ALJDEC decisions subject to certification as final

2009A-60449438-ROC · Registrar of Contractors · 2012-01-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 20, 2011, at 8:00 a.m. APPEARANCES: The Complainants appeared through Julie Ford. The Respondent appeared through its authorized representative, Anthony Chandler. The Registrar of Contractors appeared through Assistant Attorney General, Montgomery Lee. 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. Credible testimony and evidence established that on March 17, 2009, the Complainants entered into a construction contract with the Respondent for improvements to their residential property located at 19950 E. Squaw Valley Road, Black Canyon City, Arizona. 2. There was no dispute that the agreed upon construction work included the construction of a driveway and mobile home pad for the Complainants’ manufactured residence. 3. Credible testimony and evidence established that the Complainants agreed to pay the Respondent a total of $10,727.50 for the agreed upon construction work. 4. Credible testimony and evidence established that the Complainants paid the Respondent the sum of $4,000.00 in cash on March 18, 2009. 5. Credible testimony and evidence established that the Complainants paid the Respondent another $2,000.00 with a check dated March 23, 2009. 6. On May 22, 2009, the Complainants filed a complaint with the Registrar of Contractors resulting in a Citation and Complaint being issued against the Respondent. As the result of a formal hearing on the Citation and Complaint in Matter No. 09F-6044-ROC before the Office of Administrative Hearings on March 8, 2010, the Respondent’s License was suspended on June 20, 2010. 7. The Registrar’s Order in Case No. 09F-6044-ROC (ROC Case No. 09-6044) provides, in pertinent part, as follows: Respondent’s License No. 143254 shall be suspended on the effective date of the Order entered in Case No. 09-6044 until Respondent provides written proof to the Registrar, and the Registrar accepts such proof, of the following items being properly performed: 1. Compaction testing of the Complainants’ fill shall be performed per code requirements with proof that such testing has been approved by the local building authority. Also, all of Respondent’s work shall comply with local building code requirements…

8. Credible testimony and evidence established that the Respondent failed to fully comply with the terms of the Registrar’s Order issued in Case No. 09-6044. 9. There was no dispute that the Complainants have obtained $5,000.00 from the Respondent’s bond company. 10. Credible testimony and evidence established that the Registrar’s Order in Case No. 09-6044 does not require the removal and replacement of the construction work performed by the Respondent on the Complainants’ property. 11. The Complainants filed a claim with the Contractors’ Recovery Fund on August 16, 2010. 12. The Complainants’ Claim was denied on October 7, 2011. The Notice of Denial of Claim provides, in relevant part, as follows: On or about August 16, 2010, a claim was filed with the Recovery Fund for an undetermined amount of damages. In order to determine the scope of repair work necessary to remedy the project, compaction testing / core tests and an engineering report are required for the Fund to estimate the amount necessary to repair the project. The compaction tests / core tests and engineering report were not completed by Complainant as required by the Fund. Despite multiple document requests and extensions of time granted to Complainants from April 2011 through September 2011, Complainants failed to obtain and submit the requisite documentation that could allow quantification of their potential actual damages. The Complainants provided documentation from Yavapai County showing that the compaction / core tests and engineering report were indeed necessary, not only for the Fund’s determination of the extent of damages directly related to the Respondent’s work, but also to obtain the necessary permits from the County to perform the remedial work. The Complainants, however, have not supplied the necessary documentation to the Fund or to the County. Section 32-1132(A) limits any award to “an amount necessary to complete or repair” a project. Because the Complainants failed to supply the Fund with the requisite documentation that defines the scope of remedial work necessary, the Fund has no basis to calculate damages and to limit any award of monies within the limitations of A.R.S. § 32-1132(A). As such, Complainants claim must be denied.

13. The Complainants disagreed with the denial of their claim and requested an administrative hearing. 14. The Complainants continued to decline to obtain the requested core testing and instead, retained an engineer to provide a plan for the complete removal and replacement of the Respondent’s construction work on their property. 15. The Complainants then obtained one (1) bid from a licensed contractor for the complete removal and replacement of the Respondent’s construction work for the sum of $48, 605.72. 16. The Complainants assert that a Judgment by the Yavapai County Development Services (Exhibit No. C-7) requires the complete removal and replacement of the Respondent’s construction work on the property. 17. Credible testimony and evidence established that the Judgment of the Yavapai County Development Services in Case No. V32009000700 provided for the imposition of a civil penalty against the Respondent in the sum of $1,000.00 which would only be set aside if the Respondent (1) obtained an issued grading permit or (2) removed the non-permitted grading from the property and provided evidence of legal disposal and called for a compliance inspection for the county. 18. Credible testimony and evidence presented at hearing established that the Complainants’ pad for their manufactured residence may, or may not, comply with applicable county code requirements, and the only way to assess whether the pad is in compliance would be the performance of further testing. 19. Credible testimony and evidence established that the requested core testing would necessarily require that a core test be performed on the Complainants’ property as close to their residence as possible, and that the requested core testing could only be performed by the Complainants. 20. Credible testimony and evidence presented at hearing established that the requested core testing would have established what, if any, corrective action is required to be corrected on the Complainants’ property in order to comply with the terms of the Registrar’s Order of June 20, 2010 issued in Case No. 09-6044. 21. The credible testimony and evidence of record is insufficient and fails to support a finding as to what the Complainants’ actual damages, if any, are in this matter. CONCLUSIONS OF LAW 1. A.R.S. § 32-1131 (3) provides as follows: "Person injured" means 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 including community property, tenants in common or joint tenants who are damaged by the failure of a residential contractor or a dual licensed contractor to adequately build or improve a residential structure or appurtenance on that real property. Included in this definition are lessees of residential real property who contract directly with a residential contractor or indirectly with a subcontractor of that contractor and homeowners' or unit owners' associations after transfer of control from the builder or developer for damages to the common elements within the complex.

2. 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.

2. The Complainants have the burden of demonstrating by a preponderance of the evidence to establish (1) eligibility pursuant to A.R.S. § 32-1131, et seq., and (2) actual damages pursuant to A.R.S. § 32-1132 (A). 3. Proof by “preponderance of the evidence” means that it is sufficient to persuade the finder of fact that the proposition is “more likely true than not.” In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). It “is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (rev. 6th ed. 1990). 4. The Complainants failed to sustain their burden of proof to establish eligibility pursuant to A.R.S. § 32-1131, et seq., and their actual damages pursuant to A.R.S. § 32-1132 (A). RECOMMENDed order In view of the foregoing, it is recommended that the Denial of Recovery Fund Claim issued in this matter be affirmed and that the Complainants’ claim for damages be denied. 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, January 3, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors -----------------------

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