ALJDEC decisions subject to certification as final

2010A-308473644-ROC · Registrar of Contractors · 2011-09-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

RECOVERY FUND ELIGIBILITY HEARING: September 6, 2011, at 8:00 a.m. APPEARANCES: Complainant Timothy C. Nelson appeared on his own behalf; Respondent Under Budget Cabinets Counter Installations, L.L.C. did not appear; the Arizona Registrar of Contractors appeared through Elizabeth Campbell, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In March 2005, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC204324, Class K-60 for dual finish carpentry to Under Budget Cabinets Counter Installations, L.L.C. (“Respondent”). Respondent’s address of record is 1256 West Wheatridge Drive, Tucson, Arizona, 85704- 2432. On or about June 8, 2010, the Registrar received a complaint from Timothy C. Nelson (“Complainant”) regarding Respondent’s failure to deliver or install cabinets at Complainant’s home at 638 West Sunlight Lane, Tucson, Arizona pursuant to the parties’ contract, despite Complainant’s payment of the $3,596.92 down payment. Complainant attached a copy of the parties’ contract that showed November 21, 2009, as the date that both parties signed it. The Registrar designated Complainant’s complaint as Case No. 2010-[number redacted]. Complainant subsequently requested a hearing on his complaint. On or about August 5, 2010, the Registrar issued a Citation and Complaint against Respondent, charging abandonment in violation of A.R.S. § 32-1154(A)(1).[1]

Respondent failed to file a timely written answer to the Citation and Complaint. On September 13, 2010, the Registrar issued a Decision and Order, finding that under A.R.S. § 32-1155(B), Respondent, by failing to file a timely written answer, was deemed to have admitted the charges in the Citation and Complaint. As a result of Respondent’s admitted violation, on October 13, 2010, the Registrar revoked Respondent’s license. On April 4, 2011, Complainant filed a claim to the Residential Contractors’ Recovery Fund (“the Fund”) under A.R.S. § 32-1132 for a return of the $3,596.92 down payment that he had paid to Respondent. As proof of his payment to Respondent, Complainant furnished a copy of his personal check no. 2104, made payable to Respondent, in the amount of $3,596.92, dated November 21, 2009. On April 26, 2011, the Registrar issued a Notice to Claimant of Recovery Fund Ineligibility for the following reason: Respondent’s License was in an Inactive Status, Expired, Cancelled, Revoked, Suspended or Not Issued at the Time of the Contract as Prohibited by A.R.S. § 32-1132(A).

A search of agency records showed that Under Budget Cabinets Counter Installations LLC, residential license number 204224 was suspended 8/28/09 through 11/25/09 for lack of bond. Complainant contracted with Under Budget Cabinets Counter Installations LLC on 11/21/09 and paid the contractor, by check #2104, on that same date. The contractor never started any work or delivered any materials. As such, the license was suspended at the time of the contract and A.R.S. § 32-1132(A) requires that Claimant’s claim be denied as ineligible.

Complainant requested a hearing on the Registrar’s determination of ineligibility. The Registrar referred the matter to the Office of Administrative Hearings (“the OAH”), an independent agency, for an evidentiary hearing on the issue of whether Complainant was eligible to recover damages in any amount from the Fund. On August 1, 2011, the Registrar issued a Notice of Recovery Fund Eligibility/ Payout Hearing, setting a hearing on September 6, 2011, at 8:00 a.m. The Registrar sent a copy of the notice of hearing to Respondent at its address of record. A hearing was held on September 6, 2011. Complainant testified. The Registrar presented the testimony of Doug Ulmer, the Fund’s claims reviewer assigned to Complainant’s claim, and submitted six exhibits. Respondent did not request to appear telephonically at the Recovery Fund Eligibility Hearing and did not request that the hearing be continued. Although the hearing did not conclude until approximately 35 minutes after its duly noticed time, Respondent did not appear through an authorized member, employee, or attorney, nor did Respondent contact the OAH. Hearing Evidence The Registrar submitted a printout of the electronic record of Respondent’s license history. The printout showed that Respondent’s license was suspended by operation of law for lack of bond between August 28, 2009, and November 25, 2009. Mr. Ulmer testified that the Registrar’s electronic record would have shown the administrative suspension of Respondent’s license, and that the information would have been accessible to the public on the dates of the suspension. Mr. Ulmer testified that the evidence showed that the date of Complainant’s contract with Respondent was November 21, 2009, the date that both parties signed the contract and Complainant issued check no. 2104 to Respondent for the down payment on the job. Mr. Ulmer testified that because Respondent’s license was suspended on the date of the parties’ contract, he determined that Complainant’s claim to the Fund was ineligible. Complainant testified that at time of the contract, Respondent had operated a storefront for six months or more and appeared to be conducting a legitimate and thriving business. Under the circumstances, most consumers would not check Respondent’s license and, as a consumer, Complainant had assumed that the license was valid. Complainant argued that it is unfair to let Respondent get away with thievery. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[2] 2. The Notice of Recovery Fund Eligibility/Payout Hearing that the Registrar mailed to Respondent at its address of record was reasonable, and Respondent is deemed to have received notice of the hearing.[3] 3. Complainant bears the burden of proof and must establish his eligibility for a payout from the Fund by a preponderance of the evidence.[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] 4. A.R.S. § 32-1132(A) provides as follows: An award from the fund shall not be available to persons injured by an act, representation, transaction or conduct of a residential contractor who was not licensed pursuant to this chapter or whose license was in an inactive status, expired, cancelled, revoked, suspended or not issued at the time of the contract.

The legislature’s use of the words, “shall not,” in a statute usually means a mandatory and absolute prohibition.[6] 5. Complainant did not dispute that the date of the parties’ contract was November 21, 2009, and that Respondent’s license was suspended on that date. Unfortunately, the plain language of A.R.S. § 32-1132(A) does not allow the Registrar to find that a homeowner is eligible for a payout from the Fund if the contractor’s license was suspended at the time of the contract, even though the contractor’s statutory violation damaged the homeowner. RECOMMENDED ORDER In view of the foregoing, it is recommended that the Registrar deny Complainant Timothy C. Nelson’s appeal of the Notice to Claimant of Recovery Fund Ineligibility and close his claim to the Fund in Case No. 2010-[number redacted]. 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, September 26, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] A.R.S. § 32-1154(A)(1) 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] See 32-1101 et seq. [3] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [4] See A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] See, e.g., Mountain States Tel. & Tel. Co. v. Arizona Corp. Comm'n, 160 Ariz. 350, 360, 773 P.2d 455, 465 (1989).

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