ALJDEC decisions subject to certification as final

2018A-04520-ROC · Registrar of Contractors · 2019-11-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 22, 2019 APPEARANCES: Mary P. Derby on her own behalf; James N. Hanson, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT 1. This matter addresses docket numbers 2018A-04520-ROC and 2019A- 00676-CHC-ROC that were consolidated for hearing. 2. Complainant is Mary P. Derby. 3. Respondent is Diaz Roofing LLC that holds license No. 264775 issued by the Registrar of Contractors (“ROC”). David Diaz is Respondent’s owner. 4. On December 13, 2018, ROC issued a Notice of Hearing setting docket number 2018A-04520-ROC for hearing on February 5, 2019. That matter was convened as scheduled. At that time, Ms. Derby had not filed her complaint in case 2019-00676, but she planned to do so. Respondent requested a continuance so that the matters could be heard at the same time. 5. Ms. Derby agreed to Respondent’s request and the continuance was granted. 6. On April 29, 2019, ROC issued a Notice of Consolidated Hearing consolidating docket number 2018A-04520-ROC with number 2019A- 00676-CHC-ROC and setting the consolidated matter for hearing on June 18, 2019. 7. Ms. Derby requested that the consolidated matter be continued until she could engage a contractor to perform work on the roof. The request was granted and the hearing was conducted on October 22, 2019. 8. Ms. Derby, Mr. Diaz, and ROC investigators Mike Springer and Arlo Houston testified. 9. In or after July 2016, Respondent entered into a contract to perform roofing work for Tom Mosby at a house he owned at 4442 East Seneca Street in Tucson. The house was built in 1947, with additions added after that. 10. The contract called for Respondent to replace a 600 square-foot section of roof (on one of the additions) and for Respondent to make repairs to other parts of the roof. Mr. Mosby used the property as a rental, he wanted to do things cheaply, and he expected that there would be “call-backs.” Mr. Mosby lived out of state and the terms were negotiated over the phone. 11. No permits were required for the work Respondent performed. 12. Respondent completed the initial scope of work that Mr. Mosby hired it to do. After that, in or about September 2017, Mr. Mosby sold the house to Ms. Derby. 13. While Ms. Derby was negotiating with Mr. Mosby, Respondent performed additional work on the roof, including patching seams and cracks. 14. Ms. Derby acknowledged that she did not have a contract with Respondent and that she had not paid any money to Respondent. 15. Mr. Mosby’s seller’s disclosure or SPDS shows that there were roof/scupper leaks that had been repaired by Respondent. Mr. Diaz explained that the old scuppers were too small and Respondent replaced them. 16. The Residential Buyer’s Inspection Notice and Seller’s Response or BINSR, shows that Ms. Derby was requesting certain repairs, none of which involved the roof, and that in lieu of any repairs not listed, she was asking for a credit of $4600 at the closing and for the purchase price to be reduced to $190,000. Ms. Derby and Mr. Mosby agreed to these terms, with the house being sold “as-is.” 17. The sales contract between Mr. Mosby and Ms. Derby purports to transfer a roofing warranty to Ms. Derby. Diaz Roofing is not a party to that contract. 18. Mr. Diaz testified that Mr. Mosby never mentioned a transferable warranty and that when they entered the contract, Mr. Diaz did not know that Mr. Mosby was going to sell the house. 19. Ms. Derby agreed that she bought the house “as-is” but to her mind that included a warranty from Respondent. 20. After Ms. Derby purchased the house she experienced problems and Respondent made repairs. Mr. Diaz testified to the effect that Respondent made these repairs because they were necessary, not because Respondent was contractually obligated to Ms. Derby. 21. In March 2018, Ms. Derby filed a complaint against Respondent in case number 2018-1074; that case was closed by ROC in June 2018.

22. On September 24, 2018, Ms. Derby filed with ROC her complaint in case 2018-04520. 23. ROC’s Mr. Houston conducted a jobsite inspection on October 2, 2018. He began a 10-minute water test and observed leaking in the kitchen, which is under the 600 sq. ft. area that Respondent had completely replaced for Mr. Mosby. 24. Mr. Houston acknowledged however that he could not identify the source of the leak. 25. Mr. Houston also observed ponding water on the roof in excess of that allowable under the workmanship standards. 26. On October 19, 2018, ROC issued a Directive ordering Respondent to “remedy … by the appropriate means” the leak and the ponding. ROC found that the rest of Ms. Derby’s allegations of poor workmanship were unsubstantiated. The Directive required Respondent to provide ROC with proof showing that it had completed the repairs by 5:00 p.m. November 6, 2018. 27. Respondent sent Ms. Derby an email on November 2, 2018, showing that Respondent had decided to make the required repairs itself, because the estimate it had reviewed was far over the normal cost. Respondent told Ms. Derby that it wanted to perform the work on Monday November 5, 2018. 28. In her response, Ms. Derby asserted that a permit was required; that she would obtain a permit from Tucson on Monday the 5th; but in order to get the permit, she would need from Respondent a detailed description of the proposed work (on Diaz Roofing letterhead); that she would notify Respondent when she had the permit; and that Respondent could not start the work until she notified it that she had the permit. 29. Mr. Diaz testified that Ms. Derby therefore denied it access to make repairs in the time ROC allowed. Ms. Derby testified that it was not a denial of access because she never got any documents from Respondent showing that Respondent would do the repairs without obtaining a permit. Because no permit was required for the work, Ms. Derby’s insistence that she would not allow Respondent to make the repairs without one is a denial of access. 30. On November 9, 2018, ROC issued the Citation in docket no. 2018A- 04520-ROC alleging that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22). As set out above, that matter was noticed for hearing, convened, and continued by agreement of the parties. 31. On February 14, 2019, Ms. Derby filed with ROC her complaint in case 2019-00676. On March 4, 2019, ROC’s Mr. Springer conducted an investigation of her allegations. 32. Mr. Springer determined that a bubble in the 600 sq. ft. area that Respondent had replaced for Mr. Mosby had cracked and was separated, which in his opinion did not meet the workmanship standard. 33. Mr. Springer also confirmed that no permit had been required for Respondent’s work. 34. On March 5, 2019, ROC issued a Directive ordering Respondent to “remedy … by the appropriate means” the bubble that had cracked and separated. The Directive required Respondent to provide ROC with proof that it had made the repair ROC ordered it to make by no later than 5:00 p.m. March 21, 2019. 35. At the hearing, Mr. Springer acknowledged that he had intended to allow Respondent an additional two days to make the repair, which means that Respondent would have been required to provide ROC with proof of performance on Saturday March 23, 2019. Mr. Springer testified to the effect that he had inadvertently failed to include time for the Directive to be mailed to Respondent. 36. Respondent made repairs to the roof and, through an email dated March 21, 2019 it informed ROC that the work was complete. 37. Through an email dated March 25, 2019, Ms. Derby informed Mr. Springer that the area of the roof that Respondent had repaired was again beginning to bubble. 38. ROC scheduled a compliance jobsite inspection, but did not invite Mr. Diaz to attend that inspection. Mr. Springer’s notes show that the inspection occurred on March 4, 2019, but it actually occurred on March 26, 2019. 39. At that inspection, Mr. Springer identified an area of about 3- inches by 5-inches that had a bubble that was not adhered to the roof. Consequently, his opinion was that Respondent had not complied with the Directive. 40. Mr. Springer’s notes do not show whether Respondent had patched the crack and there is evidence to suggest that the area Mr. Springer identified as deficient during the compliance inspection may not have been the one he identified during the March 4th inspection. 41. On March 27, 2019, ROC issued the second Citation alleging that Respondent may have violated sections 32-1154(A)(3) and (A)(22). 42. On April 29, 2019, ROC issued the Notice of Consolidated Hearing. 43. Ms. Derby requested continuances for the purpose of engaging another contractor. 44. Ms. Derby hired Alan Bradley Roofing, but rather than making only the repairs that ROC had ordered Respondent to make (leak, ponding, and bubbling), Ms. Derby had them replace the entire roof (1578 sq. ft.) and perform work that was not part of Respondent’s contract with Mr. Mosby (e.g. installation of a taper system to allow better drainage). This work was completed before the consolidated matter was convened for hearing. 45. At the hearing, Mr. Diaz testified that Respondent had been willing to make the repairs that ROC ordered it to make in the first Directive, but it was denied access. Ms. Derby testified that there had been no denial of access. 46. Mr. Diaz also testified to the effect that if Respondent had been invited to the compliance inspection and informed that ROC did not find the repairs adequate, it would have made additional repairs as required. CONCLUSIONS OF LAW 1. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof, and a party asserting an affirmative defense has the burden of establishing that defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 2. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3). 4. A preponderance of the evidence is: The 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.

Black’s Law Dictionary 1373 (10th ed. 2014). 5. Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 6. “Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B). 7. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 8. The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118. 9. Ariz. Rev. Stat. section 32-1154(A) provides that The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: ***** 3. Violation of any rule adopted by the registrar. ***** 22. Failure 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. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held.

10. Ariz. Admin. Code section R4-9-108(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.” 11. Ariz. Rev. Stat. section 32-1154(E) provides that ROC may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of Ariz. Rev. Stat. section 32- 1154(A)(22). 12. The preponderance of the evidence shows that there is a leak under the 600 sq. ft. of roofing replaced by Respondent, which is a violation of Ariz. Admin. Code section R4-9-108 and Ariz. Rev. Stat. section 32-1154(A)(3). 13. The preponderance of the evidence shows that there was ponding on the roof in excess of that allowed by the workmanship standards, which is a violation of Ariz. Admin. Code section R4- 9-108 and Ariz. Rev. Stat. section 32-1154(A)(3). 14. The preponderance of the evidence shows that the 600 sq. ft. section of new roofing had a bubble in violation of the workmanship standards, which is a violation of Ariz. Admin. Code section R4-9-108 and Ariz. Rev. Stat. section 32-1154(A)(3). 15. The preponderance of the evidence shows that Respondent’s failure to comply with ROC’s first Directive within the time allotted was justified because Ms. Derby would not allow Respondent access to make those repairs until she obtained a permit, when no permit was required. 16. The preponderance of the evidence shows that Respondent failed to comply with ROC’s second Directive within the time allotted because although it made repairs, these were not effective. Although Mr. Springer intended to allow Respondent an additional two days to complete the work, this not probative of the issue because Respondent purportedly completed the work in the time that ROC did allow. 17. Because Respondent has committed violations of Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22), ROC has authority to discipline its license. 18. There are no factors in aggravation. 19. Factors in mitigation include Respondent’s willingness to make any repairs ROC believed were necessary, Ms. Derby’s denial of access for the first violation, that Respondent was not invited to the compliance inspection in the second matter, and that Respondent has no prior discipline against its license. Also to be considered is that Mr. Springer could not identify the source of the leak and the limited scope of Respondent’s contract with Mr. Mosby, and that Ms. Derby had the entire roof redone before the hearing. 20. Considering, the above, Respondent should be ordered to pay a civil penalty of $250.00 for its failure to comply with ROC’s second Directive. RECOMMENDED ORDER IT IS RECOMMENDED that the Registrar of Contractors dismiss case 2018- 04520; IT IS FURTHER RECOMMENDED that in case 2019-00676 the Registrar of Contractors require Diaz Roofing LLC to pay $250.00 as a civil penalty pursuant to Ariz. Rev. Stat. section 32-1154(E). 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 is forty days after the date of that certification.

Done this day, November 12, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

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