ALJDEC

99F-1839-ROC · Registrar of Contractors · 1999-05-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 12 and May 13, 1999 APPEARANCES: Complainant was represented by its attorney, Barrett Kime and Respondent was represented by its attorney, Denise Henslee. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

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. Pursuant to written contract, Complainant retained Respondent for the purpose of constructing a combination gasoline station, convenience store, and car wash facility (‘facility”). Complainant alleges certain deficiencies in the work performed by Respondent and same are discussed in the findings below. 2. At the outset of the scheduled hearing and during the course of said hearing, Respondent stipulated to correcting specified deficiencies and paying certain bills previously paid by Complainant. The items on the filed complaint that Respondent agreed to resolve included providing Complainant with copies of special inspections for the concrete work (no. on the filed complaint), to pay Complainant $51.16 for a repair to a back-flow preventer device (no. 35 on the filed complaint), to pay Complainant $251.00 for a specified repair (no. 22 on the filed complaint), to pay Complainant $145.00 for remedial work on a urinal (part of no. 29 on the filed complaint), to provide Complainant with all pertinent warranty information on the HVAC system, and to correct all of the parapet issues delineated in no. 6 of the filed complaint (parapet was not properly sloped in accordance with applicable plans and specifications and improper flashing installed on the sides of the parapet). Respondent agreed that these items of remedial work and payment shall be accomplished on or before the effective date of the Order entered herein. 3. During the course of the instant hearing, Complainant withdrew any claim for specified air-conditioning related billings that it incurred due to the fact that it could not locate the bills in question. Thus, any restitution issues contained in item nos. 24 and 30 of the complaint were removed from consideration. 4. Respondent admits that there are a number of changes from the original plans and specifications in the as-built construction for the facility but avers that there were oral agreements with Complainant that allowed said changes to go forward. Complainant disputes the fact that it authorized any changes that are not the subject matter of written change orders. 5. The applicable contract between the parties provides that changes from the plans and specifications shall be in writing. Sharply conflicting evidence and testimony was presented by the parties regarding the authority, or lack thereof, to allow Respondent to deviate from certain areas of the applicable plans and specifications. Although the law may uphold the validity of verbal changes despite the fact that the applicable contract requires written change orders, it is determined that in those situations wherein changes become the subject of a perceived oral agreement which may be effectively disputed at a future date, a contractor acts at its peril to deviate from the plans and specifications without first receiving written authorization from the owner or his designated representative. 6. . Respondent failed to present sufficient evidence to corroborate its position regarding the alleged verbal changes to the contract. The weight of the evidence of record was sufficient to support a finding that Complainant did not agree to changes to the contract that were not ultimately subject to written documentation. 7. Respondent contends that the applicable contract required Complainant to notify Respondent of any claimed deficiencies within one year of completion of the contract and that Complainant failed to comply with this requirement on many of the items set forth in the filed complaint. In fact, Respondent contends that it had never been apprised by Complainant of many of the items set forth on the complaint before receiving a copy of said complaint. Evidence of record demonstrated that the complaint filed with the Registrar of Contractors was filed over one year after the certificate of occupancy was issued for the facility. 8. Although the aforementioned contract provisions regarding notification of claimed deficiencies may affect the parties’ respective legal rights in civil court litigation, said contract provisions do not have the effect of abrogating or negating the Registrar of Contractor’s two year statutory period of jurisdiction, set forth in A.R.S. § 32-1155, to investigate alleged violations of the State’s Contracting laws and to impose license disciplinary sanctions against a contractor for any determined violations of said law. 9. The weight of the evidence of record was sufficient to support a finding that the following constitute substandard workmanship attributable to Respondent and/or unauthorized deviations from the plans and specifications which were found to be material and prejudicial to Complainant: a. There is no access cover for the shut-off valves for the air and water dispenser units. In addition, a built in trash-can receptacle for said area was not provided. b. Respondent failed to install a concrete pedestal or pad for the self-service vacuums. c. Specified “J-molding” was not installed in the “transaction tray (exterior payment drawer).” d. Respondent failed to install all required control joints in the stucco walls of the convenience store. There is excessive cracking of the stucco finish on the convenience store. e. Specified areas of the stucco application are too thin, as manifested by the fact that mortar joints of the block wall are visible through the stucco. f. A specified weep screed was not installed two inches below the plate line and as a result wood framing members are exposed. g. Respondent failed to provide a drain line for air compressor condensation. h. Respondent failed to install the required insulation in specified areas of the hot water pipes. i. Due to Respondent’s failure to respond to a problem with the hot water tank, Complainant was required to obtain the services of someone else to replace the heating element of said hot water tank within the first year of installation of same. Complainant paid $250.00 for this remedial work, which should have been covered as a warranty item, and the cost for said billing was not shown to be unreasonable. Therefore, Respondent should reimburse Complainant for this expenditure. j. The degree of slope of the concrete away from the fuel dispenser containment area is very minor and not in accordance with the requirements of the plans and specifications. Due to the need to keep water from getting into this area, Respondent should have provided the required degree of positive drainage away from said area. Respondent also failed to provide sufficient and required slope (positive drainage) of the concrete away from the manhole covers for the gasoline vaults. k. Major cracking is visible in specified areas of the concrete. In addition, there are areas of the concrete that reveal crazing, spalling, and exposed aggregate. Respondent is not responsible for those areas of damaged concrete which are clearly caused by vehicular traffic. l. The landscape irrigation system is leaking. m. The Veeder-Root system fails to operate properly due to a faulty cable that was installed by Respondent. Complainant incurred costs of $350.00 to hire another contractor to determine the cause of the problem to see if same would be covered by the applicable warranty. Due to the finding that the cable installation was not installed properly, the problem would not be covered under the manufacturer’s warranty. Respondent needs to correct this deficiency and reimburse Complainant for this expenditure. n. The canopy over the gasoline dispensers leaks water during rainfall. o. Tile cove base was supposed to be installed around a specified counter in the convenience store and instead Respondent installed a rubber base. p. Respondent failed to provide specified testing reports for the concrete work as required by the applicable contract. q. Respondent was required by contract to pay all costs for required construction inspections. Respondent failed to pay for an electrical inspection by a company known as SDI and thus, Complainant paid the bill of $778.25. Respondent should reimburse Complainant for this expenditure. 10. Evidence of record supports a finding, as claimed by Respondent, that many of the items set forth in the foregoing Findings of Fact were never part of any punch list or other notification to Respondent from Complainant requesting remedial work. Thus, Respondent first received notice of many of the items at the time the instant complaint was filed with the Registrar of Contractors. 11. Construction work, such as that at issue herein, is not a perfect science and it is not uncommon in the industry to have corrections, repairs, or replacements of resultant poor workmanship prior or subsequent to completion of a specified project, in order to bring the final work product up to appropriate industry standards. In this regard, a contractor should be given notice and a reasonable opportunity to complete necessary remedial work. The failure of Complainant to give Respondent notice on many of the items is a matter in mitigation for any disciplinary sanctions to be determined herein against Respondent’s license. 12. A jobsite inspection by the appointed inspector for the Registrar of Contractors was held, pursuant to which that Agency sent Respondent a letter directing it to accomplish specified remedial work and to make specified reimbursements to Complainant within a stated period of time. Notwithstanding the terms of said Agency directive, Respondent failed to comply with same. 13. Although Complainant contends that the strength of the concrete placed by Respondent is less than required by applicable plans and specifications, said issue was not enumerated in the filed complaint. Based on basic principles of due process under the law, this issue was disallowed from consideration at the instant hearing. Nothing in this ruling should be construed to prevent Complainant from filing a future complaint regarding this issue. 14. Notwithstanding the above-described ruling regarding the issue of the strength of the concrete, Respondent is on notice that any concrete remedial work that it performs pursuant to the Order entered in this matter must be more than a mere “Band-Aid” response. Although there is no basis to justify a departure from a long-standing policy of the Registrar which allows a contractor to choose the method of corrective work, it must be noted that any contractor who elects to perform a less expensive or less extensive manner of remedial work would be at its peril to achieve results which are effective, adequate and otherwise acceptable. 15. As set forth in the Citation and Complaint issued by the Registrar of Contractors, Respondent was advised that in the event of a finding of a violation against Respondent, Respondent’s prior disciplinary record of final Registrar of Contractor’s Orders may be considered in mitigation or aggravation. Accordingly, subsequent to conclusion of the instant hearing, notice was taken of official records of the Registrar of Contractors regarding any prior final disciplinary orders against Respondent and said notice revealed that there are no prior disciplinary actions against Respondent’s B-01 license. Therefore, Respondent’s prior record is properly deemed to be good and thus, is viewed as a matter in mitigation for any disciplinary penalties to be imposed as a direct result of this case. 16. It is important to note that Complainant has sold the facility. Nevertheless, it averred at the hearing that the new owner would allow Respondent access to complete any repairs required herein. 17. All other enumerated items of the complaint, presented at the instant hearing, were either not found to constitute material and prejudicial deviations from the plans and specifications, not adequately shown to be workmanship deficiencies, or matters upon which Complainant failed to sustain the requisite burden of proof.

CONCLUSIONS OF LAW

1. Respondent violated the provisions of A.R.S. § 32-1154A (23), (7) (2), and (3); namely Rule R4-9-108.

RECOMMENDED ORDER

In view of the foregoing it is recommended, commencing on the effective date of the Order entered in this matter, that the Class B-01 license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has either accomplished appropriate and effective remedial work on the items set forth in Findings of Fact 2, 9(a) through 9(h), 9(j) through 9(p) and pays Complainant the total sum of $1,825.41 or concludes other mutually satisfactory arrangements with Complainant. It is further recommended that if Respondent complies with the above- described conditions on or before the effective date of the Order entered in this matter, then the aforementioned license suspension shall not take place. It is further recommended, in addition to the above-provided penalties, that Respondent pay the sum of $200.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. § 32-1154(D). The failure by Respondent to pay the entire amount of the aforesaid civil penalty on or before 30 days following the effective date of the Order entered in this matter shall result in the automatic revocation of Respondent’s contractor’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A) (3), unless payment of any outstanding civil penalty is tendered. It is further recommended, in addition to the foregoing license suspension, if any, that Respondent’s Class B-01 license be placed on a period of 90 days’ disciplinary probation. This additional disciplinary penalty shall commence on the effective date of the Order entered in this matter or the date on which notice of Respondent’s compliance with the terms of this Order is filed with the Registrar, whichever is later. Done this day, May 27, 1999.

______________________________________ MARK A. SILVER Administrative Law Judge

Original transmitted by mail this ____ day of May, 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 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826