ALJDEC decisions subject to certification as final

2009A-62411336-ROC · Registrar of Contractors · 2011-07-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 24, 2011

APPEARANCES: Complainant appeared on his own behalf; Respondent did not appear; the Residential Contractors’ Recovery Fund intervened in this matter and was represented by Assistant Attorney General Montgomery Lee.

WITNESSES: Doug Ulmer, Recovery Fund Claim Reviewer Tim McCormick

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant seeks a payout from the Residential Contractors’ Recovery Fund (“Fund”) for damages caused by Respondent Sonoran Family Communities, LLC. Respondent did not appear. The Fund appeared through Assistant Attorney General Montgomery Lee and challenged Complainant’s eligibility for payout from the Fund. The only issue for which the parties were given notice and for which the hearing was held is Complainant’s eligibility. That is the only issue addressed herein. This tribunal entered the claim file received from the Registrar of Contractors into the record, along with Exhibits 1 through 5 (offered by the Fund) and Exhibit A (offered by Complainant). Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding Complainant to be eligible for recovery from the Fund. FINDINGS OF FACT 1. Respondent was the holder of license B.178470-R issued by the Registrar of Contractors (“ROC”). Respondent entered into a contract with Complainant for the construction of a new home. Respondent abandoned the contract after taking a down payment and was found to have violated the statues governing licensed contractors in Arizona. Respondent’s license has been revoked. 2. Complainant made a claim to the Fund for recovery of the down payment. The ROC conducted a preliminary check of the claim and determined that the property was not classified as class three (residential owner- occupied) property. Class three classification of the subject property is required by the statutes governing the Fund, so the ROC notified Complainant that he was ineligible for recovery. In addition, the Fund questions whether Complainant intended to occupy the home.[1] The Complainant then requested a hearing. 3. At hearing, the Fund did not submit direct evidence as to the classification of the real property, nor did Complainant.[2] Instead, the Fund relies on sales/escrow documents for its conclusion that the property was not intended to be occupied. The evidence shows that Complainant obtained ownership of the property in July 2005, as evidence by a warranty deed.[3] At the same time, Complainant executed an Affidavit of Property Value (“Affidavit”) that stated that the intended use of the property was for rental use and not to be occupied by the owner.[4] 4. At hearing, Complainant submitted credible evidence showing that the Affidavit was erroneous with respect to the intended use of the property. This evidence includes a notarized letter from the sales agent stating that Complainant intended to live in the home[5] and an e-mail from Complainant’s title insurance carrier showing that the policy that was issued for the home was for an owner-occupier and not an owner-renter.[6] It also includes a recorded document from the title company stating that the Affidavit should have shown the property to be owner-occupied.[7] 5. In addition, Exhibit A shows that Complainant purchased another property in the same community (Lot 38) that was intended to be an investment/rental property. Complainant persuasively showed that he is not seeking recovery for that property, only the property (Lot 4) that he intended to occupy. 6. The evidence shows that Complainant intended to occupy the property for which he is seeking recovery. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person who brings the action.[8] Further, the standard of proof at hearing is by preponderance of the evidence.[9] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that he is eligible for recovery from the Fund.[10] Complainant has met that burden. 2. Only owners of “residential real property . . . classified as class three property under section 42-12003 and . . . actually occupied or intended to be occupied by the owner as a residence . . .” are eligible for recovery from the Fund.[11] That statutory requirement entails: (1) classification as class three property, and (2) actual occupancy (or intent to occupy) by the owner. Those provisions are mandatory and not ambiguous. 3. Complainant must clear both hurdles to show eligibility. First, he must show that the property was classified as class three property at the time he was damaged by Respondent (“the classification hurdle”). Second, he must show that he actually occupied or intended to occupy the property (“the occupancy hurdle”). Complainant has cleared both hurdles. 4. First, although the Notice to Claimant of Recovery Fund Ineligibility states that the property was not classified as class three property, at hearing the Fund did not present evidence as to, or argue, that aspect of the claim. Instead, the Fund argued only that the record was not clear as to whether Complainant intended to occupy the property. Thus, the classification hurdle was not addressed at the hearing. Because of this, this tribunal presumes that the classification of the property is not an issue that is disputed. Therefore, Complainant has cleared that hurdle. 5. Second, Complainant has sufficiently shown that he intended to occupy the property. He has cleared the occupancy hurdle. 6. The evidence supports Complainant’s claim that he is eligible for recovery from the Fund as a person injured within the meaning of the statute. RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors find that Tim McCormick is eligible for recovery from the Fund.

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 Decision will be 40 days from the date of that certification.

Done this day, July 8, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The evidence is clear and not disputed that Complainant never occupied the home. [2] This would have been the best evidence. [3] Exhibit 1. [4] Id. [5] Exhibit 4. [6] Id. [7] Exhibit 5. [8] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949); Arizona Administrative Code (A.A.C.), OAH Rule R2-19-119(B). [9] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). [10] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [11] Arizona Revised Statutes (A.R.S.) § 32-1131(3).

-----------------------

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