ALJDEC decisions subject to certification as final

2021A-03968-CHC-ROC · Registrar of Contractors · 2022-02-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Sebastian Walter Samu RAINBOW INTERNATIONAL OF GREATER TUCSON ,

COMPLAINANT

American Epoxy Arizona LLC

License No. ROC 324300,

RESPONDENT

No. 2021A-03968-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: February 3, 2022

APPEARANCES: Brian A. Laird, Esq. for Complainant; Stephen Weber, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On November 16, 2021, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Contested Case setting the above captioned matter for hearing on December 16, 2021 at the Office of Administrative Hearings. The matter was continued and the hearing was conducted on February 3, 2022.

Through its Notice of Hearing, ROC alleges that Respondent American Epoxy Arizona LLC may have violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22).

Respondent holds license No. 324300 issued by ROC in April 2019. Adam Ruzsa is Respondent’s qualifying and a member of the LLC. Mr. Ruzsa testified for Respondent, which also presented the testimony of Xhesika Ruzsa.

Mr. Ruzsa has almost 30 years’ experience in epoxy work.

Complainant Sebastian Walter Samu, appeared through counsel and testified. Mr. Samu owns a water restoration service company.

ROC investigator Arlo Houston also testified.

Mr. Samu hired an unnamed person or persons to apply an epoxy finish to floors at his house. Soon after the finish was applied, it began to bubble or peel.

Mr. Samu testified that he thought that the bubbling was the result of a slab leak and he filed a claim with his insurer.

The insurer sent American Leak Detection that tested the plumbing and sewer lines, but not the irrigation lines or the pool and pool lines. American Leak Detection found no leaks in the plumbing or sewer lines and Complainant’s insurer denied his claim.

Mr. Samu contacted Respondent and in January 2020, Ms. Ruzsa met with Mr. Samu and his wife at the house. Ms. Ruzsa estimated that at the time of her inspection, 70% of the epoxy had been removed, but it was clear that there was water under portions that had not been removed.

Considering the state of things, Ms. Ruzsa felt it appropriate to have Mr. Ruzsa inspect the site, and subsequently Mr. Ruzsa, Ms. Ruzsa and Mr. Samu met at the site.

Mr. Ruzsa testified that there were three possible causes for the first application’s failure: a water leak; no vapor barrier under the slab; and no vapor barrier or primer coat under the epoxy itself.

Mr. Ruzsa and Ms. Ruzsa each testified that Mr. Samu told them that there that there had been pool-related issues that were fixed and that there was a vapor barrier under the slab.

Mr. Samu denied telling Ms. Ruzsa and Mr. Ruzsa that he had had a leak that was fixed after the first application of epoxy failed. According to Mr. Samu, Respondent told him that the reason the first installation failed was that that installer did not know what he was doing.

Mr. Ruzsa testified that Respondent wanted to help Mr. Samu, but needed to make sure the problem would not reoccur, which is why he asked about the source of the leak and the vapor barrier. Whether the leak was fixed and whether there was a vapor barrier under the slab were out of Respondent’s control, but he was satisfied that these were taken care of, and Respondent routinely adds a vapor barrier (i.e., primer) to cover the third concern.

During Mr. Ruzsa’s inspection about 70% of the floor was exposed (epoxy removed) and it was dry, allowing moisture testing to be conducted. Mr. Ruzsa did so at five to eight locations using a meter approved for that use by the epoxy manufacturer. The moisture readings were all 3% or less, whereas the manufacturer allows up to 4% at the time the epoxy is applied.

On January 21, 2021, Respondent started grinding and it finished the project on February 1, 2021.

Respondent applied two coats primer, Sherwin Williams RESUPRIME that is effective to block moisture of 15 pounds per 1000 square feet per 24 hours, which equates to 97% humidity, and a top coat.

Respondent uses the primer because not all slabs have the required barrier and because problems can occur after installation of the epoxy (e.g., a pipe might burst).

Mr. Samu testified that Respondent’s epoxy started to bubble about three weeks after it was installed.

On or about August 17, 2021 Complainant filed with ROC a complaint against Respondent alleging abandonment and poor work on Respondent’s part.

ROC investigator Mr. Houston conducted a jobsite inspection on September 7, 2021.

On September 15, 2021, ROC issued to Respondent a Directive that provided in part:

.... You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on October 4, 2021.

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DIRECTIVE REQUIREMENTS

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Compliance Item: 1 - "Epoxy flooring was applied to concrete. 3 weeks after completion epoxy is bubbling in numerous areas throughout the home."

Investigator’s Observation: Verified. Upon inspection at this JSI I observed for areas of bubbling in the epoxy floor in the kitchen, living room, and laundry room.

Respondent conducted an inspection of the floor, which required removing some of the epoxy to expose the concrete. Moisture readings were at or above the meter’s 6% maximum. Consequently, Respondent conducted a test using anhydrous calcium chloride.

In that test, a cup containing the chemical is weighed and placed on the concrete and then sealed; after 60 hours, the cup is again weighed with the change in weight being used in a formula to determine the moisture vapor emission rate (MVER), measured in pounds of water emitted from 1000 square feet in 24 hours.

Mr. Samu’s floor had a MVER of 22.01 pounds, the likes of which Mr. Ruzsa has never seen.

Mr. Ruzsa acknowledged that Respondent conducted the anhydrous calcium chloride test for about 58 hours, not 60, but his opinion was that this would result in a lower MVER than a full 60 hours.

Through a letter to Mr. Samu dated October 4, 2021, Respondent, though its attorney, informed Mr. Samu that either the original source of water had not been remedied or there was a new source, and that although Respondent did not believe it was at fault or responsible for the bubbling, it would make repairs provided that Mr. Samu identified and repaired the source of moisture.

Mr. Samu denied knowledge of any such offer from Respondent.

Through a letter to ROC dated October 4, 2021, Respondent, through its attorney, informed ROC of its position that it was not responsible for the bubbling, of its willingness to nevertheless make repairs provided that Complainant identified and repaired the source of the moisture, and that making repairs before the leak was remediated would be futile.

On October 4, 2021, Mr. Samu had American Leak Detection conduct a second test on the under-slab pipes and sewer lines, which showed that these were not the source of the leak.

Mr. Houston conducted a compliance jobsite inspection on October 12, 2021 at which time he determined that Respondent had not made all the corrections that ROC ordered it to make.

ROC issued to Respondent a Citation dated October 15, 2021, through which ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22).

Mr. Houston testified that he did not investigate the underlying cause of the bubbling and that at the time of his jobsite inspection he had not been aware that a prior application of epoxy to Complainant’s floor had failed. There is no explicit workmanship standard for epoxy coatings.

Mr. Houston did not see that the contract included a provision excusing the bubbles based on high moisture content in the substrate, therefore he found that the bubbling was a workmanship problem.

The parties’ contract has a Limited Warranty and Disclaimer provision showing that damage caused by misinformation provided by the Complainant or by substrate related issues is not covered. The contract also shows however that any warranties provided by law take precedence over the limitation of the contract.

At the hearing, Respondent confirmed that it was willing to make repairs if the source of water was identified and fixed, although Respondent does not agree that it was responsible for the problems at issue.

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).

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 32-1154(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:

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3. Violation of any rule adopted by the registrar.

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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(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.”

The preponderance of the evidence shows that Respondent received assurances from Mr. Samu to the effect that the leak that caused the original epoxy to fail had been repaired. Consequently, either Mr. Samu was mistaken, the leak reoccurred, or a new source of water infiltrated under the slab.

The preponderance of the evidence shows Mr. Ruzsa performed proper due diligence by verifying that the original source of water had been repaired, by conducting moisture testing before Respondent did its work, and by applying the primer coats. Consequently, ROC’s policy regarding acceptance of the surface is not applicable to Respondent’s work.

It has not been proven that Respondent’s work was in violation of Ariz. Admin. Code section R4-9-108(A) and Respondent has not violated Ariz. Rev. Stat. § 32-1154(A)(3).

Although Respondent did not comply with ROC’s Directive in the time allowed, this failure was justified because it has not been proven that Respondent’s work was deficient. Consequently, it has not been proven that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(22).

RECOMMENDED ORDER

IT IS ORDERED that the case number 2021-03968 is 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.

-54864001

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-137160-45720000Done this day, February 22, 2022.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors-54864001

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-137160-45720000