ALJDEC decisions subject to certification as final

2009A-7100510-ROC-res · Registrar of Contractors · 2011-08-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

RECOVERY FUND PAYOUT HEARING: July 14, 2011, at 8:00 a.m. APPEARANCES: Complainant Richard Nelson appeared on Complainants’ behalf; Respondent C A V Construction and Development, L.L.C. did not appear; the Arizona Registrar of Contractors appeared through Montgomery Lee, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. In March 2005, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC203948, Class B for general residential contracting to C A V Construction and Development, L.L.C. (“Respondent”). Respondent’s address of record is P.O. Box 532, Heber, Arizona 85928-0532. 2. The Registrar received a complaint against Respondent from Richard Nelson and Jill Buckley (“Complainants”) alleging that Respondent’s workmanship was deficient in 18 specifically enumerated respects on a substantial remodel that Respondent had performed at Complainants’ house at 1076 Mogollon Circle in Show Low, Arizona 85901. The Registrar designated the complaint as Case No. P09-0132. 3. The Registrar assigned Case No. P09-0132 to its inspector in the Show Low office, Tom Sandoval, for investigation. Inspector Sandoval performed a jobsite inspection. 4. On December 8, 2008, Inspector Sandoval issued a Corrective Work Order (“CWO”) in Case No. P09-0132 that required Respondent to correct by appropriate means within 20 calendar days certain workmanship deficiencies, as follows: 1. CWO Item No. 1: The exterior door to the master bedroom sagged and was not completely trimmed or painted; 2. CWO Item No. 2: Same as CWO Item No. 1 for the exterior door to guest bedroom #1; 3. CWO Item No. 3: Same as CWO Item No. 1 for the exterior door to guest bedroom #2; 4. CWO Item No. 4(B): The master bath shower needed to be caulked; 5. CWO Item No. 5: The guest bath shower needed to be caulked; 6. CWO Item No. 6: The electric wires in the master bathroom were exposed and non-functional and the switch and light fixture in the master bath closet were not installed according to code; 7. CWO Item No. 7: Two ceiling fans in the sun room needed to be reinstalled so that they were not in the way of the path of the door and the fans’ bases needed to be tightened or connected; 8. CWO Item No. 8: The siding and trim on the shed needed to be attached and/or installed; 9. CWO Item No. 9: The metal roof over the deck needed to be correctly installed and trimmed; 10. CWO Item No. 10: The partial roof over the house needed to be finished and skylights needed to be installed over the sauna; 11. CWO Item No. 11: The front steps needed to be secured and finished with treated lumber at the bottom; 12. CWO Item No. 12: The rear steps needed to be completed and leveled, with a handrail; 13. CWO Item No. 13: The master bath storage closet needed to be trimmed out and the front of the door wall made plumb; 14. CWO Item No. 14: The paint and trim on “all projects” was unfinished and peeling and needed to be completed and corrected; 15. CWO Item No. 15: Although the contract did not require lattice, lattice was partially installed on the deck and needed to be completed; 16. CWO Item No. 16: Lattice should be installed at the bottom of the storage shed to keep out small animals that were in the area; and 17. CWO Item No. 17: The guest bath toilet was not level. 5. Complainants requested a hearing in Case No. P09-0132. On May 4, 2009, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32- 1154(A)(1), (2), (7), (23), and (3), namely A.A.C. R4-9-108. 6. Respondent failed to file a timely written answer to the Citation and Complaint in Case No. P09-0132. On September 14, 2009, the Registrar issued a Decision and Order, deeming Respondent’s failure to answer the Citation and Complaint to be an admission of the charges contained therein under A.R.S. § 32-1155(B). As a result of Respondent’s admitted statutory violations, the Registrar revoked Respondent’s license and assessed a $500.00 civil penalty against it. 7. On or about December 29, 2009, the Registrar received Complainants’ claim to the Residential Contractors’ Recovery Fund (“the Fund”) in the amount of “$20,000.00 +” for the damages that Respondent’s violations caused. Complainants attached to their claim to the Fund two estimates: (1) An estimate from 316 Construction, L.L.C., License No. ROC256200, Class B (“316 Construction”) in the total amount of $7,555.00 if CWO Items Nos. 1-3 could be corrected by repairing only the door frames and headers, or $8,305.00 if new doors were required to correct those items; and (2) An estimate from Edward Gerald Morin doing business as Morins Construction, License No. ROC244457, Class B (“Morins Construction”) in the total amount of $21,816.00. According to Complainants’ claim to the Fund, the amount of their contract with Respondent was $25,000.00 and they had paid Respondent “$25,000 +.” The Registrar designated Complainants’ claim to the Fund as Case No. RF10-0510. 8. Inspector Sandoval performed another jobsite inspection and obtained documentation to investigate Complainants’ claim to the Fund in Case No. RF10-0510. On June 16, 2010, Inspector Sandoval issued a Recovery Fund Inspection Report, summarizing the results of his investigation as follows: (1) 316 Construction submitted the low bid of $8,305.00, with new doors, to perform the repairs required in Case No. P09-0132; and (2) Complainants’ documentation showed that they had paid Respondent only $17,357.40 on the $25,000.00 contract amount, and still owed $7,642.53. Therefore, Inspector Sandoval recommended that the Fund pay Complainants $662.47, the difference between 316 Construction’s low bid and the amount that Complainants still owed under their contract. 9. The Registrar redesignated Case No. RF10-0510 as Case No. 2009-7100510. On or about June 30, 2010, the Registrar issued a Notice of Claim for Administrative Payout in the amount of $662.47. 10. On or about July 6, 2010, Complainants requested a hearing on the amount of the proposed payout in Case No. 2009- 7100510. The Registrar submitted the matter to the Office of Administrative Hearings (“the OAH”), an independent agency, for an evidentiary hearing. 11. A hearing was scheduled to be held in Case No. 2009-7100510 on November 8, 2010, before Administrative Law Judge (“ALJ”) Eric A. Bryant of the OAH. At the time scheduled for the hearing to begin, ALJ Bryant took evidence and, over Complainants’ objection, determined to remand the matter back to the Registrar to cure an apparent deficiency in the notice to Respondent of the hearing. 12. On March 11, 2011, the Registrar issued a Re-Issued Notice of Claim for Administrative Payout in Case No. 2009-7100510 in the amount of $662.47. Complainants again requested a hearing, and the Registrar resubmitted the matter to the OAH. 13. On June 7, 2011, the Registrar issued a Notice of Recovery Fund Eligibility/ Payout Hearing in Case No. 2009-7100510, setting a hearing at the OAH on July 14, 2011, at 8:00 a.m. The Registrar sent a copy of the Notice of Recovery Fund Eligibility/ Payout Hearing to Respondent at its address of record. 14. A Fund payout hearing was held before the undersigned ALJ on July 14, 2011. Complainant Mr. Nelson testified and submitted eleven exhibits. The Registrar presented the testimony of two witnesses: (1) Inspector Sandoval; and (2) Glen Hawkins, the Fund’s supervisor. 15. Respondent did not request to appear telephonically at the Fund payout hearing and did not request that the hearing be continued. Although the hearing did not conclude until after 12:00 p.m. on July 14, 2011, Respondent did not appear, through an authorized member, employee, or attorney. Consequently, Respondent did not present any evidence to dispute Complainants’ claim to the Fund. Additional Evidence 16. Mr. Nelson testified that he paid an additional $5,000.00 in cash to Respondent. However, Mr. Nelson could not provide any record of a bank account withdrawal or other documentation to establish the source of the cash to corroborate his testimony. 17. In addition to the estimates from 316 Construction and Morins Construction that Complainants had attached to their claim to the Fund, Mr. Nelson submitted three more estimates: (1) A revised estimate from 316 Construction, in the revised total amount of $20,105.00; (2) An estimate from 2nd Generation Builders, Inc., License No. ROC234952, Class C-61 (“2nd Generation”) in the total amount of $27,500.00; and (3) A lump-sum estimate from C S I General Contractors, Inc., License No. ROC225782, Class KB-1 (“C S I”) in the amount of $22,000.00. 18. Mr. Nelson also submitted an unsigned letter from Matthew Mannie of 316 Construction dated October 8, 2010, that stated in its entirety as follows: It has come to my attention upon second review that a bid given by 316 Construction was overlooking many factors which have greatly affected the final cost of bringing the items on the related complaint into roc [sic] and local building compliance. I have, therefore re-submitted a new and more accurate bid for consideration.

19. Inspector Sandoval has been the inspector in the Registrar’s Show Low office for 11 years. Inspector Sandoval is familiar with the cost of materials and labor in the Show Low area. Before he became an inspector for the Registrar, Inspector Sandoval was a licensed contractor, although not in Show Low. Inspector Sandoval is familiar with construction practices generally, and adequate methods of repair. 20. Mr. Hawkins was a licensed general contractor before he began working for the Registrar. Mr. Hawkins also was an insurance adjuster. Mr. Hawkins is familiar with the costs of labor and materials for remodeling and repair projects. 21. Mr. Hawkins testified that with national chain supply stores, such as Lowe’s and Home Depot, and national home building companies, the cost of construction and repairs is becoming more homogenized nationally. Mr. Hawkins testified that since the onset of the recession, the cost of labor and materials dropped and then stayed level or softened. Mr. Hawkins testified that some contractors have dropped their hourly rate from $60.00 to $80.00 per hour to only $30.00 per hour to bring in work. 22. Inspector Sandoval testified that the estimates that contractors prepare for submission to the Fund frequently include a premium, and are generally somewhat higher than the estimates for comparable work that contractors prepare to secure a contract with the homeowner for the work. 23. Mr. Hawkins pointed out that the estimates from Morins Construction and 2nd Generation contained the same descriptions and order of items. In his experience, such similarities implied collusion. Mr. Hawkins testified that it was unethical to show a contractor someone else’s bid for the same project because the information could corrupt or prevent a competitive bidding process. 24. The remainder of the hearing compared the CWO items with the items on 316 Construction’s initial and revised estimates, Morins Construction’s estimate, and 2nd Generation’s estimate. Because C S I’s estimate did not include any itemized breakdown for the specific CWO items, it was not discussed further. The Three Exterior Doors (CWO Item Nos. 1-3) 25. 316 Construction’s initial estimate for CWO Item Nos. 1-3 stated that 36” doors were improperly installed, and that it was possible that the improper installation could be corrected with a proper header and frame. If proper headers and frames did not correct the problems, new doors would have to be purchased. 316 Construction’s initial estimate for the three doors if replacement was required was $365.00/door, or $1,095.00 for all three doors. 26. Inspector Sandoval testified that he did a survey of the cost of various exterior doors in the Show Low area. Costs at Home Depot ranged from $500.00 for high-end exterior solid wood doors to $200.00 for less expensive solid wood exterior doors. Inspector Sandoval testified that it would cost approximately $100.00/door to install a range of doors. Inspector Sandoval testified that because Complainants’ residence was a mobile home, he felt that a lower priced exterior door was appropriate. In light of his knowledge and experience, Inspector Sandoval testified that 316 Construction’s initial estimate was appropriate. 27. Mr. Nelson testified that his residence was a modular home, around which a weight bearing exterior shell had been constructed. Mr. Nelson testified that the walls were a total of 1’ to 14” thick, and that the thickness of the walls complicated the installation of exterior doors. Mr. Nelson testified that he had added a 3-car garage to his home, and that it had been appraised at $400,000.00. Mr. Nelson did not submit any evidence of the style or cost of the doors that Respondent had installed or of the other exterior doors on the house. 28. 316 Construction’s revised estimate stated that 36” doors were improperly installed, and that new doors were needed. The price of each door on the estimate was $615.00, for a total of $1,845.00. 29. Morins Construction’s and 2nd Generation’s estimates stated that although 36” doors had been installed, the doors would have to be replaced with 32” doors. Morins Construction’s price was $655.00/door, for a total of $1,965.00. 2nd Generation’s price was $950.00/door, for a total of $2,850.00. 30. Neither 316 Construction, Morins Construction, nor 2nd Generation mentioned the thickness of the wall or the quality of the exterior doors in their estimates. 31. Inspector Sandoval testified that the estimates submitted by 316 Construction (revised), Morins Construction, and 2nd Generation seemed to tack on substantial additional cost for no apparent reason and seemed high. Inspector Sandoval testified that the price of labor in Show Low was currently $30.00 to $40.00 per hour, that a general contractor generally would charge $50.00 to $60.00 to cover overhead and profit, and that a door could be installed in two or three hours. 32. Inspector Sandoval testified that allowing for longer time to install the doors, a cost of $200.00 to purchase and $200.00 to install each door, for a total of $1,200.00 for all three doors, was reasonable. Caulking the Master Bath Shower and Guest Bath Shower (CWO Item Nos. 4(B) and 5) 33. 316 Construction’s initial estimate included a price of $85.00 per enclosure to properly caulk, trim, and finish areas around the shower/tub enclosures in the master bath and guest bath, for a total price of $170.00. 34. Inspector Sandoval testified that a tube of caulking cost between $5.00 and $6.00 and that repairs would take at most an hour. Inspector Sandoval testified that a contractor would not use his most high-priced employee for such a simple repair. 35. Mr. Nelson testified that there was no bathtub in either shower, and that the showers were both approximately 6’ long and 6’ high. In addition, the water intrusion that resulted from the lack of caulking had caused the bathroom floor to collapse. 36. The CWO in Case No. P09-0132 did not require Respondent to take any action to correct the sagging master bath floor (CWO Item No. 4(A)) because “[t]he floor looked to be installed correctly and the sagging was not a workmanship issue.” 37. 316 Construction’s revised estimate includes the same description of the repair, but a total price of $670.00, without any explanation of the additional cost. 38. Morins Construction’s and 2nd Generation’s estimates describe the work to correct CWO Item Nos. 4 and 5 as replacing and painting the shower trim and caulking the shower stalls completely with a high quality caulk. Morins Construction’s price per shower stall was $222.00, for a total price of $444.00. 2nd Generation’s price was $550.00 per shower stall, for a total price of $1,100.00. 39. Inspector Sandoval testified that he did not understand Morins Construction’s and 2nd Generation’s estimates, and that 2nd Generation’s estimate seemed “way high” in light of the scope of the repair. Repairing the Electrical Wiring in the Bathroom and Ceiling Fans (CWO Item Nos. 6 and 7) 40. 316 Construction’s initial estimate included a total price of $500.00 to hire an electrical contractor to remove, reroute, and replace all electrical work to meet electrical codes. 41. Inspector Sandoval testified that at his initial jobsite inspection, the problem with the fans was that they were hung from a low ceiling, and that if the door to the room was opened, the door would hit the fan blades. The electrical wiring in the master bath was incomplete, and was taped. Inspector Sandoval testified that he thought that $500.00 was a good price for repairing these deficiencies. 42. 316 Construction’s revised estimate provided the same description as its initial estimate, but raised the price of the repair to $1,800.00. 43. Morins Construction’s estimate to hire an electrical contractor to repair the electrical system in the master bath was $800.00. Morins Construction’s estimate to repair and relocate two ceiling fans was $464.00, including removing and reinstalling the ceiling panel and trimout. 44. 2nd Generation’s estimate to hire an electrical contractor to repair the electrical system in the master bath was $1,500.00. 2nd Generation’s estimate to repair and relocate the two ceiling fans was $850.00. 45. Inspector Sandoval testified that it appeared as though Complainants provided 316 Construction’s initial estimate to the other contractors and instructed them to increase the amounts by 300% to 400%. Inspector Sandoval testified that Morins Construction’s and 2nd Generation’s estimates to repair CWO Item Nos. 6 and 7 appeared excessive. 46. Mr. Nelson testified that the fans were installed in a porch that was enclosed to make an interior room. Because Respondent had connected the fans to the electrical system with an extension cord, the whole electrical connection needed to be redone. / / / / / / / / The Siding and Lattice on the Shed (CWO Item Nos. 8 and 16) 47. 316 Construction’s initial estimate included a total price of $315.00 to properly install the window, renail the siding, and trim, caulk, paint, and add lattice to the shed. 48. Inspector Sandoval testified that the repair would require approximately $100.00 in materials and one to two hours’ labor, for a total of $200.00 to $225.00 for the repairs. Inspector Sandoval testified that 316 Construction’s initial estimate was fair. 49. 316 Construction’s revised estimate provided the same description as its initial estimate, but raised the price of the repair to $1,415.00. 50. Morins Construction’s estimate to install two new sheets of siding on the window side of the shed and to renail the remaining siding, as well as trim-out all corners, the window, and the door of the shed was $708.77. Morins Construction’s estimate to install 48 linear feet of 18” tall lattice on the shed and to include framing support for the new lattice was $172.38. 51. 2nd Generation’s estimate to install two new sheets of siding on the shed and to trim all corners, windows, and doors was $2,250.00. 2nd Generation’s estimate to frame up a support to install 50’ of lattice around the storage shed was $550.00. 52. Inspector Sandoval testified that 316 Construction’s revised estimate and Morins Construction’s estimate appeared excessive and unjustified based on his experience. 2nd Generation’s estimate was “way overpriced.” 53. Mr. Nelson testified that the shed was very large. In addition, the paint on the shed was supposed to match the house’s three different colors of paint. The Metal Roof over the Deck and Partial Roof over the House (CWO Item Nos. 9 and 10) 54. 316 Construction’s initial estimate included a total price of $3,350.00 to remove the framing above the hot tub, to frame the roof above the tub with two 24” x 48” skylights, and to install new metal roofing over the hot tub, as well as to replace approximately 500 sq. ft. of metal roofing over the deck. 55. Inspector Sandoval testified that 316 Construction’s initial estimate seemed to provide a “good number.” Inspector Sandoval testified that although he did not know the price of metal roofing, the hardest part of the job would be taking down and reframing the framing above the hot tub. Inspector Sandoval estimated that this work would take a couple days, or 16-20 hours. 56. 316 Construction’s revised estimate provided the same description as its initial estimate, but raised the price of the repair to $6,850.00. 57. Morins Construction’s estimate to remove and reinstall the roofing system over the sauna area, with skylights, was $6,871.00. Morins Construction’s estimate also included finishing a 5’ section of handrail below the sauna area, and installing three new footings, piers, and girders under the sauna area “per Navajo County Span chart.” 58. 2nd Generation’s estimate to remove and reinstall the roofing system over the sauna room, with skylights, was $8,950.00. 2nd Generation’s estimate also included finishing an existing handrail to and from the sauna, and installing three new footers, piers, and girders under the sauna “according to Navajo County Span Chart.” 59. 316 Construction’s initial and revised estimates included a final item to “add new bearing member under existing deck to remove overspan condition,” including adding piers, a beam, and hangers and ties, which did not appear to correlate with any item on the CWO. 316 Construction’s initial estimate for this repair was $825.00; its revised estimate was $2,825.00. 60. Morins Construction’s estimate to remove metal roofing that was too damaged to reinstall and to install new metal roofing was $1,440.00. 61. 2nd Generation’s estimate to remove metal roofing that was too damaged to reinstall and to install new metal roofing was $2,800.00. 62. Inspector Sandoval testified that 316 Construction’s revised estimate and Morins Construction’s and 2nd Generation’s estimates appeared excessive and unjustified based on his experience. Inspector Sandoval testified that Morins Construction’s and 2nd Generation’s estimates included repairs that were not in the CWO. The Front Steps, the Rear Steps, and the Lattice around the Deck (CWO Item Nos. 11, 12, and 15) 63. 316 Construction’s initial estimate included a total price of $1,050.00 to remove and replace the front and back stairs, to add new deck railing where needed, and to add lattice skirting to the deck. 64. Inspector Sandoval testified that the materials for these repairs would cost between $400.00 and $500.00, and that 8-10 hours of labor would be required, at a cost of between $500.00 and $600.00. 65. 316 Construction’s revised estimate provided the same description as its initial estimate, but raised the price of the repair to $2,550.00. Inspector Sandoval testified that 316 Construction’s revised estimate was not supported and too high. 66. Morins Construction’s estimate was $857.75 to remove the front steps and repour the concrete pad on which the steps were constructed because the pad was not level. Morins Construction’s estimate was $677.00 to remove and replace approximately 35 square feet of floor joist, decking, stairs, and hand railing because the deck to which the rear stairs were attached was not level, causing the stairs not to be level. Morins Construction’s estimate was $757.50 to install linear feet of lattice approximately 48” tall around the decking, including framing support. 67. Inspector Sandoval testified that Morins Construction’s total price of $2,292.25 for CWO Item Nos. 11, 12, and 15 was “a little high,” but closer to an appropriate cost for repair than its estimates for repairing other items. 68. 2nd Generation’s estimate was $1,500.00 to remove the front staircase, including the concrete landing, and pour a new landing and rebuild the staircase. 2nd Generation’s estimate was $1,050.00 to remove 40 sq. ft. of floor joist and decking, including stairs and handrail, because otherwise the stairs would not meet up with the unlevel decking. 2nd Generation’s estimate also included a price of $950.00 to install 80’ of lattice around the porch to match existing lattice. 69. Inspector Sandoval testified that 2nd Generation’s total estimate of $3,500.00 for CWO Item Nos. 11, 12, and 15 was excessive and that there was nothing in the work description to justify the additional expense. Trim Out and Make Plumb Master Bath Closet and Repair and Complete Painting (CWO Item Nos. 13 and 14) 70. 316 Construction’s initial estimate included a total price of $950.00 to trim, caulk, and paint the master closet, and to sand, pre-treat, and repaint all areas where the paint was peeling. 71. Inspector Sandoval testified that he thought that this number was a good number. Inspector Sandoval testified that these repairs were labor-intensive, and that the materials would cost less than $100.00. Inspector Sandoval testified that the repairs to the master bath closet would probably take two hours’ labor and that the sanding and repainting of the exterior deck would take 18-20 hours’ labor. 72. 316 Construction’s revised estimate provided the same description as its initial estimate, but raised the price of the repairs to $1,950.00. 73. Morins Construction’s estimates were $340.00 to finish, trim out as necessary, caulk, and paint the master bathroom storage closet, and $1,800.00 to sand, reseal, and paint the peeling paint on the deck. 74. Second Generation’s estimates were $550.00 to finish, install necessary trim, caulk, and paint the master bathroom storage closet, and $2,500.00 to sand and paint the peeling paint on the deck. 75. Inspector Sandoval testified that 316 Construction’s revised estimate and Morins Construction’s and 2nd Generation’s estimates were excessive and not supported by the description of the work on the estimates. 76. Mr. Nelson testified that the deck was on all four sides of the house, and was 65’ long on two sides and 10’ to 20’ long on the other two sides. Mr. Nelson testified that the areas where paint was peeling were substantial. 77. Mr. Nelson testified that when Respondent built the master bath shower, it took out the garden tub and built the closet. Mr. Nelson testified that the closet door is 5” or 6” out of plumb from top to bottom, and that he does not believe the door can be repaired without taking out the shower stall. / / / / / / / / Re-level Guest Toilet (CWO Item No. 17) 78. 316 Construction’s initial estimate to re-level the guest bath toilet, including adding latex grouting to blend with the tile work, was $50.00. 79. 316 Construction’s revised estimate provided the same description as its initial estimate, but raised the price of the repairs to $450.00. 80. Morins Construction’s price to loosen the bolts, shim, and re-level the guest bath toilet was $45.00. 81. 2nd Generation’s price to shim, re-level, and re-caulk the toilet was $100.00. 82. No additional evidence was offered on this item. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[1] 2. The notice of the Fund payout hearing that the Registrar mailed to Respondent at its address of record was reasonable and it is deemed to have received notice of the hearing.[2] 3. Complainants bear the burden of proof and must establish the amount that they are entitled to recover from the Fund by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 4. The Registrar’s final decision in Case No. P09-0132 established that Respondent violated the charged statutes, and that its violations substantially injured Complainants.[5] 5. The legislature has imposed the following limitations on awards that the Registrar can make from the Fund: 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. . . .

A.R.S. § 32-1132(A). 6. Complainants did not establish that they made an additional $5,000.00 cash payment to Respondent. Therefore, any award from the Fund must be reduced by the $7,642.53 that Complainants still owed under the contract. 7. Most of the itemized descriptions in 316 Construction’s revised estimate, Morins Construction’s estimate, and 2nd Generation’s estimate do not explain why the price to repair the item was so much higher than 316 Construction’s initial estimate. Instead, the estimates appeared to be inflated solely to increase the amount of Complainants’ award from the Fund, without any relation to the reasonable costs of repair. 8. An exception is Morins Construction’s estimate to repair the front steps, the rear steps, and the lattice around the deck (CWO Item Nos. 11, 12, and 15). The additional description in Morins Construction’s estimate explained that because the concrete pad to which the front steps attached and the deck to which the rear steps attached were out of level, these items would need to be repaired to properly repair the steps. Complainants established that they are entitled to recover these additional costs of repair. 9. Similarly, all four estimates noted that the span of the deck under the sauna exceeded Navajo County code requirements. Morins Construction’s and 2nd Generation’s estimates included the cost of correcting the code violation in the cost of constructing framing on the deck to support the roof over the hot tub (CWO Item No. 9). Therefore, Complainants established that they are entitled to recover the cost of correcting the code violation; however, they have not established that they are entitled to recover any amount greater than 316 Construction’s initial low bid on this item. 10. Finally, Inspector Sandoval’s testimony supported a greater cost to replace the three exterior doors (CWO Item Nos. 1-3) to pay for a more difficult installation and a greater cost to sand and repaint the deck (CWO Item No. 14) due to its large size. Complainants did not establish that any of the much higher estimates were justified. 11. The calculation of the reasonable cost of repairs for the various items follows: |CWO Item Nos.|Source of Cost |Cost of | | | |Repair | |1, 2, and 3 |Inspector Sandoval |$ | | | |1,200.00[6] | |4(B) and 5 |316 Construction’s | 170.00| | |original estimate | | |6 and 7 |316 Construction’s | 500.00| | |original estimate | | |8 and 16 |316 Construction’s | 315.00| | |original estimate | | |9 and 10 + |316 Construction’s | | |code |original estimate |4,175.00[7] | |violation | | | |11, 12, and |Morins Construction’s | | |15 |estimate |2,292.25[8] | |13 and 14 |Inspector Sandoval | | | | |1,420.00[9] | |17 |Morins Construction’s | | | |estimate |45.00 | |TOTAL | |$10,117.25 |

12. The $7,642.53 that Complainants still owed to Respondent under the contract must be deducted from the cost of repairs. Therefore, Complainants established that they are entitled to an award from the Fund in the amount of $2,474.72. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order, the Registrar order the Residential Contractors’ Recovery Fund to pay $2,474.72 to Complainants Richard Nelson and Jill Buckley. It is further recommended that the Registrar under A.R.S. § 32- 1139(B) charge this amount in Case No. 2009-7100510 (formerly RF10-0510) to License No. ROC203948 previously issued to C A V Construction and Development, L.L.C. 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, August 1, 2011. /s/ Diane Mihalsky Administrative Law Judge Transmitted electronically to: William A. Mundell, Director Registrar of Contractors ----------------------- [1] See 32-1101 et seq. [2] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [3] See A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] See former A.R.S. § 32-1154(A)(7). This former statute was charged and 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.” [6] See Finding of Fact Nos. 31 and 32, supra. [7] See Finding of Fact Nos. 54 and 59, supra: $3,350.00 + $825.00 = $4,175.00. [8] See Finding of Fact No. 66, supra: $857.75 + $677.00 + 757.50 = $2,292.25. [9] See Finding of Fact Nos. 31 and 71, supra: $60/hour x 22 hours = $1,320.00; $1,320.00 + $100 for material = $1,420.00

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