FINACT2018A-05857-ROC.pdf

2018A-05857-CHC-ROC · Registrar of Contractors · 2019-09-05

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Maria Ramirez, Case No. 2018-05857 COMPLAINANT, Docket No. 2018A-05857-CHC-ROC v. FINAL ADMINISTRATIVE DECISION AND ORDER Tesla Energy Operations, Inc., License Nos. ROC 278512, 245450, 243771, RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an

administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the

Registrar must provide written justification setting forth the reasons for the modification or rejection.

REGISTRAR’S ACCEPTANCE

In this case, a hearing was held, and the administrative law judge issued a written decision. See

Administrative Law Judge Decision, attached. The Registrar reviewed that decision and hereby accepts

it.

CONCLUSION

Because the Registrar has accepted the administrative law judge’s decision, that decision is the

final administrative decision in this case and becomes effective on October 6, 2019.

FINAL NOTE On page one, paragraph two, line 29, “Uma” should be replaced with “Yuma.”

On page four, paragraph 11, line 27, “give” should be replaced with “given.”

On page six, paragraph 13, line 12, “Castaneda” should be replaced with “Langston.”

On page nine, paragraph one, line five of the recommended order, “Ramirez’” should be replaced

with “Ramirez’s.”

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Dated August 27, 2019.

Registrar of Contractors

/s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund Copy mailed via USPS First Class Mail August 27, 2019 to: Respondent Tesla Energy Operations, Inc. 901 Page Ave, Attn Licensing Fremont, CA 94538-7341 Complainant Maria Ramirez 4205 West 15th St Yuma, AZ 85364 AND copy electronically mailed this same date to:

Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar Office of Administrative Hearings Diane Mihalsky, Administrative Law Judge

Case No. 2018-05857 / KR

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 8.8.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Maria Ramirez, No. 2018A-05857-CHC-ROC

COMPLAINANT, ADMINISTRATIVE LAW JUDGE v. DECISION Tesla Energy Operations, Inc., License Nos. ROC 278512, ROC 245450, and ROC 243771, RESPONDENT.

HEARING: July 19, 2019, at 8:30 a.m. APPEARANCES: Maria Ramirez (“Complainant”) appeared on her own behalf; Tesla Energy Operations, Inc. (“Respondent”) appeared through Tom Langston, its Installation Supervisor. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________ FINDINGS OF FACT BACKGROUND AND PROCEDURE 1. According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website, on or about March 26, 2008, the Registrar of Contractors (“the Registrar”) issued License No. ROC 243771 for General Dual KB-1 Dual Building Contracting to Respondent. On or about May 17, 2008, the Registrar issued License No. ROC 245450 for Specialty Dual CR-11 Electrical contracting to Respondent. On or about May 14, 2012, the Registrar issued License No. ROC 278512 for Specialty Dual CR-78 Solar Plumbing, Liquid Systems Only. On March 5, 2019, License No. ROC 278512 became inactive. 2. On or about December 10, 2018, Complainant filed a complaint with the Registrar against Respondent that alleged that when Respondent installed solar panels on the roof of her house at 4205 W. 15th Street, Uma, Arizona 85364, it had damaged the roof and caused leaks.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 8.8.2019 ROC LEGAL

3. The Registrar assigned the complaint to its Investigator, Steve Lawton, for investigation. On or about January 16, 2019, Investigator Lawton performed a jobsite inspection. On February 4, 2019, Investigator Lawton on behalf of the Registrar issued

a directive to Respondent, requiring it to take certain actions, in relevant part as

follows:

Complaint Item 1: Damage to the roof causing leaks in the ceiling in the areas of the garage master bedroom and living room. Investigator’s Observation: At the time of inspection it had rained the night before. It was also observed that there was standing water in the locations of both flat roofs over the garage, living room and master bedroom. It was also observed that the parapet walls had cracks where the roofing was turning up the parapet [from] the flat roof areas. The water standing on the roofs was about an inch and a half. At time of inspection I observed that the ceilings in the master bedroom and living room appeared to have water stains and after touching those areas there did not seem to be any moisture to the touch at time of inspection. It was also observed that in the garage near the parapet wall on the west side of garage that there was moisture to the touch. I could not [determine] the cause of the leak at the time of inspection. A directive will be issued to perform a water test by the Respondent to determine as to the cause and send the findings to this investigator. If it is determined to be the fault of the installation of the panels the respondent needs to correct and repair damaged ceiling by appropriate means. Governing Rule: Workmanship Rule: ARS 32-1154 (A) (3); Namely R4-9-108 4. Investigator Lawton referred the complaint to the Registrar’s Legal Department. On May 7, 2019, the Registrar issued a Citation against Respondent’s license, charging cause to suspend or revoke 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). 5. Respondent filed a timely written answer to the Citation, denying any statutory violations. Respondent made the following affirmative allegations: 5.1 Complainant initially complained of the leak on October 8, 2018. On October 11, 2018, a field technician inspected the roof but was unable to determine the RECEIVED 8.8.2019 ROC LEGAL

source of the leak. Nonetheless, as a gesture of good will, on October 31, 2018, Respondent sent a crew out to reseal the roof, but Complainant refused to allow the crew to work on the roof and demanded that the drywall be fixed first. Although

Respondent attempted to explain that it intended to perform interior repairs, but that the

mounting bases needed to be resealed first, Complainant refused to allow Respondent

to reseal the roof. Respondent subsequently agreed to complete the resealing of the

roof and interior repairs on the same day.

5.2 On January 16, 2019, Respondent attended Investigator Lawton’s jobsite

inspection. Neither Respondent nor Investigator Lawton were able to find an active

leak.

5.3 On November 17, 2018, a second crew arrived at Complainant’s house to

complete the repairs and resealing. The second crew discovered a crack in the

parapet wall and roof separation occurring between the garage and main home and

concluded that these issues were the cause of the leak, not the mounting of the system

on the roof. Respondent’s crew offered to conduct a water test to demonstrate that the

roof leaks were not related to the system, but Complainant declined to allow

Respondent to perform a water test. 5.4 On April 26, 2019, after the Registrar’s directive was issued, a field service technician inspected Complainant’s roof and noticed drill holes over the area where Complainant reported leaks, which were approximately 6’ away from the solar panels that Respondent had installed. The technician performed a water test by running water over the solar panel system and its penetrations for about 15 minutes, while avoiding the unrelated drill holes and cracks by the parapet walls. The technician inspected the inside of the home and was unable to locate any leaks or signs of water intrusion. Respondent communicated the results of its test to Complainant and Investigator Lawton.1 6. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on July 19, 2019. Complainant submitted four exhibits and presented the testimony of two RECEIVED 8.8.2019 ROC LEGAL

witnesses: (1) Herself; and (2) Her husband, Alejandro Castaneda. Respondent submitted four exhibits, including photographs of the April 26, 2019 water test, and presented the testimony of Tom Langston, its Installation Supervisor. Investigator

Lawton also testified.

HEARING EVIDENCE

7. Complainant’s house was built in 1979 and Complainant and her husband

have owned it since 2009. The house has a flat or build-up roof. Complainant testified

that the house suffered extensive fire damage and, as a result, its interior was

extensively repaired six or seven months before the hearing. The roof was not

damaged in the fire and was not repaired. Complainant testified that she does not

know when the roof was last replaced or repaired.

8. Investigator Lawton testified that when he performed the January 16, 2019

jobsite inspection, it had rained the night before and there was standing water about 1-

1/2” deep on the roof. He noted the cracks in the parapet wall away from where Respondent had installed the solar panel system. Investigator Lawton explained that because he could not determine whether Complainant’s roof was leaking in the area where Respondent had installed the solar panels, he issued the directive that required Respondent to perform a water test. 9. Investigator Lawton acknowledged that there were water stains in the ceilings of Complainant’s bedroom and living room. Investigator Lawton testified that the stains looked old and that he did not require Respondent to repair the drywall because he did not know when the stains had occurred or whether the leak that caused the stains were the result of the roof penetrations that Respondent made to install the solar panels. 10. Respondent submitted the City of Yuma’s 2017 final inspection report, approving its installation of the solar photovoltaic system on Complainant’s roof.2 11. Complainant testified that she asked an attorney to refer her to someone who could tell her whether Respondent had damaged the roof and that she was give the name of Fowler Malone, P.E., as the best in the business. Complainant submitted See the Registrar’s electronic file at pdf pages 4 to 6. 2 See Respondent’s Exhibit B. RECEIVED 8.8.2019 ROC LEGAL

Mr. Malone’s signed, stamped, February 4, 2019 letter, which provided in relevant part as follows: In my opinion, the roof leaks that you have are caused by improper sealing of the solar panel supports. Please see my attached inspection report. In my opinion, the flat roof areas of the home should have been reroofed before solar panels were installed. Solar Panels have an approximate 25-year life. At the time the Panels were installed 2 years ago the existing roof covering had an approximate remaining life of 8 to 10 years. With as many roof penetrations that we now have from the solar panel supports, the only solution we have is to remove the solar panels and supports from the flat roof areas, remove existing roof covering and to install a new built-up roof covering.3 Complainant did not submit Mr. Malone’s roof inspection report, which he referenced in his letter to support his stated opinion that the leak was from Respondent’s roof penetrations. 12. Respondent performed a water test on Complainant’s roof on April 26, 2019, to comply with the directive. Respondent provided the following summary of the water test to Investigator Lawton: Tesla’s Maintenance Tech arrived at 12:00p to greet [Complainant’s] Husband/Partner. The Tech then perform[ed] a roof top survey prior to the water test to ensure that the area under the system, along with its support, had not been tampered with. During the survey, the Tech found new drill holes over the area where [Complainant] reported the leaks (the drill holes are approximately 6ft. away from the system). The Tech ran the water over the system and its penetrations for about 15 minutes before returning to the inside of the home. No immediate leaks were visible beneath the system, so the Tech went inside to see if there were any visible signs of water intrusion. While inside, the Tech noticed that [Complainant] had recently mounted a TV projector and 3 Complainant’s Exhibit A. RECEIVED 8.8.2019 ROC LEGAL

other electronics directly beneath the area with reported water damage. minutes later, the Tech returned to the roof top to verify that there was standing water under the system, but no visible leak inside the home. [Complainant’s] companion was notified that the water test was completed and that we could not reproduce the roof leak. [Complainant’s] companion then became combative towards our Tech and subsequently asked him to leave the property.

I’ve attached photos from the water test to this email for your review.4

Mr. Langston testified consistently with this summary. Respondent also submitted photographs of the water test.5 13. Mr. Castaneda testified that Respondent’s technician only tested the roof over Complainant’s garage and left after five minutes. Complainant also submitted a letter from Victor Roman, a worker who had seen the roof of the home when the repairs to the interior were performed in 2017, stating that he did not see anything on the roof that would have caused a leak.6 14. Investigator Lawton opined that some solar panel companies would not install panels on a roof that needed repair or replacement. It is possible that a contractor who installed a solar panel system on a roof that needed repair or replacement was responsible for the roof because it had accepted the substrate as adequate to support the solar panels. 15. Investigator Lawton testified that Complainant had punched a hole in the roof over the garage to allow water to drain from the roof and that the drywall was wet in the garage. Investigator Lawton acknowledged that there was no evidence that the roof penetrations that Respondent made to install the solar panel system caused Complainant’s roof to leak. ////

The Registrar’s electronic file at pdf page 51. See Respondent’s Exhibit D. 6 See Complainant’s Exhibit D. RECEIVED 8.8.2019 ROC LEGAL

CONCLUSIONS OF LAW

1. This matter lies within the Registrar’s jurisdiction.7

2. Complainant bears the burden of proof to establish cause to suspend or

revoke Respondent’s license by a preponderance of the evidence.8 Respondent bears

the burden to establish affirmative defenses and factors in mitigation of the penalty by

the same evidentiary standard.9

3. “A preponderance of the evidence is such proof as convinces the trier of fact

that the contention is more probably true than not.”10 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.”11

4. Complainant established that her roof is leaking. Mr. Malone did not testify at the hearing and there is no basis in this record for his stated opinion that the roof penetrations that Respondent made caused the leaks. In fact, a preponderance of the evidence that was submitted establishes that the roof is leaking through the holes that were punched in the roof and/or the parapet walls. Mr. Lawton testified and Respondent’s photographs confirm that these areas were not close to the roof penetrations that Respondent made to install the solar panels. 5. As a general principle in construction, a contractor who performs work on top of a surface prepared by another contractor accepts the surface. The second contractor should have inspected the surface for any flaws or defects that would affect the work he proposes before performing the work. If he found the surface to be unacceptable, he should have called 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

See A.R.S. § 32-1154(A). See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). See A.A.C. R2-19-119(B)(2). 10 MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). RECEIVED 8.8.2019 ROC LEGAL

owner is not willing to pay to correct the surface, the subsequent contractor may obtain an explicit warranty disclaimer.12 6. Mr. Malone opined that Respondent should not have installed the solar

panels because the expected operational life of the panels is longer than the expected

remaining life of the flat roof. But all construction projects have a limited useful life and

require maintenance. Although it would have been a better practice for Respondent to

advise Complainant that she should repair or replace the flat roof on her home before

she installed solar panels, homeowners also bear some responsibility for coordinating

repairs and upgrades to the various systems in their homes. The doctrine of accepting

the surface does not require Respondent to be responsible for repairing areas of

Complainant’s roof that it did not damage.

7. Because Complainant did not establish that Respondent’s penetrations

caused her roof to leak, she did not establish cause to suspend or revoke

BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999). 12 No Arizona authority addresses the Registrar’s policy that a subsequent contractor who accepts a surface prepared by an earlier contractor also accepts full responsibility for the outcome. The policy is supported by case law from other jurisdictions. See generally cases cited at “Duty of Contractor to Warn Owner of Defects in Subsurface Conditions,” 73 A.L.R.3d 1213 (1976). A contractor who knew or should have known of a defect in the surface does not perform construction in a workmanlike manner if the contractor fails to notify the owner of the defect and the construction later fails due to the defective surface. See, e.g., Parker v. Thornton, 596 So. 2d 854, 858 (Miss. 1992); Lewis v. Anchorage Asphalt Paving Co., 535 P.2d 1188, 1199 (Alaska 1975). The principle is based on common sense and a need for fair dealings between contractors and property owners: For the requirements of public order and the obligation implicit in every contract that the work will be done in a good and workmanlike manner would compel us to reject a contention that an undertaker is not responsible for building upon a site which he knows to be defective. In such a case, the barest standards of care would require him to bring the defect to the attention of the owner before proceeding. The owner would then have an opportunity to make the indicated adjustment in the contract to provide against the defective soil condition of which he had no prior knowledge. . . . Wurst v. Pruyn, 202 So. 2d 268, 271-72 (La. 1967) (citation omitted). RECEIVED 8.8.2019 ROC LEGAL

Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3),13 namely A.A.C. R4-9- 108,14 and A.R.S. § 32-1154(A)(22).15

RECOMMENDED ORDER

Based on the foregoing, IT IS ORDERED that on the effective date of the final

order in this matter, Complainant Maria Ramirez’ complaint against Respondent Tesla

Energy Operations Inc.’s License Nos. ROC 278512, ROC 245450, and ROC 243771

in Case No. 2018-05857 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, August 7, 2019. /s/ Diane Mihalsky Administrative Law Judge Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors

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.” 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 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.”