ALJDEC

99F-1732-ROC · Registrar of Contractors · 1999-07-29

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

The above-entitled matter came on for two sessions of hearing commencing on July 27, 1999 and concluding on July 29, 1999. On both occasions, the Complainant was represented by its attorney, James L. Tanner, Esq., and the Respondent was represented by its corporate counsel and authorized employee, Robert M. Binham, Esq. Evidence and testimony were presented, and based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. Complainant is a homeowner’s association representing a condominium complex of 16 separate buildings, each of which contain 6 dwelling units, all located in the City of Scottsdale (herein called the “City”). Each building has a riser serving in excess of 100 interior fire sprinkler heads, and an applicable City requirement is that buildings with 100 or more sprinkler outlets must be monitored.

2. In late 1996, a degree of malfunctioning of the then-existing Sescoa fire protection equipment began to be experienced. These ongoing problems subsequently resulted in an express notification to Complainant from the City that false alarms had been transmitted by the complex’s monitored fire alarm system, suggesting that such system should be examined for malfunctions or other errors, and also suggesting the need for a backup power or battery system.

3. A determination that the panels and the automatic dialing features of the previously installed Sescoa equipment mounted on three of the sixteen separate building units in the complex were malfunctioning, as well as reportedly being somewhat obsolete and not presently conforming to local code requirements, prompted Complainant to seek proposals for the replacement and updating of such equipment.

4. Although not the installer of the original fire protection equipment for Complainant’s condominium complex, Respondent had been providing monitoring services for several years prior to late 1996. All of the potential bidders, including Respondent, were effectively informed that the objective of any replacement work was not only to discontinue using obsolete equipment but also to achieve compliance with all present code requirements.

5. Respondent was the successful bidder, and Complainant’s Board of Directors (herein called the “Board”) approved the submitted proposal dated October 29, 1996 to replace the existing Sescoa panels mounted on three of the buildings in Complainant’s complex with “Silent Knight - 5207 Fire Alarm Control Panels and Communicators” at a total cost price of $3,338.00 plus applicable taxes.

6. Further ongoing problems with the original equipment at other building locations in the complex motivated Complainant to obtain a subsequent bid from

Respondent for similar replacements of the panels previously installed in seven other buildings. This second proposal obtained by Complainant was submitted by Respondent on August 26, 1997, also specifying the above- identified “Silent Knight” panels, and setting forth a cost price of $7,789.00 plus tax. The submitted proposal was similarly approved by Complainant’s Board.

7. A final bid was subsequently obtained from Respondent for the replacement of the balance of the Sescoa panels on all of the remaining six buildings in the complex. That bid was dated February 23, 1998 and stated a cost price of $5,563.00 plus tax, also specifying that the six existing panels would be replaced by “Radionics - 8112 Fire Alarm Control Panels and Communicators.” Board approval was duly obtained.

8. All of the invoices that were ultimately presented to Complainant after the installation work by Respondent pursuant to the three contractual agreements, in the respective amounts of $3,445.41; $8,181.50; and $5,885.88 (taxes included), aggregating a total sum of $17,512.79, were approved by and fully paid at the direction of the Board.

9. It was not effectively disputed that all of the panels provided and installed by Respondent under the first two agreements were not the contractually specified “Silent Knight” units, but instead, were the “Radionics” units that were identified in the third proposal. Without condoning the Respondent’s unilateral decision to change the brand or type of panels from those expressly specified in the first two submitted bids, without giving at least some form of advance or even reasonably prompt subsequent notification to its customer, the evidence adduced at the hearing tended to indicate that the individuals acting on behalf of Complainant were generally unaware of the type of

unit identified in the proposals and did not rely upon receiving same. More importantly, no credible showing was made that the Radionics panel units furnished by Respondent, although slightly less costly, were inferior or not comparable in performance to the Silent Knight equipment.

10. The relatively small cost differential between the two models of equipment was shown to be the amount of $174.00 per panel, and Respondent had expressed a willingness, albeit somewhat belatedly, to credit or to remit the monetary difference to Complainant, calculated by Respondent to be a combined total sum of $2,784.00. However, no such payment or credit from Respondent was shown to have been effectuated. Such total sum should be appropriately paid to Complainant at this time.

11. Credible testimony demonstrated that the smoke detectors, two of which had existed within each of the dwelling units before Respondent’s installation work, and all of which had been wired so as to function with the automatic dialing features of the previously installed panels, were not connected to the new Radionics panels furnished and installed by Respondent. The previously existing smoke detector wiring was, in point of fact, left unlabeled as well as unconnected. Further testimony indicated that these omissions, coupled with the apparent lack of an alternative back–up battery system, served to generate an inability to always automatically make contact with the monitoring company, not only posing a realistic potential danger to the occupants of the various residential units but also constituting a basis for the possible imposition upon Complainant of fines or other action by City of Scottsdale.

12. No valid or plausible explanation was given by Respondent for omitting the re-connection of all smoke detection units to the replaced panels. The omission is especially puzzling in light of the showing that, while discharging its prior monitoring

obligations under a service agreement, and as reflected in Respondent’s records, smoke detector monitoring, presumably with the replaced Sescoa units, was included under the original service understanding, as well as under the periodically transmitted invoices. The evidence was inconclusive with respect to whether the functioning of the prior smoke detection monitoring incorporated one combined single signal for each separate building or six separate signals to and from each of the building panels whenever any smoke detector device was activated from one of the six individual dwelling units in a building. Similarly, the evidence did not adequately establish whether the heat sensor devices in the attic area of each building were or were not connected to the newly installed fire panels.

13. It is determined that appropriate remedial work to re-connect the smoke detector wiring in each building in the complex to the installed Radionics panels must be undertaken and successfully accomplished by Respondent, such work not necessarily to include the means to specifically identify the exact origin or source location of any signal from a smoke detector alarm in a particular dwelling unit as opposed to providing for operation as a single signal. However, a portion of the required re- connection work in every building shall also consist of verifying or confirming that all of the heat sensor devices are connected to the panels and are fully functional.

14. Numerous malfunctions were experienced by Complainant with the newly installed Radionics panels, including false alarms, inability to shut off audible alarm noise, and most significantly, failures to transmit signals to and from the monitoring company. Due to delays occasioned by the sale of a portion of Respondent’s business, the response time to reported problems was not satisfactory. In light of the health and safety nature of this construction feature and the specialty type of license necessary to

enable a contractor to perform work in this field, such delays are found to be inexcusable and reflect adversely upon Respondent’s workmanship and business practices as well as constituting wrongful acts to the detriment of Complainant within the meaning and intent of another contracting law violation charged hereunder against Respondent.

15. At the present time and since September, 1998, the dialers in three of the buildings (Numbered 6, 8 and 15) have not been transmitting any signals from the complex to the monitoring company. Additionally, the dialer in one of the buildings (Number 14) is experiencing intermittent malfunctioning and the digital keypad in another building (Number 3) has sustained substantial water damage, All of these deficiencies or malfunctions must be promptly and correctly rectified by Respondent.

16. The installation by Respondent of the Radionics panel and dialer units did not utilize the metal enclosure or housing that was apparently available and customarily furnished as part of the model provided, but instead, the individual units were mounted on the exterior of the respective buildings in the same wood box with a metal door that had enclosed the prior Sescoa units. Although the reason for so utilizing the previously existing mounted enclosure boxes was not communicated to Complainant or its management company, it appeared that such decision was made after the discovery by Respondent’s installers that the metal box for the Radionics unit would not fit inside of the existing mounted box. These boxes were subsequently treated by Complainant with materials designed to provide some added measure of protection from water entry.

17. It is found and determined, especially in view of Respondent’s substitution of a brand of panel other than the type expressly specified in two of its own written

proposals, submitted to and accepted by Complainant, that an obligation existed for Respondent to furnish and install the metal housing enclosure that is furnished with and is customarily used with the Radionics units. Respondent had elected to submit a proposal without physically observing the jobsite conditions where any size discrepancy could have been ascertained and added charges, if any, for relocation of the wiring and/or the enclosure boxes could have been incorporated into the overall quoted costs. Instead, the bid, as submitted, was duly accepted by Complainant, thereby ripening into a binding contract. The indication from the testimony that wood enclosures, if properly maintained, may equally serve the intended purposes of protection from the weather elements is found not to justify the failure to provide a metal enclosure which admittedly would entail far less maintenance efforts on the part of the purchaser of the equipment. The proper removal and replacement of all exterior mounted wood enclosures on the individual buildings with the appropriate all-metal enclosures must be accomplished by Respondent.

18. The evidence failed to adequately establish that corrections to the system and its component elements were incapable of being acceptably accomplished by measures short of a complete removal and replacement of all installed panels and dialers. On the contrary, there was a credible showing that all requirements of applicable local codes and workmanship standards were capable of being met or exceeded by proper corrective action on the presently installed system.

19. The testimony indicated that the business and assets of Respondent were sold in late 1998 to a third party, and Respondent is no longer actively engaged in any contracting activities.

20. Notice is taken of the Registrar’s license records which reveal that Respondent’s Class L-67 license has been on an inactive status since October 14,

1998, a date that was after its performance of all work which is the subject matter of this case. The inactive license status of Respondent does not preclude the pursuit by Complainant of its administrative remedies nor the conducting of these disciplinary proceedings. Moreover, such inactive license status must be considered when formulating an appropriate Order in this action. Since little or no motivation would exist for any contractor to undertake and complete any remedial measures to avoid imposing a suspension upon an already-inactivated license, the non- compliance by Respondent with any conditions deemed proper for inclusion in the Order to be entered hereunder should result in the revocation of Respondent’ s license, which not only will adversely impact on the ability of persons named on the license to obtain another license in the State of Arizona but also, in turn and in due course, will lead to the initiation of appropriate disciplinary action pursuant to A.R.S. §32-1154A(21) against any other separate license on which any of the same individuals are listed as a “person” as defined in A.R.S. §32-1101A(5).

CONCLUSIONS OF LAW

1. The totality of the evidence of record sufficiently established violations by Respondent of the provisions of A.R.S. §32-1154(A)(7) and (3); namely, Rule R4-9-108.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the Class L-67 license of Respondent be revoked on the effective date of this Order (thirty-five [35] days after the date of mailing by the Registrar).

It is further recommended that if, on or before this Order’s effective date, the Registrar receives proof that Respondent has accomplished or has caused to be accomplished all of the following:

(a) has paid or tendered to Complainant the sum of $2,784.00, representing the price differential between the contractually identified panels and those actually installed (as set forth in Finding of Fact No. 10),

(b) has reconnected all smoke detector wiring to the present panels, also verifying the proper connections of all heat sensor wiring (as set forth in Finding of Fact No. 13),

(c) has accomplished proper corrective work on the malfunctioning or water-damaged panels, dialer or keypad equipment (as set forth in Finding of Fact No. 15), and

(d) has replaced all wood housing enclosures on the exterior of the buildings with metal enclosures (as set forth in Finding of Fact No. 17),

then and in that event, the above-provided license revocation shall not take place and Respondent’s Class L-67 shall be deemed to have been returned to inactive status in good standing. This alternative disposition shall be applicable, if at all, on the effective date of this Order.

Dated: August 5, 1999. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert. I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Mr. Michael P. Goldwater, Director Registrar of Contractors 800 West Washington Street (6th Floor) Phoenix, AZ 85007

ATTN: Joyce Armijo -----------------------

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