ALJDEC decisions subject to certification as final

2014A-1720-RFA-ROC · Registrar of Contractors · 2018-05-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Chris Martin,

Complainant,

v.

R M Flooring Enterprises Inc.,

License Nos. CR-8.205455-D

CR-8.292341-D,

Respondent.

No. 2014A-1720-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 1, 2018, at 1:00 p.m.

APPEARANCES: R M Flooring Enterprises Inc. (“Respondent”) appeared through its employee, Dylan Traver; Chris Martin (“Complainant”) appeared on his own behalf; the Arizona Registrar of Contractors (“the Registrar”) was represented by Thomas Raine, Esq., Assistant Attorney General.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

On February 23, 2018, the Registrar issued a Notice of Claim for Administrative Payout from the Residential Contractors’ Recovery Fund (“the Fund”), notifying the parties that “[a]fter a review of the claim and all supporting documentation, the Fund determined that Complainant is to be awarded $20,465.04 in the form of a payment issued by the Fund.”

After Respondent requested a hearing on the amount of the payout, the Registrar referred Complainant’s claim to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing.

Respondent did not challenge the Registrar’s determination that Complainant was a person who had been injured as defined by A.R.S. § 32-1131(3) who was potentially eligible to receive a payout from the Fund.

A hearing on the merits of was held on May 1, 2018, before the OAH. The Registrar presented the testimony of Marlee McCormick, a Legal Assistant in the Registrar’s Legal Department/Fund who had analyzed Complainant’s claim, and submitted fifteen exhibits. Complainant testified on his own behalf. Respondent presented the testimony of its employee, Dylan Traver, and submitted one exhibit.

Background: The Underlying Workmanship Complaint

On or about March 18, 2005, the Registrar issued License No. CR-8.205455-D for dual floor covering to Respondent. License No. CR-8.205455-D expired on April 1, 2014. On or about June 6, 2014, the Registrar issued License No. CR-8.292341-D for dual floor covering to Respondent. As of this date, License No. CR-8-292341-D is current and in good standing.

On or about May 1, 2014, Complainant filed a complaint with the Registrar against Respondent alleging that it had performed poor work on its contract to install bamboo flooring in Complainant’s home at 1507 W. El Alba Way, Chandler, Arizona 85281. According to complaint, Complainant had paid Respondent in full for the $2,250.00 contract amount. Complainant signed the complaint under penalty of perjury.

The Registrar assigned the complaint to its Investigator, Ted Gerold. Investigator Gerold performed a jobsite inspection on December 3, 2014, and on December 15, 2014, issued a directive to Respondent to “replace any of the wood flooring that has cupped and or excessively gapped throughout the entire home where necessary” on or before 5:00 p.m. on December 31, 2014.

Investigator Gerold performed a compliance jobsite inspection on January 29, 2015, and determined that Respondent had not started any work to replace the bamboo floor.

On May 21, 2015, the Registrar issued a Citation against Respondent’s licenses, charging cause to revoke or suspend the licenses under A.R.S. § 32-1154(A)(2), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

On September 14, 2015, Investigator Gerold performed a prehearing jobsite inspection and concluded that Respondent still had not done anything to replace the bamboo floor.

A hearing was held on September 16, 2015, before OAH on Complainant’s workmanship complaint. Complainant testified on his own behalf. Investigator Gerold testified. Respondent’s qualifying party/officer, Walter Elmer Rico, testified and presented the testimony of general contractor, Brandon Hepworth.

On September 17, 2015, the Administrative Law Judge (“ALJ”) who conducted the hearing on the workmanship complaint issued a decision that found that Respondent had violated A.R.S. § 32-1154(A)(2) by failing to follow the manufacturer’s instructions to perform a moisture test or to allow the flooring to acclimate at least five days before installing the floor, had violated A.R.S. 32-1154(A)(3), namely A.A.C. R4-9-108, by performing poor work in the installation of the floor, resulting in excessive gaps between planks and cupping in the floor throughout the home, and had violated A.R.S. § 32-1154(A)(22) in failing to comply with the December 15, 2015 directive. As a result of Respondent’s proven violations, the ALJ recommended that both of its licenses should be suspended for five days and that it should be required to pay a $250.00 civil penalty.

On or about September 29, 2015, the Registrar issued a final order substantially accepting the ALJ’s Decision. The effective date of the final order was November 9, 2015.

Respondent did not request a rehearing on or appeal the Registrar’s final order in the workmanship complaint. On March 9, 2016, the Registrar issued an order quashing the revocation of Respondent’s licenses and allowing Respondent additional time to pay the civil penalty because the Registrar found that Respondent had not been properly served with the final decision.

Complainant’s Claim to the Fund

On or about December 17, 2017, Complainant submitted a claim to the Fund to recover the damages that were allegedly caused by Respondent’s poor work, requesting a payout in the amount of $24,032.44. According to the claim, Complainant had paid Respondent the full contract amount of $11,390.95 to install the floor.

With the claim to the Fund, Complainant submitted an invoice from Slayer Distributing dated May 2, 2012, to “Chris Martin c/o RM Flooring” for 70 boxes of Mfg Bel Air Bamboo Strand Woven Color Carbonized flooring, Bostik Best 5-gallon mastic, and a trowel, in the total amount of $6,390.95.

The Registrar submitted a flooring installation sheet that Respondent attached to its written answer to the citation in the underlying workmanship complaint that was dated May 17, 2012, and signed by Mr. Rico and Complainant, stating that Respondent would install 1549 square feet of flooring at a cost of $1.50/square foot, or $2,323.00, plus $200.00 for floor preparation, for a total cost of $2,523.00.

As part of Complainant’s claim to the Fund, he submitted a signed, sworn affidavit that pursuant to a verbal contract with Respondent, he paid $6,390.95 for the materials and $5,000.00 for installation, for a total cost of $11,390.95. Ms. McCormick explained that when the homeowner tells the Fund that he has paid cash for a construction project, the Registrar requires him to submit an affidavit.

Complainant submitted three itemized bids to replace the bamboo flooring in his house: (1) A bid from The Artist of Wood Floors in the total amount of $24,032.44, including $7,909.00 for “Dustless Glued down Bamboo Flooring removal and haul away,” $5,392.50 to “Install Glued down Straight Lay Bamboo Flooring” over 1438 sq. ft., and $5,976.00 for 79 boxes of bamboo flooring; (2) A bid from ENMAR Hardwood Flooring in the total amount of $24,247.33, including $8,664.00 for “Removal of flooring 1444sq.ft @ $6.00sq.ft,” $6,498.00 to install 1444 sq. ft. of flooring, and $7,147.80 for 1588 sq. ft. of bamboo flooring, and (3) A bid from Diamondback Flooring in the total amount of $24,405.87, including $8,100.00 for “Tear out / haul away existing Bamboo flooring using dustless removal system,” $7,743.00 to install new bamboo flooring, including removing and replacing baseboards and moving furniture, and $7,452.00 for 79 boxes of flooring and glue.

Ms. McCormick testified that all three contractors who provided bids to Complainant were appropriately licensed. Ms. McCormick testified that she disallowed the items that had not been included in Respondent’s scope of work, such as moving furniture and removing and replacing baseboards. The Registrar submitted a spreadsheet that showed the total disallowed amounts. Ms. McCormick testified that the Registrar used The Artist of Wood Floors’ low bid, less disallowances, to calculate the payout from the Fund that would make Complainant whole.

Respondent did not dispute that the floor needed to be completely replaced. Respondent submitted a bid from Spectra Contract Flooring in the total amount of $9,750 for labor to remove and reinstall bamboo flooring in a 1500 sq. ft. residence, including $4,425.00 for the removal and $5,325.00 for the installation. Mr. Travers testified that the demolition costs on Complainant’s bids were higher than industry standards.

Spectra Contract Flooring’s bid provided in relevant part as follows:

[T]he installation space must be climatized appropriately prior to installation per material specifications, and remain at that temperature throughout the life of the flooring. If the temperature is not maintained according to specifications, the bamboo product may fail. In a case of a failure due to climate, the material and installation will not be covered by any warranty proceedings.

Complainant testified that none of the three contractors from whom he had obtained bids would submit a bid without coming to his home to measure the floor. Complainant testified that bamboo is a grass and that the demolition of the existing floor would release formaldehyde into the air. In addition, during demolition, silica from the concrete slab and additional particulates from the glue would be released into the air. Complainant testified that Spectra Contract Flooring’s requirement that the air conditioning system remain on during installation would result in particulates remaining in the HVAC system for years. Complainant testified that he wanted to make sure that his family was not endangered by the demolition process.

Mr. Travers testified that OSHA prevents contractors from performing work that results in an environmental hazard. Mr. Travers testified that Spectra Contract Flooring’s requirement was that the floor be in a climate-controlled environment before and after, but not during, installation.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

After the Registrar has calculated the amount of a Complainant’s compensable damages and proposed a payout from the Fund to which he is entitled, Respondent bears the burden of proof to establish that the Registrar’s calculations were erroneous or not supported by a preponderance of the evidence.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

A.R.S. § 32-1132(A) describes the measure of damages that an eligible homeowner is entitled to recover from the Fund, in relevant part as follows:

The residential contractors' recovery fund is established, to be administered by the registrar, from which any person injured by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter may be awarded in . . . an amount of not more than thirty thousand dollars for damages sustained by the act, representation, transaction or conduct. An award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines. . . .

(Emphasis added.) For the purposes of A.R.S. § 32-1132(A), “actual damages” are the reasonable cost of repairing the contractor’s defective work and completing the project, minus any portion of the contract price still unpaid to the original contractor.

Complainant’s various sworn statements at different times about what he paid Respondent to install the floor are wildly inconsistent and all differ from the signed document that Respondent submitted to the Registrar with its written answer. Although the inconsistencies do not affect the calculation of damages because Respondent did not claim any unpaid amount that should be offset against the payout from the Fund, Complainant’s contradictory statements affect the measure of his credibility.

Although Complainant testified to attempt to justify his contractors’ high price for the demolition of the bamboo floor, Complainant did not claim any particular expertise in construction. It is not clear on this record why all three of Complainant’s contractors’ bids to demo the floor exceeded the cost of installing a new floor.

Mr. Traver’s testimony that flooring contractors are governed by OSHA and other environmental regulations was credible. Mr. Traver’s testimony was credible that flooring contractors generally require that wood flooring be allowed to acclimate before installation and, after installation, require that their customers maintain the floor in a climate-controlled environment for the contractor to warranty the floor. Mr. Traver’s testimony that the HVAC system is not run during demo was also credible and consistent with Spectra Contract Flooring’s bid. Spectra Contract Flooring is a licensed contractor and, as such, is presumed to have submitted a bid to perform work in a way that will comply with the Registrar’s workmanship standards and all other applicable environmental and workplace regulations. Neither the Registrar’s workmanship standards nor federal and state environmental or workplace regulations allow a contractor to perform its work in such a way that endangers the public or the environment.

Respondent established that Complainant’s contractors’ bids to demo the bamboo floor exceeded industry standards and what most other qualified contractors would charge for the job. Respondent therefore established that the proper measure of the payout that Complainant should recover from the Fund is $16,981.04.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that on the effective date of the final order in this matter, the Residential Contractors’ Recovery Fund shall pay $16,981.04 to Complainant Chris Martin.

It is further recommended that under A.R.S. § 32-1139(B), the Registrar shall charge $16,981.04, plus interest at a rate of ten percent a year, to Respondent R M Flooring Enterprises Inc.’s License Nos. CR-8.205455-D and CR-8.292341-D.

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 five days from the date of that certification.

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Done this day, May 3, 2018.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors