ALJDEC decisions subject to certification as final

2012A-4222-ROC · Registrar of Contractors · 2014-05-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 11, 2014 APPEARANCES: Complainant appeared on his own behalf. Respondent did not appear. The Registrar of Contractors was represented by Assistant Attorney General Seth T. Hargraves. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT Background and Procedure 1. The Arizona Registrar of Contractors (the Registrar) issued License No. C-39R.103060-R to AL Tech Energy Management Inc. (Respondent). Respondent’s current address of record is 21402 North 7th Avenue, Phoenix, Arizona 85027-7037. 2. John R. McAtee, Jr. (Complainant) submitted a claim to the Registrar’s Residential Contractors’ Recovery Fund (the Fund). On December 16, 2013, the Registrar issued a Notice and Order of Denial of Recovery Fund Claim (Denial) that informed the parties that the Fund had determined Complainant did not meet the eligibility requirements to access the Fund. 3. Complainant requested a hearing on the Registrar’s Denial. The Registrar referred the matter to the Office of Administrative Hearings (OAH), an independent agency, for an evidentiary hearing. 4. On February 11, 2014, the Registrar issued a Notice of Recovery Fund Eligibility/Payout Hearing setting a hearing at 8:00 a.m. on April 11, 2014. The Registrar sent a copy of the Notice of Recovery Fund Eligibility/Payout Hearing to Respondent at its address of record. 5. A Recovery Fund Payout Hearing was held on April 11, 2014. Complainant appeared on his own behalf and submitted one exhibit. The Registrar submitted four exhibits and presented the testimony of James Barbour, Claims Adjuster for the Fund. 6. Respondent did not request to appear telephonically and did not request that the hearing be continued. Although the hearing did not conclude for over an hour, Respondent did not appear through an officer, authorized employee, or attorney. Consequently, Respondent did not present any evidence. Hearing Evidence 7. On or about September 1, 2010, George and Dawn Truelove (Trueloves) entered into a contract with Respondent for the installation of a heat pump and air conditioner at their home at 19123 North Signal Butte Circle, Sun City, Arizona. Respondent completed the work, and the Trueloves paid the full contract price of $6,000.00. 8. On or about June 3, 2012, Complainant entered into a contract with the Trueloves for the purchase of the home at a price of $106,000.00. 9. On or about August 29, 2012, Complainant filed a complaint with the Registrar alleging poor workmanship by Respondent that resulted in the roof of the home leaking. 10. The Registrar assigned the complaint to Inspector Scott Deering for investigation. On September 26, 2012, Inspector Deering issued a Corrective Work Order giving Respondent 15 days to correct the deficient work. 11. Respondent did not comply with the Corrective Work Order and the Registrar issued a Citation and Complaint against Respondent’s license. On August 26, 2013, after Respondent failed to file a timely written answer to the Citation and Complaint, the Registrar issued a Default Decision and Order that, pursuant to A.R.S. § 32-1155(B), deemed Respondent’s failure to file an answer an admission of the charges and, based on the admission, revoked Respondent’s license and ordered Respondent to pay a $500.00 civil penalty. 12. On November 19, 2013, Complainant filed a claim to the Fund in the amount of $1503.00. Complainant attached to his claim evidence that he had paid $825.00 to repair the roof and three bids to repair the water damaged master bedroom ceiling ranging from $678.00 to $995.00. 13. The Registrar determined that Complainant was not eligible for recovery of damages because he was not the owner of the property at the time of the contract, he did not occupy or intend to occupy the property as a residence, and he did not contract with a residential contractor, and therefore, Complainant was not a “person injured” as defined in statute. 14. Complainant argued that, while he did not own or reside in the property and did not contract with Respondent, he was assigned the rights of the Trueloves when he purchased the home. Complainant maintained that he was the type of individual the Fund was intended to protect. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] The Notice of Recovery Fund Eligibility/Payout Hearing that the Registrar mailed to Respondent at its address of record was reasonable. Respondent is deemed to have received notice of the Recovery Fund Payout Hearing.[2] Complainant bears the burden of proof to establish the amount, if any, that he is entitled to recover from the Fund under A.R.S. § 32-1132(A) by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 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.”[5] A.R.S. § 32-1131(3) defines a “person injured,” in relevant part, as follows: any owner of residential real property which is classified as class three property under [A.R.S. § 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.

Further, A.R.S. § 32-1132(A) provides, in relevant part, as follows: [a]n 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.

Complainant is not a “person injured” who is eligible to recover a payout from the Fund. Complainant did not own the property at the time of the contract with Respondent or at the time the injury accrued. Complainant did not actually occupy or intend to occupy the property as a residence at the time of the contract with Respondent or at the time the injury accrued. Complainant did not contract with a residential contractor whose license was in good standing at the time the contract was executed. Complainant argued that the Trueloves met the definition of a “person injured” and, because he purchased the property directly from them, he also acquired their rights to recovery under the Fund. Complainant offered no authority to support his interpretation of the statutes applicable to the Fund. The Registrar has a fiduciary duty to preserve the Fund’s assets and to ensure that no payouts are made except as authorized by statute.[6] Because Complainant was not a “person injured” under the definition of the statute, he was not entitled to recovery from the Fund. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar find that the claim filed by John R. McAtee, Jr., was not eligible for recovery from the 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, May 1, 2014.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] A.R.S. §§ 32-1131 to 32-1140. [2] A.R.S. § 41-1092.04; A.R.S. § 41-1092.05(D). [3] 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). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at 1220 (8th ed. 1999). [6] A.R.S. § 32-1134(A) requires the Registrar to take the following actions to preserve the Fund and to ensure that payouts for damages that are authorized by law are made from the Fund:

1. Establish assessments and maintain the fund balance at a level sufficient to pay operating costs and anticipated claims using the cash basis of accounting. 2. Cause an examination of the fund to be made every three years by an independent certified public accountant. 3. File with the department of insurance an annual statement of the condition of the fund. 4. Employ accountants and attorneys from monies in the fund, but not to exceed ten thousand dollars in any fiscal year, that are necessary for the performance of the duties prescribed in this section. 5. Employ or contract with individuals and procure equipment and operational support, to be paid from or purchased with monies in the fund, but not to exceed in any fiscal year fourteen per cent of the total amount deposited in the fund in the prior fiscal year as may be necessary to monitor, process or oppose claims filed by injured persons which may result in collection from the recovery fund.

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