ALJDEC decisions subject to certification as final

2017A-3504-CHC-ROC · Registrar of Contractors · 2017-12-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Brian Gibson,

COMPLAINANT,

v.

Epicure Builders LLC,

License No. KB-1.177458-D,

RESPONDENT.

No. 2017A-3504-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 12, 2017, at 8:30 a.m.

APPEARANCES: Brian Gibson (“Complainant”) was represented by Michael Gerity, Esq., Israel & Gerity, PLLC; Epicure Builders, LLC (“Respondent”) was represented by Lori A. Guner, Esq., Lang & Klain, PC.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about August 13, 2002, the Arizona Registrar of Contractors (“the Registrar”) issued License No. KB-1.177458-D for dual building contracting to Respondent. Respondent’s qualifying party/member is Harry Russell (“Rusty”) Swann.

On or about June 5, 2016, the parties entered into a Cost Plus Fixed Fee Contract under which Complainant and his wife would pay Respondent’s cost for its employees or subcontractors to construct a vacation house at 155 Blue Ridge Road, Mormon Lake, Arizona 86038, plus a fixed fee of $34,500.00.

On or about July 7, 2017, Complainant filed a complaint with the Registrar against Respondent alleging 24 specific items of allegedly poor workmanship in Respondent’s performance of its contract to construct Complainant’s vacation house in Mormon Lake. According to the complaint, Complainant had paid Respondent $402,327.52 of the $432,680.22 contract amount.

The Registrar assigned the complaint to its Investigator, Steve Philpott, for investigation. Investigator Philpott performed a jobsite inspection on July 31, 2017. On August 9, 2017, Investigator Philpott issued a directive to Respondent to repair ten items on Complainant’s complaint on or before 5:00 p.m. on August 28, 2017, in relevant part as follows:

Complaint Item 1: Siding- Ordered James Hardie color plus siding, install 2 different types, caulked joints, painted and no flashing

Investigator’s Observation: Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and [manufacturer’s] installation instructions.

Complaint Item 3: Drywall -tape lines and nails coming on walls and ceiling. Living room wall and ceiling not even. Beams upstairs

Investigator’s Observation: This complaint item is substantiated. Per the jobsite agreement, Respondent has asked the Complainant to mark the areas with blue tape and Respondent will then make repairs.

Complaint Item 5: Outside fireplace, stacked stone drops in the middle- not even

Investigator’s Observation: This complaint item is substantiated. See jobsite photos. Respondent shall correct by appropriate means.

Complaint Item 6: Driveway - water pitches into garage- 1 section replaced already. Entire concrete driveway needs to be replaced

Investigator’s Observation: This complaint item is substantiated. Per jobsite agreement the Respondent will correct by appropriate means

Complaint Item 9: Outside light fixtures sit in between siding- not level and seals for water- poor caulking job

Investigator’s Observation: This complaint item is substantiated. Respondent shall correct by appropriate means.

Complaint Item 11: Roof main truss over patio / house- Large truss visible on roof

Investigator’s Observation: This complaint item is substantiated. According to the National Association of home builders, residential construction performance guidelines, roof sheathing should not bow more than 1⁄2” in 2’. It did appear that a section exceeds that standard.

Complaint Item 12: Wood trim on stairs nail holes not filled and stained . . . .

Complaint Item 15: Garage- Both entry doors going outside are not sealed, light comes through

Investigator’s Observation: This complaint item is substantiated. Respondent shall correct by appropriate means.

Complaint Item 16: Patio- front and rear- hanger brackets not painted black as told

Investigator’s Observation: This complaint item is substantiated. Per jobsite agreement the Respondent will correct by appropriate means.

Complaint Item 17: Roof Peak- Wood is splitting apart, not even attached.

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

After Complainant informed Investigator Philpott that Respondent had not performed corrective work to comply with the July 31, 2017 directive, the complaint was referred to the Registrar’s Legal Department. On August 30, 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 attorney filed a timely written answer to the Citation, denying any statutory violations. Respondent’s attorney affirmatively alleged that it had nearly remedied all of the items on the July 31, 2017 Directive, but that Complainant denied access for Respondent to arrange to have a representative of James Hardie, the manufacturer of the siding, inspect the siding and instruct Respondent how it could perform the repairs that the Directive required without voiding James Hardie’s warranty.

An evidentiary hearing was held on December 12, 2017. Complainant submitted 15 exhibits and testified on his own behalf. Respondent submitted 23 exhibits and presented the testimony of four witnesses: (1) Mr. Swann; (2) Patrick Russell, who is employed by Arizona Stone in Prescott, which supplied the stone that Respondent used to construct the outside fireplace; (3) Mike Murphy, Respondent’s roofing subcontractor on the project; and (4) Matthew Howell, who works for Capital Painting, Respondent’s painting subcontractor on the project. Investigator Philpott also testified

Hearing Evidence

The James Hardie Color Plus Siding (Complaint Item No. 1 on Directive)

The parties’ contract does not specify the siding.

Complainant testified that he and his wife chose the style of Color Plus siding that was manufactured by James Hardie because it was painted at the factory and the manufacturer provides a 15-year warranty for the siding. Complainant testified that his neighbors in Mormon Lake have to paint their houses every two years due to the harsh climate and that he wanted to avoid having to paint his house so often. James Hardie includes among its Conditions of Warranty that its Color Plus siding must be installed according to its printed installation instructions.

Investigator Philpott testified that at the initial jobsite inspection, he saw that Respondent had installed Color Plus siding on the majority of the house, but that Respondent had installed regular siding on some parts of the house and painted it to match the Color Plus siding.

Investigator Philpott testified that Respondent had caulked the joints of the siding where they butted up, which he believed voided the manufacturer’s warranty because James Hardy recommended that flashing be used to seal the joints and expressly did not recommend using caulk due to concerns with moisture management. James Hardie’s installation instructions explained that “joint flashing behind field butt joints provides a physical layer that directs water down and out away from the wall cavity” and that caulking “impedes [this] drainage and requires maintenance.

Investigator Philpott testified that caulking must be maintained because it will weather differently than the Color Plus siding. Investigator Philpott testified that Respondent had not caulked the horizontal joints, only the vertical butt joints.

Mr. Swann testified that he did not initially know that Respondent had installed two different kinds of siding. Because it takes 6-7 weeks to order the siding, after Home Depot supplied two different kinds of siding, Respondent painted the different siding to match the Color Plus siding. Mr. Swann testified that Home Depot originally provided zone 5 siding and zone 10 siding, which should not be used in Mormon Lake. Mr. Swann testified that currently, all the siding on the house is Color Plus for zone 5.

Mr. Swann testified that when he asked Complainant whether he wanted Respondent to cut out the caulking at the butt joints and install flashing, Complainant looked puzzled and Mr. Swann concluded that he liked the caulking.

Complainant testified that Respondent painted the replacement siding. Although Complainant submitted a video that he testified showed Mr. Swann using a sweeping motion in front of the siding, it is not clear what Mr. Swann was doing or when the video was taken.

Mr. Swann denied that Respondent had painted the Color Plus siding that Respondent installed to replace the zone 10 siding, except possibly to touch up scuff marks and caulking. Mr. Swann testified that James Hardie provided both the caulking and touchup paint that matched the Color Plus siding. Mr. Swann submitted an email dated October 5, 2017 from Amber Boles at James Hardie that stated that “[i]f you caulk the butt joints, the additional flashing piece is not necessary. The house still needs one layer of house wrap regardless.”

Respondent submitted an email from Ms. Boles dated June 22, 2017, that provided in relevant part as follows:

I am going to suggest that the homeowner start a claim with Hardie. That way all of your bases are covered and our claims department will work directly with the homeowner and get them all the documents that show what would and would not void the color plus warranty. I’m going to double check the language, but I believe that even though we don’t want you to caulk the field joints, it’s more of an aesthetic reason rather than structural, so the warranty should not be affected.

I can call the homeowner directly and get them set up with the claims department if you would like.

Mr. Swann testified that Respondent had installed flashing on some of the house.

The emails reflect that Mr. Swann was attempting to schedule a time for Ms. Boles to inspect the house in Mormon Lake. Mr. Swann testified that although Ms. Boles scheduled a meeting to inspect the house in August 2017, Complainant cancelled the meeting.

On August 16, 2017, Mr. Swann sent an email to Investigator Philpott, requesting that the Registrar extend the time for Respondent to repair the exterior siding, in relevant part as follows:

[Respondent] will have all work complete by the end of the month except the exterior siding. It took me over two months to set up a meeting with the [Hardie] rep last time and then [Complainant] refused to let me meet with her two days before it was set up. She has approved the caulking of the joints and touch up paint without hindering the warranty, But I need to show her the two [different] sidings and see what she says.

Also I am on vacation with the family for a week starting the 26th of the month. I’m asking for an extension of time.

On August 28, 2017, Mr. Swann sent an email to Ms. Boles in relevant part as follows:

I know you were going to look at your schedule for last week to schedule a date to meet me since the homeowners cancelled the last meeting. I now have the ROC on my heels to have this completed by the 31st. And I haven’t received a meeting date from you yet. Can you please try to see if you can meet us by the end of this week. I am so sorry but I have to have your recommendation for a solution so my repair list from the ROC can be completed.

Investigator Philpott did not extend the time for Respondent to repair the exterior siding.

Complainant’s attorney called Investigator Philpott’s attention to a photograph that Complainant had taken of an area of the house where the siding did not appear to cover the bottom plate of the house. Investigator Philpott testified that the siding should cover the bottom plate and that the gap could cause moisture issues.

Respondent submitted a video of the house that showed the same corner without the bottom plate showing. Mr. Swann testified that the angle of Complainant’s photograph was looking up at the siding and that if the bottom of the siding at the corner was viewed at the same level, the bottom plate does not show. Mr. Swann testified that he installed flashing over the bottom plate on the Friday before the hearing.

Complainant also submitted photographs of siding that appeared to be bowing out, which Investigator Philpott indicated could be the result of Respondent having cut the siding too long. Investigator Philpott and Mr. Swann testified that industry standards allow 3/8” of bowing in 8’. Neither Complainant nor Investigator Philpott measured the bowing. Investigator Philpott did not testify that the bowing of the siding was excessive. Mr. Swann testified that the bowing was within industry standards.

Complainant submitted photographs that appeared to show minor color variations in the siding. Mr. Swann testified that the siding could have been affected by snow or wind blown dirt, but denied painting it.

Investigator Philpott testified that after the directive was issued, Respondent had replaced siding with matching Color Plus siding, but that he had not looked closely at the siding at the prehearing inspection to determine if the color matched exactly. In Inspector Philpott’s opinion, the only remaining issue was Respondent’s caulking of the butt joints because James Hardie did not recommend the use of caulk.

The Drywall Tape Lines and Nail Pops (Complaint Item No. 3 on Directive)

After the directive was issued, Respondent asked Complainant to mark with blue painters’ tape all the areas of drywall with which he was dissatisfied.

Investigator Philpott acknowledged that Complainant used a flashlight to point out areas of drywall with which he was dissatisfied, even though drywall should be judged in natural light under normal lighting conditions.

Mr. Swann testified that although Investigator Philpott finally told Complainant that it was improper to point out alleged drywall flaws with a flashlight, by that time they had walked through almost the entire house and Complainant had tainted the outcome of Investigator Philpott’s inspection.

Investigator Philpott testified that the Registrar requires contractors to repair nail pops in drywall

once during the first year after construction is complete. Investigator Philpott acknowledged that replacing the exterior siding may have caused addition nail pops to appear in the interior drywall.

Investigator Philpott testified that based on his prehearing inspection, Respondent had corrected most of the drywall but that a small area in the living room ceiling still required correction to comply with the Registrar’s standards. Investigator Philpott testified that there was one seam where Respondent had corrected a crack that had not been painted and that there were still a few nail pops in this small area.

Mr. Howell testified that he walked through the house to make sure that all of the areas marked with blue tape had been repaired. Mr. Howell testified that he could not see any deficiencies in many of the areas that Complainant had marked with blue tape. Mr. Howell testified that he did not see any drywall repairs that had not been properly painted.

Stacked Stone on Outside Fireplace (Complaint Item No. 5 on Directive)

Although Respondent corrected the stone on the outside fireplace to comply with the directive, two stones had fallen off before Investigator Philpott’s prehearing inspection.

Mr. Russell testified that Respondent had repaired the outside fireplace to comply with industry standards. Complainant acknowledged that on the Friday before the hearing, Respondent reattached the two stones and that the outside fireplace required no further repair.

Pitch of Driveway into Garage (Complaint Item No. 6 on Directive)

Investigator Philpott testified that although Respondent was in the process of replacing sections of the driveway at the prehearing inspection, the driveway was flat and the same level as the garage, and there was an area of negative drainage near the man door. Investigator Philpott testified that Coconino County had adopted the 2012 International Residential Code. Section R401.3 of the IRC required a minimum of 6” of fall for every 6’, or 20% fall in impervious surfaces exceeding 10’ around a structure, such as a driveway.

Mr. Swann testified that although Respondent graded the building pad for the house in Mormon Lake, Complainant’s partner had graded the driveway. Complainant denied hiring anyone other than Respondent to grade the driveway.

Mr. Swann testified that the carport is 4” lower than the subgrade. Respondent could not meet the slope percentage required by code due to the height of the subgrade. If Respondent increased the slope, a dam would be created that would prevent drainage.

Complainant submitted a video that showed water from a rainstorm apparently draining under the garage.

Mr. Swann testified that rainwater will flow everywhere. Respondent submitted a video that showed that no more than 3/16” puddling remained twenty minutes after Respondent had used a hose to flood the driveway.

Investigator Philpott testified that negative drainage under the garage slab could cause foundation issues. Investigator Philpott testified that the problem was that the driveway was draining back to the house, not that there was excessive puddling on the driveway. Investigator Philpott testified that the drainage toward the house was an obvious code violation.

Outside Light Fixtures (Complaint Item No. 9 on Directive)

Investigator Philpott testified that at the time of the prehearing inspection, Respondent had fixed the outside light fixtures.

Visible Roof Truss (Complaint Item No. 11 on Directive)

Investigator Philpott testified that Respondent had mostly fixed the visible roof truss at the time of his prehearing inspection, but that there was still an area that had a 3⁄4” hump in a 2’ x 4’ section. Investigator Philpott testified that because the standard was 1⁄2”, the 3⁄4” hump was just outside the standard.

Mr. Murphy testified that he holds residential and commercial roofing licenses. Mr. Murphy testified that he installed the shingle roof and went back two or three times to make repairs to the roof of the house in Mormon Lake. Mr. Murphy testified that he removed the shingles from the roof and the framer crawled into the attic and leveled out the roof. Mr. Murphy testified that he checked the hump after he replaced the shingles and that, in his opinion, the hump was within industry standards.

Mr. Murphy testified that he was not aware of the Registrar’s standard that required the hump to be less than 1⁄2”. Mr. Murphy testified that he never saw the directive.

Mr. Swann testified that he checked the beams and that there was no sag. Mr. Swann testified that the roofer and framer lowered the rake wall. Mr. Swann testified that he put a level on the ridge to measure variations and that most of the ridge was within 1⁄4”. Mr. Swann testified that the last section was 1⁄2”. Mr. Swann testified that Investigator Philpott read the level from a standup position, but that you had to look at the level horizontally to read it accurately.

Nail Holes on Wood Trim on Stairs (Complaint Item No. 12 on Directive)

Investigator Philpott testified that at the prehearing inspection, Respondent agreed to correct the nail holes, but that at the prehearing jobsite inspection, Respondent still had not corrected all the nail holes on the wood trim on the stairs.

Mr. Swann testified that Respondent installed 2” x 12” tread on the stairs and that after Complainant hired a wood flooring contractor to replace the tread, Respondent was required to remove the stairs. Mr. Swann acknowledged that Respondent may have missed putting putty in 2-3 nail holes, but testified that it does not make sense for Respondent to put putty in all the nail holes until Complainant’s contractor brings the stairs back.

Daylight Visible Through Garage Entry Doors (Complaint Item No. 15 on Directive)

Investigator Philpott testified that Respondent had adjusted the doors and mostly fixed the doors, but that when the lights in the garage were turned out, he could still see a tiny area of light at the top and bottom of the doors. Investigator Philpott testified the deficiency had been basically fixed and the daylight that could be seen around the door was minor.

Under Respondent’s attorney’s examination, Investigator Philpott amended his earlier testimony to state that the tiny bit of daylight that still could be seen met the Registrar’s standards.

Mr. Swann testified that the doors that Complainant picked out for the garage were cheap and that weather-stripping would eliminate any visible daylight at the top and bottom of the doors.

/ / / /

/ / / /

/ / / /

Hanger Brackets Not Painted Black on Patio (Complaint Item No. 16 on Directive)

The parties’ contract does not specify whether or not Respondent was required to paint the hanger brackets. On April 30, 2017, Complainant sent an email to Respondent, specifying that the hanger brackets were supposed to be painted black.

Mr. Swann testified that special decorative brackets are available but they are very expensive. Mr. Swann testified that the painter initially put stain on the brackets, which Mr. Swann thought looked good, and that Respondent wanted to make sure that Complainant still wanted the brackets painted after seeing the stain.

Respondent submitted an email from Complainant dated May 8, 2017, in which he had requested that Respondent paint “[a]ll hangers like shown [in a photograph] and rest of them painted all black.” Based on this email, Respondent did not paint the brackets shown in the photograph. Mr. Swann testified that Respondent painted the other brackets black in May, while it had a lift. Mr. Swann testified that a lift cost $300/day.

Investigator Philpott testified that Respondent agreed to paint the hanger brackets black at the initial jobsite inspection on July 31, 2017. Investigator Philpott acknowledged that no workmanship standard required Respondent to paint the brackets, but since Respondent had agreed to paint the brackets at the initial jobsite inspection, the Registrar’s directive required Respondent to perform its agreement.

Mr. Swann acknowledged that he had offered to paint the remaining brackets at the initial jobsite inspection, but testified that Respondent would have to charge Complainant for this work under the parties’ cost-plus contract.

Investigator Philpott testified that at the time of the prehearing jobsite inspection, all the brackets had not been painted black.

Wood Splitting Apart at Roof Peak (Complaint Item 17 on Directive)

Investigator Philpott testified that Respondent attempted to correct the area where the wood was splitting at the roof peak by installing and staining a small wedge. Investigator Philpott testified that Respondent’s repair was not professional or workmanlike.

Mr. Swann testified that Investigator Philpott’s photograph showed Respondent’s repair of the roof peak with only one coat of stain, but that it looked better now. The roof peak is no longer splitting.

Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s disciplinary history as shown on the Registrar’s public website on this date. Respondent’s License No. KB-1.177458-D was current and in good standing. No discipline has ever been taken against the license, although the license has been administratively suspended six times for non-renewal or lack of bond.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish cause to suspend or revoke Respondent’s contractor’s license 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.”

Construction is not a perfect art and, generally, a contractor must be afforded an opportunity to correct its workmanship as it sees fit before the Registrar disciplines its license. Although Complainant established that Respondent failed to comply with James Hardie’s recommendations for installing the Color Plus siding by caulking the butt joints, Respondent established that it contacted James Hardie’s representative and that she was willing to inspect Respondent’s installation and render an opinion on whether Respondent’s use of caulk voided James Hardie’s warranty, but that Complainant refused to allow James Hardie’s representative to inspect Respondent’s use of caulk on the siding. Therefore, Complainant did not establish cause to suspend or revoke Respondent’s contractor’s license under any of the statutes charged in the Citation based on Respondent’s use of caulking to seal the butt joints in the James Hardie Color Plus siding.

Complainant also did not establish cause to suspend or revoke Respondent’s contractor’s license under any of the statutes charged in the Citation based on its construction and/or repairs of the stacked stone on the outside fireplace, the outside light fixtures, the tiny amount of daylight that was still visible at the top and bottom of the man door in the garage, or any of the complaint items that the August 9, 2017, directive did not require Respondent to correct.

Complainant established that Respondent’s installation of the driveway did not comply with the Registrar’s workmanship standards or applicable building code because it did not have the required fall from the garage that would allow it to drain. Even if Respondent established that Complainant was responsible for grading the driveway, by installing the driveway, Respondent accepted the surface and was required to warranty that the installed driveway would meet applicable workmanship standards and code. Complainant therefore established cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, in its construction of the driveway.

Because Complainant established that Respondent failed to correct the driveway to comply with the Registrar’s directive, Complainant established cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(22).

Complainant established that the repaired crack in the drywall was not painted and that there were a few remaining nail pops in the drywall, that there was a small area of where the roof truss had a 3⁄4” bump, that a few nail holes on the stairs still are not filled, and that Respondent’s repair of the peak wood was not professional and workmanlike. Although Respondent established that these remaining defects are minor, because Complainant established that these items did not comply with the Registrar’s workmanship standards or prevailing standards in the industry and that Respondent did not fully correct these items to comply with the Registrar’s directive, Complainant established cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

With respect to the remaining hanger brackets that Respondent failed to paint black, Complainant did not establish cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, because neither the Registrar’s workmanship standards nor standards in the construction industry required the brackets to be painted. However, because Mr. Swann acknowledged that at the initial jobsite inspection, he agreed that Respondent would paint the remaining brackets, the directive required Respondent to paint the remaining brackets, and Respondent failed to paint the remaining brackets, Complainant established cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22).

The legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages. Whether Respondent has a claim for the cost of painting the remaining brackets under the parties’ cost-plus contract, in addition to any other amounts that remain unpaid under the contract, is beyond the scope of this recommended decision on the administrative complaint that Complainant filed with the Registrar. The parties may resolve their potential claims against each other for contract damages in a court of competent civil jurisdiction.

/ / / /

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the final order in this matter, License No. KB-1.177458-D of Respondent Epicure Builders LLC LLC shall be suspended for a period of five (5) business days.

It is further recommended that the Registrar require Respondent to pay the sum of $250.00 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 Order, the Registrar shall 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 five days from the date of that certification.

Done this day, December 28, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors