Notice of Review and Appeal Rights - DOC 3

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					  BEFORE THE OFFICE OF ADMINISTRATIVE HEARINGS
                STATE OF OREGON
                                  for the
                     CONSTRUCTION CONTRACTORS BOARD


In the Matter of the Arbitration between:

PERFECTION HARDWOOD FLOORS, INC.,                                     Complaint No: 145835-120
Complainant

And                                                                ARBITRATION AWARD
INNOVATIVE DESIGN & CONSTRUCTION LLC,
Respondent



                                   STATEMENT OF THE CASE
This subcontractor complaint was timely filed in accordance with ORS 701.143. All items
determined are within the scope of ORS Chapter 701 and require licensing with the Board for both
complainant and respondent. Complainant alleges that respondent failed to pay it for work it
performed as respondent’s subcontractor. Complainant seeks monetary damages in the amount of
$8,000.00.

Pursuant to its authority under ORS 701.148(1), and subject to the provisions of ORS 701.148(4),
the CCB, on April 29, 2009, referred this matter to the Office of Administrative Hearings, as
required under ORS 701.149, for binding arbitration, in accordance with OAR Chapter 812,
Division 10, and in conjunction with homeowner complaint no. 145835-119, Rawson v. Innovative
Design & Construction LLC. A Notice of Arbitration Hearing set for July 27, 2009, along with a
copy of OAR Chapter 812 Division 10, was served on the parties. David Marcus was appointed as
the Arbitrator and a telephone prehearing conference was held on June 18, 2009. Respondent and
Rawson participated in the teleconference but complainant did not. The hearing was twice
postponed at the request of the parties to allow for settlement discussions. A two-day arbitration
hearing was finally set for January 19 and 20, 2010. Prior to the hearing, complaint no. 145835-
119 was settled and closed.

Respondent failed to appear for the arbitration hearing on January 19, 2010, but a new hearing was
set based on a determination that respondent had good cause for its failure to appear. A new
hearing was set for March 2, 2010, but complainant failed to appear for the hearing. A good cause
determination was made on March 3 and the hearing was held on March 4, 2010 in Salem, Oregon.
Complainant appeared through its vice president, Kim Mai Nguyen. Respondent appeared through
its managing member, Gene Pfeiffer. The following persons testified: Ms. Nguyen; Mr. Pfeiffer;
John Rawson, owner of the home involved in the case; and Stephen Jones, a carpenter employed by
respondent who worked on this project. Having duly heard the proofs and allegations of the

Perfection Hardwood Floors, Inc. and Innovative Design & Construction LLC,                  Page 1 of 3
CCB complaint no. 145835-120
parties, and having considered the entire record, consisting of Exhibits 1 through 106 and R1
through R17, and a digital recording of the arbitration hearing, I, the undersigned Arbitrator, enter
the following:

                                                FINDINGS
On or about January 28, 2008, complainant and respondent entered into a written contract for the
installation of hardwood flooring at a home addition and remodeling project for which respondent
was the general contractor. The price of the contract was $8,000.00. The homeowners were Mr.
and Mrs. John Rawson.

Complainant completed the work before the end of February. The flooring was installed in the new
addition and in the adjoining existing section of the home. Respondent was responsible for having
existing flooring removed and underlayment ready for installation of the new flooring. When
complainant arrived to install the new flooring, the existing flooring was not ready. In constructing
the addition, the underlayment for the new flooring did not match up evenly to the existing floor’s
underlayment. This created humps along the marriage line of the new addition floor and the
existing flooring. Respondent’s workers on site took measures to sand down the area while
complainant started work in a different section. Respondent’s on site supervisor ultimately advised
complainant’s supervisor that the humps and difference in level were resolved the best they could
be. Complainant proceeded with installation of the new flooring.

The homeowner’s were quite pleased with the quality and appearance of the new floor installed by
complainant. However, they were quite displeased with the humps in the flooring where the new
addition and the existing home were joined. The homeowners were quite displeased with
respondent over several other issues and they issued a stop work order. The homeowners made no
further payments to respondent and they filed a complaint with the CCB, listing one of the items of
complaint as the humps in the floor.

This complaint and the homeowners’ complaint had been consolidated for arbitration. However,
prior to the scheduled arbitration, respondent entered into a settlement agreement with the
homeowners. As a result, the merits of the homeowners’ complaints have not been determined and
the settlement agreement specifically provides that the parties’ settlement “is a compromise of
disputed claims and that nothing herein contained can be construed as an admission of fault or
liability of any party or any person released herein, all of which parties and persons hereby
expressly deny fault and liability.”

Respondent acknowledges that no payment has been made to complainant on its $8,000.00 invoice.
Respondent advances two theories for why it should not be required to make payment to
complainant for the completed work.

First, respondent asserts that the parties’ contract contains a pay when paid clause. Because the
homeowners did not make any payments to respondent after complainant’s work was completed,
respondent asserts that it was not paid and therefore is not contractually obligated to pay
complainant. I find that respondent did not provide sufficient evidence at hearing to prove that it
did not receive sufficient payments from the homeowners to pay complainant for its work. I
further find that in settling the Rawsons’ complaint, respondent effectively agreed that it was not
owed any money from the Rawsons because it released any and all claims for unpaid work. As a
Perfection Hardwood Floors, Inc. and Innovative Design & Construction LLC,                 Page 2 of 3
CCB complaint no. 145835-120
consequence, respondent cannot rely on the pay when paid clause in its contract as the basis to
withhold payment to complainant.

Respondent’s second argument is that complainant performed improper work by installing the floor
when the difference in level and the hump issues were known to complainant. I am not persuaded
that the work was improper or that any repair is necessary. While Mr. Rawson testified regarding
his displeasure with the humps, respondent has not presented sufficient evidence to establish that
the installation does not meet industry standards. If, however, it was improper work to install the
flooring notwithstanding complainant’s awareness of the problem, I find that complainant did so
only after respondent’s crew made the juncture of the new and old flooring as good as they could
and complainant was given the go-ahead to install. As the general contractor, respondent had the
responsibility to assure that the areas were ready for complainant to proceed.

Finally, even if complainant’s work was found to be improper, respondent has not shown that it
suffered damages as a consequence of that work. While the flooring issue was one of the many
issues in the homeowners’ complaint against respondent, the compromise settlement of those
claims, including the flooring, was without any admission of liability or concurrence that any of the
homeowners’ claims had merit. In short, I cannot find that respondent suffered any damages
directly related to the floor.

For all of the above reasons, I find that complainant has met its burden to establish a valid
complaint for payment for work it completed as a subcontractor to respondent. Respondent has not
established any appropriate offset. Complainant is therefore entitled to recover the full unpaid
amount of the contract, $8,000.00. Pursuant to ORS 701.133(4)(a) and OAR 812-004-0250(2)(c),
complainant is also entitled to recover its complaint processing fee in the amount of $50.00. Based
on these Findings, and in accordance with ORS Chapters 701 and 36, and OAR Chapter 812
Division 10, I enter the following:

                                                 AWARD
Respondent shall pay complainant $8,000.00, plus $50.00 in costs for complainant’s processing
fee.


Dated this 12th day of March, 2010




                                                      David Marcus, Arbitrator




Perfection Hardwood Floors, Inc. and Innovative Design & Construction LLC,                Page 3 of 3
CCB complaint no. 145835-120

				
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