ALJDEC decisions subject to certification as final

2010A-308476786-ROC-rf · Registrar of Contractors · 2014-05-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 17, 2014 APPEARANCES: Daniel D. Oldfield and Jo D. Oldfield were represented by their attorney, Michael Johns, Esq. Robert Martin Shake appeared personally. The Arizona Registrar of Contractors was represented by Assistant Attorney General Seth T. Hargraves. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ FINDINGS OF FACT 1. The Arizona Registrar of Contractors (“Registrar”) is the administrator of the Residential Contractors Recovery Fund (“Fund”) from which a person injured by a licensed residential contractor in violation of the State’s contracting laws and/or regulations may be awarded actual damages of not more than $30,000.00. 2. Pursuant to the Notice of Recovery Fund Eligibility/Payout Hearing in Case No. 2010-[number redacted] issued by the Registrar, the above-captioned matter came on for hearing before the Office of Administrative Hearings, an independent agency, “to determine if an award and payment from the [Fund] pursuant to A.R.S. § 32-1154(F) [to Daniel D. Oldfield to Jo D. Oldfield] is justified by the evidence.” 3. On January 27, 2014, the Registrar issued a Notice and Order of Denial of Recovery Fund Claim in Case No. 2010-[number redacted] for the Fund Claim submitted by Complainants.[1] Complainants timely requested an administrative hearing regarding the Registrar’s denial of their claim for an administrative payout from the Fund. 4. At the hearing, Daniel D. Oldfield and Jo D. Oldfield (“Complainants”) presented their case through the testimony of Mr. Oldfield. 5. Robert Martin Shake, doing business as A Drilling Company (“Respondent”), presented his case through his own testimony. 6. The Registrar presented its case through the testimony of James Barbour, a claims adjuster for the Fund, and eleven exhibits consisting of the following: Exhibit 1: Fund Claim form with attachments submitted on behalf of Complainants; Exhibit 2: Documentation from the underlying disciplinary case in Complaint No. 2010-[number redacted] filed by Complainants against Respondent; Exhibit 3: Acknowledgement of receipt of Fund Claim and request for documentation; Exhibit 4: Response to document request letter and request to reopen Fund Claim; Exhibit 5: Acknowledgement of receipt of request to reopen Fund Claim; Exhibit 6: June 26, 2013 document request letter; Exhibit 7: Response to June 26, 2013 document request letter; Exhibit 8: Notice of claim closure; Exhibit 9: Estimates and request to reopen Fund Claim; Exhibit 10: Acknowledgement of receipt of request to reopen Fund Claim; and Exhibit 11: Notice and Order of Denial of Recovery Fund Claim. 7. On or about July 17, 2008, Complainants entered into an oral contract with Respondent for the drilling of two water wells and the installation of the casings and pumps for the two wells at Complainants’ residence located at 5288 N. Lead Stravenue, Bisbee, Arizona. 8. Respondent drilled the two water wells and installed casing. However, Respondent did not “develop” the wells to make them produce water. Complainants had an existing operational water well on their property so the two wells drilled by Respondent were capped for later use. 9. On or about October 25, 2010, Complainants filed a Complaint Form alleging statutory and regulatory violations on the project by Respondent.[2] The Registrar designated Complainant’s complaint as Complaint No. 2010-[number redacted]. 10. The original contract price for the drilling of the wells and the installation of the casings and pumps[3] was stated to be $7,800.00 according to the statement made by Complainants in their complaint submitted to the Registrar.[4] In Section 3. Contract and Worksite Information of the Complaint Form, the contract amount was inserted as follows: “$7,800.00*” On page two of the Complaint Form, the following handwritten notation appears in the bottom half of the page: “*Contractor was trading shop time to repair his truck for drilling of the two wells.” Ms. Oldfield signed the Complaint Form below the following language: “Under penalty of law, I verify that the information given in this complaint is true to the best of my knowledge.” (Emphasis in the original). 11. The evidence of record established that Mile High Enterprises, L.L.C.,[5] a business owned by Complainants, made a single payment by its business check in the amount of $1,700.00 to Respondent. The remaining balance of $6,100.00 of the contract price stated by Ms. Oldfield in the Complaint Form was allegedly to be consideration of bartered services of Complainants permitting Respondent to use their shop and tools so that Respondent could perform maintenance on his drilling equipment. 12. The Registrar issued a citation to Respondent, ultimately resulting in the revocation of the Respondent’s license on March 8, 2012, as direct result of Complaint No. 2010-[number redacted].[6] Respondent was determined to have violated the provisions of A.R.S. § 32-1154(A)(1), A.R.S. § 32- 1154(A)(2), A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1158, A.R.S. § 32-1154(A)(23), and A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 13. On January 18, 2013, Complainants Fund Claim was filed with the Registrar.[7] In Section C.3. of the Fund Claim, Complainants stated that the contract amount was $29,500.00. In Section C.4. of the Fund Claim, Complainants further stated that the total paid by them to Respondent was $29,000.00. In Section F. of the Fund Claim, Complainants itemized the sum of $29,000.00 as follows: (i) Payment of $1,700.00 by check to Respondent on 7/17/08; (ii) Shop time in the amount of $6,000.00 to Respondent on 7/25/08; (ii) Shop time in the amount of $7,800.00 to Respondent on 8/25/08; (iii) Shop time in the amount of $8,000.00 on 10/1/08; and (iv) Shop time in the amount of $6,000.00 on 11/15/08. 14. In Section E.1. of the Fund Claim, Complainants contended that the lowest bid to repair and/or complete Respondent’s deficient workmanship totaled $31,521.44.[8] In Section E.2. of the Fund Claim, Complainants stated that the total amount to complete and or repair the project was the sum of $15,760.72.[9] In Section F. of the Fund Claim, Complainants itemized the sum of $15,760.72 as follows: (i) On May 23, 2011, a check in the amount of $150.00 to the Arizona Department of Water Resources; (ii) On June 14, 2011, a check in the amount of $1,0513.81 to Allen’s Well Service; (iii) On June 14, 2011, a check in the amount of $3,200.00 to D & W Well Service; and (iv) On June 14, 2011, a check in the amount of $1,896.71.[10] 15. At the end of the Fund Claim, Tom Creech, as power of attorney for Complainants, signed their names after the following verification: “I declare, under penalty of perjury, that I have read the Claim Form Instructions and that all information provided herein is true of my own knowledge. I further certify that all documents attached to this Claim are true and accurate copies of the originals.” (Emphasis in the original). 16. On January 24, 2013, Eric Ulinger, the Registrar’s Recovery Fund Supervisor, informed Complainants that their claim could not be processed until they submitted a copy of the Cochise County parcel information for the tax year 2008 to prove that their property was a class three property at the time of the contract and a copy of the property deed for the job-site address from the Cochise County Recorder. By letter dated May 15, 2013, and received by the Registrar on May 20, 2013, Ms. Oldfield submitted the requested information. 17. By letter dated May 28, 2013, Amber Plesinger, an administrative assistant for the Fund, informed Complainants that the Registrar had received their request to reopen the Fund Claim. Ms. Plesinger advised Complainants that Complainants had to establish the following: (i) That Complainants were persons injured, pursuant to A.R.S. § 32- 1131.3; (ii) That Respondent had been disciplined as a result of an Order to remedy, pursuant to A.R.S. § 32-1154(F); (iii) Compliance with the two-year jurisdiction of the Registrar on contracting complaints, as required by A.R.S. § 32-1155(A); and (iv) That Complainants had suffered “actual damages” as defined by A.R.S. § 32- 1132(A). 18. By letter dated June 26, 2013, Mr. Barbour advised Mr. Oldfield that Complainants’ Fund Claim lacked three itemized bids to complete the two wells drilled by Respondent. Mr. Barbour requested that the bids be submitted to the Registrar by July 10, 2012. 19. By letter dated July 10, 2013, Ms. Oldfield requested an extension of the deadline date to submit the bids because Complainants were still trying to obtain bids to either repair the wells drilled by Respondent or estimates to drill two new wells. 20. By letter dated August 9, 2013, Marc D’Amore, the Registrar’s Fund Administrator, informed Complainants that their submission of documentation was incomplete preventing the Fund from determining if Complainants had suffered actual damages pursuant to A.R.S. § 32-1132 et seq. Mr. D’Amore noted that the Fund had given Complainants over two months to submit the required documentation but Complainants had failed to comply. 21. On September 18, 2013, Ms. Oldfield submitted the following documentation to Mr. Barbour[11]: (i) A written request from Ms. Oldfield to reopen Complainants’ Fund Claim; (ii) A letter dated August 21, 2013, from Brian Allen, a driller at Allen’s Well Service giving an analysis of Respondent’s two wells; (iii) A letter dated September 13, 2013, from Matthew Tanner of Tanner Well Service, LLC, giving an analysis of Respondent’s two wells; (iv) A handwritten receipt of a payment in the amount of $10,513.81 by check number 1583 on June 7, 2011, to “Allen’s”; (v) An undated invoice from D & M Well Service in the total amount of $5,096.71; (vi) A copy of the previous invoice with an undated handwritten notation of payments in the amounts of $3,200.00 by credit card and $1,896.71 by check number 1607; (vii) An invoice dated March 21, 2011 from D & M Well Service in the amount of $201.42; (viii) A check in the amount of $201.42 paid by Mile High Enterprises, L.L.C. for the previous invoice; (ix) A copy of a Mile High Enterprises, L.L.C., check dated June 10, 2011 in the amount of $10,513.81 payable to Allen’s Well Service; (x) A bank statement for Mile High Enterprises, L.L.C.’s account showing the previous payment to Allen’s Well Service; and (xi) A copy of a check dated June 14, 2011 drawn on Complainants’ personal checking account payable to D & M Well Services in the amount of $3,200.00. 22. Since September 18, 2013, the Fund has not received any additional documentation from Complainants in support of their Fund Claim. 23. By letter dated September 19, 2013, Debra Skow, an administrative assistant for the Fund, acknowledged receipt of Complainants’ request to reopen their Fund Claim. Ms. Skow informed Complainants that since they had provided the documentation requested by the Fund’s August 9, 2013 letter that Mr. Barbour would review the information and contact Complainants if he needed additional information. 24. On January 27, 2014, Mr. D’Amore issued the Fund’s Notice and Order of Denial of Recovery Fund Claim. The Fund found that while Complainants “appear to meet all the eligibility criteria they have not provided evidence that they as individual Complainants suffered any ‘actual damages’.”[12] 25. At the hearing, Mr. Oldfield testified that the subject property has been residential property for 26 years and is classified as residential property. 26. Mr. Oldfield further testified that Respondent was properly licensed in good standing at the time of the verbal contract. 27. Mr. Oldfield stated that Complainants had a verbal barter agreement that Respondent could use Complainants’ personal shop to maintain his equipment in exchange for Respondent drilling two wells. Mr. Oldfield further stated that no economic value had been agreed upon for drilling the wells. Mr. Oldfield testified that there was no way to estimate the value of Respondent’s use of his shop. Mr. Oldfield testified that Respondent used Complainants’ shop for two weeks. Mr. Oldfield stated that the itemized list of payments to Respondent for the shop time values were a best estimate. However, Mr. Oldfield did not present any credible evidence as to how those values were established. 28. Mr. Oldfield acknowledged that funds were used from Mile High Enterprises, L.L.C., for the wells on Complainants’ residential property. 29. Mr. Shake testified that he only received payment in the amount of $1,700.00 for his work in drilling the two wells. The evidence of record established that Mile High Enterprises, L.L.C. paid that amount to Respondent and that Complainants did not pay any money to Respondent. Mr. Shake agreed that the parties never agreed on a price for his drilling services or the use of Complainants’ shop. However, Mr. Shake testified that he worked on his drilling equipment outside of Complainants’ barn using his own tools. 30. Mr. Shake testified that he offered to make necessary repairs to the wells but that Complainants refused to allow him to do so. Instead, Complainants had a third well drilled which they contend establishes the value of their actual damages. 31. Complainants had Allen’s Well Service drill a new well for $10,513.81. The payment for the third well to Allen’s Well Service was by a check in the amount of $10,513.81 from Mile High Enterprises, L.L.C., not from the Complainants. 32. Complainants then contracted with D & W Well Services for the installation of a well pump and completion of the well for $5,096.71, of which $3,200.00 was paid by check from Complainants’ checking account and the balance of $1,896.71 was paid by a check from Mile High Enterprises, L.L.C. 33. Mr. Barbour testified that he determined that Complainants were eligible for the Fund as injured persons, but stated that the next step in the analysis is establishing whether or not Complainants suffered compensable damages. 34. Mr. Barbour stated that Complainants’ Fund Claim was denied based upon an evaluation of damages. Complainants submitted insufficient documentation to the Fund. CONCLUSIONS OF LAW 1. Pursuant to A.R.S. § 32-1132(A), the Registrar is the administrator of the Fund that may award actual damages up to $30,000.00 to any person injured by the acts or omissions of a licensed residential contractor. 2. Pursuant to A.A.C. R2-19-119(B), Complainants have the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. See A.A.C. R2-19-119(A). 3. The evidence of record established that Complainants are “[p]erson[s] injured” as defined by A.R.S. § 32-1131(3). 4. The evidence of record established that Respondent was a “[r]esidential contractor” on the subject project, as defined by A.R.S. § 32-1131(4). 5. The evidence of record established that Complainants were injured by Respondent’s violations of A.R.S. § 32-1154(A)(1), A.R.S. § 32- 1154(A)(2), A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1158, A.R.S. § 32-1154(A)(23), and A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. 6. The evidence of record supports the conclusion that Complainants failed to sustain their burden of establishing that they suffered actual damages caused by Respondent as required by A.R.S. §32-1132(A) that provides as follows: “[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.” Complainants failed to allow Respondent to repair the two wells, albeit belatedly in Complainants’ eyes. However, Complainants failed to obtain bids to repair the wells and, instead, elected to have new wells drilled. 7. The evidence of record supports the conclusion that Complainants failed to establish actual damages because the parties had no agreement on the value of the two wells to be drilled or the use of Complainants’ shop. Complainants failed to present any credible, measurable method of calculating the monetary value of Respondent’s use of the shop. 8. The Administrative Law Judge concludes that Mile High Enterprises, L.L.C., is not a “person injured” pursuant to the provisions of A.R.S. § 32-1131(3). That business is a separate legal entity from Complainants. Mile High Enterprises, L.L.C., is not the owner of Complainants’ residential property nor could it actually occupy the property as a residence. Therefore, Mile High Enterprises, L.L.C., cannot access the Fund for any money paid to Respondent on the project. RECOMMENDED ORDER Based on the foregoing, the Registrar’s Notice and Order of Denial of Recovery Fund Claim in Case No. 2010-[number redacted] is upheld.

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 shall be forty (40) days from the date of the certification.

Done this day, May 7, 2014.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See Exhibit 11. [2] See Exhibit 2. [3] Complainants were responsible for supplying the casings and pumps to Respondent. [4] See Exhibit 2 at 1. [5] There was credible evidence presented at the hearing that Mile High Enterprises, L.L.C., had several contracting licenses with the Registrar per the Registrar’s database and all of the licenses were “suspended, expired or voluntarily cancelled. One or both of Complainants are listed as owners of the licenses. See Exhibit 11 at 1. [6] In the Administrative Law Judge Decision dated August 28, 2011, issued for Complaint No. 2010-[number redacted], Finding of Fact 15 reads as follows: “There was no dispute that the Complainants have now paid $16,000.00 to an alternative well driller to construct a new water well for their property.” [7] See Exhibit 1. [8] Section E.1. advises a claimant that they are to “complete ONLY if repair and / or completion was ordered in [claimant’s] underlying disciplinary case.” (Emphasis in the original). The underlying disciplinary case did not require Respondent to perform remedial work because his contracting license had expired on June 10, 2010. [9] Section E.2. advises a claimant that such an amount is “compensable ONLY if repair and / or completion were ordered in your underlying disciplinary case AND original contractor was unable or refused to comply with order.” (Emphasis in the original). [10] Both payments to D & W Well Service on June 14, 2011, were paid with check number “092823.” [11] See Exhibit 9. The facsimile header of the documents indicates that they were sent from “Mile High Enterprises.” [12] See Exhibit 11 at 5.

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