ALJDEC decisions subject to certification as final

2011A-531-ROC · Registrar of Contractors · 2012-07-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 2, 2012, at 8:00 a.m. APPEARANCES: Complainants appeared through Kim Cichy. San Tan Adobe Builders LLC dba San Tan Southwestern Adobe Builders (hereinafter “San Tan”) failed to appear. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. The Notice of Claim for Administrative Payout provided, in pertinent part, as follows: The Complainants 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 Complainants are to be awarded $10,400.00 in the form of a payment issued by the Fund. In accordance with A.R.S. § 32-1154(F), both Complainants and Respondent have fifteen (15) days from the date of mailing of this Notice to file an administrative hearing request to contest the amount and/or propriety of the payment. Such request must be received by the Registrar no later than March 27, 2012. As provided in A.R.S. § 32-1154(F), the failure of Complainants and/or Respondent to file a timely written request for a hearing shall be deemed a waiver to contest the amount and/or propriety of the payment awarded.[1]

2. An assigned Agency Inspector, Eric Ulinger (hereinafter “Inspector Ulinger”), conducted an onsite inspection and on February 15, 2012, issued a Summary and Recommendation that provided, in pertinent part, as follows: Claimant entered into a contractual agreement with the contractor on June 29, 2009 for the construction of a new home. This contract is exclusively for the structure and excludes any improvements other than the structure itself. The contracted price was $338,796.00. The claimant paid a total of $76,164[.00] to Jason Masur, the qualifying party of San Tan Southwest Adobe Builders, leaving a balance due of $262,632.00.

The claimant owns and occupies the home. Claimant has not recovered loss from other sources.

Claimant filed complaint 2011-531, claiming abandonment of the project and for work that does not meet the required building codes. Upon my review of the complaint I determined that the primary allegation was abandonment[;] therefore, a jobsite inspection was not required. The complaint was not resolved and the [C]omplainant[s] requested an administrative hearing. A citation was issued against the contractor’s license and the [R]espondent failed to respond. A default D&O was issued revoking the contractor’s license effective June 22[,] 2011.

The claimant had the project completed prior to their filing to the Recovery Fund. Documentation was submitted to support the costs as follows.

Art Rubash Construction Inc $269,632.00 Mc Rann Excavating LLC 3,000.00 Yavapi County (permit) 400.00 Total cost to complete $273,032.00

Additional documentation was submitted for work that was contracted for Universal Drilling Inc and RW Turner and Bill Johnson Excavation. This work was contracted for prior to alleged abandonment date and appears to be for work that is other than the structure itself. The contract clearly omits any improvements other than the structure. Therefore the total of these costs can not be used to determine the recoverable injured amount.

Based on the documents and my findings it is my recommendation that the Recovery Fund make payment as follows.

Total cost to complete $273,032.00 (less) the balance due on the contract (262,632.00) Total Payout $10,400.00.[2]

3. San Tan’s request for an administrative hearing was received by the Registrar of Contractors on March 27, 2012.[3] 4. Kim Cichy (hereinafter “Mr. Cichy”) testified that San Tan utilized construction funds for personal gain rather than for the construction of Complainants’ residence. Mr. Cichy stated that San Tan repeatedly lied about where Complainants’ money was going and repeatedly misrepresented the status of the construction project. San Tan falsely misrepresented that it had paid $23,620.00 for a lumber package that was not actually paid for. The few construction items that San Tan actually did complete, such as the concrete slab, required removal and replacement because San Tan failed to obtain a required construction permit and failed to request mandatory building inspections.[4] 5. Valerie Cichy testified that San Tan falsely misrepresented that it had paid for the construction of a water well for Complainants’ residence, when in fact Complainants paid for the construction of their water well.[5] 6. The local building authority stated that because the slab and footings constructed by San Tan were not inspected or approved by the local building authority, it was unable to approve the construction of the slab and footings without extensive forensic investigation or demolition.[6] 7. San Tan falsely represented that it had paid for Complainants’ lumber package when no lumber had been ordered.[7] 8. Complainants are found to be an “injured person” as defined by statute and are entitled to receive payment from the Residential Contractors’ Recovery Fund for damages sustained as a result of San Tan’s acts and omissions. 9. It is found that a proper and reasonable amount payable to Complainants from the Contractors’ Recovery Fund for Complainants’ actual damages is the sum of $10,400.00, representing the cost of completion of their residence as set forth in Inspector Ulinger’s Summary and Recommendation. 10. Administrative notice is taken of San Tan’s prior license record as reflected on the Registrar of Contractors’ public website on July 16, 2012. Such prior license record reflects that License No. B.189796-R of San Tan was revoked on July 18, 2011, and on September 15, 2011. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. A.R.S. § 32-1132(A) provides, in pertinent part, as follows: The residential contractors' recovery fund is established, to be administered by the registrar, from which any person injured by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter may be awarded in the county where the violation occurred an amount of not more than thirty thousand dollars for damages sustained by the act, representation, transaction or conduct. An 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.

4. The credible evidence of record supports an award from the Residential Contractors’ Recovery Fund to Complainants in the sum of $10,400.00, all of which shall be appropriately chargeable against San Tan and/or persons on San Tan’s license as set forth in A.R.S. § 32-1139(B) RECOMMENDed order In view of the foregoing, it is recommended that the Registrar of Contractors commence and finalize payment procedures from the Residential Contractors’ Recovery Fund to Complainants in the total amount of $10,400.00 when sufficient funds are available. In the event of certification of this 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 the certification. Done this day, July 16, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] March 12, 2012 Notice of Claim for Administrative Payout. [2] February 15, 2012 Recovery Fund Claim Report. [3] Respondent’s undated request for administrative hearing received on March 27, 2012. [4] 7/2/12 Hearing Record (hereinafter “H.R.”) at 6:13-25:58. [5] H.R. at 26:10-27:15. [6] See Exhibit No. C-15 (1/31/12 email from local Yavapai County Building Department). [7] See Exhibit No. C-14 (Tim Bockland Statement).

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