ALJDEC

99F-2810-ROC-com-rhg2 · Registrar of Contractors · 2001-01-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 4, 2001 at 9:00 a.m. APPEARANCES: Complainants Leroy and Karen Fulton appeared on their own behalf; Respondent Arizona Concrete Surfaces appeared through its qualifying party, Jim Harrison. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The parties presented factual evidence and legal argument. Based upon the entire record in this second compliance rehearing on whether Respondent complied with the terms of its settlement made during the hearing on the disciplinary complaint, the undersigned makes the following recommended Findings of Fact, Conclusions of Law, and Order to the Arizona Registrar of Contractors. FINDINGS OF FACT Procedural and Factual Background In early March 1999, Respondent contracted to and did apply a coating to the concrete on the patio of Complainants’ residence that was meant to simulate the appearance of sandstone. On April 4, 1999, Complainants made a complaint to the Registrar that alleged that Respondent’s workmanship was deficient in 11 enumerated respects. The Registrar’s Inspector Phil Coscia performed a jobsite inspection and, on June 22, 1999, on behalf of the Registrar directed Respondent to take appropriate action to repair or correct six of the alleged eleven deficiencies, as follows: 4) CONTRACTOR SHALL MAKE PROPER REPAIRS TO ENSURE UNIFORM AND CONSISTENT GROUT JOINTS. 5) THIS INSPECTOR COULD NOT CONFIRM THAT COLOR OF CONCRETE COATING IS INCORRECT. NO ACTION REQUIRED BY CONTRACTOR AT THIS TIME. 6) CONTRACTOR SHALL CORRECT COLOR DIFFERENCE OF COATING AT EAST AND REAR PATIOS. 7) THIS INSPECTOR DID NOT CONFIRM THAT THERE IS ANY BOND FAILURE DUE TO APPLYING COATING OVER PREVIOUS LAYER OF COATING. 8) CONTRACTOR SHALL CORRECT AREAS OF DIRT SEALED-IN UNDER SEALER COAT. 9) CONTRACTOR TO CORRECT SLOPPY COATING THAT CREATES AN INCONSISTENT, AND IRREGULAR EDGES OF CONCRETE PATIO (EAST). 10) MAKE NEEDED REPAIRS TO UNSIGHTLY BRUSH AND SWEEP MARKS IN SURFACE OF FINISH. 11) THE USE OF CAULK BETWEEN ISOLATED SECTIONS TO CONCRETE PATIO IS NOT UNCOMMON. CONTRACTOR SHALL ENSURE ALL CAULK IS PROPERLY AND NEATLY APPLIED. 12) SEE #5 FOR DIRT ON FINISH. 13) MR. FULTON STATED THAT HE WILL TOUCH UP PEELED PAINT ON STEM. THIS WAS CAUSED FROM REMOVAL OF MASKING TAPE. 14) OTHER THAN REPAIRS LISTED ABOVE, THIS INSPECTOR CANNOT COMMENT ON AS TO WHETHER OVERALL WORK IS THAT OF SAMPLE VIEWED BY THE FULTONS. THIS INSPECTOR HAS NOT SEEN THE SAME SAMPLE.

The January 20, 2000 Hearing At the first hearing, which was held on January 20, 2000, Inspector Coscia amended Item No. 3 of his directive because he had performed additional research, which indicated that applicable industry standards require only that adjacent simulated flagstone concrete slabs must be a similar, but not the same, color. Inspector Coscia therefore testified at the first hearing that he believed that the observed color variations in Respondent’s work were acceptable. After a discussion on the record, Respondent agreed to perform the five areas of work required to comply with Inspector Coscia’s June 22, 1999 directive, as amended by his hearing testimony, including repairs to grout joints (#1 on Inspector Coscia’s directive), dirt under sealer coat (#5 and 9), sloppy coating on east edge of patio (#6), unsightly brushmarks (#7), and caulking (#8). Complainants agreed to withdraw their complaint and to consent to the entry of an order closing it. Respondent subsequently performed some corrective work and informed the Registrar that it had complied with his order. Complainants disputed Respondent’s compliance. On March 17, 2000, Inspector Coscia performed a compliance inspection and opined that Respondent had corrected in a professional and workmanlike manner four of the five items that comprised Inspector Coscia’s directive and the parties’ settlement. Respondent also had failed to install in a professional and workmanlike manner a deco drain, which was not included on Inspector Coscia’s June 22, 1999 directive or in the parties’ settlement but which Respondent performed as part of its repairs. Inspector Coscia’s compliance inspection report provided in relevant part as follows: 2. Clean and caulk plastic joints that separate existing slabs. Owners point out that concrete coating was not removed from plastic joints as per agreement. Inspector: Contractor has failed to remove the coating from plastic joints and coating is peeling due to poor bond.

. . . .

5. Fix unsightly brush marks in finish at entry to yard. The Fultons state that Contractor did no work to coating beyond front gate to correct this. Inspector: There are no brush marks in the coating as viewed at initial inspection, only a swirling type pattern. This would result from trying to simulate the texture of natural stone. The coating requires no repair as there are no brush marks to correct.

6. Install new deco-drain between patio and pool deck. Mr. Fulton pointed out that the deco-drain installed between the rear patio and pool deck is not secured properly and “pops” when stepped on. Also, he states the drain lacks a bottom to it that will cause the water to undermine the soil under the slab along the drain. Inspector: I too found the drain needs to be firmly anchored with a provision allowing water to be retained in the drain where it can exit out the sides. The drain will not function as intended.

Inspector’s opinion: Contractor has failed to properly correct items 2 and 6 and in my opinion has not met compliance with the decision and order on this case.

The June 6, 2000 Compliance Hearing On March 29, 2000, the Registrar ordered that a compliance hearing be set and, on April 11, 2000, issued a notice to both parties of a hearing to be held on June 6, 2000 at 1:30 p.m. On May 31, 2000, Respondent’s qualifying party requested that the compliance hearing be continued because Complainants allegedly had denied him access to perform further repairs after Inspector Coscia’s compliance inspection and he had made personal plans that would prevent him from attending the compliance hearing. On June 2, 2000, the administrative law judge denied the motion for continuance as untimely under A.A.C. R2-19-106.C. A copy of the denial was mailed to Respondent’s qualifying party at 1617 East Jefferson Street, Phoenix, AZ 85034, the same address as shown on Respondent’s letterhead and the same address to which the Registrar’s notice of compliance hearing had been sent. Although the beginning of the duly noticed hearing was delayed fifteen minutes to allow Respondent additional travel time, it neither appeared through a duly authorized representative or attorney, contacted the Office of Administrative Hearings to request that the time for the hearing be further delayed, nor presented any evidence at the hearing to dispute Complainant’s evidence of its failure to comply with the terms of the settlement and the Registrar’s directive. The administrative law judge recommended and the Registrar ordered that Respondent’s license should be suspended and Complainants allowed to make a claim to the Residential Contractors’ Recovery Fund for the costs of repairing the plastic joints, the deco drain, and the brush marks. The October 12, 2000 Compliance Rehearing Respondent requested a compliance rehearing because, between the times when the Registrar issued the notice of the June 6, 2000 compliance hearing and when the administrative law judge denied the motion for continuance, it had moved its office and, although it had informed the Registrar of the new address, it did not inform the Office of Administrative Hearings and the notice of denial was sent to the wrong address. The Registrar granted a compliance rehearing. On July 28, 2000, the Registrar mailed notice of a compliance rehearing scheduled to begin at 9:00 a.m. on October 12, 2000 to Complainants at 2346 W. Shaw Butte, Phoenix, AZ 85029, the same address shown on their original complaint form and the same address to which all the other notices and decisions had been sent. Although the beginning of the October 12, 2000 compliance rehearing was delayed seventeen minutes to allow Complainants additional travel time, they did not appear, personally or through an authorized representative, or contact the Office of Administrative Hearings. Complainants did not pay Respondent between $1,784.00 (according to Complainants’ form complaint to the Registrar) and $2,500.00 (according to Respondent’s hearing testimony) of the contract price. Respondent’s qualifying party testified at the October 12, 2000 compliance rehearing that the deco drain was not part of the original contract, that he had installed it as a favor to Complainants, that the collateral civil action regarding the parties’ contract had been finally decided in Complainants’ favor, that Complainants still had not paid Respondent the full contract price, that Complainants had not allowed access for further corrective work to be performed after Inspector Coscia’s compliance inspection, and that Complainants had covered over the simulated flagstone coating on their patio. Because the evidence presented at the October 12, 2000 compliance hearing did not indicate that additional corrective work was possible, that an award of restitution against Respondent or of damages from the Residential Contractors’ Recovery Fund was appropriate, or that Respondent’s contractor’s license should be unconditionally revoked or suspended, the administrative law judge recommended and the Registrar ordered that the complaint be closed. The Registrar subsequently granted a second compliance rehearing because Complainants had moved between the times when they received the Registrar’s decision after the original compliance hearing and when the Registrar granted Respondent’s request for compliance rehearing. The Second Compliance Rehearing on January 4, 2001 Both parties appeared and testified at the second compliance rehearing held on January 4, 2001. Complainants testified that they no longer own the residence where the work was performed. Before moving, they paid $2,000.00 to have the simulated sandstone covered. The new owners purchased the residence “as is.” The parties agreed that Complainants had obtained a default judgment in their court action against Respondent in the amount of $500.00. That judgment had become final. Respondent had not paid the judgment. Inspector Coscia testified that, in his opinion, the only items that required further correction were removal of the coating that was peeling from the plastic joints and installation of a new deco-drain between the patio and pool deck. These are relatively minor deficiencies. Inspector Coscia testified that the brush marks simulate water flow marks on natural sandstone. After the January 20, 2000 hearing, Inspector Coscia looked at other contractors’ finishes of simulated sandstone and revised his original opinion. He now believes that Respondent’s brush marks comply with applicable minimum standards. On the issue of access, Complainants testified that they did not remember Respondent’s qualifying party calling to schedule or actually attempting to perform additional corrective work after Inspector Coscia’s March 17, 2000 compliance inspection. Although Complainants recalled one of Respondent’s crews arriving at their home in July 2000, the crew performed no work because its members did not know what needed to be done. Respondent’s qualifying party testified that it had never sent out a crew after Inspector Coscia’s March 17, 2000 compliance inspection. Complainants were thinking about an event that occurred before the January 20, 2000 hearing. Based on Respondent’s internal records, its qualifying party testified that it had made telephone calls to Complainants on March 29, 2000, May 1, 2000, and May 31, 2000 and had sent a registered letter on May 9, 2000 to schedule work. Complainants either failed to return messages or refused to allow access for repairs to be made. Complainants testified that Respondent had sent them many registered letters. They did not remember receiving one in May 2000. The Registrar’s records reveal that, on the date of the second compliance rehearing, Respondent’s contractor’s license was revoked as a result of its failure to comply with the final order in Case No. 99-2264, an unrelated case.[1] Respondent’s qualifying party testified at the second Compliance Rehearing that it intended to reinstate its license and remain in the business of contracting. CONCLUSIONS OF LAW The record shows that Respondent failed to comply with minimum workmanship standards in its installation of the deco-drain, in violation of A.R.S. § 32-1154(3).[2] But installation of the deco-drain was not required by Inspector Coscia’s June 22, 1999 directive or the parties’ January 20, 2000 settlement. The record also shows that Respondent failed to comply with applicable minimum standards, Inspector Coscia’s June 22, 1999 directive, or the terms of the parties’ January 20, 2000 settlement, in violation of A.R.S. § 32- 1154(A)(3) and (23),[3] when it failed to correct the concrete coating that was peeling off the plastic joints. The record also shows that Respondent failed to comply with its January 20, 2000 settlement agreement to remove brushstrokes and the Registrar’s subsequent order that Respondent comply with the terms its settlement. Regardless of whether or not Respondent’s workmanship in this respect complied with minimum workmanship standards, Respondent’s agreement on January 20, 2000 to remedy the brushstrokes superseded any order that the Registrar might have issued requiring correction following a hearing on the merits of the disciplinary complaint, if the parties had not settled. Failure to comply with the terms of the settlement constituted a failure to comply with a final order issued by the Registrar, in violation of A.R.S. § 32-1154(A)(23). As noted at the second compliance rehearing, the workmanship deficiencies in the deco-drain and the concrete coating were relatively minor, relative to the size and scope of the contract work. Although Complainants had a contractual right to have Respondent remedy the brushmarks they found esthetically unacceptable, compliance with minimum standards did not require such correction. These circumstances render inappropriate an that Respondent return the contract price to Complainants as a condition of keeping its license. Although the issue is close, the evidence shows that it is more likely than not that Complainants did not allow access to Respondent to perform additional repairs after Inspector Coscia’s March 17, 2000 compliance inspection. But Respondent failed to make any attempt to comply with Inspector Coscia’s June 22, 1999 directive and failed to make any attempt to comply with its January 20, 2000 settlement agreement to correct the brushmarks. Respondent failed to comply with the June 22, 1999 directive, its January 20, 2000 agreement, or with applicable minimum workmanship standards with respect to the peeling concrete coating. Respondent failed to comply with minimum workmanship standards when it failed to install the deco-drain in a professional and workmanlike manner as part of its performance of the settlement. Respondent is not entitled to unlimited opportunities to perform repairs and new construction that is incidental to repairs in a timely, professional and workmanlike manner. The evidence therefore establishes continuing and persistent violations. Because Complainants covered the coating and sold their residence, it is no longer possible for Respondent to correct its workmanship or to comply with the terms of the parties’ January 20, 2000 settlement. Complainants have obtained a $500.00 civil default judgment against Respondent. But the legislature did not establish the administrative hearing process before the Registrar as method to collect civil default judgments, absent proof of an actual loss. The evidence here shows that Complainants’ failure to pay the full contract price prevents them from showing an actual loss that might be compensable damages in a claim to the Residential Contractors’ Recovery Fund[4] or appropriate restitution in this workmanship complaint.[5] The evidence does not show a continuing violation of A.R.S. § 32-1154(A)(7).[6] The revoked status of Respondent’s license does not preclude Complainants from pursuing their administrative remedy or preclude the Registrar of Contractors from conducting these disciplinary proceedings.[7] Any penalty that the Registrar imposes on Respondent’s contractor’s license as a result of this complaint should be considered a factor in aggravation of any statutory violation found in future disciplinary proceedings against its license. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar close Case No. 99-2810 against License No. 126285, Class C-05 of Respondent J A S Systems, Inc. dba Arizona Concrete Surfaces. It is further recommended that, if the Registrar reinstates Respondent’s contractor’s license, as an express condition for the next two renewals, the Registrar require Respondent to pay an additional $150.00 into the Residential Contractors’ Recovery Fund. If Respondent fails to pay such additional assessment, the Registrar should reject any renewal application and suspend Respondent’s license. It is further recommended that, if the Registrar reinstates Respondent’s contractor’s license, he place Respondent’s license on disciplinary probation for a period of 180 days commencing on the effective date of his order. Done this day, January 8, 2001.

______________________________________ Diane Mihalsky Administrative Law Judge Original transmitted by mail this ____ day of January, 2001, to: Registrar of Contractors Michael P. Goldwater, Director Attn: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] In Case No. 99-2264, the complainants had paid the full contract price of $4,424.64 and the Registrar found that Respondent had made numerous and inadequate attempts to repair serious deficiencies in the concrete coating it had applied prior to the hearing. Because the evidence showed that the coating would have to be completely removed to be adequately repaired, the Registrar required Respondent to return the full contract price as a condition of keeping its contractor’s license. Respondent failed to return the money and Complainants made a claim to the Residential Contractors’ Recovery Fund, No. RF01-0333, which was denied because Complainants were not the owners/occupants of the residence where Respondent performed the deficient work.

[2] 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.”

[3] 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.”

[4] See A.R.S. § 32-1131 et seq.

[5] See Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 440-41, 803 P.2d 430, 433-34 (App. 1990).

[6] 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.”

[7] See A.R.S. § 32-1154.C.

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