ALJDEC decisions subject to certification as final

2009A-7100255-ROC · Registrar of Contractors · 2011-03-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 14, 2011

APPEARANCES: Complainant appeared and was represented by attorney Paul Levine; Respondent did not appear; the Residential Contractors’ Recovery Fund intervened in this matter and was represented by Assistant Attorney General Anne Froedge.

WITNESSES: Doug Ulmer, Investigator with the ROC Recovery Fund James Yacenda

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant James Yacenda seeks a payout from the Residential Contractors’ Recovery Fund (“Fund”) for damages caused by defective workmanship of Respondent Saucedo Godoy Construction, Inc. Respondent did not appear. The Fund appeared through Assistant Attorney General Anne Froedge 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 stipulated Exhibits 1 through 6 (offered by the Fund) and A through C (offered by Complainant). As agreed to by the parties at the hearing, Complainant was allowed to submit Exhibit D after the hearing. On February 28, 2011, Complainant filed as Exhibit D an Affidavit of Scrivener’s Error that was filed with the Maricopa County Recorder. Exhibit D has been added to the record. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding Complainant ineligible for recovery from the Fund. FINDINGS OF FACT 1. Respondent Saucedo Godoy Construction, Inc. was the holder of license B-10.216678-R issued by the Registrar of Contractors (“ROC”). Respondent performed contracting work on Complainant’s property in 2006- 2007. The license has since been revoked. 2. Complainant made a claim to the Fund in April 2009 for recovery of damages caused by Respondent.[1] The ROC conducted a preliminary check of the claim and determined that Complainant’s property was not classified as class three (residential owner-occupied) property at the time Complainant was damaged by Respondent. The ROC also determined that the owner of the property is a limited liability company (“LLC”) and not an individual. The Fund takes the position that an entity that owns residential property is not eligible for recovery from the Fund. Also, 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.[2] The Complainant then requested a hearing. 3. At hearing, Complainant and Doug Ulmer, a Fund investigator, testified about the property ownership and classification. The evidence shows that ownership of the house began in 2005 by transfer of title from Nicholas Aretakis, an individual, to The Orchards at Arizona, LLC (“Orchards”), an entity.[3] Complainant testified that he is the Managing Member of Orchards and that the house was bought to be the family residence. In December 2006, the property was transferred by quitclaim deed from Orchards to JCJY Realty, LLC (“JCJY”). Complainant testified that he is the Managing Member of JCJY. Complainant and his family have lived in the house since Orchards bought it. JCJY is the current owner. 4. Records from the Maricopa County Assessor’s Office (“County Assessor”) show that the house at issue here has been classified since 2006 as class four property, which is property that is intended for rental to non-family members.[4] The records show this classification through the year 2011. Before 2006, the property was classified as class three property, which is residential property that is owner occupied. 5. Complainant testified that the house was never intended to be rental property. He claimed that the reason it was classified as such by the County Recorder was due to an error on an Affidavit of Property Value signed by Nicholas Aretakis and Complainant (for Orchards) in August 2005 and filed with the County Recorder at the same time.[5] According to Complainant, the error occurred in section 7 of that form when the box next to “To be rented to someone other than ‘family member’” was checked rather than the box next to “To be occupied by owner or ‘family member.’” Complainant blames the error on the title company, but Complainant signed the Affidavit of Property Value as being true and correct at that time. Complainant surmises that the County Assessor classified the property as class four property based on the error. 6. In February 2011, Complainant recorded with the Maricopa County Recorder an Affidavit of Scrivener’s Error.[6] That Affidavit describes the error in the same manner as above in Finding of Fact 5. There is no affidavit from Nicholas Aretakis, who was the other signer of the Affidavit of Property Value. There is also no indication that the property’s classification by the County Assessor has been changed, either retroactively or for future years.

CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person who brings the action.[7] Further, the standard of proof at hearing is by preponderance of the evidence.[8] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that he is eligible for recovery from the Fund.[9] Complainant has not 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.[10] 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 the owner of the property, JCJY, actually occupied or intended to occupy the property (“the occupancy hurdle”). Complainant has failed to clear either hurdle for the following reasons. 4. Regarding the classification hurdle, Complainant argues that the classification of the property was based on a mistake in the Affidavit of Property Value recorded in 2005. However, Complainant is responsible for that mistake, not someone else. The property was accurately classified according to the Affidavit of Property Value that Complainant swore was correct. Complainant could have corrected that mistake at any time but did not do so until February 2011, after the hearing. In any case, the property was not classified as class three property when the damages arose. Therefore, the first hurdle has not been cleared. 5. Regarding the occupancy hurdle, the evidence shows that Complainant and his family occupied the home at the time damages arose. However, the owner of the property is JCJY, and not Complainant or his family. JCJY has been damaged by the actions of Respondent.[11] The statute does not contemplate a legal entity as a “person injured” because a legal entity cannot occupy “residential real property . . . as a residence. . . .”[12] Thus, the second hurdle has not been cleared. 6. Complainant is not eligible for recovery from the Fund because he does not meet the statutory requirements that he be the owner and occupier of property that was classified as class three property at the time the damages arose. RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors find that the claim filed by James Yacenda is not 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, March 18, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Exhibit 1. [2] Exhibit 2. [3] Exhibit 3. [4] Exhibit 6. [5] Exhibit D. [6] Id. [7] 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). [8] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). [9] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [10] Arizona Revised Statutes (A.R.S.) § 32-1131(3). [11] In fact, Complainant filed the claim in the name of JCJY, noting himself as Managing Member. [12] A.R.S. § 32-1131(3).

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