ALJDEC decisions subject to certification as final

2010A-7100565-ROC · Registrar of Contractors · 2011-04-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 28, 2011

APPEARANCES: Complainant appeared on her own behalf; Respondent did not appear; the Residential Contractors’ Recovery Fund intervened in this matter and was represented by Assistant Attorney General Keely Verstegen.

WITNESSES: Sylvia Arce, Recovery Fund Claim Reviewer Cindi Eagleton

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant seeks a payout from the Residential Contractors’ Recovery Fund (“Fund”) for damages caused by the defective workmanship of Respondent Geo’s Home Improvements, Inc. Respondent did not appear. The Fund appeared through Assistant Attorney General Keely Verstegen, challenging Complainant’s eligibility for payout from the Fund. The only issue for which the parties were given notice and for which the hearing was held is Complainant’s eligibility. This tribunal entered the claim file received from the Registrar of Contractors into the record, along with Exhibits A and B. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding Complainant ineligible for recovery from the Fund. FINDINGS OF FACT 1. Respondent was the holder of license C-62.220859-R issued by the Registrar of Contractors (“ROC”). Respondent performed contracting work on Complainant’s residence in 2007. The license was revoked in December 2008. 2. Complainant made a claim to the Fund in January 2010 for recovery of damages caused by Respondent at her residence. She made the claim in her individual capacity and on behalf of her company Rare, Inc.[1] The ROC conducted a preliminary check of the claim and determined that the owner of the property is a corporation (Rare, Inc.) and not Complainant. The ROC notified Complainant that she was ineligible for recovery because the property is owned by a legal entity that cannot occupy the residence. The Complainant then requested a hearing. 3. The important facts of this case are not in dispute. Exhibit 2, a warranty deed, shows that since December 16, 2004, Rare, Inc. has been the sole owner of the residential property at issue. Complainant and her husband have lived on the property since December 2004 as their only residence. Furthermore, Complainant owns 100% of the shares of Rare, Inc. 4. Complainant argued at hearing that she should be treated as the owner of the property because she is the sole shareholder of Rare, Inc. and because Rare, Inc. is classified as an S Corporation for tax purposes. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person asserting a claim.[2] Further, the standard of proof at hearing is by preponderance of the evidence.[3] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that she is eligible for recovery from the Fund.[4] Complainant has not met that burden. 2. Only owners of “residential real property . . . actually occupied or intended to be occupied by the owner as a residence . . .” are eligible for recovery from the Fund as “injured persons.”[5] That statutory requirement entails actual occupancy (or intent to occupy) by the owner. That provision is mandatory and not ambiguous. 3. Complainant is not the legal owner of the real property, even though she occupies the home. Thus, in her own capacity, she is not eligible because she is not the owner of the real property.[6] 4. The evidence shows that the owner of the property is Rare, Inc. and not Complainant or her husband. Rare, Inc., as the owner, has been damaged by the actions of Respondent. The statute does not contemplate a legal entity as a “person injured” because a legal entity cannot occupy “residential real property . . . as a residence. . . .”[7] 5. Complainant is not eligible for recovery from the Fund because she does not meet the statutory requirements that she be the owner and occupier of the property. Furthermore, Rare, Inc. is not eligible for recovery from the Fund because Rare, Inc. does not occupy the home. RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors find that the claim filed by Cindi Eagleton is not eligible for recovery from the 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 Decision will be 40 days from the date of that certification.

Done this day, April 14, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Although the Notice of Hearing provides a caption naming only Cindi Eagleton as the claimant, it is clear from the Recovery Fund Claim Form that the claim was filed by both Cindi Eagleton and Rare, Inc. At hearing, the eligibility of both Cindi Eagleton and Rare, Inc. was addressed. [2] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949); Arizona Administrative Code (A.A.C.), OAH Rule R2-19-119(B). [3] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). [4] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [5] Arizona Revised Statutes (A.R.S.) § 32-1131(3). [6] Complainant did not assert or argue that she is a lessee of the property. [7] A.R.S. § 32-1131(3).

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