ALJDEC

98F-3269-ROC · Registrar of Contractors · 1999-03-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 9, 1999 APPEARANCES: Barbara DeBerry, Complainant, in her own behalf Andy Wolfe, president, on behalf of the corporate Respondent ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________

Findings Of Fact The Complainant’s home in Phoenix, Arizona, a rental at the time, burned on January 1, 1997. The fire damaged areas were the garage, dining room and part of the living room. Water damaged areas were the bathrooms and the kitchen. The Complainant resides in Somerton, Arizona which is in Yuma County. On or about January 2, 1997, the Complainant entered an agreement with Property Adjustments, LTD. (PAL), whereby PAL would process the insurance claim, hire a contractor and oversee the repair of the home, for 10% of the insurance proceeds. On February 13, 1997, the Complainant and Respondent entered an agreement for the repair of fire and water damage to the home. By written agreement, the final cost of repair had not been determined but said cost would be the same as the estimate to the insurance company. According to the Complainant, the parties had a verbal understanding that the cost of repair would be in the $25,000.00 range and any insurance proceeds in excess of that amount would be split between the Complainant and Respondent. The Complainant testified she did not know the amount which would be paid out by insurance. The Complainant asserts she requested a contract in writing but was put off by the Respondent and was never given a written contract. Nonetheless, the Complainant paid the Respondent even without a written contract. An initial payment of $15,000.00 was made on March 28, 1997. Ultimately, the insurance company, Allstate, paid nearly $54,000.00 on this loss. A small portion was for personal property, loss of rents and clean out. The Respondent began work on the home in late March or early April 1997, after the property had been “red tagged” by the City of Phoenix. The work was originally to take six to eight weeks but was not finished until the middle of August, 1997. The Complainant had paid the Respondent $25,000.00 through July 1, 1997. By invoice dated July 28, 1997, the Respondent submitted a bill for the total of $47,387.10 which allowed for credit for some tile and the non- installation of blinds. This left an amount of $22,387.10 owing, according to the Respondent. The Complainant and Respondent agreed to a settlement of $18,700.00 of which $17,500.00 was paid by the Complainant with two money orders on August 13, 1997, and the remaining $1,200.00 was paid by check at $100.00 a month through August of 1998. In September, 1997, the Complainant’s daughter moved into the home. A leak was noted in the ceiling at the exhaust vent and the Respondent corrected this condition. Some vinyl tile was lifting in the bathroom and kitchen and some other problems were noted. The complaint was filed with the Registrar of Contractors (Registrar) on June 12, 1998. On July 17, 1998, Inspector Phil Coscia (Coscia) went to the home to perform an inspection. The Respondent was not present because he had not received the notification. When Coscia was doing the inspection, the Complainant pointed out numerous asserted problems which had not been identified in the original complaint. Coscia requested the Complainant to submit these additional problems as an addendum to the complaint. On August 24, 1998, Coscia performed another inspection. This time the Respondent as well as the Complainant was present. On September 23, 1998, Coscia issued a Corrective Work Order (CWO). 20 items were listed for corrective work, 15 other items were found not to require corrective work. As of the hearing, all items had been corrected except the kitchen cabinets over the stove which the Complainant asserts should have been 36 inches in height and gone to the ceiling. All other cabinets in the kitchen are according to this plan except the cabinets over the stove. The cabinets over the stove were only 24 inches in height but went to the ceiling. At this height, the Complainant who is five foot three had a difficult time reaching the bottom shelves of the cabinets. The evidence established that for safety, the cabinets were to be at least 30 inches from the top of the stove which does not have a hood or similar cover. The cabinets were originally installed 34 inches above the top of the stove. A 36 inch cabinet would have come within 24 inches of the stove top. The day prior to the hearing the Respondent moved the cabinets down from the ceiling to within 24 inches of the top of the stove. The Complainant agreed to purchase and install a hood or stove cover to comply with safety provisions. Although the Complainant still preferred the 36 inch high cabinets above the stove, she stated she would accept the cabinets as currently placed. Upon moving the cabinets down from the ceiling, a small discolored area is noted where the leak near the exhaust fan did some minor ceiling damage. The Respondent would be advised to address this minor problem, although technically it is newly discovered and not part of the complaint. The Complainant also testified that the Respondent put the thermostat for the air conditioning on the wrong side of the hall wall. This brought the thermostat to0 near the water heater resulting in incorrect temperature readings and the air conditioning going on at the wrong time. The Complainant moved the thermostat back to the other wall but no cost for this change was presented in evidence. Conclusions Of Law The violations alleged in the Citation and Complaint concern A.R.S. §32-1154(A)(3), violation of any rule specifically A.A.C. R4-9-108 relating to workmanship, (A)(7), wrongful or fraudulent conduct, and (A)(23), failure to take appropriate corrective action. The evidence shows all items on the CWO have been satisfactorily corrected and there is no violation of A.R.S. §32-1154(A)(23). Under the facts of this case, upon satisfactory corrective work having been accomplished, there is no apparent purpose in determining whether there has been a workmanship violation. The only matter remaining was the Complainant’s claim that the Respondent failed to perform according to the provisions of the asserted oral contract. The problems with the Complainant’s position are multifold. The written terms of the contract do not reflect the asserted verbal agreement between the parties. The terms of the asserted agreement could be construed as potential fraud if the insurance company paid out $25,000.00 more than was required to bring the home to its pre-fire condition and the parties with knowledge of any overcharge or improper estimate having been submitted to the insurer agreed to split such amounts not properly payable for repairs. Finally, there was no evidence that the cost of the work done by the Respondent was excessive or otherwise inappropriate. The Complainant’s actions are somewhat inconsistent. She testified she tried to get the terms of the contract (specifically cost terms) from the Respondent in writing as early as February 13, 1997. She spoke with the Respondent again at the end of February and in mid-March, 1997. There was ample opportunity to demand a written contract or cancel the rather flimsy contract which had been entered into by the parties. The Complainant did neither but on March 28, 1997 wrote the first check to the Respondent in the amount of $15,000.00. This action makes little sense in any case but even less in light of the Complainant’s testimony that she had some prior business experience in the bar and grocery business. The fact that the Complainant paid exactly $25,000.00 until the final invoice from the Respondent lends some credence to her claim that she anticipated paying only that amount to the Respondent. However, if the Complainant was secure in the correctness of her position she would not have readily settled the case with the Respondent by paying the additional $18,700.00. This additional amount could have provided a means for a legal defense if the Respondent was not entitled to that amount for the work which was done. As part of this conclusion, it is noted that the Respondent‘s failure to provide a more detailed written contract to the Complainant is a poor, and possibly suspect business practice in light of the Complainant’s allegations. In any event, based on the evidence, the Complainant has not proven that the Respondent engaged in fraud or is responsible for wrongful acts resulting in substantial injury. Recommended Order In view of the foregoing, it is recommended that the Citation and Complaint upon which it is based be dismissed. Done this day, March 10, 1999.

_________________________________ ALLEN REED Administrative Law Judge

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

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

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

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826