ALJDEC

99F-1570-ROC · Registrar of Contractors · 1999-04-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 13, 1999; 9:30 A.M.; Phoenix, Arizona APPEARANCES: Complainant: Dolores T. Taylor Bowers Roofing, Inc.: James B. Rolle III, Esq. ADMINISTRATIVE LAW JUDGE: George A. Schade, Jr.

This matter is a disciplinary proceeding pursuant to Arizona Revised Statutes (“A.R.S.”) § 32-1154. Based upon the evidence presented at the hearing, Administrative Law Judge George A. Schade, Jr. submits this Recommended Decision and Order to the Arizona Registrar of Contractors (“Registrar”). FINDINGS OF FACT PROCEDURAL HISTORY AND FACTS 1. Bowers Roofing, Inc. (“Bowers”) holds License No. 125893, Class C-42 (Roofing), issued by the Registrar on July 28, 1997. Mr. Stanley Grant Bowers is the qualifying party. 2. On November 18, 1998, Mrs. Dolores T. Taylor filed a complaint alleging that Bowers had “failed to fulfill the terms of the [parties’ “verbal addendum”] and refused to perform.” Official notice was taken of the complaint. Thereafter, “work stopped,” and there was “rain damage to residence and belongings.” Complaint.

3. On December 3, 1998, Bowers responded to the complaint by writing a letter to the Registrar. 4. Although the complaint was referred to an inspector, no jobsite inspection or formal Corrective Work Order was issued. 5. On January 8, 1999, the Registrar issued Citation and Complaint No. 99-1570 to Bowers alleging violations of A.R.S. §§ 32-1154(A)(1), -(A)(2), and -(A)(7). 6. On January 14, 1999, Bowers answered the citation and complaint. 7. On February 1, 1999, the Registrar issued a Notice of Hearing setting a hearing on April 13, 1999. Pursuant to A.R.S. § 41-1092.01, the hearing was assigned to the Office of Administrative Hearings. 8. On April 13, 1999, a hearing was held. Mrs. Taylor testified, and she presented the testimony of Mr. Bobby L. Cramp, an employee of Cameron Ashley Building Products (“Cameron Ashley”). Mrs. Taylor submitted three exhibits and other documents which were used for demonstrative purposes. Mr. Stanley G. Bowers testified, and he submitted three exhibits. The Administrative Law Judge took official notice of Bowers’ complaint summary records for the past two years. THE WRITTEN AND VERBAL UNDERSTANDINGS OF THE PARTIES 9. On September 4, 1998, Mrs. Taylor and Bowers entered into a written contract (“the contract”) for the installation of a new roof at Mrs. Taylor’s house in Phoenix, Arizona. The amount of the contract was $7,250.00, of which Mrs. Taylor paid $5,500.00 on that date. 10. The pertinent provisions of the contract in issue in this proceeding are Bowers agreed to (1) “install modified rubber to areas of roof,” and (2) “install Monier tile to manufacturers’ specifications.” Complainant’s Exhibit No. 1. The Underlayment Mrs. Taylor’s position is that Bowers verbally agreed with her (1) not to use granulated underlayment and (2) to install two layers of underlayment. Bowers’ position is that the granulated underlayment which was delivered to Mrs. Taylor’s house was an upgraded material of modified rubber which conformed with the written contract. 11. Bowers ordered the underlayment from Cameron Ashley, a local materials supplier. Bowers ordered 32 rolls of US/INTEC #730 underlayment. 12. On October 7, 1998, around 7:00 A.M., Cameron Ashley delivered the rolls of underlayment (and associated base materials) to Mrs. Taylor’s house. 13. Mrs. Taylor was home when the materials arrived at her house. She inspected the underlayment and saw that it had “little rocks,” or in other words, was granulated. The little rocks were approximately 1/8 inch in diameter. 14. Mrs. Taylor did not wish to have the delivery made, as she believed the granulated underlayment was not what she and Bowers had agreed would be installed. She called Cameron Ashley to find out if it had made a mistake. Cameron Ashley informed her that Bowers had ordered what was being delivered, and a mistake had not been made. During this conversation, she was told that the underlayment being delivered was sufficient for one layer. Mrs. Taylor became “pretty upset” (Mr. Cramp’s testimony). 15. Mrs. Taylor telephoned Mr. Bowers. Their conversation quickly escalated into an unproductive discussion. Mrs. Taylor believed that the materials being delivered were not what Bowers had verbally told her would be used, and Mr. Bowers believed that these materials were not only an upgrade but also were made of modified rubber as the written contract specified. Mrs. Taylor did not wish to accept delivery of the materials. 16. Faced with this situation, Cameron Ashley’s delivery driver returned to the “yard” taking with him the underlayment. 17. The underlayment which Cameron Ashley attempted to deliver on October 7, 1998 - the US/INTEC #730 - was the kind Bowers had ordered. 18. The US/INTEC #730 underlayment is made of modified rubber and has a weight of “102 lb./square” (Mr. Bowers’ testimony). 19. In September, Mrs. Taylor and Mr. Bowers had spoken about installing two layers of underlayment, but they did not discuss using US/INTEC #730 underlayment. 20. According to Mr. Bowers, two layers of the underlayment he had discussed using with Mrs. Taylor would have provided a combined value of 60 lb./square. As the US/INTEC #730 had a weight of 102 lb./square, in his opinion, this material was an upgrade and was superior to two layers of 30 lb./square underlayment. This specific product information was not told to Mrs. Taylor, it appears, until the day of the hearing. 21. Bowers had paid $815.00 for the underlayment returned to Cameron Ashley. Subsequently, Bowers was credited this amount. The Roof Tile 22. The roof tile was Monier Lifetile 3963 Duralite 2000 Camouflage color. 23. Bowers ordered the tile from Cameron Ashley, who delivered the tile to Mrs. Taylor’s house on October 1, 1998. 24. The total cost of the tile was $4,135.08, which Bowers paid. Bowers paid $218.21 for sales tax, making the total cost of the tile $4,353.29. 25. The Monier tile which Bowers had purchased was subsequently installed on Mrs. Taylor’s new roof by Century Roofing, Inc. (“Century Roofing”), another roofing contractor. THE REMOVAL OF THE EXISTING ROOF 26. On October 7, 1998, Bowers paid $924.00 to Rimmer Removal to remove the existing roof of Mrs. Taylor’s house. The removal of the roof was completed at noon on October 7, 1998. 27. Bowers had scheduled his workmen to be at Mrs. Taylor’s house at 3:00 P.M. on October 7, 1998, to cover the exposed roof. The workmen were not able to do this work as the underlayment and other base materials were not available, having been returned to Cameron Ashley. 28. After their conversation on October 7, 1998, Mrs. Taylor and Mr. Bowers did not speak with each other. Mrs. Taylor called Mr. Bowers, but Mr. Bowers “hung up” (on October 8, 1998) or did not return her calls, as he did not believe he could have a productive discussion with Mrs. Taylor. 29. Mr. Taylor retained Mr. Rolle as his legal counsel. On October 8, 1998,[1] Mr. Rolle wrote a letter to Mrs. Taylor, which she received on October 10, 1998. Mrs. Taylor never called or wrote to Mr. Rolle because she is “afraid of lawyers.” 30. Mrs. Taylor retained the services of Mr. Robert Ware, an individual who assists others with negotiations and legal documentation services. Mrs. Taylor paid Mr. Ware $100.00. Mr. Ware prepared the complaint which Mrs. Taylor filed with the Registrar. In November, Mr. Ware also spoke with Mr. Rolle and with Mr. Bowers, but no resolution came out of these discussions. THE RAIN DAMAGE 31. On October 20, 1998, it rained. As the roof was uncovered, the rain entered all the rooms in Mrs. Taylor’s house. Walls, furniture and personal items were damaged. 32. On October 20, 1998, Mrs. Taylor retained Joel’s Handyman Services to put plastic covering on her entire roof in order to prevent further rain damage. She paid $729.27 for this work. 33. Mrs. Taylor is in the process of obtaining insurance reimbursement for these damages, but she has incurred two deductible loss payments totaling $1,000.00. THE COMPLETION OF THE NEW ROOF INSTALLATION 34. Mrs. Taylor retained Century Roofing to complete the installation of the roof. The new roof was installed between mid-December, 1998, and late February, 1999. 35. Mrs. Taylor paid Century Roofing $9,409.18, of which $1,000.00 was paid as a deposit prior to commencement of work, and $8,409.18 was paid on February 28, 1999. 36. Century Roofing purchased additional roofing tile but used the Monier tile which Bowers had previously purchased, which was stored at Mrs. Taylor’s house. BOWERS’ PRIOR DISCIPLINARY RECORD 37. The Registrar’s public records show that since January 5, 1998, four complaints (including Mrs. Taylor’s complaint) have been filed against this license. CONCLUSIONS OF LAW The issues are did Bowers violate A.R.S. §§ 32-1154(A)(1), -(A)(2), and -(A)(7)? A.R.S. § 32-1154(A) A.R.S. § 32-1154(A) provides in the pertinent subsections: “A. The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:

1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code. *** 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

As the roofing work has been completed, Mrs. Taylor wishes to be reimbursed the following amounts: 1. Century Roofing $9,409.18 2. Insurance Deductibles 1,000.00 3. Joel’s Handyman Services 729.27 Total $11,138.45 CONCLUSIONS OF LAW 1. The Registrar is charged with determining professional workmanship of construction, or whether a licensed contractor performed “in a good workmanlike manner and in a manner befitting a skilled contractor.” Reliable Electric Co. v. Clinton Campbell Contractor, Inc., 10 Ariz. App. 371, 374, 459 P.2d 98 (1969); see, J. W. Hancock Enterprises, Inc. v. Registrar of Contractors, 126 Ariz. 511, 514, 617 P.2d 19 (1980); A.R.S. § 32-1154(A)(3); Rule R4-9-108(A), Ariz. Admin. Code. 2. In these disciplinary cases, the complainant has the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996), review denied (1997); Troutman v. Valley Nat. Bank of Arizona, 170 Ariz. 513, 826 P.2d 810 (App. 1992). 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). It “is evidence which is of greater weight or more convincing than the 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 1182 (6th ed. 1990). 3. The Registrar does not have authority to award compensatory damages either in tort or in contract. Sunpower of Arizona v. Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (App. 1990), review denied (1991) (restitution is allowed). Such damages must be sought in a court of competent jurisdiction or in an appropriate arbitration forum (if the contract requires arbitration of disputes). In Sunpower, the Court of Appeals upheld the Registrar’s order directing the contractor “to remove the solar equipment it sold and installed and to return the monies paid for the sales and installations.” Sunpower, 166 Ariz. at 440. The Court of Appeals held “we believe the Registrar’s order was a restitutionary remedy contemplated by the legislature as part of the Registrar’s regulatory authority to take appropriate disciplinary action against those who violate the licensing standards.” Sunpower, 166 Ariz. at 441. Restitution is an “equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he or she would have been, had the breach not occurred.” BLACK’S LAW DICTIONARY 1313 (6th ed. 1990). The remedy restores a party to the position the party would have been if the other party had not breached the contract. In breach of contract cases, the remedy is associated with the return of monies paid. While there is language (albeit sparse) in Sunpower which appears “to encompass the award of damages,” 166 Ariz. at 441, presumably other than restitutionary damages, Sunpower is at its heart a restitution case, and nothing more can or should be read from the Court’s opinion. Further, the Registrar: “interprets the intent of the Legislature in enacting Title 32, Chapter 10, A.R.S. to be for the regulation of the conduct of those engaged in the business of contracting so as to discourage certain bad practices which might be indulged in to the detriment of the public and to protect the public against unscrupulous and unqualified persons purporting to have the capacity, knowledge, and qualifications of a contractor.” A Guide for Contractors…Statutes and Rules, page 41 (publication of the Registrar, May 1998); Security Ins. Co. of. New Haven v. Day, 6 Ariz. App. 403, 406, 433 P.2d 54 (1967); Sunpower, 166 Ariz. at 440).

In short, the Registrar is not a forum for the settlement of contractual money claims between private parties and licensed contractors. Mrs. Taylor’s claims for rain damages, specifically, the $1,000.00 insurance deductibles, properly belong in a civil court of law. These claims are related to damages alleged to have resulted from a breach of contract. Moreover, the exact amount of these compensatory damages is still being negotiated between Mrs. Taylor and her insurance carrier. Similarly, the claim for $9,409.18 is a claim for compensatory damages which is outside the Registrar’s authority to order restitution. Sunpower, supra. The Registrar may order full or partial restitution of monies paid and may order the completion of corrective work, but is powerless to adjudicate contested issues of contractual money claims and award compensatory damages.[2] Lastly, Mrs. Taylor paid Bowers $5,500.00, for which she received the benefits of the Monier tile installed on her new roof ($4,353.29) and the removal of her old roof ($924.00) - a total of $5,277.29. Mrs. Taylor is entitled to restitution of the difference between what she paid and what she received for her monies, or the amount of $222.71. Sunpower, supra. 4. On September 4, 1998, Mrs. Taylor and Bowers executed a written contract for construction work. 5. Bowers violated A.R.S. § 32-1154(A)(1). On October 7, 1998, Bowers abandoned the contract “without legal excuse.” A.R.S. § 32-1154(A)(1). Mrs. Taylor’s concerns regarding the underlayment delivered on October 7, 1998, were not promptly and fully answered. Her actions of returning the delivery truck to the “yard,” although appearing to be overly assertive, did not constitute “legal excuse” for Bowers to leave the project. Subsequently, Bowers sought to remedy the deteriorating situation, but was not able to do so before October 20, 1998, when Mrs. Taylor incurred the $729.27 expense for covering the roof to avoid further rain damage. Mrs. Taylor is entitled to restitution of this amount, directly incurred due to Bowers’ “abandonment of [the] contract,” A.R.S. § 32-1154(A)(1), and for the purposes of protecting the uncovered roof and preventing further rain damage. Sunpower, supra. Mrs. Taylor is entitled to be returned to the position she was in before Bowers abandoned the contract. The payment of the $729.27 is within the Registrar’s regulatory authority as defined in Sunpower. 6. Bowers did not violate A.R.S. § 32-1154(A)(2). The underlayment delivered to Mrs. Taylor’s house on October 7, 1998, conformed with the terms of the contract. It was made of modified rubber and was an upgrade from the materials the parties had verbally discussed (102 lb./square as opposed to 60 lb./square). The evidence does not support a conclusion that there was a “departure from or disregard of plans or specifications…in any material respect.” A.R.S. § 32-1154(A)(2). 7. Bowers did not violate A.R.S. § 32-1154(A)(7). Its actions cannot be considered to have been “wrongful or fraudulent.” A.R.S. § 32- 1154(A)(7). In legal argument, Mrs. Taylor contended that Bowers had made fraudulent misrepresentations to her, but the evidence does not support a conclusion that Bowers violated A.R.S. § 32-1154(A)(7). The Registrar’s authority is limited by A.R.S. § 32-1154(A)(7), and the evidence does not establish a violation of this provision. 8. The Registrar may suspend a residential contractor’s license “with or without imposition of specific conditions” if the licensee “commits any of the acts or omissions set forth” in A.R.S. § 32-1154(A). A.R.S. § 32- 1154(B). 9. Bowers’ prior disciplinary record may be considered “as a matter in mitigation or aggravation when formulating and submitting an appropriate recommended disposition of this matter.” Notice of Hearing, page 2 (February 1, 1999); Rule R4-9-117 (Prior Record), Ariz. Admin. Code. RECOMMENDED ORDER It is recommended that the Registrar suspend Bowers’ License No. 125893, Class C-42, unless and until the Registrar receives, not later than the effective date of the Registrar’s order of suspension, written notification that Bowers has reimbursed Mrs. Taylor the amount of $951.98. SUBMITTED this 23rd day of April, 1999.

George A. Schade, Jr. Administrative Law Judge

The original Recommended Decision and Order was mailed on April 23, 1999, for distribution to the parties, to:

Michael P. Goldwater Arizona Registrar of Contractors 800 West Washington, 6th Floor Phoenix, Arizona 85007-2940

George A. Schade, Jr. ----------------------- [1] Mr. Bowers might not have answered Mrs. Taylor’s calls because his attorney was then representing him, but Mr. Bowers should have informed Mrs. Taylor that he could not speak with her as he had legal counsel and asked her to speak with Mr. Rolle. [2] For example, why Century Roofing charged $9,409.18 for the work Bowers charged $7,250.00, even after Century Roofing had the benefit of $4,353.29 of tile and the old roof had been removed, is a question better suited for civil litigation.

-----------------------

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