ALJDEC decisions subject to certification as final

2019A-04206-CHC-ROC · Registrar of Contractors · 2020-08-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

John Edward Schreck,

COMPLAINANT

v.

Harris Steel Buildings LLC,

ROC License: ROC 221046,

RESPONDENT

No. 2019A-04206-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: Through Google Meet on July 8, 2020; hearing record held open for the parties to make several specific exhibit submissions.

APPEARANCES: Complainant John Edward Schreck appeared representing himself. Attorney Mark Molique represented Respondent Harris Steel Buildings LLC.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

_____________________________________________________________________

Respondent is the holder of License No 221046, CR-17, Steel and Aluminum Erection, issued by the Arizona Registrar of Contractors (Registrar) in 2006 and renewed through July 31, 2020.

On August 15, 2019, the Registrar received Complainant’s Complaint containing a 12-item list of complaints and a narrative of background information regarding the construction of a steel structure building and a concrete foundation pad.

In February 2018, the parties contracted for the purchase and for the installation of a steel building structure Complainant intended to use as a garage/storage for vehicles. After the design of a steel structure building is finalized, the structure is engineered, i.e., the structural drawings for the project are created, including a separate drawing for the engineered foundation concrete pad on which the building will be installed. The materials for a steel building structure are manufactured according to the engineered plans. The purchase order indicates that the parties should allow 14 business days for stamped drawings and 7 to 8 weeks after approval of stamped drawings for the delivery of the building [materials]; the customer is responsible to verify that the designed codes and designed loads meet with the local building jurisdiction requirements.

Complainant acted as the general contractor, hiring a concrete contractor (Mr. Felix) and other trades needed for the interior work (such as plumbing and electrical).

Relevant to the issues in this case, Complainant requested that Mr. Felix make the building’s foundation concrete pad larger: “Decided to have it built a little larger so there is a few inches of cement beyond the buildings footprint.” Complainant wanted to keep the soil line further from the sides of the metal building.

Mr. Felix was provided a copy of the foundation drawings; however, he recalled that Complainant had wanted the concrete pad eight inches larger all around. At that time (and prior to the pour), Mr. Felix indicated that he had agreed to make the concrete pad larger but only three to four inches larger and that, as to the “notch” at the perimeter of the pad, he could enlarge it, using a 2x4 as the guide for the notch. Mr. Felix, working for Petitioner, did not contact Respondent or the engineer about the changes to the pad.

Mr. Felix also poured the “apron” adjacent to the foundation pad that functions as the concrete slab outside the man door. Mr. Felix indicated that he poured the apron for that door lower than the foundation floor but at the same level as the “notch” he had created. Mr. Felix did not pour the driveway that leads to the overhead roll-up door.

At hearing, Complainant indicated that, although he did have in his possession the engineered plans for the building and the drawing for the foundation concrete pad, he had not known there was a “notch” on the outer edge of the footprint. Complainant further indicated that he had only “recently” become aware that the “notch” was a part of the overall design for the project.

Complainant had not notified Respondent that he was making changes to the foundation concrete pad. When considering making the changes to the concrete pad, Complainant did not request any information from Respondent or from the manufacturer in this regard.

Overall, there were delays in the project for multiple reasons, which appear to be unrelated to the verified items in Complainant’s Complaint. For example, once the building had been manufactured, the concrete pad pour and the installation was delayed and, with fees charged for storage, the manufacturer delayed shipping the materials; however, at a certain point, the manufacturer was obliged to ship the materials and the materials were delivered to Complainant in July of 2018, where the materials sat on pallets at the site while other work was completed before the steel building could be constructed/installed in April 2019.

Neither Respondent’s owner nor its employee inspected the concrete pad prior to beginning the installation.

On the second day of installation (which appears to be April 12, 2019) when they were putting up the sheets (i.e., the walls), Respondent’s workers called in to inform Respondent that the base trim was not able to be installed, sending pictures of the concrete pad to demonstrate the problem.

The base trim is specifically designed to be flush with the building edge, covering the 11⁄2 inch notch and the edge of the concrete when it is put in place against a base angle iron that is attached to the [interior] concrete pad at the edge of the pad over which the walls are secured. Additionally, while there are foam strips placed between the wall panels and the base angle to “prevent” insects and air from coming through open areas of the wall panels, neither the foam nor the base trim are intended to create a water-tight seal.

At hearing, Complainant and Respondent presented testimony regarding the discussions they had that day; there were some differences in recollections and characterizations. In general, the hearing record demonstrates that the parties discussed various options: (a) installing the trim and trying to make it fit; (b) installing the trim so it rested on the concrete instead of covering the depth of a notch; (c) reaching out to the manufacturer for fabrication of new base trim and the cost thereof and, thus rescheduling the installation; and, (d) finishing the installation without using the base trim.

At hearing, Complainant indicated that his primary concern was the “integrity” of the building as to shedding water away from the structure; he indicated that he offered “to contribute” to the cost of new metal base trim and shipping. Complainant indicated that he had a conversation with Mrs. Harris and she was going to contact the manufacturer regarding new metal. Complainant also indicated he had a conversation with Mr. Harris who had been loud and adamant that the men would be pulled off the job (for some other uncertain rescheduled day) unless they could finish the installation. While it appears that some installation proceeded on that day, the documents presented also indicate that some installation did not get completed until April 18, 2019 or thereafter when Respondent came by to pick up a $3,000.00 payment.

On April 13, 2019, Complainant took photos of some water intrusion near the man doors.

The parties’ email communications on April 18, 2019, contain extensive information and explanations:

(a) Complainant’s various concerns about the warranty and future water damage in the absence of the base trim being installed;

(b) Respondent’s responses, based on his 35+years of experience, to Complainant’s5various concerns about water intrusion and the 30-year warranty on painted finishes against fading, peeling, and rust;

(c) Complainant’s acknowledgement of the information and request to have the remaining work finished the next day and to pay the amount due on the installation; (d) Respondent’s concern that the matter was at an impasse and suggestion that Respondent stop its installation work and remove its equipment while awaiting a complete price breakdown “to remove the wall panels and install a special made base trim, with the understanding that this is no fault of HSB for the modification of the foundation. During this time, while HSB is preparing an estimate for this additional work and upon, either your approval or disapproval, HSB will [then] reschedule you back into our time schedule of other jobs and equipment availability.”

(e) Complainant’s response indicating that his biggest concern was the warranty against future damage from “rust, corrosion and discoloration;” that they were no longer considering exploring “newly fabricated trim;” that they were not proposing to tear the building down; and that, now “accepting” Respondent’s feedback that the “building as built should not be a problem,” hoping that the job could be completed the next day as they were ready to pay the $3,000.00. Emphasis added here.

Based on the April 18, 2019 email exchange, Respondent’s impression at that point was that any issue regarding the base trim was resolved.

Following the installation and after the parties’ efforts to resolve some other concerns with the building, the Registrar received the Complaint containing a 12-item list of complaints and a narrative of background information regarding the construction of the steel structure building and the concrete pad.

After receiving the Complaint, Registrar’s Investigator John Smith issued a warning letter on August 22, 2019, regarding the required minimum elements of a contractor’s written contract. In this case, Respondent believed that this was in reference to the contract not containing an estimated completion date.

Following the jobsite inspection on September 11, 2019, Registrar’s Investigator John Smith issued a Written Directive (Directive) verifying two of the twelve items: Item #5 regarding water leaks at both man doors and along the east wall; and, Item #7, failure to install “lower rain skirting” (i.e., the base trim) listed in the contract. The Registrar set forth October 2, 2019 as the deadline for Respondent’s compliance with the Directive.

In the Directive, citing to the Registrar’s Substantive Policy Statement 2017.01 regarding workmanship, Investigator Smith noted that Respondent had accepted the condition, and dimensions, of the concrete foundation slab and the driveway prior to building the steel structure.

As to the water leaks, Investigator Smith observed daylight at/around the doors even though they were closed and he indicated that a water test demonstrated water intrusion in less than one minute. As to the leaks at the east wall, a water test demonstrated that water intruded in less than two minutes. Investigator Smith found that the driveway adjacent to the east wall was “approximately the same height” as the concrete foundation slab along that wall, noting that the driveway had been installed prior to the installation of the building. Investigator Smith indicated that the water leaks were Respondent’s responsibility.

As to the base trim, Investigator Smith had not been able to confirm that there was an agreement to eliminate the base trim or that there was no change order for no installation of the base trim. Investigator Smith indicated, therefore, that Respondent’s failure to install the contracted-for base trim was poor work in not following the plans, i.e., a workmanship issue.

Although the parties had communication after the Directive was issued, and Respondent believed that they had come to an agreement to resolve the matter, in the end, the two Directive items were not completed and the parties did not resolve the dispute between themselves prior to the administrative hearing.

The Registrar issued a Citation on October 11, 2019, charging Respondent with possible violations of: Ariz. Rev. Stat. § 32-1154(A)(3), namely Ariz. Admin. Code Section R4-9-108; Ariz. Rev. Stat. § 32-1154(A)(12) as to Ariz. Rev. Stat. §32-1158; and Ariz. Rev. Stat. § 32-1154(A)(22).

Ariz. Rev. Stat. § 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.”

Ariz. Admin. Code Section 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.”

Ariz. Rev. Stat. § 32-1154(A)(12) includes among the grounds for disciplinary action a failure in any material respect to comply with this chapter.

Ariz. Rev. Stat. § 32-1158 provides that contracts between the parties that are over $1,000.00 must contain, in writing, nine specific elements, including an estimated date of completion. Additionally, this statue provides that the contract set forth the following information in Bold 10-point type: the property owner’s rights to file a complaint with the Registrar for alleged violation of Ariz. Rev. Stat. § 32-1154 within the time frame set forth in Ariz. Rev. Stat. § 32-1155(A) and the Registrar’s telephone number and website.

Ariz. Rev. Stat. § 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.”

On October 28, 2019, Respondent filed its written Answer to the Citation, noting that the issues raised were not workmanship issues, or were specifically caused or done by Complainant or through Complainant’s directions to his subcontractors and independent of any action by Respondent. Respondent further noted that any modification to the building had been at the express agreement of Complainant. Finally, Respondent indicated that Complainant had subsequently agreed to allow Respondent to make certain corrections and yet had the Registrar proceed with a Citation. Respondent’s position was that the allegations did not merit discipline against its license.

The Registrar noticed the matter for hearing.

At the July 6, 2020 pre-hearing inspection, Investigator Smith was informed that no corrective work had been performed; he determined that, as to the Directive items, they remained in the same condition as during the September 11, 2019 jobsite inspection.

Regarding the contract element issue, Respondent noted that there were always two contracts, one for the purchase and one for the installation. Respondent indicated that they cannot give a specific estimated completion date because it could take 7-8 weeks for the materials to be manufactured and delivered and installation dates would have scheduled with the purchaser.

Regarding the water issues, Respondent noted that the doors were installed correctly but that it is a challenge to get the door sweeps tight because when doors are required by a fire code to be installed to open in, more of the door jamb is always exposed, and the doors are not required to be waterproof, only water tight. Additionally, Respondent indicated that there had been a manufacturer issue with the door sweeps, which they would have been able to correct with the new sweeps obtained from the manufacturer but their time frame to complete those corrective repairs was interrupted with a business trip which occurred during the time the Directive deadline was in play or for which they had asked for an extension and then Complainant told the Registrar to move forward with the complaint process instead of working with Respondent as to their respective schedules and allowing Respondent to come and do the water-intrusion corrective work.

At hearing, Respondent argued there was justification regarding not completing the Directive corrective work in that: (a) Complainant agreed to have the building completed absent base trim and he paid the final amount due, thereby waiving the issue; (b) it’s not a defect or “workmanship” issue to have not installed the trim; (c) Complainant himself directed his subcontractor to alter the concrete pad which ultimately prevented Respondent from being able to install the trim and created the water intrusion issue; (d) as to Registrar’s Substantive Policy Statement 2017.01, Respondent had not covered up a “surface;” and (e) Respondent is not responsible for manufacturer defects and stood ready to replace the defective door parts and comply with the Directive as to water leaks.

Overall, Respondent argued that they should be able to rely on the customer to have followed the foundation concrete plans and that, in this case, Mr. Felix had altered the pad and the requisite notch, had not accurately created the necessary slope to the slab, and had poured the “apron” too high which caused water intrusions. Respondent also argued that they would not have completed the building installation in April 2019 without the base trim unless Complainant had agreed to do so; Respondent argued that there are no construction codes requiring a base trim.

At hearing, Complainant noted that he had allowed the Registrar to proceed with the complaint process because Respondent had had “ample time” “to work on a settlement [they] both agreed on” but made no movement “until the very end” of the time period; further, in Complainant’s opinion, the referral to proceed had not prevented Respondent from still being able to go ahead and do the work before coming to a hearing. Complainant believed he had not been adamant about not saw-cutting the concrete but just did not see how that could have been accomplished. Complainant indicated that he relied on the Registrar to correctly “define” a contractor’s role and that he would have withdrawn the matter if the Registrar had determined the Complaint did not have merit.

Administrative notice is taken of Respondent’s License record with the Registrar, which reflects that this matter is the only open complaint regarding Respondent’s license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. See Ariz. Rev. Stat. § 32-1101 et seq.

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 section R2-19-119.

In this case, Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See Ariz. Rev. Stat. § 41-1092.07(G)(2); Ariz. Admin. Code Section R2-19-119(A) and Ariz. Admin. Code Section R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).

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. Construction is not a perfect art and, normally, contractors must be allowed an opportunity to correct poor workmanship before their licenses may be suspended or revoked as a result of a failure to comply with workmanship standards.

9. The Registrar’s Substantive Policy Statement 2017.01, Acceptance of the Surface, provides:

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.

10. Regarding workmanship, Investigator Smith’s Directive noted that Respondent had accepted the condition, and dimensions, of the concrete foundation slab and the driveway prior to installing the steel structure.

11. Regarding the water leaks at the man doors, the hearing record demonstrated that the existence of those leaks was the result of at least two factors: manufacturer issues with the door sweeps and the need to create a sufficient seal or fit of the door frame/jamb with the steel building. The hearing record in no way demonstrates that the water leaks at the man doors were caused by the lack of the base trim. The Administrative Law Judge concludes, however, it would be Respondent’s responsibility to assure that the building was appropriately connected to the doors and the doors were appropriately connected and in place on/in the building, thus making sure the structure of the building was sound. Investigator Smith appropriately found workmanship issues as to the ensuing leaks at the man doors. The Administrative Law Judge concludes that, as to the water leaks at the man doors, a workmanship issue existed and Respondent is in violation of Ariz. Rev. Stat. § 32-1154(A)(22) for failure to take appropriate corrective action to comply with the Directive Item #5 as to the water leaks by the man doors by the Directive deadline.

12. Regarding the water intrusion against, or under, the east wall, the hearing record does not demonstrate that the water intrusion is caused by the lack of the base trim; rather, it appears that the water intrusion at the east wall is the result of the variances in slope and/or height of the foundation slab and the adjacent driveway. An exact measurement of the variance was not provided. In the Directive, Investigator Smith had indicated that the driveway adjacent to the east wall was “approximately the same height” as the concrete foundation. Respondent’s photographs show that the driveway was poured such that the height of the driveway is slightly higher than the foundation slab and, therefore, a reasonable person would conclude that water may pool somewhat in or against the lowest of the elevations until it runs off or evaporates. The Registrar’s policy on acceptance of the surface should not be applied to Respondent regarding water intrusion at the east wall, because (a) Respondent was not performing any of its steel building installation work on top of the driveway and (b) Respondent’s installation work on the foundation slab was not the cause of the water intrusion at the east wall. The Administrative Law Judge concludes that Investigator Smith’s determination that it was Respondent’s workmanship as to the water intrusion at the east wall is not appropriate, and the Administrative Law Judge concludes that this portion of the Directive Item #5 is not a workmanship violation by Respondent.

13. The hearing record clearly demonstrated that the base trim set forth in the purchase contract was not installed by Respondent in April 2019 and has not been installed since that time. Whether or not the base trim was a necessary item, structurally or aesthetically, the base trim has not yet been installed.

14. While Respondent should have inspected the foundation concrete slab for any flaws or defects that would affect the installation work, once the issue arose on April 12, 2019 and Respondent found the surface to be unacceptable to be able to complete the installation with the base trim (i.e., according to the plans and purchase contract), the issue was immediately brought to Complainant’s attention and Respondent indicated to Complainant that it could not complete the installation of the base trim because the base trim would not now fit onto the building due to the foundation slab not being poured according to the engineered plans. At that time, Respondent further indicated to Complainant that it could contact the manufacturer regarding the possibility of fabricating new trim and the cost thereof and also indicated that it would pull its workers off the installation. Under the Registrar’s general principle of acceptance of the surface, Complainant’s choices, once the problem was found, were to have the surface corrected, to pay to correct the surface or to choose not to do either and give a waiver to Respondent. If an owner were to refuse to take any of those actions, a contractor would be within its rights to not perform work or to stop any further work taking place.

15. In this case, at the time when the foundation slab was found to be unacceptable for completion of the contract and Respondent so indicated, it was then up to Complainant to choose whether to correct the defective surface or not and, if not, to provide a waiver to Respondent or, in these specific circumstance, to work with Respondent to resolve the problem. Of the options available to Complainant, Complainant chose to have Respondent’s workers continue to install the building structure without the base trim rather than stop the installation or to correct the foundation surface. It must be noted that there was additional installation work ongoing that day, the base trim was not the only building structure installation being performed that day; the overall installation work was not complete on April 12, 2019. Additionally, on April 18, 2019, the parties were still negotiating actions to be taken regarding completing the total building installation and/or what to do about the base trim.

16. As of July 9, 2020, Complainant had not corrected the foundation concrete slab and Respondent had not installed any base trim. However, on April 18, 2019, Complainant advised Respondent that they were no longer considering exploring “newly fabricated trim;” that they were not proposing to tear the building down; and that, now “accepting” Respondent’s feedback that the “building as built should not be a problem,” Complaint further advised that he hoped the job could be completed the next day.

17. Based on the entire hearing record, the Administrative Law Judge concludes that the April 18, 2019 email exchange between the parties, especially following the verbal determinations made on April 12, 2019, should be considered to serve as a “change order” and demonstrates an agreement between the parties to eliminate the base trim. As a result, the Administrative Law Judge concludes there was no workmanship violation for Respondent’s failure to install the base trim. Based on the parties’ agreement, Respondent not completing the base trim corrective work within the Directive time period was demonstrated to be justified and, as to the base trim, the Administrative Law Judge concludes that no workmanship issue remained and Respondent is not in violation of Ariz. Rev. Stat. § 32-1154(A)(22) for failure to take appropriate corrective action to comply with the Directive Item #7 by the Directive deadline.

18. Regarding Ariz. Rev. Stat. § 32-1154(A)(12) and the requisite contract elements, Respondent’s contract forma did not contain all nine elements. In addition to not having a specific estimated completion date, the contract forma did not set forth the information regarding a property owner’s rights to file a complaint with the Registrar for alleged violation of Ariz. Rev. Stat. § 32-1154 within the time frame set forth in Ariz. Rev. Stat. § 32-1155(A) and the Registrar’s telephone number and website. Overall, given the parameters of such a contract for the purchase of a steel building that has to be manufactured according to engineered plans that are not yet created, it seems obvious that, at the time of the purchase contract, the vendor would simply be at a loss to determine a specified estimated completion date. In this case and for this type of contract, setting forth the two known time periods - the estimated time to have engineered plans developed and approved and the estimated time for manufacturing and delivery – would appear to meet the statutory provisions as those two dates in combination alert the purchaser of an estimated time frame. As to an owner’s complaint rights, however, the Respondent’s written contract was deficient. Therefore, the hearing record demonstrated a violation of Ariz. Rev. Stat. § 32-1154(A)(12) in failing to comply with the requirements set forth in Ariz. Rev. Stat. § 32-1158.

RECOMMENDED ORDER

Based on the foregoing, the Administrative Law Judge recommends that the Registrar impose discipline on Respondent’s ROC License 221046 in the form of a two-day suspension.

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 40 days from the date of that certification.

Recommended this date, August 7, 2020

/s/ Kay Abramsohn

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors