ALJDEC decisions subject to certification as final

2016A-4770-CHC-ROC · Registrar of Contractors · 2018-07-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Alfie Ware,

COMPLAINANT,

v.

Crystal Creek Builders Inc.,

License No. B.291474-R,

RESPONDENT.

No. 2016A-4770-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING DATES: May 24, 2018, at 9:00 a.m.; July 23, 2018, at 9:00 a.m.; and July 24, 2018, at 9:00 a.m.

APPEARANCES: Alfie Ware (“Complainant”) was represented by J. Jeffrey Coughlin, Esq., J. Jeffrey Coughlin PLLC; Crystal Creek Builders Inc. (“Respondent”) was represented by Thomas P. Kack, Esq., Musgrove Drutz Kack & Flack, PC.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website, on or about April 25, 2014, the Registrar issued License No. B.291474-R for general residential contracting to Respondent.

On or about November 28, 2016, Complainant filed a complaint with the Registrar against Respondent alleging that on July 16, 2015, Respondent had contracted to construct a new residence for Respondent and his wife at 1508 N. Split Rail Trail, Prescott Valley, Arizona 86314 (“the house”), that Complainant and his wife had moved into the house on November 5, 2016, and that Respondent’s workmanship was deficient in seven respects, including that there was “excessive moisture in crawl space discovered by home inspector later dismissed by soil engineer as normal which I dispute.”

On December 19, 2016, the Registrar’s Investigator assigned to the complaint, Jim Dimond, performed a jobsite inspection. On December 23, 2016, Investigator Dimond on behalf of the Registrar issued a Directive that required Respondent, among other things, “to ensure that the crawl space meets the code requirements of ventilation which is typically 1 sq. ft. venting/150 sq. ft. of space in an appropriate manner.” The deadline on the December 23, 2016 Directive for Respondent to complete corrective work was January 8, 2017, at 5:00 p.m.

On or about January 23, 2017, Complainant’s attorney filed an addendum to the complaint that alleged eighteen additional items of deficient workmanship, including the following:

16. Excessive gaps in trim boards above deck (ceiling [or “lid”]) and trim attached to wall with unsightly large nail heads

17. Unsightly vents for crawl space PD; leaks in foundation/basmnt. Walls (WS) Waterproof and Vapor [Barriers]

. . . .

19. Smell coming up from master bathroom shower drainage

. . . .

22. Insulation in crawl space not installed properly/falling down and wet

.

Investigator Dimond informed Respondent of the additional complaint items and scheduled a second jobsite inspection on February 9, 2017. Investigator Dimond’s notes of his February 9, 2017 jobsite inspection included the following statements:

Complaint Item 17: Unsightly vents for crawl space.

Investigator’s Observation: The vents are necessary and required [aesthetically] pleasing vents may possibly be purchased by the homeowner and installed at his expense.

The venting is not a violation . . . .

. . . .

Complaint Item 19: Smell coming up from master bathroom shower drainage

Investigator’s Observation: no smell has been noted at any inspection . . . .

. . . .

Complaint Item 22: Insulation in crawl space not installed properly/falling down and wet.

Investigator’s Observation: at the original inspection the insulation was dripping and drooping. At this inspection, the insulation was considerably dryer due to the added venting I believe.

The insulation at the time of compliance inspection now has been replaced, supported and a vapor barrier installed. . . .

On February 23, 2017, Investigator Diamond issued a second Directive to Respondent, including the following items:

Excessive gaps in trim boards above deck (ceiling) and trim attached to wall with unsightly large nail heads.

There are poorly fitting vertical joints [that] shall be corrected in an appropriate manner.

The fasteners used are appropriate for the application and there has not been any specifications provided to show that they are not appropriate.

Wood expands and contracts. The gaps that have occurred between the ledger boards and the ceiling planks is beyond the control of the respondent. Caulking these gaps would likely have a negative result.

Unsightly vents for crawl space PD: leaks in foundation/basement walls

The vents are an appropriate correction for item #3 of the original directive.

The respondent has agreed to inspect the below grade walls at the footing to confirm that the waterproofing is intact and will appropriately address any potential concerns in an appropriate manner.

. . . .

Insulation in crawl space not installed properly/falling down and wet.

Once venting issue is resolved, the respondent is to determine the integrity of the insulation. Any deficiencies shall be corrected in an appropriate manner.

The February 23, 2017 Directive did not require Respondent to correct any foul smells in the master bathroom drainage. The deadline on the February 23, 2017 Directive by which Respondent was to complete this work was March 13, 2017, at 5:00 p.m.

On June 14, 2017, Investigator Dimond performed a compliance inspection. Investigator Dimond’s report of his compliance inspection opined in relevant part as follows:

This inspection encompassed the original directive and addendum directive. It is my understanding that there have been several scheduling/access issues during the course of the complaint but the parties have gotten through it.

Several minor issues remain resulting in the respondent being not compliant.

Compliance Findings:

. . . .

Item #16- The issue of vertical gaps has been corrected however, there is one piece of 1X that contains the edge of the tree resulting in a large gap and the piece should not have been used.

It is the investigator’s opinion that the rest of the items are in compliance.

After the compliance inspection, Investigator Dimond referred the complaint to the Registrar’s Legal Department. On June 19, 2017, the Registrar issued a Citation against Respondent’s contractor’s license, charging cause to revoke or suspend the license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

Respondent’s qualifying party Charles Scott (“Scott”) Nalda filed a timely written answer to the Citation, stating that Respondent would complete all repairs that were necessary to bring its work into compliance with the Registrar’s standards within a week.

The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. An evidentiary hearing was held on May 24, 2018, July 23, 2018, and July 24, 2018. Complainant submitted nineteen exhibits and presented the testimony two witnesses: (1) Glen K. Copeland, P.E., a forensic soils engineer who testified as Complainant’s expert; and (2) Complainant Alfie Ware. Respondent submitted twenty-six exhibits and presented the testimony of four witnesses: (1) Gregg Cuka, the contractor who excavated the house site; (2) Mr. Nalda, Respondent’s qualifying party; (3) Timothy R. Robbins, P.E., the civil engineer who prepared the drainage plan for the house and who issued an opinion about the cause of excess moisture in the crawl space; and (4) Gary Reeves, Respondent’s superintendent on the job. Investigator Dimond testified about his investigation into the complaint and, because Investigator Dimond had undergone knee replacement surgery that prevented him from accessing the crawl space, the Registrar’s Investigator Chris Allison testified about his inspection of the crawl space.

Additional Hearing Evidence

Excess Moisture in the Crawlspace

The site for the house is on a steep hill with granite rock. Granite hills are common in the Prescott area. Although in the past, houses were built on hills to capitalize on the views, currently most new houses are built on hillsides in the Prescott area because they only unimproved sites left.

Prescott Valley, unlike some municipalities, requires drainage plans to be stamped by a licensed engineer. Mr. Robbins stamped the drainage plan for Complainant’s house.

Originally, the house was planned to be constructed slab on grade. However, after two days of excavation, Mr. Cuka encountered a hard dig in the southeast corner of the house pad. The cost of a hard dig was excluded from Respondent’s construction contract with Complainant, as it is from most construction contracts. Mr. Cuka contacted Mr. Nalda.

Mr. Nalda contacted Complainant and presented him with three options: (1) Continuing to try to break the rock up, which could be prohibitively expensive because it would cost $1,800/day with no guarantee of if or when enough granite would be removed to pour the slab at the elevation shown on the plans; (2) Bring in fill to the southwest corner of the house planned pad to bring it up to the level of the hard rock, which would be expensive and produce an unsightly result that would require substantial additional landscaping; or (3) Modify the plans to build the house at the planned elevation over a crawl space.

Complainant with Mr. Nalda’s advice chose the third option, the crawl space. Respondent submitted a plan amendment to construct the house over a crawlspace. The Town of Prescott Valley approved the plan amendment and Respondent constructed the house over a crawl space.

The house faces southwest, with the hill on the backside of the house, to the northeast. The front of the house is on the low side of the hill and the back of the house, including a rear patio, is against the hill. Viewing the house from the front, the surface of the crawl space on one side of the house is approximately 9’ lower than the surface of the crawl space on the other side due to the slope of the lot. Mr. Copeland testified that the crawl space was only 18” high on right side. The entry to the crawl space is on the east side.

Because the house was constructed on a hillside, Respondent installed several features to intercept and drain surface water away from the house, including French drains above the retaining wall around the patio at the back of the house, French drains over the footings, a 6” pipe to carry water from the rear of the house to the street, and waterproof coating on the interior and exterior of the stemwalls.

Respondent also installed bedding material in the crawl space to cover the rocky native ground. The footings were pinned to the bedrock.

Before Complainant moved into the house, he expressed concerns about the crawl space. On October 18, 2016, Mr. Robbins on behalf of Red Butte Engineering wrote a letter to Mr. Nalda to address Complainant’s concerns. Mr. Robbins noted that the following features had been constructed at the house to address surface water drainage: (1) A minimum slope of 5 feet away from the house, gutters, and drainage swales around the house; (2) A protective water proofing sealant on the below grade portion of the foundation wall to prevent it from absorbing groundwater; (3) Four-inch perforated pipe or French drains had been installed in the back of house at the top of the footing to convey water away from the footing; (4) A drainage swale at the back of the house to intercept and convey runoff away from the house; and (5) Venting in the crawl space. In addition, Mr. Nalda testified that Respondent installed a 6” pipe running north to south on the lot to convey surface water that the drain intercepted to the street in front of the house.

Mr. Robbins’ October 18, 2016 letter offered two possible reasons for moisture in the crawl space: (1) The cooling of outdoor air that was brought into the crawlspace through the vents reached its saturation point (dew point), causing an increase in relative humidity; or (2) Because the lot had been cut into a granite hill, capillary action caused fissures in the granite to convey water to the crawl space during wet times of the year.

Investigator Dimond testified that he performed two jobsite inspections. Investigator Dimond testified that he performed a compliance inspection on June 14, 2017. In his opinion, Respondent’s installation of additional venting in the crawl space complied with the Registrar’s standards and the crawl space overall complied with the Registrar’s minimum workmanship standards.

Investigator Allison testified that at Inspector Dimond’s request, he inspected the crawl space on September 12, 2017. He did not see any evidence of water intrusion, although some of the bedding material was damp when he stuck his finger into it.

As noted in the complaint filed with the Registrar on November 28, 2016, Complainant was not satisfied with Mr. Robbins’ explanations. Complainant retained Mr. Copeland and his company, Copeland Geotechnical Consultants, to provide his opinion. On September 11, 2017, Mr. Copeland inspected the crawl space and the area behind the house.

On or about October 25, 2017, Mr. Copeland issued a report of his inspection to Complainant. Mr. Copeland stated the following concerns:

A shallow swale in the crawl space was “indicative of running water” and the crawl space had “relatively high ambient air humidity,” as witnessed by rust on nail heads and foundation bolts;;

Mr. Copeland was not aware of the plan amendment and noted that the house had been built on structural wood posts without any approved plans for the change; and

The French drains above the footings, impervious membrane under landscape rock in the rear of the house, and foundation sub-draining systems along the rear wall either had not been installed or were compromised because surface water appeared to have been draining into the crawl space from the hill.

On December 15, 2017, Mr. Copeland’s employees excavated behind the house to ascertain the nature and adequacy of the drainage system. They found the French drains where the plans showed them. During the excavation, Mr. Copeland’s employees tore the impermeable fabric that Respondent had installed around the French drains and left soil in the excavation. The record does not include any repairs to the French drains after Mr. Copeland’s excavation.

Mr. Copeland testified that the drainage system that Respondent installed at the house was adequate to divert surface water draining from the hill behind the house. On January 10, 2018, Mr. Copeland issued a second report, confirming the existence of the French drains and surface water drainage system at the house, although Mr. Copeland opined that the perforations in the French drains with time would “silt up and become blocked.”

Mr. Copeland testified at the hearing that in his opinion, the water entering the crawl space was subsurface water that entered the ground through fractured granite on the hillside, in all likelihood flowed under the footings, and was wicked up into the crawl space through capillary action. Mr. Copeland acknowledged that the moisture in the crawl space was sporadic, that he had not seen any standing water during his inspections, and that the swale may have been dug by the contractor.

Mr. Copeland criticized Respondent for making no provision to divert subsurface water from the crawlspace. Mr. Copeland testified that either the house should have been built on piers, which would leave the drainage undisturbed, an interceptor drain should have been put in the crawlspace, or an 8’ to 10’ deep trench should have been dug behind the house to intercept subsurface water before it reached the crawl space.

Mr. Copeland acknowledged that Respondent’s construction of the house complied with industry standards for Prescott and Prescott Valley. Nonetheless, Mr. Copeland testified that because fractured granite is commonly found in Prescott and Prescott Valley, Respondent should have anticipated the moisture problem that Complainant experienced in the crawl space.

The Prescott area experienced substantial monsoon rains before the July 23, 2018, and July 24, 2018 hearing dates. Complainant submitted photographs that showed evidence of water rivulets or “crevasses” in the bedding material in the crawl space and 10” of standing water where the crawl space was deepest.

Investigator Dimond acknowledged that standing water could wick into framing and cause the wood to deteriorate and could cause metal bolts, nuts, screws, nails, and other construction materials to rust. The level of moisture shown in Complainant’s photographs was not acceptable. Investigator Dimond suggested that a sump pump or French drain should be installed in the crawl space to drain standing water that accumulated during a significant storm event.

Investigator Dimond testified that that the provisions for surface drainage that Respondent installed at the house exceeded standards for Yavapai County. Investigator Dimond also testified that a contractor is responsible for known conditions at a jobsite, but a contractor is not responsible for a condition that manifests after a structure is built.

Mr. Cuka testified that he has been an excavation contractor for 38 years and that he averages excavation of 4 to 5 houses per month, or 40 to 60 houses per year. Approximately 30% of his excavations were on hillsides. Mr. Cuka testified that Complainant’s house was the first one in this area that he had seen that had subsurface water wicking up into a crawl space from fractured granite on a hillside behind the house, although he had seen a similar problem in a house 15 miles away.

Mr. Nalda testified he has been building houses in the Prescott area for 33 years. He has read approximately 8,000 drainage reports, but has never seen plans for drainage from a crawl space. He has never seen an 8’ deep ditch behind a house to intercept subsurface water. The cost of such a ditch, especially behind a house that was not built as planned due to a hard dig, would be prohibitive.

Mr. Robbins has been a professional engineer since 1994 in the Prescott area and for the ten years before he obtained his license, he worked as an engineer-in-training. Mr. Robbins testified that because engineered drainage plans deal with drainage of surface water, plans include a more extensive drainage system on the high side of the property next to the house. Sump pumps and French drains in a crawl space are not included on drainage plans for houses to be built in the Prescott area. Such measures are not undertaken until a drainage problem manifests.

Mr. Robbins testified that although water may travel through fractured granite and rise it the surface through capillary action, until the water manifests, it is impossible to know where it will come to the surface. It is also not possible to know exactly where the water comes from.

Mr. Reeves has been working in construction as a supervisor in the Prescott area for 27 years. In the past, engineered drainage plans were not required by municipalities, but municipalities have come to increasingly require such plans. Mr. Reeves has never seen a house plan that called out for a French drain underneath the house. Usually French drains are installed near exterior footings, as they were in Complainant’s house, although some moisture is common in crawlspaces.

Mr. Reeves testified that contractors do not put in extra drainage that is not shown on the plans for free, although he acknowledged that it would be a good idea for Complainant to install a sump pump to remove standing water and excess moisture after storm events. Eventually the excess moisture will either evaporate or absorb into the ground.

The Allegedly Mismatched Boards in the Lid

The underside of the patio cover or “lid” is wood with a clear stain that shows the grain of the wood. As noted above, Inspector Dimond noted in his June 14, 2017 compliance inspection notes that Respondent should replace a 1X piece of trim on the lid because it had bark on it.

By the time of the hearing, Respondent had replaced the 1X piece of trim. Respondent also replaced some of the boards because they had shrunk or cracked.

Complainant complained that the trim piece was not pink enough and that the replacement boards were too pink. Complainant asked that the Registrar require Respondent to replace certain boards with boards that were closer to the color of the surrounding boards. Complainant submitted photographs that showed variations among the boards on the lid.

Investigator Dimond testified that because Respondent had used the same stain from the same bucket on the replacement boards, Respondent could not get any better match. The wood on the lid complied with the Registrar’s minimum workmanship standards. If Complainant wanted a more uniform color, he could have chosen a denser stain.

/ / / /

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish cause to discipline Respondent’s licenses by a preponderance of the evidence. Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.

“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.”

Complainant did not establish that Respondent’s construction of the drainage system at the house violated the Registrar’s minimum workmanship standards or that Respondent should have anticipated that subsurface water would come up into the crawl space through capillary action. Complainant therefore has not established that the moisture or water in the crawl space furnishes cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.

Everyone agreed that standing water in the crawl space is not a desirable condition. However, the Registrar does not require contractors in their construction of buildings to anticipate every problem that could conceivably occur, no matter how unlikely, because such a requirement in most cases would be unnecessary and would raise the cost of construction beyond most people’s ability to pay for improvements to be constructed on their property. Since Complainant did not prove the Respondent departed from the Registrar’s workmanship standards when it installed drainage for the house, it is Complainant’s responsibility to protect his investment by installing a sump pump or French drain to remove water from the crawl space that may result from significant storm events.

Complainant’s original complaint did not allege mismatched boards in the field of the lid. Respondent established that it corrected the trim piece that was alleged in the complaint to comply with the Registrar’s standards. Although the allegedly mismatched boards are not part of the current complaint, Respondent established that the color of boards comply with the Registrar’s minimum workmanship standards. Complainant has not established that the allegedly mismatched boards in the lid furnish cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.

Because Complainant did not establish that Respondent failed to comply fully with any of the Registrar’s Directives, Complainant did not establish cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is ordered that on the effective date of the final order in this matter, Complainant Alfie Ware’s complaint in Case No. 2016-4770 against Respondent Crystal Creek Builders Inc.’s contractor’s License No. B.291474-R shall be dismissed.

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.

Done this day, July 30, 2018.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors