ALJDEC decisions subject to certification as final

2018A-04407-ROC · Registrar of Contractors · 2019-03-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 14, 2019 APPEARANCES: Complainant Katherine V. Inzalaco appeared on behalf of herself. Ray S. Smith appeared on behalf of Respondent Exteriors At A Discount, Inc. ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson _____________________________________________________________________ FINDINGS OF FACT 1. On December 27, 2018, the Registrar of Contractors, (“Registrar”), issued a Notice of Hearing setting the above-captioned matter for hearing on February 14, 2019, by the Office of Administrative Hearings in Phoenix, Arizona. 2. Respondent Exteriors At A Discount, Inc. (“Exteriors”) holds license number 218893 issued by the Registrar. 3. Ray S. Smith is the owner of Exteriors. 4. The Notice of Hearing shows that the hearing was set to consider the charges made in the Citation and Complaint. 5. Through the Citation, the Registrar alleges that Exteriors may have violated Ariz. Rev. Stat. sections 32-1154(A)(3)(specifically, Ariz. Admin. Code section R4-9-108; Ariz. Rev. Stat. sections 32-1158(B); Ariz. Rev. Stat. sections 32-1154(A)(12) and (22). 6. The Citation shows that if the Administrative Law Judge finds that the alleged charges are valid, the Registrar may suspend or revoke the license of Exteriors. 7. On or about May 2, 2018, Ms. Inzalaco and Exteriors entered into a contract wherein Exteriors would repair Ms. Inzalaco’s pool for $2,000. 8. Exteriors did not provide Ms. Inzalaco with a contract that included information regarding the property owner’s right to file a Complaint with the Registrar against Exteriors for an alleged violation of Ariz. Rev. Stat. section 32-1154(A) within the time allowed by Ariz. Rev. Stat. section 32-1155(B), and did not provide the Registrar’s telephone number or website address. 9. On or about May 3, 2018, Exteriors began work on the pool. 10. Mr. Smith explained to Ms. Inzalaco that the new coating texture would not match the original texture. However, Mr. Smith did not obtain a written waiver signed by Ms. Smith regarding the fact that the old and new textures would not match. 11. On or about May 7, 2018, Exteriors stopped work on the pool. 12. On or about September 19, 2018, the Registrar received a Complaint from Ms. Inzalaco alleging poor work and abandonment on the part of Exteriors. 13. On or about October 16, 2018, Registrar Investigator John Smith conducted a jobsite inspection. 14. On October 17, 2018, Investigator Smith issued a Directive. The Directive provides, in relevant 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 the issuance of a Citation, discipline of your license, and a civil penalty pursuant to A.R.S. § 32-1154(E) 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 November 5, 2018. You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 1: "Deck Surface - unfinished / not matching" This includes the following: chipping, cracking, flaking, and delaminating texture material (both new and old), expansion joints filled in with new material, areas of newly applied material rubbing off, poorly matched texture of newly applied material, and the "Kool-Deck" coating not being applied.

15. Exteriors did not correct the items listed in the Directive during the time period for compliance. 16. On October 23, 2018, Investigator Smith met with Alex Castillo, a representative from Rapid Set. Exteriors used texture coating from Rapid Set on the pool. Mr. Castillo explained to Investigator Smith that the new coating would not last unless the original material on the pool was stripped down to the concrete. 17. On November 15, 2018, Investigator Smith conducted a compliance job site inspection. Investigator Smith found that Exteriors had not repaired any of the items listed in the Directive. 18. On February 12, 2019, Investigator Smith performed a prehearing inspection. Investigator Smith found that Exteriors had not repaired any of the items listed in the Directive. 19. The matter was referred to the Office of Administrative Hearings for an evidentiary hearing. 20. At hearing, Mr. Smith testified on behalf of himself and presented the testimony of John Cirelli. Ms. Inzalaco testified on behalf of herself and submitted exhibit A. 21. Investigator Smith testified regarding his job site inspection, the issuance of the Directive, and his compliance and prehearing inspections. 22. Investigator Smith explained that each time that he went to Ms. Inzalaco’s home in connection with the complaint, the ground was dry around the perimeter of the pool. Investigator stated that he had been to Ms. Inzalaco’s on four times. Investigator Smith opined that Exteriors did not scrape down the existing coating to the concrete before applying the new coating, because when Investigator Smith inspected the pool, he rubbed of the new coating with his fingers and the original coating was still there. Investigator Smith explained that the original color of her deck was appeared, not the bare concrete. 23. Mr. Smith alleged that the pool deck surface began to chip due to moisture under the pool deck. 24. Mr. Smith asserted that Ms. Inzalaco told him that she has six complaints against licensed and unlicensed contractors. Mr. Smith alleged that he in fact scraped down the original texture to the concrete over the course of three days. Mr. Smith explained that Ms. Inzalaco told him not to apply the top coat because the textures did not match. 25. Mr. Smith contended that he was not responsible for the deterioration and that the moisture coming from the pool. Mr. Smith alleged that Ms. Inzalaco admitted that the pool overflowed and the chlorine from the water damaged the surface, because she did not apply a clear coat. 26. Mr. Smith asserted that he did not abandon the job. Mr. Smith asserted that Investigator Smith was biased at the jobsite inspection and would not believe anything that he said. 27. Ms. Inzalaco contended that Exteriors performed poor work when it repaired her pool. Ms. Inzalaco testified that her pool overflowed twice in October of 2018 due to the monsoon, but that it also drained quickly. Ms. Inzalaco submitted her water bill into evidence to show the consistency of her water usage to refute any allegation that she had a leak. The charge of approximately $160 was occurred once because a garbage truck ran over her water drainage. 28. John Cirelli explained that he was present for the initial jobsite inspection. Mr. Cirelli asserted that there were other areas of the pool deck which Mr. Smith had not touched had fallen into the pool. 29. Administrative notice is taken of the Registrar’s public website. According to the information available on the website on March 6, 2019, Exteriors’s license was first issued on April 13, 2006 and is active. Such prior License record also shows that there is only one open complaint against Exterior’s license and the Registrar has never before taken disciplinary action against Exterior’s license. The lack of prior disciplinary action is considered as a factor in mitigation of the recommended penalties.

CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32- 1101 et seq. 2. Complainant bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. See Ariz. Rev. Stat. section 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. The preponderance of the evidence shows that the issues found by Investigator Smith constituted workmanship issues with the repair of Ms. Inzalaco’s pool. Moreover, if Exteriors could not apply a coating that would match the original texture, it should not have undertaken the job without a written waiver signed by Ms. Inzalaco.[1] Exteriors did not obtain such a warranty disclaimer in this case. 4. The preponderance of the evidence shows that Respondent did not perform the work in a professional and workmanlike manner in violation of Ariz. Rev. Stat. section 32-1154(A)(3), namely A.A.C. R4-9-108.[2] 5. The preponderance of the evidence shows that Respondent failed to correct the items listed in the Registrar’s Directive without valid justification, which is a violation of Ariz. Rev. Stat. section 32- 1154(A)(22). 6. The undisputed evidence established that Exteriors’s contract did not include a statement that the property owner has the right to file a written complaint with the Registrar for alleged violations of Ariz. Rev. Stat. section 32-1154(A). 7. The preponderance of the evidence showed that Exteriors violated Ariz. Rev. Stat. section 32-1154(A)(12),[3] namely Ariz. Rev. Stat. section 32-1158(B).[4] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend Exteriors At A Discount, Inc.’s License No. 218893 for one day. It is further recommended that the Registrar require Respondent to pay the sum of $250.00 as a civil penalty pursuant to Ariz. Rev. Stat. section 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. Done this day, February 14, 2019.

/s/ Velva Moses-Thompson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See Nastri v. Wood Bros. Homes, Inc., 142 Ariz. 439, 441-42, 690 P.2d 158, 160-61 (App. 1984) (citing Darner Motor Sales, Inc. v. Universal Underwriters Insurance Co., 140 Ariz. 383, 682 P.2d 388 (1984) and Peterson v. Hubschman Construction Co., Inc., 76 Ill. 2d 31, 389 N.E.2d 1154 (1979)). With respect to warranty disclaimers or waivers, according to the Arizona Court of Appeals’ authority,

Although the implied warranty of habitability is a creature of public policy, we do not consider a knowing disclaimer to be against the public policy of this State. However, we do hold that any such disclaimer must strictly be construed against the builder- vendor. . . . We refer to the well-reasoned opinion of the Supreme Court of Missouri in Crowder v. Vandendeale (Mo. 1978), 564 S.W.2d 879, where it was held that “boilerplate” clauses, however worded, are rendered ineffective in such a disclaimer (564 S.W.2d 879, 881), and the court further stated:

“[O]ne seeking the benefit of such a disclaimer must not only show a conspicuous provision which fully discloses the consequences of its inclusion but also that such was in fact the agreement reached. The heavy burden thus placed upon the builder is completely justified, for by his assertion of the disclaimer he is seeking to show that the buyer has relinquished protection afforded him by public policy. A knowing waiver of this protection will not be readily implied.” (Emphasis in original.) Crowder v. Vandendeale (Mo. 1978), 564 S.W.2d 879, 881 n.4.

Petersen, 76 Ill. 2d at 43, 389 N.E.2d at 1159 (1979) (some authorities omitted; emphases added and in original). [2] A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the Registrar.” A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [3] A.R.S. § 32-1154(A)(22) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” [4] A.R.S. § 32-1158(B) sets forth the required elements of the contract as follows:

From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. . . . . 9. That the property owner has the right to file a written complaint with the Registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the Registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32- 1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365.

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826