ALJDEC

99F-M0526-ROC · Registrar of Contractors · 1999-05-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 19, 1999 APPEARANCES: Ken Ryan and Jane Stoeppelman, Complainants, in their own behalf Earl Burl Howard dba Sonny’s Roofing Co., Respondent, in his own behalf ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________

Findings of Fact In early 1998, the Complainants entered a contract for the purchase of a house in Gilbert, Arizona. The Realtor, Realty Executives, represented itself as an agent for both the buyer and seller of the house. The Complainants and the seller of the house agreed to this condition. In March,1998, an appraisal report for Accubanc Mortgage Corp. indicated the roof needed some shingles repaired, the rest of the roof inspected, and that the foam portion of the roof had been done two years ago. The Complainants were not aware of the contents of the appraisal report prior to closing on the house. As part of the sale and prior to closing, a roof inspection was to be done and the Complainants were to be provided with the results. The agent for Realty Executives, Arlen Teeters (Teeters), contacted the Respondent to do the roof inspection and to give an opinion of the condition of the shake roof. On April 15, 1998, the Respondent performed the inspection and noted that part of the house had a shake roof and the remainder had a foam roof. The inspection did not include the interior of the home which was not accessible to the Respondent. The Respondent does not install or evaluate foam roofs and communicated this to Teeters. The Respondent’s Roof Report provided:

“A visual inspection was done 4/15/98 pertaining the Shake roofing at the above address. The overall condition of the shakes is good. Some minor cosmetic touch-up is needed on the ridge. The roof has gone through a very wet season as it is and no leaks have been disclosed by the seller nor observed by buyer’s agent.” The cost of the roof inspection and report was $150.00. It is not a roof certification. Roof certifications may at times be required by lenders, buyers, sellers or other parties involved in a transaction concerning a home. Such a certification when given, is generally construed as a warranty that a roof does not leak. Absent extraordinary circumstances, the warranty remains in effect for two years (this is being changed to three years by HUD according to the Respondent). The interior of the home had been recently painted and the Complainants had noted no signs of leaks during their viewing of the home prior to purchasing it. The Complainants closed on the house in May, 1998, but did not move in. During the summer of 1998, the Complainants noted stains on the floor and determined there were leaks in the ceiling of the living room and one of the bedrooms. In September, 1998, the Complainants obtained a Roof Inspection Report from IRT Roofing. It indicated “burn thru” of the shakes, that the tar paper was in good condition, the ridge cap was loose, split, broken and missing, and valleys were in good condition. The flat roof needed to be re-coated with elastomeric at a cost of $1,450 plus tax. Repair of the shake roof was set at $1,875.00 plus tax and replacement of the shake roof was approximately $7,000.00 plus tax. An insurance claim by the Complainants resulted in an inspection by an adjuster on October 8, 1998 on behalf of the carrier (Farmers). The Complainants’ claim was denied because Farmers asserted the Respondent’s report asserted the roof was in good condition. This is a somewhat inaccurate statement by Farmers since the Respondent stated the overall condition of the shakes was good and the seller and buyer’s agent had not disclosed or observed leaks (exhibit 1). Farmers stated that the shake roof had been installed in 1970, was worn, the felt was deteriorated, the nails had popped and that this damage could not have been sustained since the Complainants purchased the home. The letter was signed by the branch claims manager who did not perform the inspection. It is hearsay on hearsay, and although such evidence is allowed in administrative hearings, this type of hearsay is suspect and cannot be given much weight because there are no specific facts to support the general conclusions (to what extent is the roof worn, deteriorated, exactly what does the author or speaker mean by these terms, how many nails have popped, how does one determine when damage was sustained over a period of 28 years?). These and numerous other questions cannot be answered by a letter. In addition, Farmers may have a certain self interest in making the stated determinations which cannot be ascertained because cross examination is not available. On October 20, 1998, the Complainants filed their complaint with the Registrar of Contractors (Registrar). In November, 1998, the Complainants had Barnett Roofing Company (Barnett) submit a proposal which included repair of damage to the wood shakes on the hip-ridge and field areas, place metal shims in the burn out areas (approximately $800.00), to replace shakes ($2,500.00), and to seal coat the foam deck ($2,354.00). On January 5, 1999, Inspector Van Bagley (Bagley) of the Registrar’s Office performed an inspection and concluded that the Respondent was not responsible for the roof because he had not done any work on the roof and had been told the roof did not leak. By letter dated January 19, 1999, and based on an inspection of the roof, Bill Barnett asserted he found wind damage on the wood shake portion of the roof, that the felt was very dry and brittle, and the foam area has low spots and needs to be re-sealed. This adds little to what was set forth in November, 1998 proposal (paragraph 15 above). Conclusions of Law The allegations of the Citation and Complaint concern A.R.S. §32- 1154(A)(3)/ A.A.C. R4-9-108, workmanship and A.R.S.§32-1154(A)(7), wrongful or fraudulent acts with substantial injury. The issues are what did the Respondent provide, to whom did he provide it and how was it used with respect to the Complainants. The Roof Report refers to shake roofing and uses terms such as “overall condition…good…cosmetic touch up needed on ridge”. As to leaks, the language is somewhat indirect and guarded in that no leaks have been “disclosed…nor observed”. This latter part of the report which refers to leaks does not require any expertise as a roofer since anyone can repeat what someone else tells them. As to disclosure by the seller, there is no showing that the seller was ever asked about leaks by the Respondent. It would be unconscionable to charge for the unverified hearsay restatement or a non statement of third parties as part of an expert’s inspection fee. It involves no expertise and has no legally binding effect on anyone. This entire affair borders on a ruse. The real estate agent is acting as an agent on behalf of the buyer and seller. The agent requests the Respondent to do a roof inspection and as a consequence the Respondent states in part that no leaks have been observed by the real estate agent. The Complainants are then given this report by the agent and rely on it to conclude that the roof is in good condition and to close on the house. The agent does not relay complete information to the Complainants and never tells them that the Respondent made no determination about the foam roof. Although this case raises some highly suspect issues, it cannot be concluded that the Respondent has been shown to have engaged in fraudulent or wrongful acts by a preponderance of the evidence. As part of this conclusion, it is also noted that in light of the circumstances surrounding the sale (the agent as buyer’s and seller’s agent), and the above discussion regarding the language of the report, the Complainants acceptance and reliance on this Roof Report was misplaced and not fully justified. The remaining issue concerns the Respondent’s workmanship in doing the inspection. The photographic evidence clearly shows that by October, 1998, the ridge portion of the roof and shakes in the area of the ridge were not in good condition and needed more than a cosmetic touch up. However, although the September, 1998 IRT inspection also indicated that the ridge cap was loose, split broken and missing, and needed to be replaced, the hearsay evidence does not satisfactorily establish that the roof was not in the condition it was claimed to be some four and a half months earlier and prior to the monsoon season. For reasons already stated previously, the Respondent’s testimony that in April, 1998, the overall condition of the shakes was good and touch up was needed at the ridge, is given greater weight on this issue, than the documentation (hearsay) submitted by the Complainants which claims the roof was not in that condition. As a final note, the fact that the Roof Report was not certified makes it of little utility under the circumstances of the case. Absent a showing of fraud, incompetence, gross negligence or such other similar type of act on the part of a Respondent, it appears that such a Roof Report has little binding value and consumers accept them and rely on them at their risk. Recommended Order In view of the foregoing, it is recommended that the Citation and Complaint upon which it is based be dismissed. Done this day, May 21, 1999.

______________________________________ ALLEN REED Administrative Law Judge

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

Michael P. Goldwater Registrar of Contractors 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