not been shown. 4. Neither have Complainants shown a failure to comply with the CWO. The evidence shows that Respondent has not been allowed on the property and that Complainants have not wanted Respondent to perform work at the house for some time because of the contractual dispute and the poor relationship between the parties. In addition, the addendum items were not issued in a CWO. Under these circumstances, there is no finding of failure to comply with the CWO. 5. The evidence does show, however, that various aspects of Respondent’s work do not meet workmanship standards. That is a violation of A.R.S. § 32-1154(A)(3) by way of A.A.C. R4-9-108. 6. Administrative notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website on February 5, 2013. That prior record shows that Respondent has held the license since May 2010 and has not been disciplined. 7. The appropriate sanction in this matter is to require Respondent to finish the corrections. If Respondent does not do so in a timely manner, the license should be suspended. If Complainants do not allow reasonable access to make those corrections, the case should then be closed. RECOMMENDED ORDER IT IS RECOMMENDED that License No. B.264536-R, held by Krisel Construction and Remodeling, Inc., be suspended beginning the effective date of the Registrar’s Order until the Registrar receives written proof that Respondent has made the corrections noted in Findings of Fact 6 through 11 and the Registrar of Contractors accepts such written proof. IT IS FURTHER RECOMMENDED that if Respondent provides such written proof on or before the effective date of the Registrar’s Order, the license suspension shall not take place and case 2012-970 shall be closed.

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, February 5, 2013.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] This tribunal is retaining Complainants’ numbering. G2 was excluded. [2] H1a was excluded. [3] J and K2 were excluded. [4] Exhibit 1. [5] Addendum items will be numbered A1, A2, etc. [6] He noted that this was the standard even if a column is not shown on the plans. The only exception to this is when there are engineered plans approved by the local building authority that allow the lack of a column. [7] The no action items listed in the CWO will be numbered as NA1, NA2, etc. Those in the addendum will retain the numbering noted in footnote 5. [8] Inspector Cook found that the floor slab was ready for being prepared for flooring, which was Complainants’ responsibility under the contract. [9] David Holt is not a licensed contractor. Based on the evidence at hearing, he might be operating as an unlicensed subcontractor. The Administrative Law Judge recommends that the ROC investigate his activities. Even so, Holt appeared to be knowledgeable about framing. [10] 8/31/12 Hearing Record (hereinafter “8/31/12 H.R.”) at 3:35-3:41. [11] 8/31/12 H.R. at 4:13-4:16. [12] Id. at 5:50-5:51. [13] Id. at 5:51:14-16. This was confirmed by the testimony of Craig Krisel. 9/21/12 H.R. at 7:00:00. [14] Id. at 5:53. [15] Id. at 5:54-5:55. [16] Id. at 5:55-5:58. [17] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [18] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [19] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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