ALJDEC decisions subject to certification as final

2013A-3689-ROC-rf · Registrar of Contractors · 2015-08-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 29, 2015, at 8:00 a.m. APPEARANCES: William B. Kennedy, Sr. (hereinafter “Mr. Kennedy” or “Complainant”) appeared on his own behalf. Valley of the Sun Roofing, LLC (License Nos. C-42.186171-R and L-42.186172-C) (hereinafter “Valley” or “Respondent”) was represented by is attorney, Clifford L. Frisbie, Esq. The Arizona Registrar of Contractors (hereinafter “Registrar” or “ROC”) was represented by Assistant Attorney General Seth T. Hargraves, Esq. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. The Registrar issued License No. C-42.186171-R to Valley on June 23, 2003. 2. The Registrar issued License No. L-42.186172-C to Valley on June 10, 2003. 3. On or about August 2, 2013, the Registrar received a Complaint against Valley from Mr. Kennedy alleging poor workmanship by Valley on a residence owned by Mr. Kennedy that was located at 5302 W. Paradise, Glendale, Arizona 85406. 4. On or about September 6, 2013, Registrar Investigator Phil Coscia (hereinafter “Investigator Coscia”) conducted an onsite inspection at the construction project located at 5302 W. Paradise, Glendale, Arizona 85406. The Registrar subsequently issued a Corrective Work Order on September 20, 2013, directing Valley to properly correct its deficient workmanship on the construction project. 5. On or about October 10, 2013, Mr. Kennedy filed a request that the Registrar issue a Citation against Valley’s contractor’s license. Mr. Kennedy stated that Valley had not corrected the problems with his roof. 6. On or about October 11, 2013, Valley filed a response, stating that Mr. Kennedy’s roof had been corrected by Valley. 7. On or about December 23, 2013, Investigator Coscia conducted a second onsite inspection at the residence located at 5302 W. Paradise, Glendale, Arizona 85406. Investigator Coscia found that Valley had not fully complied with the terms of the Corrective Work Order. During the course of the second onsite inspection, Valley agreed to replace the foam roof on Mr. Kennedy’s residence. 8. On or about February 20, 2014, Mr. Kennedy filed an affidavit with the Registrar stating that Valley had failed to replace the foam roof on the residence located at 5302 W. Paradise, Glendale, Arizona 85406. 9. On March 25, 2014, the Registrar issued a Citation and Notice of Hearing for this matter. An administrative hearing was held on July 21, 2014. During the administrative hearing Mr. Kennedy testified that he wanted to sell the residence located at 5302 W. Paradise, Glendale, Arizona 85406. Mr. Kennedy stated that he could not list the residence for sale until the roof was properly corrected. Mr. Kennedy acknowledged that he did not reside at the residence located at 5302 W. Paradise, Glendale, Arizona 85406.[1] 10. On October 6, 2014, as a direct result of Mr. Kennedy’s complaint, the Registrar suspended Valley’s licenses.[2] 11. On or about December 9, 2014, Mr. Kennedy filed a claim with the Residential Contractors’ Recovery Fund (hereinafter “Fund”) seeking an award of the costs to remove and replace the roof on the residence at 5302 W. Paradise, Glendale, Arizona 85406.[3] 12. On or about April 27, 2015, the Registrar issued a Notice and Order of Denial of Recovery Fund Claim that provided in relevant part as follows: On or about December 9, 2014, Mr. Kennedy filed a claim with the Fund. Fund reviewer James Barbour reviewed the claim. As part of his review, Mr. Barbour reviewed the record of the July 21, 2014 hearing. At the hearing, Mr. Kennedy testified that the Glendale house was not his primary home and that he was fixing up the house to sell it. Mr. Kennedy also testified that he had lived at the Glendale house for twenty years, and that he had built the house himself. Mr. Barbour also noticed that several documents provided by Mr. Kennedy listed his address as 14510 W. Desert Cove Road, Surprise, Arizona 85379-4333 (the “Surprise house”). A quick check of the Maricopa County Assessor’s records shows that the Surprise house is owned by the same trust that owns the Glendale house and that the Surprise house is in care of Mr. Kennedy. Further, the Surprise house is approximately double the size of the Glendale house and more than twenty years newer. Given Mr. Kennedy’s admissions at the hearing and the other evidence the ROC discovered, Mr. Barbour issued a Document Request to Mr. Kennedy to clarify whether Mr. Kennedy occupied or intended to occupy the Glendale house as a residence. Mr. Kennedy responded to Mr. Barbour’s request with several documents including a vehicle registration and a copy of Mr. Kennedy’s driver’s license. Both of these documents list the Surprise house as Mr. Kennedy’s address.

II Analysis-Eligibility:

Pursuant to A.R.S. § 32-1135, the ROC holds assessments received for deposit in the Fund in trust to carry out the purpose of the Fund. In order to fulfill its fiduciary responsibility and determine and amount payable, the ROC must obtain sufficient evidence to support all payments from the Fund. Because a claimant bears the burden to prove its damages by a preponderance of the evidence, the ROC must obtain evidence to show--by a preponderance of the evidence--the extent of all claimed damages. Anything less mandates that the ROC deny the unproven portion of any claimed loss.

A. Mr. Kennedy is ineligible to recover from the Fund because he did not occupy or intend to occupy the Glendale house as a residence at either the time the contract was executed, or at the time the injury accrued.

To be eligible to access the Fund, an applicant must meet five criteria. A.R.S. §§ 32-1131, 32-1132. An applicant must meet the definition of a “person injured” set forth at A.R.S. § 32-1131(3), which requires first that the applicant must own or rent residential real property. Second, the property must have a classification of three under A.R.S. § 42-12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a residence. Forth, the person must be damaged by a residential or dual licensed contractor who has paid for financial protection from the Recovery Fund. These criteria must be met at either the time the contract was executed or at the time the injury accrued. McMurren v. J.M.C. Builder, Inc., 204 Ariz. 345 (App. 2003). Fifth, the construction contract, under which the contractor performed (or failed to perform), must have been executed while the contractor’s license was in good standing. A.R.S. § 32-1132(A). Mr. Kennedy testified at an Administrative Hearing that the Glendale house was not his primary residence. Mr. Kennedy testified that he wanted to sell the Glendale house, but could not until the roof was corrected. Mr. Kennedy also testified that he built the Glendale house and lived in it for twenty five years. County Assessor records show the Glendale house was built in 1983. In 2009, Mr. Kennedy purchased the Surprise house, a home approximately double the size of the Glendale house and more than twenty years newer. Mr. Kennedy has his vehicle registered at the Surprise house and Mr. Kennedy’s driver’s license lists the Surprise house as his address. Based on Mr. Kennedy’s testimony and other evidence before the ROC, Mr. Kennedy--more likely than not--ceased occupying the Glendale house as a residence in 2009, years before he entered into his contract with Valley. As such, Mr. Kennedy did not intend to occupy or intend to occupy the Glendale house as a residence at either the time the contract was executed, or at the time the injury accrued.

III. Conclusion:

Based upon the foregoing, Mr. Kennedy’s claim must be denied as ineligible, with no payment from the Fund.

13. Mr. Kennedy disagreed with the denial of his request and filed a timely request for hearing on the Registrar’s Notice and Order of Denial of Recovery Fund Claim. 14. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing regarding Mr. Kennedy’s eligibility for payment from the Fund. 15. A hearing was held on July 29, 2015. Mr. Kennedy testified on his own behalf. The Registrar presented the testimony of Recovery Fund Claims Adjuster, James Barbour (hereinafter “Mr. Barbour”), and submitted six exhibits. 16. Mr. Barbour testified that he is a Recovery Fund Claims Adjuster for the Registrar. Mr. Barbour 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. Barbour stated that he had personally reviewed Mr. Kennedy’s claim for payment from the Fund. Mr. Barbour said that there was no question that Mr. Kennedy owned the Glendale house. Mr. Barbour opined that Mr. Kennedy was ineligible for payment from the Fund because Mr. Kennedy did not occupy or intend to occupy the Glendale house as a residence at either the time the contract was executed or at the time the injury accrued. 17. Mr. Barbour’s testimony is found to be credible. 18. Mr. Kennedy testified that he wanted an award from the Fund to repair the roof on his home in Glendale, Arizona. Mr. Kennedy acknowledged that he was currently living at the Surprise home. Mr. Kennedy said that the Surprise residence was too large for him and that it was now his intent to re-occupy the residence located at 5302 W. Paradise, Glendale, Arizona 85406, as his personal residence. Mr. Kennedy acknowledged that the Glendale residence was not his personal residence when he entered into the contract for the new roof on the Glendale house. 19. Mr. Kennedy acknowledged that during the administrative hearing held on July 21, 2014, he testified that he could not list the Glendale residence for sale until the roof was properly corrected and that he did not reside at the Glendale residence. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[4] 2. Complainant bears the burden of establishing, by a preponderance of the evidence, both (1) eligibility and (2) compensable damages pursuant to A.R.S. § 32-1131, et seq.[5] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[6] 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.”[7] 4. 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.[8] 5. Credible testimony and evidence established that Mr. Kennedy did not intend to occupy or intend to occupy the Glendale house as a residence at either the time the contract was executed, or at the time the injury accrued. 6. This Tribunal concludes that Mr. Kennedy failed to establish that he is eligible for payment from the Fund pursuant to A.R.S. § 32-1131, et seq. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the Order of Denial of Recovery Fund and that Mr. Kennedy’s claim for payment for damages from the Fund be denied. 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, August 10, 2015. /s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See Exhibit 2 (Documentation from underlying Complaint Proceedings and 7/21/14 Hearing Record 1:52:00-2:09:45). [2] See Exhibit 2 (Documentation from underlying Complaint Proceedings). [3] See Exhibit 1 (Recovery Fund Claim Form with Attachments). [4] See A.R.S. §§ 32-1131 to 32-1140. [5] 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). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] Black’s Law Dictionary at 1220 (8th ed. 1999). [8] 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