ALJDEC

99F-0204-ROC · Registrar of Contractors · 1999-03-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 30, 1999 at 9:00 a.m. APPEARANCES: Complainant appeared on his own behalf; Respondent appeared through its attorney, Hyung S. Choi, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The parties presented evidence and testimony and, following presentation of Complainant’s case-in-chief, the parties agreed to settle Complainant’s claim. Based upon the entire record of this matter and the Registrar of Contractors’ records concerning the parties and the witnesses who testified on their behalf, the administrative law judge makes the following Findings of Fact, Conclusions of Law and Recommended Order. FINDINGS OF FACT Background 1. The Registrar of Contractors issued License No. 107256, Class C-36 to Respondent, a corporation, on May 15, 1995. This action originally was brought on behalf of three Complainants: (1) M & S Environmentally Sensitive Homes, L.L.C. (“M & S”), a limited liability corporation, (2) Adrian Slater, and (3) the present Complainant, Michael L. Miller. M & S no longer is a viable company and Mr. Slater has moved to Mexico. The Registrar issued License No. 107432, Class B, to M and S Steel Builders, L.L.C., on May 24, 1995. Listed on M and S Steel Builders’ license are Mr. Slater, as qualifying party, “M & S Environmentally Sound, LLC,” as principal and dba, and Complainant, as principal and manager. On August 3, 1998, M and S Steel Builders’ license was suspended pursuant to the Registrar’s Order in Case No. 97-1555[1] and, on February 26, 1999, terminated retroactively to September 4, 1998, after the Registrar was informed that its limited liability company status had been canceled. Complainant testified at the hearing that he is a real estate appraiser who became a manager of M & S Environmentally Sensitive Homes, L.L.C. because he is interested in contracting. Complainant testified further that M & S as general contractor constructed a house for Complainant’s personal use and residence. Complainant was extremely involved in this construction, although the record is unclear in what capacity he was involved. On February 13, 1996, Respondent submitted a bid to Complainant to perform the stucco work on the house, including all exterior surfaces and a soffit and fascia on a large, flat-roofed patio that had been constructed in the back of the house. Subsequently, M & S or Complainant accepted the bid and Respondent completed this stucco work, including application of Senergy Finish Coat, a synthetic stucco, to the soffit and fascia on the patio on the back of the house. M & S had constructed the roof over the soffit and fascia on the back patio where Respondent applied synthetic Senergy stucco. After Respondent’s application, an unidentified party also constructed a second patio adjacent to the one to which Respondent had applied stucco. Shortly thereafter, when the synthetic stucco started coming off the soffit and fascia on the back patio, Complainant refused to pay Respondent. On February 3, 1997, Bob Crowley of Seneca, the local Senergy distributor, wrote a letter to Complainant at M & S, as follows:

At your request, Chris Hoffarth of Classic Systems and I inspected the Senergy applications at the above referenced project today. At the time of our inspections (10:00 am), your field superintendent Greg Goguen was onsite and accompanied us on our inspections.

I have listed my observations below:

1. An additional patio has been constructed on the site and is directly attached to the existing patio structure. Both Chris Hoffarth and I had not seen this addition before today. The new patio is clad in a system similar in appearance to Senergy, although the color does not match. Greg Goguen stated that the new patio had been added recently and that he did not know who the plastering contractor was.

2. The lack of roof to wall, roof to roof transition flashing and improper roof edge flashing has allowed water to penetrate into the patio roof structure.

3. Once inside the roof assembly, the water migrated to the lowest possible point, the patio roof fascia edge of the East elevation.

4. This water penetration has damaged the gypsum sheathing and joint treatment material causing the Senergy Finish Coat to delaminate.

5. The damaged area is limited to the patio roof fascia edge at the East elevation, south section only. All other areas are intact with no signs of deterioration or damage.

The lack of flashing and improper flashing on this project were discussed in our July 1996 jobsite meeting. In my August 14, 1996 letter to you, I recommended that you repair the improper roof edge flashing. Obviously this was not done nor were proper flashings incorporated into your new patio addition.

Also, please be advised that neither Seneca Architectural Products or [sic] Senergy Inc. has issued a warranty on the above referenced project . . . as you have withheld payment. Please refer to our September 16, 1996 letter to you.

I would suggest that you forward all communications to [Respondent] as your contract is with them and not Seneca Architectural Products. Respondent subsequently sued Complainant for failing to pay the contract price for the stucco work, $12,259, which lawsuit was designated Maricopa County Superior Court CV 97-03145. On March 10, 1997, Complainant made a complaint to the Registrar, designated Complaint No. 98-0671, that, among other things, Respondent “did not use #4 mesh on soffits & eaves, per manufacturer’s and [Complainant’s] request” and, because “stucco soffits misapplied after roof flashing applied[,] stucco falling off eaves & soffits.” [Emphasis added.] On or about April 4, 1997, Michael Twarog of JACHOL Construction sent a letter to Complainant at M & S, as follows:

IT IS MY PROFESSIONAL OPINION THAT THE PATIO EAVES AND POSTS WERE NOT PREPARED PROPERLY TO EXCEPT [sic] THE SYNTHETIC FINISH.

THE INSTALLER SHOULD HAVE USED AN ADHESIVE TYPE BASE COAT AND EMBEDED [sic] REINFORCING MESH BEFORE APPLICATION OF SYNTHETIC STUCCO.

ON THE SUBJECT OF SOFFITS THERE IS A SHORT LIST OF EXCEPTABLE [sic] SHEATHING SUBSTRATES FOR THIS SYNTHETIC APPLICATION. ATTACHED YOU WILL FIND THE LIST.

ME [sic] PROFESSIONAL OPINION IS THAT THE APPLICATOR FAILED TO USE THE CORRECT SHEATHING, DID NOT USE REINFORCING MESH THROUGHOUT THAT WOULD GIVE THE SURFACE IN QUESTION THE CONTINUITY AND STRENGTH TO RESIST CRACKING. THE PROPER REPAIR WOULD BE TO REMOVE THE SHEATHING AND START AS DETAILED ABOVE.

THE ORIGINAL APPLICATOR SHOULD BE ASKED TO REPAIR THIS. IN THE EVENT YOU NEED AN APPLICATOR OUR COST FOR THESE REPAIRS WOULD BE $3,850.

[Emphasis added.] Neither Mr. Twarog nor anyone else from JACHOL Construction testified at the hearing. The record does not contain any mention of Mr. Twarog’s or . . . . . . JACHOL’s qualifications to render the above opinions or to apply stucco to Complainant’s house.[2] On or about May 16, 1997, Robert E. Shackelford of Lawrence Roof Consultants sent Complainant a roof report on the “Monier Homestead,” which Complainant testified at the hearing was his house. Attached to the report were eleven photographs of the house’s tile roof illustrating five noted deficiencies. Mr. Shackelford took no photographs of the roof over the back patio and his only mention of such roof was that the “[t]orched, south flat roof is acceptable.” Neither Mr. Shackelford nor anyone from Lawrence Roof Consultants testified at the hearing and the record also does not contain any mention of their qualifications to render this opinion.[3] On September 16, 1997, the Registrar’s inspector Lewis King performed a jobsite inspection. Complainant represented himself to be the homeowner and informed Inspector King that he had been living in the house for two weeks before the inspection.[4] Both parties were hostile and vulgar at Inspector King’s jobsite inspection. Respondent stated that it had used mesh at the joints. Inspector King could not verify this without punching a hole in the stucco. Usually such intrusive investigation is performed with the understanding that the party whose position is not supported by what the hole reveals would be responsible for its repair. At Inspector King’s jobsite inspection, however, Complainant did not challenge Respondent’s statement and, instead, agreed that mesh had been used. Inspector King also noted drip edge flashing embedded in the stucco, which he felt could cause water to penetrate behind the stucco and cause the delamination Complainant complained about. Complainant told him that the flashing had been installed after Respondent had applied the stucco, while it was still soft. On December 1, 1997, Inspector King wrote a letter to the parties in Complaint No. 98-0671 that did not require Respondent to take any corrective action with respect to the stucco application on the soffit or fascia because “complainant and contractor agreed fiber mesh was used at joints of soffits,” “complainant stated roofer installed flashing while stucco was still setting or soft,” and “damage to east patio soffit appears to be from improperly installed roof flashing on patio roof.” Inspector King also did not require Respondent to take any corrective action with respect to the stucco application on the eaves because “stucco is not falling off eaves.” Complainant did not request a hearing and the Registrar subsequently closed Complaint No. 98-0671 in late 1997 or early 1998. At some point, the stucco was patched by Complainant himself or someone other than Respondent. The record does not show the identity of the person who patched the stucco or whether he or she possessed an appropriate license. Nothing was done to repair the roof. On or about January 6, 1998, Randall L. Donovan of Senergy, the manufacturer of the stucco system that had been applied to the soffit and fascia, wrote a letter to Joseph Seginski, Complainant’s friend and the owner of the house next door, where Respondent also had performed stucco work. The letter stated that “[i]n order for Senergy to issue its standard manufacturer’s warranty, the full system including EPS insulation, reinforcing mesh, base coat, and finish coat, must be used. Senergy offers a coatings-only warranty which was previously issued for your residence, for application which do [sic] not include the complete Senerflex Wall System.”[5] [Emphasis added.] On January 30, 1998, in Maricopa County Superior Court No. CV 97-03145, Arbitrator Anthony R. Lucia, Esq. denied M & S’s motion for summary judgment that was based on the factual allegation it did not contract with Respondent, granted M & S’ attorney’s motion to withdraw from representing it, and granted in part Respondent’s motion for sanctions against Complainant and M & S, ordering that, “[i]f [Complainant] fails to appear for deposition and/or fails to bring documents that have been requested, . . . the Arbitrator will grant a default in favor of [Respondent] and award to [Respondent] all relief requested in the complaint.” The record does not reveal whether, in Maricopa County Superior Court No. CV 97-03145, Complainant produced the requested documents, appeared for his deposition or, if he did, the nature of his testimony. On February 9, 1998, Complainant individually and Mr. Slater on behalf of M & S elected to settle Respondent’s civil breach-of-contract claim against them, agreeing to pay a total of $21,000, which represented the amount owed plus the attorney’s fees Respondent incurred in prosecuting that civil action. The amount owed was secured by a deed of trust on the house at issue in this action. The settlement agreement did not expressly bar future claims that Complainant might assert about the stucco work. At some point, Complainant obtained a report issued by the International Conference of Building Officials (“ICBO Report”), whose date is not legible, that includes among the materials required for installation of Senerflex and Semerthik wall systems reinforcing mesh. The report is not clear whether its requirements also apply categorically to Senergy synthetic stucco applied to soffits, fascia, or other protected or horizontal surfaces. At some point, Complainant also obtained an “Application Bulletin” issued by Dryvit and dated February 24, 1993, which provided that, for Dryvit Stucco applied to soffits, “Dryvit Standard™ Reinforcing Mesh shall be embedded in the base material.” The record does not contain evidence that the Senergy synthetic stucco applied to Complainant’s house is part of a Dryvit stucco system. At some point, Complainant and M & S reneged on the payment obligations they undertook in their agreement to settle Maricopa County Superior Court No. CV 97-3145. Respondent filed a second civil suit to foreclose its lien on the property at issue. The parties agreed that, at the time of the hearing in this matter, Complainant or M & S had paid Respondent all monies owed for the settlement and stucco work at issue. The Complaint at Issue On July 17, 1998, instead of reopening Complaint No. 98-0671, Complainant, M & S and Adrian Slater filed a second complaint to the Registrar, alleging that “stucco falling off soffits, major cracks at eves [sic] and soffits, roofing report indicates proper roof application/construction. This is second complaint – one previously dismissed by Lewis King – Inspector. However, cracking and peeling of stucco has reappeared.” On September 9, 1998, the Registrar’s inspector Robert Dragoon, who had been assigned to Inspector King’s former territory, conducted a jobsite inspection. The parties again displayed much hostility. Before the inspection, Complainant had removed a round section of stucco-coated drywall from the soffit, allowing Inspector Dragoon to see that the stucco had been applied over tape, not mesh. Respondent’s principal Chris Hoffarth told Inspector Dragoon at the jobsite that Respondent had not applied the tape; rather, the exterior drywall surface had been prepared for Respondent when it arrived at the jobsite. Complainant provided additional materials and information after the jobsite inspection, including the Dryvit Application Bulletin, referred to supra in Finding of Fact No. 20, and the JACHOL Construction report, referred to supra in Finding of Fact No. 11. Based on these materials, on October 8, 1998, the Registrar through Inspector Dragoon ordered Respondent to determine the cause of and correct by appropriate means damage to the stucco on the southeast patio fascia and soffit where delamination had occurred. On October 29, 1998, Mark Passerrelli, the president of T & M Enterprises, Inc., a licensed roofing contractor,[6] inspected the roof at the residence. Mr. Passerrelli took photographs of the roof and, on November 2, 1998, prepared a report of his inspection that concluded as follows: WHO EVER INSTALLED THE ROLLED ROOFING ON THE ABOVE MENTIONED PATIO DID AN INSUFFICIENT JOB. THE METAL EDGING DOES NOT COVER THE ENTIRE EDGE. THERE IS NO Z METAL OR SLIP SHEET BETWEEN WALL AND PATIO. THERE IS NEGATIVE DRAINAGE AT EDGES, SO THERE IS WATER PONDING. THERE IS SHRINKAGE AND THE EDGES ARE PULLING AWAY AT THE EDGE.

IT IS MY BEST OPINION THAT THE PROBLEM IS WITH THE ROOFING SYSTEM LEAKING AND GETTING THE FASCIA AND SOFFIT DAMAGE BY THE WATER, THEREFORE CAUSING THE SYNTHETIC FINISH TO BE DAMAGED.

THIS ROOF NEEDS TO BE PROPERLY REPAIRED BEFORE THE FASCIA AND SOFFIT CAN BE REPAIRED.

On November 9, 1998, based on this report and the earlier Seneca report implicating the defective roof in the stucco’s failure, described in Finding of Fact No. 8, supra, Respondent requested an administrative hearing. Inspector Dragoon also performed a prehearing inspection, which did not change his opinion that Respondent had applied stucco to an improperly prepared surface. Inspector Dragoon testified that he did not inspect the roof over the patio. He did see some evidence of water damage and deterioration of the drywall and stucco, but was unable to perform a satisfactory water test because he did not have access to a hose. He did pour a bucketful of water over the roof, which did not reveal any obvious leaks. Inspector Dragoon assumed that Respondent applied the patches on the stucco because Complainant did not tell him otherwise. Inspector Dragoon testified that, if Respondent did not apply the stucco patches that were visible on the soffit and fascia, Respondent was not responsible for the failure of the patches, even if it accepted the surface originally by applying stucco over drywall tape rather than mesh. Mr. Passerrelli testified at the hearing pursuant to a subpoena that Respondent had caused to be issued. Mr. Passerrelli testified regarding numerous deficiencies he saw in his October 29, 1998 inspection of the rolled roofing that M & S had installed on the patio, which deficiencies were well illustrated by photographs that were introduced into evidence. The rolled roofing had shrunk and pulled away from the patio wall, the corner edge of the flashing was uncovered, the metal edge of the flashing did not cover the edge of the roofing, and the rolled roofing evidenced rolls or speed bumps. All of these deficiencies would cause water ponding on the roof and water penetration through the drywall and stucco on the fascia and soffit. One of the photographs showed a large water stain on the soffit. Mark Bogart, a licensed plaster and stucco contractor,[7] also testified at the hearing pursuant to a subpoena that Respondent had caused to be issued. Mr. Bogart testified that he viewed all four exposures of the house and that most of the stucco work looked like a nice, high-quality job. Several different drywall systems were used on the house. On the back patio soffit and fascia area, Mr. Bogart testified he saw evidence of water running down numerous areas where flashing either had not been installed or had been installed improperly on the roof. Mr. Bogart testified that synthetic stucco is applied in protected areas, like the fascia and soffit, and is not designed to shed water. It is not contrary to applicable building codes or industry practice to apply synthetic stucco over drywall or drywall tape. In fact, Mr. Bogart applied Senergy synthetic stucco over drywall tape on 60,000 square feet on the underside of the pedestrian walkway at the Fashion Square project in Scottsdale. The stucco did not delaminate except in one area, where an automatic sprinkler pipe had broken and water had damaged the stucco from above. In Mr. Bogart’s opinion, the same damage would have occurred if the stucco had been applied over mesh. According to Mr. Bogart, the Dryvit bulletin and ICBO report do not refer to the system that Respondent used to apply stucco to the soffit and fascia on the back patio. Usually, a stucco contractor follows the instructions of the architect or homeowner on a project, because application of the entire system is more expensive than application of only part of the system and may not be required for every job. The manufacturer usually issues a limited warranty if only part of the system is used. If the proposed application is contrary to the manufacturer’s express instructions or industry standards, the contractor should inform the homeowner or architect. Complainant offered no other evidence or expert testimony other than the various hearsay reports summarized supra at Findings of Fact Nos. 11, 12, 16, 19, and 20. He offered no testimony or direct proof that the stucco on the patio soffit and fascia had delaminated because it was improperly applied, not because the roof leaked. Before Complainant finished his own testimony, the administrative law judge asked the parties if they would consider settlement. Respondent said the history of its relations with Complainant made it disinclined to perform any more work for Complainant, even for additional money, but that it would agree not to institute any further legal proceedings, including one for abuse of process,[8] if Complainant agreed to dismiss the complaint with prejudice, meaning that Complainant would not make any more complaints to the Registrar or institute any more legal proceedings on account of the stucco work at the house. Complainant reluctantly but voluntarily agreed to Respondent’s terms on the record. CONCLUSIONS OF LAW In this administrative proceeding, Complainant bears the burden of proof and must establish statutory violations by a preponderance of the evidence. See A.A.C. R2-19-119; see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App. 1996). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). A preponderance of the evidence is “evidence which is of greater weight or more convincing than evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary at page 1064 (6th ed. 1990) Neither Complainant’s settlement of Respondent’s civil suit, Respondent’s civil action to foreclose of its lien on Complainant’s house, nor the Registrar’s closure of Complaint No. 98-0671 bars the complaint at issue under principles of res judicata or collateral estoppel. “‘Under the doctrine of res judicata, a judgment on the merits in a prior suit involving the same parties or their privies bars a second suit based on the same cause of action.’” Hawkins v. State of Arizona, Department of Economic Security, 183 Ariz. 100, 103, 900 P.2d 1236, 1239 (App. 1995) (quoting Gilbert v. Board of Medical Examiners, 155 Ariz. 169, 174, 745 P.2d 617, 622 (App. 1987); emphasis added). For the related doctrine of collateral estoppel to bar a claim, “the issue [must have been] actually litigated in the previous proceeding, there [must have been] a full and fair opportunity to litigate the issue, resolution of such issue [must have been] essential to the decision, there [must have been] a valid and final decision on the merits, and there [must have been] a common identity of the parties. Gilbert, 155 Ariz. at 169, 745 P.2d at 622 (quoted in Hawkins, 183 Ariz. at 103, 900 P.2d at 1239; emphasis added). Since Inspector King closed Complaint No. 97-0617 because neither party requested a hearing and the parties settled Maricopa County Superior Court No. CV97-03145, no final decision or judgment on the issue of Respondent’s workmanship has ever been rendered by any judicial or administrative tribunal. Complainant’s decision to file a second complaint, rather than reopening the first complaint or asserting poor workmanship as a defense to Respondent’s breach-of-contract claim, may be considered on the issues of credibility and motives, however. Complainant testified at the hearing that he did not request a hearing in or reopening of Complaint No. 98-0671 or assert workmanship as a defense before settling Respondent’s civil breach-of-contract claim because he did not know that that stucco should only be applied to mesh or that Respondent had applied stucco to an improperly prepared surface until after the administrative complaint had been closed and the civil action settled. This testimony is belied by the language of Complainant’s original complaint to the Registrar and Complainant’s April 4, 1997 JACHOL report. Although the rules of evidence do not strictly apply in administrative proceedings like this one, any recommended decision must be supported by “substantial, reliable, and probative” evidence. See A.R.S. § 41- 1062(A)(1). Complainant’s various hearsay reports, offered without authentication, explanation, or context, do not suffice to establish that Respondent’s application of Senergy synthetic stucco did not comply with applicable industry standards. Complainant’s evidence is not entirely unequivocal on this point, moreover, since the manufacturer apparently contemplated that the finish would be applied without mesh because it issued a “coatings-only warranty” for Mr. Seginski’s house, which is consistent with Mr. Bogart’s testimony. Finally, even if Complainant’s various reports established that Respondent’s application of Senergy synthetic stucco did not comply with the manufacturer’s instructions and applicable industry standards, the evidence also established that the only place the stucco delaminated was under the leaky roof that M & S constructed. The cause of Complainant’s stucco problems more likely than not was the leaky patio roof, not Respondent’s application. In addition, even if Complainant’s evidence established that Respondent’s original application of the stucco was deficient and the deficient application had caused the stucco to delaminate in 1996, after Complaint No. 98-0671 was closed Complainant had someone else repair the stucco and, in this complaint, seeks not restitution[9] but an order that Respondent repair the cracking and peeling that had “reappeared” on the stucco patches that someone else applied. Complainant’s election not to request a hearing in Complaint No. 98-0671 and to make repairs to the stucco himself voids any warranty that Respondent otherwise would have had to honor. Complainant cannot by filing a second complaint make Respondent responsible for delamination of stucco that it did not apply. Complainant either himself acted as an owner-builder or arranged for his own company, M & S, to act as general contractor in construction of the house. Either way, Complainant exercised a great deal of control and supervision and thereby eliminated an important layer of protection he would have enjoyed as a homeowner had he contracted with a licensed general contractor at arm’s length. Under the usual scenario, the general contractor would be responsible to the homeowner for both the leaky patio roof and delamination of the stucco. Complainant’s and M & S’ failure to repair the patio roof for more than two and one-half years after they received actual notice that the roof was leaking and damaging the stucco, despite obvious evidence of water damage, indicates that, in prosecuting this complaint against Respondent, Complainant was less concerned with getting his house repaired than he was in extracting a pound of flesh from Respondent. The Registrar’s hearing process was not meant to serve such a purpose. In light of the evidence and applicable law, the terms of the settlement were reasonable. All rights and defenses of the respective parties are deemed to have been merged into the settlement agreement. If either of the parties asserts a claim based on Respondent’s application of stucco to Complainant’s house or Complainant’s various complaints against Respondent for that work, the settlement agreement may be raised by either party as a contractual bar to the other’s assertion of the claim. RECOMMENDED ORDER In view of the foregoing, it is recommended that the entire Citation and Complaint in Case No. 99-0204 be closed. Done this day, April 7, 1999.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

By ___________________________

----------------------- [1]The administrative law judge’s recommended decision in Case No. 97-1555, which the Registrar accepted on June 26, 1998, indicates that Complainant was involved in some capacity for M and S Steel Builders, L.L.C. in the construction at issue in that case and that he testified at the hearing. See Registrar’s Decision in Case No. 97F-1555-ROC, Finding of Fact No. 12. [2] The Registrar’s records reveal that License No. 108366, Class B was issued to JACHOL Construction, Inc. and its qualifying party, Michael Twarog, on July 25, 1995. The Registrar revoked that license on January 22, 1998 as a result of his order in Complaint No. 97-2534, Campbell v. JACHOL, but set aside the revocation on April 21, 1998. JACHOL’s license currently is expired. [3] The Registrar’s records do not show that any contractor’s license was ever issued to Lawrence Roof Consultants or Robert E. Shackelford.

[4]Complainant has since moved and rented the house to a third party. Inspector King received a change of address form, either in Complaint No. 98-0617, involving the soffit and fascia, or Complaint No. 99-1271, involving Respondent’s claim that M & S had used unlicensed contractors building the house at issue, which Inspector Lewis also investigated and which was dismissed for lack of evidence. Complainant represented himself to be the homeowner in bringing Complaint No. 99-0617 and in prosecuting the complaint at issue and minimized his involvement in M & S and in construction of the house. Inspector King felt that Complainant may have been guilty of unlicensed contracting activity in construction of the house and misrepresented his status as falling within the exemption created by A.R.S. § 32-1121(5).

[5] Mr. Seginski, unlike Complainant, apparently paid Respondent for the stucco work.

[6] The Registrar issued License No. 088382, Class L-42, to T & M Enterprises, Inc. on November 20. 1990.

[7] The Registrar issued License Nos. 132817 and 132818, both Class L-36, to Out West Wall Systems on March 19, 1998. Mr. Bogart is the qualifying party on both licenses. Mr. Bogart also testified that he had worked in the plaster and stucco trades for fifteen years.

[8] The exception, which Respondent expressly noted, was that Respondent would cooperate if the Registrar instituted a regulatory action against Complainant for unlicensed contracting in connection with the construction of the house at issue and requested information from Respondent as part of its investigation.

[9] Neither the Office of Administrative Hearings nor the Registrar of Contractors properly may adjudicate and award money damages, which must be recovered, if at all, through civil court action. However, the Registrar is empowered by statute to impose reasonable conditions that may serve to reduce or eliminate any otherwise appropriate disciplinary penalties for proven violations of the State’s contracting laws. Whenever the performance of corrective or remedial measures on a jobsite is no longer warranted or possible, the inclusion of a condition in the nature of restitution, total or partial, may be appropriate and equitably justified. Here, restitution would not be appropriate because the evidence does not show Complainant patched the stucco to mitigate his damages, since he did not also repair the leaky roof, and Respondent’s refusal to repair the stucco was not unreasonable since Inspector King had exonerated it.

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