ALJDEC decisions subject to certification as final

2011A-10-ROC · Registrar of Contractors · 2014-02-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

RECOVERY FUND PAYOUT HEARING: September 6, 2013, at 8:00 a.m. and December 17, 2013, at 8:00 a.m.; the record was held open until January 31, 2014, to allow the parties to submit written closing arguments. APPEARANCES: Complainants Richard Corton and Faith Sussman were represented by Matthew D. Saxe, Esq., Lang Baker & Klain, PLC; Respondent Studio 369 LLC failed to appear; the Arizona Registrar of Contractors was represented by Seth T. Hargraves, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. The Arizona Registrar of Contractors (“the Registrar”) issued License No. B.209579-R to Studio 369 LLC (“Respondent”). Respondent’s current address of record is 5814 S. 25th St., Phoenix, Arizona 85040-3629. 2. Richard Corton and Faith Sussman (“Complainants”) submitted a claim to the Registrar’s Residential Contractors’ Recover Fund (“the Fund”). On or about April 8, 2013, the Registrar issued a Notice and Order of Denial of Recovery Fund Claim, stating in relevant part as follows: The Complainant(s) named above filed a claim for payment with the Residential Contractors’ Recovery Fund pursuant to A.R.S. § 32-1154(F). After a review of the claim and all supporting documentation, the Fund has determined that Complainant(s) are denied payment from the Fund for the following reasons:

I. Background and Procedural History:

On or about September 5, 2006, Complainants entered into a contract with Studio 369 LLC., license number 209579, for the construction of a home and pool at their residence located at 5244 E Rancho Del Oro Cave Creek, AZ 85331. The construction contract is specific in the work to be performed, limited to the construction of a home and pool with specific allowances to be allotted for some of the work detailed in article 6.2.1 of the contract, as well as changes in the terms of the contract to be agreed to as detailed in articles 6.1.1 thru 6.1.5.

The original contracted price was $1,340,062.00. There are conflicting statements by Complainants as to the actual contract price and the amount paid on the contract. In the complaint form filed with the Registrar, Complainants assert the total contract price to be $1,500,000.00 and assert that amount was paid in full. However, on the claim form filed with the Registrar, Complainants assert the contract to be $1,649,184.70 with the amount paid to be $1,500,000.00. Neither amount agrees with the actual contract terms or the allowances within it. Further, the Complainants have alleged that change orders affecting the final price were agreed to but they have failed to submit these documents despite request.

The allowances allotted for the project as set forth in the contract are as follows: Cabinets $50,000.00, Plumbing Fixtures $7,500.00, Special doors $20,000.00, Septic $6,500.00, Carpet $3,800.00, Light Fixtures (non-recessed) $3,500.00, Countertops $10,000.00, Appliances $20,000.00, Landscaping $10,000.00, Tile (material per sq. ft.) $7.50. Also, a contingency reserve in the amount of $134,938.00 that is not included in the agreement amount of $1,340,062.00. Based on the contingency the total contract price, with changes or expenditures exceeding the allowances could increase to $1,475,000.00.

On or about December 29, 2010 Complainants filed a complaint alleging abandonment and poor work, with the Registrar of Contractors. The alleged abandonment date was December 28, 2010. The complaint was assigned to Registrar of Contractors (ROC) inspector Jeff Wills who, on January 18, 2011, inspected the alleged violations stated in the complaint. A Corrective Work Order (CWO) was issued directing the Respondent to make specific repairs to some of the alleged issues. On or about January 31, 2011 the Complainants filed an addendum to the complaint alleging additional issues with the work performed. Once again, a CWO was issued directing the Respondent to make specific repairs. The Respondent failed to comply with the CWO and the Respondent was cited for the alleged violations. Respondent’s license was ultimately revoked on September 28, 2011, as a direct result of the complaint.

On November 21, 2011 the Complainants filed a claim with the Recovery Fund in the amount of $43,971.35. The claim was procedurally deficient, as it did not include all information required for processing. In a letter dated November 25, 2011 the Fund informed the Complainants that a copy of all change orders and proof of payments as well as other documentation was required in order to process the claim. On January 9, 2012, the Fund received some of the required documentation requested. A review of the documents revealed that claim still lacked the required documents to verify the totality of actual damages and once again, the Fund sent a letter requesting the missing documents. On February 15, 2012 and again on March 7, 2012 the Fund received documents from the Complainants. Included with these documents was a statement from Complainants that they could not locate any of the change orders and therefore could not supply them to the Fund.

On February 23, 2012, in a phone conversation, claim reviewer Dolly Lucero explained to the Complainants the importance of the Fund being able to verify the total contract amount and suggested that they could go over their documents again to see if they could support an amended actual contract price. On or about March 2, 2012 the Complainants provided the Fund with a letter acknowledging they made “a number of mistakes” in their claim submittal and supporting documentation. Complainants further state in this letter that they went over their documents “more carefully” and arrived at the revised actual amount alleged to be paid to the Respondent of $1,406,338.60, along with totals paid to unnamed “others” of $93,661.40, for a total of $1,500,000.00 paid to complete the project.

Copies of draw requests, as well as invoices in support of the draw requests, were submitted by Complainants in support of their claim thereafter. A number of the invoices describe that a portion of the payments were for additional work that were paid from the ‘contingency reserve’. Also included was a statement indicating that a new pool contract was in effect as of August 2, 2010[1].

Complainants also provided bank statements and proof of draws from a construction loan with Johnson Bank. The Complainants also submitted copies of personal checks totaling $20,111.14 paid to The Great Organization, $21,180.13 paid to Stockett Tile and Granite, and $75,987.50 paid to Carlos Ramirez[2]. These amounts are unaccounted for in the above revised assertions of Complainant concerning expenditures on the original contract. Further, the corresponding invoices and payments to these three entities verify that the Complainants contracted directly with these contractors and that these entities were not subcontractors of Respondent.[3] Complainants are still seeking credit for these amounts as payments towards the original contract, even though they are not amounts paid to Respondent.

In sum, the Fund has determined through its analysis of all available information that Complainants provided proof of expenditures totaling $1,499,800.00 in draws against the construction loan for this project. Of that amount, $1,298,343.75 that was paid directly to the Respondent, $67,456.25 was paid directly to Complainant Richard Corton himself, and $134,000.00 was paid to an unnamed payee[4]. Despite the Fund’s best efforts, the original contract amount and the amounts paid to Respondent towards that amount remain incalculable, thereby making it impossible to determine whether the contract was paid in full or whether an unpaid balance due remains outstanding.

On or about August 21, 2012 Complainants’ claim was reassigned to Recovery Fund Supervisor Eric Ulinger to see if a determination of actual damages could be established. On October 11, 2012 Mr. Ulinger called the Complainants to attempt to reconcile the numerous inconsistencies in Complainants’ claim and the Complainants provided yet more documentation to the Fund on October 19, 2012, alleged to document completion expenditures. Included in these documents were copies of personal checks verifying payment by Complainants in the amounts of $10,616.70 to Kustom Kreations, $1,200.00 to Paint America, $956.06 to Pete the Plumber and $3,939.05 to Metal Works. These checks are all dated in the year 2011 (after the Respondent abandoned the project) and were paid to licensed contractors. As such, these payments are potential ‘actual damages’ and potentially recoverable from the Fund as a cost to complete the project.

II. Analysis

Pursuant to A.R.S. § 32-1134(A)(2)(3) and (5) the Registrar is required to subject all Recovery Fund claim files to examination by an accountant to ensure that all claims paid are appropriate. In order to fulfill this fiduciary responsibility and determine an amount payable (if any), the Registrar must request sufficient documentation to support all payments from the Fund. This includes having conclusive proof of the extent of all claimed damages. Anything less mandates that the Registrar deny the unsubstantiated portion of any claimed loss.

A. Eligibility:

To be eligible to access the Fund, an applicant must meet four eligibility criteria set forth at A.R.S. § 32-1131 et seq. See also McMurren v. J.M.C. Builder, Inc., 204 Ariz. 345 (App. 2003). An applicant must meet the definition of a “person injured” set forth at § 32-1131(3) which requires first that the applicant must own residential real property. Second, the property must have had a classification of three under § 42- 12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a residence. These criteria must be met at either the time the contract was executed or at the time the injury accrued. Fourth, as set forth in § 32- 1132(A), an applicant must have contracted with a contractor whose license was in good standing at the time of contract execution. This fourth requirement is only applied at the time the contract was executed, not at the time of injury. McMurren v. J.M.C. Builder, Inc., 204 Ariz. 345, 350 (App. 2003).

It is an applicant’s burden to prove, by a preponderance of the evidence, that they are eligible to access the Fund and that they have sustained actual damages within the limitations of § 32-1132(A) that are compensable from the Fund. Based on all available evidence in the records of the Registrar, Complainants appear to meet all the above eligibility criteria.

B. Actual Damages:

Pursuant to A.R.S. § 32-1132(A), an award from the Recovery Fund is limited to actual damages suffered by the Complainant(s) as a direct result of the residential contractor’s violation, but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance. As above, it is an applicant’s burden to prove, by a preponderance of the evidence, that they are eligible to access the Fund and that they have sustained actual damages within the limitations of § 32-1132(A) that are compensable from the Fund.

In reviewing ‘actual damages’ the Fund must look at the totality of the contract, including any and all changes agreed to that alter the contract price or specifications. The measure of damages is the reasonable cost to complete the project in conformance with the contract terms, less the unpaid balance due the original contractor. If the contract can be completed for an amount within the unpaid contract funds, then no damage is suffered. Complainants bear the burden of establishing, through introducing proof in support of their claim, that the contract price for completion of the project was reasonable for the work done; mere evidence of the amounts paid, without more, is no[t] evidence that those amounts are reasonable.

Complainants must keep track of the charges in such a way as to allow comparison by the Fund with what it would have cost the original contractor to complete the work. In other words, in order to carry their burden of proof, Complainants in this case needed to provide proof to the Fund of the final contract amount, as well as contract specifications, to evidence what damages they might be entitled to recover from the Fund.

The Complainants have not provided the Fund with copies of the change orders they claim amended the original contract amount. Without this required documentation, the Fund cannot measure the actual damages suffered by Complainants since the Fund cannot verify the final contract amount or specifications. Further, the financial analysis undertaken by the Fund demonstrates numerous contradictions in the evidence, as detailed above, that prevent a corroborated amount paid to Respondent on the contract from being established.

The payments to The Great Organization, Stockett Tile and Granite, and Carlos Ramirez cannot be credited as payments towards the original contract since Complainants hired these contractors directly and they were not subcontractors of Respondent. Further, these payments cannot be considered actual damages as they occurred prior to Respondent’s abandonment. The payments to Kustom Kreations, Paint America, Pete the Plumber and Metal Works cannot be determined reimbursable from the Fund, since the original contract amount and the amount paid towards that contract to Respondent remain unverified.

As such, in light of all available evidence on file with the Registrar, Complainants failed to their burden of proof as their damages, if any, are incalculable and their claim must be denied.

/ / / / / / / /

III. Conclusion:

Based on the above, the agency will close this claim with no payment from the Fund. If Complainant(s) disagree(s) with this finding, Complainant(s) may choose to request a hearing. Complainant’s(s’) hearing request must be in writing and must be received no later than 5:00 p.m. on April 26, 2013.

If a timely written request for hearing is received, the agency will then enter its objection, intervene in this matter and the matter shall be set for an administrative hearing. Complainant(s) will receive written notification of the time and date of the administrative hearing. Complainant(s) may retain legal representation or Complainant(s) may represent himself/herself/themselves at the administrative hearing. At the administrative hearing, Complainant(s) will bear the burden of proof to establish (1) eligibility and (2) compensable actual damages pursuant to A.R.S. § 32-1131, et seq. The agency will request that an Assistant Attorney General be assigned to represent it and, as such, the Assistant Attorney General will voice the agency's objections and defenses at the administrative hearing.

(Footnotes in original.) 3. Complainants requested a hearing on the Registrar’s determination that they were not entitled to a payout from the Fund in any amount. The Registrar referred the matter to the Office of Administrative Hearings (“the OAH”), an independent agency, for an evidentiary hearing. 4. On July 5, 2013, the Registrar issued a Notice of Recovery Fund Eligibility/Payout Hearing setting a hearing on September 6, 2013, at 8:00 a.m. The Registrar sent a copy of the Notice of Recovery Fund Eligibility/Payout Hearing to Respondent at its address of record. 5. Respondent did not request to appear telephonically at the hearing, did not request that the hearing be continued, and did not appear at the September 6, 2013 hearing. 6. Complainants appeared through their attorney at the September 6, 2013 Recovery Fund Payout Hearing and requested that they be given time to submit to the Registrar additional documentation to establish their damages. The Registrar agreed that a further hearing could be scheduled to allow Complainants time to submit additional documentation to support their claim to the Fund. 7. On September 6, 2013, the Administrative Law Judge (“ALJ”) assigned to this matter issued an order setting a further hearing on October 25, 2013. OAH staff mailed the September 6, 2013 order to Respondent at its address of record. 8. Complainants and the Registrar did not resolve their dispute. On October 18, 2013, the Registrar’s attorney filed a stipulated motion to continue the further hearing because the Registrar’s investigator assigned to this matter, Eric Ulinger, had recently undergone foot surgery. 9. On October 22, 2013, the ALJ issued an order setting a continued further hearing on December 17, 2013. OAH staff mailed the October 22, 2013 order to Respondent at its address of record. 10. A further Recovery Fund Payout Hearing was held on December 17, 2013, at 8:00 a.m. Complainants submitted sixty-one exhibits and presented the testimony of Complainant Richard (“Rick”) Corton. The Registrar submitted twelve exhibits and presented the testimony of Mr. Ulinger, the Fund’s Supervisor. 11. Respondent again did not request to appear telephonically and did not request that the hearing be continued. Although the hearing did not conclude for over three hours, Respondent did not appear through a member, an authorized employee, or an attorney. Consequently, Respondent did not present any evidence. Hearing Evidence 12. On or about September 5, 2006, Respondent and Complainants entered into a Construction Agreement to construct a house according to the requirements of the contract documents for the total contract sum of $1,340,062.00, plus a contingency reserve of $134,938.00.[5] The contract documents were defined as the Construction Agreement, subsequently issued modifications or change orders, which were required to be in writing, drawings, specifications, addenda, and the cost breakdown. The Construction Agreement did not contain any other description of the size, layout, materials, or other details of the work to be performed in the construction of the house. 13. Mr. Corton testified that the contract amount plus the contingency reserve made the total contract price $1,475,000.00. 14. Complainants also submitted a Cost Breakdown/Bank that Respondent had prepared of its allowances for the work required by its contract, including “10% architectural fees” ($134,000.00), stake out/survey ($6,000.00), site preparation ($20,000.00), foundation ($75,000.00), “AAC walls” ($80,000.00), block walls ($12,000.00), back fill ($2,500.00), driveway ($5,000.00), debris removal ($5,000.00), steel ($16,000.00), framing materials ($50,000.00), framing labor ($55,000.00), roofing ($118,000.00), windows ($65,000.00), exterior doors ($10,500.00), garage door ($3,000.00), insulation ($25,000.00), plumbing ($25,000.00), HVAC ($45,000.00), electrical ($20,000.00), phone/cable jacks ($1,500.00), low voltage security ($7,500.00), fireplace box ($15,000.00), fireplace face ($2,500.00), stucco ($20,000.00), soffits ($25,000.00), drywall ($25,000.00), trim ($23,500.00), shelving (closets) ($6,500.00), paint interior ($12,500.00), paint exterior ($7,500.00), wood ceilings ($30,000.00), wood floors ($17,500.00), tile ($25,000.00), clean inside ($1,000.00), caulking ($2,500.00), final grade ($750.00), pool ($60,000.00), Porta-John ($1,500.00), project management ($152,000.00), cabinet allowance ($50,000.00), special door allowance ($20,000.00), countertop allowance ($10,000.00), light fixture allowance ($3,500.00), plumbing fixture allowance ($7,500.00), appliance allowance ($20,000.00), septic allowance ($6,500.00), landscaping allowance ($10,000.00), carpet allowance ($3,800.00), and contingency reserve ($134,938.00).[6] 15. Mr. Corton testified that the total of the breakdown amounts was $1,475,000.00, which is the same amount of the contract. 16. Mr. Corton submitted the disbursement log of his construction lender, Johnson Bank, to show that the full amount of the construction loan, $1,500,000.00, had been disbursed. The disbursement log did not identify the payees. Mr. Corton testified that because the Construction Agreement capped the cost of the house at $1,475,000.00, Complainants had paid $25,000.00 more than the contract amount to Respondent or other subcontractors, but that the house still needed to be repaired and completed. 17. Mr. Corton testified that $134,000.00 had been paid as the architectural fees, as shown on the Cost Breakdown/Bank. Complainants did not submit any evidence of the payment or of the payee. 18. Mr. Corton testified that Complainants used money from their construction loan to pay directly The Great Organization, Stockett Tile and Granite, and Carlos Ramirez, and that the contract amount should be reduced by Complainants’ payments to these entities. Mr. Corton testified that the payments to these licensed and unlicensed contractors corresponded to amounts shown on the Cost Breakdown/Bank. Mr. Corton testified that Complainants were not seeking a payout from the Fund for the amounts that they paid directly to The Great Organization, Stockett Tile and Granite, and Carlos Ramirez. 19. Mr. Corton testified that Complainants had obtained estimates from two contractors and had paid $10,173.00 to Custom Screen & Awnings for custom screen awnings and that this work corresponded to an item that Respondent had been required to but failed to correct in the underlying workmanship complaint. 20. Mr. Corton testified that one of the most expensive items to complete or repair was the radiant floor heating. Respondent had poured the slab with copper tubes in it to carry hot water to provide ambient heat to the house, but the heating system did not work. Because it was not possible to know what Respondent had constructed inside the slab, other contractors refused to provide a warranty that they would make the radiant floor heating functional. 21. Mr. Corton testified that although the Cost Breakdown/Bank provided that the pool would cost $60,000.00, a disagreement between Respondent and the pool subcontractor caused the price to be increased to $63,365.19. Mr. Corton pointed to Respondent’s accounting of draw 4 that showed an extra $3,369.83 from the contingency reserve for “pool fountains.” 22. Mr. Corton testified that all of the change orders showed up as draws on the contingency reserve. 23. Mr. Corton testified that several changes had been made to the contract pursuant to a verbal agreement between Respondent and Complainants. Mr. Corton testified that although the initial contract amount was $1,475,000.00, there were no hard numbers on exactly what construction of the house would cost due to its custom nature. 24. Mr. Corton testified that numerous items on the Corrective Work Orders had not been repaired or completed. Mr. Corton testified that he had paid for certain items, such as a retractable pool cover, for which he did not seek reimbursement from the Fund. Mr. Corton testified that he cannot afford to pay out-of-pocket for all the repairs and incomplete work that needed to be performed at his house. 25. Mr. Corton testified that Complainants had paid other contractors or had obtained estimates to repair other items that the Registrar had directed Respondent to correct in the underlying workmanship complaint. 26. Complainants did not submit any plans or specifications. Mr. Corton testified that he had plans for the project, but that the Registrar would not accept the plans because they were not stamped as approved by the local building authority. 27. Mr. Ulinger testified that although Complainants were potentially eligible for a payout from the Fund, they did not present proof that would allow the Registrar to liquidate their damages or to determine that they had actually suffered any damages that the Registrar could verify. 28. Mr. Ulinger explained that the Registrar has a fiduciary duty to preserve the Fund’s assets and that payouts are audited every three years to verify damages for which the Fund has made payouts. 29. Mr. Ulinger explained that actual damages include the cost to repair or to complete a construction contract. With respect to the contract scope of work, the Registrar is not bound by a Corrective Work Order because the investigator may not have had the contract and the contractor may not have raised valid contract defenses. 30. Mr. Ulinger testified that if a homeowner’s contract with a contractor is verbal, the Fund requires the homeowner to provide an affidavit to support his claim to the Fund. Mr. Ulinger pointed out that Complainants stated in their claim to the Fund that they did not have copies of relevant plans, drawings, and/or building specifications that were relevant to the scope of work at issue, and that the Construction Agreement that Complainants submitted did not include any detailed or complete scope of work.[7] 31. Mr. Ulinger stated that although the Fund had made multiple requests to Complainants to provide additional documents that described Respondent’s scope of work under the contract, they had failed to submit plans, specifications, or any other documents that would clarify Respondent’s scope of work. 32. Mr. Ulinger testified that the reason for the Fund’s requests was to ascertain whether construction of and repairs to the house complied with the scope of work with which Respondent had contracted to comply. For example, the plans and specifications would specify whether the roof of the house was supposed to be asphalt shingle, slate, or tile. Mr. Ulinger explained that if Respondent contracted to construct an asphalt shingle roof, Complainants would not be entitled to recover a payout from the Fund for the cost of a slate roof. 33. Mr. Ulinger testified that the only time the Registrar can use blueprints to determine a contractor’s scope of work is when the prints were verified and stamped by the local building authority. Mr. Ulinger explained that every municipality or county requires approved, stamped plans to be kept at the jobsite. If the plans have not been stamped, Mr. Ulinger testified that there is no way of knowing whether the plans show how the structure was supposed to be built. 34. Mr. Ulinger testified that the Registrar’s Notice and Order of Denial of Recovery Fund Claim summarized the Registrar’s conclusions based on its review of Complainants’ claim to the Fund and the documents that they submitted in support of that claim. Complainants’ statements regarding the amount of the contract and the amounts paid to Respondent were inconsistent. The monies that Complainants paid to unlicensed contractors for work were not recoverable. Although Mr. Corton said that he had an agreement with Respondent to contract directly with subcontractors, that would be a change to the Construction Agreement, but Complainants did not provide anything in writing, signed by Respondent evidencing its agreement to such a change. Mr. Ulinger testified that the Fund would not take work out of the contract and reduce the contract amount without an agreement in writing from Respondent. 35. Mr. Ulinger testified the Fund still does not have written change orders, plans, specifications, verification of amounts paid to Respondent, or verification of the contract amount. Many of the items for which Complainants seek a payout from the Fund, such as the front door, the screen room, and the radiant heating in the slab, were not described on the Construction Agreement or the Cost Breakdown/Bank. The Fund would not act as a fiduciary if it merely took Complainants’ word that these items were included in Respondent’s contract. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[8] The Notice of Recovery Fund Eligibility/Payout Hearing that the Registrar mailed to Respondent at its address of record and the orders setting continued and further hearing dates that OAH mailed to Respondent at its address of record were reasonable. Respondent is deemed to have received notice of the Recovery Fund Payout Hearing.[9] A.R.S. § 32-1132(A) provides that “[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 bear the burden of proof to establish the amount, if any, that they are entitled to recover from the Fund under A.R.S. § 32-1132(A) by a preponderance of the evidence.[10] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[11] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[12] The Registrar is not bound in Complainants’ claim to the Fund to find that the scope of Respondent’s contract included items that Respondent was required to repair or complete in the underlying workmanship complaint. The Registrar was only a nominal party to the workmanship complaint[13] and the issue of the scope of Respondent’s contract was not actually litigated in that complaint.[14] Complainants did not establish by a preponderance of the evidence the exact amount of Respondent’s contract, the amount of payments that Complainants made to Respondent under the contract, or Respondent’s scope of work under the contract. Therefore, Complainants did not establish that they are entitled to a payout from the Fund in any amount. / / / / RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, Case No. 2011-10 be closed because Complainants Richard Corton and Faith Sussman have not established that they are entitled to a payout in any amount 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, February 19, 2014.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] No contract was provided to the Fund, nor was any documentation submitted detailing the terms, conditions or specifications of the alleged contract. [2] An ROC query did not reveal a license number for Carlos Ramirez. Per the documentation provided, the total amount paid to Carlos to install cabinets is $75,000.00. A.R.S § 32-1132(A) states that “an award from the fund shall not be available to persons injured by an act, representation, transaction, or conduct of a residential contractor who was not licensed pursuant to this chapter or whose license was in an inactive status, expired, cancelled, revoked, suspended or not issued at the time of the contract”. One can reasonably determine that if a contractor is not licensed, he does not pay into the Recovery Fund and therefore any money paid to an unlicensed contractor cannot be used to verify payment on a contract with a licensed contractor. [3] This information was also verified by the Fund in a phone conversation with Complainants on November 27, 2012. [4] No documentation was provided to verify who received these funds. [5] See Complainants’ Exhibit 1, the Registrar’s Exhibit 2. [6] See Complainants’ Exhibit 2. [7] See the Registrar’s Exhibit 4 at 2. [8] See A.R.S. §§ 32-1131 to 32-1140. [9] See A.R.S. § 41-1092.04; A.R.S. § 41-1092.05(D). [10] See A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [11] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [12] Black’s Law Dictionary at 1220 (8th ed. 1999). [13] See MVC Construction, Inc. v. Treadway, 182 Ariz. 615, 620, 898 P.2d 993, 998 (App. 1995). [14] The Arizona Court of Appeals has held:

The doctrine of “collateral estoppel” is a doctrine of issue preclusion. It bars a party from relitigating an issue identical to one he has previously litigated to a determination on the merits in another action. The elements necessary to invoke collateral estoppel are: the issue is actually litigated in the previous proceeding, there is a full and fair opportunity to litigate the issue, resolution of such issue is essential to the decision, there is a valid and final decision on the merits, and there is a common identity of the parties.

Gilbert v. Board of Medical Examiners, 155 Ariz. 169, 174, 745 P.2d 617, 622 (App. 1987).

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