ALJDEC decisions subject to certification as final

2016A-1985-ROC · Registrar of Contractors · 2017-02-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Westbrook Townhouse Association,

COMPLAINANT,

v.

Doc Services Inc.,

License Nos: 166871, 302097, 251453

RESPONDENT.

No. 2016A-1985-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: November 23, 2016, and January 9, 2017, with the record held open until January 25, 2017, to permit the filing of written closing arguments.

APPEARANCES: Westbrook Townhouse Association (Complainant) was represented by Chandler Travis, Esq. Doc Services, Inc. (Respondent) was represented by Kirk Hayes, Esq.

ADMINISTRATIVE LAW JUDGE: Suzanne Marwil

_____________________________________________________________________

Hearing was convened to determine whether Respondent violated state law as alleged by Complainant and as cited by the Registrar of Contractors (Registrar). Evidence and testimony were presented, and based on the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Order are made:

FINDINGS OF FACT

Complainant is an association located at 50 North Alma School Road, Mesa, Arizona 85201.

Respondent holds Arizona Contractor’s License Nos. 166871 (inactive), 302097, and 251453.

On June 8, 2016, Complainant filed a complaint with the Registrar alleging that Respondent had performed poor work on the association’s buildings, leading to unsealed nail holes, siding that did not meet at the studs, lack of counter flashing at roof decks, peeling paint, and problems with caulk and wood rot. The complaint specified that it did not include buildings, 1, 2, 3, 13 and 25, which were worked on by a different contractor.

The Registrar assigned investigator Michael A. Crow to investigate the complaint. Crow testified that he arranged to perform an inspection on June 28, 2016, and notified Complainant and Respondent of the time and place of the inspection. Both Respondent and Complainant were present at that inspection. Crow indicated that at the time of an inspection he substantiated issues with nailing, peeling paint and caulking.

On July 21, 2016, Crow sent Respondent a Directive from the Registrar. The Directive stated in pertinent part as follows:

After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in discipline of your license and a civil penalty pursuant to A.R.S. § 32-1154(4) of up to $500.00. Failure to comply with this Directive may also be treated as an aggravating factor should the Registrar pursue discipline of your license. You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on August 5, 2016.

You are hereby directed to correct the following violations by appropriate means:

Nail holes + fascia boards not sealed.

Respondent shall correct by the appropriate means.

Siding not meeting at studs.

Respondent shall correct by the appropriate means.

Peeling paint, caulk + separation leaving cracks for water penetration.

Respondent shall correct by the appropriate means.

2x 6 corners are not nailed + sealed properly.

Respondent shall correct by the appropriate means.

Wood rot.

Respondent shall correct by the appropriate means.

Paint flashing.

Respondent shall correct by the appropriate means.

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.

Crow said that the wording of the Directive is taken directly from the complaint and the Registrar does not take a position on how the items should be corrected, leaving that up to the contractor performing corrective work.

After receiving the Directive on July 29, 2016, Respondent contacted Crow and indicated it required an extension in light of the monsoon weather that was impeding the work. Crow granted the extension.

Complainant inquired of Crow why the extension was given and complained that Respondent was not doing corrective work. Respondent maintained that Oglesby was onsite whenever weather permitted to perform corrective work.

Crow drove to the jobsite and saw evidence that Respondent had been working so he left the extension in place.

On September 16, 2016, Crow performed a compliance inspection and determined that all the items were not complete. He clarified that he saw caulking had been done on the bottom board of the flashing, but that nail holes had not been corrected, and issues remained with the painting, caulking and flashing.

Crow forwarded the matter to the Registrar’s legal department for review. At some point, Crow learned that Oglesby had injured himself.

On September 8, 2016, the Registrar issued Respondent a Citation. That Citation contained two charges. Charge 1 referenced “[a] violation of Rule 4-9-108, titled ‘Minimum Construction Standards,’ in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3).” Charge 2 specified a violation of A.R.S. § 32-1154(A)(22), namely “[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.”

Respondent claimed that access limitations such as Complainant’s instructions that it could not work on weekends, safety issues with the workplace in the form of debris, Complainant’s unwillingness to give back Respondent’s equipment (Exhibit 22) and the disrepair of the condition of Complainant’s upkeep of the buildings in question, including inadequate ventilation, all contributed to Respondent’s difficulty in performing corrective work. Respondent noted that Oglesby had broken his ankle performing corrective work at Complainant’s jobsite because he had to step over debris.

Complainant argued that Respondent’s contract (Exhibit 1) did not limit its scope of work or liability for ventilation issues or deficiencies with maintenance issues. It noted that the contract stated only that:

[t]his proposal is based on the surface conditions of the community as of June 30, 2014. Changes in substrates or replacement of services subsequent to the state they require cost provision not currently included in this proposal (ex wood replacement, signage changes, additional parking structures, new pool fencing, etc.)”

Complainant maintained that it provided Respondent adequate access to the jobsite from the time of the jobsite inspection until early September 2016 and that Respondent chose to limit its own access by refusing to work on weekends and blaming weather conditions, particularly the monsoon.

Crow testified he saw no signs of a denial of access and that when Respondent agreed to perform the work contracted for, it accepted the substrate and agreed to correct prior conditions, including, but not limited to: securing siding, and fixing nails that were sunk in too far and allowed water to leach into the surface, causing swelling. Crow acknowledged that most of the material on the building was original and that he had done no investigation into the ventilation required by building code or whether Respondent had sent emails to Complainant warning it of caulking issues caused by improper ventilation.

David Dillon, Vice President and Arizona Division Manager for John Wayne Construction, Inc., testified that he inspected Complainant’s property in November 2016 in order to offer his opinion in this matter. Dillon indicated that he has thirty years of experience in construction and had worked on projects similar to Complainant’s in California but is not a licensed contractor in Arizona. He noted that during his inspection, he observed that the conditions listed in the Directive still existed. In particular, Dillion said that the nail holes and fascia boards have not been sealed in the siding of the trim, siding still does not meet at the studs, there was peeling paint and caulk separation present, paint flashing still exists, and the 2 X 6 corners of the roof were still not nailed and sealed correctly. He could not say with certainty what precise work Respondent had done but did indicate that it was clear some of the siding, paint and nailing was newer than others. He stated that Respondent had placed nails too deep in the siding and had installed all of the 1 X 6 boards on the trim.

Dillon disputed that the buildings lacked adequate ventilation, noting that he inspected the vents and soffits at Complainant’s property and determined they provided adequate ventilation. He commented that he had never seen ventilation blow out caulking that had been correctly done. He acknowledged that he had not done calculations to assess the amount of ventilation and to determine whether the ventilation complied with the applicable building code.

Curtis Neal Olglesby, President and Qualifying Party of Respondent, testified that he first met Complainant in 2014 when the condition of its buildings was distressed. He recalled making recommendations to Complainant that were not undertaken. When Complainant again contacted Respondent, monsoons had further damaged the buildings and Respondent recommended that all the siding be removed and replaced at a cost of $1.5 million. Complainant declined to do that and indicated it preferred to make repairs on a building-by-building basis. Respondent agreed to perform this repair project to assist in providing the buildings some protection.

During the project, Olglesby verbally informed Complainant that it believed the buildings lacked proper ventilation that posed problems for caulk and paint. See Exhibit 29. Oglesby also said he informed Complainant that its poor landscape maintenance was flooding the buildings, causing damage. The parties’ contract did not mention these issues or limit Respondent’s liability for issues caused by preexisting ventilation or landscaping problems. See Exhibit 1. Oglesby noted he undertook the work because the buildings needed some protection, but repeatedly informed Complainant that this was not a long-term fix.

Following the completion of the repairs sought by Complainant, Respondent scheduled a walk-though with a punch list (Exhibit 9). Thereafter, monetary disputes arose between the parties, resulting in Respondent being locked out of the project while still having material and equipment on site. Oglesby said Respondent had no further contact with Complainant before the complaint was filed.

Oglesby indicated Respondent took the complaint seriously, but never received direction from Crow regarding what work needed to be corrected. When Oglesby was present at the jobsite inspection, he was mainly listening and figuring out how to correct the items at issue. After belatedly receiving the Directive, Olglesby said he and his crew worked diligently when weather permitted to complete corrective work. He requested that the manufacturers of the paint and caulk visited the site and they agreed that the issue was not one of workmanship but of improper ventilation. See e.g. Exhibits 34 and 36.

Oglesby acknowledged that Respondent decided not to work on the weekends because it was a busy complex and working was not safe. Oglesby stated that Respondent’s work was hampered by ongoing landscaping and ventilation issues because the two-story units lacked vents. He said he believed his crew was ninety-nine percent successful in caulking overdriven nail holes during the Directive period. He also emphasized that the buildings themselves are excessively moving, causing problems that no paint or caulk can fix.

Oglesby recalled that Respondent’s crew lacked access to the residents’ private patios and did not have ability to match paint during the Directive period due Complainant’s refusal to provide the drawdowns needed to reproduce the correct color. He also stated that on September 1, 2016, he fell doing corrective work at Complainant’s property, resulting in a multi-day hospital stay and surgery. By the time he called Crow to alert him to the injury, Crow had already referred the matter to the legal department.

Oglesby noted that even after the matter was referred to the legal department, Respondent continued to offer to perform corrective work, which Complainant rejected.

David Argano, licensed architect, testified that he had inspected the site three times. He noted that some of Complainant’s buildings were built in 1985 while others were built in 1998, but none were well-maintained. He viewed paint that had deteriorated over a long period of time and siding that was near the end of its useful live causing stability problems for the buildings. Argano opined that the buildings needed a “full facelift” and that Respondent’s repairs were simply trying to match existing conditions, which is far different than working on a new project. He commented that in a repair project, Respondent did the best it could with the conditions it had.

Argano indicated that the Directive was not specific and left him unable to determine what to repair. He opined that the issues contained in the Directive concerning the cracked paint around the nails in the siding had nothing to do with Respondent’s workmanship and stemmed entirely from building movement. Similarly, he said that the paint and caulking were not workmanship issues and that it would be unfair to hold Respondent responsible for the paint and caulking on the buildings forever. He did acknowledge that some of Respondent’s work on the trim it installed “needs cleanup” and that some paint flashing was observed. Argano found it difficult to distinguish old siding from new siding once it was painted and caulked. Argano also opined that the Phase 1 buildings from 1985 had no ventilation; he said the vents seen by Dillion were dryer vents not meant for ventilation. Finally, he indicated that the irrigation system is flooding the siding, which is a maintenance issue, not a workmanship issue. He emphasized that the trim was always going to fail due to landscaping issues.

Following hearing, the parties filed a stipulation to admit certain exhibits that may have been inadvertently not included in the record. The Tribunal has reviewed all of the stipulated exhibits and accepts them as part of the record even if not expressly referenced in this Decision. Similarly, the Tribunal has reviewed and considered both of the written closing arguments.

The Tribunal takes administrative Notice of Respondent’s license history as reflected on the Registrar’s website, which the Tribunal reviewed on February 2, 2017.

CONCLUSIONS OF LAW

The Registrar has jurisdiction over this matter, pursuant to A.R.S. § 32-1101, et seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154.

To warrant such sanctions by the Registrar, Complainant must demonstrate by a preponderance of the evidence that Respondent violated the statutory section cited. Proof by a “preponderance” means that “the evidence is sufficient to persuade the finder of fact that the proposition is more likely true than not.” In re: Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994). See also Culpepper v. State of Arizona, 187 Ariz. 431, 930 P.2d 508 (App. 1996). It is “evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (Rev. 6th ed. 1990).

As a general principle in construction, a contractor who performs work on top of a surface prepared by another contractor accepts the surface. The subsequent contractor should inspect the surface for any flaws or defects that would affect the work it proposes before performing the work. If it found the surface to be unacceptable, it should call any defects to the owner’s attention so that the owner can choose whether to pay for the defective surface to be corrected or if the owner is not willing to pay to correct the surface, the subsequent contractor may obtain an explicit warranty disclaimer. In addition, after a subsequent contractor covers the original contractor’s work, the Registrar cannot apportion fault because the subsequent contractor’s work may have exacerbated or even caused the observed deficiency.

Undisputed credible testimony established Respondent accepted the surface of Complainant’s buildings and thereafter performed substandard work for Complainant. Respondent conceded its work did not look good. Respondent’s contract did not expressly exclude responsibility for problems with its work caused by ventilation or other maintenance issues. Respondent as the licensed contractor is in the best position to identify problems with the surface and to choose not to work on jobs where work cannot be completed to a minimum standard of workmanship. Accepting Respondent’s argument that it may undertake work and then explain either verbally or in writing why its work will not meet minimum workmanship standards would effectively gut the Registrar’s policing and regulatory function and is therefore rejected.

Thus, Complainant established Respondent’s work on the items specified in the Directive was not done in a professional and workmanlike manner in violation of A.A.C. R4-9-108 and thereby of A.R.S. § 32-1154(A)(3).

An A.R.S. § 32-1154(A)(22) violation is warranted given that Respondent failed to complete the requisite corrective work despite being afforded an extension of time to do so. Respondent first complained that the Directive was vague, but having done the work it was in the best position to know what work required correction. Respondent next cites access issues, but most were of its own making, including the decision not to work on weekends and to not work whenever there was any possibility of rain. Add to this that Respondent concedes it had access to Complainant’s property for hundreds of hours during the corrective period and, it is clear that access was not an issue.

Respondent admitted that it had other tools and equipment of the type left with Complainant and acknowledged that Complainant had attempted to return the items in question. While it is true that the difficulty of obtaining matching paint may have impacted the corrective painting, the record was clear that other corrective work was also not complete.

The Tribunal finds, however, that Respondent did make some attempt to perform corrective work and that this effort should be recognized when imposing discipline.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend Respondent’s License Nos. 166871, 302097 and 251453 for a period of three (3) days.

It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(E).

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 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, February 2, 2017.

/s/ Suzanne Marwil

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors