ALJDEC

01F-R012006-BFS · Department of Building and Fire Safety · 2001-12-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 27, 2001. APPEARANCES: Russell Graves, Complainant. ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang. _____________________________________________________________________ Integrity Manufactured Home Sales, L.L.C., violated the applicable licensing law by failing to return earnest money paid to Russell Graves or to provide the agreed on goods and services. Although the qualifying party has filed personal bankruptcy, the administrative hearing in this case fell under an exception to the stay in bankruptcy and the Department of Building and Fire Safety has jurisdiction to revoke Respondent’s license. Considering the violation involved, revocation is appropriate. Therefore, the undersigned Administrative Law Judge hereby recommends that Respondent’s license be revoked. FINDINGS OF FACT 1. On January 25, 2001, Russell Graves paid $3000 to Integrity Manufactured Home Sales, L.L.C., (“Integrity”) as earnest money for a manufactured home that he was planning to lease with the option to buy. Integrity accepted the money but refused to perform the sale or to return the earnest money to Mr. Graves. On April 13, 2001, Integrity closed its doors for business. Later, Mr. Graves received a notice that Nick Liberatore, the qualifying party for Integrity, had filed Chapter 7, for personal bankruptcy, on April 6, 2001 naming Mr. Graves as a creditor. Integrity did not file for bankruptcy. Mr. Graves filed a complaint with the Department of Building and Fire Safety on April 18, 2001. 2. Although advised to seek relief from the stay in bankruptcy to avoid complications, Mr. Graves declined to do so for personal reasons and requested that the Administrative Law Judge make a recommendation on his complaint without a grant of relief from the Bankruptcy Court. CONCLUSIONS OF LAW 1. This administrative hearing was held under authority of and pursuant to A.R.S. § 41-1092, and A.R.S. § 41-2181. According to the applicable law, the Department of Building and Fire Safety is empowered to revoke or suspend the license of any licensed manufacturer, dealer, broker, salesperson or installer for any violation of A.R.S. § 41-2186. That statute provides that it is a violation to conduct “false, misleading or deceptive sales practices” or to fail “to provide all agreed on goods and services”. 2. The burden of proof at an administrative hearing is generally upon the Complainant. Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). Further, the standard of proof at hearing is a “preponderance of the evidence”. Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). 3. In this case, the Complainant offered clear evidence that the Respondent failed to deliver the home or return the earnest money entrusted to it. The weight of the evidence has established that the Respondent violated the applicable statutes by flagrantly misusing earnest money and refusing to provide the goods and services that Mr. Graves bargained for. Thus, the undersigned Administrative Law Judge recommends that Respondent’s license be revoked. 4. Regarding Respondent’s bankruptcy, the Arizona Court of Appeals has held that the Bankruptcy Court may re-review the appropriateness of an administrative agency’s determination that the bankruptcy stay does not apply to its hearing. It also supported that agency’s determination that the administrative hearing fell squarely within the exceptions to the stay in bankruptcy. In re: Dunbar. Contractor’s State License Board of California, Registrar of Contractors State of California, Department of Consumer Affairs, State of California v. Dunbar, 245 F. 3d 1058 (9th Cir. 2001). Federal Bankruptcy Law provides that an agency may proceed with a hearing to enforce its police or regulatory powers. 11 U.S.C.S. § 362(b)(4). 5. The bankrupt in Dunbar stood to have his contractor’s license revoked but was ordered instead to pay a fine and restitution. The bankrupt in this case also stands to have his license revoked, though the license is to conduct manufactured home sales rather than to do contracting work. It appears that the exception to the stay in bankruptcy would apply to this case as well. The risk of confusion or harm resulting from a decision by the Bankruptcy Court to nullify the agency decision in this case was freely acknowledged and accepted by Mr. Graves at hearing. RECOMMENDED DECISION Based upon the foregoing considerations, I recommend that the Director of the Department of Building and Fire Safety revoke Respondent’s license. Done this day, December 31, 2001.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Dorinda M. Lang Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2002, to:

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

By ___________________________

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