ALJDEC decisions subject to certification as final

2013A-3898-ROC · Registrar of Contractors · 2014-01-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 4, 2013

APPEARANCES: Complainant was represented by Assistant Attorney General Michael Raine, accompanied by ROC staff attorney Jose Gill; Respondent was represented by attorney Michael Thal, accompanied by Respondent’s President Rich Morgan.

WITNESSES: Beau Cruz, ROC Inspector Steve Klein, ROC Inspector Betty Landon, homeowner Rich Morgan

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant, the Registrar of Contractors (Registrar or ROC),[1] brings this action against Respondent alleging poor workmanship with regard to repair of the installation of a heat pump unit on a roof at the residence of John and Betty Landon. Complainant alleges that Respondent’s work has caused the roof to leak. Respondent admits that the roof leaks, but denies that its work is the cause. These charges are brought against Respondent’s residential license. In addition, Respondent’s commercial license has been cited for an alleged violation based on having a person on the license who has been on a license that has been suspended or revoked. That allegation will be supported ONLY IF a violation is found against the residential license AND suspension or revocation results. Thus, the allegation against the commercial license is dependent and contingent upon the outcome of the allegations against the residential license. Respondent denies all allegations. Respondent’s Dismissal Motion Respondent filed a Motion to Dismiss on December 3, 2013, the day before the hearing. Complainant was given time to file a response, and did so on December 12, 2013. Respondent filed a reply on December 20, 2013. Respondent argues that the complaint in this matter has been filed beyond the statutory two-year period for filing complaints and must be dismissed. For the reasons now stated, the Motion to Dismiss is denied. The facts that are the basis for the dismissal motion are not disputed. The installation of the heat pump unit on the roof took place on December 24, 2010. Respondent came to the jobsite and performed repairs in an attempt to stop a water leak in February 2011 and July 2011. The complaint was filed with the ROC on March 11, 2013. Thus, only the most recent repair work in July 2011 is within the two-year period. A.R.S. § 32-1155(A) allows consumers to file an ROC complaint “within two years . . . of an act that is cause for suspension or revocation of a license. . . .” The final sentence of that provision states: “The two-year period prescribed by this subsection shall commence on the earlier of the close of escrow or actual occupancy for new home or other new building construction and otherwise shall commence on completion of the specific project.” This provides two possible starting points for the two-year period: (a) New Construction: earlier of close of escrow or actual occupancy; and (b) Non-New Construction: completion of the specific project. Because the work at issue here was not new construction, only (b) is applicable. Therefore, in this matter the two-year period began upon completion of “the specific project.” If that is not the July 2011 repair, then the complaint was filed too late. The ROC has treated the July 2011 repair as the “specific project” at issue here. The question presented at hearing is whether or not that repair meets workmanship standards. Respondent argues that the ROC’s reading of the phrase “specific project” to include a repair is absurd. The Administrative Law Judge disagrees. In fact, it is Respondent’s reading of the statute that is absurd. Respondent reads the statute to exclude repairs unless they are made and a complaint about them can be filed before two years after the completion of the original project, arguing that the two-year period begins to run for all work upon completion of the original work project. This means that Respondent reads “specific” to mean “original,” which it manifestly does not mean. Thus, in Respondent’s view, a repair made more than two years after the installation of equipment is outside the scope of the ROC complaint process, since it is impossible to file a complaint about that repair within two years of the original installation. This cannot be what the statute means and is certainly not what it says. This tribunal finds that “specific project” as used in A.R.S. § 32- 1155(A) includes a repair project undertaken by a licensed contractor. Here, the repair project at issue was undertaken in July 2011 and is within the two-year period. Respondent’s motion is denied. Recommendation on the Merits This tribunal entered the complaint file received from the ROC into the record, along with Respondent’s Exhibits 1-8, 10-16, 18, 22-29, 36, 38- 39, 46, 48, and 53-54.[2] Testimony was presented from the witnesses listed above. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding no workmanship-related violation and recommending closure of this matter. FINDINGS OF FACT 1. Respondent is the holder of two licenses: (a) License No. C39R.149817-R, a specialty residential contracting license issued by the Registrar that authorizes Respondent to perform work related to air conditioning and refrigeration on residential properties; and (b) License No. L-39.149818-C, a specialty commercial contracting license issued by the Registrar that authorizes Respondent to perform work related to air conditioning and refrigeration on commercial properties. Richard (“Rich”) Sheridan Morgan is the President of the company. Both licenses are exempt from having a Qualifying Party.[3] 2. In December 2010, homeowners hired Respondent to remove and replace a heat pump unit located on the shingle roof of their house.[4] Installation was completed within a few days. Respondent used the existing roof jack to tie the unit into the existing duct work.[5] Respondent did not remove or move any shingles.[6] The homeowners had never had a roof leak prior to that time. 3. In late February 2011, homeowners experienced a roof leak and notified Respondent, who immediately sent a technician to address the issue. He water tested the area around the roof jack and noted that water was observed inside the home at the edge of the return grill. The technician resealed a “seam” on one edge of the roof jack with roofing tar.[7] 4. In July 2011, homeowners again complained about leaking from the roof. This time, Respondent sent supervisor Rick Barrow to address the issue. Barrow completely removed the tar seal around the roof jack edge and replaced it with a new seal with a double layer of tar.[8] 5. Homeowners had no issues with leaking until January 26, 2013, when they contacted Respondent again about leaking. The technician that went to the home could not find any leak. He did not look inside the attic because it was “not accessible.” He thought it might be a problem with the roof.[9] 6. Evidence shows that the shingle roof on the home had been installed in 2002 by Desert Mountain Roofing. 7. Respondent did further investigation to determine the problem. Barrow talked to Desert Mountain Roofing about the issue in February 2013.[10] He was told by Desert Mountain Roofing (who had also looked at the roof) that the leak was caused by the location of the unit; the upper edge of the roof jack was so close to the roof ridge that when water pooled at the upper edge of the jack it backed up to the roof peak/ridge where the leak then occurred.[11] In other words, the area in which the water was entering was the roof peak, not around the jack edge. Desert Mountain Roofing blamed the leaking on Respondent because it alleged that Respondent had “installed the unit too close to the roof peak.”[12] 8. As noted above, Respondent did not relocate the roof jack, but used the existing roof jack, as per the contract. 9. On March 11, 2013, homeowners filed their complaint against Respondent with the ROC, alleging that Respondent’s work was the cause of the leak and that Respondent was responsible for repairs. 10. ROC Inspector Beau Cruz inspected the roof on March 28, 2013. Based on that inspection, he did not issue a Corrective Work Order (“CWO”) but instead issued a letter that stated the following findings: Due to the evidence presented at the jobsite inspection i.e. water staining at the ridge area, no water staining noted inside the main trunk with clear view (unobstructed) view [sic] of flex supply line from jack connection to the trunk line via view with aid of flashlight, from supply register at the entrance to the hallway area, and the fact that as per complainants allegations that water was noted first dripping two months after installation, and after replacing the complete flange membrane on the seventh month after installation, with no water infiltration noted then for approximately a year and a half (1 ½ year), the reason for water entry is the proximity of the jack to the ridge, since if it was indeed the case, then every time a water event occurred water, [sic] should have entered the structure, and clearly did not. It is also this inspector’s opinion that the problem appears to be an issue with the ridge cap installation and is also supported by another inspector which [sic] he stated in his report “the moisture is getting underneath the roof shingles”, therefore, this inspector is unable to apply responsibility to respondent.

Here, Inspector Cruz states that the ridge cap installation by the roofer is the problem. He notes that the scenario of water pooling with enough volume to enter the interior through the roof ridge cap is consistent with the intermittent nature of the leaking (the roof did not leak every time it rained[13]). Thus, he did not hold Respondent responsible and did not issue a CWO. 11. In early April 2013, homeowners had Sure Temp Air Conditioning look at their roof and make a diagnosis. Exhibit 36 is the invoice/record of that inspection. The technician wrote: “Water still leaking from original install, elbow needs to be thoroughly sealed—drip coming through return duct only when it rains, water is getting into that duct somehow & needs to be sealed once & for all by contractor who installed—hasn’t been fixed right from the beginning.” Homeowners sent this invoice to Inspector Cruz and requested another inspection, which was granted. 12. Inspector Cruz performed a second inspection of the roof on May 1, 2013, this time with ROC Inspector Steve Klein in the attic to watch for water leaking into the attic. Barrow was also present in the attic. They both took photographs that are part of the record. Also present for the inspection, outside on the roof with Inspector Cruz, was Desert Mountain Roofing. Rich Morgan was there as well. 13. The parties presented the testimony of Inspector Cruz, Inspector Klein, and Rich Morgan about that inspection. Based on that testimony, and primarily on the Jobsite Inspection Notes in the file from Inspector Cruz, the following is clear: The intent of the inspection was to “determine if the roof cap or A/C jack was the reason for the roof leak.”[14] Inspector Cruz sprayed water on the unit itself for 10 minutes and there were no leaks noted. He then sprayed water directly on the roof jack and noted an entry of water into the attic. Those inside the attic testified that the exact location of the entry could not be determined due to the tight spacing in the attic and the angle from which they could observe. They merely noted when they saw leaking water based on when Inspector Cruz changed the areas that he was spraying. Inspector Cruz noted that he used a piece of roof flashing to keep water from pooling. Inspector Cruz also sprayed another area of the roof (“between the roof deck and jack N/W corner of jack”) and there was a noted entry of water by the two men in the attic. In addition, they noted that in the attic there were seemingly random nails driven into various areas of the underside of the roof. The photographs in Exhibit 23 show these nails very clearly. Some are nails that pierced through the roof from the outside and went through the roof sheathing into nothing; their points do not penetrate a rafter or beam. There are also nails that were put into the ridge beam from inside the attic at various locations and appear to serve no apparent purpose. There is visible water staining and wood damage in those areas where the nails are located. Some of the nails appear to have been in place for a long time. Inspector Cruz noted the nail issue in his notes. He found that the nail issue could not be determined to be Respondent’s responsibility. 14. Rich Morgan testified that even though Inspector Cruz tried to prevent water from pooling at the roof ridgeline by using the piece of flashing during the water testing, he was not successful. A photograph in Exhibit 23 shows Morgan’s finger pointing at the ridgeline during the water testing and clearly shows water pooling.[15] Therefore, the evidence shows that Inspector Cruz’s attempt to prevent pooling did not succeed. 15. After the May inspection, Inspector Cruz changed his opinion and issued a CWO to Respondent. The record contains two versions of the CWO. Both are dated May 16, 2013. Both state that they replace the earlier letter in which no corrective work was ordered. They both order Respondent to repair roof damage and to make necessary repairs so that no further leaking occurs. However, one is longer than the other. The shorter one, which Rich Morgan testified was the one that Respondent received, gave a one-sentence general description of the water test that was performed and did not reference the nails issue or the ridge cap issue, which clearly had not been found to be the responsibility of Respondent.[16] It ordered Respondent to correct water damage caused by heat pump installation and “make necessary repairs to heat pump to eliminate future water damage.” The other, and longer, CWO that is in the ROC file describes the three tests that Inspector Cruz performed and specifically states that no action is required by Respondent for the nail issues.[17] 16. Respondent did not perform any repairs, taking the position that the cause of the water leaks was not Respondent’s work. Homeowners had Desert Mountain Roofing perform repairs in July 2013.[18] 17. The final significant piece of documentary evidence in the record is a February 11, 2013, estimate for repair of the water leaks by Desert Mountain Roofing.[19] Homeowners obtained this estimate and sent it to the ROC as an attachment to their complaint. It provides an estimate of $225.00 to repair the roof leaks as well as a description of the problem and a description of the proposed corrective work. The problem is described as water leaking coming from the roof jack flashing: the estimate states that the installer (Respondent) did not seal it correctly to the existing shingles. However, the proposed corrective work is to remove and replace 5 to 6 feet of ridge shingles above the unit and install new ridge shingles. This is contradictory. The estimate addresses the ridge cap issue but not the roof jack issue. But, it is also an admission that the ridge cap is the problem and that replacing it in the area of the roof jack would be the cure.[20] 18. Finally, at hearing Respondent stipulated to the factual allegation made by the ROC that Respondent’s letterhead did not contain its license numbers preceded by the acronym “ROC” as required by law. Respondent provided credible testimony and evidence showing that this has been changed.[21] CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[22] Further, the standard of proof at hearing is by preponderance of the evidence.[23] Therefore, the ROC bears the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[24] The ROC has not met that burden with respect to the workmanship-related allegations. 2. The Citation and Notice of Hearing alleges violations of A.R.S. § 32-1154(A)(3) by way of A.A.C. R4-9-108 (prohibiting poor workmanship), A.R.S. § 32-1154(A)(23) (requiring compliance with a CWO), and A.R.S. § 32- 1154(A)(13) by way of A.R.S. § 32-1124(B) (requiring that ROC license numbers appear in a certain manner on all documentation used by a licensee). It also alleges a violation of A.R.S. § 32-1154(21), but only against Respondent’s commercial license and only if a violation is found with respect to Respondent’s residential license. Here, only one violation has been shown by the evidence. That violation is against Respondent’s residential license but does not warrant any discipline. 3. Respondent admitted that its letterhead used in corresponding with the ROC during the complaint process for this matter was in violation of A.R.S. § 32-1154(A)(13) by way of A.R.S. § 32-1124(B) because it did not have the acronym ROC in front of its license number. Respondent received a warning letter from the ROC and corrected this issue promptly. 4. The evidence does not show a violation of the two workmanship- related citations because it does not support a finding that Respondent performed faulty work. Respondent responded promptly to the homeowners when complaints were made and performed repair work in a timely manner in 2011. Then, in February 2013, Respondent accepted and relied on the admission of Desert Mountain Roofing, the installer of the roof, that the ridge cap was the issue. 5. The invoice from Sure Temp Air Conditioning is given little weight. There is no evidence that water was ever inside the duct as stated in the invoice and the conclusion it makes is conclusory—it does not explain how it came to that conclusion. 6. The second inspection by Inspector Cruz is also not persuasive, even though he changed his opinion. It is clear that water was indeed pooling at the ridgeline even though Inspector Cruz tried to prevent it. That causes doubt about the reliability of the results of the test he performed. 7. Finally, the Administrative Law Judge finds the February 2013 estimate from Desert Mountain Roofing to be significant. It is an admission that the problem with the roof is the ridge cap. 8. In conclusion, the evidence shows that the roof was leaking due to faulty roof ridge construction and not due to any work done by Respondent.[25] For that reason, there was no workmanship violation and no violation in Respondent’s failure to perform work under the CWO. 9. The only violation supported by the record is the one based on Respondent’s letterhead. 10. Administrative notice is taken of Respondent’s prior residential license record as reflected on the ROC’s public website on January 9, 2014. That prior record shows that Respondent has held the residential license since November 1999 and has not had any disciplinary actions. This is an excellent record. 11. Due to Respondent’s license history and the nature of the letterhead violation, as well as the warning letter that has been issued to Respondent, the Administrative Law Judge recommends that the violation be noted as above, but that this matter be closed with no disciplinary action. 12. Because neither suspension nor revocation of Respondent’s residential license is warranted, there is no basis to find a violation against Respondent’s commercial license as charged in the Citation and Notice of Hearing. 13. This case should be closed. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that Citation and Notice of Hearing 2013-3898 against Respondent Magic Touch Mechanical, Inc. 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, January 9, 2014.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Because the ROC has brought this matter based on a consumer complaint, the ROC is the Complainant in this matter. When acting in a “prosecutorial” role, the ROC will be referred to as Complainant. For other roles, the agency name will be used. [2] See Respondent’s Motion to Admit Exhibits Into Evidence, filed December 9, 2013. Exhibit 54 is admitted only as to the question of what discipline should be imposed if a violation is found; it is not relevant to any other issue. [3] These findings are based, in part, on a stipulation made at hearing as to Factual Allegations 1 and 2 in the Citation and Notice of Hearing issued by the ROC on October 8, 2013. In addition, administrative notice is taken of the information reflected on the ROC’s public website on January 8, 2014. [4] Exhibit 10. [5] Before and after photographs in Exhibit 23 confirm that the roof jack was not moved. Its edge is only inches from the ridgeline. [6] There is no reliable evidence that Respondent removed or moved any shingles. [7] Exhibit 13. [8] Exhibit 14. [9] Exhibit 15. [10] Exhibit 18. [11] Id. [12] Id. [13] See Exhibit 53, climatalogical information for Tempe. [14] Jobsite Inspection Notes. [15] The photograph is the tenth page of the exhibit (the pages are not numbered) and contains a handwritten caption that reads “Inspector asked if crease in ridgeline shingle was ‘imprint from jack flange’!” [16] Exhibit 4. [17] Exhibit 5. [18] Exhibit 39. [19] Exhibits 1 and 38. [20] This is the work that homeowners had done in July 2013. [21] See Respondent’s Notice of Compliance with A.R.S. § 32-1124(B), filed December 9, 2013. [22] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [23] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [24] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [25] There are also other possible causes of leaking (nails and other evidence from the attic), but none of these are attributable to Respondent.

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