ALJDEC

97F-2495-ROC · Registrar of Contractors · 1997-10-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 20, 1997 APPEARANCES: Kenneth Hildebrandt, Complainant, in his own behalf William Carlson, Co-Owner and Officer, on behalf of Delmar Development, Inc., Respondent ADMINISTRATIVE LAW JUDGE: Allen W. Reed _____________________________________________________________________

FINDINGS OF FACT During early part of 1996, the Complainant visited various homes being built by the Respondent at Scottsdale Square in Scottsdale, Arizona. The Respondent’s Plan #1607 homes which were viewed by the Complainant had a 48 inch wide shower pan in the master bath. These homes were under construction and not model homes. Plan #1607 did not specify the size of the shower pan. Sometime between February 1996 and May 1996, Lucille Presson (Presson), the Complainant’s fiancée, told the Respondent’s broker that she and the Complainant wanted the large shower pan. The discussion was most likely prior to March 1, 1996 in view of the Respondent’s memorandum on that date (referenced in Finding of Fact # 6). The Complainant ultimately decided on Plan #1607, as the design for his house. On May 6, 1996, the parties executed an Offer to Purchase for a Plan #1607 house on lot 23. A utility sink was added to the diagram of the Plan by the Respondent’s broker. The sink was to be in the garage, on the south side of the water heater. During a walk through of the home prior to closing on October 4, 1996, the Complainant noted that the utility sink was installed on the north side of the water heater in the garage. He was told by the Respondent that this was required because a Scottsdale inspector had told the Respondent the sink could not go where originally planned because of egress problems. The placement of the sink made it impossible for the Complainant to place a freezer in the garage as he had planned. The Complainant had paid an extra $3,500.00 to have the garage extended by three feet in order that he could have the freezer and also park a boat in the garage. The Complainant also noted that the shower in the master bath was smaller than anticipated. A 42 inch pan rather than a 48 inch pan was used in construction by the Respondent after an in house memorandum was issued on March 1, 1996, stating a supply problem and pony wall problem for Plan #1607 homes, would be corrected through this change. The Complainant did not know of this policy or memorandum until closing when the Respondent told him of the reason for the change and that the Respondent reserved the right to change floor plans and specifications without notice. The Complainant accepted the Respondent’s explanations and the closing took place as scheduled. After moving into the home, the Complainant noted other problems and began questioning the answers he had received from the Respondent regarding the sink and shower. The Complainant contacted the City of Scottsdale and was informed that there was no problem with the code if the sink had been placed as originally planned. The Complainant also talked with an attorney who told him the Respondent’s claim of the right to change the shower size without notice did not have to be accepted by the Complainant. The Complainant filed his complaint on April 16, 1997. On April 30, 1997, Inspector Robert Mechsner (Mechsner), of the Registrar of Contractors (Registrar), performed an inspection of the home and on May 1, 1997, he issued a Corrective Work Order (Order). The Order covered 21 items, 19 of which required correction according to Mechsner. The items requiring correction included the sink and shower. Between the time of the Order of May 1, 1997, and when Mechsner did a pre- hearing inspection on October 17, 1997, the Respondent attempted to correct all items except the sink and shower. Of the attempted corrections all were satisfactory except two items which remain as issues in the hearing. The attempted correction of the paint on a laundry room door was unsatisfactory because the area on the door which showed a paint run on the interior is still apparent from five feet away. Efforts to correct the front door were inadequate and although the door was re-stained, the lower interior portion of the of the door shows a dark circular area that does not match the rest of the door and the outside has what appears to be an elongated smear and does not blend with the rest of the door. CONCLUSIONS OF LAW The allegations in this case involve A.R.S. §32-1154(A)(7), a wrongful or fraudulent act resulting in substantial injury, (23) failure to take appropriate corrective action and (3), violation of any rule specifically, A.A.C. R4-9-108 relating to workmanship standards. Based on the preponderance of the evidence presented in this case, it is concluded that even though the repair attempts were in good faith, they were inadequate and the Respondent is in violation of A.R.S. §32-1154(A)(3) and (23) with respect to the painting of the laundry room door and the interior and exterior of the front door. The evidence also supports a violation of A.R.S. §32-1154(A)(7) wrongful act, with respect to the incorrect placement in the garage, of the utility sink. The rather suspect reason for the placement of the sink given by the Respondent to the Complainant at the time of the walk through is of some concern. However, it was not proven to have been an intentional falsehood so as to constitute a fraudulent act. In any event, the Complainant had a right to rely on the representation by the Respondent’s broker in the diagram of the home, that the utility sink would be on the north side of the water heater thereby allowing enough room on the south side of the water heater for a freezer. The Respondent’s failure to correct or otherwise resolve this with the Complainant as required by Mechsner’s Order of May 1, 1997, also constitutes a violation of A.R.S.§32-1154(A)(23). With respect to the issue of the shower pan, the Respondent’s internal memorandum changing the size was issued two months prior to the Offer to Purchase by the Complainant. The language in the Respondent’s literature with respect to its rights to change floor plans and specifications without prior notice does not specifically apply in the context of this case because the shower pan change had been made long before there was any contractual relationship between the parties. The Complainant’s position is that when he looked at other Plan #1607 homes they had the larger shower and that Presson made mention of this to the Respondent’s broker. The time and context of Presson’s discussion of shower size with the Respondent’s broker is too vague to be given weight as notice to the Respondent that the size of the shower was a material issue at the time of the Offer to Purchase which was more than two months after the discussion. There was no other communication to the Respondent which would have put it on notice that the Complainant was anticipating the larger shower at the time the parties agreed to the building and purchase of the home. The larger showers had been discontinued over two months prior to the Offer to Purchase except as a special order and cost item. If shower size was a material issue to the Complainant, he should have made some inquiry or mention of it at the time of the Offer to Purchase and his sole reliance on what he saw in some of the homes under construction, was not justified. The Complainant accepted the smaller shower and the Respondent’s explanation regarding its right to make changes without notice, and closed on the house. The Respondent’s explanation prior to the closing was not a falsehood but rather a statement of position or opinion and if the Complainant disagreed, he could have asked for legal advice prior to closing. No violation is found on this issue. RECOMMENDED ORDER In view of the foregoing, it is recommended, commencing on the effective date of the Order entered in this matter, that the Class B license of the Respondent shall be suspended until the Registrar of Contractors receives written proof that the Respondent has accomplished appropriate and effective remedial work on the laundry door and front door, and has properly positioned the utility sink; It is further recommended that if the Respondent accomplishes the above described corrective work on or before the effective date of the Order entered in this matter, then the aforementioned license suspension shall not take place and the Citation and Complaint upon which it is based shall be closed. Done this day, October 22, 1997.

______________________________________ ALLEN W. REED Administrative Law Judge

Original transmitted by mail this ____ day of October, 1997, to:

Mr. Michael P. Goldwater, Director Registrar of Contractors ATTN: Jennifer Varela 800 West Washington, 6th Floor Phoenix, AZ 85007

By _______________________________

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Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826