ALJDEC decisions subject to certification as final

08F-RF0320-ROC · Registrar of Contractors · 2008-11-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 20, 2008. APPEARANCES: Miguel Angel Escobedo appeared personally. Suncore Pipelines, LLC did not appear. The Registrar of Contractors was represented by Assistant Attorney General Mona Baskin. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order:

FINDINGS OF FACT 1. The Registrar of Contractors (“Registrar”) is the administrator of the Residential Contractors’ Recovery Fund (“Fund”). 2. Eligible residential homeowners may apply to the Fund for an administrative payout for damages caused by a licensed residential contractor. 3. Miguel Angel Escobedo (“Plaintiff”) is the owner of two properties located at 724 and 728 East South Mountain Avenue, Phoenix, Arizona. 4. Plaintiff lives at 727 E. Desert Lane, Phoenix, Arizona. Plaintiff’s residence is adjacent to the above-described properties. 5. On or about April 16, 2008, Plaintiff filed a written Complaint with the Registrar against Suncore Pipelines, LLC (“Defendant”). The Registrar designated Plaintiff’s Complaint as Case No. 07-2366. 6. Defendant is the holder of License No. 209726, a Class K-80 contracting license, issued by the Registrar. 7. On or about December 21, 2005, Plaintiff contracted with Defendant to provide sewer and water services to 724 and 728 East South Mountain Avenue, Phoenix, Arizona. 8. On or about June 15, 2007, the Registrar issued a Citation and Complaint in Case No. 07-2366 alleging possible violations by Defendant of A.R.S. § 32-1154(A)(1), (7), (9), (11), (18) and (3), namely R4-9-108. The Citation and Complaint advised Defendant that its failure to timely file an answer within 15 days would “be deemed an admission by you of the charges made by the [Plaintiff], and the Registrar of Contractors may revoke or suspend your license or increase your bond requirements without any further proceedings pursuant to A.R.S. § 32-1101 et seq.” 9. Defendant failed to timely file an answer to the Citation and Complaint issued in Case No. 07-2366. 10. On or about September 6, 2007, the Registrar issued a default Decision and Order in Case No. 07-2366 due to Defendant’s failure to file an answer. The Registrar revoked Defendant’s contracting license and imposed a civil penalty in the amount of $1,000.00. 11. On or about November 8, 2007, Defendant’s contracting license was revoked in Case No. 07-2366. 12. On or about April 16, 2008, Plaintiff filed a Recovery Fund Claim seeking payment from the Fund in the amount of $120,000.00 for damages caused by Defendant. 13. By letter dated May 7, 2007 to Plaintiff, Fund staff notified him that his Claim No. RF07-0835 was denied because “the contractor’s license was not disciplined as a direct result" of Complaint No. 07-2366. 14. On or about October 17, 2007, Plaintiff filed Claim No. RF08-0320 with the Fund seeking an administrative payout in the amount of $183,326.63 for damages sustained by Defendant’s acts or omissions. 15. On or about April 8, 2008, the Fund’s assigned inspector, Phil Coscia, issued a Recovery Fund Inspection Report (“Inspection Report”) for Plaintiff’s Claim No. RF08-0320. 16. Inspector Coscia’s investigation determined that Plaintiff is a member of E & M Desert Properties, a development company. Several checks paid to contractors came from an E & M Desert Properties’ bank account. 17. Inspector Coscia’s Inspection Respondent noted that Defendant’s contracting license was revoked on November 8, 2007 in Case No. 07- 2366. 18. Inspector Coscia recommended that Plaintiff’s Claim No. RF08-0320 be denied. 19. By letter dated April 30, 2008, Fund staff notified Plaintiff of his ineligibility for an administrative payout from The Fund. 20. Fund staff determined that the subject properties are legally classified as Legal Class 2, AG/VACANT LAND/NON-PROFIT/RP. The Fund is only available to Class 3 properties which the owner either resides in a residence on the property or establishes an intent to do so. 21. The Fund also denied Plaintiff’s claim for the following reasons:

• The amounts [Plaintiff] states [he was] overcharged are not recoverable from the Fund. Suncore’s proposal/contract states that the labor quantities are only estimates. Inspector Coscia reported that there are many unknown project conditions in this type of work. Usually, conditions are exposed, which require the local jurisdiction to direct how the work must be done, and it is not possible to fully know the scope and cost of some of the work beforehand. • The work was performed on a city street not on residential property. Inspector Coscia considers this an improvement to raise the value of the lots. • Base upon a search of the Registrar of Contractor’s records, it does not appear that [Plaintiff is] a licensed residential contractor, however, [Plaintiff has] built a home on one of the lots, and have obtained a permit to build on the other lot. It does not seem possible to occupy both homes. • Inspector Coscia noted that [Plaintiff is] a member of a development corporation, E and M Desert Properties, and several checks that were paid to contractors came from the E and M account. Inspector Coscia reported that it appears you are developing the properties for profit. • A newly completed home is built on the property at 728 E. South Mountain and it appeared to be occupied. The new home is South of and directly behind [Plaintiff’s] current mailing address of 727 E. Desert Lane. However, a neighbor who lives adjacent to [Plaintiff’s] mailing informed Inspector Coscia that [Plaintiff still lives] at 727 E. Desert Lane.

22. Plaintiff timely filed an appeal of the Fund’s denial of his claim for an administrative payout. The Registrar forwarded the appeal to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 23. The Registrar issued a Notice of Recovery Fund Payout Hearing in Case No. RF08-0320, which advised the parties of the time, date and location of the hearing. The Notice of Recovery Fund Payout Hearing was sent to the parties at their addresses of record with the Registrar. 24. The commencement of the hearing was delayed 15 minutes to allow for the late arrival of Defendant’s authorized representative. After the delay the Administrative Law Judge conducted the hearing in Defendant’s absence. 25. Plaintiff failed to establish that he is an owner/builder of 724 East South Mountain Avenue and 728 East South Mountain Avenue. 26. The house constructed on 728 East South Mountain Avenue is inhabited by Plaintiff’s family members. 27. Plaintiff failed to establish that he is an “injured person,” as defined by statute. The work performed by Defendant was to benefit the two subject lots, at least one of which is inhabited by Plaintiff’s family members. 28. Part of the funding for the contract between Plaintiff and Defendant was provided by E & M Development Company. Therefore, there is credible evidence that the two lots were being developed by Plaintiff and E & M Development Company. 29. Plaintiff failed to credibly establish that he intends to occupy a residence to be constructed on 724 East South Mountain Avenue in the future.

CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Defendant and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Plaintiff has the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 3. Plaintiff is not an owner/builder pursuant to A.R.S. § 32-1121(A)(5). 728 East South Mountain Avenue was developed by Plaintiff and E and M Development Company. Plaintiff’s family members reside in the house built on that property. 4. Plaintiff failed to establish that he hired a general contractor for the development of the two lots, as required by A.R.S. § 32- 1121(A)(6). 5. Plaintiff failed to establish that he is a “person injured”, as defined in A.R.S. § 32-1131(3). That statute requires that property be legally classified as class three property. The two subject lots are classified as class two properties. In addition, Plaintiff does not reside at 728 East South Mountain Avenue or 724 East South Mountain Avenue. Plaintiff’s testimony that he eventually intends to reside on the latter lot is speculative at best. 6. Plaintiff failed to establish his eligibility for an administrative payout from the Fund pursuant to A.R.S. § 32-1132(A).

RECOMMENDED ORDER Plaintiff’s appeal in Case No. RF08-0320 is dismissed, and the Registrar’s denial of Plaintiff’s claim for an administrative payout from the Fund is upheld and affirmed. 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 will be 40 days from the date of that certification.

Done this day, November 6, 2008

______________________________________ Brian Brendan Tully Administrative Law Judge

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

Armando Contreras, Director Registrar of Contractors 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________ -----------------------

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