ALJDEC decisions subject to certification as final

2012A-547-ROC-rf · Registrar of Contractors · 2014-01-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

RECOVERY FUND ELIGIBILITY/PAYOUT HEARING: December 20, 2013, at 8:00 a.m.; the record was held open until January 3, 2014, to allow Respondent and the Arizona Registrar of Contractors to file responses to Complainants’ Hearing Memorandum. APPEARANCES: Complainants Chris E. Boyles and Karen J. Boyles, 1501 Horses LLC, and KCB Properties LLC were represented by Guy W. Bluff, Esq., Bluff and Associates, P.C.; Respondent Bellagio Builders LLC did not appear; the Arizona Registrar of Contractors was represented by John R. Tellier, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. Chris E. Boyles and Karen J. Boyles, 1501 Horses LLC, and KCB Properties LLC (collectively “Complainants”) filed a claim to the Residential Contractors’ Recovery Fund (“the Fund”) pursuant to A.R.S. § 32-1154(F) to recover damages caused by Bellagio Builders LLC’s violations of A.R.S. § 32-1154(A). 2. On or about September 23, 2013, the Arizona Registrar of Contractors (“the Registrar”) issued a Notice and Order of Recovery Fund Ineligibility, finding that none of the named Complainants were eligible to recover a payout from the Fund. The Registrar’s September 23, 2013 Notice and Order included the following background and analysis: Background and Procedural History:

On or about April 26, 2011 Complainant Chris Boyles (Mr. Boyles) entered into a contract with Bellagio Builders LLC (“Bellagio”), license number 236607, as a sole individual for a new residential home to be built at 1501 Calle De Caballos Tempe, AZ 85284. The contracted price was a fixed amount of $1,596,497.42 subject to additions and deductions pursuant to authorized change orders. Cancelled checks made payable to Bellagio by KCB Properties LLC was submitted by the Mr. and Mrs. Boyles in support of their claim. These payments total $566,722.64 leaving a balance due in the amount of $1,029,724.78.

At the time of contract execution the property was owned by 1501 Horses LLC (“1501”). Mr. and Mrs. Boyles are both managing members of 1501. 1501 obtained title to this property on or about August 16, 2010 from KCB Properties LLC.

On or about December 29, 2011 the Respondent’s performance of the contract was terminated by the Complainant’s attorney due to its superintendent’s failure to supervise subcontractors, approval of subcontractors’ change orders without the consent of Mr. and Mrs. Boyles, subcontractors’ liens against the property, poor workmanship and unsafe, [un]clean and dangerous conditions of the jobsite in general. The last time [Bellagio] performed work on the project was in November of 2011 according to Complainants’ sworn statements to the Registrar on the claim form.

On or about January 30, 2012, Complainants Mr. and Mrs. Boyles filed a complaint against the Respondent with the Registrar of Contractors on behalf of 1501 Horses LLC and KCB Properties LLC alleging abandonment, departure from and disregard of plans and specifications, building codes, workmanship, fraudulent act, failure to complete the contract for the price stated and failure to pay subcon-tractors. Additionally, according to the documents filed within the complaint Mr. and Mrs. Boyles also state they over paid the Respondent in the amount of $128,986.16. A citation was issued to the Respondent. The Respondent answered the citation and the matter was set for an administrative hearing, docket number 2012A-547-ROC. At the hearing, Administrative Law Judge (“ALJ”), Diane Mihalsky, granted Complainants’ request to amend the caption to add as party Complainants Mr. and Mrs. Boyles. Also, in the ALJ’s hearing evidence, Complainant Chris Boyles, testified that he and Mrs. Boyles have formed ten to twelve trusts or limited liability companies on the advice of their attorney for estate planning purposes. Mr. Boyles also testified that KCB Properties LLC is the parent company that paid all the bills for the construction of the subject property. Mr. Boyles continued to testify that 1501 Horses LLC was formed to take legal title to the property when the house was built and that he and Mrs. Boyles presently occupy and always intended to occupy the house. Mr. Boyles stated that he considers the house to be his, even though 1501 Horses LLC owns the residential property. Respondent’s license was subsequently revoked as a direct result of the complaint on November 28, 2012.

On or about April 30, 2013 Complainant Mr. Boyles filed a claim with the Registrar of Contractors Recovery Fund.

Analysis:

In order to be eligible to access the Fund, an applicant must meet four eligibility criteria set forth at A.R.S. § 32- 1131 et seq. See also McMurren v. J.M.C. Builder, Inc., 204 Ariz. 345 (App. 2003). An applicant must meet the definition of a “person injured” set forth at § 32-1131(3) which requires first that the applicant must own residential real property. Second, the property must have had a classification of three under § 42-12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a residence that is damaged by a residential or dual licensed contractor. These criteria must be met at either the time the contract was executed or at the time the injury accrued. Fourth, as set forth in § 32-1132(A), an applicant must have contracted with a residential contractor whose license was in good standing at the time of contract execution. This fourth requirement is only applied at the time the contract was executed, not at the time of injury. McMurren v. J.M.C. Builder, Inc., 204 Ariz. 345, 350 (App. 2003). The Complainants’ eligibility will be addressed individually below:

1. 1501 Horses LLC (1501) Eligibility

Section 32-1131(3) requires, as a threshold issue, that an applicant to the Fund be the owner of the subject property either at the time of contract execution or the date the injury accrued. Further, the owner must also occupy or intend to occupy the subject property as a residence at these relevant time periods. See McMurren v. J.M.C. Builders, Inc., 204 Ariz. 345 (App. 2003). 1501 is not eligible to access the Fund as 1501 is a business entity that cannot occupy a residential structure as a residence, even if it owned the property at the relevant time of contract execution or the time of injury. Additionally, the contract entered into was between Chris Boyles as a sole individual and Bellagio Builders LLC (Bellagio), not 1501 and Bellagio. Further, all subsequent payments for the project were made by KCB Properties LLC, a different business entity.

The Legislature, in adopting the statutory scheme pertaining to the Recovery Fund, chose to limit eligibility to access the Fund to individual ‘persons injured’ that ‘own’ and ‘occupies or intends to occupy’ the property as a ‘residence’. The Fund has a fiduciary responsibility to ensure that only eligible applicants obtain compensation from the Fund. The monies in the Fund are held in trust for such purpose and the administration of such monies requires that all applicants bear their burden of proof to prove their eligibility. 1501 has not and cannot bear that burden of proof.

While the definition of “person injured” has been amended numerous times since the Fund’s creation in 1981, the Legislature has never included in that definition a limited liability company, corporation, partnership, or similar business entity that by law, may own residential real property. As such, the Legislature did not intend that a corporation, partnership or LLC could meet the definition of a “person injured,” which it could have chosen to do. Moreover, the Registrar has never interpreted “person injured” to include a limited liability company. See U.S. Parking Systems v. City of Phoenix 160 Ariz. 210 (App. 1989) (judicial deference is afforded an agency charged with responsibility of carrying out specific legislation and agency’s interpretation of its own statutes should be given great weight). A legal business entity simply cannot occupy or intend to occupy residential property as a “residence”. Therefore, 1501 does not meet the definition of a “person injured.”

Based upon all the foregoing 1501’s claim must be denied as ineligible.

2. Chris and Karen Boyles (Boyles) Individual Eligibility

Complainants Mr. and Mrs. Boyles do not meet the legal definition of a “person injured” as required by § 32-1131.3. Section 32-1131.3 requires, as a threshold issue, that an applicant to the Fund be the owner of the subject property either at the time of contract execution or the date the injury accrued. Further, the owner must also occupy or intend to occupy the subject property at these relevant time periods. See McMurren v. J.M.C. Builders, Inc., 204 Ariz. 345 (App. 2003). In this matter, at the time of contract execution and time of injury Mr. and Mrs. Boyles did not own the property located at 1501 E. Calle de Caballos Tempe AZ.

Based on the Maricopa County Recorder website, at the time of the contract and the time the injury the property was owned by 1501 Horses LLC (“1501”). Additionally, Mr. Boyles testified at the underlying disciplinary hearing that 1501 Horses LLC was formed to take legal title to the property when the house was built, which is what occurred. As stated above, title was transferred from KCB LLC to 1501 LLC around the time of contract. Further, all proof of payments submitted to the Fund indicate payments were made by a different business entity, KCB Properties LLC, not the Complainants Boyles.

In enacting the Recovery Fund, the Legislature expressly stated in 1981 Ariz. Sess. Laws, Ch. 221, § 1, that:

It is the purpose and intent of the legislature to continue the registrar of contractors’ agency in order to protect the public health, safety, and welfare by providing for the continued licensing, bonding and regulation of contractors engaged in residential contracting. It is the further purpose of the legislature to provide improved protection for owners and lessees of property who contract for the construction or alteration of residential structures by establishing the contractors’ recovery fund and the contractors’ recovery fund board. (Emphasis added.)

Accordingly, the Fund’s purpose is limited to protecting those persons who enter into contracts with regulated licensees. Based upon all the foregoing and the records of the Registrar, Mr. and Mrs. Boyles’ individual claim must therefore be denied as ineligible.

3. KCB Properties LLC (KCB) Eligibility

Complainant KCB was the source of payments for the executed contract, but did not own the property at the time of contract execution or at the time of injury. KCB was not a party to the contract. The contract was between Chris Boyles and Bellagio; not KCB and Bellagio.

Section 32-1131(3) requires, as a threshold issue, that an applicant to the Fund be the owner of the subject property either [at] the time of contract execution or the date the injury accrued. Further, the owner must also occupy or intend to occupy the subject property at these relevant time periods. See McMurren v. J.M.C. Builders, Inc., 204 Ariz. 345 (App. 2003). KCB is not eligible to access the Fund as KCB, a business entity, cannot occupy a residential structure as a residence, even if it would have owned the property at the relevant time of contract execution or the time of injury.

While the definition of “person injured” has been amended numerous times since the Fund’s creation in 1981, the Legislature has never included in that definition a limited liability company, corporation, partnership, or similar business entity that by law, may own residential real property. As such, the Legislature did not intend that a corporation, partnership or LLC could meet the definition of a “person injured,” which it could have chosen to do. Moreover, the Registrar has never interpreted “person injured” to include a limited liability company. See U.S. Parking Systems v. City of Phoenix 160 Ariz. 210 (App. 1989) (judicial deference is afforded an agency charged with responsibility of carrying out specific legislation and agency’s interpretation of its own statutes should be given great weight). A legal business entity simply cannot occupy or intend to occupy property as a “residence” therefore, KCB is a “person injured.”

Based upon all the foregoing KCB’s claim must be denied as ineligible.

(Footnotes omitted.) 3. Complainants requested a hearing to appeal the Registrar’s determination that none of them were eligible to recover a payout from the Fund. The Registrar referred the matter to the Office of Administrative Hearings (“the OAH”), an independent state agency, for an evidentiary hearing. 4. On November 15, 2013, the Registrar issued a Notice of Recovery Fund Eligibility/Payout Hearing, setting a hearing on December 20, 2013, at the OAH. The Registrar mailed a copy of the notice of hearing to Bellagio at its address of record. 5. A hearing was held on December 20, 2013. Bellagio did not request to appear telephonically and did not request that the hearing be continued. Although the hearing did not conclude for more than an hour, Bellagio did not appear, through an authorized member, employee, or attorney, and did not contact the OAH to request that the start of the hearing be further delayed. Consequently, Bellagio did not present any evidence to dispute Complainants’ claim to the Fund. 6. Complainants filed a Hearing Memorandum, submitted thirteen exhibits, and presented Mr. Boyles’ testimony. The Registrar cross-examined Mr. Boyles and submitted twelve exhibits. The record was held open to allow the Registrar to file a legal memorandum responding to Complainants’ Hearing Memorandum. Evidence Presented at Hearing 7. Complainants did not dispute the facts alleged in the Registrar’s September 23, 2013 Notice and Order of Recovery Fund Ineligibility. 8. Mr. Boyles testified that, on the advice of his attorneys and accountants, to limit personal and tax liabilities and for estate planning purposes, he and his wife have formed at least 15 irrevocable and revocable trusts, corporations, and limited liability companies to conduct their businesses and to hold title to real and personal properties.[1] Mr. Boyles testified that the first trust was created on November 2, 1993. 9. Complainants acknowledged that at the times when Mr. Boyles contracted with Bellagio and when Bellagio committed the statutory violations that were established in the underlying complaint against Bellagio, 1501 Horses LLC held title to the property and that it currently holds title to the residence. 10. Mr. Boyles testified that he believes that corporations or limited liability companies hold title to most houses in the price range of the house that Bellagio contracted to build. 11. Mr. and Mrs. Boyles are listed as “managers/members” on the printout from the website of the Arizona Corporation Commission (“ACC”) for 1501 Horses LLC.[2] However, on the actual Articles of Organization for 1501 Horses LLC, Mr. and Mrs. Boyles are listed only as managers and KCB Properties LLC is listed as the sole member.[3] 12. Mr. Boyles did not dispute that all of the checks that Complainants provided to the Registrar to establish the amount of payments to Bellagio were drawn on KCB Properties LLC’s bank account,[4] not on Mr. and Mrs. Boyles’ personal bank account. 13. According to the ACC’s printout for KCB Properties LLC, its only Managers/Members are the November 2, 1993 Trust Agreement and KCB Management, Inc., another corporate entity that was formed on the advice of Mr. Boyles’ attorneys and accountants.[5] 14. Mr. Boyles testified that he intended to live in the house with his family when he entered into the contract with Bellagio. Mr. Boyles testified that he and his family currently live in the house and that he and his wife plan to live in the house “forever” and that there are rooms for their unborn grandchildren. 15. Mr. Boyles testified that no one else is authorized to sign documents on behalf of the various trusts, corporations, and limited liability companies that were formed on his attorneys’ and accountants’ advice other than himself and his wife. Mr. Boyles testified that such entities have at least different checking accounts and that although his wife generally makes sure that bills are paid from the account of the entity that is responsible for the bill, occasionally amounts must be reimbursed to the proper account. 16. Mr. Boyles testified that his paycheck pays for all expenditures from the various entities’ accounts, including the checks that KCB Properties LLC paid to Bellagio. Mr. Boyles testified that for tax reasons, his wife does not receive a salary, even though she works for the family businesses. 17. Mr. Boyles testified that he and his wife are the beneficiaries of all of the trusts, corporations, and limited liability companies that were formed on the advice of his attorneys and accountants. 18. Complainants submitted a Memorandum of Lease between 1501 Horses LLC, KCB Properties Inc., and Mr. and Mrs. Boyles that identified Mr. and Mrs. Boyles as the “Lessees” of the property and 1501 Horses LLC and KCB Properties Inc. collectively as the “Lessor.”[6] Mr. Boyles acknowledged that the lease was created a couple of days before the Recovery Fund Eligibility/Payout Hearing. 19. Mr. Boyles testified that if he had been asked a week before the hearing what his relationship to the property was, it would have “clicked” that he was the lessee who had the right to occupy and use the property. 20. The Memorandum of Lease defined the real property and the house that Bellagio built on it as the “Leased Premises.” The property is classified as Class Three residential under A.R.S. § 42-12003. 21. The Memorandum of Lease did not require the Lessees to pay any sum certain as rent, but instead defined as rent and required the Lessees to pay all expenses associated with the Leased Premises, including insurance, property taxes, and homeowners’ association dues. 22. Mr. Boyles acknowledged that although the City of Tempe requires rental tax to be paid on leased premises, no such rental taxes had ever been paid on the purportedly leased property. Mr. Boyles acknowledged that he had never paid rent to 1501 Horses LLC and that he did not know which of his companies paid the property taxes. Mr. Boyles testified that he believed that the limited liability company was the named insured on the homeowner’s insurance policy. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[7] The Notice of Recovery Fund Eligibility/Payout Hearing that the Registrar mailed to Bellagio at its address of record was reasonable and Bellagio is deemed to have received notice of the hearing.[8] Complainants bear the burden of proof to establish their eligibility to recover a payout from the Fund by a preponderance of the evidence.[9] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[10] A.R.S. § 32-1131(3) defines a “person injured” who is eligible to recover from the Fund as follows: [A]ny 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 . . . 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.

(Emphases added.) The Fund owes a fiduciary responsibility to ensure that only eligible applicants obtain payouts from the Fund.[11] To be eligible to access the Fund, a claimant must meet the four eligibility criteria set forth in A.R.S. § 32-1131(3): (1) The property must be classified as Class 3 residential; (2) The claimant must occupy or have intended to occupy the property; (3) The claimant must own or lease the property; and (4) The claimant must have contracted with the contractor and been damaged by the contractor’s statutory violations.[12] “Words contained in statutes are to be given their ordinary meaning unless the context in which they are used suggests another meaning.”[13] The Registrar’s statutes should be read together in light of their purpose “‘to regulate the conduct of those engaged in the business of contracting so as to discourage certain bad practices which might be indulged in to the detriment of the public.’”[14] 1501 Horses LLC and KCB Properties LLC Cannot Recover Any Payout from the Fund Because They Cannot Reside in the House; KCB Properties LLC also Cannot Recover a Payout Because It Does not Own the House.

A.R.S. § 32-1154(A) provides grounds for property owners to file workmanship and other complaints with the Registrar against licensed contractors. A.R.S. § 32-1154(B)(2) defines “owner” to include limited liability companies and other legal entities,[15] such a trust, corporation, limited liability company, or other business association. In contrast, A.R.S. § 32-1131(3) does not include persons who are somehow associated with legal entities that own property among the persons who are entitled to recover a payout from the Fund. Only a natural person can reside at a property. Although the definition of “person injured” has been amended numerous times since the Fund’s creation in 1981, the Legislature has never included in the statutory definition of “person injured” set forth in A.R.S. § 32-1131(3) a limited liability company, corporation, partnership, or similar business entity that by law may own residential real property. In Arizona, because administrative agencies’ interpretations of the statutes that they are charged with implementing are entitled to deference,[16] ambiguities in statutes must be resolved according to the implementing agency’s interpretation.[17] Because the Registrar has never construed “person injured” under A.R.S. § 32-1131(3) to include a limited liability company, even if A.R.S. § 32-1131(3)’s definition of owner were ambiguous, deference must be given to the Registrar’s long-standing construction that a limited liability company cannot recover a payout from the Fund because it cannot reside at a property. Because 1501 Horses LLC and KCB Properties LLC cannot reside at the property, they are not “persons injured” as defined by A.R.S. § 32-1131(3) who are eligible to recover a payout from the Fund. In addition, because KCB Properties LLC does not own the property, it cannot recover a Fund payout. Mr. and Mrs. Boyles Cannot Recover a Payout from the Fund Because They Do Not Own the House, They Do Not Lease the Property, and They Were Not Personally Damaged by Bellagio’s Statutory Violations.

Mr. Boyles acknowledged that 1501 Horses LLC holds legal title to the residence. However, he argued that he and his wife hold equitable title to the residence and that their legal relationship to 1501 Horses LLC is that of lessees to a lessor. A lease is “[a] contract by which a rightful possessor or real property conveys the right to use and occupy the property in exchange for consideration, usu. rent.”[18] Although the Memorandum of Lease purported to convey a leasehold interest in the property to Mr. and Mrs. Boyles, they did not undertake to pay any consideration for the purported interest. The rent described in the Memorandum of Lease included only the expenditures that the limited liability companies, trusts, and corporations have been paying since KCB Properties LLC purchased and 1501 Horses LLC took title to the property. It appears that the Memorandum of Lease was created only to qualify Mr. and Mrs. Boyles as potential Fund claimants. The document does not create any liabilities or rights in Mr. and Mr. Boyles that are different from the liabilities and rights they have due to their status as the principals of, albeit once or twice removed, and the only natural persons associated with 1501 Horses LLC. The Memorandum of Lease does not evidence a transfer of any bona fide property interest.[19] KCB Properties LLC paid Bellagio. Although Mr. Boyles may have provided funds to KCB Properties LLC and his other business entities, because these entities are legally distinct from Mr. Boyles, once funds were infused into them, the funds no longer belonged to Mr. Boyles. In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute's context, subject matter, historical background, effects, consequences, spirit, and purpose.’”[20] If the Fund makes a payout to Mr. and Mrs. Boyles, A.R.S. § 32-1139(B) automatically suspends Bellagio’s license by operation of law until it repays the amount of the payout, plus ten percent interest. A.R.S. § 32-1139(B) further provides that for purposes of the Registrar’s licensing statutes, the natural persons listed on Ballagio’s contractor’s license are personally liable for the payout.[21] This requirement is consistent with other statutes in Title 32, Chapter 10, that require corporate license applicants to list their officers, members, or directors on their license applications[22] and that the persons listed on a contractor’s license are personally responsible for its statutory violations.[23] Although the natural persons listed on Bellagio’s license are personally responsible for Bellagio’s violations of A.R.S. § 32-1154(A) and personally liable for any payout from the Fund that the Registrar may make to reimburse an eligible claimant, even though Bellagio is a limited liability company, those natural persons and Bellagio cannot assert a claim against Mr. and Mrs. Boyles’ personal assets due to their decision to protect their estates and to avoid personal liability by creating numerous artificial entities to conduct their businesses and to hold title to various real and personal properties.[24] The legislature recognized the difference between natural persons and the artificial legal entities with which they may be associated when it declined to allow the natural persons listed on a limited liability company’s license to avoid responsibility for the company’s acts. “Statutes are not interpreted in a vacuum . . . and legal relationships mandated by one statute cannot be ignored in interpreting another.”[25] “Where a term is used in one provision of a statute and omitted from another, that term should not be read into the section where it is omitted.”[26] The legislature knew how to pierce the corporate veil and ignore the corporate form when it saw a reason to do so in the Registrar’s statutes. The language that the legislature used in A.R.S. § 32-1131(3) does not indicate that the Legislature intended to make eligible for Fund payouts natural persons who do not own the residence and who were not personally damaged by a contractor’s statutory violations, even if they reside at the residence and are principals, albeit once or twice removed, of the limited liability company that owns the residence. Because Mr. and Mrs. Boyles do not hold legal or equitable title to the residence and were not personally damaged by Bellagio’s statutory violations, they are not eligible to recover a payout from the Fund. The Williamson v. PVOrbit case that Complainants cite to support Mr. and Mrs. Boyles’ eligibility to recover a payout from the Fund is inapposite.[27] First, Williamson involved application of A.R.S. § 33- 1002(A)(2)’s definition of “owner-occupant” as one who “holds legal or equitable title” to invalidate a materialman’s lien against a property under A.R.S. § 33-420.[28] As noted above, the matter at issue involves A.R.S. § 32-1131(3)’s requirement that a Fund claimant own and reside or intend to reside at the property. Second, the plaintiffs in Williamson held legal title to the property as trustees of the family trust. In contrast, as noted above, Mr. and Mrs. Boyles are principals once or twice removed from the limited liability company that owns the property and hold neither legal nor equitable title to the property. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the final Order, Case No. 2012-547 be closed because Complainants 1501 Horses LLC, KCB Properties LLC, or Chris E. Boyles and Karen J. Boyles have not established that any of them are eligible to recover a payout from the Residential Contractors’ Recovery 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, January 14, 2014.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See Complainants’ Exhibit C-13. [2] See Complainants’ Exhibit C-5; the Registrar’s Exhibit R-10. [3] See the Registrar’s Exhibit R-9. [4] See the Registrar’s Exhibit R-5. [5] See Complainants’ Exhibit C-3; the Registrar’s Exhibit R-11. [6] See Complainants’ Exhibit C-7. [7] See A.R.S. §§ 32-1101 to 32-1169. [8] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [9] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [10] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [11] See A.R.S. § 32-1134(A). [12] See McMurren v. JMC Builders, Inc., 204 Ariz. 345, 350 ¶ 12, 63 P.3d 1082, 1087 (App. 2003) [13] Sunpower of Arizona v. Registrar of Contractors, 166 Ariz. 437, 440, 803 P.2d 430, 443 (App. 1990). [14] See Sunpower, 166 Ariz. at 440, 803 P.2d at 443 (quoting Security Ins. Co. of New Haven v. Day, 6 Ariz. App. 403, 406, 433 P.2d 54, 57 (1967)). [15] A.R.S. § 32-1154(B)(2) defines “owner” as follows: [A]ny person, firm, partnership, corporation, association or other organization, or a combination of any of them, that causes a building, structure or improvement to be constructed, altered, repaired, maintained, moved or demolished or that causes land to be excavated or otherwise developed or improved, whether the interest or estate of the person is in fee, as vendee under a contract to purchase, as lessee or another interest or estate less than fee, pursuant to a construction contract. [16] See, e.g., Bridgestone Retail Tire Operations v. Industrial Commission, 227 Ariz. 453, 456 ¶ 12, 258 P.3d 271, 274 (2011). [17] Eaton v. Arizona Health Care Cost Containment System, 206 Ariz. 430, 434 ¶ 16, 79 P.3d 1044, 1048 (2003). [18] Black’s Law Dictionary, supra, at 907. [19] See, e.g., Mosher v. City Ice Delivery, 32 Ariz. 560, 571, 261 P. 35, (1927) (Lease between surviving partner and partnership was “in no sense” a legitimate transaction). [20] McMurren 204 Ariz. at 350 ¶ 12, 63 P.3d at 1087 (citing Norgord v. State ex rel. Berning, 201 Ariz. 228, P7, 33 P.3d 1166, ¶ 7 (App. 2001), quoting Hobson v. Mid-Century Ins. Co., 199 Ariz. 525, P8, 19 P.3d 1241, ¶ (App. 2001)). [21] A.R.S. § 32-1139(B) provides in relevant part as follows: Any person who is or was, at the time of the act or omission, named on a license that has been suspended because of a payment from the recovery fund is not eligible to receive a new license or retain another existing license that also shall be suspended by operation of law, nor shall any suspended license be reactivated, until the amount paid from the fund is repaid as provided in this subsection. [22] See A.R.S. §§ 32-1101(A)(5) and 32-1122(B)(1)(d). [23] See A.R.S. § 32-1154(A)(21). [24] See Dietel v. Day, 16 Ariz. App. 206, 208, 493 P.2d 455, 457 (1972) (“[A] legitimate purpose of incorporation is to avoid personal liability and if the corporate fiction is too easily ignored and personal liability imposed, then incorporation is discouraged.”). [25] Hughes v. Industrial Commission, 113 Ariz. 517, 520, 558 P.2d 11, 14 (1976) (citing McClain v. Church, 72 Ariz. 354, 236 P.2d 44 (1951)). [26] U.S. Parking Systems v. City of Phoenix, 160 Ariz. 210, 211, 772 P.2d 33, 34 (App. 1989) (citing Dunlop v. First Nat’l Bank of Arizona, 399 F. Supp. 855 (D. Ariz. 1975)). [27] See Williamson v. PVOrbit, Inc., 228 Ariz. 69, 72, 263 P.3d 77, 80 (App. 2011). [28] See id.

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