ALJDEC decisions subject to certification as final

2019A-02886-CHC-ROC · Registrar of Contractors · 2020-06-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Anne Mohr,

COMPLAINANT

Tucson Restoration LLC,

DBA: Rainbow International of Tucson,

License No. ROC 288574,

RESPONDENT

No. 2019A-02886-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: November 8, 2019

APPEARANCES: Anne Mohr on her own behalf; Benardo M. Velasco, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

This Decision addresses two matters that were consolidated for hearing by the Registrar of Contractors (“ROC”), Docket Nos. 2019A-02886-CHC-ROC and 2019A-03971-CHC-ROC. The hearing was conducted on November 19, 2019.

Although the parties presented all their evidence on November 19, 2019, the matter was not concluded on that date because the parties were being afforded the opportunity to submit written closing arguments. The deadline for those submissions was extended at the parties’ request as they pursued settlement of this matter and a related civil lawsuit.

Complainant is Anne Mohr, who owns a house at 12334 Kylene Canyon in Oro Valley that she uses as a rental property.

Respondent is Tucson Restoration LLC d.b.a. Rainbow International of Tucson that holds license No. 264775 issued by ROC. David Brent Smith is Respondent’s qualifying party and a member of the LLC.

There was a fire in Ms. Mohr’s rental house and she entered a contract with Respondent who performed restoration and rebuild services. The scope of contract is limited to restoring the house to its pre-loss condition and Respondent was not required to make improvements to the house.

Respondent completed its work on June 8, 2018 when the Town of Oro Valley conducted its final inspection. On June 8, 2018, Respondent submitted to Complainant an invoice requesting payment of $43,010.07, which was the balance due on the contract.

Complainant received from her insurance company a check for $43,010.07, which was intended to compensate Respondent for its work, but as of the hearing date Complainant had not paid Respondent.

The parties are engaged in a civil lawsuit in which Respondent alleges that Complainant violated the Arizona Prompt Pay Act. In this matter, Complainant offered no valid justification for her refusal to pay Respondent the balance due on the contract.

Complainant has collected on Respondent’s bond, but there was no substantial evidence adduced as to the terms and conditions of the payout she received.

On June 3, 2019, Complainant filed with ROC a complaint (the first complaint) against Respondent alleging poor work and failure to complete all work.

Respondent received notice of the first complaint on June 19, 2019 and on that date emailed Complainant requesting the opportunity to inspect the house, asking if it could do so on June 19 or 20, 2019. Complainant responded on June 19th, showing that she would not allow Respondent to inspect the house.

On June 20th, Complainant emailed Respondent showing that ROC had informed her that she would have to allow Respondent to inspect the work if she was not going to allow Respondent to be present at ROC’s inspection scheduled for July 8, 2019. On June 25, 2019, Complainant again emailed Respondent asking if it still wanted to inspect the house. Complainant did not offer any proposed dates for the inspection in either email.

On June 26, 2019, Respondent replied to Complainant’s emails, noting that the author had been out of town, but asking for access to inspect the home on July 2nd or 3rd. Complainant informed Respondent that she was unwilling to allow Respondent access on those dates because she planned to be out of town.

Still on June 26th, Respondent then informed Complainant that to accommodate Complainant’s schedule Respondent could conduct the inspection on June 27, 2019. Complainant again refused to allow Respondent access on that date asserting that she had to give the tenants two days’ notice.

Complainant did not allow Respondent access to inspect the property within fifteen days after Respondent received from ROC notice of the first complaint.

On July 8, 2019, ROC’s John Smith conducted an inspection of Complainant’s house. David Smith was at the house at the time of ROC’s inspection, but Ms. Mohr refused to allow him entry.

On July 11, 2019, ROC issued to Respondent a Directive (the first Directive) that provided in part:

.... You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on July 29, 2019.

You are hereby directed to remedy the following violations by the appropriate means:

Complaint Item 1: “Missing Insulation in many areas” There is missing insulation in the attic.

• There are significant voids in the ceiling insulation

• The attic insulation is not R38 throughout

• The walls in the attic space are not insulated

Upon completion, the entire attic space separating conditioned space from non-conditioned space, is to be insulated with 12” R38 insulation, without voids.

Complaint Item 2: “Wrong (lower quality) insulation used. Contract specified R38 paper faced...” The insulation installed is not paper faced as required by the contract.

Complaint Item 3: “Attic frame was to be sealed at cost of $4306. Work was not done”

Complaint Item 5: “Garage floor was to be prepped and coated with epoxy coating. Grey paint was used which failed within days.” The epoxy product used on the garage floor is flaking.

Complaint Item 6: “Dry wall – many areas in home do not meet minimal workmanship standards. Repair is needed”

• There is a bulge in the drywall above the cabinets in the kitchen

• There is a crack in the living room ceiling

Complaint Item 7: “Garage was to be primed & painted with 2 coats of paint. Work was not done properly or as indicated” The paint on the ceiling and walls of the garage does not adequately cover the surface. There is also an unpainted drywall patch by the water heater chimney.

Complaint Item 10b: “Manny [sic] items listed on contract were not completed in any way i.e. security system install,...electrical plates, and roofing work not done”

• The contract requires R&R Security System Keypad and Reset Security System.

o There are no security system components visible in the house

• There are several broken electrical cover plates in the house.

• The storm collar is not sealed to the water heater chimney and has un unsealed screw penetrating the chimney.

ROC determined that any of the other alleged workmanship violations raised by Complainant in her first complaint were unsubstantiated and did not require correction.

Respondent sent to Complainant an email dated July 27, 2019 asking for access to complete what it described as the warranty work. There was no evidence to show that Complainant responded to that email and no evidence showing that Complainant allowed Respondent access to make the corrections ROC ordered Respondent to make. Respondent’s office manager acknowledged that the email did not specify what work was to be done, but she explained that she would have expected asked Ms. Mohr to provide her with a list when Ms. Mohr responded to the email.

On August 1, 2019, ROC issued to Respondent a citation (the first citation) alleging that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(2), (A)(3), (A)(12), (A)(14), and (A)(22).

The first citation is ambiguous because it does not show which of the items listed in the first complaint are alleged to be violations of subsection 32-1154(A)(2) and which are alleged to be violations of subsection 32-1154(A)(3).

On August 7, 2019, Complainant filed with ROC a second complaint against Respondent again alleging poor and incomplete work. In particular, Complainant asserted that the trusses in the attic had not been cleaned as required by the contract which could be seen by the fact that there was soot, dust and debris on the beams.

Respondent received from ROC notice of the second complaint on August 9, 2019.

On August 16, 2019, Respondent filed an answer to the first citation, denying that it had committed the alleged violations and requesting that the matter be dismissed because Complainant had not allowed Respondent to inspect the work as required by Ariz. Rev. Stat. section 32-1155(C)(1) and because Complainant had breached the contract by failing to pay to Respondent the $43,010.07 when due.

In response to the second complaint, on August 19, 2019, Respondent requested that Complainant allow it inspect the property that week. Complainant responded stating that Respondent could have access to the property for one-half hour at 10:30 a.m. on August 27, 2019, which is more than fifteen days after Respondent received notice of the second complaint. Complainant also informed Respondent that she would not allow Respondent to attend ROC’s second inspection of the property, which was scheduled for 11:00 a.m. the morning of the 27th.

Still on August 19th, after receiving Complainant’s email showing that Respondent could not have access to inspect the property before the expiration the fifteen day statutory period, Respondent requested permission to inspect the property on August 23, 2019, which was one day before the deadline. Complainant replied stating that she was out of town; that the following Tuesday (the 27th) was the soonest Respondent could have access; and that Complainant’s tenants would have to be present for any inspection. Respondent responded asking if it would be possible to perform the inspection after business hours and noting that it would take only fifteen minutes. Complainant denied Respondent’s request and stated that the inspection had to be conducted on August 27th.

On August 27, 2019, John Smith conducted a jobsite investigation of the allegations raised in Complainant’s second compliant. Ms. Mohr did allow David Smith access for that inspection.

On August 28, 2019, ROC issued a second Directive, providing in part:

You are directed to remedy the following violations by the appropriate means:

Complaint Item 1: “...cleaning of the trusses as required in the contract...this work was not done...”

Investigator’s Observation: Substantiated. I was able to observe the attic framing from inside the attic space.

• There is still a smoke smell in the attic space

• After just lightly touching the trusses, the smoke can be smelled on your fingers.

• The wood is still rough to the touch

• There is no color or sheen difference in the wood

• Labels stapled to the trusses have no color or sheen difference from front to back

• There is significant dryer lint build up on the trusses by the dryer exhaust. The cleaning process would have removed this dryer lint.

• There is no dryer lint on the new white insulation that was installed by the respondent.

• Dryer lint on the framing, but none on the insulation, confirms the dryer lint is from prior to the respondent’s work, and the trusses have not been cleaned.

• There is debris on some of the exposed framing.

• There are remnants of pink fiberglass on the framing.

• All the new insulation is white.

• The cleaning process would have removed the dryer lint, the debris, and the pink fiberglass insulation from the trusses.

Governing Rule: Workmanship Rule: 32-1154 A 3, namely R4-9-108

ROC determined that any of the other alleged workmanship violations raised by Complainant in her second complaint were unsubstantiated and did not require correction. ROC ordered Respondent to provide it notice that it had completed the repairs on or before September 13, 2019. There was no evidence adduced to show that Complainant was willing to allow Respondent access to make repairs.

On August 29, 2019, ROC issued an Order denying Respondent’s request to dismiss the first citation, finding that Respondent’s arguments were best suited for presentation at a hearing.

On September 17, 2019 ROC issued to Respondent a second citation in which it provided it had investigated the matter and found cause to warrant charging that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22).

On September 17, 2019, ROC issued a Notice of Hearing on Contested Case (the first Notice of Hearing) setting the first matter (docket number 2019A-02886-CHC-ROC) for hearing on October 21, 2019.

The first Notice of Hearing shows that the hearing was set to consider the charges made in the complaint and citation that were served on Respondent on August 1, 2019. This notice also shows that the complaint and citation allege that Respondent violated Ariz. Rev. Stat. sections 32-1154(A)(2), (A)(3), (A)(12) and (A)(14), but does not allege that Respondent violated subsection 32-1154(A)(22).

The first Notice of Hearing is ambiguous because it does not show which of the items listed in the first complaint and first citation are alleged to be violations of subsection 32-1154(A)(2) and which are alleged to be violations of subsection 32-1154(A)(3).

Respondent moved to continue the hearing in docket number 2019A-02886-CHC-ROC so that the matter could be consolidated with case number 2019A-03971 (i.e., the second complaint) that was still pending at ROC. Complainant was in agreement and the matter was continued.

On September 30, 2019, Respondent filed with ROC an answer denying the allegation(s) in Complainant’s second complaint and requesting that the matter be dismissed because Complainant had not allowed Respondent access to inspect the property as required under Ariz. Rev. Stat. section 32-1155(C)(1); because the work had been subject to neglect, modification or abnormal use; and because Respondent was in breach of contract.

On October 7, 2019, ROC issued a Consolidated Notice of Hearing on Contested Case setting the hearing for November 8, 2019, on which date the hearing was conducted.

The Consolidated Notice shows that Respondent is alleged to have violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22), but it does not include the date that the complaint(s) and citation(s) were served on the Respondent.

There is ambiguity (1) as to whether the Consolidated Notice was to supersede the first Notice of Hearing, meaning that ROC had withdrawn its allegations that Respondent may have violated subsections 32-1154(A)(2), (A)(12) and (A)(14) withdrawn), and (2) if ROC had not withdrawn those allegations, whether the Consolidated Notice was intended to add to the allegations in the first Notice, a charge that Respondent also violated subsection (A)(22).

Respondent argues that to the effect that the second Notice does supersede the first and that the only alleged statutory violations issue are those set out in the second Notice. Complainant argues to the effect that the alleged statutory violations from both Notices are at issue.

At the hearing, the parties were allowed to present evidence on the allegations from either Notice.

Ms. Mohr appeared and testified on her own behalf, and she also presented the testimony of Robert Ledbetter and Javier Elenes. Mr. Elenes is a friend of Ms. Mohr’s who has experience as a contractor. Mr. Ledbetter investigated the property and provided Ms. Mohr with a bid that purports to show the cost of work required to comply with the contract.

Respondent presented David Smith’s testimony and that of its office manager Pamela Palmer.

ROC’s John Smith also testified.

Respondent has been licensed since 2013, and Mr. Smith has experience in construction dating back to about 1995, during which time he estimates he performed thousands of jobs.

The scope of this project was to put the house back in the pre-loss or pre-fire condition and did not include making any improvements. Ms. Mohr was acting as her own superintendent in that she was the person Respondent dealt with during the project.

Respondent hired subcontractors and performed work itself. Respondent supervised and approved the work. The work passed all inspections required by the Town of Oro Valley.

David Smith testified to the effect that Complainant participated in a walk-through of the house when the work was complete, but Ms. Mohr denied that this was the case. Complainant presented no evidence to show that she requested, or was denied, the opportunity to participate in a walk-through when Respondent finished its work in June 2018.

ROC’s John Smith acknowledged that his first inspection on July 8, 2019 occurred over a year after the work at issue was completed and that he did not have knowledge of what the conditions were when the work was completed.

Ms. Mohr testified to the effect that she noticed problems with Respondent’s work soon after her tenants moved back in. She contacted her insurance company, State Farm and Respondent. She found that Respondent was not responsive and State Farm advised her to have other companies check the work. She did so, and those contractors told her that there was deficient or incomplete work.

Complainant acknowledged that there were at least four people in the attic before John Smith conducted his first inspection and she acknowledged that she had never actually entered the attic, but rather had only peeked through the opening.

First Complaint Item 1: Missing Insulation in many areas

Complainant alleges that there are areas of the attic that were not insulated and areas that have less than twelve inches of insulation. She relies on photographs taken by John Smith and reports from the contractors that she had allowed to go into the attic.

Respondent hired Banker Insulation of Southern Arizona to insulate the attic. Banker is a reputable company that is known to do good work.

David Smith’s testimony included a description of the process Banker used to install insulation in one of the areas that Complainant alleges no insulation was installed.

Respondent had admitted into evidence a Declaration that Banker prepared and filed with Pima County/City of Tucson showing that it had installed 12-inch thick fiberglass batts with a value of R-38 in the attic. Ex. I at pp. 242- 43.

After Banker completed its work, David Smith inspected it. Mr. Smith provided credible testimony to the effect that the photographs showing missing batting do not reflect the condition of the attic when the project was completed on June 8, 2018.

Respondent’s Exhibit T includes digital photographs David Smith took at the prehearing inspection showing batting in piles in the attic, which he believes supports the conclusion that the work had been altered.

First Complaint Item 2: Wrong (lower quality) insulation used. Contract specified R38 paper faced...

Respondent acknowledges that it did not use paper-faced insulation, but asserts that the paper facing is not required at the house, which is in Climate Zone 1, and that it provided Complainant with a credit to account for the lower cost of the insulation that was used.

The insulation in the house before the fire was not paper-faced

The paper facing is a vapor barrier that is not required for Oro Valley and is not commonly used in the Tucson area, which is in climate in Climate Zone 1; it is not a requirement of any building codes.

The contract was created using the Xactimate software that has application nationwide and not only in Climate Zone 1.

David Smith testified to the effect that the program has limited selections, and that for estimates created with Xactimate, not every line-item must be adhered to, but rather there is room to adapt to the local conditions. There was no substantial evidence to dispute or rebut his testimony.

First Complaint Item 3: Attic frame was to be sealed at cost of $4306. Work was not done and second Complaint Item 1: ...cleaning of the trusses as required in the contract...this work was not done...

Complainant alleges that Respondent did no cleaning of the attic trusses and that the trusses were not sealed as required.

In her second complaint, Complainant asserted that there was still soot on the trusses, but there was no evidence adduced to show that this was a true statement. To the contrary, although there were a substantial number of digital photographs in the record, neither Complainant nor any of the witnesses identified any photographs that show soot in the attic, and no one testified that there is still soot in the attic.

John Smith provided testimony consistent with the information in ROC’s Directives that: that there was still an odor of smoke in the attic when he conducted his first inspection in July 2019; that there was dryer lint on trusses but not the new insulation; that there was a small piece of pink (or old insulation) on a truss; and that the trusses were rough to the touch.

Mr. Elenes testified that he smelled smoke when he entered the attic not long after Respondent finished its work.

David Smith testified that he did not notice any odor at the prehearing inspection, and no witnesses testified to the effect that they noticed an odor at that time.

There was no evidence adduced showing that any odor could be detected by people who were in the house or the garage, or anywhere other than in the attic.

John Smith and Complainant’s witnesses were of the opinion that if the joists had been sealed, it would be evidenced by a change in color or a sheen on the trusses. David Smith disagreed and testified that Respondent used a product called Unsoot that does not leave a visible residue.

David Smith testified that he and two others dry cleaned the trusses and vacuumed all surfaces; that Respondent installed plastic to protect areas of the house that were not to be sealed; and then Respondent then used a sealer and odor encapsulant known as Unsoot.

Respondent’s exhibits include an invoice for its purchase of the Unsoot product, the instructions for its use, and an email from the manufacturer describing the product’s features and purported benefits.

Respondent had entered into evidence photographs showing multiple areas of the house during and after the installation of the plastic shielding installed in preparation for the spraying, and one photograph showing the Unsoot being applied by airless sprayer.

Respondent’s Exhibit D is a sworn statement under oath by Bill Hopkins through which he provides that: he worked on the project; there was smoke and soot residue; he and Mr. Michael Bradley cleaned and vacuumed the trusses removing all sign of fire and smoke damage; they then sealed the trusses with Unsmoke Unsoot following the manufacturer’s instructions; and after they finished, he did not see, smell or otherwise detect any sign of fire damage.

Respondent’s exhibit I is a log of work performed by Respondent, including entries by Mr. Bradley that show he installed the plastic and paper shielding and that on April 23, 2018 he sprayed the ceiling and attic space with “seal.”

David Smith’s testimony and Respondent’s exhibit Q show that Unsoot does not leave any residue showing that it has been applied, which is one advantage of Unsoot because it cannot be used to cover over and hide charred wood. It has been used in fire-damaged buildings for decades. Sealants with pigments will hide any discoloration and would not represent the pre-loss condition.

In support of her position that Respondent did not clean and seal the attic, Complainant also relies on John Smith’s opinion that wood was rough; that there is a small piece of old insulation still in the attic; and the lint, or lack thereof, in the attic.

Regarding John Smith’s opinion that the roughness of the wood shows that the work was not done, there was no evidence adduced showing that cleaning or sealing requires sanding the wood. And sanding the wood was not within the scope of the contract because the rough wood represents the pre-loss condition.

The digital photographs in evidence do show a small piece of the old, pink insulation that was stuck to a tie plate in the attic. David Smith provided credible testimony that that small piece of insulation did not hinder Respondent’s sealing of the trusses and he testified as to Respondent’s willingness to go remove that small piece of pink insulation.

Regarding the lint, Respondent’s position is that the insulation was disturbed between the time it finished its work and John Smith’s inspection, which was fourteen months after the cleaning was finished, and that its employees removed lint from the attic while cleaning in 2018.

Respondent’s Exhibit T includes one digital photograph that shows lint on the insulation.

First Complaint Item 5: Garage floor was to be prepped and coated with epoxy coating. Grey paint was used which failed within days

Complainant alleges that the epoxy product used in the garage is flaking.

Respondent effectively acknowledged that the epoxy is flaking in some areas, but argues that this is a warranty, not a workmanship issue.

David Smith provided credible testimony that he told Ms. Mohr to choose one of two contractors she had contacted and that he would hire them to make any repair, but she never got back to him.

First Complaint Item 6: Dry wall – many areas in home do not meet minimal workmanship standards.

There is a bulge in the drywall above the cabinets in the kitchen and a crack in the living room ceiling.

David Smith provided testimony to the effect that replacing the kitchen drywall was not in the scope of the contract, which was limited to cleaning and painting walls to restore the house to the pre-loss condition, and not to make improvements. Complainant did not dispute that the bulge was present before the fire.

John Smith is of the opinion that by painting over the drywall bulge, Respondent accepted that surface and is therefore responsible for the pre-existing defect in the drywall.

David Smith did not observe any cracks in the ceiling on June 8, 2018, when Respondent completed its work, and John Smith acknowledged that it could be a settlement crack that occurred after Respondent completed its work.

Nevertheless, Respondent offered to repair the crack, but Complainant never respondent to that offer.

First Complaint Item 7: Garage was to be primed & painted with 2 coats of paint. Work was not done properly or as indicated

John Smith’s opinion was that the paint on the ceiling and walls of the garage did not adequately cover the surface, and that there was also an unpainted drywall patch by the water heater chimney.

David Smith testified to the effect that subcontractor CJS Painters did the painting; he had approved that work; he had not seen a lack of paint; and he thought the condition was good. Nevertheless, Respondent had offered to fix the work for Complainant, but she never responded to that offer.

Complaint Item 10b: Manny [sic] items listed on contract were not completed in any way i.e. security system install,...electrical plates, and roofing work not done

Three items are at issue: the keypad for the security system, the collar on the water-heater chimney, and several cracked electrical cover plates.

The contract calls for the installation an R&R Security System Keypad and Reset Security System.

Respondent acknowledged that the keypad had not been reinstalled, but David Smith provided credible testimony to the effect that the security company would not change the keypad because the home was not monitored. Respondent provided Complainant with a credit for both the system and the labor to install it.

John Smith was of the opinion that the storm collar for the water-heater chimney was not properly sealed, but he acknowledged that he had not gone on the roof to verify that this was the case. The evidence shows that there is sealant above and below the collar, which evidence includes John Smith’s own testimony.

Respondent offered to address Complainant’s concerns, but got no response from Complainant.

There are several cracked electric cover plates. David Smith testified that if these were crack before the fire, Respondent did not replace them. He was of the opinion that in the garage the fire probably did crack plates, but not those in the house.

CONCLUSIONS OF LAW

Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative 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.

“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).

“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).

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).

The primary goal when construing statutes is to fulfill the intent of the legislature. Clear and unequivocal language is determinative of a statute’s meaning. Backus v. State of Arizona, 220 Ariz. 101, 203 P.3d 499 (2009).

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.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

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).

The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118.

Ariz. Rev. Stat. section 32-1155(D) provides that:

The registrar may not issue a citation for failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards if either:

1. The contractor is not provided an opportunity to inspect the work within fifteen days after receiving a written notice from the registrar.

2. The contractor's work has been subject to neglect, modification or abnormal use.

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:

*****

2. Departure from or disregard of:

(a) Plans or specifications in any material respect that is prejudicial to another ....

(b) A building code of this state or any political subdivision of this state in any material respect that is prejudicial to another.

3. Violation of any rule adopted by the registrar.

*****

12. Failure in any material respect to comply with this chapter.

*****

14. Acting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth on the license.

*****

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.

Ariz. Admin. Code section R49108 provides that “A contractor shall perform all work in a professional and workmanlike manner [and] in accordance with any applicable building codes and professional industry standards.”

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).

Substantive policy statements inform the public of an agency’s opinion regarding the applicable statutes or rules, but are not binding and are advisory only. Ariz. Rev. Stat. § 41-1001(22).

ROC’s Substantive Policy Statement 2017.01 provides in part:

Acceptance of the Surface - As a general principle in construction, a subcontractor who performs work on top of a surface prepared by another accepts the surface. The subcontractor 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 or general contractor’s attention so that the owner can choose whether to pay for the defective surface to be corrected or if the owner is not willing to pay to correct the surface, the contractor may obtain an explicit warranty disclaimer....

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. ... 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.

***

Denial of Access - Complainants are not prevented from refusing access because of their right to exclude others from their homes and it would not be appropriate to require contractors to trespass. [But it] is recognized that lack of access impinges on one party’s ability to defend itself and utilizing the benefits of the Registrar of Contractors is a privilege. Therefore, it is recommended that the Registrar dismiss complaints in which access is denied.

(Underscoring and bolding added.)

The Issues Noticed for Hearing

There is ambiguity as to the scope of the hearing because it is not clear if the Consolidated Notice superseded the first Notice, and if not, whether the Consolidated Notice was intended to add an allegation that Respondent violated section 32-1154(A)(22) in the first matter.

Respondent asserts that the Consolidated Notice does supersede the first Notice, whereas Complainant disagrees and argues that there is no harm to Respondent in considering the first Notice’s alleged violations, because the parties were prepared and had a chance to present their evidence at the hearing.

It has not been shown by a preponderance of the evidence that Respondent violated subsections 32-1154(A)(2), (A)(12), or (A)(14) that were only explicitly charged in the first Notice, nor has it been shown that Respondent violated subsection (A)(22) that was not explicitly charged in the first Notice.

Consequently, resolution of the ambiguity is not necessary to resolve this matter.

Ariz. Rev. Stat. § 32-1155

The preponderance of the evidence shows that Complainant did not allow Respondent to inspect the work at issue within fifteen days of ROC notifying Respondent of Complainant’s first complaint, despite Respondent’s requests for access to do so.

The preponderance of the evidence shows that Complainant did not allow Respondent to inspect the work at issue within fifteen days of ROC notifying Respondent of Complainant’s second complaint, despite Respondent’s requests for access to do so.

The language of section 32-1155(D) is clear and unequivocal in that a citation for a workmanship violation may not issue if the Respondent is not allowed to inspect the work within fifteen days

Because Complainant did not allow Respondent access to inspect within fifteen days, ROC should not have cited Respondent for an alleged violation of section 32-1154(A)(3) in either the first or second citation. Consequently, the allegations that Respondent violated section 32-1154(A)(3) must be dismissed.

Complainant not only denied Respondent access during the prescribed fifteen day statutory period, but never allowed Respondent access to inspect the property before the first Directive was issued and Complainant did not respond to Respondent’s request to schedule repairs after the first Directive was issued.

Consequently, under ROC’s Substantive Policy Statement 2017.01, Denial of Access, the first complaint should be dismissed in its entirety.

First Complaint Item 1: Missing Insulation in many areas

Although the insulation was not in conformity with the applicable requirements at the time of John Smith’s inspection, that inspection occurred over a year after Respondent completed its work and after Complainant had allowed at least four people access to the work in the attic. Moreover, Respondent produced digital photographs showing piles of insulation in the attic, strongly supporting a conclusion that the batts had been removed from the areas with no insulation. Complainant has not established that the condition at the time of ROC’s inspections was the same condition in which Respondent left the work. Consequently, the condition at the time of ROC’s inspection if of little probative value.

Banker is known to be reputable company and Respondent submitted Banker’s Declaration showing that the work had been properly completed, and David Smith provided credible testimony to the effect that the work had been properly completed.

It has not been shown by a preponderance of the evidence that Respondent did not install the insulation in conformity with the contract.

It has not been shown by a preponderance of the evidence that Respondent did not install the insulation in a workmanlike manner.

First Complaint Item 2: Wrong (lower quality) insulation used. Contract specified R38 paper faced...

Respondent acknowledges that it did not use paper-faced insulation, but the preponderance of the evidence shows that: (1) paper-facing is not required in Climate Zone 1; (2) that Respondent provided Complainant with a credit to account for the lower cost of the insulation that was used; and (3) the pre-loss condition of the house did not include paper-faced insulation.

Consequently, it has not been shown that any deviation from the contract was material, nor has it been shown that Complainant suffered any prejudice. Consequently, it has not been shown that Respondent violated section 32-1154(A)(2).

It has not been shown that the use of the un-faced insulation was a workmanship violation.

Complainant alleges that Respondent did no cleaning of the attic trusses and did not seal the trusses as required. Complainant relies on the observations of John Smith and her other witnesses, rather than any first-hand knowledge.

In her second complaint, Complainant asserted that there was still soot on the trusses, but there was no evidence adduced at hearing to show that this was a true statement. To the contrary, although there were numerous digital photographs of the trusses and much testimony about them, no one identified any photographs showing that there was still soot in the attic, and no one testified that there was still soot in the attic.

The preponderance of the evidence shows that Complainant was wrong and Respondent did perform cleaning of the trusses.

Regarding the lint, Complainant did not establish that the insulation was in the same condition it was when Respondent completed its work and Respondent presented evidence showing that there is now lint on some of the batting. Consequently, the lint (or lack thereof) does not show that no cleaning was done. As to the small piece of pink insulation, there was no evidence adduced to show that it hindered Respondent’s work, and sanding the trusses was not proven to be necessary or within the scope of the contract.

Respondent provided David Smith’s testimony, Mr. Hopkins’s sworn statement, and the work-log showing that the cleaning and sealing were both done. Respondent also presented digital photographs showing prep-work for spraying being done. Respondent also presented credible evidence showing that the Unsoot product does not leave a residue or other indicia that it has been applied.

Although John Smith and Complainant provided their opinions that any sealant would be visible, none of them addressed the Unsoot product specifically, and Complainant did not offer any rebuttal testimony or other evidence after Respondent presented its evidence showing that the Unsoot would not leave the type of residue those witnesses referred to.

Complainant provides no standard on which to determine how much odor would be considered a workmanship violation, how that odor might be measured, or whether odor in the attic, but not the house should be considered a violation.

Although John Smith and Mr. Elenes reported smelling smoke while in the attic, David Smith did not, and there was no evidence that there is any smell in the house, the garage, or anywhere but the attic.

It has not been shown that in cleaning and sealing the trusses Respondent violated section 32-1154(A)(2) or committed a workmanship violation.

First Complaint Item 5: Garage floor was to be prepped and coated with epoxy coating. Grey paint was used which failed within days

Although the evidence shows that there is flaking of the epoxy, the preponderance of the evidence also shows that Respondent offered to hire a contractor of Complainant’s choosing to repair the work, but she did not act on that offer.

First Complaint Item 6: Dry wall – many areas in home do not meet minimal workmanship standards

Although here is a bulge in the drywall above the cabinets in the kitchen, the preponderance of the evidence shows that replacing this drywall was not in the scope of the parties’ contract because that would have resulted in an improvement rather than restoration to the pre-loss condition.

John Smith testified that Respondent was responsible for that bulge because it had “accepted the surface.” But this is not consistent with a plain reading of ROC’s policy statement, which applies only if a contractor’s work fails as a result of working on a deficient surface (in which case the contractor is not absolved of liability).

There is no allegation that Respondent’s work (cleaning and then painting over the bulge) has failed and the acceptance of the surface policy is not applicable to this matter.

Although there is a crack in the living room ceiling, there was no substantial evidence showing that the crack was present when Respondent finished its work in June 2018. Moreover, the workmanship standards require only that settlement cracks be repaired once in the first year. Because Complainant did not file her first complainant until after a year had elapsed, Respondent was not obligated to make any repair.

Nevertheless, Respondent has offered to correct the crack.

It has not been shown by a preponderance of the evidence that Respondent’s drywall work was a violation of either subsection 32-1154(A)(2) or (A)(3).

First Complaint Item 7: Garage was to be primed & painted with 2 coats of paint. Work was not done properly or as indicated

The preponderance of the evidence shows that there is a drywall patch that was not painted, which could be a violation of section 32-115(A)(3) (depending on when that patch was added), albeit a very minor one.

John Smith’s opinion was that the paint on the ceiling and walls of the garage did not adequately cover the surface, but neither party referenced the applicable section of ROC’s Workmanship Standards and there was no objective standard provided.

Nevertheless, Respondent offered to make any required repairs, but Complainant did not act on that offer.

Complaint Item 10b: Manny items [sic] listed on contract were not completed in any way i.e. security system install,...electrical plates, and roofing work not done

Three items are at issue: the keypad for the security system, the collar on the water heater chimney, and several cracked electrical cover plates.

The preponderance of the evidence shows that Respondent provided Complainant with a credit for the alarm-system keypad and the labor to install it.

It has not been shown that there was a material deviation from the contract or that Complainant suffered any prejudice. Consequently, it has not been proven that Respondent violated section 32-1154(A)(2).

It has not been shown that the water-heater chimney was not properly sealed or that Respondent’s work was deficient.

Regarding the electric cover plates, it appears that some of these may have been cracked before the fire, but Respondent acknowledged that it is also likely that some were not. Respondent should have replaced those cover plates that were cracked during the fire, and would have been better served to replace them all.

Ariz. Rev. Stat. § 32-1154(A)(12) and (A)(14)

There was no substantial evidence adduced to show that Respondent violated Ariz. Rev. Stat. section 32-154(A)(12) or (A)(14).

Ariz. Rev. Stat. § 32-1154(A)(22)

It has not been shown that Respondent violated section 32-1154(A)(22) because Complainant denied Respondent access to do any required repairs.

Breach of Contract

The preponderance of the evidence shows that Complainant did not pay to Respondent any part of the $43,010.07 balance due despite having received from her insurance company money for that purpose. Whether Complainant violated the prompt pay act is a question for the civil courts, but in this matter Complainant provided no valid justification for her failure to pay Respondent.

Conclusion

It has not been proven by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1152(A)(2), (A)(12), (A)(14) or (A)(22).

There was no substantial evidence adduced showing that Respondent is unqualified, unscrupulous or financially irresponsible.

Because Complainant did not allow Respondent to inspect the property as required under Ariz. Rev. Stat. section 32-1154(D)(1), the citations for alleged violations of 32-1153(A)(3) must be dismissed.

Even if it was not necessary to dismiss the workmanship allegations, it would not be appropriate to discipline Respondent’s license for any such violations because: (1) any such violations are minor; (2) Respondent has offered to repair any work that Complainant believes is inadequate (with the exception of cleaning and sealing the trusses, which work has not been shown to be deficient); and (3) Complainant has not paid to Respondent any portion of the $43,010.07 balance due on the contract.

ROC’s substantive policy statement 2017.01 on Denial of Access is applicable to this matter because Complainant denied Respondent access to inspect the property and Complainant did not respond to Respondent’s request to schedule repairs after the first Directive was issued. Consequently, the first complaint should be dismissed in its entirety.

Considering the above, the weight of the evidence and legal authority show that this matter should be dismissed.

RECOMMENDED ORDER

IT IS ORDERED that Case Number 2019-02886 and Case Number 2019-03971 are 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 is forty days after the date of that certification.

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-137160-45720000Done this day, June 22, 2020.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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