ALJDEC

98F-182-ROC · Registrar of Contractors · 1998-06-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

| |(| | |RUSS AND GAIL DOUGHTY, |(|Case Nos.: 98/182, 98/185 | | |(| | |Plaintiffs, |(|Docket Nos.: 98F-182-ROC | |vs. |(|98F-185-ROC | | |(| | |License No. 100520, Class C-42 |(| | |of: |(| | |Michael Ray Allbright, d.b.a. |(|Recommended | |ARIZONA COUNTRY ROOFING (INDIV), |(|Decision and Order | |and |(| | |License No. 093687, Class B- of |(| | |J G Construction Co., Inc., |(| | |d.b.a. |(| | |GERLACH (CORP), |(| | | |(| | |Defendants. |(| | | |(| | | | | |

HEARING: Thursday, June 5, 1998 at 9:30 a.m. Appearances: The Plaintiff, Mr. Russell E. Doughty, appeared in his own behalf. The Defendant J G Corporation, J. W. Gerlach, was represented by Mr. Spencer A. Smith, Attorney-at-Law, DeConcini, McDonald, Yetwin & Lacy, P.C., 2525 East Broadway Blvd., Suite 200, Tucson, AZ 85716-5300. The Defendant Arizona Country Roofing, Michael Ray Allbright, failed to appear or be represented. Administrative Law Judge: Grant Winston.

This matter was brought on for administrative hearing on June 5, 1998. The hearing was noticed to convene at 9:00 a.m. of the date scheduled, but in waiting for the appearance of Defendant Arizona Country Roofing the hearing was delayed until 9:00 a.m. Testimony was taken and other evidence admitted and, based on the record taken as a whole, the following Findings of Fact, Conclusions of Law, and Recommended Order are made.

FINDINGS OF FACTS

1. The Defendants in these two cases, consolidated by order of the Registrar of Contractors on February 19, 1998, were, during all times material to the facts giving rise to the administrative complaints, contractors licensed by and doing business in the State of Arizona. Defendant Arizona Country Roofing held Class C-42 License (Roofing) Number 100520, and Defendant Gerlach held Class B License Number 093687. Subsequent to those times both of these licenses were revoked by the Registrar of Contractors for incidents unrelated to the instant actions, and they remain in revoked status to date.

2. The Plaintiffs, Russ and Gail Doughty, a married couple, purchased their current Tucson, Arizona residence in October of 1996, from a married couple of the surname Addey. The Addeys were in the process of purchasing and making additions to another piece of real estate at the same time. They had been paying Defendant Gerlach for work on the property they were purchasing. Gerlach’s subcontractors did some minor work at the then-current Addey residence, but declined to do, and did not do, any roofing work there. Defendant Gerlach and the Addeys, besides having their professional relationship, were long-time friends as well.

3. During the Doughtys’ purchasing process, before closing on the Addey property, the Addeys sought to have a new roof installed on the subject property. They approached Defendant James W. Gerlach in connection with this. They told Mr. Gerlach that they needed the new roof at once, but as a result of their having paid him the amount of money they already had for his work at the new property, they had not sufficient funds remaining to pay for the new roof on the house they were in the process of selling to the Doughtys. They requested that Mr. Gerlach favor them with a return of the sum of $2,200.00 from what amount he had already received from them in order that they could pay Defendant Arizona Country Roofing for installation of a new roof on their house so they could close the deal with the Doughtys. Once that deal was closed they would then be able to fully compensate Gerlach for the new project.

4. Mr. Gerlach, rather than draft a check in the amount of $2,200.00 to the order of the Addeys, drafted a check in that amount to the order of Arizona Country Roofing directly, for the installation of the new roof. As he explained in his letter to Arizona Country Roofing of October 10, 1996, Ms. Addey would be able to pay Arizona Country Roofing out of the escrow funds at closing time, but that Arizona Country Roofing needed payment at once. Mr. Gerlach continued to note in the letter that Ms. Addey had told him that if he, Mr. Gerlach, would go ahead and pay Arizona Country Roofing at that time, she would reimburse him at closing time. Mr. Gerlach, in an effort to protect the Addeys’ interest, also instructed Arizona Country Roofing in the letter to make sure that Ms. Addey was given a warranty on the new roof. Attached to the letter was the previously referenced check, check number 1280 in the amount of $2,200.00.

5. Arizona Country Roofing installed the roof and issued a Roof Warranty, not to the Addeys, but to J G Construction, care of Jim Gerlach. Mr. Gerlach naturally placed the Warranty in the hands of Ms. Addey. Other than making the check directly to Arizona Country Roofing and then receiving from Arizona Country Roofing the Warranty addressed to it as a result of the cover letter, J G Construction, Gerlach, or Mr. Gerlach had nothing to do with Arizona Country Roofing.

6. The Addeys, as previously agreed, did in fact reimburse J G. Construction $2,200.00 at closing, October 21, 1996, with check number 128 drafted in that amount.

7. The Doughtys’ purchase of the Addey property was consummated and the Doughtys took possession. Some months thereafter they noticed defects of the new roof that had been installed on the home by Defendant Arizona Country Roofing. Stipulated as fact by the parties at the hearing, and as proved by the evidence of record, the workmanship of the roof installed by Arizona Country Roofing was defective to the point that the roof required total replacement.

8. The Doughtys filed two complaints with the Registrar of Contractors as a result of the information appearing on the Roof Warranty. Reading the Roof Warranty of which they came into possession by virtue of purchasing the Addey home, they became of the opinion that in order to be sure they were naming the correct defendant it would be best for them to name Arizona Country roofing and J G Construction, and so they did. As found hereinabove, these two cases were consolidated.

9. Registrar of Contractors’ Inspector/Investigator Mr. Jim Morris, conducted a job-site inspection and issued two identical Corrective Work Orders on August 6, 1997, one to each of the Defendants herein, and both ordering replacement of the defective roof. It was assumed for the facts already found, supra, that Gerlach was the general contractor and Arizona Country Roofing the subcontractor for the job. Such was not the case.

10. Registrar of Contractors’ Inspector Mr. Bob Gibson investigated the Recovery Fund Claim filed by the Doughtys. The Doughtys had obtained three proposals for replacing the defective roof. C R Improvement Company proposed to replace the roof for $3,475.00 plus tax. Bob’s Custom Roofing, Inc., proposed to replace the roof for $2,995.00. Ralph Hays Roofing Co., Inc., proposed to do the same for $2,660.00, sales tax included.

11. Upon investigation, Inspector Gibson recommended that the Doughtys receive a payout from the Recovery Fund in the amount of the low bid, $2,660.00. He further recommended, in light of the fact of Co- Defendants, that the final order avoid double recovery. Plaintiff Doughty disagrees with Inspector Gibson’s recommendation, and seeks recovery in the amount of the highest bid, $3,475.00, plus tax. Defendant Gerlach’s position is that he should not be responsible for any amount, and that any recovery should be owing entirely to the fault of the Co-Defendant, Arizona Country Roofing. Alternatively, Gerlach contends that if it is at all liable the lowest bid should be the one recognized as the payout amount, and Gerlach should be responsible, at most, for only one half of that amount.

12. The evidence of record fails to prove that Gerlach was the general contractor for the roofing job in question. Gerlach was trying to do a good deed for a friend, and in doing so failed to calculate the appearance that his chosen method would create. That appearance resulted in Gerlach being named in this administrative complaint. However, the evidence in this case makes clear that Gerlach should not be considered a general contractor in this job, or otherwise to any degree be deemed responsible for the defective work of Arizona Country Roofing.

13. It appears from the evidence that the low proposal of Ralph Hays Roofing Co., Inc., is the most appropriate of the three proposals as a sum for a Recovery Fund Payout in this case.

Conclusions of Law

1. This hearing was held under authority of and pursuant to A.R.S. §§32- 1154.E., 32-1156, and 41-1092.

2. Plaintiffs are “Person[s] injured” within the meaning of A.R.S. §32- 1131.

3. Under the facts and circumstances of this case, the Registrar of Contractors is empowered to determine and award proper payment to the Plaintiffs from the Contractors’ Recovery Fund, pursuant to A.R.S. §32- 1154.E.

4. The record supports an award to the Plaintiffs in the sum of $2,660.00, all of which is appropriately chargeable against the Defendant Michael Ray Allbright, doing business as Arizona Country Roofing, and/or persons on License Number 100520, as set forth at A.R.S. §32-1139.B.

5. The administrative Complaint against Defendant J G Construction Co., Inc., doing business as Gerlach, should be dismissed with prejudice.

Recommended Order

In view of the foregoing it is hereby recommended that on the effective date of this Order the Registrar of Contractors shall commence and finalize payment procedures from the Contractors’ Recovery Fund to Plaintiffs in the amount of $2,660.00. for damages, all chargeable as set forth in the above Conclusions of

. . .

Law, and that this Complaint against Co-Defendant J G Construction Co., Inc., d.b.a. Gerlach, be dismissed with prejudice.

Dated this 8th day of June, 1998.

OFFICE OF ADMINISTRATIVE HEARINGS

_________________________________ Grant Winston Administrative Law Judge

Original mailed this day of June, 1998, to:

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

Transmitted by:

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