ALJDEC decisions subject to certification as final

07F-2632-ROC · Registrar of Contractors · 2009-03-18

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 18, 2009 APPEARANCES: Complainant Tim Wright appeared on his own behalf: Respondents were represented by attorney Michael Thal. ADMINISTRATIVE LAW JUDGE: Michael G. Wales _____________________________________________________________________

FINDINGS OF FACT 1. This matter convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated February 11, 2009. 2. On March 17, 2009, the eve of the hearing, Respondents, by and through counsel, filed a Prehearing Memorandum, which included a recitation of “operative facts” and legal argument regarding the doctrine of collateral estoppel, also known as issue preclusion. Respondents’ brief sought dismissal of the instant Citation and Complaint or, in the alternative, a limitation on the scope of the hearing. Later in the day, Complainant filed his memorandum, objecting to Respondents’ motion to dismiss. 3. Prior to convening the hearing, the undersigned addressed the subject memoranda with the parties and inquired of Respondents’ counsel as to his intentions regarding his memorandum. Counsel advised that he wished to use it as the basis for a motion to dismiss the instant complaint on issue preclusion grounds. The parties indicated that they had fully read and considered each other’s memorandum and were ready to proceed with oral argument. The matter then proceeded on the record for argument regarding Respondents’ motion to dismiss. 4. Respondents’ counsel moved to dismiss the instant complaint based on collateral estoppel or issue preclusion. Complainant’s May 7, 2007 Complaint and the eleven (11) addendums filed thereto (listing approximately 77 complaints), the last addendum having been filed May 23, 2008, as well as the allegations set forth in the Registrar of Contractors’ October 30, 2008 Citation and Complaint, had been previously litigated at an American Arbitration Association (“AAA”) binding arbitration before Arbitrator William F. Haug on or about September 10-11, 2008 in Case No. 76 421 00301 07 JAMA. As a result of the arbitration hearing, on October 20, 2008, Arbitrator Haug issued a Decision and Award. That Decision and Award contained the following findings by Arbitrator Haug: The parties stipulated that all Registrar of Contractors complaints have been satisfactorily resolved except one. This relates to a drainage issue in front of claimant’s home, which S&S has corrected. However, until a major storm event occurs, it will not be known if the correction is successful. Accordingly, the Respondents have agreed and stipulated that they will come back and make further corrections if what they have done does not remedy the drainage issue.

5. In response to Respondents’ Motion to Dismiss, Complainant acknowledged that the issues in the Complaint and Citation were fully litigated at the Arbitration. Likewise, Complainant acknowledged the stipulation described in the Arbitrator’s Decision and Award was true and further stated the drainage issue is now resolved to his satisfaction, as are all other workmanship issues. Complainant, however, argued that the instant matter should proceed to hearing on the following grounds: a. In regards to the complaint set forth in the May 23, 2008 addendum, specifically that the pool house constructed by Respondents violates Phoenix zoning laws, the Arbitrator’s Decision and Award was in error.[1] Complainant argued that the Arbitrator is not a zoning expert and the issue, decided against him in arbitration, should be presented to the Registrar of Contractors irrespective of the Arbitrator’s binding Decision and Award. Complainant also argued that the state’s power to protect the public and discipline a contractor cannot be abrogated by a Decision and Award arising from an arbitration to which the Registrar of Contractors was not a party. b. Respondent S&S Homes’ contracting license was suspended when they did the corrective work; therefore, the Registrar of Contractors should hold a hearing in regards to this. Complainant admitted, however, that he did not allege any such violation in his initial Complaint and 11 addendums thereto and there is no such allegation in the Registrar of Contractors’ October 30, 2008 Citation and Complaint. c. Complainant did not see any license number preceded by the acronym ROC on change orders that he signed. Complainant admitted, however, that he did not allege any such violation in his initial Complaint and 11 addendums thereto and there is no such allegation in the Registrar of Contractors’ October 30, 2008 Citation and Complaint. d. Complainant agreed that all construction issues had been resolved by Respondents; however, Complainant argued that there were times when the repairs were not completed within the 15-day window as required by the respective Corrective Work Orders in the instant case and, that Respondent should be therefore disciplined.

CONCLUSIONS OF LAW 1. Complainant, in the binding AAA arbitration, entered into a stipulation of fact that all of his Registrar of Contractors complaints have been resolved with the exception of the drainage issue. Complaint has further admitted, in the instant case, that the drainage issue has been resolved to his satisfaction. While Complainant is entirely correct that the Registrar of Contractors’ power to discipline contractors cannot be abrogated by the Arbitrator, when a Complainant enters into a stipulation of fact in a judicial or quasi-judicial proceeding that all of the complaints that he filed before the Registrar of Contractors have been resolved, the Complainant has, by operation of law imposed a factual finding on this tribunal that a factual basis no longer exists for discipline. This includes any claim that repairs were not completed within the 15-day window as required by the respective Corrective Work Orders. The applicable legal doctrine is known as collateral estoppel. Collateral estoppel, or issue preclusion, applies when an issue was actually litigated in a previous proceeding, there was a full and fair opportunity to litigate the issue, resolution of the issue was essential to the decision, a valid and final decision on the merits was entered, and there is common identity of parties. Collins v. Miller & Miller, Ltd., 189 Ariz. 387, 397, 943 P.2d 747, 757 (Ct. App. 1996). The doctrine of collateral estoppel relieves parties of the costs and vexation of multiple lawsuits, conserves judicial resources, and, by preventing inconsistent decisions, encourages reliance on adjudication. See Allen v. McCurry, 449 U.S. at 94. 2. Complainant’s arguments that a hearing should proceed on his claim, as set forth in him May 23, 2008 addendum, that the Pool House, as built by Respondents, violates City of Phoenix zoning laws because the Arbitrator erred in his decision against Complainant fails for the same reason. Neither this tribunal nor the Registrar of Contractors has the legal authority to ignore the doctrine of collateral estoppel and grant Complainant the relief he seeks, essentially a finding that the Arbitrator erred and that, therefore, the Decision and Award are not binding on the parties and this tribunal. 3. Finally, Complainant’s argument that the hearing should proceed on his allegations that Respondent S&S Homes was not licensed at the time it performed corrective work and that Respondents’ license number and the acronym ROC were not on the change orders executed by Complainant must fail as well. Neither of these two complaints was ever raised in Complainant’s initial complaint, Complainant’s eleven addendums, or the Registrar of Contractors’ October 30, 2008 Citation and Complaint. That Citation and Complaint alleges only violations of A.R.S. 32-1154A(2), (7), (15), (23), and (3) (namely A.A.C. R4-9-108). For these reasons, a hearing on these two uncharged allegations, for which no initial factual allegation was ever made in Complainant’s complaint and addendums, would violate due process.

RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that Respondents’ Motion to Dismiss be granted and the entire Citation and Complaint in Case Nos. 07- 2632 and 07-2632W be dismissed on the basis of collateral estoppel.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order in this matter will be forty (40) days from the date of that certification.

Done this day, March 18, 2009.

Office of Administrative Hearings

__________________________ Michael G. Wales Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2009, to:

Registrar of Contractors William A. Mundell, Director c/o Legal Department 3838 N. Central Ave. Phoenix, AZ 85012, Director

By ___________________________ ----------------------- [1] Complainant did file an action to set aside the Arbitrator’s Award in part, but only moved to set aside the Arbitrator’s decision regarding whether attorneys’ fees were appropriate. The Superior Court did find that the Arbitrator exceeded his power by not awarding fees and costs to the prevailing party and remanded the attorneys’ fees decision back to the Arbitrator. Complainant’s argument that the remand is evidence of poor decision making skills by the Arbitrator fails as this tribunal does not have the legal authority to set aside the Arbitrator’s Decision and Award.

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