ALJDEC

99F-2144-ROC · Registrar of Contractors · 1999-10-14

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Pursuant to notice, a formal hearing was held in this case on October 14, 1999, in Phoenix, Arizona, before Neal H. Jordan, Administrative Law Judge of the Office of Administrative Hearings. APPEARANCES For Complainant: Tony DeLeano, pro se

For Respondent: Michael J. Childers, Esq. Turley, Swan & Childers, P.C. 3101 N. Central Ave., Suite 1300 Phoenix, AZ 85012-2643

FINDINGS OF FACT Based upon all the evidence of record, the following findings of fact are determined: In October, 1996 a well drilling company by the name of Del Rio Drilling & Pump (“Del Rio”) drilled a domestic well (“Well No. 1”) on the property of Complainant pursuant to an agreement dated July 11, 1996. This agreement provided for a well to be drilled to a depth of 600 feet at a price of $11,220.40. Well No. 1 yielded water for a period of approximately two and a half months before the pumped water began to evidence sediment and discoloration. Upon being notified of the problem with Well No. 1, and after failed attempts to repair the well, it was determined by Del Rio that the well PVC casing had become collapsed or broken. The well pump could not be extracted due to the collapsed or broken condition of the well casing. Well No. 1 was abandoned, although no credible evidence was offered to support a finding that such abandonment has been in compliance with any applicable rules or regulations of the Arizona Department Water Resourses (“ADWR”). At the time Well No. 1 had been drilled, the ownership of Del Rio was held by two brothers named Eric and Garth Owens. These brothers decided for private reasons to cease working together whereby Eric Owens retained ownership of Del Rio, and Garth Owens started a new company named Drill Tech, Inc., the Respondent herein. In order not to compete with each other, it was agreed that Del Rio would cover the northern half of the state, while Drill Tech would cover the southern half. When Well No. 1 failed, Drill Tech, which was now responsible for the southern half of the state according to the agreement with Del Rio, assumed responsibility for Well No. 1. Respondent has consistently maintained that the collapsed or broken well casing in Well No. 1 was strictly due to causes beyond its control, i.e., natural subsurface ground movement or shifting. Complainant asserts that the collapsed or broken casing was caused by Del Rio pounding the casing into the borehole, thereby stressing the PVC to the breaking or collapsing point. The evidence establishes that Del Rio did not cause the collapsed or broken pipe casing to occur during the drilling process since it would have otherwise been virtually impossible to insert and set the pump at or near the bottom of the borehole. This finding is bolstered by the fact that the pump was set in place and water was being pumped until the well failed, and that this pump could not be extracted due to the blockage caused by the collapsed or broken well casing. Testimony was presented to suggest that Complainant threatened Respondent with lawsuits and other complaints to government agencies if a new well was not provided without additional cost, notwithstanding fault or natural causes. Complainant denies making such threats. At Complainant’s continued insistence and without admitting fault regarding the drilling of Well No. 1, Respondent did agree to drill a new well (“Well No. 2”). Respondent also testified that, at Complainant’s request, Well No. 2 would be drilled to a depth of 500 feet (100 feet less than Well No. 1) and that Complainant would be reimbursed for the cost of the difference in depth and for the cost of water hauled to Complainant’s residence during the interim. Garth Owens also testified that he suggested to Complainant that steel pipe casing be used in place of Schedule 40 PVC pipe in order to forestall a second incidence of collapsed or broken well casing due to shifting ground conditions, provided that Complainant pay the differential cost between the PVC casing and steel casing. Respondent maintains that Complainant refused to pay the extra cost for steel, insisting that Well No. 1 failed because of defective workmanship, and not from subsurface ground movement. Complainant testified that no such conversation occurred and that, if it had, he would have raised the extra money to pay the cost differential. It is clear that Schedule 40 PVC pipe casing was used in Well No. 2, the same casing material as used in Well No. 1. Respondent did not obtain any written or other provable waiver from Complainant indicating his refusal to accept and pay for steel pipe and/or accepting responsibility and liability if Schedule 40 PVC pipe was used a second time. Well No. 2 was drilled and completed in June, 1998. The testimony of the employee who actually drilled the well establishes that the depth was 100 feet less than Well No. 1, as insisted upon by Complainant, and that it was completed without incident. Upon completion, the well was allowed to “blow” and after an hour clear and clean water flowed freely. A new one horsepower, 5 gallon per minute pump was installed in Well No. 2, and the well functioned normally for a period of about two months. Complainant’s domestic water supply suddenly ceased, and a check of the storage tank revealed it was empty with about 2 inches of silt at the bottom. Respondent was contacted and its pump division made a service call to identify the problem. After investigations, including the use of a video camera designed for this purpose, it was determined that the PVC pipe casing had become either “broken” or “collapsed” at a depth of approximately 379 feet, a repeat of the condition that occurred in Well No. 1. Attempts made to extract the pump proved unsuccessful due to the obstruction resulting from the collapsed or broken pipe casing. Respondent claims it is no longer responsible for either well and that it performed in all respects according to acceptable minimum industry and governmental regulatory standards. A report from Well Scan, Inc. was admitted into evidence that summarizes its interpretation of a videotape produced by lowering a camera into the drill hole of Well No. 2 to varying depths until the obstructions caused by the collapsed or broken casing would not permit it to be lowered further. Complainant’s Ex. 1. This report concludes that there was major damage to the PVC casing at 375 feet, with some areas showing casing missing from 379 feet to at least 386 feet. It is undisputed that such damage exists. A report from one Dennis G. Hall (“Hall”) of Errol L. Montgomery & Associates, a consultant in hydrogeology, together with his testimony, concludes that the wells were not constructed properly and that Respondent was negligent in the construction of Well No. 2. See Complainant’s Ex. 3. It is noted that these conclusions were all premised upon information provided by Complainant, that no personal investigation was conducted and that no visit to the well site was made. While the recommendations contained in this report are worthy for any homeowner to consider, they involve a cost for materials and labor that Complainant (and most homeowners) would most likely be unwilling to pay. Further, Hall’s primary business is in the commercial field and he admittedly has not been involved in any domestic well studies or case analyses other than that conducted for Complainant. Accordingly, it is found that while the report is well presented, its substance carries little credible weight due to the one- sided assumptions upon which the recommendations are premised, and the significant increased cost that would result if such recommendations were to be followed, none of which were discussed or agreed upon by the parties at the time either well was drilled. The testimony of Michael Ball (“Ball”), the Chief of the Technical Support Unit, Groundwater Management Support Section of ADWR, was also adduced and his written report was submitted into evidence substantiating a present investigation of “Groundwater Code Violations” by ADWR concerning Respondent’s activities regarding Well No. 2. See Complainant’s Ex. 2. As with Complainant’s Exhibit 3, virtually the entire report was based upon information provided by the Complainant, with the exception of one visit and modest excavation at a depth of 16 inches around the well cap. Although there may be an initial conclusion that certain discrepancies exist between Respondent’s well-driller’s reports and the actual construction, no findings of improper conduct can be concluded at this juncture, since Respondent has not had the opportunity to respond to or contest any ADWR findings. To conclude otherwise would be tantamount to a violation of Respondent’s due process rights. This is particularly true when it is noted that the investigator’s report states that there are only “suspected violations” of Arizona Revised Statutes and ADWR rules and regulations, and until such violations have been charged and proved, no credence can be given to a suggestion that there may be such violations. This is particularly evident when the evidence is at odds over the installation of the cement grout seal, which Ball asserts was not present and Respondent maintains was installed but has since been covered over by other parties.

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 (Ct. App. 1996). Further, the standard of proof is that of the "preponderance of evidence." Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985) 3. The Respondent is charged with having violated A.R.S. §32-1154 A (1), (3) [namely Rule R4-9-108], (7), and (9) as set forth in the Citation and Complaint filed and served in this case. Complainant has failed to establish by a preponderance of the evidence that Respondent abandoned the contract to drill either well or that it refused to properly perform the work under any contract without legal excuse in violation of A.R.S. §32-1154 A (1). Although Well No. 1 is not the primary issue in this case, it does furnish the underlying premise which led to the drilling of Well No. 2. When Well No. 2 was completed and pumping clear and clean well water, contractually, Respondent had fulfilled its obligations under the agreement. The fact that Well No. 2 failed some two months later as a result of like or similar conditions as occurred at Well No. 1 and that Respondent refused to drill another well is not evidence that supports a conclusion of abandonment. By a preponderance of the evidence, Complainant has established that Respondent has committed a wrongful act when it failed to take proper and reasonable precautions to assure that when Well No. 2 was completed and pumping water that the type and quality of well pipe casing would be such as to resist collapsing or being broken due to subsurface shifting ground or, in the alternative, procuring a provable agreement from Complainant establishing a clear waiver of liability in favor of Respondent when using the same PVC casing as that utilized in Well No. 1, which conduct is in violation of A.R.S. §32-1154 A (7). Complainant has failed to establish by a preponderance of the evidence that Respondent failed to complete the agreement to drill Well No. 2, therefore, no violation of A.R.S. §32-1154 A (9) has been proved. In fact, Respondent did complete Well No. 2 to the point of pumping clean and clear water. Because it failed for other reasons is not evidence there has been a failure to complete the job in any material respect. Complainant’s evidence introduced in Complainant’s Exhibits 2 and 3 suggest that Respondent’s workmanship is below acceptable minimum standards. However, such evidence fails to rise to that level of credibility so as to form the basis of establishing, by a preponderance of the evidence, 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. The evidence of record establishes that Well No. 1 failed due to subsurface shifting ground conditions resulting in a collapsing or breaking of the PVC pipe casing. It is clear that such collapsing or breaking did not occur during Respondent’s activities while drilling the well since the pump was inserted in place according to usual practices and it pumped acceptable domestic water for a period of two months. Had Respondent refused to drill a second well based upon the foregoing facts and conclusions, it would have been justified in doing so without liability since it had fully discharged its contractual obligations. The problem is manifest when Respondent agreed to drill Well No. 2. The evidence is sufficient to establish that Respondent failed to properly and adequately informed Complainant of the advisability, or even the necessity, of using a stronger pipe casing material, such as steel, when drilling Well No. 2. Respondent clearly made the determination that Well No. 1 failed because of shifting ground conditions. Armed with that knowledge, it was incumbent upon Respondent to provide Complainant with any and all information that would then be logically necessary for him to make an informed decision when drilling another well. Respondent testified that the issue of using steel in place of PVC casing was discussed. Complainant, however, strongly disputes this point. In the absence of probative evidence that Complainant waived any liability on the part of Respondent when PVC casing was used in Well No. 2, instead of steel, this tribunal must then weigh the credibility not only of the parties, but also of the entire evidence of record. It is precisely for this reason the conclusion is made that Respondent failed to properly and adequately inform Complainant of the liabilities that would result by drilling a second well using a PVC casing. Respondent’s testimony without other supporting independent evidence fails to establish that Complainant made a knowing and intentional waiver of liability when steel was not used in Well No. 2.

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 53 license of Respondent shall be suspended until the Registrar of Contractors receives credible written proof that Respondent has drilled a third well by using steel casing. However, Respondent is not required to drill a third well unless and until a written agreement is procured from Complainant stating that steel casing will be used and that Complainant will pay to Respondent the cost differential, without markup or profit to Respondent, between that for Schedule 40 PVC casing and steel casing. Further, said agreement must also include provisions for services and materials for legally abandoning Well Nos. 1 and 2, with the cost to be equally shared between Complainant and Respondent for such work. It is further recommended that if Respondent accomplishes the above described corrective work on or before the effective date of the Order entered in this matter, then the above license suspension shall not take place.

DONE AND ENTERED this day, October 28, 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 ___________________________

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