Remodeling Contract This Contract Entered into This Day of January

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Remodeling Contract This Contract Entered into This Day of January Powered By Docstoc
                                STATE OF OREGON
                                         for the
                            CONSTRUCTION CONTRACTORS BOARD

In the Matter of the Arbitration between:

Trever Anderson & Anna-Meike Anderson,                                File No: 171871-101

And                                                               ARBITRATION AWARD
AL Consulting Technology Services Inc., dba
Castlekey Construction Company Inc.,

                                     STATEMENT OF THE CASE

This 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. Complainants allege that
respondent performed improper and negligent work under their contract for remodeling the two
bathrooms in complainants’ home. An on-site investigation was conducted by the Board on
November 15, 2007, at which both parties were present. The investigator’s report was subsequently
sent to the parties and respondent filed a written response objecting to the findings and
recommendations, which the CCB accepted as a request for a hearing. Complainants subsequently
filed a Statement of Damages form seeking monetary damages in the amount of $14,292.00.

Respondent filed a complaint in the Washington County Circuit Court Small Claims Division
against Mrs. Anderson seeking payment of the unpaid balance of the contract, and Mrs. Anderson
answered and counterclaimed, but did not include all items asserted in this CCB complaint. On
January 28, 2008, the court entered judgment for Mrs. Anderson in the amount of $1,775.00 and
dismissed with prejudice respondent’s claim for the unpaid balance of the contract. The court also
noted, “Judgment is for out of pocket costs of defendant (Mrs. Anderson). Defendant may pursue
repair costs/labor costs with CCB.” Respondent has not made any payment on the judgment. The
judgment included an award for the following items, which were also asserted by the complainants
in their complaint and Statement of Damages before the CCB: damaged cabinet, $434.00; duct
cleaning, $595.00; and CCB processing fee, $50.00. As these items fall within the jurisdiction of
the CCB, these amounts are properly included in this award to allow complainants potential
recovery from respondent’s bond.

Upon confirmation of the court judgment, the CCB, on March 17, 2008, 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. A Notice of Arbitration Hearing, 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 conducted on June 9, 2008. Both parties
participated without legal counsel.

Anderson and AL Consulting Technology Services Inc., CCB File No.. 171871-101
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The hearing was held on July 9, 2008 in Salem, Oregon. Complainants Trever and Anna-Meike
Anderson appeared in person and were not represented by counsel. Respondent appeared through
its president, Augustine Lehecka. Mr. and Mrs. Anderson and Mr. Lehecka all testified. Dave
Hosty testified for complainants and Ben J. Faber testified for respondent. Having duly heard the
proofs and allegations of the parties, and having considered the entire record, consisting of Exhibits
1 through 139, C1 through C4 and R1and R2, and a digital recording of the arbitration hearing, I,
the undersigned Arbitrator, enter the following:


On or about June 26, 2007, the parties entered into an oral contract for respondent to remodel the
two bathrooms in complainants’ home, located at 7605 SE Erica Pl. in Beaverton. The contract
price was $4,500.00 for labor and basic construction materials, such as nails, backer board,
subflooring, plumbing lines, etc. Complainants were responsible for providing all finish material,
such as vanities, tile, floor covering, etc. The parties discussed the terms by telephone and
memorialized at least some of their terms by email communications.

Respondent started work at the end of June. Respondent stopped work on or about July 9, 2007 due
to complainants’ concerns about the quality of respondent’s work. Based on the prior judgment of
the court in the small claims action, respondent breached the contract, i.e. complainants are the non-
breaching party, and respondent’s claim for an unpaid balance on the contract was also adjudicated
and decided by the court. Therefore, no offset applies in this case.

At the outset of the proceeding, it became quite apparent that complainants’ presentation of their
numerous items of complaint, and evidence of damages for each item, was at best convoluted.
Many of the bids complainants relied on combined various items of the complaint without breaking
out the cost for each item. As complainants asserted that virtually everything respondent did will
have to be redone, I explained to the parties the two principal methods for compensating a non-
breaching party for damages. It is the non-breaching party’s choice whether to rescind the contract
and ask for restitution or affirm the contract and ask for damages. The Court explained the
difference in Bollenback v. Continental Casualty Co., 243 Or 498, 515 (1966) as follows:

             The purpose of rescission and restitution is to return the parties as near as
             possible to their respective positions prior to the formation of the contract
             so that each of the parties will be free to obtain his desired performance
             elsewhere. The purpose of an action for damages is to put the injured party
             as near as possible to the position where he would have been had the
             contract actually been performed.

The CCB has, by rule, defined the term “monetary damages” in a similar manner. ORS 812-002-
0460 provides:

             “Monetary damages” may include, but is not limited to:
             (1) The dollar amount required in excess of the contract amount to provide
             the complainant what was agreed to be provided under the terms of the
             contract minus any amount due and unpaid the licensee; or

Anderson and AL Consulting Technology Services Inc., CCB File No.. 171871-101
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             (2) The dollar amount paid to the licensee less the reasonable value of any
             work properly performed by the licensee, plus the cost to demolish work
             that has no value, and to restore the property to the condition it was in
             before work began.

After being apprised of these alternative approaches, complainants conferred and elected to seek
restitution and present their case under subsection (2) of the above rule.

Value of Work Properly Performed by Respondent

Complainants assert that they received no value from any of the work respondent performed
because all work will have to be torn out and redone, with the exception of the window trim, which
is acceptable. Complainants’ position is supported by the CCB investigator’s report, by the
statement of a plumber from Mission Plumbing Services, and by the fact that respondent
acknowledged that he did not employ the services of a licensed plumber or a licensed electrician for
any of the work. It is undisputed that complainants paid respondent $2,850.00. Respondent did
satisfactorily install the window trim, for which I allow $50.00. I have also considered respondent’s
evidence and I am persuaded that all other work by respondent was of no value to complainants.
Complainants are therefore entitled to recover $2,800.00.

Demolition and Loss of Materials

Based on the evidence at hearing, the demolition of respondent’s work will not be any more
extensive than the original demolition that respondent was required to do under the contract.
Complainants are therefore not entitled to recover for costs associated with demolishing
respondent’s work.

Complainants are, however, entitled to recover their costs for the materials they provided to
respondent for the project that cannot be salvaged, as well as materials respondent removed from
the home. These items are set forth, with their documented cost, in the following table:

Complainant-provided items that will be demolished or are missing               Complainants’ Cost

1 Shower pan damaged by respondent, will have to be replaced                        $ 99.99

Bath tile that will have to be demolished                                           $246.96

Vinyl flooring for bath, to be demolished to fully repair dry rot                   $133.21

Decorative tile, grout and 1 bath fan (Ex. 83)                                      $101.67

Hall bath countertop tile                                                           $100.00

                                                             TOTAL:                 $681.83

Anderson and AL Consulting Technology Services Inc., CCB File No.. 171871-101
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Complainants are also entitled to restoration of specific items damaged by respondent in the course
of its work. Complainants presented persuasive evidence that respondent did not properly protect
the bathtub and that it was damaged during respondent’s work. Complainants seek to replace the
tub at a cost of $388.88. As indicated at hearing, complainants have not shown that replacement is
necessary as opposed to having the tub refinished. Complainants were also not able to show the
reasonable cost of labor to replace the tub, in any event. Professional refinishing of the tub is also
less costly. Although no evidence of the cost to refinish was presented, I allow complainants
damages of $300.00 to repair the tub to its pre-contract condition.

Complainants also established that respondent removed the shower door to perform work on the
shower, and then removed the shower door from the home. Complainants inquired and asked for
the shower door back as they planned to reuse it after the stall was redone. Respondent returned the
door to the job site, but it had been scratched up and is no longer reusable. Complainants seek
$505.88 for a new replacement door. That amount is not unreasonable and is awarded to the

Finally, complainants established that respondent altered the plumbing and electrical systems.
Restoration to pre-contract condition is not possible or practical; nor, in restitution, are
complainants entitled to recover all costs to complete the remodeling and changes to the plumbing
and electrical. Complainants did incur a cost of $198.00 for emergency repairs to provide a
functional toilet in the upstairs bath and supply water in the downstairs bath. While this did not
provide full restoration to complainants, all other plumbing related documentation addresses
correction and completion of the planned changes to the plumbing. I award complainants $198.00
in restitution for the plumbing issues.


Complainants are entitled to recover $4,485.71 from respondent ($2,800.00 paid to respondent +
$681.83 loss of materials + $300.00 for tub repair + $505.88 for shower door + $198.00 repair to
plumbing). Complainants are also entitled to recover the portion of the court judgment that is
within the jurisdiction of the CCB. That amount is $1,079.00 ($434.00, cabinet + $595.00, duct
cleaning + $50.00, CCB fee).1 Based on these Findings, and in accordance with ORS Chapters 701
and 36, and OAR Chapter 812 Division 10, I enter the following:


Respondent shall pay complainant $5,564.71.

Dated this 17th day of July, 2008

                                                      David Marcus, Arbitrator
  Complainants testified and respondent acknowledged that he has not paid any portion of the court judgment to

Anderson and AL Consulting Technology Services Inc., CCB File No.. 171871-101
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