ALJDEC

01F-RF0319-ROC · Registrar of Contractors · 2001-05-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 30, 2001. APPEARANCES: The Plaintiffs were represented by their attorney, David Higgins, Esq. The Defendant was represented by its attorney, Frederick Taylor, Esq. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT

1. This matter came on for hearing to determine if an award and payment from the Residential Contractors’ Recovery Fund (“Fund”), which is administered by the Registrar of Contractors, to the Plaintiffs for damages sustained by the acts or omissions of the Defendant is justified by the evidence. 2. Defendant is the holder of License Number 104662, a Class C-05 Swimming Pool Solar System only license, issued by the Registrar of Contractors on October 21, 1994. 3. Defendant’s owner and qualifying party, Dick Hatfield Nickles, is also listed on License Number 152204, a Class B-05R Factory Fabricated Pools and Accessories license, issued by the Registrar on February 23, 2000 to Action Pools, a sole proprietorship of Dick Hatfield Nickles. 4. Plaintiffs originally hired Defendant to install an in-ground San Juan fiberglass shell swimming pool at their home. Defendant also did grading, plumbing and Kool deck work. Plaintiffs paid Defendant approximately $17,000.00 of the total contract price, but withheld approximately $1,000.00 balance due to a dispute about both Defendant’s installation and subsequent attempts to repair deficiencies in the pool (it is unlevel and has numerous cracks) and Kool deck. 5. In Case No. G00-0086, the Registrar of Contractors issued a citation against the Defendant alleging that it had violated provisions of A.R.S. § 32-1154(A)(7), (10), (17), (23) and (3); namely Rule R4-9-108. The Registrar issued that citation based upon a complaint filed by the Plaintiffs against Defendant. 6. The Defendant failed to timely file a written answer to the citation in Case No. G00-0086. 7. As a result of the Defendant’s failure to file an answer, the Registrar issued a default Decision and Order dated June 7, 1999. The Registrar concluded that the Defendant had violated the provision of A.R.S. § 32- 1154(A)(7), (10), (17), (23) and (3); namely A.A.C. R4-9-108. The Registrar ordered that the Defendant’s Class C-05 license be revoked, unless the Defendant accomplished the corrective work set forth in the filed complaint on or before the effective date of the Registrar’s Order. The Registrar also imposed a civil penalty on Defendant in the amount of $250.00, which was due no later than 30 days following the Order’s effective date. 8. Defendant’s Class C-05 license was revoked by the Registrar in Case No. G00-0086. 9. Defendant was not “duly” licensed to perform the scope of work on the Plaintiffs’ project. Defendant’s Class C-05 permits it to perform “swimming pool solar system only”. 10. Defendant initiated a lawsuit against the Plaintiffs in Scottsdale Justice Court. The Defendant was seeking a judgment for the outstanding contract price retained by the Plaintiffs for Defendant’s out-of-scope contracting work. That case was ultimately dismissed by the Justice Court. 11. Plaintiffs filed a claim for damages caused by Defendant with the Residential Contractors’ Recovery Fund (“Fund”). 12. The Registrar’s assigned inspector reviewed Plaintiffs’ claim and recommended an administrative payout from the Fund to Plaintiffs in the amount of $20,000.00. The inspector opined that Plaintiffs’ actual damages exceeded the sum of $20,000.00, therefore he recommended the maximum amount of payout from the Fund. 13. Plaintiffs are “injured persons” as defined in the statute and are entitled to receive payment from the Fund for damages sustained as a result of Defendant’s acts or omissions. 14. Defendant’s contracting license has been previously revoked by Order of the Registrar of Contractors. Such revocation and the nature of the out- of-scope work performed on the project are determined to render this Defendant unable to remedy the violations of the State’s contracting laws which gave rise to the instant claim for damages. 15. Defendant’s owner and qualifying party, Dick Hatfield Nickles, testified that the damages sustained by Plaintiffs could be repaired at a cost in the approximate range of $1,000.00 to $1,500.00. Mr. Nickles’ estimate is deemed neither credible nor reliable based upon the totality of the evidence. 16. The evidence of record supports a finding that Plaintiffs’ damages sustained as a result of the acts or omissions of the Defendant exceed the sum of $20,000.00. 17. Plaintiffs have established their entitlement to an administrative payout from the Fund in the maximum amount of $20,000.00, which represents a proper and reasonable amount payable to remedy the damages caused to them by the Defendant.

CONCLUSIONS OF LAW

1. A.R.S. § 32-1153 provides that “(n)o contractor…shall…commence or maintain any action in any court of the state for the collection of compensation for the performance of any act for which a license is required by this chapter without alleging and proving that the contracting party whose contract gives rise to the claim was a duly licensed contractor when the contract sued upon was entered into and when the alleged cause of action arose”. (emphasis added) Defendant was not duly licensed to perform the scope of work on this project with its Class C-05 license. The prior Scottsdale Justice Court litigation is not res judicata. 2. In this administrative proceeding, Plaintiffs bear the burden of proof and must establish the amount of their damages by a preponderance of the evidence.[1] A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.[2] 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.”[3] 3. Defendant’s default in Case No. G00-0086 before the Registrar of Contractors, which charged Defendant with a violation of A.R.S. § 32- 1154(A)(7)[4], (10)[5], (17)[6], (23)[7], and (3)[8], conclusively determined that Defendant had violated these statutes and required the Registrar to revoke the Defendant’s Class C-05 license. 4. In Arizona, ‘“[p]ublic policy dictates that there be an end to litigation; that those who have contested the issue shall be bound by the result of the contest; and that matters once tried shall be considered forever settled as between the parties.’”[9] “That the judgment was rendered by default does not affect its validity, for such a judgment admits as true all the material allegations properly set forth in the complaint and is just as binding and conclusive as to them as though it had been rendered after answer and contest.”[10] This law conclusively establishes that Defendant violated A.R.S. § 32-1154(A)(7), (10), (17), (23) and (3) in its construction at the Plaintiffs’ residence. 5. The evidence submitted at the hearing establishes that Defendant’s violations of A.R.S. § 32-1154(A)(7), (10), (17), (23) and (3) damages Plaintiffs in an amount in excess of $20,000.00. 6. A.R.S. § 32-1132(A) provided that the Registrar may make an award from the Residential Contractors’ Recovery Fund in “any amount of not more than twenty thousand dollars for damages sustained by the act, representation, transaction or conduct” of a residential contractor that violates statutes governing contractors or the rules the Registrar has adopted pursuant to those statutes. Since Plaintiffs have established that Defendant’s various statutory violations committed on their residential construction project damaged in excess of $20,000.00, they are entitled to the maximum payout allowed from the Fund.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the entered Order in this case that the Registrar of Contractors shall commence and finalize payment procedures from the Residential Contractors’ Recovery Fund to Plaintiffs in the amount of $20,000.00 for damages. Done this day, May 18, 2001

______________________________________ Brian Brendan Tully Administrative Law Judge

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

Registrar of Contractors Michael P. Goldwater ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________ ----------------------- [1] See A.A.C. R2-19-119; see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App.1996). [2] Morris K. Udall, ARIZONA LAW OF EVIDENCE § 5 (1960). [3] BLACK’S LAW DICTIONARY at page 1064 (6th ed. 1990). [4] This statutory subsection includes among the grounds for suspension, revocation or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” [5] This statutory subsection includes among the grounds for suspension, revocation or other disciplinary action against a contractor’s license “[a]iding or abetting a licensed or unlicensed person to evade this chapter, knowingly combining or conspiring with a licensed or unlicensed person, allowing one’s license to be used by a licensed or unlicensed person or acting as an agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.” [6] This statutory subsection includes among the grounds for suspension, revocation or other disciplinary action against a contractor’s license “[k]nowingly contracting beyond the scope of the license or the licenses of the licensee.” [7] This statutory subsection includes among the grounds for suspension, revocation or other disciplinary action against a contractor’s license “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving written directive from the registrar.” [8] This statutory subsection includes among the grounds for suspension, revocation or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar”. The rule violated here was A.A.C. R4-9-108, which requires that [a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [9] Lofts v. Superior Court, 140 Ariz. 407, 410, 682 P.2 412, 415 (1984) (quoting Baldwin v. Iowa State Travelling Men’s Ass’n., 283 U.S. 522, 525, S. Ct. 517, 518, 75 L. Ed. 1244 (1931)). [10] Collister v. Inter-State Fidelity Building and Loan Ass’n, 44 Ariz. 427, 435, 38 P.2d (1934) (citations omitted).

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