ALJDEC decisions subject to certification as final

09F-1956-ROC · Registrar of Contractors · 2009-08-26

STATE OF ARIZONA OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 6, 2009

APPEARANCES: Complainants Robert and Michele Bocskay appeared and testified on their own behalf; Respondent was represented by its President Daniel Martinez.

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainants Robert and Michele Bocskay bring this action claiming that Respondent Lauren Homes, Inc. abandoned a contract to build a home and wrongfully retained $83,000.00 that was paid toward that contract. Respondent denies abandonment or any wrongful conduct. This tribunal entered the complaint file received from the Registrar of Contractors into the record, along with Complainant’s Exhibits A and B and Respondent’s Exhibit 1. The parties presented evidence and testimony, consisting of testimony from Robert and Michele Bocskay, Daniel Martinez, and Mike Clemons. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Decision finding no violation of law. FINDINGS OF FACT 1. Respondent is the holder of a class B- general residential contractor license (No. 198230) issued by the Registrar of Contractors (“ROC”). That license authorizes Respondent to perform general residential construction of a structure or appurtenance, except for certain specialty contracting such as electrical, plumbing, swimming pools, etc.[1] Daniel Martinez was the Qualifying Party on the license until he resigned as such in August 2008. The license has been suspended since October 2008 for lack of a Qualifying Party. 2. Complainants testified that in March 2007 they entered into a contract with Respondent under which Respondent would build a home.[2] Complainants provided an $83,000.00 deposit toward the purchase of the home. 3. The evidence shows that Complainants dealt with a person named Terrence Allen Griffith, who represented himself as one with authority to act on behalf of Respondent. Complainants knew him as “Terry Allen” and testified that he was “the money guy” for Respondent, handling loans and scheduling. 4. After several months, in July 2007, Complainants and “Terry Allen” cancelled the contract for the first home and “rolled the down payment over” to a new property. There was no written agreement for this new property. 5. Work on the new property essentially never got started and Complainants began to have trouble getting in contact with “Terry Allen.” In September 2007 Complainants decided that they wanted the down payment back. They could not get in touch with “Terry” and were eventually contacted by Daniel Martinez, who told them that he was the sole corporate officer for Respondent and he had no knowledge of the transactions that “Terry Allen” had made with them and no knowledge of the $83,000.00 deposit. 6. Evidence submitted at the hearing shows that Terrence Griffith deposited the $83,000.00 into Respondent’s corporate checking account on July 6, 2007, and then immediately forged many checks, writing corporate checks and forging Martinez’ signature on the checks on the same day as the deposit and for several days thereafter. The forged checks totaled an amount close to $83,000.00. 7. Respondent has made complaints to both the bank and the police, but the complaints are complicated by the fact that Terrence Griffith had a debit card on the corporate account at that time and was able to withdraw funds on that account. That debit card had been authorized by Respondent. 8. Martinez testified that he was the sole corporate officer for Respondent and had sole authority for entering into contracts. Terrence Griffith made sales, but the contracts were to be signed only by Martinez. Martinez was not aware of any contract with Complainants. 9. In summary, there is not sufficient evidence showing a written contract between Complainants and Respondent. The evidence does show, however, that $83,000.00 of Complainants’ money was deposited into Respondent’s corporate account. It also shows that that money was almost immediately taken out of the account by Terrence Griffith through forged checks. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[3] Further, the standard of proof at hearing is by preponderance of the evidence.[4] Therefore, Complainants bear the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[5] Complainants have not met that burden. 2. The Citation and Complaint alleges violations of Arizona Revised Statutes (A.R.S.) § 32-1154(A)(1) and (A)(7). The evidence is not sufficient to show that Respondent has violated those statutes cited in the Citation and Complaint; namely, that Respondent abandoned a contract, breached a contract, or has done some other wrongful act. The evidence needed to establish a contract is insufficient, showing at most the existence of a verbal contract for the purchase of a house to which the $83,000.00 relates. Therefore, abandonment or breach of contract is not supported. 3. Furthermore, this tribunal cannot conclude that Respondent committed a wrongful act with regard to the $83,000.00. It appears that Terrence Griffith was a rogue employee acting without authority and used the corporate account to take the money for his own purposes. Under these circumstances, this tribunal does not see a “wrongful act” by Respondent, although perhaps there was negligence in supervision of its employees. 4. Complainants have failed to show a violation of statute by Respondent. Complainants may have other avenues of redress in civil court against Respondent or others that are not appropriate in this forum. 5. This matter should be dismissed. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that the Citation and Complaint against Respondent Lauren Homes, Inc. in case 09-1956 be dismissed.

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 25th day of August 2009.

Office of Administrative Hearings

______________________________ Eric A. Bryant Administrative Law Judge

Copy mailed this ___ day of August 2009 to:

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

By ___________________________ ----------------------- [1] See, Arizona Revised Statutes (“A.R.S.”) § 32-1102 and Arizona Administrative Code (“A.A.C.”) R4-9-103 for a description of residential license classifications. [2] There is a blank written contract in the complaint file that Complainants testified was the contract. However, the contract does not name Complainants and is not signed by either party. [3] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [4] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [5] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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