ALJDEC

01F-R012002-BFS · Department of Building and Fire Safety · 2001-10-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 15, 2001. APPEARANCES: COMPLAINANTS: Steve and Brenda Brown. RESPONDENT: by Carlos Estrada, Esq., with Guy Williams. DEPARTMENT OF BUILDING AND FIRE SAFETY/OMH: Inspector Dennis Butzen.

ADMINISTRATIVE LAW JUDGE: Anthony Halas. _____________________________________________________________________ Hearing in this matter convened on October 15, 2001 to consider Complainants’ Consumer Recovery Fund claim pursuant to A.R.S. § 41-2190. On the basis of the testimony and evidence presented, and the entire record, the following Findings of Fact, Conclusions of Law, and Order are made to the Director of the Department:

FINDINGS OF FACT 1. Complainants Steve and Brenda Brown (the Browns) purchased a manufactured home from Respondent Oakcrest Mobile Homes, Inc. (Oakcrest Mobile Homes) on October 25, 1999. 2. Respondent dealer Oakcrest Mobile Homes was previously issued License No. 7085, Class D-8, by the Department of Building and Fire Safety (Department). 3. Complainants Brown filed a complaint relative to deficiencies in the manufactured housing they had purchased from Respondent dealer. The dealer failed to comply with the VERIFIED COMPLAINT & SIGN OFF FORM issued (and supplemented) by the Department’s inspector after his inspection of the home, which verified for correction by the dealer Item Nos. 1, 2, 3, 4a, 5b, and 6. As a result, Respondent’s license was revoked by the Department effective May 29, 2001. 4. On July 11, 2001, Complainant filed a claim seeking payment of $29,995.95 from the Consumer Recovery Fund pursuant to A.R.S. § 41-2190, and hearing was duly scheduled. 5. At hearing, Steve and Brenda Brown appeared and testified, and offered Exhibits 1 through 15 as estimated costs to repair or complete the items verified for correction by the Department’s Inspector Butzen, as well as certain other additional estimated costs. The exhibits were marked and admitted. Inspector Butzen also appeared, by subpoena issued at Complainants’ request, and testified to generally explain certain of the Department’s policies and procedures and his specific findings on inspection. 6. Respondent Oakcrest Mobile Homes appeared, represented by counsel, and provided the testimony of Guy Williams, a corporate officer and qualifying party on the license, and offered Exhibit A. 7. Complainants explained that in seeking bids and calculating costs, they relied on the bidding contractors and providers to consider the items verified and to measure and estimate, on site as necessary, and then recommend how best to address the various verified items, and whatever else should be considered as necessary to properly complete the work. These included such items as the length of the baseboard and ridge cap which required correction, and the linoleum in the guest bath (now curling where the dealer’s workman had removed baseboard while repairing drywall and then failed to return to complete the job). 8. The several multiple-item bids (Exhibits 1, 2, and 3) submitted by Complainants are generally itemized in a manner consistent with the 6 items verified for dealer correction, with each bid then totaled. Complainants also submitted one bid specific to re-leveling the manufactured home (Exhibit 15). Complainants acknowledged that certain of the bids for costs to repair and complete seemed high, but stated the bids were high for reasons beyond their control, given the limited number of licensed contractors in their rural area outside Eager, Arizona, and their own inability - along with the inability of the now-revoked licensee - to procure labor and materials at wholesale prices, or directly from the manufacturer. 9. Complainants also submitted several bids for additional expenses they anticipated their family of five would incur for temporary lodging (Exhibits 4, 5, and 6); for furniture moving (Exhibits 7, 8, and 9) and storage (Exhibits 11 and 12); for meal reimbursement (Exhibits 13 and 14); and for removal and replacement of their wood-stove by the original installer (Exhibit 10). Complainants’ premise for these additional expenses was that the contractors bidding on the carpet replacement and drywall repair and painting recommended that, to minimize disruption and maximize getting the work done, the home should be vacated of people and furnishings for the three weeks (per Exhibits 1 and 3) necessary to accomplish those tasks, rather than attempt to proceed room-by-room and item-by-item. 10. In columnar form, the following represents a cross-referencing of the items verified for correction and other included items with the particular multiple-item bids (Exhibits 1, 2, and 3):

VERIFIED COMPLAINT Upright Builders Expertise, Inc. Cheyenne Log Item cost or other cost (Exhibit 1) (Exhibit 2) (Exhibit 3) Item 1) Carpet $ 6300.00 $ 6713.00 $ 6750.00 Unacceptable

Item 2) Baseboard $ 1500.00 $ 1384.32 $ 1350.00 Replacement

Item 3) Ridge Cap $ 225.00 $ 300.00 $ 250.00 Replacement

Item 4a) Drywall/Paint $ 6400.00[1] $ 5936.80[2] $ 6200.00[3] Completed

Item 5b) Corner Rosettes -- $ 60.00 $ 50.00

Item 6) Home not secure $ 480.00 -- -- Re-level

R/R linoleum in (Incl. in carpet) $ 395.00 $ 445.00[4] Guest Bath

Trash disposal -- $ 450.00 --

Travel/Mileage -- $ 697.20 --

Profit/Overhead $ 1500.00 -- $ 1504.50

Taxes $ 1509.00 -- $ 978.90

___________________________________________________________________

TOTALS $17914.00 $15936.32 $17528.40

11. In a similar format, Complainants’ bids (Exhibits 4, 5, and 6) for temporary lodging costs for three weeks for the family of five are listed as follows: TEMPORARY LODGING Rode Inn Motel Sunrise Inn El Jo Motor Inn (Exhibit 4) (Exhibit 5) (Exhibit 6)

$ 1274.70 $ 1505.91 $ 1678.95 (tax incl.) (tax incl.) (plus tax)

12. To try to establish food costs for three week’s meals for the family of five while displaced from their home, Complainants submitted the current per diem rates for employees of the Town of Eager (Exhibit 13) and the U.S. Forest Service (Exhibit 14): PER DIEM MEALS Town of Eager U.S. Forest Service (Exhibit 13) (Exhibit 14) $ 10.00 (per person per meal) $ 30.00 (per person per day)

Assuming three meals per person per day for three weeks, (and without discounting the appetites of the three children in the family), extrapolation of each of the two per diem allowances would result in the same total amount: $3150.00. 13. For moving their furniture while the work was being done, Complainants submitted three bids (Exhibits 7, 8, and 9):

FURNITURE MOVING A & M Moving AARO Moving Quality Movers (Exhibit 7) (Exhibit 8) (Exhibit 9)

$ 3690.00 $ 6700.71 $ 3535.00 (incl. 1 month storage)

14. For storing their furniture while the work was being done, Complainants submitted two bids (Exhibits 11 and 12): FURNITURE STORAGE Bannister’s Country Storage (Exhibit 11) (Exhibit 12) $ 89.00 per month $ 90.00 per month

(10 x 25) (10 x 25)

15. Complainants submitted one bid (Exhibit 10) for removal and reinstallation of their woodstove by a certified woodstove installer. They stated they relied on the advice of the general contractors who made bids for the conclusion that such action was necessary in order to allow the other necessary repairs to be made: WOODSTOVE R/R David McCombs (Exhibit 10)

$ 225.76

16. Complainants submitted one additional bid (Exhibit 15) for re- leveling the manufactured home relative to verified item no. 6: RE-LEVEL HOME Master Mobile (Exhibit 15)

$ 525.00

17. Respondent dealer, through the testimony of its principal, Guy Williams, argued two primary points of contention to what it considered to be the “outrageous” recovery fund claim made by Complainants: A. First, Respondent contends that any of the costs estimated to specifically complete the six items verified for dealer correction could have been (or could now be) corrected by the dealer if given a chance, for wholesale costs much less than the costs bid by the various contractors and service providers. Respondent offered its Production Order dated November 10, 1999 (Exhibit A) in support of this contention, and specifically questioned the cost and extent of the bids to repair or replace carpet, drywall, paint, door rosettes, and baseboards. B. Second, Respondent contends that certain of Complainants’ cost bids were not recoverable because they either had not been verified for dealer correction (e.g., the guest bath linoleum); were unnecessary to adequately do the work (e.g., vacating the home for three weeks for carpeting, painting, and drywall repair, all of which could be done room-by- room; removing and reinstalling the woodstove), or had been done (e.g., re- leveling the home), or were not the “actual or compensatory damages” permitted by statute (including temporary lodging; per diem meals; furniture moving and storage; bid travel/mileage).

CONCLUSIONS OF LAW 1. In this administrative proceeding, Complainants bear the burden of proof such that they must establish their right to a recovery from the Fund, and the amount, pursuant to A.R.S. § 41-2190.B, 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). 2. “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). 3. The Browns are “consumers” as defined by statute and entitled to receive payment from the Consumer Recovery Fund (the Fund) for damages as a result of Respondent dealer’s acts or omissions in failing to perform on the sales agreement. (A.R.S. § 41-2190(B)). The extent of such recovery is defined by statute (A.R.S. § 41-2188(B)): Recovery from the consumer recovery fund is limited to actual or compensatory damages, including costs but excluding interest or attorney fees.

4. So, while the Department shall pay from the consumer recovery fund whatever sum the administrative law judge finds payable upon the claim (A.R.S. § 41-2190(D)), this tribunal does not have unfettered discretion in that regard, since any award that can be determined is constrained by law to actual or compensatory damages, including costs, per A.R.S. § 41- 2188(B). 5. In this instance, the undersigned finds and concludes that Respondent’s contention that it could now correct - or could have then corrected - the verified items at wholesale costs much lower than those now bid presumes a factual and legal impossibility. This is so because the dealer previously failed to address the verified items when required to do so, its license was revoked as a direct result, and the company is therefore now precluded from taking any further action, at any cost, to correct the verified deficiencies. 6. Since the undersigned further concludes that there are no intrinsic or extrinsic reasons evident to question the bona fides of the bids sought and submitted by Complainants to correct the verified items and for additional costs (except for per diem meals; see below), and because Respondent offered no evidence other than its principal’s opinion to specifically rebut the amount of those bids, it is determined that the lowest bid for necessary and comparable services constitutes a reasonable actual cost basis for recovery from the Consumer Recovery Fund. 7. Respondent’s additional contentions that repair of the guest bath linoleum, removing and reinstalling the woodstove, and re-leveling the home are not recoverable costs are also not found persuasive in light of the probative weight of the evidence. Instead, the undersigned concludes that the preponderance of the testimony and evidence of record demonstrates that these are reasonably necessary elements of those items already verified for correction by the dealer. 8. Finally, actual or compensatory damages for breach of contract are those which arise naturally from the breach itself. See Southern Arizona School for Boys, Inc., v. Chery, 119 Ariz. 277, 580 P.2d 738 (App. 1978). 9. In that light, and in resolution of factual and legal conflicts in the record, the undersigned therefore determines that based on the evidence presented at hearing, Complainants have established that the low bids for temporary lodging and furniture moving and storage properly constitute actual or compensatory damages and costs in this instance and are therefore appropriate and reasonable elements of Complainants’ Recovery Fund claim. 10. However, it is further concluded that the evidence of per diem meal reimbursement in the amount of $3150.00 (as extrapolated from Exhibits or 13 for a family of five for 3 meals per day for 3 weeks) is both excessive and too speculative for consideration in this instance, and it is deemed insufficient and inappropriate as a means of assessing an actual or compensatory damage or cost. That amount is therefore not recoverable from the Fund. 11. Therefore, the following itemization constitutes the actual and compensatory damages, including low bid costs, Complainants are entitled to recover from the Consumer Recovery Fund:

$ 15936.32 Expertise, Inc. (Exhibit 2) for multiple items 525.00 Master Mobile Installation Co. (Exhibit 15) for re-leveling 1274.70 Rode Inn Motel (Exhibit 4) for temporary lodging 3690.00 A & M Moving (Exhibit 7) for furniture moving and storage 225.76 David McCombs (Exhibit 10) for woodstove removal and reinstall _________ $ 21651.78 TOTAL

ORDER In view of the foregoing, IT IS ORDERED that the Department of Building and Fire Safety shall commence and finalize payment procedures from the Consumer Recovery Fund for an award to Complainants in the amount of $21651.78. IT IS FURTHER ORDERED that the revoked Class D-8 License No.7085 of Respondent Oakcrest Mobile Homes, Inc. shall be suspended and remain so until Respondent has repaid in full the amount of the above claim, plus interest, pursuant to A.R.S. § 41-2190(D). Done this day, October 24, 2001.

______________________________________ Anthony Halas Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2001, to:

Department of Building and Fire Safety N. Eric Borg ATTN: Shawna Blank East Virginia, Suite 100 Phoenix, AZ 85004

By ___________________________

----------------------- [1] Painting and drywall cost figures combined. [2] Painting and drywall cost figures combined. [3] Painting and drywall cost figures combined. [4] Related cost figures combined.

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