ALJDEC

97F-M1950-ROC · Registrar of Contractors · 1998-02-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 27, 1998. APPEARANCES: Complainant appeared personally. Respondent was represented by its attorney, Michael Moore.

ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT

1. Respondent is the holder of a Class C-21 landscaping and irrigation systems license issued by the Registrar of Contractors. 2. Complainant entered into a written agreement dated May 3, 1997, with the Respondent. Respondent contracted to furnish the materials and perform the labor necessary for the installation of an in-ground spa and specified landscaping per approved plans at Complainant’s residence. 3. The parties’ written agreement provided that Complainant would pay Respondent a total contract price in the amount of $13,480.00. The agreement further provided for the following payment schedule: a down payment in the sum of $5,000.00; payment in the sum of $5,000.00 when the spa came in; payment in the sum of $2,500.00 when the waterfall was completed; and a final payment in the amount of $980.00 upon completion of the project. Complainant has properly tender the first three installment payments to Respondent but has withheld the final draw due to Respondent’s failure to complete the project. 4. Respondent commenced operations on the project on May 6, 1997. 5. Prior to entering into their written agreement, Respondent presented Complainant with a brochure of DiamondBack Spas for her to review and select her choice of spa. The brochure showed photographs and product specifications and features of various models. Complainant selected the Sea Ray model 1010. 6. The parties’ written agreement specified the model 1010 spa, but contained other specifications that varied from the brochure. 7. Respondent is deemed to have contracted beyond the scope of its Class C-21 licensed by entering into its written agreement to provide labor for the installation of Complainant’s spa. Although there is no requirement that the supplier of a spa be licensed, Respondent could not contract for the installation of the spa, even if he intended to have a properly licensed subcontractor actually perform the installation, under the scope of its Class C-21 license. Unlike the installation of an above-ground spa, which is prefabricated by the manufacturer with all electrical and plumbing components, the installation of Complainant’s spa by Respondent entailed taking a manufactured spa shell and Respondent outfitting it with the necessary electrical and plumbing components in the ground. Respondent’s Class C-21 license does not permit it to perform such an installation. 8. The weight of credible and reliable evidence of record supports a finding that Complainant did not receive the spa she believed she was selecting as presented to her by Respondent. Although there are discrepancies between the advertised product specifications in the brochure and the spa specifications drafted by Respondent in the written agreement, it is determined that Complainant had a reasonable expectation that the spa she selected from the advertisement given to her by Respondent would be consistent with the specifications drafted in the agreement by Respondent, whose experience as a licensed contractor was relied upon by Complainant even though, and unknown to her, Respondent was contracting outside the scope of its license. Respondent’s claim that Complainant was only selecting the model 1010 spa shell is unpersuasive. However, it is further determined that Complainant had a responsibility to review the contents of the written agreement prior to executing it.

9. Respondent is deemed to have violated local building codes by failing to obtain a required building permit from the City of Tempe prior to commencing work on this project. It is standard practice for City of Tempe building inspectors not to inspect prefabricated spas with an IAMPO number prior to installation. The city inspectors inspect a job after the spa is completed for compliance with local electrical codes. Respondent eventually obtained the necessary permit. 10. As a result of Complainant’s filed complaint, the Registrar’s assigned agency inspector performed a jobsite inspection of Respondent’s workmanship on August 4, 1997. At that inspection the Registrar’s inspector advised Respondent’s president and qualifying party that Respondent could not install Complainant’s spa under its Class C-21 license. The spa was not operational at that time. The inspection further revealed the following additional areas of deficient workmanship: landscape rock still needed to be properly spread; plants were not planted in the ground; the irrigation system was not operational; and the sod had not been properly installed at joints. 11. During the jobsite inspection the bottom of the in-ground spa shell was drained of mortar and water. A blister was discovered in the bottom of the spas. Respondent is deemed responsible for causing the defect to be remedied. 12. As a result of the jobsite inspection, the Registrar of Contractors issued a Corrective Work Order dated August 4, 1998, directing Respondent to timely undertake the following remedial actions: complete the landscaping of Complainant’s yard and cause a properly licensed contractor to complete the installation of the spa. 13. It is determined that Respondent failed to timely comply with the Registrar’s written directive to complete the landscaping. However, there is evidence of record to establish that the landscaping work was eventually completed by Respondent to minimum workmanship standards. 14. Respondent is deemed to have failed to timely comply with the Registrar’s written directive to cause a properly licensed contractor to complete the installation of the spa. Although the spa is now operational, there is insufficient evidence to support a finding that the completion of the installation was performed by a properly licensed contractor. Since the installation of the spa involved plumbing and electrical work, Respondent’s failure to establish that the installation was completed by a properly licensed contractor creates a safety issue. 15. Respondent belatedly furnished Complainant with a copy of a limited warranty for portable spas manufactured by DiamondBack Spas. That warranty provides, among other things, that Arizona Pacific Spas, whose relationship to DiamondBack Spas is not explained, gives purchasers a ten year structure warranty, a two year surface and plumbing warranty and a two year component warranty. It is unclear if any claim by Complainant would be honored by these warranties other than the spa shell. 16. Respondent’s contracting beyond the scope of its Class C-21 license, its above described deficient workmanship, its failure to obtain a required building permit prior to commencing work on the project, its failure to timely comply with the Registrar’s written directive, its substantial and material deviation from advertised product specifications and the unreasonable length of time it took Respondent to complete the project are deemed wrongful acts which have substantially injured Complainant. 17. There is credible evidence of record to establish that Respondent has installed spas on a regular basis for an extended period of time beyond the scope of its Class C-21 license and without possessing the required contracting licensing. 18. The Respondent has applied to the Registrar of Contractors for the issuance of a Class B-10 license to permit it to construct and repair hot tubs and spas. The Registrar of Contractors should review Respondent’s out of scope contracting on this project when considering the issuance of any Class B-10 license to Respondent, or contemplating any disciplinary action against any such license if already issued.

CONCLUSIONS OF LAW

1. The evidence of record is adequate to establish that Respondent violated the provisions of A.R.S. ( 32-1154 (A) (2), (3), (7), (17), (23) and (3); namely Rule R4-9-108. 2. The Registrar of Contractors has the authority, pursuant to A.R.S. ( 32-1154 (D), to impose a civil penalty up to $500.00 on a contractor for each violation of A.R.S. ( 32-1154 (A) (23). The Registrar of Contractors should exercise a significant portion of that authority in this matter.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class C- license be revoked on the effective date of the Order entered in this matter.

It is further recommended that if Respondent, at its sole cost and expense, causes a properly licensed contractor to inspect the installed spa, to remove any and all portions of the spa installation which do not meet minimum workmanship standards, to install any and all products and features required to bring the spa within minimum workmanship stands, and Respondent submits to the Registrar of Contractors written proof of compliance, on or before the effective date of the Order entered in this matter, then the above-provided license revocation shall not take place, but instead that Respondent’s Class C-21 license shall be placed on active suspension for a period of 7 days followed immediately by a period of disciplinary probation for 120 days. This alternative penalty shall commence, if at all, on the effective date of the Order entered in this matter.

It is further recommended, if the alternative penalty is applicable and in addition to the above-provided alternative disciplinary penalties, if any, that Respondent pay the sum of $350.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. ( 32-1154 (D). The failure by Respondent to pay the entire amount of this civil penalty on or before 30 days following the effective date of the Order entered in this matter shall result in the automatic revocation of Respondent’s Class C-21 contractor’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. ( 32-1101 (A) (5), unless payment of any outstanding prior civil penalty is tendered.

It is further recommended, if the alternative penalty is applicable and in addition to the above-provided alternative disciplinary penalties, that any restoration of Respondent’s rights to resume contracting, whether or not probationary, shall be subject to a condition that Respondent first post an additional surety bond, cash deposit or alternative deposit for a period of 24 months, including future renewal periods, in the amount of $1,000.00, such bond or deposit to be in addition to the required surety bond, cash deposit or recovery fund participation set forth in A.R.S. (( 32- 1152 and 32-1152.01. Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional 2 year period following the above-provided 24 month period and only if no claims are then pending.

Done this day, February 17, 1998.

______________________________________ BRIAN BRENDAN TULLY Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 1998, to:

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

ATTN: Joyce Armijo

By ___________________________

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