ALJDEC decisions subject to certification as final

08F-R089027-BFS · Department of Fire Building and Life Safety · 2008-12-18

STATE OF ARIZONA OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 3, 2008

APPEARANCES: Complainant Robert Reeder and his wife Karen appeared and were represented by attorney Nathaniel Wadsworth of Rowley Chapman Barney & Buntrock, Ltd.; no one appeared on behalf of Respondent; nor did anyone appear on behalf of the Consumer Recovery Fund.

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant Robert Reeder seeks an award from the Consumer Recovery Fund (“Fund”), administered by the Board of Manufactured Housing (“Board”) of the Arizona Department of Fire, Building, and Life Safety (“Department”). He claims damages that were caused by Respondent House Mart Factory Outlet’s failure to complete a sales agreement and installation of a manufactured home as described by the Department in a verified complaint. Complainant appeared at the appointed time and place for hearing. As noted above, Respondent did not appear. Neither did anyone appear on behalf of the Fund. Therefore, Complainant’s evidence is uncontested. Complainant presented documentary evidence and testimony. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Order that the Fund payout an amount of $92,878.21 on Complainant’s claim.

. . . FINDINGS OF FACT 1. Respondent was the holder of a class D-8 Retailer of Manufactured Homes or Mobile Homes license (No. 7731) issued by the Office of Manufactured Housing (OMH). That license authorized Respondent to act as a retailer of mobile homes, manufactured homes, and factory-built buildings by buying and selling them.[1] This includes authority to contract with other properly licensed entities for the setup or installation of the homes. The Qualifying Party on the license was Debra Quesenberry. The license was revoked in August 2008. 2. In December 2007, Complainant entered into a contract with Respondent for the purchase and set-up of a new manufactured home, at a total purchase price of $116,358.00. Complainant had made a $500.00 down payment in May 2007, and made a further deposit of $15,000.00 in October 2007. Finally, in January 2008, Complainant paid the remainder due in two payments, one for $99,000.00 and the other for $1,858.00. This completed Complainant’s obligations under the contract. Respondent had yet to perform. The sales agreement included delivery and setup. The home was delivered to the site in April 2008 but no setup occurred. 3. Complainant tried to get Respondent to perform but was not successful and at one point could no longer contact Respondent. 4. In August 2008, the OMH told Complainant in a letter that Respondent’s license had been revoked and that Complainant might be eligible for recovery from the Fund. Additionally, Complainant discovered that an entity called Textron Financial holds a lien on the home (as an “inventory creditor” under the Uniform Commercial Code) in the amount of $85,893.00. This is verified by Exhibit B, a letter from Textron. Complainant testified that he cannot obtain “title” (MSO—Manufacturer’s Statement of Origin) to the home unless he pays this amount to Textron. 5. In October 2008, Complainant filed a Consumer Recovery Fund Claim, seeking recovery of an amount to cover the costs of completing the setup and gaining title to the home, for a total amount of $95,821.66. The OMH inspected the property and verified numerous items that needed to be done to complete setup and installation.[2] Complainant obtained bids from licensed contractors. The Department verified the claim and set the matter for hearing with this tribunal. 6. Complainant testified with regard to the items for which he is seeking compensation from the Fund. Complainant submitted evidence of the Textron lien and three bids for the setup completion work that needs to be performed.[3] The bids that Complainant obtained are from properly licensed contractors and appear to be genuine bids on the work. 7. The bids are not for the same amounts, although they all clearly cover the same work as the work described in the verified complaint. The highest bid is $9,928.66; the next lowest $6,985.21; the lowest $6,435.94. Generally, this tribunal will award the lowest bid. However, in this case, the middle bid is closer to the lowest bid than to the high bid. This tends to show that the middle bid is reasonable. In addition, the middle bid is more specifically itemized than the low bid, and thus it is found to be more credible. 8. In this case, the tribunal finds that the middle bid of $6,985.21 is the most reasonable estimate of Complainant’s damages for completion of setup. 9. The evidence shows that Complainant has been damaged by Respondent’s failures in the amounts of $85,893.00 for the lien and $6,985.21 for the completion of setup and repairs. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person who brings the action.[4] Further, the standard of proof at hearing is by preponderance of the evidence.[5] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that the claim is payable and that the amounts sought are reasonable.[6] Complainant has met the burden. 2. Arizona Revised Statutes (A.R.S.) § 41-2190(B), relating to administration of the Fund, provides the following: If any consumer of manufactured homes, mobile homes or factory- built buildings designed for use as residential buildings is damaged by the failure of the principal to perform a sales agreement or to perform repairs under a warranty, the consumer may file a claim with the office for payment from the consumer recovery fund. The claim shall be verified by the office.

Furthermore, A.R.S. § 41-2190(D) provides that the Board “shall pay from the consumer recovery fund whatever sum the administrative law judge finds payable upon the claim. . . .” 3. In this case, the uncontested evidence shows that Complainant was damaged by Respondent’s failure to perform the agreement. Therefore, Complainant is eligible for payment from the Fund. 4. Recovery from the Fund is limited to “actual or compensatory damages, including costs but excluding interest and attorney fees.”[7] Actual damages are “such compensation or damages for an injury as follow from the nature and character of the act, and will put the injured party in the position in which he was before he was injured.”[8] Costs are incidental damages that are allowed to indemnify a party against the expense of successfully asserting his rights in court.[9] Therefore, Complainant must show that the amounts sought for each item are either actual damages or costs. 5. The evidence shows that the amounts sought by Complainant are for actual damages caused by Respondent’s failure to complete performance on the contract and comply with the verified complaint. 6. The evidence of record supports an award to Complainant in the total amount of $92,878.21 ($85,893.00 + $6,985.21), all of which shall be chargeable against Respondent and any other persons on the license as set forth in A.R.S. § 41-2190(D). ORDER In view of the foregoing, IT IS ORDERED that the Board of Manufactured Housing, Arizona Department of Building and Fire Safety make payment from the Consumer Recovery Fund to Complainant in the amount of $92,878.21. IT IS FURTHER ORDERED, pursuant to A.R.S. § 41-2190(D), that license 7731, Class D-8, held by House Mart Factory Outlet, LLC, is hereby suspended until the licensee has repaid in full, plus interest at the rate of ten per cent per year, the amount paid from the Consumer Recovery Fund on the licensee’s account.[10]

Done this 18th day of December 2008.

Office of Administrative Hearings

______________________________ Eric A. Bryant Administrative Law Judge

Original mailed this ___ day of December 2008, to:

Robert Barger, Director Arizona Department of Fire, Building, and Life Safety ATTN: Debra Blake 1110 West Washington Ave., Suite 100 Phoenix, AZ 85007

By ___________________________ ----------------------- [1] See Arizona Administrative Code (A.A.C.) R4-34-203. [2] These are listed in a Verified Complaint and Sign-Off Form from an inspection dated September 10, 2008. [3] These bids are comprehensive [4] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949); Arizona Administrative Code (A.A.C.), OAH Rule R2-19-119(B). [5] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). [6] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [7] A.R.S. § 41-2188(D). [8] Havasu Heights Ranch and Development Corp. v. Desert Valley Wood Products, Inc., et al., 179 Ariz. 456, 459, 880 P.2d 676, 679 (App. 1994) citing United States Fidelity & Guaranty Co. v. Davis, 3 Ariz. App. 259, 263, 590, 594 (1966). [9] In Re Estate of Stavro, 17 Ariz. App. 257, 262, 497 P.2d 77, 82 (1972). [10] Although the license is already revoked, this Order is required by A.R.S. § 41-2190(D).

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