ALJDEC decisions subject to certification as final

2010A-308475097-ROC · Registrar of Contractors · 2011-10-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

RECOVERY FUND ELIGIBILITY HEARING: September 15, 2011, at 1:00 p.m. APPEARANCES: Complainant Nilawan Trevino appeared telephonically on Complainants’ behalf; Respondent Rez Workz Construction, L.L.C. did not appear; the Arizona Registrar of Contractors was represented by Seth T. Hargraves, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT 1. In December 2006, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC228240, Class KB-1 for dual building contracting to Rez Workz Construction, L.L.C. (“Respondent”). Respondent’s address of record is P.O. Box 836, Parker, Arizona 85344-0836. 2. On August 12, 2010, the Registrar received a complaint against Respondent from James R. Trevino and Nilawan Trevino (“Complainants”) regarding Respondent’s failure to construct a 20’ x 22’ storage shed and to relocate a fence at Complainants’ property at 516 Kofa Avenue in Parker, Arizona. The complaint alleged that the date of the parties’ contract was September 5, 2008, and that Complainants paid $5,356.00 to Respondent. The Registrar designated the complaint as Case No. 2010-[number redacted]. 3. After Respondent failed to resolve the complaint, Complainants requested a hearing. On October 6, 2010, the Registrar issued a Citation and Complaint against Respondent, charging a violation of A.R.S. § 32-1154(A)(1).[1] 4. Respondent failed to file a timely written answer to the Citation and Complaint. On November 10, 2010, the Registrar issued a Decision and Order, finding that pursuant to A.R.S. § 32-1155(B), Respondent’s failure to timely answer the Citation and Complaint was deemed an admission of the charge contained therein. As a penalty for Respondent’s admitted statutory violation, the Registrar’s Decision and Order required Respondent within forty days to provide proof that it had rectified Complainants’ complaint to avoid having its license suspended. 5. On January 6, 2011, Complainants filed a claim in the amount of $5,356.00 to the Residential Contractors’ Recovery Fund (“the Fund”) to recover the monies paid to Respondent. 6. On January 12, 2011, the Registrar suspended Respondent’s license as a result of its failure to comply with the final Decision and Order. 7. On April 15, 2011, the Registrar issued a Notice to Claimant of Recovery Fund Ineligibility for the following reasons: Property was Not Class Three Residential Property Under A.R.S. § 42-12003 at the Time of Contract

Property was a Rental or Income Generating Property Classified as Class Four Property Under A.R.S. 42-12004 at the Time of Contract

For the year 2008, the residential property at issue was classified as a class four rental property. The Claimant executed the contract with contractor on September 8, 2008 and paid a deposit on that same date. Contractor was the tenant of Claimant and further compensation for the project was made in the form of credit towards contractor’s rent, per the contract terms between the parties. As such, Claimant is not eligible as a “person injured” as defined by § 32-1131.3.

8. Complainants requested a hearing on the Registrar’s determination that they were ineligible for a payout from the Fund. The Registrar referred the matter to the Office of Administrative Hearings (“the OAH”), an independent state agency, for an evidentiary hearing. 9. On August 3, 2011, the Registrar issued a Notice of Recovery Fund Eligibility/ Payout Hearing. The Registrar sent a copy of the Notice of Recovery Fund Eligibility/ Payout Hearing to Respondent at its address of record. 10. A recovery fund eligibility hearing was held on September 16, 2011, at 1:00 p.m. Complainant Nilawan Trevino testified telephonically on Complainants’ behalf. The Registrar submitted five exhibits and presented the testimony of Glen Hawkins, the Fund’s supervisor. 11. Respondent did not request to appear telephonically at the hearing and did not request that the hearing be continued. Although the hearing did not conclude until approximately 1:55 p.m., Respondent did not appear through an authorized member, employee, or attorney. Consequently, Respondent did not present any evidence. 12. The Registrar submitted the form that Complainants completed to make their claim to the Fund. Complainants checked the box marked “no” in response to the question on the form, “Do you live in the residence?” 13. Complainants submitted two documents to establish the amount of their payments to Respondent: (1) a copy of their personal check no. 4860, dated September 8, 2008, made payable to Respondent, in the amount of $2,678.00; and (2) a copy of an agreement dated October 20, 2008, signed by Respondent’s qualifying party, Alvin Ameelyenah, and Complainant, James R. Trevino, that the balance of $2,678.00 was credited to Respondent’s rent on the property at 516 Kofa Avenue. 14. The Registrar also submitted documentation from the La Paz County Assessor that the property at 516 Kofa Avenue was classified as residential rental since Complainants purchased the property in November 1995. 15. The Registrar also submitted Complainants’ request for hearing. In the request, Complainants stated that Respondent rented the property at 516 Kofa Avenue for use as an office and residence, and that after Respondent failed to pay rent on the property, Complainants agreed to accept Respondent’s construction of the shed and relocation of the fence in lieu of rent, but that Respondent still failed to perform the parties’ contract. 16. Mrs. Trevino argued that the property at 516 Kofa Avenue was residential and that Complainants were injured parties because Respondent had not done any work, despite receiving a payment and living in the house without paying rent. Mrs. Trevino testified that she did not understand why she and her husband were not protected, since they had hired someone who had a license. Mrs. Trevino testified that the Registrar’s decision that Complainants were not eligible to recover a payout from the Fund was not fair, but that she and her husband could not afford to hire an attorney. 17. Mrs. Trevino acknowledged that she did not live at the property on 516 Kofa Avenue in 2008, and that Complainants rented the property to tenants who were not related to Complainants as an income property. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[2] The Notice of Recovery Fund Eligibility/Payout Hearing that the Registrar mailed to Respondent at its address of record was reasonable. Respondent is deemed to have received notice of the hearing.[3] Complainants bear the burden of proof to establish their eligibility to recover 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] A.R.S. § 32-1131(3) defines a “person injured” who is eligible to recover from the Fund as “any owner of residential real property which is classified as class three property under section 42-12003 and which is actually occupied or intended to be occupied by the owner as a residence . . . .” Complainants as landlords and rental property owners were injured by Respondent’s failures to pay rent, to construct the shed, or to relocate the fence after Complainants compensated Respondent for this work and agreed to accept the work in lieu of rent. However, the issue in this case is not whether Complainants were injured, but whether they meet the requirements set forth in A.R.S. § 32-1131(3) for eligibility for a payout from the Fund. “In applying a statute, . . . its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”[6] Complainants did not present any evidence that they ever lived in or intended to live in the property at 516 Kofa Avenue, or that during the time they owned the property, it was ever classified as anything other than a Class 4 residential rental property under Title 42 for purposes of taxation.[7] Therefore, Complainants did not establish that they are eligible for an award from the Fund. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, Case No. 2010-[number redacted] be closed because Complainants James R. Trevino and Nilawan Trevino have not established that they are eligible for a payout from the Residential Contractors’ Recovery 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 Order will be 40 days from the date of that certification. Done this day, October 5, 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.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). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Mid Kansas Federal Savings and Loan Ass’n of Wichita v. Dynamic Development Corp., 167 Ariz. 122, 128, 804 P.2d 1310, 1316 (1991). [7] A.R.S. § 42-1204(A)(2) defines Class four property as follows: For purposes of taxation, class four is established consisting of . . . [r]eal and personal property and improvements to the property that are used solely as leased or rented property for residential purposes, that are not included in class one, two, three, six, seven or eight and that are valued at full cash value. A.R.S. § 42-12003 defines Class three property as follows: For purposes of taxation, class three is established consisting of real and personal property and improvements to the property that are used as the owner's primary residence or leased or rented to a relative of the owner, as provided by section 42- 12053, and used as the relative's primary residence, that are not otherwise included in class one, two, four, six, seven or eight and that are valued at full cash value.

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