ALJDEC decisions subject to certification as final

2012A-4419-ROC-rf · Registrar of Contractors · 2015-08-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 6, 2015 APPEARANCES: Robert S. Porter, Esq. for Complainant; Seth T. Hargraves, Esq. for the Registrar of Contractors ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ FINDINGS OF FACT 1. On March 6, 2015, the Registrar of Contractors (“Registrar”) issued a “Notice of Recovery Fund Eligibility/Payout Hearing” setting the above-captioned matter for hearing on May 1, 2015, at the Office of Administrative Hearings in Phoenix, Arizona. 2. The Notice shows that the hearing was set to determine whether an award and payment from the Contractors’ Recovery Fund pursuant to Ariz. Rev. Stat. section 32-1154(F) is justified by the evidence.[1] 3. The matter was continued and the hearing was conducted on August 6, 2015. 4. Complainant Pamela A. Johnson appeared and testified and also presented the testimony of her husband Jim Morgan. The Registrar presented the testimony of Doug Ulmer, a Recovery Fund claims reviewer. 5. On or about June 29, 2012, Ms. Johnson purchased a house from Michael and Nichole Masson, with her intention being to occupy the house as a residence. 6. In November 2010, the Massons had entered a contract for roofing services with Forsythe and Sons Construction, Inc. (“Forsythe”).[2] 7. On November 30, 2010, Forsythe completed the roofing work that underlies the Recover Fund claim at issue in this matter. 8. In August 2012, after Ms. Johnson took possession of the house, Ms. Johnson and Mr. Morgan were doing renovation work when they observed the roof leaking. 9. On September 7, 2012, Ms. Johnson and Mr. Morgan filed with the Registrar a complaint against Forsythe. On November 1, 2013, a hearing was conducted and Forsythe was found to have violated Ariz. Rev. Stat. section 32-1153(A)(23). As a result of the statutory violation, the Registrar suspended Forsythe’s license. 10. On October 7, 2014, Ms. Johnson filed with the Registrar a Recovery Fund claim. 11. Ms. Johnson’s claim was evaluated by reviewer James Barbour. 12. In a “Notice and Order of Denial of Recovery Fund Claim” dated February 2, 2015, the Registrar informed Ms. Johnson that her request for payment from the Fund had been denied. 13. The Registrar denied Ms. Johnson’s claim because it found that she was not eligible to access the Fund for three reasons: (1) she did not own the house at either the time the contract was executed or the time of injury; (2) she did not occupy or intend to occupy the house at the time the contract was executed or at the time of injury; and (3) she did not have a contract with Forsythe. 14. At the hearing, the Registrar informed Ms. Johnson and the tribunal that it no longer considered the lack of contractual privity to be a requirement for eligibility.[3] 15. Prior to her purchase of the house, Ms. Johnson had a home inspection completed. The home inspection revealed that potential deficiencies in two areas, identified as Roof Area #1 and Roof Area #2. Roof Area #2 is not at issue in this matter. 16. The home inspection report shows, among other things, that Roof Area #1’s protective coating was split/cracked/peeled, the covering is curled/separated at the roof seems, and that there was interior damage indicating a possible roof leak. 17. Mr. Morgan testified to the effect that the Massons informed him and Ms. Johnson that the interior damage had occurred prior to Forsythe completing its work in November 2010 and that there had been no leaks since 2010. 18. Ms. Johnson takes the position that the time of injury was in August 2012 when she first observed the roof to leak. The Registrar takes the position that the time of injury was in November 2010 when Forsythe completed its work. CONCLUSIONS OF LAW 1. Ms. Johnson bears the burden of proof and the standard of proof on all issues in this matter 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. To be eligible for a payout from the Fund, Ms. Johnson must show that she is a “person injured” within the meaning of Ariz. Rev. Stat. section 32-1131(3), which provides: "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.

4. In McMurren v. JMC Builders, Inc., the Court concluded that to qualify as a person injured, a claimant was required to meet the ownership and occupancy requirements either at the time the contract was entered or at the time a claim resulting from a violation of Ariz. Rev. Stat. section 32-1154 accrues. 204 Ariz. 345; 63 P.3d 1082 (App. 2003). 5. The McMurren Court also provided that “the claim accrues, when a contractor inadequately builds or improves the property, thereby violating the chapter.”[4] Id. at 349, 63 P.3d at 1086. 6. The claim in this matter accrued when Forsythe completed its work in November 2010. Ms. Johnson did not own the house at the time Forsythe completed its work and the claim accrued, or at the time the Massons entered the contract with Forsythe. 7. Consequently, the Registrar appropriately denied Ms. Johnson’s Recovery Fund claim. ORDER IT IS ORDERED that Pamela A. Johnson’s appeal is dismissed. 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, August 24, 2015.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] In the Registrar’s “Notice and Order of Denial of Recovery Fund Claim,” denying Complainant’s claim, the Registrar informed her that if she requested a hearing, she would be required to prove that she was eligible to access the fund and that there were compensable damages. At the hearing, the Registrar took the position that the hearing was limited to the threshold issue of whether Ms. Johnson is eligible to access the Fund under Ariz. Rev. Stat. section 32-1131 et seq. Complainant agreed to limit the scope of this hearing to that issue. [2] Forsythe did not appear at the hearing. The Notice of Recovery Fund Eligibility/Payout Hearing does not include Forsythe on the mailing list. [3] This change of position was based on the ruling in Pinnamaneni v. Arizona Registrar of Contractors. 347 P.3d 593; 2015 Ariz. App. LEXIS 48; 710 Ariz. Adv. Rep. 4 (App. 2015). [4] Chapter 10, Ariz. Rev. Stat. Title 32.

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