ALJDEC decisions subject to certification as final

2012A-3388-ROC-rf · Registrar of Contractors · 2013-10-31

`IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 22, 2013, at 8:00 a. m. APPEARANCES: Ramesh Devaraj and Monika Sub-Devaraj (hereinafter “Complainants”) were represented by Ramesh Devaraj. Simply Home Cinemas LLC (hereinafter “Simply”) was represented by its owner, Anthony John Tangelos. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

Simply challenges a proposed payout by the Residential Contractors’ Recovery Fund (“the Fund”). The Fund has issued notice that it intends to make a payout to Complainants in the sum of $4,594.43. Simply challenges the proposed payout amount as being too high. Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law, and Recommended Order are made: BACKGROUND AND PROCEDURE Simply is the holder of License No. K-11.200305-D issued by the Registrar of Contractors. On or about December 7, 2011, Simply contracted with Complainants to perform remodeling work on their residence for the total sum of $22,900.00. Complainants filed the underlying complaint against Simply alleging numerous workmanship issues. Pursuant to the filing of the formal complaint, the Registrar of Contractors issued a Citation and Complaint charging Simply with possible violations of A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(2), A.R.S. § 32-1154(A)(3), namely, A.A.C. R4-9-108, A.R.S. § 32-1154(A)(16), and A.R.S. § 32-1154(A)(17). A hearing was held in the underlying disciplinary matter on January 15, 2013. The Administrative Law Judge found, in relevant part, as follows:: Simply refused to complete the construction project in accordance with the parties’ construction agreement. This Tribunal concludes that Simply violated the charged provision of A.R.S. § 32-1154(A)(1).[1]

Simply failed to obtain a required construction permit from the local building authority and failed to perform its work in compliance with applicable code requirements and workmanship standards. This Tribunal concludes that Simply violated the charged provisions of A.R.S. § 32-1154(A)(2)[2] and A.R.S. § 32- 1154(3),[3] namely, A.A.C. R4-9-108.[4]

Simply knowingly and falsely represented to Complainant that Simply had a valid K-67.196571-D license and a valid C-62.200578-R license and that Simply was properly licensed to perform major construction work, including structural alterations, at Complainant’s residence. This Tribunal concludes that Simply violated the charged provision of A.R.S. § 32-1154(A)(16).[5]

Simply knowingly contracted to perform work beyond the scope of Simply’s No. K-11.200305-D License. This Tribunal concludes that Simply violated the charged provision of A.R.S. § 32- 1154(A)(17).[6]

The Administrative Law Judge recommended the revocation of Simply’s License No. K-11.200305-D. A Certification of Decision of Administrative Law Judge was issued on March 13, 2013. On April 29, 2013, the Registrar of Contractors issued an Order Denying Petition for Rehearing. On August 12, 2013, the Registrar of Contractors issued a Notice of Claim for Administrative Payout that provided, in relevant 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 $4,594.43 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 5:00 p.m. on August 30, 2013. 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.

On or about August 21, 2013, Simply filed a request for an administrative hearing to contest the amount of the payment. FINDINGS OF FACT Testimony of Ramesh Devaraj Ramesh Devaraj (hereinafter “Mr. Devaraj”) testified that Complainants paid a licensed contractor, identified as Amazing Stairways,[7] the sum of $2,838.00 to properly correct the handrail at Complainants’ residence. Mr. Devaraj stated that the correction was necessary to bring the handrail on the stairway to within applicable code requirements. Mr. Devaraj testified that Complainants paid $85.00 for five new speaker grilles from Yamaha. Mr. Devaraj stated that the new speaker grilles were necessary to replace the speaker grilles that Simply damaged. Mr. Devaraj testified that Complainants paid $95.00 to repair a leather recliner that Simply had damaged in their residence. Mr. Devaraj stated that the leather repair was necessary to prevent the tear in the leather chair from becoming larger. Mr. Devaraj testified that Complainants paid a licensed electrical company, identified as IES Residential,[8] the sum of $250.00 to add three electrical outlets in Complainants’ basement. Mr. Devaraj stated that the three electrical outlets were necessary to bring the basement to within code requirements. Mr. Devaraj testified that Complainants paid a licensed contractor, identified as Arizona Painting Company,[9] the sum of $237.00 to paint the stairway columns and speaker grilles and to touch-up around the new electrical outlets. Mr. Devaraj stated that the painting work was necessary to complete the construction work in Complainants’ basement. Mr. Devaraj testified that Complainants paid a licensed contractor, identified as Floor Source,[10] the sum of $1,426.00 to install carpet in the stairway and basement game room. Mr. Devaraj stated that Complainants paid Floor Source an additional $184.00 for a carpet repair in the theater room. Mr. Devaraj testified that the installation of the new carpet was necessary to complete the construction work in Complainants’ residence. Mr. Devaraj testified that Complainants paid the City of Mesa the sum of $281.00 to obtain a required building permit. Mr. Devaraj stated that the local building authority required that a building permit be obtained for the construction project in Complainants’ residence. Mr. Devaraj testified that the total amount expended by Complainants to correct Simply’s construction errors and to complete the construction project on Complainants’ residence was the sum of $5,396.00. Mr. Devaraj acknowledged that there was a balance of due to Simply under the terms of the parties’ construction agreement. Mr. Devaraj stated that Complainants were willing to accept the sum of $4,594.43 as payment in full for Complainants’ damages in this matter. Mr. Devaraj’s testimony is found to be credible. Testimony of Monika Sub-Devaraj Monica Sub-Devaraj (hereinafter “Ms. Sub-Devaraj”) testified that she agreed with her husband’s testimony. Ms. Sub-Devaraj stated that the construction process had been very difficult for Complainants. Ms. Sub- Devaraj testified that she was very unhappy with the construction work that was performed by Simply. Testimony of Anthony John Tangelos Simply’s owner, Anthony John Tangelos (hereinafter “Mr. Tangelos”), testified that he opposed the amount of the payout proposed by the Fund. Mr. Tangelos stated that the sum of $2,838.00 for the correction of the handrail for the stairway was too high. Mr. Tangelos testified that it would have been far cheaper to build an outside rail for the stairway rather than an inside rail for the stairway. Mr. Tangelos stated that he believed that an outside rail for the stairway would have been code compliant. Mr. Tangelos opined that $600.00 would be a reasonable amount to pay for the construction of the handrail. Mr. Tangelos testified that all of the speaker grilles did not have to be replaced. Mr. Tangelos stated that he was willing to pay the sum of $34.00 for the replacement of two of the speaker grilles. Mr. Tangelos testified that he opposed the payout of anything for the carpet installation and repair. Mr. Tangelos stated that there was enough of Complainants’ old carpet in a closet under the stairway to correct the carpeting on the stairway. Mr. Tangelos testified that the carpet damage in the theater room was minor and should have been left alone. Administrative notice is taken of Simply’s prior license record as reflected on the Registrar of Contractors’ public website on October 29, 2013. Such prior license record reflects that License No. K-11.200305-D of Simply was revoked on June 21, 2013, suspended for lack of qualifying party on August 6, 2013, suspended for lack of bond on October 6, 2012, and suspended for non-renewal on September 1, 2012. 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. The Notice of Claim for Administrative Payout states that Complainants bear the burden of showing, by a preponderance of the evidence, that the proposed payout amount of $4,594.43 is reasonable and proper. Complainants have met that burden. 4. Complainants are injured persons within the definition in A.R.S. § 32- 1131(3)[11] and are, therefore, entitled to recovery from the Fund. 5. Under the facts and circumstances of this case, the Registrar is empowered to determine and award, based on actual damages, an appropriate payment to Complainants from the Fund pursuant to A.R.S. § 32-1132[12] and A.R.S. § 32-1154(F).[13] 6. The credible evidence of record supports an award to Complainants in the sum of $4,594.43, all of which shall be chargeable against Simply and the persons on License No. K-11.200305-D of Simply. RECOMMENDed order In view of the foregoing, it is recommended that the Registrar authorize a payment from the Residential Contractors’ Recovery Fund to Complainants in the amount of $4,594.43. 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 31, 2013.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] A.R.S. § 32-1154(A)(1) includes among the grounds for disciplinary action against a contractor’s license abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal. [Footnote in original.] [2] A.R.S. § 32-1154(A)(2) includes among the grounds for disciplinary action against a contractor’s license, departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code. [Footnote in original.] [3] A.R.S. § 32-1154(A)(3) includes among the grounds for disciplinary action against a contractor’s license, violation of any rule adopted by the registrar. [Footnote in original.] [4] A.A.C. R4-9-108 provides, in pertinent part, as follows:

A. A contractor shall perform all work in a professional and workmanlike manner.

B. A contractor shall perform all work in accordance with any applicable building codes and professional industry standards.

C. All work performed by a contractor in a county, city, or town that has not adopted building codes or where any adopted building codes do not contain specific provisions applicable to that aspect of construction work shall be performed in accordance with professional industry standards.

[Footnote in original.] [5] A.R.S. § 32-1154(A)(16) includes among the grounds for disciplinary action against a contractor’s license, false, misleading or deceptive advertising whereby any member of the public may be misled and injured. [Footnote in original.] [6] A.R.S. § 32-1154(A)(17) includes among the grounds for disciplinary action against a contractor’s license, knowingly contracting beyond the scope of the license or licenses of the licensee. [Footnote in original.] [7] Amazing Stairways LLC holds License No. KB-2.208620-D. [8] I E S Residential Inc. holds License No. K-11.241476-D. [9] Arizona Painting Company LLC holds License No. K-34.251484-D. [10] Floor Source LLC holds License No. K-8.23`1575-D. [11] 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.

[12] A.R.S. § 32-1132 provides, in relevant part, as follows:

A. 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. Actual damages shall not be established by bids supplied by or the value of work performed by a person or entity that is not licensed pursuant to this chapter and that is required to be licensed pursuant to this chapter. If the claimant has paid a deposit or down payment and no actual work is performed or materials are delivered, the award of actual damages shall not exceed the exact dollar amount of the deposit or down payment plus interest at the rate of ten per cent a year from the date the deposit or down payment is made or not more than thirty thousand dollars, whichever is less. Interest shall not be paid from the fund on any other awards under this chapter unless ordered by a court of competent jurisdiction.

[13] A.R.S. § 32-1154(F) provides as follows:

Notwithstanding any other provisions in this chapter, if a contractor's license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter, the registrar may order payment from the residential contractors' recovery fund to remedy the violation. The registrar shall serve the contractor with a notice setting forth the amount claimed or to be awarded. If the contractor contests the amount or propriety of the payment, the contractor shall respond within ten days of the date of service by requesting a hearing to determine the amount or propriety of the payment. Failure by the contractor to respond in writing within ten days of the date of service shall be deemed a waiver by the contractor of the right to contest the amount claimed or to be awarded. Service may be made by personal service to the contractor or by mailing a copy of the notice by registered mail with postage prepaid to the contractor's latest address of record on file in the registrar's office. If service is made by registered mail, it is effective five days after the notice is mailed. Except as provided in section 41-1092.08, subsection H, the contractor or injured person may seek judicial review of the registrar's final award pursuant to title 12, chapter 7, article 6. An applicant to the residential contractors' recovery fund pursuant to this subsection must show that the applicant has proceeded against any existing bond covering the residential contractor and has not collected on the bond in an amount of thirty thousand dollars or more.

-----------------------

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