ALJDEC decisions subject to certification as final

2010A-308475073-ROC-rf · Registrar of Contractors · 2012-02-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

RECOVERY FUND PAYOUT HEARING: February 9, 2012, at 1:00 p.m. APPEARANCES: Complainant Lois Berkowitz appeared telephonically on her own behalf; Respondent Robert Taylor Fine Cabinetry, L.L.C. appeared through Robert T. McClure, its qualifying party and member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. In June 2008, the Arizona Registrar of Contractors (“the Registrar”) issued License No. B.241086-R for residential general contracting to Robert Taylor Fine Cabinetry, L.L.C. (“Respondent”). 2. On or about August 10, 2010, the Registrar received a complaint against Respondent from Lois Berkowitz (“Complainant”) alleging poor workmanship in Respondent’s fabrication and installation of kitchen cabinets at Complainant’s residence at 12211 North Cloud Ridge Drive, Oro Valley, Arizona (“the project”). The Registrar designated Complainant’s complaint as Case No. 2010-[number redacted]. 3. The Registrar referred Complainant’s complaint to the Office of Administrative Hearings (“the OAH”), an independent state agency, for an evidentiary hearing on the issue of whether Respondent violated charged contracting statutes in its performance of its contract. 4. A hearing was held in the OAH before Administrative Law Judge (“ALJ”) M. Douglas on June 10, 2011. Subsequently, ALJ Douglas issued a recommended decision to the Registrar, making the following findings: 1. Complainant paid Respondent a total of $13,000.00 on a $15,632.00 contract;[1] 2. Complainant did not unreasonably deny access to Respondent to perform repairs and to complete the project;[2] 3. Respondent failed to comply with two Corrective Work Orders (“CWOs”) without legal excuse and abandoned the project;[3] 4. Respondent’s construction work on the cabinets was “very poor” and did not comply with the Registrar’s and industry standards or plans and specifications;[4] and 5. Complainant was justified in paying another contractor the sum of $12,584.25 to correct and complete the cabinets.[5] 5. As a result of these and other factual findings, ALJ Douglas concluded that Respondent violated A.R.S. § 32-1154(A)(1),[6] (2),[7] (3), namely A.A.C. R4-9-108,[8] and (23).[9] Therefore, ALJ Douglas recommended that the Registrar suspend Respondent’s license until Respondent provided proof that it had paid restitution to Complainant in the amount of $12,584.25 and required Respondent to pay a civil penalty pursuant to A.R.S. § 32-1154(D). 6. On July 28, 2011, the Registrar issued a final Order substantially adopting ALJ Douglas’ recommended decision, but reducing the amount of restitution by the $2,632.00 that Complainant still owed under the parties’ contract, for a total of $9,952.25. 7. The Registrar’s July 28, 2011 Order informed the parties that the Order would become effective on September 6, 2011, that any request for rehearing must be filed on or before September 1, 2011, and that any appeal to the superior court must be filed and a stay order obtained on or before the effective date of the Order. 8. Because Respondent did not request a rehearing or appeal the Registrar’s July 28, 2011 Order, the Order became final. 9. On or about September 12, 2011, Complainant made a claim to the Residential Contractors’ Recovery Fund (“the Fund”) for the damages caused by Respondent’s proven violations of A.R.S. § 32-1154(A). 10. On October 18, 2011, the Registrar suspended Respondent’s license after it failed to pay restitution to Complainant. On October 18, 2011, the Registrar revoked Respondent’s license after it failed to pay the civil penalty. 11. On or about October 25, 2011, Complainant submitted evidence to the Registrar that she had recovered $5,000.00 from Respondent’s bond with Capitol Indemnity Corporation. 12. On or about November 7, 2011, the Registrar issued a Notice of Claim for Administrative Payout in the amount of $4,952.25. 13. On or about November 21, 2011, Respondent requested a hearing on the proposed payout. The Registrar referred the matter back to the OAH for an evidentiary hearing on the amount of the payout. 14. A Recovery Fund Payout Hearing was held on February 9, 2012. Complainant submitted three exhibits and testified on her own behalf. Respondent presented the testimony of three witnesses: (1) Frank Grochocki, the Registrar’s inspector who investigated and issued the CWOs in the underlying workmanship complaint; (2) Robert T. McClure, Respondent’s qualifying party and member; and (3) John L. Boldon, Mr. McClure’s partner, who helped Mr. McClure to fabricate the cabinets that Respondent started installing in Complainant’s kitchen. Hearing Evidence 15. Complainant submitted three bids from three licensed contractors to complete and repair her kitchen cabinets, including the low bid from Cushman Custom Cabinetry, L.L.C., License No. K-60.257456-D (“Cushman”). Complainant testified that she asked the contractors to submit bids on the same work that Respondent contracted to perform. Complainant testified that she hired Cushman for the job because she trusted its representatives and that she was well satisfied by Cushman’s completed work. 16. Complainant testified that she had received $5,000.00 from Respondent’s bond company. 17. Complainant testified that she owned and intended to live in the residence when Respondent contracted and started performing its contract to fabricate and install the kitchen cabinets. 18. Mr. McClure attempted to elicit testimony from Inspector Grochocki that Complainant did not allow Respondent reasonable access to perform repairs to comply with the two CWOs. The Administrative Law Judge informed the parties that the Registrar’s July 28, 2011 final Order had resolved the issue of access. 19. Mr. McClure and Mr. Boldon testified that because much of the cabinetry needed to complete Respondent’s contract was in Mr. Boldon’s shop, Cushman did not need to fabricate new cabinets. In addition, Mr. Boldon testified that he ordered special hinges that were needed for the project, but that were not included in the original specifications. 20. Complainant testified that all of the licensed contractors who submitted bids, including Cushman, wanted to be responsible only for their own workmanship and were not willing to use the cabinets that Respondent had fabricated for the project. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[10] Complainant bears the burden of proof to establish her eligibility for a payout and the amount of the payout from the Fund by a preponderance of the evidence.[11] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[12] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[13] 4. The Registrar’s final July 28, 2011 Order not only established that Respondent violated the charged statutes, but also established that Complainant did not deny reasonable access for Respondent to repair and complete the job, that Complainant was justified in hiring another contractor to repair and complete the job, and that Complainant was entitled to $9,952.25 in restitution for the damages that its statutory violations caused her to incur. Respondent needed to request a rehearing or appeal the order to superior court to contest these findings. Respondent did not contest the findings in the Registrar’s final July 28, 2011 Order on rehearing or appeal. Respondent cannot collaterally contest the Registrar’s final Order on workmanship in a Recovery Fund Payout hearing. 5. After the Registrar’s final July 28, 2011 Order, Complainant recovered $5,000.00 from Respondent’s bond. The amount of the payout from the Fund must be reduced by the amount of her recovery from another source.[14] 6. In accordance with A.R.S. § 32-1154(F), the Registrar may order payment from the Fund to Complainant, as long as Complainant constitutes a “person injured” under A.R.S. § 32-1131(3). Complainant established that she is a “person injured” by Respondent’s violations of A.R.S. § 32-1154(A).[15] Therefore, Complainant has established that she is entitled to an award from the Fund in the amount of $4,952.25. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order on Complainant Lois Berkowitz’s claim to the Residential Contractors’ Recovery Fund, the Registrar order the Fund to pay $4,952.25 to Complainant when such funds are 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, February 22, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See Recommended Decision at Finding of Fact Nos. 2 and 3. [2] See Recommended Decision at Finding of Fact No. 12. [3] See Recommended Decision at Finding of Fact Nos. 13 and 14. [4] See Recommended Decision at Finding of Fact No. 15 and 16. [5] See Recommended Decision at Finding of Fact Nos. 17, 18, 19, and 20. [6] 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.” [7] A.R.S. § 32-1154(A)(2) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of plans or specifications or any building codes of any state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.” [8] A.R.S. § 32-1154(A)(3) 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.” [9] A.R.S. § 32-1154(A)(23) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.” [10] See 32-1101 et seq. [11] 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). [12] See A.A.C. R2-19-119(B)(2). [13] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [14] See A.R.S. § 32-1132(A) (“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”). [15] A.R.S. § 32-1131(3) defines “person injured” as “any owner of residential real property . . . which is actually occupied or intended to be occupied by the owner as a residence . . . who [is] damaged by the failure of a residential contractor or a dual licensed contractor to adequately build or improve a residential structure or appurtenance on that real property.”

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

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