ALJDEC decisions subject to certification as final
18F-A1819001-ADH · Arizona State Department of Housing · 2018-09-16
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Office of Manufactured Housing,
Complainant,
vs.
JK & K Services, LLC,
Respondent/Appellant.
No. 18F-A1819001-ADH
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: August 27, 2018 at 8:30 am
APPEARANCES: James Kirts (“Mr. Kirts”, representative for JK & K Services, LLC (“Respondent/Appellant”)); Debra Blake (“Ms. Blake”, Witness for Office of Manufactured Housing (“OMH”)); Donna Grant (“Ms. Grant”, witness for OMH); Valerie Marciano (“Ms. Marciano”, counsel for Department of Housing Department); and Dennis Bassi (“Mr. Bassi”, observer as representative for Kathleen Burns).
ADMINISTRATIVE LAW JUDGE: Linda Marie Brown
_____________________________________________________________________
FINDINGS OF FACT
Karen S. Kennett is the qualifying party of JK & K Services LLC (“Respondent/Appellant”). Respondent is a valid license holder of a class I-10D Installer of Accessory Structures attached to Manufactured Homes, Mobile Homes, or Residential Single-Family Factory-Built Buildings. Respondent’s License No. 8176 was issued on April 24, 2006, by the Arizona Department of Housing (Department). That license authorizes Respondent to install prefabricated accessory structure units. Constructs accessory structures onsite. Places concrete footings or slabs for accessory structures. Contract with properly licensed contractors for the installation of plumbing, electrical, and mechanical equipment as part of an accessory structure and subcontracts all or any part of the items within this subsection (i.e. scope) to properly licensed installers or contractors. See A.A.C. R4-34-204(A)(2).
JK & K Services, LLC is an active registered Foreign LLC in good standing with the Arizona Corporate Commission, listing it domicile in the state of Nevada, entity no. R12793180.
Kathleen Burns (“Claimant”) entered into a contract with Respondent that resulted in Claimant, by way of her attorney, filing Complaint No. CV17-001334-RC, in the Pima County Consolidated Justice Court (“Justice Court”) against Respondent citing Respondent failed to complete work properly pursuant to the terms of their agreement.
A hearing was held on September 25, 2017, on the aforementioned complaint. On or about October 2, 2017, the Justice Court signed a Judgment in favor of the Claimant in the amount of $7,720.60 for costs of remediation of the work improperly done and for her attorney’s fees and costs.
Respondent filed an appeal on the Judgment. On April 16, 2018, the Justice Court issued a second Judgment to the appeal citing Plaintiff/Appellants JK & K Services and Jim Kirts abandoned their appeal and awarded the $50.00 bond posted by JK & K Services and Jim Kirts to Claimant. The Court issued its Judgment awarding $2,341.00 for attorney fees and cost incurred by Claimant to defend the appeal.
On June 7, 2018, the Department sent a letter to Karen S. Kennett advising that a claim against its Bond was received from Dennis Bassi, on behalf of his client, Kathleen Burns. The Department provide copies of the Judgments obtained against Respondent, and advised to Respondent to provide an update on its intent to render payment of the judgments to Ms. Burns within twenty (20) days from receipt of the letter.
The Department further advised Respondent that failure to comply would result in the Department directing the State Treasurer to pay the full cash bond amount to Ms. Burns, and that payment from the cash bond would result in immediate suspension of license number 8176. The letter also provided information on Respondent’s right to request an appeal hearing on this matter.
On or about June 29, 2018, the Department received Appellants’ appeal on the matter of payment of cash bond to Kathleen Burns, and stated it will present evidence that an appeal of the original hearing has been filed with the Pima County Consolidated Justice Court.
During the hearing in this matter, Complainants presented evidence of the existence of two (2) valid Judgments obtained against Respondent. Complainant’s Exhibits A through I were admitted without objection.
Donna Grant, Licensing and Investigation Manager in the Manufactured Housing Division testified on behalf of the Department. Ms. Grant stated she has over 35 years’ experience, and provided background information leading up to notice to Respondent of its intent to pay out Respondent’s cash bond to Ms. Burns.
She testified that in review of Case Search on the underlying case leading to the Judgment, she was unable to ascertain that the matter was pending further hearing. While she never communicated directly with the Qualifying Party, she left a voice mail and on July 2, 2018, followed up with an email in an attempt to clarify with Respondent (1) whether they filed a new request for an appeal hearing, or if Respondent is referring to the April 16, 2018, Judgment; and (2) if a new request for an appeal hearing has been filed with the Justice Court, to scan and email a legible copy of the document to her office.
Debra Blake, Deputy Director for the Manufacturing Division at the Department, also testified that she was unable to verify that the matter was pending further hearing at the Justice Court level.
Mr. Kirts testified as to Judgments obtained and stated that he was not advised by his attorney of the appeal hearing date and that his attorney dropped the ball, and that was why the Appeal was entered by default. He provided Exhibits A and B. Exhibit A is a copy of his engagement letter with counsel in which he asserts he has retained counsel to work to overturn the underlying Judgments.
Mr. Kirts also provided Exhibit B, a copy of his Appellant Memorandum to the Judgment entered on October 2, 2017, as filed by Respondent’s attorney. Mr. Kirts was reminded by the Tribunal that the purpose of this hearing is not to dispute the underlying facts leading to the Judgment but to provide any evidence that an appeal is currently pending at the Justice Court, or that the Judgment is not valid, or has since been satisfied.
In closing, Counsel for the Complainant asserted that the Department has authority to act as set forth under A.R.S. 41-4029, and further takes the position that at the time of this hearing, the Department has been presented with two (2) valid judgments, and Respondent having not presented any evidence that a stay is currently in effect, if in the future Respondent is successful to have the Judgments set aside, the Department would take no action to reimbursing any payout from Respondent’s cash bond.
CONCLUSIONS OF LAW
Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. A.A.C. R2-19-119.
A preponderance of the evidence is:
The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.
Black’s Law Dictionary 1373 (10th ed. 2014).
Under A.R.S. § 41-4029(D)(1), the bond or deposit required by this section shall be in favor of the state for the benefit of any person covered by this subsection. The bond or deposit shall be subject to claims by consumer of a unit regulated by this chapter who enters into an agreement with any licensee, except a salesperson or broker of manufactured homes, mobile homes or factory-built buildings designed for use as residential buildings, and is damaged by the failure of the principal to perform a sales or installation agreement or to perform repairs under a warranty.
Under A.R.S. § 41-4029(E), Any person claiming against the bond or deposit, except the department, may maintain an action against the principal and the surety. Such principal's bond or deposit may be sued on in successive actions until the full amount is exhausted. No suit may be commenced on the bond or deposit after the expiration of two years after the date of sale or installation of the unit, whichever is later, on which the suit is based, except that the time for purposes of the claim for fraud shall be measured pursuant to section 12-543.
In this instance, the Tribunal finds that Respondent’s cash bond is subject to the claim the Department received as supported by the Judgments and as authorized under the law, shall payout Respondent’s cash bond receipt number 1202 to Dennis Bassi, on behalf of his client, Kathleen Burns.
Additionally, the Department is empowered to revoke or suspend the license of any licensed manufacturer, dealer, broker, salesperson or installer for any violation of A.R.S. § 41-4039. Among the grounds for discipline is the requirement to return the cash deposit to the required balance or, as an alternative, file a commercial surety bond for the full amount and pay all applicable reinstatement fees.
The Administrative Law Judge finds nothing in the statutes that make it impermissible for the Department upon directing the State Treasurer to payout to claimant Respondent’s cash bond, and for failure of Respondent to provide any proof of payment that the judgements have been satisfied, to suspend Respondent’s license.
The Tribunal further finds that Respondent failed to prove by a preponderance of the evidence that Complainant does not have the authority to payout Respondent’s bond as set forth under A.R.S. § 41-4029 for its failure to properly satisfy full payment of the October 2, 2017 Judgment in the amount of $7,720.60; and April 16, 2018, Judgment in the amount of $2,341.00 to the Claimant.
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ORDER
Based upon the foregoing considerations, the undersigned Administrative Law Judge hereby recommends that the Department direct the State Treasurer to payout Respondent’s cash bond to the Claimant, and that Respondent’s license be suspended until the Department receives confirmation that the Judgments have been satisfied. At that time, the license suspension shall cease, and Respondent shall return the cash deposit to the required balance or, as an alternative, file a commercial surety bond for the full amount and pay all applicable reinstatement fees.
It is further recommended that if Respondent accomplishes the above-described condition on or before the effective date of the final decision entered in this matter, then the aforementioned license suspension shall not take place.
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 five days from the date of that certification.
Done this day, September 16, 2018.
/s/ Linda Marie Brown
Administrative Law Judge
Transmitted electronically to:
Carol Ditmore,
Arizona Department of Housing