ALJDEC decisions subject to certification as final

2010A-7100616-ROC · Registrar of Contractors · 2011-07-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 23, 2011

APPEARANCES: Greg Huffaker appeared on behalf of both Complainants, accompanied by his wife Katherine, who are both members of Lot 41 Turquoise Ridge LLC; Respondent did not appear; the Residential Contractors’ Recovery Fund intervened in this matter and was represented by Assistant Attorney General Camila Alarcon.

WITNESSES: Doug Ulmer, Recovery Fund Claim Reviewer Greg Huffaker Katherine Huffaker

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainants seek a payout from the Residential Contractors’ Recovery Fund (“Fund”) for damages caused by the defective workmanship of Respondent CJKB Construction LLC. Respondent did not appear. The Fund appeared through Assistant Attorney General Camila Alarcon, challenging Complainants’ eligibility for payout from the Fund. The only issue for which the parties were given notice and for which the hearing was held is Complainants’ eligibility. This tribunal entered the claim file received from the Registrar of Contractors into the record, along with Exhibits 1 through 6. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding both Complainants to be ineligible for recovery from the Fund. FINDINGS OF FACT 1. Respondent was the holder of license C-61.194743-R issued by the Registrar of Contractors (“ROC”). Respondent was a contractor on a project that was building a single family residence at Lot 41 of Desert Mountain Phase II, Unit Eleven in Maricopa County in 2006-2007. Respondent failed to pay a material supplier, who placed a lien on the property. Complainants paid the material supplier to remove the lien. They seek damages for the money they paid to remove the lien. Respondent’s license was revoked in December 2009. 2. Complainants made a claim to the Fund in January 2010 for recovery of damages caused by Respondent’s failure to pay the material supplier. The ROC conducted a preliminary check of the claim and determined that the owner of the property in 2006 and 2007 was Complainant Lot 41 Turquoise Ridge LLC (“Lot 41”).[2] The ROC notified Complainants that Lot 41 was ineligible for recovery because it is an entity and therefore not an eligible person because a legal entity cannot occupy a residence. The ROC also notified Complainants that Greg Huffaker was ineligible for recovery because he was not the owner of the property. In addition, and alternatively, the ROC notified Complainants that the claim was not eligible because the building was a “spec home” and not intended to be occupied by the owner. Complainants then requested a hearing. 3. The important facts of this case are not in dispute. Exhibit 3, a quit-claim deed, shows that as of September 23, 2005, Lot 41 owned the residential property at issue. Lot 41 owned the property through the years 2006 and 2007.[3] Also, Complainant Greg Huffaker never lived on the property. He testified that he briefly considered occupancy in February 2009, but that never occurred. 4. At the time of the damage by Respondent, Lot 41 owned the property and intended to sell the home upon its completion. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person asserting a claim.[4] Further, the standard of proof at hearing is by preponderance of the evidence.[5] Therefore, Complainants bear the burden of showing, by a preponderance of the evidence, that one of them is eligible for recovery from the Fund.[6] Complainants have 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.”[7] That statutory requirement entails actual occupancy (or intent to occupy) by the owner. That provision is mandatory and not ambiguous. 3. Complainant Greg Huffaker was not the legal owner of the real property. Thus, in his own capacity, he is not eligible because he was not the owner of the real property. 4. The evidence shows that the owner of the property was Lot 41 a limited liability company. The statute does not contemplate a legal entity as a “person injured” because a legal entity cannot occupy “residential real property . . . as a residence. . . .”[8] 5. Complainants are not eligible for recovery from the Fund. Complainant Greg Huffaker is not eligible because he was not the owner and occupier of the property. Furthermore, Lot 41 is not eligible for recovery from the Fund because Lot 41 did 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 Gregg Huffaker and Lot 41 Turquoise Ridge, LLC 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, July 8, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The recovery fund claim that is the subject of this case was amended at the hearing, without objection, to include Lot 41 Turquoise Ridge, LLC as a claimant. [2] Exhibits 3, 4, and 5. [3] Exhibit 6 shows that in July 2009 Lot 41 deeded the property to Morgan Az Financial, LLC. [4] 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). [5] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). [6] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [7] Arizona Revised Statutes (A.R.S.) § 32-1131(3). [8] A.R.S. § 32-1131(3).

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