ALJDEC decisions subject to certification as final

2007A-12857114-ROC · Registrar of Contractors · 2012-06-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 11, 2012, at 8:00 a.m., and June 5, 2012, at 1:00 p.m. APPEARANCES: Complainants appeared through Lynell Merriman. Respondent failed to appear. The Registrar of Contractors appeared through Assistant Attorney General, Seth Hargraves, Esq. ADMINISTRATIVE LAW JUDGE: M. Douglas

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. There is no dispute that the Complainants are an “injured person” as defined by statute and that they are eligible to receive payment from the Contractors’ Recovery Fund (the “Fund”) for their actual damages sustained as a result of Respondent’s acts or omissions.[1] 2. Administrative notice is taken of Respondent’s prior license record as reflected on the Registrar of Contractors’ public website on June 20, 2012. Such prior license record reflects that License No. B.145286-R of West Ajo Contracting Inc. was revoked on April 26, 2010. 3. The January 17, 2012, Notice of Denial of Recovery Fund Claim provides, in pertinent part, as follows: On or about February 21, 2006, Complainants entered into a purchase agreement, in the amount of $408,644.00, to buy a home built by West Ajo Contracting Inc. On April 17, 2007, a complaint (T07-1285) was filed with the Registrar of Contractors. Inspector Frank Grochocki reviewed the complaint and issued a Corrective Work Order. A Citation and Complaint followed and effective September 9, 2008, the Respondent’s license was suspended by Order of the Registrar. Complainants’ claim was received in the Recovery Fund July 14, 2011, requesting $30,000.00. On July 27, 2011, the Fund reviewed the claim and determined that it was missing required information needed to establish Complainant’s [sic] right to recover from the Fund. On July 27, 2011, the Fund sent Complainants a ‘Document Request’ letter requesting (1) a copy of the signed contract, (2) Copies of costs to repair and/or complete the project (over and above the bids already on file), and (3) any other information to support their claim. On August 11, 2011, the Fund received a letter from Complainants. The letter stated that there was no construction contract, as the purchase contract was for a purchase of a custom home built by Respondent; that the three (3) bids had been submitted, and if more documentation was needed to please give specifics on what was needed and allow extra time to gather the documentation. On August 15, 2011, the Fund sent Complainants’ [sic] a second ‘Document Request’ letter requesting (1) a copy of the purchase agreement, and (2) proof of cost to repair and/or complete the project, as it appeared from the documentation on file that some repairs had already been completed. Specifically, the Fund requested the front and back of check #3040 in the amount of $450.00, and proof of payment in the amount of $1,160.00 paid out of pocket for epoxy flooring, along with required contractor name and license number missing from that invoice. On September 12, 2011, the Fund received a copy of the purchase contract and another copy of the invoice for the $1,160.00, but did not receive the requested contractor name or license number to enable the Fund to identify the contractor that did these repairs. Complainants also failed to provide proof of payment of this invoice and failed to provide the other required documentation (the front and back of check #3040). Upon review of the documentation submitted, the Fund nonetheless assigned the claim to Inspector Frank Grochocki for him to review and make a recommendation for a potential payout from the Fund. Inspector Grochocki completed a thorough evaluation of the bids complainants’ [sic] submitted in support of the claim. Based upon his construction experience and knowledge of the industry, he concluded that that the scope of bids complainants’ [sic] submitted in support of the claim exceeded the scope of work at issue for the items in the Corrective Work Order (“CWO”) issued in the underlying disciplinary case, upon which this claim is based. The Fund therefore, by letter dated November 28, 2011, requested new bids, itemized and limited to the items the contractor was ordered to repair in the CWO issued August 21, 2007. That November 28, 2011 letter detailed the specific information needed in order for Complainants to carry their burden of proof necessary to establish a right to recover ‘actual damages’ from the Fund pursuant to A.R.S. § 32-1132(A). Enclosed with the letter was a copy of [sic] August 21, 2007 Corrective Work Order. As of the date of this letter, the Fund has not received the requested documentation or a response to this letter. Despite the Fund allowing Complainants adequate time to provide the required documentation, Complainants have refused/failed to provide the documentation required to support their claimed damages. Based upon all available evidence on record with the Registrar, the Complainants’ have failed to establish that they have a right to any recovery from the Fund.[2]

4. Complainants disagreed with the Registrar’s determination to deny their recovery fund claim and filed a written request for an administrative hearing.[3] 5. The assigned Agency Inspector, Frank Grochocki, testified that he had reviewed Complainants’ claim for damages from the Fund and found that the bids submitted were in excess of the items set forth in the Corrective Work Order issued in the underlying disciplinary matter (T07-1285). Inspector Grochocki testified that Complainants’ claim for damages included items not set forth in the original complaint in Case No. T07- 1285 and not addressed in the Corrective Work Order issued in that matter.[4] 6. On July 27, 2011, the Fund issued a Document Request Letter to Complainants requesting additional information including the parties’ contract and proof of cost to repair and/or complete the construction project.[5] 7. Complainants then filed a reply asking for clarification of what documentation was being requested by the Fund and asking for more time if any extra documentation was needed. No additional information was provided to the Fund in the Complainants’ reply.[6] 8. On August 15, 2011, the Fund issued a second Document Request Letter which lists the specific items of additional documentation being requested by the Fund.[7] 9. On September 5, 2011, Complainants filed a reply to the August 15, 2011, Document Request Letter and stated that if the new information was not sufficient that Complainants would “need more time to gather bank info.”[8] 10. On November 22, 2011, Inspector Grochocki issued a written Recovery Fund Claim Report and recommended that Complainants submit bids specific to items needing correction set forth on the original Corrective Work Order issued in T07-1285.[9] 11. On November 28, 2011, the Fund issued a third Document Request Letter which provides, in pertinent part, as follows: On November 17, 2011, Inspector Grochocki conducted a Recovery Fund jobsite inspection at your residence.

Inspector Grochocki completed a thorough evaluation of the bids. Based upon his construction experience and knowledge of the industry it is the Fund’s position that the scope of the bids you submitted in support of your claim exceed the scope of work at issue for the items in the Corrective Work Order (“CWO”) issued in the underlying disciplinary case upon which this claim is based. The Fund is therefore requesting new bids.

In order to expedite the processing of your claim, please ensure that the new bids are itemized and are limited to the items the contractor was ordered to repair in the CWO issued August 21, 2007. A copy of this CWO is enclosed for your convenience.

When the Fund receives the requested bids, it will re-evaluate your claim as soon as is practicable. Please provide the bids by December 28, 2011. If you are unable to submit the bids by this date you may request an alternate date in writing, but the request must be received by the Fund on or before December 28, 2011.

Failure to provide the information by December 28, 2011, or any approved alternate date, may result in the denial of your claim.[10]

12. On or about December 26, 2011, Complainants filed a written communication with the Fund in response to the third Document Request Letter wherein Complainants asked for a different Agency Inspector to conduct an inspection of their property and requested additional time to provide additional bids which would be required. No additional information was provided.[11] 13. During the first day of hearing on April 11, 2012, Ms. Lynell Merriman testified and stated that Complainants were seeking thirty thousand dollars ($30,000.00) from the Fund for assorted repairs to their residence including the re-roofing of their residence, the painting of their residence, various painting and drywall work inside their residence, the installation of a new floor in their residence, reimbursement for Complainants’ cost of installing an epoxy floor in their garage, granite countertops, removal and replacement of concrete porches, and the installation of a larger kitchen island.[12] 14. Mr. Tim Merriman testified that the termite issue and the concrete porch problems should be covered under the structural damage item of their complaint in the underlying disciplinary case.[13] 15. Mr. Eric Ulinger, the supervisor for the Fund, testified that Complainants’ bids for roofing work could not be accepted as a basis for compensation from the Fund because the bids were for more than applying a coating over a roof repair and included construction work not required of the Respondent. He further testified that Complainants’ claim for payment for exterior and interior painting, concrete work, drywall work and termite touch-up could not be accepted as a basis for compensation from the Fund because they were not items of the original request for Citation. 16. Mr. Ulinger testified that the Fund could not pay anything for Complainants’ cost of having an epoxy coating applied because there was no proof that the work was performed by a licensed contractor.[14] 17. Mr. Ulinger stated that based on his review of everything he could verify that Complainants were eligible for payment from the Fund but that Complainants had failed to provide sufficient documentation to support a payment from the Fund.[15] 18. Mr. Ulinger indicated that the Fund could reconsider Complainants’ request for payment from the Fund for the removal and replacement of Complainants’ tile floor and the cost of the granite countertops if further documentation was provided by Complainants. 19. The matter was then set for further hearing on June 5, 2012, to allow Complainants sufficient time to submit additional documentation regarding their claim for payment from the Fund for the removal and replacement of the tile floor and payment for the granite countertops. 20. On the second day of hearing Mr. Ulinger testified that Complainant had furnished additional information regarding the removal and replacement of the tile floor and that the Fund was now recommending payment from the Fund for the removal and replacement of Complainant’s tile floor in the sum of $13,585.96 based upon the bid from Southern Mill and Tile.[16] 21. Mr. Ulinger also testified that Complainants had provided additional information regarding the granite countertops but that the additional information was still insufficient to serve as a basis for a payment from the Fund for the granite countertops.[17] 22.It is found that a proper and reasonable amount payable to Complainants from the Contractors’ Recovery Fund, for the Complainants’ actual compensable damages, is the sum of $13,585.96 representing the low bid from a licensed contractor for the removal and replacement of Complainants’ tile floor. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. The credible evidence of record is insufficient and failed to support a finding that the Fund should pay any amount above the sum necessary to remove and replace Complainants’ tile floor in this matter. Therefore, this Tribunal concludes that Complainants failed to meet their burden of proof to establish by relevant, and material, testimony and evidence their actual compensable damages in this matter for anything other than the removal and replacement of their tile floor. 4. A.R.S. § 32-1132(A) provides, in pertinent part, as follows: The residential contractors' recovery fund is established, to be administered by the registrar, from which any person injured by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter may be awarded in the county where the violation occurred an amount of not more than thirty thousand dollars for damages sustained by the act, representation, transaction or conduct. An award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines. Actual damages shall not be established by bids supplied by or the value of work performed by a person or entity that is not licensed pursuant to this chapter and that is required to be licensed pursuant to this chapter. If the claimant has paid a deposit or down payment and no actual work is performed or materials are delivered, the award of actual damages shall not exceed the exact dollar amount of the deposit or down payment plus interest at the rate of ten per cent a year from the date the deposit or down payment is made or not more than thirty thousand dollars, whichever is less.

5. Under the facts and circumstances of this matter, the Registrar is empowered to determine and award proper payment to Complainants from the Fund pursuant to A.R.S. § 32-1154(F). 6. The credible evidence of record supports an award from the Fund to Complainants in the sum of $13,585.96 all of which shall be appropriately chargeable against the Respondent and/or persons on the Respondent’s license as set forth in A.R.S. § 32-1139(B). / / / RECOMMENDed order In view of the foregoing, it is recommended that the Registrar of Contractors shall commence and finalize payment procedures when sufficient funds are available from the Contractors’ Recovery Fund to the Complainants in the total amount of $13, 585.96 for Complainants’ actual compensable damages. In the event of certification of this 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 the certification. Done this day, June 25, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] Exhibit No. R-17 (Notice of Denial of Recovery Fund Claim). [2] Exhibit No. R-17 (Notice of Denial of Recovery Fund Claim). [3] Exhibit No. R-18 (Request for Hearing). [4] 4/11/12 Hearing Record (hereinafter 4/11/12 H.R.) at 14:48-19:15. [5] Exhibit No. R-10 (Document Request Letter of July 27, 2011). [6] Exhibit R-11 (Complainants’ request for additional time). [7] Exhibit R-12 (Document Request Letter of August 15, 2011). [8] Exhibit R-13 (Letter of September 5, 2011). [9] Exhibit No. R-14 (November 22, 2011, Recovery Fund Claim Report). [10] Exhibit No. R-15 (Document Request Letter of November 28, 2011). [11] Exhibit No R-16 (December 26, 2011 email). [12] 4/11/12 H.R. at 34:52-1:41:18. [13] 4/11/12 H.R. at 1:42:15-1:43:38 [14] 4/11/12 H.R. at 1:52:24-1:54:00. [15] 4/11/12 H.R. at 2:08:39-2:08:57. [16] 6/5/12 Hearing Record (herein after “6/5/12 H.R.”) at 7:04-8:13. [17] 6/5/12 H.R. at 8:13-12:29.

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