ALJDEC decisions subject to certification as final

2010A-308477161-ROC-rf · Registrar of Contractors · 2013-11-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 23, 2013 APPEARANCES: Alan R. Rose and Ruth H. Rose appeared personally. Urban Ease Development, Inc. was represented by Thomas R. May. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ FINDINGS OF FACT 1. Pursuant to the Notice of Recovery Fund Eligibility/Payout Hearing issued by the Registrar of Contractors (“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 Contractors’ Recovery Fund pursuant to A.R.S. § 32-1154(F) [to Alan R. Rose and Ruth H. Rose] is justified by the evidence.” 2. On July 15, 2013, the Registrar issued a Notice of Claim for Administrative Payout that advised the parties that the Registrar had determined that Alan R. Rose and Ruth H. Rose (“Complainants”) should be awarded the sum of $30,000.00 from the Residential Contractors’ Recovery Fund (“Fund”) for damages caused by Urban Ease Development, Inc., (“.Respondent”). By letter dated July 24, 2013, Respondent requested an administrative hearing to contest the amount of the proposed administrative payout from the Fund. 3. On or about November 9, 2009, Complainants entered into an agreement with Respondent for a second floor addition to their residence located at 4233 W. Yucca Street, Phoenix, Arizona. The scope of work included the construction of a master bedroom, a game room, a closet, and a bathroom. The contract price was $35,000.00 for the project. 4. On November 17, 2010, Alan R. Rose filed a written Complaint with the Registrar against Respondent pertaining to the project. The Registrar designated the Complaint as Case No. 2010-[number redacted]. 5. On June 22, 2011, an evidentiary hearing was conducted before the Office of Administrative Hearings in Case No. 2010-[number redacted]. 6. During the evidentiary hearing, the Registrar’s assigned inspector, Phil Coscia, testified that during a jobsite inspection, Respondent’s qualifying party and officer, Thomas Ross May, stated that Respondent underbid the project and that Respondent was experiencing financial problems. 7. On June 29, 2011, an Administrative Law Judge Decision was issued by Administrative Law Judge Sondra J. Vanella in Case No. 2010-[number redacted]. 8. By Order dated August 3, 2011, the Registrar adopted the Administrative Law Judge Decision with modifications in Case No. 2010- [number redacted]. Respondent was found to have violated the provisions of A.R.S. §§ 32-1154(A)(1) and A.R.S. § 32-1154(A)(23). 9. On September 12, 2011, the Registrar’s Order in Case No. 2010- [number redacted] became effective. 10. On April 3, 2012, Respondent’s License No. KB.2.250461-D was revoked in Case No. 2010-[number redacted]. 11. On or about January 18, 2013, Complainants filed a claim with the Fund for damages caused by Respondent. 12. On or about June 21, 2013, a jobsite inspection by the Registrar revealed that there were still approximately 32 deficiencies existing in Respondent’s workmanship on the project. Inspector Coscia and Fund Supervisor Eric Ulinger determined that an estimated sum of $41,620.00 would be required to complete the project. 13. Complainants submitted the following bids from contractors to complete the project to the Fund: (i) Miko, L.L.C., in the amount of $80,017.00; (ii) Shaughessy in the amount of $39,124.00; and (iii) G in the amount of $47,172.00. 14. On June 28, 2013, James Barbour, the assigned Fund Claims Adjuster issued a “Recovery Fund Claim Report R/F Claim No. 2010-[number redacted].” Mr. Barbour made the following determination: Based upon review of all evidence submitted in support of the Complainants’ claim, it is the claim reviewer’s findings that a Recovery Fund award in the amount of $30,000.00 is appropriate. $30,000.00 is the maximum amount that can be paid out on any claim per A.R.S. 32- 1132(A)[.]

This amount was calculated based upon the cost of the original contract in the amount of $35,000.00 (paid in full), the cost to complete per the Recovery Fund in the amount of $41,620.00 and the maximum allowable payout from the Recovery Fund in the amount of $30,000.00[.]

15. At the hearing, Mr. May argued that the bids submitted to the Fund were inflated. However, there is evidence that Mr. May admitted to Inspector Coscia that Respondent had underbid the project. In addition, the Registrar’s staff had reviewed the claim and determined that the cost to complete the project to workmanship standards exceeded $30,000.00, the maximum amount that can be paid out to a claim by the Fund. 16. Mr. May further argued that Complainant still owed Respondent an outstanding balance of $4,100.00 on the original contract price of $35,000.00. However, if the Registrar’s determination that it would cost the sum of $41,620.00 to complete the project, based upon the full contract price having been paid, were reduced by $4,100.00 as Mr. May contends, the estimated cost to complete the project would still exceed the maximum amount of $30,000.00 that can be paid out to a claim by 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), Complainant has 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) and A.R.S. § 32- 1154(A)(23), as required by A.R.S. § 32-1132(A). 6. The weight of credible and reliable evidence established that Complainants sustained actual damages in excess of $30,000.00, the maximum amount that can be paid for a claim to the Fund, as a result of Respondent’s above-described statutory violations. Therefore, Complainants have sustained their burden of establishing their entitlement to an administrative payout from the Fund in the amount of $30,000.00 for actual damages pursuant to A.R.S. § 32-1154(F), all of which shall be appropriately chargeable against Respondent and/or persons named on the license as set forth in A.R.S. § 32-1139(B). RECOMMENDED ORDER It is recommended that on or before the effective date of the Order entered in this matter that the Registrar commence and finalize payout procedures to award Complainants the sum of $30,000.00 for actual damages caused by Respondent’s statutory violations in Case No. 2010-[number redacted]. 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, November 12, 2013.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors -----------------------

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