ALJDEC decisions subject to certification as final

2010A-308474905-ROC · Registrar of Contractors · 2012-02-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 25, 2012

APPEARANCES: Complainant Bruce Staggs appeared by telephone on his own behalf;[1] Respondent appeared by telephone through Mark Chaney,[2] Managing Member and Qualifying Party; the Residential Contractors’ Recovery Fund intervened in this matter and was represented by Assistant Attorney General Elizabeth Campbell, accompanied by Claim Reviewer Doug Ulmer.

WITNESSES: Doug Ulmer, ROC Claim Reviewer Mark Chaney, Respondent Bruce Staggs, Complainant John Jestila, former licensed contractor

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainants seek a payout from the Residential Contractors’ Recovery Fund (“Fund”) for damages caused by Respondent.[3] The Fund appeared through Assistant Attorney General Elizabeth Campbell and challenged Complainants’ eligibility for payout from the Fund based on a finding that Respondent’s license was suspended at the time of the contract with Complainant. The only issue for which the parties were given notice and for which the hearing was held is Complainants’ eligibility. That is the only issue addressed herein. Complainant Bruce Staggs (hereinafter “Complainant”) alleges that he entered into a verbal contract with Respondent in November 2008 while Respondent’s license was active. The Fund alleges that no contract existed until April 2009, after Respondent’s license had been suspended. This tribunal entered the claim file received from the Registrar of Contractors into the record, as well as marked and admitted Exhibits 1 through 5, submitted by the Fund. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding Complainant to be ineligible for recovery from the Fund because Respondent’s license was suspended at the time of contract. FINDINGS OF FACT 1. Respondent was the holder of License No. B.160282-R, a general residential contracting license issued by the Registrar of Contractors (“ROC”). The license authorized Respondent to operate as a general contractor for residential projects. Mark Chaney was the Qualifying Party. The license has been revoked. 2. According to ROC records, Respondent’s license was suspended for non-renewal from December 1, 2008 through November 30, 2009, at which time it expired. 3. Respondent did poor work and failed to complete a job that Respondent had been hired to do by Complainant, who was acting as an owner/builder. The job was for installation of cabinets in various rooms in Complainant's home. There is no written contract for the work. Complainant filed a complaint with the ROC and Respondent defaulted and was found at fault. Complainant then made a claim to the Fund for recovery of his damages. The ROC reviewed the claim and determined that Complainant had entered into a contract with Respondent in April 2009, while Respondent’s license was suspended. The ROC determined that Complainant was, therefore, not eligible for recovery from the Fund. Complainant requested a hearing. 4. At hearing, Claim Reviewer Doug Ulmer testified that the date of the contract between Complainant and Respondent was determined by the Fund to be April 17, 2009. The three bases for that determination were: (a) The complaint form from the underlying complaint against Respondent, filed on August 2, 2010, in which Complainant wrote that the date of contract was “4/17/09” and that the date the last work was performed was “7/29/09.” Complainant signed the form under penalty of perjury with a statement that the information provided was true.[4] (b) The claim form filed with the Fund, which contains the same information as that above and also was signed by Complainant under penalty of perjury.[5] (c) A letter dated July 1, 2011, from Complainant to the ROC. The letter is a cover letter accompanying Complainant’s Recovery Fund claim form. In the letter, Complainant explains that he had a verbal agreement with Respondent that he documented in an e-mail attached to the letter. That e-mail is dated April 17, 2009, and states that, at the time of the e-mail, Complainant was talking to other contractors about the cabinet work and that none of them could beat Respondent’s price. It then lists the scope of the work and the price for it. It ends with this statement from Complainant to Respondent: “Mark, I trust that I have gotten everything down that we discussed. If I am in error with anything please let me know.”[6]

5. Complainant testified that he had a verbal agreement with Respondent to do the cabinet work in November 2008, before the license suspension took effect. The record contains drawings of cabinet layout purportedly made by Respondent. Even though Respondent’s handwritten name and address appear on the first page of the drawings, the drawings are not dated or even expressly labeled as being made by Respondent. Complainant and Respondent testified that the drawings were made by Respondent in November 2008 as part of a bid for Complainant’s cabinet work. John Jestila, a former Arizona licensed general contractor who was advising Complainant in November 2008,[7] also testified that Respondent’s drawings had been done in November 2008. Those drawings are the only written evidence from November 2008 that relate to whether there was a verbal agreement at that time. The drawings contain nothing in themselves that corroborate a verbal agreement at the time. They do not contain any information as to the type of materials that were to be used, the price to be paid, or the time the work would start and be completed. They could have served as plans for an agreement in April 2009 just as well as in November 2008. 6. Respondent testified that he had a verbal agreement with Complainant for the cabinet work in November 2008. When asked what the terms were, he referred to the terms stated in the April 17, 2009 e-mail. He admitted that there was no written documentation of those terms before April 17, 2009. 7. Several factors diminish the weight of Complainant’s testimony and that of his witnesses that he had a verbal agreement with Respondent in November 2008. First, all Complainant’s witnesses testified by telephone and could not be seen by the Administrative Law Judge while they testified. This makes it more difficult to assess credibility. Second, John Jestila testified that he has been Complainant’s friend for 20 years. That close connection diminishes his objectivity. In addition, most of the direct testimony from Respondent, and much of it from John Jestila, was given through leading questions, which diminishes the weight of the testimony.[8] 8. John Jestila also testified that Complainant verbally informed him in late November 2008 that Complainant had entered into a verbal contract with Respondent for the cabinets. How it is that Mr. Jestila remembers a statement made more than three years prior to his testimony is not apparent from the record. Such a statement would not have carried much significance for him at the time, and there is no written documentation of it to refresh his memory. It is more likely that he is sympathetically corroborating what Complainant believes to have happened. 9. Finally, the circumstances in which the alleged verbal agreement in November 2008 came to light indicate a need for caution in assessing the weight of the testimony, especially when, like here, there is no contemporaneous corroborating evidence of a verbal contract in November 2008. Prior to issuance of the notice of ineligibility, Complainant had alleged a verbal agreement in April 2009. Complainant did not allege a verbal agreement with Respondent in November 2008 until after he was notified that Respondent’s license was not active after November 30, 2008. 10. Complainant’s evidence is not of sufficient strength to show that there was an enforceable verbal contract between the parties in November 2008 rather than April 2009. Instead, the evidence supports the Fund’s conclusion that the verbal agreement between the parties was made in April 2009. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person who brings the action.[9] Further, the standard of proof at hearing is by preponderance of the evidence.[10] Therefore, in this matter Complainant bears the burden of showing, by a preponderance of the evidence, that he is eligible for recovery from the Fund.[11] Complainant has not met that burden. 2. A.R.S. § 32-1132 (A) provides, in part, that “[a]n 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.”[12] Thus, persons injured by a contractor with a suspended license are not eligible for recovery from the Fund.[13] 3. The evidence fails to show by a preponderance of evidence that there was an enforceable verbal contract between Complainant and Respondent for the cabinet work in November 2008. There is no reliable evidence of the terms of the alleged verbal agreement, including terms for payment or start or completion dates of the work. The testimony from Complainant’s witnesses does not carry sufficient weight or reliability to rise to the level of a preponderance of evidence. In addition, it is apparent from the April 17, 2009 e-mail that Complainant was soliciting offers for the work from other contractors in April 2009 and that he meant the e-mail to Respondent as a finalization of an offer they had been discussing and that he was accepting. There is no reliable evidence of an acceptance of the offer before the e-mail. 4. Because Respondent’s license was suspended at the time of the contract, Complainant is not eligible for recovery from the Fund. RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors sustain its finding that Bruce and Bonnie Staggs are 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, February 13, 2012.

/s/ Eric A. Bryant Administrative Law Judge

Originally transmitted electronically on February 14, 2012, to:

William A. Mundell, Director Registrar of Contractors

Resubmitted electronically with corrections on March 19, 2012 ----------------------- [1] Complainant Bonnie Staggs did not attend the hearing. [2] Mark Chaney voluntarily left the hearing (by leaving the phone) about halfway through it after he testified. During his testimony, there had been trouble with his telephone connection and, after he testified, he stated that he needed to “get back to work.” [3] Respondent is an entity that acted, for purposes of this matter, exclusively through Mark Chaney. Therefore, “Respondent” will refer to both Mark Chaney and the entity. [4] Exhibit 3. [5] Exhibit 1. [6] Exhibit 2. [7] John Jestila was the Qualifying Party for license B.097581-R of Jestila Mamula Ltd., dba J Nickolas Co. That license was suspended for non-renewal from May 1, 2008 through April 30, 2009, at which time it expired. [8] This tribunal does not give much weight to direct examination testimony that mostly consists of “yes” or “no” answers on important areas of inquiry. [9] 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). [10] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). [11] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [12] Sixth sentence. [13] They may have other avenues of redress.

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