ALJDEC decisions subject to certification as final

2009A-7100137-ROC · Registrar of Contractors · 2011-03-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 14, 2011 APPEARANCES: Complainant Ronald K. Stewart appeared on his own behalf. Assistant Attorney General Montgomery Lee represented the Registrar of Contractors. Respondent Bay Vision Construction, L.L.C. did not appear. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ The question presented by this matter is whether Complainant Ronald K. Stewart is entitled to an award and payment from the Residential Contractors’ Recovery Fund pursuant to A.R.S. § 32-1132(A). Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order to the Director of the Registrar of Contractors. FINDINGS OF FACT 1. Respondent Bay Vision Construction, L.L.C. (“Bay Vision”) is the holder of a Class KB-1 license (No. 180479) issued by the Registrar of Contractors (“ROC”).[1] 2. On November 6, 2004, Mr. Stewart purchased his home. The general contractor for the construction of the home was Bay Vision. The contract price for the purchase of the home was $179,900.00. Mr. Stewart paid $2,000.00 in earnest money toward the purchase price of the home. Mr. Stewart financed approximately $162,000.00, leaving a balance due at the close of escrow in the amount of approximately $16,000.00. 3. On December 27, 2007, Mr. Stewart filed a complaint against Bay Vision with the ROC. Mr. Stewart alleged that the roof of his home was leaking, causing water damage. 4. On September 9, 2008, the ROC issued a Citation and Complaint in Case No. A08-0326, charging Bay Vision with violations of A.R.S. § 32- 1154(A)(3), (A)(7), and (A)(23). 5. Bay Vision failed to file a written Answer to the Citation and Complaint. Consequently, on December 22, 2008, the ROC issued a default Decision and Order concluding that Bay Vision violated the charged provisions of this State’s contracting laws, and ordering that Bay Vision’s license be revoked. The ROC’s Order indicated that the Order would become effective on January 31, 2009, and that any request for rehearing must be filed on or before January 26, 2009. The Order also set forth that any appeal to the Superior Court must be filed and a Stay Order secured on or before January 31, 2009. Bay Vision did not file a request for rehearing, nor did it file an appeal to the Superior Court. 6. On August 25, 2009, Mr. Stewart filed a claim with the ROC seeking payment from the Residential Contractors’ Recovery Fund (“the Fund”) in the amount of $6,100.00. 7. The ROC investigated Mr. Stewart’s claim against the Fund and pursuant to its October 27, 2010 Notice of Denial for Actual Damages, denied recovery to Mr. Stewart because Mr. Stewart failed to provide the requested documentation establishing that he had paid the full contract price for his home. The documentation provided to the ROC by Mr. Stewart established that he had remaining funds available to him in the amount of $15,990.00, and the costs to complete the repairs were estimated at $1,850.00, based upon bids supplied by Mr. Stewart, resulting in a net gain to Mr. Stewart in the amount of $14,140.00. 8. On November 8, 2010, Mr. Stewart requested a hearing regarding the ROC’s denial of his claim, and this matter was thereafter set for hearing before the Office of Administrative Hearings, an independent state agency. 9. Sylvia Arce, an employee of the ROC who reviews claims to determine eligibility for awards from the Fund, testified that the purchase price of the home was $179,900.00. The ROC received an escrow receipt from Mr. Stewart dated November 8, 2004, indicating that he had paid $2,000.00 in earnest money toward the purchase price of the home. Mr. Stewart also provided to the ROC a Deed of Release and Reconveyance establishing that Mr. Stewart’s original mortgage on the home was in the amount of $161,910.00. The sum of those two amounts equal $163,910.00, leaving an unpaid amount of $15,990.00. Ms. Arce testified that the ROC requested that Mr. Stewart provide documentation to the ROC establishing his payment of the contract balance. On April 8, 2010, the ROC sent a letter to Mr. Stewart requesting that he provide proof of payment. Ms. Arce testified that she called Mr. Stewart on May 5, 2010, and left a voicemail message regarding the fact that the ROC had not yet received any documentation establishing his payment of the unpaid contract balance. 10. Mr. Stewart provided three bids to the ROC for the repair of the roof and the water damage. The low bid was from All About Remodeling, dated May 11, 2009, in the amount of $1,850.00. Abstract Construction Co., Inc. provided a bid in the amount of $3,891.92, dated May 28, 2009. Rich Dolan provided a third bid in the amount of $6,100.00, dated June 23, 2009. 11. Ms. Arce testified that the ROC’s position is that there are sufficient funds remaining from the contract price for Mr. Stewart to have the repairs completed. Ms. Arce testified that the ROC would re- evaluate the claim if Mr. Stewart could provide evidence that he paid the outstanding contract balance, and if he could produce the requested documentation, the ROC would recommend a payout in the amount of $1,850.00, representing the amount of the lowest bid. 12. Mr. Stewart testified that he believed he had provided the requested documentation establishing that he had paid $15,990.00 at the close of escrow as a down payment on the home. Mr. Stewart submitted into evidence a copy of his mortgage statement from Countrywide Home Loans dated December 1, 2005, showing a principal balance on his mortgage in the amount of $159,183.55. See Exhibit 1. Mr. Stewart credibly testified that his loan amount had been $161,900.00, and that he paid the contract balance in cash at the close of escrow, minus a small difference that had been an allowance for incidental repairs that did not pertain to the roof. Mr. Stewart testified that he does not have a receipt for the $15,990.00 that he paid in cash at the close of escrow. Mr. Stewart submitted into evidence a copy of his purchase contract, the bottom of which contains a section entitled “Offer.” See Exhibit 2. That section indicates that the purchase price was $179,900.00, that the amount of earnest money was $2,000.00, that $15,990.00 was to be paid in “cash at close of escrow,” and that the amount of $161,910.00 was “to be obtained by conventional loan.” Id. 13. Mr. Stewart testified that he has not had the repair work performed and he does not know whether the contractors from whom he received bids will presently honor the prices in those bids given the amount of time that has passed since he obtained the bids. Mr. Stewart requested a reasonable award from the Fund, an amount between the low and high bids he had previously obtained. 14. The Administrative Law Judge finds Mr. Stewart’s testimony regarding his payment of $15,990.00 in cash at the close of escrow to be credible and corroborated by the purchase contract. Based on the credible evidence presented, the Administrative Law Judge finds that Mr. Stewart is entitled to receive an award from the Fund in the amount of $3,947.30, representing an average of the three bids provided. The Administrative Law Judge makes this finding having considered that almost two years have passed since Mr. Stewart obtained the bids, and because Mr. Stewart has not made repairs, the extent of the damage likely has worsened over time.

CONCLUSIONS OF LAW Under A.R.S. § 32-1132, the ROC is empowered to determine and award payment to Mr. Stewart from the Fund. Mr. Stewart meets all of the requirements of a “person injured” as that term is defined in A.R.S. § 32-1131(3). Pursuant to A.R.S. § 32-1132(A), “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 . . . an amount of not more than thirty thousand dollars . . . . An award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor’s violation . . .” The weight of the credible evidence presented at hearing demonstrated that Mr. Stewart was injured as a result of Bay Vision’s poor workmanship as it relates to his roof. The credible evidence of record established that Mr. Stewart paid the contract balance in cash at the close of escrow, and therefore, suffered actual damages as a result of Bay Vision’s poor workmanship. Mr. Stewart is entitled to a payout from the Fund in the amount of $3,947.30. 5. Based on the foregoing, Mr. Stewart should be awarded a total payout from the Fund in the amount of $3,947.30, all of which should be charged against Bay Vision and/or persons named on Bay Vision’s Class KB-1 license as set forth in A.R.S. § 32-1139(B). RECOMMENDED ORDER The Administrative Law Judge makes the following Recommended Order: On the effective date of the Order entered in this matter, the ROC shall commence and finalize payment procedures from the Fund to Ronald K. Stewart in the amount of Three Thousand Nine Hundred Forty Seven Dollars and Thirty Cents ($3,947.30).

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 day, March 23, 2011.

/s/ Sondra J. Vanella Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] A review of the ROC’s official records revealed that Bay Vision’s contracting license expired on January 1, 2008, was revoked on February 23, 2009, in Case Number A08-0326, and revoked on March 10, 2009, for failure to pay a civil penalty in Case Number A08-0326. Such expired and revoked license status does not preclude this tribunal from conducting these administrative proceedings. A.R.S. § 32-1154(C).

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