ALJDEC

99F-M1426-ROC · Registrar of Contractors · 1999-12-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 22, 1999 APPEARANCES: George Johnson, Controller, on behalf of the Complainant Art Thruston, General manager, on behalf of the Respondent ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________

FINDINGS OF FACT The Complainant is a roofing subcontractor and the Respondent is a residential general contractor. On or about October 12, 1998, the parties entered a contract whereby the Complainant would apply foam roofing to a home (Smith residence), being built in Mesa, Arizona, by the Respondent. The cost under the contract was $6,595.00. On February 1, 1999, the parties entered a second contract for a foam roof on another home (Midlick residence), being built in Mesa by the Respondent.

Both contracts had “100% due on completion” provisions. On February 16, 1999, the Complainant was paid $5,000.00 on the Smith residence. The job was not billed as completed until February 22, 1999. The Complainant had not deck coated the patio cover at the Smith residence and the Respondent requested that this be done. Upon completion, and after it rained, there was significant ponding of water on the patio cover as well as some leaking.

The Respondent telephoned the Complainant regarding the leaking and ponding problem but the Complainant did not respond. Ultimately, the Respondent did some corrective work by installing edging and roof tar at the stucco line. The ponding was not corrected. The homeowners, Roger and Beverly Smith (Smith), filed a complaint against the Respondent with the Registrar of Contractors (Registrar). Inspector James Walsh (Walsh) performed an inspection and issued a Corrective Work Order (CWO) to “Correct the standing water puddles on upper patio deck”, to the Respondent. The Smiths have requested an administrative hearing. The Midlick residence was billed as 70% complete on March 17, 1999, and 100% complete on May 26, 1999. The Respondent paid nothing on the Midlick residence. According to the Respondent, the Midlick job had not been completed. The contract called for 150 square feet of tile on the front entry roof. The tile once delivered just remained at the job site and was finally installed by the homeowner and not by the Complainant. Additionally, the scuppers which extend from the roof are not long enough. The plans show a four inch stucco “pop out” for the scupper. Once the “pop out” was completed the scuppers do not extend beyond it and water runs down the wall. Respondent testified he spoke with someone at the Complainant’s office and told them of this problem. The Midlicks filed a complaint against the Respondent with the Registrar. Walsh performed an inspection and issued a CWO to the Respondent which requires re-installation of the roof tiles at the front entry and correction of the scuppers that do not extend beyond the stucco surface. The Complainant filed its complaint for non-payment with the Registrar on May 27, 1999. The Respondent has filed no complaint against the Complainant for the alleged poor workmanship or failure to complete. . . . . . . CONCLUSIONS OF LAW The allegations of the Citation and Complaint consist of A.R.S. §32- 1154(A)(7), wrongful or fraudulent act, and (A)(11), failure to pay for materials or services. The Respondent’s defense is straightforward. According to the terms of the contract, the Respondent is not required to pay until the respective jobs are 100% completed. The Respondent argues that the respective CWO’s establish that the work was never completed by the Complainant and therefore the duty to pay has not arisen. This argument does not explain why the Respondent paid $5,000.00 on the Smith home prior to the asserted completion date. With regard to the Smith home, the Respondent testified he took it upon himself to finish the roof by putting on the edging and some tar. The fact that there is continued ponding on the patio deck does not establish that the roof was not completed. The ponding issue relates to workmanship and not completion. No determination is being made regarding the Complainant’s workmanship since that issue is not before the Administrative Law Judge. Based on the evidence, it is concluded that the Smith residence has been completed within the meaning of the contract. The pooling on the deck may require corrective work but does not constitute incomplete work. The fact that the Respondent applied the edging and the tar does not alter the conclusion. The alleged violations are proven by a preponderance of the evidence for this portion of the case. With respect to the Midlick residence, the Respondent never documented his concerns about the incomplete work nor did the Respondent submit any such documentation to the Complainant, prior to the instant complaint. The Respondent made phone calls to the Complainant but was incorrect about who he spoke to and made no reliable record of what was discussed. George Johnson (Johnson) testified he was privy to part of a conversation the Respondent had with the Complainant’s general manager, but that the issue of incomplete work was not discussed. Rather, the subject concerned the Respondent promising to pay for the roofing. The Respondent testified that during one of the phone conversations, the Complainant refused to complete the Midlick residence (the tile on the entry), because they had not been fully paid on the Smith residence. Under the contract, the legal obligation to pay did not arise until the job was completed. The Respondent’s testimony regarding the Complainant’s refusal to perform is suspect. No written demand addressing the issues which were raised by the Respondent, was made to the Complainant, prior to the filing of the instant complaint. Furthermore, the Respondent’s defense, that the Complainant failed to complete the work, would apply only to the tile issue and not the scuppers. The scuppers are a workmanship issue. The Respondent should have had some awareness of the scupper problem before all the “pop outs” were completed. The Respondent cannot avoid the eventual duty to pay for the substantial completion of the work even though the entry roof tile was apparently put on by the homeowner. However, there may be set off amounts for the work which was done by the Respondent or the homeowner, but which should have been done by the Complainant. Additionally, the issue of the scuppers also needs to be resolved. These issues and potential amounts are more appropriately determined in other hearings or a civil forum. Although the charged violations are sustained in general terms, for the reasons stated above, no specific amount is determined as owing to the Complainant on the Midlick residence and any such amount is left to parties or a court to determine. Nothing in this Recommended Decision should be construed as relieving the Respondent of any obligations with respect to the complaints pending by the Smith and Midlick homeowners, or the obligation to pay an amount to be determined under the Midlick contract. 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 B license of the Respondent shall be suspended until Registrar of Contractors receives written proof that the Respondent has paid or tendered payment to the Complainant in the amount of $1,595.00 on the contract for what is termed as the Smith residence; It is further recommended that if the Respondent pays or tenders payment to the Complainant as required by the Order entered in this matter, then the aforementioned suspension shall not take place; It is further recommended, in addition to the foregoing license suspension, if any, that the Respondent’s Class B license shall be placed on probation for a period of ninety (90) days, with probation to commence on the effective date of the Registrar’s Order or the date on which notice of the Respondent’s compliance with the terms of the Order is filed with the Registrar, whichever is later. Done this day, December 28, 1999.

______________________________________ ALLEN REED Administrative Law Judge

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

Michael P. Goldwater , Director 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