ALJDEC

99F-2190-ROC · Registrar of Contractors · 1999-07-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARINGS: July 6, 1999 at 9:00 a.m. and July 7, 1999 at 9:00 a.m. APPEARANCES: A D L Arizona Design Limited appeared through its qualifying party, Kenton Stafford; D M Western Sun Building Industries, LLC appeared through its attorney, Joel E. Sannes, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The parties presented evidence, testimony, and legal argument on the interrelated issues of whether D M Western Sun Building Industries, LLC (“Western Sun”) fully performed its subcontract with A D L Arizona Design Limited (“A.D.L.”) in a professional and workmanlike manner and whether A.D.L. unjustifiably withheld final payment due Western Sun under the parties’ subcontract. Based upon the entire record in these matters, which were consolidated at the first scheduled hearing, the undersigned makes the following Findings of Fact, Conclusions of Law and Recommended Order. FINDINGS OF FACT The Registrar of Contractors issued License No. 110655, Class B, to A.D.L., a corporation, on December 13, 1995. The Registrar issued License No. 111278, Class B, to Western Sun, a limited liability company, on February 15, 1996. The Parties’ Contract Sometime in 1996, Arizona Design’s qualifying party, Kenton Stafford, purchased a residence located at 6712 E. Cheney Drive in Paradise Valley, taking title in his own name. Mr. Stafford hired architect Ed Chavez to draw plans to substantially reconstruct the residence. A.D.L. acted as general contractor on the project. Following substantial reconstruction of the residence, Mr. Stafford hoped to sell it for $2.5 million. On or about June 30, 1998, Western Sun submitted an amended proposal it had drafted to apply stucco to the residence, which proposal Arizona Design accepted on or about July 21, 1998. The resulting subcontract required Western Sun to apply the stucco to the residence, guest house, gazebo, and 650 linear feet of CMU walls and to remove debris from the jobsite, at a total cost of $51,746.00 “w/o tax,” to be paid “50% at the completion of Lath and 50% at the completion of the stucco.” The contract further provided in relevant part: 6) Subcontractor shall not be responsible for a failure to perform due to non-payment, strikes, acts of God, or other delays beyond its reasonable control.

7) Subcontractor shall not be responsible for backing, framing, or its alignment. Instructions to proceed constitutes unreserved acceptance of condition of prior trade’s work. . . . .

4) Any backcharge or claim against this subcontractor shall be submitted to the subcontractor for a signed agreement within 48 hours of cause of such claim.

The parties’ contract also required that Western Sun apply the stucco using a “dash finish.” Dash finish is a specialty stucco finish that must be blown on the lath from a distance of approximately fifteen feet through a machine designed for this purpose. Although this method of application renders a dash finish somewhat more irregular than the most common stucco finish, a sand finish, industry standards require the texture of a dash finish to be relatively consistent and uniform. Because application of a dash finish is more difficult than a sand finish or other finishes typically applied with a trowel, few stucco contractors are willing to undertake it. Subsequent Performance and Modification of the Parties’ Contract 7. Western Sun commenced installing lath on the residence pursuant to the subcontract. On August 14, 1998, Western Sun’s qualifying party sent the following letter to A.D.L.’s foreman: Western Sun is concerned with the decking that has been applied before the stucco is complete. In normal circumstances the decks are completed after stucco. This protects the decks from stucco debris. We can not take responsibility for the decks. We also are concerned about applying stucco prior to the hanging of drywall. However, we will accept the assurance you have given us that the drywall will be completely screwed and the decks will by covered by A.D.L. . . .

Western Sun was concerned about the installation of drywall subsequent to application of stucco because, if drywall is installed with nails under such circumstances, the installation may cause cracks in the stucco. On August 31, 1998, Western Sun’s lath installation failed the Town of Paradise Valley’s building inspection because weep screed had not been installed at all wall-to-stem connections. Western Sun made appropriate corrections and, on October 15, 1998, the lath passed inspection. A.D.L. apparently covered the decks and continued to provide assurances that the drywall would installed with screws, not nails. Western Sun continued installing lath and was paid $10,000.00 on September 3, 1998, and $5,000.00 on September 18, 1999. Although A.D.L. (or its drywall subcontractor) used some screws to install the drywall, it mostly used nails. While Western Sun’s crew were installing lath, its foreman noticed problems with the framing and installation of windows at the residence that would require special attention during application of stucco.[1] Western Sun called these problems to A.D.L.’s attention and took a videotape, which showed gaps of up to ¾” between some window frames and the framing of the residence, which would have to be floated, the absence of a slope on some window ledges and benches, which might result in drainage problems, and roofing foam that had not been shaved off on the vertical surface of the parapet adjacent to the residence’s roof. After most of the lath had been installed, on October 1, 1998, Western Sun sent via facsimile and certified mail the following letter to A.D.L.’s foreman: Western Sun is concerned with some of the exterior framing of the house located at 6712 E. Cheney Drive. I have attempted to reach you several times after speaking to you this morning. I need to meet with you at the house to go over some of those items. You mentioned to me that you have some items that we need to look at. I want to take care of those items this morning while we have workers on the job site. We were unable to complete the job when we first lathed because you had a problems with set backs. We have been patient in receiving our monies, however today we need to pick up the remainder of the monies due plus change orders we have completed.[2] If you will call me back I will meet with you immediately to take care of any deficiencies that Western Sun might have. While on the roof today I noticed that the lath was taken off the chimneys because the fireplace contractor brought out the wrong size cap. Western Sun also has some concern with letting the foam sit too long with applying stucco. Please call me as soon as possible so we can over [sic] these and more items. It is really important.

[Footnote added.] 13. Apparently as a result of the above letter, Western Sun’s qualifying party met with A.D.L.’s foreman at the job site. On October 2, 1998, Western Sun sent via facsimile and certified mail the following letter summarizing the conclusions the parties had reached at their meeting: On October 1, 1998 I walked the house located at 6712 E. Cheney Drive with you. These are the things we talked about.

Western Sun Builders Responsibilities:

1. Clean caulk around 3 windows on the North side of the house at the exercise room. 2. Place wire on 3 feet of exterior stairs on the North side. 3. Place wire over 4” square @ the top of the exterior stairs on the North side. 4. Cut the diamond mesh from around the lights in the soffit around the building. 5. Add ¼” J-metal around all the garage doors. 6. Correct the reveal around all the popouts on the front pillars. 7. Add diamond mesh where the horizontal and vertical surfaces meet at the underside of the patio at the front patio. 8. Caulk all penetrations.

Western Sun will have all these items completed for your lath inspection set for Monday, October 5, 1998. Western Sun will also be picking up a check for the remainder of the lath and the current change orders on Monday, October 5, 1998.

A.D.L. Responsibilities:

1. Caulk around all areas where A.D.L. removed the lath, added OSB and replaced the lath. Western Sun will take care of these items as addressed in the change order. 2. Electrical box needs lath behind it. Western Sun will take care of this as addressed in the change order. 3. End column on the East side of the building just South of the southern most garage. The stem is out further than the framing. Western Sun will add j-metal and another inch of foam. This will be addressed in the change order. 4. A.D.L. will add OSB on the pillars on the front of the house so that Western Sun can add j-metal. Western will take care of this as addressed in the change order. 5. The reveals around the windows are incorrect because the framing is incorrect. Western Sun will correct these items as addressed in the change order. 6. The Western most column between the front windows needs an inch of foam added to it because the stem sticks out further than the framing. Western Sun will take care of this as addressed in the change order. 7. A.D.L. needs to remove the telephone wire that is connected above the garage.

Western Sun will have these items completed by Monday October 5, 1998 for your lath inspection if A.D.L. has completed the items that Western Sun needs to be completed.

14. Attached to this letter was Western Sun’s “Change Order 003,” also dated October 2, 1998, which made the following changes to the parties’ subcontract: Add j-metal to the roof $ 600.00 Remove excess foam from roof to put in j-metal $ 50.00 Add diamond mesh to windows where framing is wrong $ 450.00 Fix all columns as addressed in letter dated 10-2-98 $ 100.00 Stucco stem wall around perimeter of house $ 651.00 Repair windows with foam and stucco $ 600.00 With the above changes, which totaled $2,451.00, the amount of the parties’ contract became $54,197.00. Western Sun apparently completed at least some of the additional work described in the change order because A.D.L. paid $8,000.00 on the contract on October 9, 1998 and $2,451.00, the amount of the change order, on November 3, 1998. By the first week of the November, therefore, Western Sun had substantially completed lath installation and Arizona Design had paid $25,451.00 of the revised total contract price of $54,197.00. At some point, the parties deleted from their contract the gazebo and guest house and added 250 linear feet of wall, which made the amended contract amount $54,232.00. A.D.L. paid Western Sun $10,000.00 on November 17, 1998 and $7,345.00 on November 20, 1998. The parties agreed at the hearing that $11,436.00 remains unpaid. The Parties’ Complaints to the Registrar After Western Sun demanded final payment and threatened to make a complaint to the Registrar for nonpayment, on December 23, 1998, A.D.L.’s job foreman sent via facsimile to Western Sun a letter, as follows: Items that need to be addressed before any money can be released at this time:

1. All change orders that A.D.L. has paid to Western Sun on 11/3/98 (See C.O. Invoice #003) to be completed.

2. All Windows & Frames must be cleaned from all Stucco and Masking materials, so damage to Windows & Frames can be evaluated.

3. All Decks & Roof must also be cleaned 100% so damage can be evaluated by Roof & Deck Contractors.

4. All Stucco, Trash & Debris cleaned & removed from site as per Contract.

On the same date as the above facsimile, December 23, 1998, A.D.L. made a complaint against Western Sun to the Registrar that alleged that its workmanship was deficient in thirteen enumerated respects, which may be summarized as (1) no site cleanup had been performed; (2) there was stucco overspray on windows, a saguaro cactus, pool equipment, window frames, railings, a fireplace, and an area of stone veneer and masking tape had been left on windows; (3) the texture of the dash finish was irregular and the brown coat showed through in some areas; and (4) Western Sun had damaged the deck. The Registrar’s office designated A.D.L.’s workmanship complaint against Western Sun Case No. 99-1922. On December 31, 1998, Western Sun made a complaint against A.D.L. to the Registrar for nonpayment of the $11,436.00 remaining on the contract. The Registrar’s office designated Western Sun’s nonpayment complaint against A.D.L. Case No. 99-2190. At some point in late 1998 or early 1999, both parties removed debris from and otherwise cleaned up the jobsite. On January 13, 1999, the Registrar’s inspector Bob Mechsner performed a jobsite inspection in Case No. 99-1922, A.D.L.’s workmanship complaint against Western Sun, which A.D.L.’s foreman and Western Sun’s qualifying party attended. Inspector Mechsner noted that jobsite cleanup had been performed. He also noted stucco overspray on window frames, windows, and an exterior stone veneer wall, stucco texture that in his opinion was too heavy in some areas and that allowed the brown coat and screed to show through in other areas, and that masking tape remained on some of the residence’s windows. On January 15, 1999, Inspector Mechsner on behalf of the Registrar issued the following directive to Western Sun with respect to A.D.L.’s workmanship complaint: #1) Exterior site done prior to jobsite meeting. No action required by contractor.

#2) There is stucco overspray and debris in several locations: Windows, frames, railing, fireplace, stone veneer. Contractor shall correct by appropriate means.

#3) Stucco surface is irregular in texture and unsightly in several locations: Corner wire is exposed, excessive buildup, repairs not complete, brown coat exposed. Contractor shall correct by appropriate means in a workmanlike manner.

#4) Walking deck does not appear damaged. Also some debris is the result of roof leak. No action required by contractor.

A.D.L. did not complain about and the Registrar did not direct Western Sun to take any action with respect to any cracks in the stucco. On February 4, 1999, Inspector Mechsner received a letter from A.D.L.’s foreman, which alleged that Western Sun had made only “a minimum attempt” to comply with the Registrar’s directive and set forth an itemized list of the alleged costs for A.D.L. to arrange for someone else to perform the work that the directive required, including $18,480.00 for stucco and $540.75 for window repair. The letter also included itemized costs of $1,420.00 for clean up and $3,200.00 for foam roof, alleged deficiencies for which the Registrar did not direct Western Sun to take any corrective action. Enclosed with A.D.L.’s foreman’s letter were two letters allegedly sent to Western Sun to obtain Western Sun’s plans to comply with the corrective work order. At the hearings in these complaints, A.D.L. entered into evidence bids obtained from various contractors to correct the problems allegedly caused by Western Sun’s performance of the stucco subcontract: $21,367.00 to replace windows and frames that had been damaged; $3,200.00 for the foam roof and walk decks; $132.00 to repair or replace a scratched skylight lens and bent frame; $624.00 for labor to clean up the site; $769.00 for hauling and landfill fees; $975.00 for window and frame cleaning of undamaged units; and $26,980.00 to stucco the residence in a sand finish. On February 11, 1999, Inspector Mechsner received via facsimile a letter from Western Sun’s qualifying party, as follows: Western Sun spent 6 days with four men working on the A.D.L. project. We not only corrected the items you asked us to correct we spent several hours correcting new holes A.D.L. made to fix other problems they had. On Friday January 22, 1999 I called [A.D.L.’s foreman] James Rodriguez to tell him that his workers were not allowing my workers to complete their job. His workers were harassing my guys. He told me he would ask them to stop. On Monday February 1, 1999, James Rodriguez called me and said “he wants to have his people clean the windows”. I told him that was OK with me. On Tuesday February 2, 1999, I called James Rodriguez to walk the house with me to see if we missed anything. He said “I can’t walk it today”. I asked him when we could walk the house. He told me to call him on Friday, February 5, 1999. I called him on Friday and he never answered his telephone. I called him on Saturday February 6, 1999 and he answered his phone. I told him I wanted to walk the home with him and he said “I’m leaving town because my grandmother died”. I am appalled at their attempt to keep us from being paid. I want this issue resolved immediately. Also in the letter dated February 4, 1999 James Rodriguez enclosed to you two letters he faxed and sent. Western Sun has not received any documentation from A.D.L. Please give me some help.

On the same date that Western Sun sent the above facsimile, its qualifying party made a telephone call to Inspector Mechsner, informing him that, although Western Sun had performed substantial corrective work, A.D.L. still refused to pay the remainder of the contract price. Inspector Mechsner agreed to perform another jobsite inspection in an effort to help the parties mediate their dispute. Inspector Mechsner testified that he would not have scheduled a second jobsite inspection unless he had believed that the corrective work had been fully or substantially performed. On February 12, 1999, Inspector Mechsner performed a second jobsite inspection. Although Inspector Mechsner noted that about half of the corrective work had been performed, he still observed excessive stucco overspray and buildup and that brown coat and lath were still showing in places. Given the unfinished status of the corrective work, Inspector Mechsner was surprised that Western Sun had asked him to perform a second inspection. The area of greatest concern to Inspector Mechsner was the irregular texture of the stucco and the excessive buildup in the corners of the windows. At the second inspection, Western Sun’s qualifying party agreed that additional corrective work was necessary and indicated that such work would be performed within a week. The deficiencies that Inspector Mechsner observed at his second inspection were such that a professional stucco contractor should have known corrective action was warranted without a punchlist. Inspector Mechsner did not schedule or perform a prehearing jobsite inspection because A.D.L. told him at the February 12, 1999 inspection that it intended to hire another stucco subcontractor to perform the corrective work. A.D.L. confirmed this intention in a letter dated February 17, 1999 to Western Sun, which was copied to the Registrar, allowing it until March 1, 1999 to complete the corrective work and informing it that, if no completion occurred, A.D.L. “[would] hire a new subcontractor and backcharge you accordingly.” At the hearing, Western Sun offered into evidence copies of checks totaling $7,285.00, dated between January 13, 1999 and March 15, 1999, which were paid to its workers to perform corrective work. Western Sun’s qualifying party testified that he called Inspector Mechsner, not because he thought Western Sun had fully performed the corrective work, but because he wanted to stop A.D.L.’s employees from telling Western Sun’s employees that they would not get paid. The undersigned notes that only $2,385.00 of this amount was paid before Western Sun’s qualifying party requested the second jobsite inspection. On March 30, 1999, the Registrar issued a Citation and Complaint against A.D.L., charging it with violating A.R.S. § 32-1154(A)(7) and (11). A.D.L.’s answer to the Citation and Complaint alleged that it was waiting to resolve the workmanship and backcharges issues before making final payment to Western Sun. On April 1, 1999, the Registrar issued a Citation and Complaint against Western Sun, charging it with violating A.R.S. § 32-1154(A)(7), (23), and (3). Western Sun’s answer to the Citation and Complaint alleged (1) that A.D.L.’s workmanship complaint was a subterfuge and preemptive strike to excuse its own inability to pay Western Sun, which was due to the project having been underfunded; (2) that, as a result of A.D.L.’s financial difficulties on the project, it had hired unqualified or unlicensed contractors to perform the framing and installation of doors and windows and that any deficiency in the stucco resulted from the inadequacy of the surface, which Western Sun had disclaimed; and (3) that A.D.L. or A.D.L.’s unqualified subcontractors had attempted to repair or had altered the stucco work subsequent to the time Western Sun last performed corrective work. Additional Evidence Admitted at the Hearing and Factors in Mitigation Western Sun offered into evidence a videotape that showed the conditions of the residence’s exterior prior to its application of stucco, which confirmed the framing problems noted at Finding of Fact No. 11, supra, and that led the parties to enter into the change order described at Finding of Fact No. 14, supra. This segment of the videotape showed metal railings, although it also shows some apparently temporary railings constructed with two by fours, despite Western Sun’s testimony that all the railings were originally wooden. Other segments of the videotape showed the condition of the residence’s exterior subsequent to the parties having made complaints to the Registrar and Western Sun having performed corrective work, which showed workers mixing something on the ground, which Western Sun alleged was stucco, a ladder on the jobsite that Western Sun’s qualifying party testified had held a worker applying stucco to the residence’s exterior just before he began videotaping the scene, and areas allegedly showing wet, newly applied stucco. A.D.L. admitted that it had applied stucco to the mailbox and had hired another stucco subcontractor to apply stucco to the gazebo and that it brought the doors in late, after Western Sun had begun applying stucco. A.D.L. denied that it or anyone else had attempted to correct Western Sun’s stucco work or that it had removed any windows. A.D.L. also offered into evidence a videotape of the residence’s exterior taken shortly before the hearings in these consolidated matters. The videotape showed stucco overspray on windows, railings, an interior fireplace, and exterior stone veneer, irregular texture, brown coat and screed showing through in some areas, and globs of stucco in the corners of some of the windows. Although the videotape also showed a saguaro cactus, a skylight, and various areas of the roof and parapet walls, the videotape did not show stucco overspray on these areas or damage that appeared to have been caused by stucco application. Inspector Mechsner testified that A.D.L.’s videotape mostly showed about what he observed at his second jobsite inspection, with the exception that some isolated patches and some attempts to repair the columns may have been made since that time. The Citations and Complaints issued by the Registrar advised both parties that, if they were found in violation of any contracting law, their prior disciplinary records of final Registrar of Contractors’ orders might be considered in mitigation or aggravation. Accordingly, notice is taken of official records of the Registrar of Contractors, which reveal that neither party has any final orders against them on the Registrar’s current record. Therefore, both parties’ prior records are deemed to be excellent and, thus, are viewed as a matter in mitigation for any disciplinary penalties to be imposed as a direct result of this consolidated case. CONCLUSIONS OF LAW A.D.L. bears the burden of proof to show that Western Sun’s performance of the stucco subcontract was deficient. Western Sun bears the burden to show that the full amount of the subcontract was due and that A.D.L.’s failure to pay was unjustified. Each party must establish statutory violations by the other by a preponderance of the evidence. See A.A.C. R2-19-119; see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App. 1996). “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). A preponderance of the evidence is “evidence which is of greater weight or more convincing than 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 at page 1064 (6th ed. 1990). Both parties began to mistrust the other soon after entering the contract, long before matters reached an impasse and the parties made their respective complaints to the Registrar. It appears that, beginning in August or September 1998, both parties paid more attention to protecting their positions with respect to potential complaints than they did to completing or expediting performance of the contract in a professional and workmanlike manner. A.D.L. has established that Western Sun violated A.R.S. § 32-1154(A)(7),[3] (23),[4] and (3)[5] with respect to the items described in Registrar’s directive set forth at Finding of Fact No. 22, supra. Although the evidence also shows that the framing of the residence was deficient and that Western Sun called these deficiencies to A.D.L.’s attention, Western Sun undertook to correct these framing deficiencies for an additional consideration of $2,451.00 in the October 2, 1998 change order, described at Finding of Fact No. 14. Parties to a contract may by mutual agreement supported by consideration modify their contract. See, e.g., Nationwide Resources Corp. v. Masssabni, 134 Ariz. 557, 563, 658 P.2d 210, 215 (Ct. App. 1982); Coronado Company, Inc. v. Jacome’s Department Store, Inc., 129 Ariz. 137, 139, 629 P.2d 553, 555 (Ct. App. 1981). Once Western Sun amended the contract to undertake to correct the surface that A.D.L. had prepared, the original contract was merged into and was superseded by the change order, which now governed the parties’ rights and obligations with respect to one another. By agreeing to correct the surface for consideration, Western Sun relinquished any defense it might otherwise have had under the original contract term that relieved it of responsibility for deficient “backing, framing, or its alignment.” Western Sun cannot escape liability for failing to apply stucco in a professional and workmanlike manner by arguing that it did not prepare the surface because it expressly undertook to correct the surface by the method of its application of stucco.[6] Western Sun has not established its asserted affirmative defense that another contractor attempted to repair or should be responsible for the deficiencies apparent in the stucco application on the residence. Although some evidence exists that another contractor may have performed some isolated stucco work on the residence, a preponderance of the evidence shows the stucco work is in substantially the same condition as Western Sun left it. Western Sun’s affirmative defenses that it should not be responsible for damage caused by installation of drywall with nails instead of screws or for damage caused by leaks in the roof because A.D.L. caused these conditions also are unavailing because neither the Registrar’s January 15, 1999 directive nor this recommended order hold Western Sun responsible for any deficiencies attributable to these causes. A.D.L. has not established that Western Sun is responsible for alleged collateral damage to the windows and frames, the foam roof and walk deck, or the skylight lens and frame. Likewise, although the evidence shows that Western Sun is responsible for cleaning stucco overspray from the windows, frames, railings, fireplace, and stone veneer, the evidence does not establish that it is responsible for the additional site cleanup or for landfill fees. Western Sun has not established that A.D.L. violated A.R.S. § 32-1154(A)(7) or (11)[7] in failing to make final payment to Western Sun under the parties’ subcontract because, as noted above, the evidence showed that Western Sun had not fully performed the contract in a professional and workmanlike manner. Although A.D.L. could have expedited Western Sun’s performance of the amended contract by making progress payments in a more timely manner and by preparing the surface in a more professional and workmanlike manner, A.D.L. was justified in withholding the final payment. RECOMMENDED ORDER In view of the foregoing, it is recommended that the Registrar dismiss Case No. 99-2190 against A D L Arizona Design Limited, License No. 110655, Class B. It is further recommended that the Registrar suspend D M Western Sun Building Industries, LLC’s contractor’s license, License No. 111278, Class B, on the effective date of the his order, thirty-five days after it is mailed. It is further recommended that, if Western Sun furnishes proof in writing to the Registrar that it has taken appropriate action to comply with the Registrar’s January 15, 1999 directive,[8] no license suspension should take place and the Registrar may close Case No. 99-1922. Done this day, July 22, 1999.

____________________________________ Diane Mihalsky Administrative Law Judge

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

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

By ___________________________

----------------------- [1] According to Arizona Design, subcontractor Unique Builders performed the framing and installation of windows at the residence. According to Western Sun, Arizona Design performed these parts of construction of the residence itself. Regardless of who actually performed the framing, as between these two parties, as general contractor A.D.L. is responsible.

[2] No evidence was produced at the hearing regarding any change orders submitted by either party between the time Arizona Design accepted Western Sun’s proposal on July 21, 1998 and the date of this letter. In fact, testimony at the hearing established that the only change orders affecting the contract price that the parties made were the ones dated October 2, 1998 and November 13, 1998, discussed infra at Findings of Fact Nos. 14 and 15. [3] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

[4] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure 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 written directive from the registrar.”

[5] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar.” The rule violated here was A.A.C. R4-9-108, which requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [6] Western Sun’s amendment of the contract to require it to correct the framing problems distinguishes the facts of this case from the authorities its counsel cited at the hearing to support the argument that Western Sun’s acceptance of the surface does not require it to warranty the workmanship of the stucco applied to that surface. All of Western Sun’s authorities are inapposite because they involved exoneration of a contractor for workmanship deficiencies attributable to flawed plans or specifications supplied by the owner. See United States v. Spearin, 248 U.S. 132, 136, 39 S. Ct. 59, 61 (1918) (“But if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications.”); Chaney Building Co. v. City of Tucson, 148 Ariz. 571, 574, 716 P.2d 28, 31 (1986) (“A contractor is also not liable for damages which are the direct result of defective plans and specifications furnished by the owner.”); Kubby v. Crescent Steel, 105 Ariz. 459, 460, 466 P.2d 753, 754 (1970) (same). Once a contractor undertakes to perform work, corrective or otherwise, he warrants that he will perform the work fully in a professional and workmanlike manner. See id.

[7] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay . . . .” [8] Given the overall poor relationship between these parties, it may be advisable for Western Sun to arrange for Inspector Mechsner to perform a third inspection for compliance once it feels it has completed the corrective work.

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