The most un-Halloween of Halloweens has come and gone. If you ask me though, between COVID, protests, fires, hurricanes, the passing of a Supreme Court Justice, and one of the most hotly contested elections in U.S. history, we’ve had enough scares this year to make up for it and then some.
In the next case, Sieg v. Registrar of Contractors, Case No. A156089 (September 28, 2020), 1st District Court of Appeal, one contractor, haunted by “demonized” flooring, and who couldn’t catch a break even with the talisman of a release of liability signed by the homeowner, can add one more to his list of reasons why 2020 needs to be relegated to the history books.
The Sieg Case
In January 2012, homeowners Dennis and Ana Torchia purchased wood flooring for their home in Windsor, California. Specifically, they selected Brazilian Ebony, an exotic species of unusually hard wood, for its appearance and durability.
The company from whom the Torchias purchased their flooring, Lumber Liquidators, referred them to George Sieg a sole proprietor doing business as B & G Hardwood Flooring for the installation. When the Brazilian Ebony hardwood flooring was received, Sieg and his crew delivered the flooring to the Torchias.
Following delivery, Sieg gave the Torchias a work order proposal estimating the cost of installation. Included with the work order was a document entitled “Conditions” which stated in part: “6 mil black polyethylene is recommended to cover 100% of the crawl space earth.” Sieg also gave the Torchias an installation order form which included a line stating “MOISTURE BARRIER NEEDED” and a line for the customers initials and language at the bottom of the form stating “[t]he above information has been explained to me in full by my installer, and I understand that the installer [is] not responsible for any damage caused by post-installation changes in the moisture levels.” Both documents were signed by the Torchias.
On the same day that the documents were signed, Sieg raised the need for a moisture barrier and his recommendation that installation wait a few days to allow the flooring to acclimate, but said that he would be willing to start installation immediately if the Torchias signed a disclaimer and release any claims for problems arising from the installation without a moisture barrier. The Torchias agreed and signed a disclaimer which stated that installation of the floor was inadvisable because the “Prefinished flooring [had a moisture difference of] over two points less than subfloor and no plastic covering the dirt under the house.”
Within weeks following installation of the Brazilian Ebony hardwood flooring, Torchia said that he noticed a “very loud popping sound, sounding like firecrackers going off in different parts of the house.” After the Torchias contacted Lumber Liquidators about the problem, Lumber Liquidators hired an expert, Richard King. King’s investigation revealed that, in addition to the fact that the flooring was installed without a plastic liner under circumstances in which there was a moisture differential between the hardwood floor and the subfloor, there were issues with the workmanship, including:
The flooring was installed tight against the walls with no expansion space provided;
Some areas of the flooring had no fasteners;
The flooring was generally fastened two to four inches from ends rather than one to three inches from ends as recommended by the manufacturer;
The flooring fasteners were generally fastened eight to 11 inches apart, and in some places more than 12 inches apart, rather than six to eight inches apart as recommended by the manufacturer;
Fasteners were driven through the subfloor;
No underlayment was installed around registers and crawl space access.
According to testimony by King, “when you walk on the floor and it’s not fastened properly, the floor moves, buckles, wiggles, makes noises. But with Mr. Torchia’s floor . . . I could look into the alcove with nobody in there. And the floor continues to pop and make noises. It was like it was demonized.”
The Torchias later had a moisture barrier installed in the crawl space but the demon popping continued.
The CSLB Complaint, ALJ Hearing, and Writ of Administrative Mandamus
Ultimately, the Torchias filed a complaint with the Contractors State License Board. Following investigation, the CSLB filed an Accusation against Sieg seeking revocation or suspension of Sieg’s contractor’s license and restitution.
A hearing was held over the course of two days before an Administrative Law Judge (“ALJ”) and, due to the illness of Sieg’s counsel, closing arguments were submitted in writing by both parties. The ALJ later issued a proposed decision recommending a 65-day suspension, a three-year probationary period, and restitution in the amount of $27,884.21.
One interesting note for those who have not been involved in CSLB administrative hearings is that decisions by ALJ judges are only recommendations and the CSLB can choose to adopt, reject, or modify any decisions by an ALJ. This is exactly what happened here. The Registrar of the CSLB adopted the ALJ’s proposed decision, but instead adopting the 65-day suspension recommended by the ALJ, recommended that Sieg obtained a disciplinary bond in the amount of $30,000.
Following the decision, Sieg filed a writ of administrative mandamus with the Superior Court in accordance with Code of Civil Procedure section 1094.5. The Superior Court, after hearing oral argument by the parties, issued an order denying writ relief. Sieg, in turn, appealed again to 1st District Court of Appeal.
On appeal, the 1st District Court of Appeal noted the appropriate standard of review by courts when reviewing appeals from administrative decisions. Superior Courts, explained the Court of Appeal, when considering a writ of administrative mandamus, apply what is known as the “Independent Judgment Test,” and will affirm an agency’s finding of fact if they are supported by the weight of the evidence, but reviews questions of law de novo (i.e., without weight being giving to one part or another) giving respectful consideration to an agency’s decision on legal questions to the extent its reasoning is persuasive.
Further, explained the Court of Appeal, under the Independent Judgment Test the findings of an agency come “with a strong presumption of their correctness, and the burden rests on the complaining party to convince the court that the board’s decision is contrary to the weight of the evidence.”
However, explained the Court of Appeal, when reviewing a Superior Court’s decision on a writ of administrative mandamus, the Courts of Appeal review the Superior Court’s decision for substantial evidence but review questions of law de novo. Further, explained the Court of Appeal, on appeal before the Courts of Appeal, the burden is on losing party bringing the appeal.
I won’t go into all of the details of the appeal, but suffice to say that Court of Appeal upheld the Superior Court’s denial of the writ of the administrative mandate. More pertinent to contractors and their attorneys is one already well-established rule and another one that is new to me.
First, as to the well-established rule, the CSLB found that Sieg had violated Business and Professions Code section 7109 which provides:
(a) A willful departure in any material respect from accepted trade standards for good and workmanlike construction constitutes a cause for disciplinary action, unless the departure was in accordance with plans and specifications prepared by or under the direct supervision of an architect. (b) A willful departure from or disregard of plans or specifications in any material respect, which is prejudicial to another, without the consent of the owner or his or her duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans or specifications, constitutes a cause for disciplinary action.
On appeal, Sieg argued that he could not be found to have violated Business and Professions Code section 7109 because did not “willful[ly]” depart from accepted trade standards since he did not intend for the floors to be possessed by demonic popping sounds. The Court of Appeal made short work of this argument explaining that well-established case makes clear that “7109’s willful requirement is satisfied by evidence fo a general intent to act:
In civil cases, the word “willful,” as ordinarily used in courts of law, does not necessarily imply anything blamable, or any malice or wrong toward the other party, or perverseness or moral delinquency, but merely that the thing done or omitted to be done was done or omitted intentionally. It amounts to nothing more than this: That the person knows what he is doing, intends to do what he is doing, and is a free agent.
In short, Sieg did not have to intend that something bad were to occur in order to be found to have engaged in a “willful” departure of accepted trade standards under Business and Professions Code section 7109.
Second, is the one that is new to me. On appeal, Sieg argued that by signing the disclaimer in which the Torchias released any claims against Sieg for problems arising from the installation of the flooring without a moisture barrier, a decision should have been in his favor “by simply enforcing the Disclaimer according to its plain terms.” The Court of Appeal disagreed on the ground that, while the disclaimer might be pertinent in a private action between Sieg and Torchia, the Accusation against Sieg was brought by the CSLB even though it may have been initiated by the CSLB complaint filed by the Torchias. Further, explained the Court, in disciplinary enforcement proceedings, a homeowner cannot consent to a contractor’s departure from accepted trade standards:
Because this is not a private action between Sieg and Torchia, we see no need to address matters of unconscionability or contract illegality. Whether the Disclaimer was valid and enforceable as a contract is beside the point, since we are dealing with a disciplinary enforcement proceeding brought by CSLB on behalf of the public. For purposes of licensing enforcement, a homeowner cannot consent to a contractor’s departure from accepted trade standards for good and workmanlike construction. (Civ. Code § 3513 [a law established for a public reason cannot be contravened by a private agreement].) Whatever private arrangements may be made between a contractor and a client, the contractor has an independent obligation to the public to adhere to statutorily established standards of performance. (§ 7109, subd. (a); cf. Mickelson, supra, 95 Cal.App.3d at p. 635 [rejecting concrete contractor’s attempt to defeat willfulness finding in section 7109 enforcement proceeding on the ground that “he informed both [clients] that a pour over was an improper method of repair, that he read [to the clients] the contents of the contract absolving himself of responsibility before proceeding with the pour over”].) We base this reading of section 7109, subdivision (a), on the text and legislative history of the statute. As the CSLB correctly points out, the Legislature amended section 7109, subdivision (a), in 1988, to remove language which once made it possible for contractors facing discipline to defend accusations of departure from statutory trade standards by arguing client consent. (§ 7109, as amended by Stats. 1988, ch. 1619, § 4.) Thus, while the governing contract here established the benchmark for Sieg’s obligations to Torchia, in discharging those obligations he was bound to adhere to statutorily imposed standards of workmanship that could not be diluted, circumvented, or released away by private consent.
The CSLB can take enforcement action based on any one of numerous violations set forth under the Business and Professions Code. Where those statutory sections involve a “willful departure” or “willful or deliberate” act, the term “willful” simply means an intentional act not an intent that something bad will occur. Sieg also highlights that releases and disclaimers between a contractor and a consumer will not protect a contractor in a CSLB enforcement actions against the contractor.