ALJDEC decisions subject to certification as final

2012A-5960-ROC · Registrar of Contractors · 2014-07-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 2, 2014

APPEARANCES: Complainant appeared on her own behalf; Respondent did not appear. The Registrar of Contractors Residential Contractors’ Recovery Fund intervened in this matter and was represented by Assistant Attorney General Seth Hargraves.

WITNESSES: James Barbour, Claims Reviewer Baya Sommers

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant 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 Complainant for the amount of $11,947.50. Complainant requested a hearing, challenging the proposed payout amount as too low. This tribunal entered the Fund claim file received from the Registrar of Contractors (“ROC”) into the record. The parties presented evidence, including Exhibits 1 through 6 from the Fund and testimony from the witnesses listed above. Based upon the record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order for payout in the amount of $12,847.50. FINDINGS OF FACT 1. Respondent was the holder of License No. C-61.240995-R issued by the ROC. On October 24, 2013, the license was revoked after a default finding of abandonment, workmanship, and other violations by Respondent on a project for Complainant.[1] 2. Complainant made a claim to the Fund on March 25, 2014.[2] After investigation, the Fund found that Complainant was eligible for payout and that Complainant’s contract with Respondent was for a total price of $19,400.00 and that Complainant had paid Respondent $13,200.00 of that amount.[3] This means that Complainant had a remaining, unpaid balance due of $6,200.00.[4] 3. In addition, Complainant submitted three bids from licensed contractors for the cost of work to replace/repair the unfinished and unprofessional job that Respondent had left her with.[5] Of these appropriate bids, the Fund took the lowest, which was $18,147.50. The fund then offset that amount with the unpaid balance and arrived at $11,947.50 as the appropriate amount for payout to Complainant.[6] 4. Complainant objects to that amount.[7] Complainant believes that the full amount of the lowest bid should be paid out to her because that is what it will cost her to get the work completed. She also testified that the amount left owing on her contract with Respondent was $5,300 and not $6,200.00, a $900.00 difference. She bases that argument on cryptic handwritten notations on her contract with Respondent that indicate an “adjustment” was made. There are notations on the contract form that are difficult to decipher but show three notes each concerning “$300.00.” Her testimony is inconsistent with her claim form, wherein she entered “$19,400.00” for the full contract amount,[8] but is consistent with her complaint form, wherein she wrote that the contract amount was “$18,500.”[9] 5. The Administrative Law Judge resolves the conflicting evidence in favor of Complainant. The complaint form was submitted on December 10, 2012, long before Complainant knew she was going to be filing a claim to the Fund and closer in time to the events that led to her Fund claim. Therefore, the Administrative Law Judge finds that the total contract price was $18,500.00 and not $19,400.00. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person who brings the action.[10] Further, the standard of proof at hearing is by preponderance of the evidence.[11] The Notice of Claim for Administrative Payout states that Complainant bears the burden of proof to show entitlement to any amount other than that in the Notice. Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that the proposed payout amount is not reasonable and proper. Complainant has not met that burden. 2. Complainant is an injured person within the definition in A.R.S. § 32-1131(3) and is, therefore, entitled to recovery from the Fund. 3. According to A.R.S. § 32-1132(A), an award from the Fund is limited to “actual damages suffered by the complainant as a direct result of the contractor’s violation . . .,” not to exceed the cost of repair or replacement. “Actual damages” are those that will put the injured party in the position in which he was before he was injured.[12] 4. Under the facts and circumstances of this case, the Fund is empowered to determine and award, based on actual damages, an appropriate payment to Complainant pursuant to A.R.S. § 32-1132 and A.R.S. § 32- 1154(F). 5. Here, the Administrative Law Judge concludes that the Fund appropriately used the low estimate and then deducted the unpaid balance from that amount. That is the appropriate way to determine Complainant’s actual damages and put her in the position that she would have been in but for the violations. The Fund’s analysis for determining actual damages is correct. The Administrative Law Judge has merely replaced the total contract price of $19,400.00 with $18,500.00 in that analysis. Looked at another way, Complainant agreed to pay $18,500.00 for the work. She should not have to pay a dime over that amount due to Respondent’s violations. Therefore, any amount that is needed to fix the work and that exceeds $18,500.00 should be paid to her by the Fund (and ultimately by Respondent). That amount is $12,847.50.[13] 6. The evidence of record supports an award to Complainant in the amount of $12,847.50, all of which shall be chargeable against Respondent and persons on the license as set forth in A.R.S. § 32-1139(B). RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors make payment from the Residential Contractors’ Recovery Fund to Complainants in the amount of $12,847.50.

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 Decision will be 40 days from the date of that certification.

Done this day, July 22, 2014.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Exhibit 2. [2] Exhibit 3. [3] Exhibit 5. [4] Exhibit 3. [5] Exhibit 3. [6] Exhibit 1. [7] Exhibit 6. [8] Exhibit 3. [9] Exhibit 2. [10] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949); A.A.C. R2-19-119(B). [11] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). [12] United States Fidelity & Guaranty Co. v. Davis, 3 Ariz. App. 259, 263, 413 P.2d 590, 594 (1966). [13] First, $13,200.00 (amount paid) + $18,147.50 (amount to correct) = $31,347.50 (total amount to get property to where it should have been if there had been compliance). Then, $31,347.50 (total needed for project) - $18,500.00 (agreed price) = $12,847.50 (amount over the agreed upon price). Complainant will be paying only as much as she agreed to pay for the project. Her actual damages are any amount above that.

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