ALJDEC decisions subject to certification as final

2010A-308475035-ROC-rf · Registrar of Contractors · 2012-08-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

RECOVERY FUND PAYOUT HEARING: July 25, 2012, at 1:00 p.m. APPEARANCES: Complainant Doug D. Villa appeared on his own and Faith L. Rowland’s behalf; Respondent S and S Cactus and Landscaping LLC appeared through Joshua George Shaw, its qualifying party and member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure The Arizona Registrar of Contractors (“the Registrar”) issued License No. K- 21.247108-D to S and S Cactus and Landscaping LLC (“Respondent”). Doug D. Villa (“Complainant”) filed a complaint with the Registrar regarding Respondent’s poor workmanship in installing a drip irrigation system and hose bib at Complainant’s home at 15823 West Peakview Road, Surprise, Arizona. According to the complaint, Complainant had paid Respondent $1,100.00 on a $1,000.00 verbal contract, but still owed Respondent $150.00.[1] The Registrar issued a Citation and Complaint against Respondent charging A.R.S. § 32-1154(A)(2), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32-1154(A)(9), A.R.S. § 32-1154(A)(17), and A.R.S. § 32- 1154(A)(23). Complainant’s complaint proceeded to an evidentiary hearing before Administrative Law Judge (“ALJ”) M. Douglas of the Office of Administrative Hearings (“the OAH”). ALJ Douglas concluded that Respondent had violated all of the charged statutes in its installation of and failure to repair the drip irrigation system and hose bib.[2] ALJ Douglas also made the following Findings of Fact: 3. Credible testimony and evidence established that during the course of construction, the parties became embroiled in a monetary dispute, and the Respondent stopped work on the construction project and declined to perform further construction work until the financial dispute was resolved to the Respondent’s satisfaction.

4. Credible testimony and evidence established that the new in-ground irrigation system leaked and was incapable of fulfilling its intended function of providing water to the Complainant’s plants.

5. Credible testimony and evidence established that the Complainant repeatedly notified the Respondent of the problems with the new in-ground irrigation system and the Respondent failed to resolve the problems with the new irrigation system. . . . .

10. Credible testimony and evidence established that the Respondent has continued to decline to return to the Complainant’s residence and comply with the terms of the Corrective Work Order despite the fact that the Respondent’s License has been restored to a valid status.

11. Credible testimony and evidence established that the Respondent’s workmanship on the Complainant’s in-ground irrigation system fails to comply with applicable workmanship and industry standards and that the in-ground irrigation system requires proper repair or replacement.

ALJ Douglas recommended that the Registrar require Respondent to comply with the Corrective Work Order to avoid suspension of its license. ALJ Douglas also recommended that the Registrar require Respondent to pay a $500.00 civil penalty under A.R.S. § 32-1154(D). On April 28, 2011, the Registrar issued an Order subsequently substantially adopting ALJ Douglas’s decision. According to the Registrar’s public website, on October 5, 2011, the Registrar suspended Respondent’s license after it failed to comply with the Registrar’s April 28, 2011 Order and on January 5, 2012, revoked Respondent’s license after it failed to pay the civil penalty. On or about April 4, 2012, Complainant filed a claim to the Residential Contractors’ Recovery Fund (“the Fund”) to recover the cost to repair the drip irrigation system and hose bib. Complainant Faith L. Rowland was added to the complaint as a party complainant.[3] Complainants provided with their claim evidence that they had paid a total of $1,100.00 to Respondent. Complainants also submitted bids to repair the drip irrigation system and hose bib from three contractors whose licenses were current, in the amounts of $2,816.95, $2,954.37, and $4,350.29. On or about April 23, 2012, the Registrar issued a Notice of Claim for Administrative Payout, informing the parties that “[a]fter a review of the claim and all supporting documentation, the Fund has determined that Complainants are to be awarded $2,816.95 in the form of a payment issued by the Fund.” After Respondent requested a hearing on the amount of the payout, the Registrar referred Complainants’ claim to the Fund to the OAH for an evidentiary hearing. A hearing was held before the undersigned ALJ. Complainant Doug Villa testified on his own behalf and submitted two exhibits. Respondent presented the testimony of its qualifying party and member, Joshua Shaw, and his wife, Lisa Shaw. Hearing Evidence Mrs. Shaw testified that Complainant Ms. Rowland drove the school bus that Mrs. Shaw’s son rode and that the two women were friends at the time of the parties’ verbal contract. Mrs. Shaw testified that Ms. Rowland desired to have a drip irrigation system installed on their property, but could only afford to pay $1,000.00. Mrs. Shaw testified that the parties made a verbal contract for Respondent to install the drip irrigation system and hose bib at a cost that would be determined based on Respondent’s time and materials. Mrs. Shaw testified that any other contractor would have charged approximately $2,500.00 for the work that Respondent performed under the verbal contract. Mrs. Shaw testified that Complainants were not able to pay the last $150.00 that was due under the parties’ verbal contract. Mrs. Shaw testified that Ms. Rowland felt bad because Complainants were unable to pay the full amount that they knew was owed on the verbal contract and pointed out that the last payment that Complainants made to Respondent showed the word, “Sorry,” in the in the memorandum line on the lower left side of Ms. Rowland’s check. Mr. Villa denied that Complainants owed Respondent anything under their verbal contract. Mr. and Mrs. Shaw disputed that Respondent’s work on the drip irrigation system required correction, and testified that only the hose bib was deficient. Mr. Villa pointed out that the work described in the bids that Complainants submitted included removal of the drip irrigation system that Respondent had installed using inappropriate materials and reinstallation a new system that met the Registrar’s and industry standards for materials and workmanship. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[4] Complainants bear the burden of proof to establish the amount of their compensable damages by a preponderance of the evidence.[5] Respondent bears the burden to establish affirmative defenses and offsets by the same evidentiary standard.[6] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[7] The Registrar’s Order in the underlying workmanship complaint established that Respondent violated the charged statutes. The Order rejected Respondent’s defense that Complainants’ failure to pay Respondent constituted a defense to the charged violations. With respect to the calculation of Complainants’ damages, A.R.S. § 32- 1132(A) provides that “[a]n 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.” After the Registrar has disciplined a contractor’s license for poor workmanship, the contractor’s qualifying party’s testimony on the cost of necessary repairs is not entitled to be given much weight. Therefore, Complainants’ bids from contractors who licenses were current established that proper repair of the drip irrigation system and hose bib will cost a minimum of $2,816.95. Mrs. Shaw credibly testified that Complainants still owed Respondent $150.00 under the parties’ verbal time-and-materials contract. Complainant Mr. Villa’s initial complaint acknowledged that he still owed Respondent $150.00. Therefore, $150.00 must be deducted from the cost to repair the drip irrigation system and hose bib, for a total payout of $2,666.95. / / / / RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s Order in this matter, the Registrar order the Residential Contractors’ Recovery Fund to pay $2,666.95 to Complainants Douglas D. Villa and Faith L. Rowland when such funds become available. 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 14, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The evidence presented at the Recovery Fund Payout Hearing established that the parties entered into a time-and-materials contract that Respondent initially estimated would cost Complainants about $1,000.00, rather than a lump-sum contract in a fully liquidated amount.

[2] See ALJ Douglas’s decision at Conclusion of Law No. 4. ALJ Douglas did not state the specific factual basis of his conclusion that Respondent violated A.R.S. § 32-1154(A)(9) or make any finding of the amount that Respondent should have charged to complete the project to avoid a violation of A.R.S. § 32-1154(A)(9) under the parties’ time-and-materials contract. Complainants did not present any evidence to establish these facts at the Recovery Fund Payout Hearing. [3] The printout from the Maricopa County Assessor that Complainant filed with his claim showed that Faith L. Rowland was a co-owner of the property where Respondent performed the work. The checks that Complainant filed showed the printed names, “Doug D. Villa” and “Faith L. Villa.” “Faith Villa” signed one of the checks. It appears that Complainants may have wed after they purchased the property and that Ms. Rowland may have changed her name. For consistency, the Administrative Law Judge will refer to Complainants by the names on the Registrar’s Notice of Claim for Administrative Payout and Notice of Recovery Fund Eligibility/Payout Hearing. [4] See A.R.S. § 32-1131 to A.R.S. § 32-1140. [5] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [6] See A.A.C. R2-19-119(B)(2). [7] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

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