ALJDEC

99F-2307-ROC · Registrar of Contractors · 2000-01-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 7, 2000 APPEARANCES: Complainant appeared on her own behalf and Respondent appeared through its president and qualifying party, Danny Kregle. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record in this matter, the following Findings of Fact, Conclusions of Law, and Recommended Order are made:

FINDINGS OF FACT

1. As part of major remodel/renovation work on her home Complainant retained Respondent for the limited purpose of replacing and moving the location of five air-conditioning compressors/condensers (“compressors”) for the home. Complainant alleges certain deficiencies in the work performed or materials provided by Respondent and same are discussed in the findings below.

2. The following salient facts were adduced at the hearing and are important to note:

a. Complainant’s home is extremely large (approximately 10,000 square feet of livable space) and quite old. At the time of the contract in question, five air-conditioning compressor units were being utilized to cool the various interior areas of the home. The compressors were located on the ground outside the home and five separate air-handlers/furnaces (blowers and coils) were installed inside the home. The original system was a matched system. b. As part of the major remodel/renovation of her home, Complainant desired to move the location of the existing compressors and sought a bid from Respondent for this purpose. Respondent apparently advised Complainant that due to the advanced age of the existing compressors that it would be unable to guarantee that the units would still be working after moving them from their existing location. Complainant’s general contractor also confirmed that it would be advisable for Complainant to purchase new units. c. Although Complainant contends that the original system was operational and adequately cooled her home, she ultimately consented to purchase new compressors from Respondent. In this regard she was advised by Respondent that she should consider replacing the existing air-handlers inside the home in order to assure optimum operation of the systems and to have a total new air-conditioning system for the home. Complainant was further advised by Respondent that although Respondent was recommending the additional replacements of the air-handlers, that said additional work was not required. Complainant opted to merely have Respondent replace the exterior compressors and install the new machines in a location some forty (40) feet away from the location of the existing compressors. d. The new compressors were installed by Respondent in the early part of 1998 and these new units were manufactured by Lennox. The new Lennox units were not the same manufacturer as the existing air-handlers but Respondent testified that it is acceptable to mix the manufacturers of compressors with different manufacturers of air-handlers. e. Evidence of record supported a finding that Complainant paid Respondent $8,996.00 for its work on the above-described project. f. Complainant testified that subsequent to Respondent’s installation of the new compressors that she has not been able to receive appropriate air-conditioning in her home. Evidence of record demonstrated that the new units would “freeze-up” and/or run constantly without cycling off. g. Complainant testified that although Respondent has made numerous (40-50) service calls on her home over the past two years, attempting to correct the deficiencies in her air-conditioning system, that she has had to endure two summers (1998 and 1999) without air-conditioning for her home. h. In February 1999 Complainant filed the instant complaint with the Registrar of Contractors. A jobsite inspection by the appointed inspector for the Registrar of Contractors was held, pursuant to which that Agency sent Respondent a letter, dated June 29, 1999, directing it to accomplish appropriate and effective remedial work to “insure that the new condensers (5) are operating and functioning as intended and the condensers should be capable of operating with or be compatible with existing systems and units and shall be able to cool structure 30 degrees lower than outside air temperature or a minimum of 78 degrees.” i. Respondent returned to Complainant’s home as per the direction of the above-described Agency directive and performed specified remedial work in an attempt to comply with said directive. Subsequent to accomplishing the aforementioned remedial work, Respondent believed that it did achieve a proper working air-conditioning system for the home. However, Complainant testified that the system still did not work and as a direct result of specified compressors continuing to freeze-up and/or run continuously she still did not have any proper air-conditioning in her home for the remainder of the summer of 1999. j. Respondent contends that any problems which Complainant may still be experiencing, after completion of its most recent remedial efforts, could only be due to either defects in the existing air-handlers, thermostat deficiencies, Complainant’s refusal to run all units simultaneously with the same thermostat settings, or problems in the duct system for the home k. It was undisputed that in an attempt to rectify the problems with the air-conditioning system Respondent has installed one completely new air- handler in the home and a new coil in another air-handler, at no cost to Complainant. Evidence of record demonstrated that the approximate value of these two installations would be $2,266.00. l. The assigned Registrar inspector appeared at the instant hearing and testified, among other things, that in his opinion a contractor should not sell parts (compressors) that would not be capable of working with the existing system and effectively providing a homeowner with some benefit referable to the cooling of her home. Nevertheless, in this regard, if the problems were shown to be attributable to the air-handlers, thermostats, or existing duct system he did not believe that a homeowner should be able to receive these other parts for free if that was the only way to correct the problems with the system.

3. The weight of the credible evidence of record is determined to support a finding that after spending over $8,000.00 Complainant does not have a proper working air-conditioning system for her home. This failure in the system is deemed to constitute a breach of Respondent’s implied warranty that the new compressors, which it sold and installed, would provide Complainant with a proper working air-conditioning system. It is important to emphasize that the evidence of record was sufficient to demonstrate that prior to Respondent performing its work on the project, Complainant was able to adequately cool her home with her old equipment. Complainant simply has not received the “benefit of the bargain.”

4. The failure of the new compressors sold and installed by Respondent to provide Complainant with proper cooling of her home is deemed to constitute not only a contractual breach of the implied warranty of fitness for use but also an unworkmanlike result, in violation of the applicable charged sections of the State’s Contracting laws. Moreover, Respondent is determined to have failed to substantially comply with the terms and conditions of the above-described directive issued by the Registrar of Contractors’ inspector.

5. Although Respondent has failed to provide Complainant with the benefit of the bargain regarding the installation of the new compressors, due to the fact that it has been unable to provide her with adequate air- conditioning for her home, it is important to emphasize that nothing in this world is free. Complainant did not contract with Respondent to replace or repair the air-handlers, duct system, or thermostats. Therefore, Complainant is not entitled to have same repaired or replaced by Respondent at no cost.

6. The facts presented herein support a finding that partial restitution may serve as a reasonable condition to allow Respondent to avoid the imposition of otherwise appropriate disciplinary sanctions against its license. Such a restitutionary remedy should consist of Respondent removing the five exterior compressors and returning Complainant’s money for the project, minus the approximate value of the new air-handler and coil installed inside the home. It should be noted that imposition of such a condition should not serve to prevent either party from seeking a greater or lesser award of monetary damages in a civil court of competent jurisdiction.

7. It should also be noted that any attempt to verify the adequacy of further remedial work which Respondent may elect to perform, as a means of avoiding disciplinary sanctions against its license, would require that the summer heat return to Phoenix. Therefore, in light of the fact that it is currently the winter months in Phoenix, the facts presented herein properly justify a significant extension of the deadline date, for Respondent to comply with this Order, than would normally be imposed by an Order of the Registrar.

8. 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 Contractors’ 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 the absence of any such prior disciplinary sanctions on the Registrar of Contractors’ current record regarding Respondent. Therefore, Respondent’s prior record is properly deemed to be excellent and thus, is viewed as a matter in mitigation for any disciplinary penalties to be imposed as a direct result of this case.

CONCLUSIONS OF LAW

1. Respondent violated the provisions of A.R.S. § 32-1154A (23), (7), and (3); namely Rule R 4-9-108.

2. The Registrar of Contractors’ authority in matters such as presented herein, includes the ability to impose restitution, in whole or in part, as a reasonable condition to reduce any possible disciplinary action against contractors. The exercise of such authority is deemed appropriate in the instant case. Therefore, based upon all the evidence, a reasonable alternative condition in this case would consist of the requirement that Respondent remove the five new compressors and pay to Complainant the sum of $6,730.00 (the original contract price minus the approximate value of the new air-handler and coil) as partial or full restitution.

3. 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).

RECOMMENDED ORDER

In view of the foregoing it is recommended, commencing on May 31, 2000, that the Class C-39R license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has accomplished one of the following alternative conditions: a. Perform appropriate and effective remedial work on Complainant’s air-conditioning system in order to insure that the system provides proper and adequate cooling to the home. b. Remove the new compressors and pay Complainant the sum of $6,730.00. c. Conclude other mutually acceptable arrangements with Complainant. It is further recommended that if Respondent complies with any one of the above-described conditions on or before May 31, 2000, then the aforementioned license suspension shall not take place and in that event this Citation, together with the Complaint upon which it is based, shall be closed.

Done this day, January 13, 2000

______________________________________ Mark A. Silver Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2000, to:

Registrar of Contractors 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