ALJDEC

98F-120-ROC · Registrar of Contractors · 1998-06-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 4, 1998 APPEARANCES: Plaintiff appeared at the hearing along with her husband, Allan Rosenblum (“Allan”). Defendant appeared through its president, Greg Gadek. The Contractors’ Recovery Fund was represented by Assistant Attorney General, Terrie Zenoff. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

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. At the outset of the scheduled hearing, this tribunal dealt with the issue of whether or not Allan could properly present Plaintiff’s case on the instant Contractors’ Recovery Fund claim. Allan’s name does not appear on the caption of the instant case, nor does his name appear on the title for the property in question. It was shown that Allan is an attorney (not licensed in Arizona), was married to Plaintiff at the time that Plaintiff and he entered into the contract with Defendant for construction of their custom home (his name appears on the construction contract and he signed as co-buyer of the home), and he lives with Complainant in the home. Under all of the salient circumstances presented herein, notwithstanding the fact that, for whatever reason, Allan’s name does not appear on the title to the home, he was shown to have at least a beneficial and/or community property interest in the property and therefore, meets the spirit and intent of the statutory requirement for one who may be eligible for a payout from the Contractors’ Recovery Fund. Moreover, this Tribunal could find no harm in allowing an attorney husband to represent his wife on a claim upon which he has such a beneficial and/or community property interest, despite the fact that he may not be licensed as an attorney in the State of Arizona. Thus, Allan was allowed to present Plaintiff’s claim at the instant hearing. 2. Defendant's contracting license has been previously revoked by final Order of the Registrar of Contractors. Such revocation is determined to render this Defendant unable to remedy the violation of the State's contracting laws which gave rise to the instant claim for damages. 3. The Registrar of Contractors has received advance notification of the existence and amount of the above named Plaintiff’s claim for an administrative payout from the Contractors' Recovery Fund. 4. This hearing was convened following Plaintiff’s express request therefor, subsequent to refusal of the Contractors’ Recovery Fund to pay the full amount claimed by Plaintiff. 5. Plaintiff seeks to recover the sum of $20,000.00 from the fund. 6. Evidence of record demonstrated that Defendant completed new custom home construction for Plaintiff. The applicable contract between the parties was in excess of $500,000.00. Plaintiff alleges certain deficiencies in the work and/or materials provided by Defendant and same are discussed in the findings below. 7. Although Plaintiff filed a complaint with the Registrar of Contractors regarding the alleged deficiencies in the construction of her new home, no hearing was ever held and the claim was closed due to the fact that Defendant had been previously revoked on another case filed with the Registrar of Contractors. However, her case was not closed before the Registrar had an opportunity to issue a Corrective Work Order requiring Respondent to accomplish specified remedial work within a stated period of time. 8. All of the parties stipulated to the existence of the following construction deficiencies in Plaintiff’s home: a. Drawers in the customized master bedroom closet area fail to operate properly, have sandpaper marks on the drawer faces, screw penetrations on the door faces, and the closet rods and shelves are not far enough apart to allow clothes to hang freely. In addition, the closet doors are out of proper alignment. b. There are cracks on the front exterior columns. c. The perimeter block wall has a stucco application on all sides. The block is telegraphing through specified sections of the stucco finish and there are cracks in the stucco that need repair. d. Garage man-door threshold reveals water damage. e. Mist system on rear patio is totally enclosed except for the area where the mist heads protrude. Some of the heads have retracted into the recessed area and, as a direct result thereof, are currently not easily serviceable and/or operational. f. There is a small gap in the granite stove back-splash in the area wherein said back-splash meets the bottom of the stove vent hood. g. There are specified paint deficiencies in the interior of the home such as paint holidays and nail pops. The affected areas include the kitchen, breakfast room, baseboards, and casings, along with all nail and screw pops areas. h. A number of doors in the home require minor adjustment. i. Air-conditioning air flow into the study needs to be increased, in order to properly cool said area of the home. In this regard a scoop needs to be installed in the duct work. j. There are specified stains on the rear patio slab. 9. Although Plaintiff submitted bids for repair of her home which range in price from a low of $28, 379.00 to a high of $32, 950.00, the weight of the credible evidence of record was sufficient to support a finding that said bids were all excessive and, in many cases, called for either unnecessary replacement work or more extensive repairs than required by the normal minimum industry standards applied by the Registrar of Contractors when determining alleged construction deficiencies. In this regard the following determinations were made regarding the reasonable cost needed to effectuate an appropriate repair procedure on the above-described stipulated deficiencies: a. Evidence of record was sufficient to support a finding that despite the fact that Plaintiff resides in a 1/2 million dollar home, it was shown that she merely contracted for a very inexpensive drawer system in the customization of the master-bedroom closet. The bids she submitted to the fund require complete replacement with a “high-end” drawer system. Plaintiff failed to sustain the requisite burden of proof necessary to establish any entitlement to a complete replacement of the drawers. It was shown that the existing drawers and shelving could be repaired. The weight of the evidence of record supports a finding that no greater than $1,700.00 should be allocated for this repair, including the closet door adjustment. b. It is adjudicated and determined that a sum no greater than $3,600.00 should be allocated for the repair and/or repainting of the perimeter block wall and the stucco columns. c. The sum of $1,100.00 was shown to be reasonable for all interior drywall repairs and/or re-painting. d. Although Plaintiff desires a complete new kitchen stove back- splash in order to cover the entire area between the stove and the vent hood, it was shown that the gap in question is extremely minor and that it is common in the industry to insert a trim piece on top of such a back- splash in order to finish off any gaps that may be visible. Moreover, evidence of record demonstrated that Plaintiff and Defendant apparently agreed to such a trim procedure at the original jobsite inspection that resulted in the issuance of the above-described Agency Corrective Work Order. Thus, the weight of the evidence of record was sufficient to support a finding that the sum of no greater than $400.00 should be applied for this repair. e. The weight of the evidence presented supports a finding that the sum of no greater than $500.00 is adequate to repair the mist system. f. $350.00 was found to be a reasonable sum to install the scoop into the heating/air-conditioning duct work for the study. g. The sum of no greater than $200.00 was shown to be adequate to repair the patio slab stains. h. It is adjudicated and determined that a sum no greater than $150.00 should be adequate to repair the garage man-door threshold and prevent water from continuing to penetrate said area. 10. Evidence of record was sufficient to support a finding that Plaintiff was entitled to receive a special extended warranty for her swimming pool, as part of the applicable construction contract for her home. Apparently, due to the fact that Defendant failed to pay the pool subcontractor in full for construction of the swimming pool, the pool contractor refuses to provide Plaintiff with said extended warranty unless she pays $3,000.00 for same. The loss of the extended warranty, which should have been provided pursuant to contact specification, is determined to constitute an “actual damage” to Plaintiff that should be covered in any payout from the Contractors’ Recovery Fund. 11. Plaintiff has already expended the sum of $475.00 to complete a repair to a kitchen vent hood ductwork which was not installed properly by Defendant and thus, failed to operate as a venting system. This repair cost, which also included a necessary cabinet modification, was not shown to be unreasonable. 12. Evidence of record was inadequate to support any finding that there was cracking in the stucco exterior of the home, other than at the aforementioned columns, that was beyond minimum industry standards for acceptable workmanship. Thus, Plaintiff failed to sustain the requisite burden of proof necessary to establish entitlement to stucco repairs and a complete re-painting of the exterior of her home. 13. The record presented herein demonstrated that Plaintiff contracted directly with a landscape contractor for the landscape installation in her rear yard. Although Plaintiff contends that she currently has a standing water problem in the rear yard of her property, the instant record failed to adequately demonstrate that there was a drainage problem in Plaintiff’s rear yard attributable to any work performed by Defendant. Thus, Plaintiff failed to sustain the requisite burden of proof on this issue necessary to justify any payout from the Contractors’ Recovery Fund. 14. All miscellaneous damages claimed by Plaintiff were not supported by any competent and credible evidence necessary to justify a payout from the Contractors’ Recovery Fund. 15. Evidence of record showed that the sum of $750.00 is still held in the escrow account from the closing on this home for retention purposes, until such time as Defendant accomplished any needed punch-list repairs. Plaintiff requested that this Tribunal order the escrow company to release said funds, in light of the fact that Defendant has failed to make the necessary repairs to the home. 16. The Registrar of Contractors, acting through an administrative license disciplinary hearing, is the inappropriate forum to order a private escrow company to do anything and thus, this Tribunal refused to entertain Plaintiff’s request. Nevertheless, it is clear that under all of the facts and circumstances of the instant case that Plaintiff is entitled to said monies and moreover, Defendant agreed that it would consent to a release of said funds to Plaintiff as long as any award from the fund considers the fact that Defendant was paid $750.00 less than the full contract sum. Accordingly, the recommendation for an award from the Contractors’ Recovery Fund set forth herein shall reflect a deduction for said $750.00 which was not paid to Defendant at the close of escrow on Plaintiff’s home. 17. Based on the foregoing findings and with due consideration for the aforementioned $750 deduct, it is adjudicated and determined that Plaintiff should be awarded a payout from the Contractors’ Recovery Fund in an amount no greater than $10,725.00.

CONCLUSIONS OF LAW

1. Plaintiff is an injured person as that term is defined in A.R.S. §32-1131 (3). 2. Under the facts and circumstances of this case, the Registrar of Contractors is empowered to determine and award proper payment to Plaintiffs from the Contractors' Recovery Fund pursuant to A.R.S. § 32- 1154(E). 3. The within record supports an award to Plaintiffs in the amount of $10,725.00, all of which shall be appropriately chargeable against Defendant and/or persons on the license as set forth in A.R.S. § 32- 1139(B).

RECOMMENDED ORDER

In view of the foregoing, it is recommended on the effective date of this Order the Registrar of Contractors shall commence and finalize payment procedures from the Contractors' Recovery Fund to Plaintiff in the amount of $10,725.00.

Done this day, June 9, 1998.

_______________________________ MARK A. SILVER Administrative Law Judge

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

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

By _______________________________ -----------------------

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