ALJDEC

98F-3201-ROC · Registrar of Contractors · 1999-01-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 13, 1999 APPEARANCES: Doug Heinrich for the Complainant; Bill Wilson for the Respondent ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________

FINDINGS OF FACT It is undisputed that Complainant is a real estate developer that hired a general contractor to construct two lift stations on Lots 277 and 278 of Sincuidados to remove the sewage from those homes. Subsequent to the construction of the homes, Complainant decided to upgrade the lift stations as it determined that the adequacy of the lift stations, was a factor affecting the sale of the homes. In July, 1997, Doug Heinrich, the managing member of Complainant, contacted Bill Wilson, Respondent’s vice-president, concerning upgrading the above- mentioned lift stations. There was a discussion concerning different lift systems and it was mutually determined as to the cost and method of upgrading the lift stations. Complainant arranged for the custom manufacture of the fiberglass tanks to be used at the lift stations in question. Complainant and Respondent entered into a written contract for upgrading the lift station at Lot 278 for $3,124.00 and upgrading the lift station at Lot 277 for $2,350.00. It is uncontroverted that Respondent performed the work contracted for by Complainant with respect to Lots 277 and 278. Lot 278 was sold and escrow closed on January 15, 1998, and the purchasers became temporary residents of Arizona. In May, 1998, the homeowners of Lot 278 spent a week at their residence and noticed the lid of the vault of the lift station was raised. Upon opening the lid, the homeowners observed that the fiberglass tank inside had floated to the surface breaking all of the plumbing lines. The above-mentioned homeowners contacted Mr. Heinrich, who then contacted Respondent about the lift station situation at Lot 278. Upon viewing the lift station, Respondent informed Complainant that the lift station’s failure to function was not Respondent’s responsibility because the cause of such failure was due to groundwater raising the fiberglass tank and was not related to Respondent’s installation of the upgraded system. Although Complainant believed that the failure of the lift station at Lot 278 should be covered under warranty by Respondent, Complainant wanted to resolve the situation quickly. Therefore, Complainant paid Respondent an additional $1,000.00 to fix the lift station. Prior to agreeing to fix the lift station, Respondent informed Complainant that the only way it could be properly fixed was to have the groundwater situation resolved. Respondent urged Complainant to obtain engineering opinions as to how to resolve that situation prior to repairing the lift station. The evidence of record established that Complainant insisted on Respondent repairing the lift station with the understanding that it would likely fail again until the groundwater problem was resolved. Complainant undertook that risk because it believed that there was no groundwater problem but that the lift station’s failure was due to Respondent’s installation of the upgraded system that would later be addressed with the Registrar of Contractors. It rained the evening of the date when Respondent performed the $1,000.00 repair work at the lift station for Lot 278. The next morning, Mr. Wilson received a telephone call from Mr. Heinrich informing him that the fiberglass tank had again floated to the top of the vault and broken the plumbing lines. Complainant asserted that such work was under warranty and that Respondent was responsible for repairing the lift station . Respondent visited Lot 278 and observed that the tank in the lift station had again floated to the top of the vault and broken the plumbing lines. Respondent maintained that it was not responsible for fixing the lift station under warranty as the problem was caused by groundwater and Complainant had assumed that risk. Complainant requested that Respondent bolt down the fiberglass tank in the above-mentioned lift station. Respondent refused to perform that work stating that it would not be a proper repair and not comply with the recommendations of the manufacturer of the tank. During May, 1998, when Respondent visited Lot 278 to inspect the lift station’s second failure at Lot 278, Respondent and Complainant inspected the lift station at Lot 277 and observed it was malfunctioning. It was determined that the system’s failure was due to a defective 3 amp circuit breaker and that there was no groundwater problem. Respondent installed an in-line fuse as a temporary repair and represented that it would order a 3 amp circuit breaker and replace the defective part with a new part obtained from the manufacturer. It is undisputed that Respondent and Complainant arranged for Respondent to replace the 3 amp circuit breaker at Lot 277 at an unspecified date in the future when it would perform further work with respect to Lot 278. Subsequently, Complainant and Respondent did not contract for such further work and the business relationship of the parties deteriorated. Respondent ordered the 3 amp circuit breaker from the manufacturer and notified Complainant that it had received the part. However, Respondent made no attempt to replace the defective part with the new part it received from the manufacturer. During the hearing, Mr. Wilson admitted that the 3 amp circuit breaker should have been replaced and represented that Respondent would perform that service within a few days of the hearing. Respondent bolted down the fiberglass tank with brackets in the lift station at Lot 277 upon Mr. Heinrich’s request. Respondent distinguished such work with its refusal to perform the same work to the lift station at Lot 278 on the basis that there was no groundwater issue involved in the lift station at Lot 277. While Mr. Wilson informed Mr. Heinrich that the Respondent would not perform any further work with respect to Lot 278 until Complainant resolved the groundwater problem, Mr. Heinrich contacted Paul F. Miller, a co-owner of Respondent, and requested that Respondent perform further repair work on Lot 278. Ultimately, Mr. Miller offered to perform such work for an additional $1,500.00 provided Complainant assumed the risk as to the groundwater issue. While Complainant did eventually agree to that, in the interim, Mr. Wilson learned of Mr. Miller’s offer and informed Complainant once again that Respondent would not perform any further work on that lot until the groundwater problem is resolved. Mr. Heinrich testified that he attempted to obtain engineering assistance without success. Mr. Heinrich further testified that municipalities do not require engineering for the installation or upgrading of lift stations. Because Complainant had only a few days left to repair the lift station at Lot 278 before the return of the homeowners and Respondent refused to perform any further work at Lot 278, Complainant hired a licensed contractor to effectuate the repairs to the lift station. Complainant paid that contractor $825.00 plus an additional $50.00 for missing parts for such repair. It is undisputed that when Respondent viewed the lift station after the repair of the upgraded system, Respondent and Complainant placed all of the parts, except the tank, in the garage of the residence at Lot 278. The tank is not an item that Complainant had to replace. Other than the homeowners, only Complainant had access to the garage. Complainant claims that Respondent is responsible for certain missing parts to the lift station The contractor hired by Complainant to effectuate the repairs of the lift station at Lot 278 reinstalled the plumbing lines, reinstalled the electrical and installed brackets to bolt the fiberglass tank down. It is undisputed that since such repairs, the lift station has functioned properly and there is no evidence of any groundwater problem. It is undisputed that during the time frame when Respondent performed work for Complainant, at times, there were heavy rains due to El Nino and the lift stations are located next to a wash area. Respondent contended that ground water from the wash area seeped into the lift station at Lot 278. Complainant claims entitlement to restitution from Respondent in the amount of $1,000.00 for the first repair after the upgrading of the lift stations and for the $875.00 it paid to a licensed contractor to repair the lift station at Lot 278. Although Complainant contended that after Respondent upgraded the lift station at Lot 278 that it did not function properly, the more credible evidence presented through the testimony of Bill Wilson and Arturo Marquez, who performed the upgrade and repairs, was that the system functioned properly, the system was properly tested after the upgrade and that its failure was due to groundwater problems. The evidence of record established that the parties did not contemplate groundwater problems and Complainant did not present credible evidence that it was relying on Respondent to assess the appropriateness of the lift station site and surrounding conditions when it hired Respondent to upgrade the lift station. CONCLUSIONS OF LAW In the instant case, it was not shown that Respondent knew or should have known about the potential groundwater conditions in the area wherein it performed its lift station work. Accordingly, Respondent should not be held responsible for damage to the lift stations that is attributable to an unknown groundwater condition. Therefore, the evidence of record establishes a limited finding that, with respect to the lift station at Lot 277, Respondent violated the provisions of A.R.S. §32-1154 (A) (7) and (3), namely, A.A.C. R4-9-108. RECOMMENDED ORDER Based on the above, commencing on the effective date of the order entered in this matter, Respondent’s Class B-04 license shall be suspended until the Registrar of Contractors receives written proof that Respondent has appropriately replaced the defective 3 amp circuit breaker at Lot 277. . . . . . .

It is further recommended that if Respondent accomplishes the above- described corrective work on or before the effective date of the Order entered in this matter, the above-mentioned license suspension shall not take place. Done this day, January 27, 1999.

_________________________________ LEWIS D. KOWAL Administrative Law Judge

Original transmitted by mail this ____ day of January, 1999, to:

Michael P. Goldwater, Director Registrar of Contractors ATTN: Joyce Armijo 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