ALJDEC

99F-2005-ROC · Registrar of Contractors · 1999-08-17

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Pursuant to notice, a formal hearing was held in this case on August 16, 1999, in Phoenix, Arizona, before Neal H. Jordan, Administrative Law Judge of the Office of Administrative Hearings. APPEARANCES For Complainant: Nancy Neff, pro se For Respondent: Jack E. Murray, Owner/Qualifying Party, pro se

FINDINGS OF FACT Based upon all the evidence of record, the following findings of fact are determined: Respondent is a licensed residential contractor holding a Class C-61 license Number 094966, which license is for a Limited Remodeling and Repair Contractor, provided the cost of work does not exceed $25,000.00. Complainant owns the home at 3608 E. Wethersfield Road in Phoenix, which she has been renting to third parties. During the winter of 1998, Complainant decided to cease renting this home and to list it for sale at the earliest possible time. As a result it was determined that certain aspects of the home were in need repairs, including a deteriorated roof. By an written agreement dated March 10, 1998, (the “Contract”), Complainant contracted with Respondent for the installation of a new modified bitumen torched-down roof system for the price of $4,882.91. Prior to the Contract being formed, Respondent had rendered assistance to Complainant in attempting to stem a leaking roof condition, and had availed himself of more than adequate opportunity to inspect and become familiar with the existing roof system, the roof structure and the overall condition thereof. Respondent completed the work provided for under the Contract by applying the new roof over an existing foam roof application, even though the Contract calls for the replacement of “bad decking” and for the installation of “1/2 ply over low ponding areas.” No evidence was provided that indicated Respondent performed any work in this regard. By the fall of 1998, Complainant states that leaks began to occur in numerous places within the home causing damage to walls, ceilings and carpeting. Respondent was contacted and has made repeated attempts to repair the roof to prevent further leaks from occurring. 7. Respondent’s failed attempts to complete repairs to prevent leaks from reoccurring led Complainant to file the instant complaint. As a result of the complaint being filed in this matter, an on-site inspection was conducted by an assigned inspector for the Registrar of Contractors, which led to the issuance of a corrective work order letter (“CWO”) being sent to Respondent requiring that certain corrective or remedial work to be performed within a stated period of time. Respondent testified he has completed all the specified repairs, however, at the hearing the agency assigned inspector testified that, upon a more recent inspection, there still exists ongoing problems with the roof, such that a new roof installation may be the single best solution. It is admitted by Complainant that insurance claims have been filed for damages due to the leaking roof condition, as well as other problems unrelated to this case. Respondent’s allegations that Complainant is attempting to commit some kind of “insurance fraud” is unfounded and not supported by the evidence. The fact that Respondent would make such an unsupported statement (repeatedly) calls into question his credibility as to others areas of his testimony. Subsequent to Respondent’s attempts to comply with the CWO, further leaks have resulted and testimony from witnesses indicated that Respondent stated he was at a loss as to how to remedy the problems. Repair attempts have been made to resolve the leaking condition of the roof on a minimum of 5 to a possible maximum of 10 occasions, and the leaking condition continues unabated. Since the last repair attempt, additional interior damage to the living room ceiling and carpet area directly below has resulted. Respondent repeatedly testified that he will stand by the roof installed by him, which he has been attempting to do without success. Continuing and repeated repair attempts without success only serve to aggravate a roof installation that the evidence indicates cannot be repaired fully and completely. Evidence of record supports a finding that the only solution is to completely remove the roof down to the decking, with a repair and replacement of deteriorated decking as necessary. Evidence of record also provides supports a finding that the reasonable cost to remove the existing roof applications, repair deteriorated decking, and applying a new roof would be $5,380.00. It is found that such amount is reasonable under all the circumstances. Respondent has demonstrated an apparent inability to adequate and properly repair his roof installation in such a manner as to prevent further leaking. Respondent’s testimony that Complainant, or someone acting for her, is deliberately “sabotaging the roof to make him look bad so she can get a new roof” is patently not believable, and certainly not supported by any evidence. Complainant has a buyer for this home under a binding contract provided the home can be made “water tight” and risks losing the sale due to Respondent’s failed attempts at curing a defective roof installation. Complainant relied upon Respondent to install a water tight roof system in anticipation of selling the home and certainly is entitled to the benefit of the bargain based upon the Contract. She has not received that benefit.

CONCLUSIONS OF LAW The Office of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to A.R.S. §41-1092 - 1092.12 (1998). The Complainant has brought this complaint and accordingly bears the burden of proving by a preponderance of the evidence that the allegations contained therein are true. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996). The Citation and Complaint alleges that Respondent: (a) violated A.R.S. §32-1154 A (7), (23), and (3), namely Rule R4-9-108. These provisions provide for disciplinary action to be taken against a licensee for: 4) The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.

23) Failure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held pursuant to the provisions of this article.

3) Violation of any rule adopted by the registrar, namely Rule R4-9-108 which details and establishes the workmanship and professional standards to be used in determining whether a violation of this subsection has occurred.

By a preponderance of the evidence, Complainant has established that Respondent has intentionally committed a wrongful act by failing to properly and in a workman like manner install the new roof which continually leaks after repeated repair attempts, and to otherwise perform the terms and provisions of the Contract on Respondent’s part to perform, all in violation of A.R.S. §32-1154 A (7). By a preponderance of the evidence, Complainant has established that Respondent failed to adequately comply with the Corrective Work Order issued by the Registrar of Contractors in violation of A.R.S. §32-1154 A (23), and that roof leaks and interior damage continue to result. By a preponderance of the evidence, Complainant has established that Respondent has failed to perform the work undertaken pursuant to the Contract in a professional and workmanlike manner in violation of A.R.S. §32-1154 A (3), namely Rule R4-9-108, as evidenced by the continuing leaking condition which remains unabated after numerous unsuccessful repair attempts. When a contractor installs a work product on an existing surface then that contractor is held to have accepted the condition of that surface for all purposes related to the work performed, provided that any inherent defects are capable of discovery upon a reasonable inspection. In this case, Respondent is deemed to have accepted the existing condition of the roof prior to placement of his work product and to the extent that defects arise that are attributable to such pre-existing surface then Respondent is to be held responsible for all necessary repairs and corrections. It is clear that Respondent failed to conduct any reasonable inspection as to the existing roof or the subsurface conditions relating to the decking. A contractor, such as Respondent, is normally allowed a reasonable opportunity to return to a job site and perform any necessary or ordered corrective or remedial work in a manner of his choice, provided that such choice is reasonably calculated to achieve acceptable results according to industry standards. However, a contractor is not entitled to an endless succession of opportunities to correct any such defective work nor is a complainant expected to endure numerous and repeated unsuccessful efforts which are usually disruptive and aggravating when success is not being achieved. Such failed attempts at making successful repairs are properly to be taken into consideration when determining the extent and nature of any discipline that is to be imposed upon Respondent’s license as a result of this case. Further, a complainant is not required to suffer through a seemingly endless succession of inadequate and/or ineffective repair efforts by a contractor, whether in an attempt to comply with a Corrective Work Order or to meet any legal obligations under binding agreements. The facts of this case present a sound and justified reason for a departure from a long- standing policy of the Registrar of Contractors that presumptively allows a contractor an opportunity to correct or repair construction deficiencies which, through the hearing process, are found to exist. Respondent has presented no credible evidence that would satisfy the presumption in his favor. In fact, Complainants have provided sufficient evidence that effectively rebuts this presumption. The Registrar of Contractors’ authority in cases such as presented in this matter, includes the ability to impose restitution to restore complainants to a position they would have been in had the responsible contractor performed in a good and workmanlike manner and had not breached relevant contracts in a material manner. Based upon the weight and credibility of the evidence of record, an appropriate and reasonable condition in this case would consist of an order for the payment by Respondent to Complainants of the sum of $5,380.00 as restitutionary damages. The Registrar may order a “restitutionary remedy … as part of the Registrar’s regulatory authority to take appropriate disciplinary action against those who violate the licensing … “ laws set forth in A.R.S. § 32- 1154A (1) through (24), inclusive. An administrative award of damages is not an unconstitutional exercise of administrative authority where due process procedural rights are protected, where the authority to prohibit conduct has been well defined as in A.R.S. § 32-1154, and where judicial review is available as provided in A.R.S. § 12-901, et seq. Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2nd 430 (App. 1990). A review of agency records in accordance with the standing motion before the Office of Administrative Hearings, reveals that Respondent, within the past two years, has had two other complaints filed against his license, one of which has satisfactorily resolved by compliance as directed by the agency, and the other has been cited for a hearing. This circumstance weighs somewhat in favor of Respondent in this case and will be viewed as a matter in mitigation when determining whether a suspension or permanent revocation as a disciplinary penalty should be imposed as a direct result of the findings and conclusions made in this case.

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 license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has paid or tendered the sum of $5,380.00 as restitutionary damages to Complainants. It is further recommended that if Respondent makes full and complete payment or tender to Complainants of said amount on or before the effective date of the Order entered in this matter, then the said license suspension shall not take place. DONE AND ENTERED, this day, August 17, 1999

______________________________________ Neal H. Jordan Administrative Law Judge

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

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

By ______________________ -----------------------

Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826