ALJDEC decisions subject to certification as final

08F-RF0186-ROC · Registrar of Contractors · 2008-09-15

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 27, 2008 APPEARANCES: Plaintiffs: Brent and Tamara Burnstein appeared, pro per. Defendant: Defendant failed to appear either through authorized representative or counsel. Recovery Fund: Margo Rodriguez appeared on behalf of the Registrar of Contractors and was represented by Assistant Attorney General Mona Baskin. ADMINISTRATIVE LAW JUDGE: Brian E. Smith _____________________________________________________________________ Evidence and testimony were presented and, based on the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. On or about September 4, 2007, Plaintiffs filed the instant claim with the Registrar of Contractors (“ROC”) asserting they were entitled to recover $1,500.00 from the Registrar of Contractors’ Recovery Fund (“Fund”). 2. On December 5, 2007, the Recovery Fund issued a Notice of Recovery Fund Ineligibility (“Notice”) wherein it determined that Plaintiffs did not qualify as a “person injured” under A.R.S. §32-1131.3. That statute defines “person injured” as “any owner of residential real property which is classified as class three property under section 42-12003 and which is actually occupied or intended to be occupied by the owner as a residence. The Fund is not available to investors, those who rent, lease, or otherwise make money or gain out of the residence (commercial use).” The Fund further determined that, based on a search conducted of the Maricopa County Assessor’s records, “the property located at 14208 N. 138th Drive in Surprise, Arizona…legally classifies the property as a Class Four (4) Residential Rental Property. Therefore, it does not appear you meet the legal definition of A.R.S. §32-1131(3) as intended by statute.” 3. On December 13, 2007, Plaintiffs requested a hearing on the Fund’s denial of their Recovery Fund claim. Therein, Plaintiffs asserted, inter alia, that they have been the owner of the subject property since July 5, 2005 and that such property was “misclassified in error” by the Maricopa County Assessor’s Office. 4. The Registrar of Contractors received advance notice of the existence and amount of the above-named Plaintiffs’ claim for an administrative payout from the Fund. 5. On April 30, 2008, the Registrar of Contractors issued a Notice to Contractor of Claim for Administrative Payout (“Notice to Contractor”) wherein Defendant was apprised of Plaintiffs’ Recovery Fund claim. 6. The matter was scheduled for hearing pursuant to the Registrar of Contractors’ Notice of Recovery Fund Payout Hearing dated July 15, 2008 (“Notice of Hearing”) and convened in accordance therewith. 7. Plaintiffs Tamara Burstein (“T. Burstein”) testified and submitted Exhibits A, B and C which were marked, admitted and considered. Exhibit D was admitted over objection. 8. Defendant failed to appear either by authorized representative or counsel. 9. Margo Rodriguez (“Rodriguez”) appeared and testified on behalf of the Fund and submitted Exhibits 1 through 4 which were marked, admitted and considered. 10. The following salient facts were adduced at the hearing and are important to note: a. Plaintiffs purchased the subject residence located at 14208 N. 138th Drive in Surprise, Arizona (“premises/project”) from T. Burnstein’s father on or about July 5 2005. b. Plaintiffs have continued to reside in the premises since July 5, 2005 and at no time has the premises been rented and/or put up for lease or other commercial gain. c. On or about September 22, 2006, Plaintiffs contracted with Defendant to “supply turf” to the project for a total of $3,003.00. (Exhibit 1A) At that time, Plaintiffs paid Defendant a deposit of $1,500.00. d. Defendant never performed any work or provided any materials on the project for Plaintiffs and failed to refund their $1,500.00 deposit. e. At the time Plaintiffs contracted with Defendant the subject property was classified as a Class 4 property by the Maricopa County Assessor’s Office. (Exhibit 3) f. Plaintiffs were unaware the premises were classified as a Class 4 property until they received the Recovery Fund’s December 5, 2007 Notice of Recovery Fund Ineligibility. g. On or about December 12, 2007, Plaintiffs submitted to the Maricopa County Assessor’s Office an Application for Reclassification of Property in order to have the subject project changed to Class 3. (Exhibit C) h. Plaintiffs’ Application was accepted and the premises were reclassified Class 3 effective for 2008-09. i. Plaintiffs assert that they are entitled to recover the $1,500.00 deposit from the Fund because the premises was never a rental property since the time they purchased it on or about July 5, 2005 notwithstanding the Class 4 classification. j. The Fund asserts that (1) the objective test is whether Plaintiffs were a “person injured” within A.R.S. §32-1131.3 and (2) the premises was classified a Class 3 property on the essential date of September 22, 2006, when the subject contract between Plaintiffs and Defendant was entered. …

CONCLUSIONS OF LAW 1. It is determined and concluded that Plaintiffs are an “injured person” as that term is defined in A.R.S. §32-1131(3). 2. The Registrar of Contractors is empowered to determine and award proper payment to Plaintiffs from the Contractors’ Recovery Fund pursuant to A.R.S. §32-1132. In this case, as noted above, the Fund determined that Plaintiffs were ineligible for a Recovery Fund payout because the subject premises were classified as a Class 4 property at the time of their contract with Defendant on September 22, 2006 and, therefore, they did not qualify as a “person injured” under A.R.S. §32-1131(3). Notwithstanding such fact, it must also be noted that, as stated in its Notice of Recovery Fund Ineligibility, “ the “Fund is not available to investors, those who rent, lease or otherwise make money or gain out of the residence (commercial use).” In this case, it is uncontroverted that Plaintiffs’ sole use of the premises from the time of purchase was as a residence. Contrary to the inference attempted to be drawn by the Fund, it is unreasonable to believe that Plaintiffs were aware of the property’s Class status by their assuming ownership through a Warranty Deed. Moreover, it has been also credibly established that, upon their learning of the Class 4 designation, Plaintiffs applied for and were granted a change to Class 3 status by the Maricopa Assessor’s Office, albeit not for the 2006 year in question. In light of the above, fundamental fairness requires that the Fund adhere to its acknowledged objective that payouts be available for a property which is actually occupied by the owner as a residence and not for commercial uses. 3. Pursuant to the foregoing, the ROC’s decision to deny Plaintiffs’ Recovery Fund must be reversed and they be awarded $1,500.00 from the Fund all of which shall be appropriately chargeable against Defendant and/or persons on the license as set forth in A.R.S. §32-1139(B). … … … …

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that, on the effective date of the Order entered in this matter, the Registrar of Contractors shall commence and finalize payment procedures from the Contractors’ Recovery Fund in the amount of $1,500.00.[1] Done this day, September 15, 2008.

______________________ Brian E. Smith Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2008, to:

Registrar of Contractors Fidelis V. Garcia 3838 N. Central Ave., Ste. 400 Phoenix, AZ 85012-1906

By ________________________ ----------------------- [1] 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.

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