ALJDEC decisions subject to certification as final

2009A-7100467-ROC · Registrar of Contractors · 2011-03-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 24, 2011, at 8:00 a.m. APPEARANCES: Complainant Janine Nshimirimana appeared on her own behalf; Respondent Kalosa Builders, L.L.C. appeared through Brad Foudray, its qualifying party and managing member; the Arizona Registrar of Contractors appeared through Montgomery Lee, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT 1. In March 2007, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC230340, Class KB-2 for dual residential and small commercial contracting to Kalosa Builders, L.L.C. (“Respondent”). The Workmanship Complaint (Case No. G07-0718) 2. On February 27, 2009, the Registrar received a complaint against Respondent from Janine Nshimirimana (“Complainant”). Complainant also filed a complaint against Rocking P Concrete, L.L.C., License No. ROC209691, Class C-09 (“Rocking P”). The Registrar designated Complainant’s complaints against Respondent and Rocking P respectively as Case Nos. G08-0718 and G08-0718W. 3. Complainant in Case Nos. G08-0718 and G08-0718W alleged that Respondent’s or Rocking P’s employee or subcontractor, Josh Stine, contracted to pour concrete at her house at 8092 North 88th Lane, Peoria, Arizona. Complainant attached to her complaints a narrative that provided in relevant part: Josh Stine came over to our house on October 17th, 2007, to give us an estimate on roughly 2250 square feet of concrete work to be done. He quoted us $6250 for the entire project and also said it would be completed by October 22nd, 2007, as evidenced by his contract. He also claimed to start the following day (October 18th) early in the morning. The next day came and only one person showed up midway through the day to do some grading- type work. Josh came by to draw up the contract and do some work as well. . . . The license he used on the contract was ROC209691, belonging to Rocking ‘P’ Concrete, which we later looked up and found suspended. We then called Josh on it and he said he was licensed under Kalosa Builders LLC . . . .

The next day (Saturday, October 20th) workers came and poured some concrete and only did about 800 square feet of concrete. The work was very poor at best with splattering concrete on our house exterior walls and chips and cracks in the actual slab. They also removed the RV gate we had during the course of the day and never put it back up. . . .

According to the complaints, Complainant paid Mr. Stine $4,000.00 of the contract price of $6,250.00 and after October 20, 2007, Mr. Stine did not perform any more work, despite Complainant’s numerous telephone calls to him. 4. Complainant subsequently requested that the Registrar issue citations against Respondent and Rocking P in Case Nos. G08- 0718 and G08-0718W. On June 4, 2008, the Registrar issued a Citation and Complaint against Respondent and Rocking P, charging violations of A.R.S. § 32-1154(A)(1),[1] (7),[2] (10),[3] (18),[4] and (3) (namely R4-9-108).[5] The Registrar informed Respondent and Rocking P that they were required to file written answers to the Citation and Complaint no later than June 19, 2008. 5. Rocking P filed a timely written answer to the Registrar’s Citation and Complaint in Case No. G08-0718W, and the Registrar referred the matter to the Office of Administrative Hearings (“the OAH”), an independent agency, for an evidentiary hearing.[6] 6. On June 27, 2008, Respondent filed an untimely written answer to the Citation and Complaint in Case No. G08-0718, denying that it had any connection to Mr. Stine or to the job at Complainant’s house. 7. On July 10, 2008, the Registrar informed Respondent that because its written answer to the Citation and Complaint in Case No. G08-0718 was untimely, the Registrar would issue a Default Order. The Registrar further informed Respondent that it could request a rehearing on or appeal the Default Order. 8. On September 30, 2008, the Registrar issued a Decision and Order in Case No. G08-0718, finding that pursuant to A.R.S. § 32-1155(B) Respondent’s failure to timely answer the Citation and Complaint was deemed an admission of the charges contained therein. As a penalty for Respondent’s admitted statutory violations, the Registrar’s Decision and Order in Case No. G08-0718 suspended Respondent’s license until it rectified the items in the complaint and pursuant to A.R.S. § 32-1154(E), required Respondent to pay a $1,000.00 civil penalty or have its license automatically revoked. 9. The Registrar’s Decision and Order in Case No. G08-0718 became final. 10. On May 27, 2010, the Registrar revoked Respondent’s license as a result of its failure to pay the civil penalty in Case No. G08-0718. The Claim to the Residential Contractors’ Recovery Fund 11. On or about June 17, 2009, the Registrar received Complainant’s claim in the amount of $6,350.00 to the Residential Contractors’ Recovery Fund (“the Fund”). The Registrar designated Complainant’s claim to the Fund as Case No. RF10-0467. 12. To support her claim to the Fund in Case No. RF10-0467, Complainant provided proof to the Registrar that she had paid the following amounts to repair and complete Mr. Stine’s work: (1) $200.00 to Eder Bernabe Gonzales for general labor; (2) A total of $3,450.00 to Saturno Carrillo Santoyo to repair and complete Mr. Stine’s work; and (3) $2,700.00 to American Concrete for materials. 13. The Registrar’s inspector, Scott Deering, analyzed Complainant’s claim to the Fund in Case No. RF10-0467. After Inspector Deering determined that Mr. Gonzales and Mr. Santoyo were unlicensed, he deducted the payments that Complainant made to them. Inspector Deering also deducted the $2,250.00 that remained due Mr. Stine under the original contract. After deducting these amounts from Complainant’s claim to the Fund, Inspection Deering recommended that the Fund pay Complainant $450.00. 14. The Registrar subsequently redesignated Case No. RF10-0467 as Case No. 2009-7100467. On November 15, 2009, the Registrar issued a Notice of Claim for Administrative Payout in the amount of $450.00. 15. On November 29, 2009, the Registrar received Complainant’s request for hearing in Case No. 2009-7100467 because "the issue at hand involves the repayment of the initial deposit in the amount of four thousands [sic] dollars which I gave to Josh Stine.” 16. The Registrar referred the matter to the OAH for an evidentiary hearing. 17. A recovery fund payout hearing was held on March 24, 2011. Complainant testified and submitted four exhibits, including numerous photographs. The Registrar presented the testimony of Inspector Deering and Sylvia Arce, who works for the Fund. Respondent’s qualifying party and managing member, Brad Foudray, testified on its behalf and submitted two exhibits. Hearing Evidence 18. Mr. Foudray attempted to present evidence to support the factual allegations in Respondent’s untimely answer to the Registrar’s Citation and Complaint in Case No. G08-0718. The Administrative Law Judge informed the parties that she could not consider Respondent’s responsibility for Mr. Stine’s actions in Complainant’s claim to the Fund because the Registrar’s Decision and Order in Case No. G08-0718 had determined that issue. 19. Ms. Arce testified that she calculated the Fund payout by adding the total amount that Complainant paid to complete the job ($6,350.00) to the amount paid to Mr. Stine ($4,000.00) and deducting the amount of Mr. Stine’s contract ($6,250.00). Although normally this calculation would yield a payout in the amount of $4,100.00, because A.R.S. § 32-1132(A) does not allow the Fund to reimburse homeowners for monies paid to unlicensed contractors, the $3,750.00 that Complainant paid to Mr. Gonzales and Mr. Santoyo needed to be deducted, resulting in a $450.00 payout. 20. Complainant submitted photographs that showed Mr. Stine’s poor workmanship and Mr. Santoyo’s repairs. Complainant agreed that the Fund could not reimburse the cost of unlicensed contractors, but argued that the Fund should reimburse the cost of the $4,000.00 deposit paid to Mr. Stine. 21. Inspector Deering testified that A.R.S. § 32-1132(A) does not allow the Fund to reimburse Complainant for the deposit paid to Mr. Stine because he did some work, and Mr. Santoyo repaired his work. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[7] Complainant bears the burden of proof to establish the amount that she is entitled to recover from the Fund by a preponderance of the evidence.[8] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[9] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[10] In Arizona, “‘[p]ublic policy dictates that there be an end to litigation; that those who have contested the issue shall be bound by the result of the contest; and that matters once tried shall be considered forever settled as between the parties.’”[11] “That the judgment was rendered by default does not affect its validity, for such a judgment admits as true all the material allegations properly set forth in the complaint and is just as binding and conclusive as to them as though it had been rendered after answer and contest.”[12] Therefore, the Registrar’s Decision and Order in Case No. G08-0718 conclusively establishes that Respondent violated the charged statutes. The only issue to be resolved at the hearing on Complainant’s claim to the Fund is the amount of damages that Respondent’s statutory violations caused. A.R.S. § 32-1132(A) provides the method of calculating the amount that a homeowner is entitled to recover from the Fund for a contractor’s statutory violations, in relevant part as follows: An award from the [F]und 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 . . . . [Emphasis added.] “A cardinal rule of statutory interpretation is to give full effect to each statutory word or phrase so that no part is rendered void, superfluous, contradictory or insignificant.”[13] Complainant agreed at the hearing that A.R.S. § 32-1132(A) prevents the Fund from reimbursing her for monies that she paid to unlicensed contractors to repair and to complete Mr. Stine’s work. Because Mr. Stine actually performed work at Complainant’s house, a payout from the Fund for the $4,000.00 deposit that Complainant paid to Mr. Stine would render void or superfluous A.R.S. § 32-1132(A)’s requirement that the Fund may only reimburse a homeowner’s deposit if no actual work was performed or materials delivered. Therefore, Complainant did not establish that she is entitled to a payout from the Fund for the $4,000.00 deposit that she paid to Mr. Stine. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order in this matter, the Registrar order the Residential Contractors’ Recovery Fund to pay $450.00 to Complainant Janine Nshimirimana. It is further recommended that under A.R.S. § 32-1139(B), the Registrar charge $450.00, plus interest at a rate of ten percent a year, to Respondent Kalosa Builders, L.L.C.’s License No. ROC230340. 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, April 13, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [2] This statutory subsection formerly included among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” [3] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]iding or abetting a licensed or unlicensed person to evade this chapter, knowingly combining or conspiring with a licensed or unlicensed person, allowing one’s license to be used by a licensed or unlicensed person with intent to evade this chapter.” [4] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[c]ontracting or offering to contract or submitting a bid while the license is under suspension or while the license is on inactive status.” [5] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [6] An evidentiary hearing was held in Case No. G08-0718W in the OAH before Administrative Law Judge (“ALJ”) Robert I. Worth on November 4, 2008. On November 17, 2008, ALJ Worth recommended that the Registrar dismiss Complainant’s complaint against Rocking P because she did not establish that Mr. Stine was working under Rocking P’s authority. On December 16, 2008, the Registrar accepted ALJ Worth’s recommendation and dismissed Case No. G08-0718W. [7] See 32-1101 et seq. [8] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [9] See A.A.C. R2-19-119(B)(2). [10] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [11] Lofts v. Superior Court, 140 Ariz. 407, 410, 682 P.2d 412, 415 (1984) (quoting Baldwin v. Iowa State Traveling Men’s Ass’n, 283 U.S. 522, 525, 51 S. Ct. 517, 518, 75 L. Ed. 1244 (1931)). [12] Collister v. Inter-State Fidelity Building and Loan Ass’n, 44 Ariz. 427, 435, 38 P.2d 626 (1934) (citations omitted). [13] Westburne Supply, Inc. v. Diversified Design and Construction, Inc., 170 Ariz. 598, 600, 826 P.2d 1224, 1226 (App. 1992).

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

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