ALJDEC decisions subject to certification as final

2011A-5923-ROC · Registrar of Contractors · 2012-10-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 24, 2012, at 1:00 p.m. APPEARANCES: Ulises Franco (hereinafter “Complainant”) appeared on his own behalf. A R I Construction LLC (hereinafter “ARI”) failed to appear.[1] The Registrar of Contractors’ Recovery Fund (hereinafter “the Fund”) appeared through Anne Froedge, Esq., Assistant Attorney General. 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. On July 12, 2012, the Registrar of Contractors issued a Notice to Complainant of Recovery Fund Ineligibility which provides, in pertinent 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, based upon A.R.S. § 32- 1131 et seq., that the Complainant(s) is/are ineligible for a payment from the Fund for one or more of the following reason[s]:

The property was not Class 3 residential property under A.R.S. § 42-12003 at the time of contract. ARS §32-1131(3) defines a person injured as any owner of residential real property which is classified as class three property under section 42-12003 which is actually occupied or intended to be occupied by the owner.

On or about March 10, 2011, Complainant entered into a contract with Respondent ARI Construction LLC (“ARI”), license number 269986, for construction on their home located at 1546 N 46th St, Mesa, AZ 85205.[2] Complainants paid a down payment of $11,880.51 on or about April 7, 2011and later filed a complaint alleging abandonment against ARI after ARI refused to refund this down payment. ARI’s license was subsequently revoked as a result of the complaint filed by Complainants on or about October 17, 2011. On May 23, 2012, Complainants filed a claim with the Recovery Fund. The claim submission included a copy of the 2011 County Assessors report, which covers the time period of the contract execution and the time of injury to Complainants. The Assessor’s parcel information reflects that the property was class four at all relevant times which the Fund must evaluate eligibility pursuant to McMurren v. J.M.C. Builders, Inc., 204 Ariz. 345 (App. 2003). Complainants’ ineligibility is further confirmed in the Complaint form dated October 17, 2011, where Complainants confirmed the subject property to be an income generating property at all relevant times. Given this information, Complainants do not meet the definition of persons injured as set forth in ARS §32-1131(3).[3]

2. Complainant disagreed with the Registrar of Contractors’ determination to deny his claim for payment from the Fund and requested an administrative hearing. 3. Complainant testified that he resides in a four apartment structure located at 1546 N. 46th Street, Mesa, Arizona 85205. Complainant acknowledged that the four apartment structure was not a Class 3 residential property under A.R.S. § 42-12003 at the time of his contract with Respondent. Complainant stated that the Assessor’s parcel information reflects that the four apartment structure is a class four property.[4] Complainant testified that he rents three of the apartments for income and resides in the fourth apartment. 4. Complainant testified that, even though he admittedly resides in an apartment in a class four income generating property, he should be eligible for payment from the Fund because he permanently resides in one of the four rental apartments. 5. Richard Ulinger (hereinafter “Mr. Ulinger”) testified that he is the Supervisor for the Fund. Mr. Ulinger testified that the property located at 1546 N 46th Street, Mesa, Arizona 85205 was not a Class 3 residential property under A.R.S. § 42-12003 at the time of Complainant’s contract with Respondent. Mr. Ulinger stated that the Assessor’s parcel information reflects that the four apartment structure is a class four property. Mr. Ulinger testified that Complainant was not a “person injured” as defined by statute and that Complainant was not eligible for payment from the Fund.[5] 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. § 42-12003 provides as follows: Class three property; definition A. For purposes of taxation, class three is established consisting of: 1. Real and personal property and improvements to the property that are used as the owner's primary residence, that are not otherwise included in class one, two, four, six, seven or eight and that are valued at full cash value. 2. Real and personal property that is occupied by a relative of the owner, as provided by section 42-12053, and used as the relative's primary residence, that is not otherwise included in class one, two, four, six, seven or eight and that is valued at full cash value. B. For the purposes of this section, a homesite that is included in class three may include: 1. Up to ten acres on a single parcel of real property on which the residential improvement is located. 2. More than ten, but not more than forty, acres on a single parcel of real property on which the residential improvement is located if it is zoned exclusively for residential purposes or contains legal restrictions or physical conditions that prevent the division of the parcel. C. For the purposes of this section, "physical conditions" means topography, mountains, washes, rivers, roads or any other configuration that limits the residential usable land area.

4. Complainant’s property located at 1546 N 46th Street, Mesa, Arizona 85205 was not a Class 3 residential property under A.R.S. § 42-12003 at the time of Complainant’s contract with Respondent. The Assessor’s parcel information reflects that the four apartment structure located at 1546 N. 46th Street, Mesa, Arizona 85205, is a class four property. Therefore, Complainant is not an owner of residential real property which is classified as class three property under A.R.S. § 42-12003. This Tribunal concludes that Complainant is not a “person injured” as defined in A.R.S. § 32-1131 and that Complainant is not eligible for payment from the Fund. RECOMMENDed order In view of the foregoing, it is recommended that the Fund’s determination that Complainant is ineligible for payment from the Fund be upheld and that Complainant’s claim for damages from the Fund be denied. 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, October 10, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

Done this day, October 11, 2012.

/s/ Rosella J. Rodriguez Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Administrative notice is taken of Respondent’s prior license record as reflected on the Registrar of Contractors’ public website on October 9, 2012. Such prior license record reflects that License No. B.269986-R of ARI was suspended for lack of bond on November 9, 2011, revoked twice on May 7, 2012, revoked twice on May 15, 2012, revoked on June 14, 2012, revoked twice on July 27, 2012, and revoked on August 21, 2012. [2] This property is a four-plex apartment dwelling with four separate units. [3] See Exhibit No. R-2 Notice to Complainant of Recovery Fund Ineligiblity. [4] A.R.S. § 42-12004 provides as follows: A. For purposes of taxation, class four is established consisting of: 1. Real and personal property and improvements to the property that are used for residential purposes, including residential property that is owned in foreclosure by a financial institution, that is not otherwise included in another classification and that is valued at full cash value. The homesite that is included in class four may include: (a) Up to ten acres on a single parcel of real property on which the residential improvement is located. (b) More than ten, but not more than forty, acres on a single parcel of real property on which the residential improvement is located if it is zoned exclusively for residential purposes or contains legal restrictions or physical conditions that prevent the division of the parcel. For the purposes of this paragraph, "physical conditions" means topography, mountains, washes, rivers, roads or any other configuration that limits the residential usable land area. 2. Real and personal property and improvements to the property that are used solely as leased or rented property for residential purposes, that are not included in class one, two, three, six, seven or eight and that are valued at full cash value. 3. Child care facilities that are licensed under title 36, chapter 7.1 and that are valued at full cash value. 4. Real and personal property and improvements to property that are used to operate nonprofit residential housing facilities that are structured to house or care for persons who are handicapped or sixty-two years of age or older and that are valued at full cash value. 5. Real and personal property and improvements that are used to operate licensed residential care institutions or licensed nursing care institutions that provide medical services, nursing services or health related services and that are structured to house or care for persons who are handicapped or sixty-two years of age or older and that are valued at full cash value. 6. Real and personal property consisting of no more than eight rooms of residential property that are leased or rented to transient lodgers, together with furnishing no more than a breakfast meal, by the owner who resides on the property and that is valued at full cash value. 7. Real and personal property consisting of residential dwellings that are maintained for occupancy by agricultural employees as a condition of employment or as a convenience to the employer, that is not included in class three and that is valued at full cash value. The land associated with these dwellings shall be valued as agricultural land pursuant to chapter 13, article 3 of this title. 8. Real property and improvements to property constituting common areas that are valued pursuant to chapter 13, article 9 of this title. 9. Real and personal property that is defined as timeshare property by section 32-2197 and valued pursuant to chapter 13, article 10 of this title, except for any property used for commercial, industrial or transient occupancy purposes and included in class one to the extent of that use. B. Subsection A, paragraphs 4 and 5 of this section shall not be construed to limit eligibility for exemption from taxation under chapter 11, article 3 of this title

[5] A.R.S. § 32-1131(3) provides as follows: "Person injured" means any owner of residential real property which is classified as class three property under section 42-12003 and which is actually occupied or intended to be occupied by the owner as a residence including community property, tenants in common or joint tenants who are damaged by the failure of a residential contractor or a dual licensed contractor to adequately build or improve a residential structure or appurtenance on that real property. Included in this definition are lessees of residential real property who contract directly with a residential contractor or indirectly with a subcontractor of that contractor and homeowners' or unit owners' associations after transfer of control from the builder or developer for damages to the common elements within the complex.

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