ALJDEC decisions subject to certification as final

2012A-3941-ROC-rf · Registrar of Contractors · 2014-10-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 17, 2014 APPEARANCES: Complainants appeared on their behalf; Respondent did not appear; Seth T. Hargraves, Esq. for the Registrar of Contractors ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ FINDINGS OF FACT 1. Respondent J N T Plastering Inc. holds license number CR36.241194-D,[1] issued by the Registrar of Contractors (“Registrar”). Respondent’s license was suspended in August 2013 and was suspended as of the hearing date. 2. Prior to the hearing in this matter, the Registrar took the position that on or about December 8, 2008, Nita K. Gulbas and Brian H. Tognoni (“Complainants”) entered a contract with Respondent for the application of exterior stucco to Complainants’ residence (the “initial contract”). Agency Record, Rf Interv Memo1.pdf, pp 1 - 2. As discussed below, at the hearing, the Registrar took the position that there was no initial contract between the parties, whereas prior to that time, the Registrar had concluded that there was an initial contract. 3. Respondent began work and installed the “brown coat” to the residence in late 2008 or early 2009. Complainants then stopped the construction work at their home due to financial difficulties. After resolving their financial difficulties, on September 30, 2010, Complainants paid Respondent $3500.00 for the estimated cost of materials to complete the stucco work at the home. 4. Prior to the hearing, the Registrar took the position that Complainants abandoned the initial contract and that the $3500.00 payment created a new, oral contract (the “second contract”). Agency Record, Rf Interv Memo1.pdf, pp. 1 - 2. 5. Respondent did not do any work and did not delivery any materials in furtherance of the second contract. 6. On or about August 7, 2012, Complainants filed with the Registrar a complaint against Respondent. As a result of that complaint, an administrative hearing was held on February 7, 2013 (the “Original Matter”). The Original Matter was designated as docket number 2012A-3941-ROC. 7. On February 26, 2013, an Administrative Law Judge Decision was issued in the Original Matter. 8. On April 2, 2013, the Registrar issued an Order (the “Order”) adopting that Administrative Law Judge Decision with the exception of Conclusion of Law No. 4. The Registrar did not accept Conclusion of Law No. 4 because that Conclusion related to work on the brown coat that had been completed in December 2008 or January 2009, and the Registrar determined that claims related to that work were untimely, based on the statute of limitations found in Ariz. Rev. Stat. section 32-1155(A). 9. Through the Order, the Registrar directed that Respondent’s license would be suspended until Respondent paid Complainants $3500.00. 10. On April 26, 2013, Complainants filed a Request for Rehearing of the Original Matter. In their request, Complainants wrote that they did not have a written contract with Respondent, and that Respondent had been hired by Complainants’ contractor Jerry Kachlic of Pyramid Installations. Complainants also wrote that in September 2010 they met with Respondent and subsequently entered a contract directly with Respondent. 11. Complainants’ Request for Rehearing was denied. 12. On or about August 13, 2013, Respondent’s license was suspended as a direct result of the complaint filed in the Original Matter. Agency Record, Rf Interv Memo1.pdf, p. 1. 13. On May 5, 2014, Complainants filed a Recovery Fund Complaint seeking damages in the amount of $11,025.00. 14. The Registrar reviewed Complainants’ Recovery Fund Complaint and determined that Complainants had abandoned the initial contract with Respondent and that a new contract was formed when Complainants paid Respondent the $3500.00. Agency Record, Rf Interv Memo1.pdf, pp. 1 - 2. 15. Because Respondent did not perform any work in furtherance of the second contract, the Registrar determined that Complainants’ actual damages were limited to the $3500.00 they had paid Respondent, and because Complainants had recovered $1000.00 from Respondent’s surety bond, their actual damages were only $2500.00. Agency Record, Rf Interv Memo1.pdf, pp. 1 – 2 (citing Ariz. Rev. Stat. § 32-1132(A)). 16. On June 9, 2014, the Registrar issued a Notice of Claim for Administrative Payout that advised the parties that the Registrar had determined that Complainants would be awarded $2500.00 from the Residential Contractors’ Recovery Fund. 17. Complainants requested a hearing. 18. On July 23, 2014, the Registrar issued a Notice of Recovery Fund Eligibility/Payout Hearing (“Notice of Hearing”) setting the matter for hearing at 8:00 a.m. September 17, 2014, at the Office of Administrative Hearings in Phoenix, Arizona. 19. The Notice of Hearing provided that the hearing was to determine if an award and payment from the Contractors’ Recovery Fund pursuant to Ariz. Rev. Stat. section 32-1154(F) is justified by the evidence. Respondent did not appear at the hearing and the matter was conducted in Respondent’s absence. 20. At the hearing, the Registrar took the position that Complainants did not have a contract with Respondent until September 2010 (i.e., that there was no initial contract). 21. James Barbour, a Recovery Fund claims adjuster, testified that the Registrar did not have a copy of any initial contract between Complainants and Respondent, but the Registrar did have a copy of a proposal between Respondent and Pyramid Installations. Based on this and the Complainants’ Request for Rehearing, Mr. Barbour testified as to the Registrar’s position that there was no initial contract between Complainants and Respondent. 22. The agency record in this matter shows that prior to the hearing, the Registrar had accepted that the proposal between Respondent and Pyramid Installations was the initial contract. The agency record also shows that the Registrar had determined that Complainants had paid Respondent $26,850.70 for work completed under the terms of that proposal, which conclusion is supported by cancelled checks.[2] See Agency Record, Rf Interv Memo1.pdf, pp. 1, 2, 7, 9, and 10. 23. Ms. Gulbas testified that in their Request for Rehearing, Complainants referred to Pyramid Installations as their contractor because Pyramid Installations is a licensed contractor who had been assisting them with some aspects of the construction of their residence and had made recommendations for a number of contractors. 24. Ms. Gulbas testified that Pyramid Installations had made clear through emails that it was not acting as Complainants’ contractor. Ms. Gulbas did not have copies of those emails because she did not know that whether Complainants had a contract with Respondent was at issue in this hearing. 25. Ms. Gulbas also testified that Complainants had contracted with Respondent prior to the payment of $3500.00 in September 2010 (i.e., that there was an initial contract) and that the agreement entered into at that time was a continuation of the parties’ original contract. 26. In the Original Matter, Ms. Gulbas and Respondent’s qualifying party, Kim Ann Tuccino each provided testimony showing that in late 2008 Complainants and Respondent had entered into a contract for stucco work and that the brown coat was completed in furtherance of this contract. 27. In the Original Matter, Ms. Tuccino also testified as to her opinion that the original contract was voided due to the two year delay occasioned by Complainants’ financial difficulties, and that it would have cost between $10,000.00 and $14,000.00 to complete the stucco work. 28. At the instant hearing, Ms. Gulbas testified that because Respondent did not complete the stucco work after Complainants paid Respondent the $3500.00, Complainants were required to hire another contractor that charged them approximately $9375.00 to complete the stucco work.[3] Complainants were therefore requesting a payment that would cover entire cost they incurred to complete the stucco work at their residence (less the $1000.00 they have already recovered). CONCLUSIONS OF LAW 1. Complainants bear the burden of proof in this matter and the standard of proof on all issues is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 2. A preponderance of the evidence is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990). 3. The Registrar is the administrator of the Residential Contractors’ Recovery Fund that may award actual damages to any person injured by the acts or omissions of a licensed residential contractor. However, when the claimant has paid a deposit, but 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. Ariz. Rev. Stat. § 32-1132(A). 4. Recovery Fund claims must be made no later than two years from the date of the contractor’s act that is the cause of the injury. Ariz. Rev. Stat. § 32-1136(A). 5. Complaints alleging that a contractor has committed workmanship violations must be filed within two years of the date of the alleged violation. Ariz. Rev. Stat. § 32-1155(A). 6. There is no dispute that Complainants were injured by acts of the Respondent and the only issue is the degree of Complaints’ damages. There is conflicting evidence as to the contractual relationship between Complainants and Respondents. But regardless of the number and nature of the contracts, Complainants have not shown by a preponderance of the evidence that they should be awarded more than $2500.00. 7. If, as the Registrar asserted at hearing, there was no initial contract, Complainants are precluded by Ariz. Rev. Stat. section 32-1132(A) from recovering more than their $3500.00 payment to Respondent. 8. If, as the Registrar previously determined, there was an initial contract that was abandoned by Complainants, any claims related to that initial contract are barred by the statute of limitations. 9. Even if as Complainants’ assert, the $3500.00 payment was for a continuation of the initial contract, Complainants have not shown that Respondent caused actual and compensable damages of more than $3500.00. 10. Although Complainants had to pay more than $3500.00 to complete the stucco work, the evidence does not show whether any of the additional costs were the result of Respondent’s acts or the result of Complainants’ decision to halt work at the residence.[4] The evidence also does not establish that Respondent agreed to complete the stucco work for the $3500.00 price.[5] Instead, the evidence shows that the $3500.00 was intended to cover material costs and that Respondent believed that it would cost between $10,000.00 and $14,000.00 to complete the work, which is in line with what Complainants actually paid. 11. Because Complainants have already recovered $1000.00 from Respondent’s surety bond, their actual damages are only $2500.00. Consequently, Complainants have not demonstrated by a preponderance of the evidence that their actual damages exceed $2500.00. ORDER IT IS ORDERED that on or before the effective date of the Order entered in this matter that the Registrar commence and finalize payout procedures to award Complainants the sum of $2500.00 for actual damages caused by Respondent’s statutory violations.

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 is forty days after the date of that certification.

Done this day, October 3, 2014.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The Registrar’s website shows Respondent’s license number as 241194. Consistent with existing policy, in this Decision the number set out in the caption is used. [2] It also appears that it is Ms. Gulbas’s signature under the section entitled “Acceptance of Proposal.” [3] Ms. Gulbas did not have an exact figure because that contractor also did work that Complainants acknowledge was not subject to a Recovery Fund claim. [4] Because Complainants have not shown that these additional costs were the result of Respondent’s acts, they have also not shown that their Recovery Fund Claim was submitted within the applicable statute of limitations. [5] This is not to say that such an agreement would have been sufficient to show actual damages, an issue that need not be addressed in this Decision.

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