ALJDEC decisions subject to certification as final

2013A-1791-ROC-rf · Registrar of Contractors · 2015-03-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 23, 2015, at 8:00 a.m. APPEARANCES: The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General Seth T. Hargraves, Esq. Thomas E. Appleton and Louise C. Appleton (hereinafter “Complainants”) appeared through Louise C. Appleton (hereinafter “Mrs. Appleton”). Oates Family Enterprises, Inc., DBA: Havens Roofing (hereinafter “Havens” or “Respondent”) appeared through its qualifying party and officer, Thomas Brent Havens (hereinafter “Mr. Havens”). ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

FINDINGS OF FACT

The Registrar issued License No. CR42.156789-D to Havens on July 6, 2000.[1] Thomas Brent Havens is Havens’ qualifying party. On April 18, 2013, Complainants filed a workmanship complaint with the Registrar against Havens for its poor work in installing a new roof at Complainants’ home at 1290 S. Aspaas Road, Cornville, Arizona 86325.[2] According to the workmanship complaint, Complainants had entered into a contract with Havens on February 27, 2013, and Havens had last performed work on their residence on April 10, 2013. The contract that Complainants attached to their complaint showed February 27, 2013, as the date on which it had been signed.[3] After investigation, the Registrar issued a Citation and Complaint charging Havens with violations of A.R.S. § 32-1154(A)(3),[4] namely A.A.C. R4-9- 108,[5] A.R.S. § 32-1154(A)(13),[6] namely, A.R.S. § 32-1158(B),[7] A.R.S. § 32-1154(A)(21),[8] and A.R.S. § 32-1154(A)(23).[9] On March 20, 2014, the Registrar issued a Consent Order. Havens’ representative, Thomas Brent Havens, signed the Consent Order. Havens specifically acknowledged in the Consent Order that it failed to perform all work at Complainants’ residence in accordance with workmanship and professional industry standards.[10] On or about June 11, 2014, Complainants filed a claim to the Residential Contractors’ Recovery Fund (“Fund”) with the Registrar.[11] On October 7, 2014, the Registrar issued a Notice of Claim for Administrative Payout that provided in relevant part as follows: After review of the claim and all supporting documentation, the Fund has determined that Complainants are to be awarded $6,875.98 in the form of payment issued by the Fund.

Havens filed a timely request for hearing on the Registrar’s Notice of Claim for Administrative Payout. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing regarding the amount and/or propriety of the payment from the Fund. A hearing was held on February 23, 2015. Mrs. Appleton testified on the Complainants’ behalf. Mr. Havens testified on Havens’ behalf. The Registrar presented the testimony of Recovery Fund Claims Adjuster, James Barber (hereinafter “Mr. Barber”), and submitted four exhibits. Mr. Barber testified that he is a Recovery Fund Claims Adjuster for the Registrar. Mr. Barber stated that he had personally reviewed Complainants’ claim for payment from the Fund. Mr. Barber said that the Fund had determined that Complainants were eligible for payment from the Fund for their actual damages. Mr. Barber testified that the Registrar must review all documentation that is necessary on a claim for a payout from the Fund before the Registrar makes a decision for a payout. Mr. Barber stated that he and the Fund had reviewed the entire file in this matter and determined that a proper payout from the Fund for Complainants’ actual damages is the sum of $6,875.98. Mr. Barber said that he caused a Fund inspection to be conducted by a Registrar Inspector before Complainants’ actual damages were determined by the Fund. Mr. Barber testified that he created a Recovery Fund Cost spread sheet in order to determine Complainants’ actual damages.[12] Mr. Barber stated that $685.98 was disallowed from the lowest bid submitted for completing or repairing Complainants’ roof. Mr. Barber said that the $685.98 was disallowed because the replacement of plywood on the roof was not warranted. Mr. Barber’s testimony is found to be credible. Mrs. Appleton testified that the process with the Registrar against Havens had been difficult. Mrs. Appleton opined that Havens failed to do a good job on Complainants’ roof because Havens was in a hurry. Mrs. Appleton stated that Complainants noticed that there were problems with their new roof as soon as the new roof was completed. Mrs. Appleton said that she did not believe that Complainants could fully correct their roof for the sum of $6,875.98. Mr. Havens testified that the Complainants had a beautiful roof. Mr. Havens stated that the repairs on Complainants’ roof should take one man no more than one half day to correct. Mr. Havens said that the sum of $6,875.98 for the repair of Complainants’ roof was “ridiculous.” CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[13] 2. Complainants bear the burden of proof to establish the amount, if any, that they are entitled to recover from the Fund under A.R.S. § 32-1132(A) by a preponderance of the evidence.[14] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[15] 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.”[16] 4. Complainants are “persons injured” who are potentially eligible to recover a payout from the Fund.[17] 5. 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.[18] 6. The Notice of Claim for Administrative Payout stated that Complainants bear the burden of showing, by a preponderance of the evidence, that the proposed payout amount of $6,875.98 is reasonable and proper. Complainants have met that burden. 7. Under the facts and circumstances of this case, the Registrar is empowered to determine an award, based on actual damages, and to make an appropriate payment to Complainants from the Fund pursuant to A.R.S. § 32-1132[19] and A.R.S. § 32-1154(F).[20] 8. The credible evidence of record supports an award to Complainants in the sum of $6,875.98, all of which shall be chargeable against Havens and the persons listed on License No. CR42.156789-D of Havens. RECOMMENDED ORDER Based on the foregoing, it is recommended that, on the effective date of the final Order, the Registrar order the Fund to pay Complainants the sum of $6,875.98 for Complainants’ actual damages. It is further recommended that such payment be made when the monies are available to 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 five days from the date of that certification. Done this day, March 3, 2015.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See the Registrar’s Exhibit 3. [2] See the Registrar’s Exhibit 3 at 1. [3] See the Registrar’s Exhibit 3 at 5. [4] A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” [5] A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [6] A.R.S. § 32-1154(A)(13) (now A.R.S. § 32-1154(A)(12)) provides as follows:

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: . . . .

13. Failure in any material respect to comply with this chapter.

[7] A.R.S. § 32-1158(B) provides as follows:

From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. . . .

[8] A.R.S. § 32-1154(A)(21) (now A.R.S. § 32-1154(A)(20)) provides as follows:

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: Having a person named on the license who is or was named on any other license in this state or in another state that is under suspension or revocation for any act or omission that occurs while the person is or was named on the license unless the prior revocation was based solely on a violation of this paragraph.

[9] A.R.S. § 32-1154(A)(23) (now A.R.S. § 32-1154(A)(22)) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.” [10] See the Registrar’s Exhibit 3 at 9-15. [11] See the Registrar’s Exhibit 2 at 1. [12] See the Registrar’s Exhibit 4. [13] See A.R.S. §§ 32-1131 to 32-1140. [14] See 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). [15] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [16] Black’s Law Dictionary at 1220 (8th ed. 1999). [17] A.R.S. § 32-1131(3) defines “person injured” in relevant part as follows:

"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. 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.

[18] 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.

[19] A.R.S. § 32-1132 provides, in relevant part, as follows:

A. The residential contractors' recovery fund is established, to be administered by the registrar, from which any person injured by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter may be awarded in the county where the violation occurred an amount of not more than thirty thousand dollars for damages sustained by the act, representation, transaction or conduct. An award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines. Actual damages shall not be established by bids supplied by or the value of work performed by a person or entity that is not licensed pursuant to this chapter and that is required to be licensed pursuant to this chapter. If the claimant has paid a deposit or down payment and 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 plus interest at the rate of ten per cent a year from the date the deposit or down payment is made or not more than thirty thousand dollars, whichever is less. Interest shall not be paid from the fund on any other awards under this chapter unless ordered by a court of competent jurisdiction.

[20] A.R.S. § 32-1154(F) provides as follows:

Notwithstanding any other provisions in this chapter, if a contractor's license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter, the registrar may order payment from the residential contractors' recovery fund to remedy the violation. The registrar shall serve the contractor with a notice setting forth the amount claimed or to be awarded. If the contractor contests the amount or propriety of the payment, the contractor shall respond within ten days of the date of service by requesting a hearing to determine the amount or propriety of the payment. Failure by the contractor to respond in writing within ten days of the date of service shall be deemed a waiver by the contractor of the right to contest the amount claimed or to be awarded. Service may be made by personal service to the contractor or by mailing a copy of the notice by registered mail with postage prepaid to the contractor's latest address of record on file in the registrar's office. If service is made by registered mail, it is effective five days after the notice is mailed. Except as provided in section 41-1092.08, subsection H, the contractor or injured person may seek judicial review of the registrar's final award pursuant to title 12, chapter 7, article 6. An applicant to the residential contractors' recovery fund pursuant to this subsection must show that the applicant has proceeded against any existing bond covering the residential contractor and has not collected on the bond in an amount of thirty thousand dollars or more.

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