ALJDEC decisions subject to certification as final

2018A-1641-RFA-ROC · Registrar of Contractors · 2019-10-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 7, 2019 APPEARANCES: Nancy Kowalski, Complainant, appeared on her own behalf. Richard Cobb, attorney, appeared on behalf of Sargent Enterprises, Inc. DBA: Sargent Quality Roofing. John Tellier, Assistant Attorney General, appeared on behalf of the Registrar of Contractors. ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera _____________________________________________________________________ Respondent challenges a proposed payout by the Residential Contractors’ Recovery Fund (the Fund). The Fund has issued notice that it intends to make a payout to Complainant for the amount of $17,640.00. Respondent filed a Request to Dismiss Notice of Claim for Administrative Payout or Alternatively for Administrative Hearing to Contest Amount and/or Propriety of Recovery Fund Award (Request). Complainant requested a hearing, challenging Respondent’s Request and stated that the Fund payout was sufficient. Complainant requested $14,478.00. Based upon the record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order for payout in the amount of $17,640.00. FINDINGS OF FACT 1. Respondent was the holder of License No. 217483 issued by the Registrar of Contractors (the Registrar). 2. On or about June 29, 2016, Complainant entered into a contract with Respondent to install metal roofing on her residence located at 3833 E. Hampton Street, Tucson, AZ 85716. The total contract amount was $13,984.00. Complainant paid Respondent $14,478.00. Work started on July 30, 2016, and was completed on August 27, 2016. 3. On or about April 9, 2018, Complainant filed a complaint with the Registrar against Respondent alleging poor workmanship by Respondent. 4. On May 31, 2018, the Registrar issued a Directive to Respondent noticing it that the Registrar substantiated the following workmanship issues and to remedy by appropriate means, to include an acquired building permit as obtained from the local building authorities, by June 18, 2018. The Directive included the following items: (1) the (roof penetrations) are sealed with caulking material, not rubber bellow style boots. The caulk had dried, cracked, and lost the ability to “flex” with the metal panels; (2) no flashing was installed around AC/heater downdraft; and (3) no flashing was installed around porch skylights. 5. On or about October 16, 2018, Respondent’s license was suspended for a period of one (1) day after a default finding of poor workmanship and failure to comply with the Directive. 6. On or about July 1, 2019, Complainant made a claim to the Fund indicating the lowest bid she obtained to repair the project was 17,640.00. She anticipated receiving $14,478.00 (the amount she paid to Respondent) from the Fund. 7. On or about August 6, 2019, the Registrar requested that Complainant submit three bids to repair only the three items that were included in the Directive issued on May 31, 2018. In response to the Registrar’s request, Complainant submitted three bids that she had already obtained from licensed contractors for the installation of a new roof. The bid from All Stars Metal Roofing Systems LLC, License No. 309761, totaled $17,640.00. The bid from Headlee Roofing, Co. Inc., License Nos. 076771 and 061781, totaled $24,097.00. A third bid from Vertex Metal Roofing Inc., License No. 269913, totaled $29,589.00 8. Additionally, Complainant responded that the three items in the Directive could not be completed by repair only without affecting the integrity of the entire roof. 9. On or about March 6, 2019, Complainant obtained a statement from Perry Richardson at All Stars Metal Roofing Systems LLC, License No. 309761. In summary, the statement provided was as follows: After inspecting the roof leaks, the roof penetrations had large amounts of white caulking, the retro style boots were installed incorrectly with white caulking instead of NP-1 metal roof sealant. The flashing around the skylights were incorrect, there was no side- wall flashing or end-wall flashing around the skylights. The air conditioner unit’s duct work was not flashed correctly. The aluminum tape wrapped around them, instead of being properly flashed, would lead to leaking. All the overlap joints of the current metal roofing would cause leaks because of the white caulking on the outer seams.

To fix the skylights, all roof penetrations, and a/c duct work we will have to remove the roof and start over with a new Standing Seam Roof. The reason why is we don’t know the manufacturer of the metal so we can’t buy new metal to replace all the sheets that are cut wrong and installed incorrectly. We don’t know the Specifications the manufacturer requirements for installation over foam insulation on top of the roof due to the inside of the house is exposed beams and tongue and grove 2X6. All errors in original.

10. The Fund determined that Complainant was eligible for payout from the Fund in the amount of $17,640.00. That amount was determined to be the lowest repair bid. Respondent objected to the proposed payout. 11. At hearing, the Registrar introduced the testimony of Flora Hayden, legal assistant and reviewer of recovery fund claims. Ms. Hayden confirmed that the Fund’s amount was for replacement not repair. Just prior to the hearing, the Registrar received information from Respondent that the roof could be repaired and did not have to be replaced. The Registrar considered Respondent’s estimate from Red Mountain Roofing, License No. 262642 CR-42. The Registrar determined that the cost to repair the items per the Directive would be $2,900.00. 12. At hearing, Respondent introduced the testimony of Brian Gleason, Vice President of Red Mountain Roofing License No. 262642 CR-42. Mr. Gleason did not physically inspect the roof and based his opinions from viewing photos of the roof. Mr. Gleason testified that $3,300.00 would be the appropriate amount for repair because there was an extra air duct that needed to be repaired. 13. At hearing, Complainant presented the testimony of Perry Richardson at All Stars Metal Roofing Systems LLC, License No. 309761. Mr. Richardson stated he physically examined and inspected Complainant’s roof. He stated that the roof could not be repaired because it would be difficult find the correct metal to match perfectly. In order to repair the roof back to its original state, the contractor must know the manufacturer’s specifications first. Mr. Richardson tried three different types of sheet metal to see if those would match, but was unsuccessful. A cursory look at the snap lock was not enough to determine the manufacturer. If someone were to repair the roof without knowing the manufacturer, that repair would cause further damage in the future with respect to leaks. He opined that the only solution in this case was to replace the roof.

14. At hearing, Complainant testified that she experienced leaking immediately after Respondent installed a new metal roof. Respondent tried to remediate the leaks by adding more caulk, but that did not solve the problem. 15. Complainant testified that the three licensed contractors who provided bids were unable to repair the scope of work outlined in the Directive. They all stated that the work could not be done without knowing who the manufacturer was so that there would not be future problems. Complainant attempted to get the name of the manufacturer from Respondent but was unsuccessful. 16. Complainant would settle for repair if she had the manufacturer’s information so that she could hire another contractor. However, without that information, no one else could repair her roof and her problems would not be remediated. Considering the existing penetrations, incorrect flashing, incorrect caulking, Complainant opined that she wanted to be made whole and that the only way to be made whole was to get a roof replacement. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person who brings the action. Utah Construction Company v. Berg et al., 68 Ariz. 285, 205 P.2d 367 (1949); A.A.C. R2-19- 119(B). Further, the standard of proof at hearing is by preponderance of the evidence. Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2- 19-119(A). The Notice of Claim for Administrative Payout states that Complainant bears the burden of proof to show entitlement to any amount other than that in the Notice. 2. Complainant is eligible for an award from the Fund pursuant to A.R.S. § 32-1132(B)(1). 3. According to A.R.S. § 32-1132.01(B), an award from the Fund is limited to “actual damages suffered by the claimant as a direct result of a contractor’s violation . . .,” not to exceed the cost of repair or replacement. “Actual damages” are those that will put the injured party in the position in which he was before he was injured. United States Fidelity & Guaranty Co. v. Davis, 3 Ariz. App. 259, 263, 413 P.2d 590, 594 (1966). 4. Under the facts and circumstances of this case, the Fund is empowered to determine and award, based on actual damages, an appropriate payment to Complainant pursuant to A.R.S. § 32-1132.01. 5. The weight of the evidence established that the roof could not be repaired without knowing the manufacturer of the existing sheet metal. Complainant’s witness unsuccessfully attempted to match three different types of sheet metal to the existing roof. Without properly matching the metal, future damage could occur creating a band-aid type of situation. There was no evidence from Respondent as to why it did not provide Complainant with the manufacturer’s information. Furthermore, Respondent did not introduce evidence of the manufacturer or knowledge thereof. 6. Complainant established, by a preponderance of the evidence, that the Fund appropriately awarded her funds through her bid from Mr. Richardson. Mr. Richardson was the only person to testify that he physically inspected the roof and even tried to match different types of other sheet metal with the existing one. Mr. Gleason, from Red Mountain Roofing, stated that the roof could be repaired without physically examining the roof. Complainant established that replacement of the roof would make her whole again. Because the limited approach required by the Fund is not possible without knowing the manufacturer or causing further and future damage, Complainant’s payout from the Fund cannot be limited to repairing those three items. 7. The evidence of record supports an award to Complainant in the amount of $17,640.00, all of which shall be chargeable against Respondent and persons on the license as set forth in A.R.S. § 32- 1139(B). RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors make payment from the Residential Contractors’ Recovery Fund to Complainant in the amount of $17,640.00. 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 Decision will be 40 days from the date of that certification. Done this day, October 27, 2019.

/s/ Antara Nath Rivera 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