ALJDEC

99F-P0157-ROC · Registrar of Contractors · 1999-11-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 2, 1999 at 8:30 a.m. APPEARANCES: Complainant appeared on her own behalf;[1] Respondent did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

Complainant presented evidence on the issue of whether Respondent committed any statutory violations in its installation of a new roof and siding on Complainant’s residence and, if so, the adequacy of subsequent corrective work. Based upon the entire record, the undersigned makes the following Findings of Fact, Conclusions of Law, and Recommended Order. FINDINGS OF FACT Background The Registrar of Contractors issued License No. 089477, Class B-, to Respondent, a corporation, on April 8, 1991. In May 1997, Complainant received a telephone solicitation from Respondent to install vinyl siding on her residence, a manufactured home built in 1983 on which a room had been added, in Eager. On May 18, 1997, Complainant accepted Respondent’s offer to install vinyl siding on her residence for $9,800.00, for which amount Respondent would arrange financing.[2] Complainant accepted Respondent’s offer. While Respondent’s workmen were installing the siding, they mentioned that it also installs aluminum skirting and performs roofing. Before Respondent replaced the roof on Complainant’s residence, several areas of the roof over the kitchen, former master bedroom, and living room had leaked, leaving water stains on the ceilings of these rooms. In addition, to prevent damage from the wind, Complainant at that time had laid old tires on the roof of her home, which she considered ugly. Respondent offered to tear off and replace the existing roof, install additional insulation in the ceiling, and install skirting, in addition to installing new siding and trim, at a total cost of $16,061.00, for which amount Respondent would arrange financing.[3] Complainant accepted Respondent’s offer. The parties’ contract required Respondent to replace the roof with a composition asphalt shingle roof. The roof Respondent installed on Complainant’s residence consisted of a single membrane with elastimer coating. At the time of installation, Respondent did not possess a Class C-42 or Class K-42 contractor’s license. Complainant painted over the water stains with Kilz shortly after Respondent replaced the roof. In June 1997, Respondent completed replacing the roof and installing siding and skirting on Complainant’s residence. Complainant expressed concern that the corners of the siding on the room addition did not match. Respondent’s workman “Whitey” assured her that he would return to repair the corners. Based on “Whitey’s” and another of Respondent’s employee’s assurances, Complainant on June 7, 1997 signed the Completion Certificate that allowed Respondent to obtain full payment from the finance company. In November 1997, Complainant moved to Zapata, Texas to work at a temporary job, leaving her daughter Dena Prater and her children to live in the residence. In March 1998, Ms. Prater called Complainant in Texas and told her that the roof was leaking so badly that the ceiling in the living room had fallen in. Complainant attempted to call Respondent to report the problem but could not get through. Complainant was finally able to contact Respondent in May 1998. “Whitey” went to Complainant’s residence in Eager and informed her that the whole roof would have to be redone and that he would return to perform the work in a couple weeks. Complainant made a claim to her homeowner’s insurer, State Farm, and on May 12, 1998 it issued a check to her in the amount of $1,380.66. State Farm’s claim specialist informed Complainant that “[i]t appears that the roofer who installed the coating over your roof is at fault”[4] and advised Complainant to consult an attorney. Complainant has obtained bids from other appropriately licensed contractors for roof repairs to prevent continued leaking. The low bid was $4,000.00, more than she received from her homeowner’s insurer. Complainant cannot afford to pay out-of-pocket to repair her roof. Respondent’s president refused to pay State Farm for damage caused by leaks in the roof it had installed because its president claimed all the damage was caused by a television antenna that had come loose. Complainant retained Timothy B. Shaffery, Esq. On August 12, 1998, Mr. Shaffery on Complainant’s behalf wrote a letter to Respondent, informing it that Complainant wished to resolve the matter amicably and requesting that it communicate its plans to repair the leaking roof. On October 6, 1998, after Mr. Shaffery wrote several more letters to Respondent on Complainant’s behalf, Respondent sent via facsimile a proposed “Settlement Agreement.” In the proposal, Respondent asserted that, because “[m]any months [after the roof was installed], some strong force, most likely wind tour [sic] off some roof trim resulting in a leak,” Respondent “had no legal responsibility for service caused by wind damage” and that, therefore, Complainant “is financial[ly] responsible to pay for repair work to be performed by [Respondent] or anyone else she chooses.” Finally, although Respondent disclaimed all responsibility for leaks allegedly caused by a high wind, it offered in settlement to “repair roof edge for no charge, by replacing the trim that has been torn off and then re-coating over the replaced trim piece with black base, seam tape, and white coat on top.” Under Respondent’s settlement proposal, Complainant would have no recourse against it for any leaks not corrected by this proposed repair or any other problems in Respondent’s construction work. Respondent’s president Mark Johnson wrote several letters, offering to perform the corrective work described in the proposed settlement only if Complainant relinquished all claims against him by signing it. On November 9, 1998, Complainant’s insurance agent, Todd Bosen of State Farm, photographed her residence. The photographs, which Mr. Bosen authenticated, show numerous deficiencies, including an area where the wind had torn off or loosened flashing and trim, areas of the roof where the sealant Respondent had applied had cracked and split, and new water stains that had appeared in the ceiling of the residence after Respondent had reroofed it. On November 9, 1998, Complainant filmed a videotape of her home, which was admitted into evidence at the hearing, that shows siding starting to pull out of the trim, roofing sealant and tar dripped onto the siding, the roof separating from the residence and flapping in the wind, holes in the surface of the roof where seams were separating, and numerous new water spots in the south bedroom, former master bedroom, kitchen, and living room. On November 19, 1998, Complainant’s attorney sent a letter informing Respondent that she had rejected his settlement offer as unacceptable. On November 21, 1998, Respondent sent a letter informing Complainant’s attorney that, since she had rejected its settlement offer, it had instructed its workmen not to perform any further work at her residence. The letter suggested that, with “[w]inter around the corner,” Complainant should accept the settlement to avoid incurring attorney’s fees and additional damage to her home. Complaint to the Registrar On November 10, 1998, Complainant made a formal complaint to the Registrar regarding deficiencies in the siding and roof Respondent had installed on her residence. The complaint was assigned to the Registrar’s inspector Bernie St. John to investigate. On December 21, 1998, Complainant was informed by her daughter Ms. Prater that the rest of the trim Respondent had installed on the west side of the residence had blown off. On January 15, 1999, Inspector St. John performed a jobsite inspection and took 13 polaroid photographs to illustrate Respondent’s workmanship. Inspector St. John noted on his written report of the January 15, 1999 jobsite inspection and testified at the hearing that the written contract required Respondent to install composition asphalt shingles, which its Class B- license would have allowed, not the single membrane with elastimer coating that Respondent installed, which was beyond the scope of the only license it possessed at that time. Inspector St. John further testified that the roof on Complainant’s residence lacked sufficient slope for installation of a shingled roof. However, no written change orders commemorated the contractual alteration from shingles to a membrane. On January 15, 1999, on behalf of the Registrar, Inspector St. John described in detail Respondent’s workmanship deficiencies and directed it to perform the following items of corrective work: Repair or replace roof as necessary, “using a properly licensed contractor,” to correct roof leaks;

On the east side room addition, correct the corner caps and decorative trim to match and to prevent water entry;

Correct by appropriate means the aluminum trim on the west side of the residence to allow the door to open and close properly; and

Properly install all flashing and correct fastening by appropriate and adequate means to prevent water from flowing beneath the siding and to prevent wind from tearing off flashing and trim.

On February 5, 1999, Respondent’s president Mr. Johnson sent a letter to Complainant’s attorney regarding the Registrar’s directive, asserting as follows: I have no intention of tearing off the roof. The directive says to “Repair or replace as necessary”. Mr. St. John is correct in that if I were to tear off and replace the roof it would require a licensed roofing contractor to do so. But I have no inention of tearing off the roof. The roof is not the problem and I don’t believe that the leaks showing up in the ceiling inside the Mobil [sic] home are caused from anything to do with the roof. The leaks I believe are coming from the nail holes that attached the top trim piece of the siding prior to the wind blowing them off. The water is entering the top of the wall nail holes and traveling through the ceiling tile material inside. To repair it properly requires a differently designed top siding trip piece.

In either case, the licensing issue is between me and the R.O.C. I don’t agree with all of Mr. St. John’s personal opinions regarding this issue nor all of his job site findings. He may work for the R.O.C. but that does not make him right nor the final legal authority for the R.O.C. No disrespect intended, but he is just an inspector with a job to do. That does not make him right. That’s what R.O.C. Hearing Officer’s and Superior courts are for.

My intention is to fix the problem for [Complainant] for good. Once the new trim piece is installed, I believe the leak will be fixed. . . .

On February 10, 1999, Complainant requested an administrative hearing. On February 26, 1999, the Registrar issued a Citation and Complaint against Respondent’s Class B- license, charging it with violations of A.R.S. § 32-1154.A.2, .7, .23, and .3. On February 25 and 26, 1999, Respondent’s workmen replaced some of the trim on and applied additional roofing membrane material and tar to the roof of Complainant’s residence. On March 1, 1999, Complainant filmed a videotape of Respondent’s repairs to her residence, which was admitted into evidence at the hearing. The videotape shows construction debris that Respondent’s workmen left at the residence, screws and nails coming out of the trim and siding, corners of trim that do not match up, roofing materials on windows, trim, and siding, a large hole over the main entry door, and uneven application of membrane material and gaps in the roof. On March 2, 1999, Respondent sent a letter to the Registrar, alleging that he had complied with the Registrar’s January 15, 1999 directive. On March 9, 1999, Complainant sent a copy of the March 1, 1999 videotape to the Registrar and informed him that she was not satisfied with Respondent’s corrective work. On April 16, 1999, the Registrar issued License No. 144530, Class K -42 to Respondent, which allowed it to “install and repair materials used in the industry to form a watertight and weather resistant surface” on the roof of Complainant’s residence. See A.A.C. R4-9-103; R4-9-104. On April 22, 1999, pieces of siding blew off the eaves of Complainant’s residence. On May 19, 1999, Complainant asked to amend her complaint to include the siding that had blown off. On June 30, 1999, Inspector St. John sent a letter notifying the parties that he would conduct a prehearing jobsite inspection on July 19, 1999. On July 14, 1999, the Registrar issued a notice of hearing, setting this matter for a hearing before an administrative law judge appointed by the Director of the Office of Administrative Hearings at the Registrar’s office in Show Low on August 3, 1999. The notice was mailed to Respondent at its current address of record, 418 E. Thunderbird Road, Phoenix, Arizona 85022. This is the same address shown on all of Respondent’s correspondence in this matter and the same address where the Registrar had served Respondent with the Citation and Complaint. On July 19, 1999 Inspector St. John conducted a second jobsite inspection, which Respondent did not attend. At that jobsite inspection, Inspector St. John noted that the door on the west side of the residence, around which Respondent had installed aluminum trim, would not open. On July 26, 1999, Respondent’s president wrote a letter to the Registrar, which was forwarded to the Office of Administrative Hearings, requesting a continuance because Respondent’s president Mr. Johnson alleged that he had not received notice of the hearing and that he would be out of town on August 3, 1999 and from September 15 through October 1, 1999. On July 29, 1999, the administrative law judge continued the hearing because the notice of hearing was issued less than 30 days before the hearing, contrary to the requirements of A.R.S. § 41-1092.05(D). On August 2, 1999, Respondent’s president Mr. Johnson wrote a letter to Complainant’s attorney, informing him that his workmen had gone to Complainant’s residence to fix the siding and repair the roof leaks but that Complainant’s daughter had not allowed them to perform any work. Ms. Prater confirmed at the hearing that she had not allowed Respondent to perform corrective work prior to the hearing, which she still thought would be held on August 3, 1999, but testified that she had allowed him to measure the areas where siding had blown off so that additional materials could be ordered. On August 22, 1999, the Office of Administrative Hearings issued a Notice of Continued Hearing, setting a hearing in this matter before the undersigned on November 2, 1999 at 8:30 a.m., which was mailed to Respondent’s president Mr. Johnson at the current address of record, 418 E. Thunderbird Road, Phoenix, Arizona 85022, the same address to which the Registrar had sent the first notice of hearing. Inspector St. John scheduled a second prehearing inspection on October 19, 1999. On the morning of the scheduled inspection, Respondent’s president called Inspector St. John and informed him that he would not attend the inspection because he had undergone knee surgery the day before. At approximately 8:15 a.m. on November 2, 1999, the undersigned received a telephone call from Respondent’s president, Mr. Johnson, requesting a continuance of the hearing because Mr. Johnson alleged he had come down with the “flu” at 1:30 a.m. and that he had been throwing up and having diarrhea every 45 minutes since then. The undersigned denied Respondent’s request for a continuance as untimely and his request to appear telephonically at the hearing because the conference room where the hearing would be held did not have a telephone and Registrar’s Show Low office lacks sufficient telephone lines to allow an extended telephonic appearance. The undersigned offered to delay the start of the hearing, which had been scheduled for all day, to allow Mr. Johnson to travel from Phoenix or to arrange for one of Respondent’s other employees to attend the hearing, but he declined. The hearing thereafter commenced at 8:35 a.m. and concluded at 12:30 p.m. Inspector St. John had prepared a report of his October 19, 1999 prehearing inspection, which was admitted as Complainant’s Exhibit No. 1 at the hearing and is attached to this recommended decision for the Registrar’s benefit and, if the Registrar accepts this recommended decision, for Respondent’s benefit. Inspector St. John’s report of his October 19, 1999 inspection referenced the polaroid photographs taken at the January 15, 1999 inspection, provided detailed descriptions of the uncorrected deficiencies, and concluded that, although there was evidence that Respondent had performed some corrective work, it had not brought any of the original workmanship deficiencies noted in the January 15, 1999 directive up to minimum standards. See Exhibit 1, Item Nos. 2, 4, 5A, 5B, 5C, and 6. Inspector St. John testified that, as to the door on the west side of the residence, Item 5C on his report, although the door operated properly on October 19, 1999, there was no evidence that Respondent had not performed any work since July 19, 1999, when it had not operated at all. Therefore, in Inspector St. John’s opinion, the door likely would not operate when the weather changed again and should be corrected to operate under all foreseeable weather conditions. Inspector St. John also noted the water stains and other evidence of damage to the ceilings in the interior of the residence that had resulted from leaks that occurred after Respondent originally installed the roof. 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 numerous prior complaints that had gone into the hearing process. Therefore, Respondent’s prior record is properly deemed to be poor and thus, is viewed as a matter in aggravation for any disciplinary penalties to be imposed as a direct result of this case. CONCLUSIONS OF LAW In this administrative proceeding, Complainant bears the burden of proof and must establish statutory violations 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). The record does not establish that Respondent violated A.R.S. § 32- 1154.A.2[5] in its installation of a new roof consisting of a single membrane with elastimer coating instead of the composite asphalt shingle roof specified in the contract because the latter roof could not have been installed on Complainant’s roof. Although the contract provision evidences a lack of attention to detail, the record does not show that Complainant’s interests were prejudiced by the kind of roof installed, as opposed to the poor workmanship evident in the installation. In soliciting Complainant’s business and contracting to install a new roof and siding in Eager, Respondent undertook to perform construction that would be fit for its intended purpose in the location where the work was performed. Arizona law does not allow Respondent to void a warranty or escape responsibility for installation of a roof or siding that begins to fail within months of installation due to weather conditions that were foreseeable at the time of contracting. The record in this matter establishes that Respondent violated A.R.S. § 32- 1154.A.7,[6] .23,[7] and .3[8] in its installation of the roof and siding and failure to correct the deficiencies Inspector St. John noted in his October 19, 1999 report, described supra in Findings of Fact Nos. 48, 49, and 50, and attached as Exhibit 1 hereto. Respondent’s B- license allowed it to construct “all or any part of a residential structure or appurtenance, except for . . . roofing (except shingles and shakes) which must be subcontracted to an appropriately licensed contractor.” A.A.C. R4-9-103 (emphasis added). The record in this matter establishes Respondent persistently has contracted beyond the scope of its license in originally installing the single-membrane roof, in attempting to make repairs to it, and in rendering an opinion as to the cause of the leaks beyond the scope of its license and its professional competency, in violation of A.R.S. § 32-1154.A.17. Because this subsection was not charged in the Citation and Complaint and Respondent eventually obtained the requisite license,[9] Respondent’s statutory violations are considered only as additional factors in aggravation of the penalty to be imposed in this matter. Respondent’s attempts to blame the wind or a television antenna for its own workmanship deficiencies, its dilatory tactics and belligerent tone in numerous letters to Complainant and her attorney, its attempt to avoid by contract the warranties that Arizona law requires it to provide, and its refusal to perform any corrective work unless Complainant relinquished her legal right to have the work performed in a professional and workmanlike manner are additional factors that should be considered in aggravation of the penalty to be imposed as a result of this hearing. With respect to the issue of access, the evidence shows that on at least one occasion, Complainant or her daughter denied access to Respondent to perform corrective work. The evidence also shows, however, that Respondent’s attempts at correction were inadequate, contrary to the Registrar’s detailed instructions, and made long past the time that the Registrar allowed. Denial of access on the day before the prior scheduled hearing does not exonerate Respondent or preclude a finding that it has violated A.R.S. § 32-1154.A.23. Nonetheless, Complainant and her daughter were admonished at the hearing that they must allow Respondent access to perform corrective work. Respondent is admonished in this recommended decision that, to avoid having a penalty imposed upon its license, it must perform corrective work during normal business hours in the time allowed and, to avoid future problems, should provide Complainant, in writing, with advance notice of the dates on which it intends to perform corrective work. RECOMMENDED ORDER In view of the foregoing, it is recommended that the Registrar revoke Respondent’s License No. 089477, Class B- on the effective date of the Registrar’s order, thirty-five days after the date of service. It is further recommended that no revocation take place if, on or before the effective date of the Registrar’s order, Respondent provides written confirmation that it has performed in a professional and workmanlike manner the corrective work described above in Conclusion of Law No. 4, as well as repairing the ceilings in Complainant’s kitchen, former master bedroom, living room, and porch that were damaged by leaks that appeared after Respondent installed the roof, or otherwise has settled Complainant’s complaints in this matter to her satisfaction and that the Registrar may close Case No. P99-0157. It is further recommended that, if the Registrar does not revoke Respondent’s license, it be placed on disciplinary probation for a period of 180 days after the effective date of the Registrar’s order. Done this day, November 5, 1999.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

By ___________________________

----------------------- [1]Complainant is represented in this matter by Timothy B. Shaffery, Esq., who conferred with her prior to the start of the hearing. In light of Respondent’s president’s decision not to appear at the hearing, which is discussed infra at Finding of Fact No. 46, Mr. Shaffery elected to allow Complainant to present her own case, which he had worked with her to prepare, probably to save legal costs. The record in this matter indicates that Mr. Shaffery’s involvement in this dispute has been extensive and the Registrar should provide a copy to Mr. Shaffery of any final decision rendered in this matter.

[2]The parties’ original contract included a finance agreement whereby Complainant agreed to pay $9,800.00 over 15 years at 12.95% interest, for a total of $23,545.80.

[3]The parties’ amended contract included a finance agreement whereby Complainant agreed to pay $16,061.00 over 15 years at 13.99% interest, for a total of $38,480.96. On the contract, the rate of interest is crossed out. Complainant alleged that she did not agree to the 13.99% rate or initial this change. Because her credit is good, however, she is paying a lesser rate than shown on the contract.

[4]In the event that the Registrar accepts this recommended decision, State Farm may have a subrogation claim against Respondent under Arizona common law for any monies it paid to Complainant, its insured, for damages caused by roof leaks attributable to Respondent’s poor workmanship.

[5]This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[d]eparture from or disregard of plans or specifications . . . in any material respect which is prejudicial to another without the consent of the owner . . . .”

[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] 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.”

[8] 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.”

[9]If the Registrar revokes Respondent’s Class B- license as a result of this complaint, in due course, its K-42 license also should be disciplined under A.R.S. § 32-1154.A.21.

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