ALJDEC decisions subject to certification as final

2013A-872-ROC · Registrar of Contractors · 2014-12-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 14, 2014 APPEARANCES: Complainant Katalin Csiba-Spindler appeared on her own behalf. David Fuller, the Qualifying Party, appeared on behalf of Respondent Fuller Builders LLC. The Registrar of Contractors was represented by Assistant Attorney General Seth T. Hargraves. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ Complainant challenges the denial of a payout by the Residential Contractors’ Recovery Fund (“the Fund”). The Fund issued notice that it would not make a payout to Complainant because the Registrar of Contractors (“the Registrar”) was “unable to calculate with any mathematical certainty the amount or scope of work in the original contract.” Complainant requested a hearing, challenging the denial of a payout. Based upon the record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order. FINDINGS OF FACT On February 21, 2013, Complainant Katalin Csiba-Spindler filed a Complaint with the Registrar alleging poor workmanship by Respondent Fuller Builders LLC, holder of License No. KB-2.226918-D issued by the ROC. On the complaint form, Complainant indicated the contract was both written and verbal, that the contract amount was “Per Scope Provided by ins.”, and that the total paid to the contractor was $20,600.00. With the Complaint, Complainant submitted a document entitled Work Authorization Notice to Insurance Company, Mortgage Company, Assignment of Claim, Covenant of Payment (“Work Authorization”). The Work Authorization provided, in relevant part, that “[t]he description of work to be done, materials to be used and/or installed, are described in the “Scope of Work” attached hereto or to be attached hereto. That Scope of Work has been, or will be, submitted to and approved by the insurance company specific to this claim.” There was also a handwritten note on the bottom that read, “Payment per scope provided. Invoice to be scope provided.” Attached to the Work Authorization was a scope of work that indicated a total contract price of $11,088.10. A Corrective Work Order was issued by the Registrar on March 25, 2013. A citation was issued to Respondent that ultimately resulted in a finite suspension of Respondent’s license on February 11, 2014, as a direct result of the Complaint. On March 14, 2014, Respondent’s license was revoked for the failure to pay civil penalties. Complainant made a claim to the Fund on May 12, 2014. The claim indicated that the contract was written, that the contract amount was $30,134.39, and that the total paid to the contractor was $30,134.39. Complainant submitted an additional invoice from Respondent. The invoice identified “added extras performed at said address” totaling $10,695.60. Complainant also provided a document prepared by Pro Claim Public Adjusting Corporation (“Pro Claim”) with a handwritten note on top of the first page that stated, “Original scope that Fuller Builders went by per authorization.” The document identified work exceeding that attached to the Work Authorization and totaling $34,328.03. Complainant asserted that the ultimate scope of work in this matter is reflected in this document. Complainant also submitted appraisal awards from an umpire indicating that on December 21, 2012, the umpire awarded Complainant an additional $18,500.00 for structure loss excluding previous structure loss payments. Complainant also provided financial records showing payments were made to Complainant, Respondent, and Pro Claim totaling $30,134.39. Some portion of that total was paid to Pro Claim for their services provided to Complainant. In addition, Complainant submitted three bids from licensed contractors for the cost of work to replace/repair the project. The three bids were for $38,544.00, $39,140.45, and $47,418.78. The scope of work outlined in the bids was beyond that included in the scope of work attached to the Work Authorization. Upon review of the documents provided by Complainant, the Registrar concluded that the umpire’s award of $18,500.00 did not include an additional scope of work beyond that attached to the Work Authorization. Ultimately, the Registrar concluded that it was unable to calculate, with any mathematical certainty, the amount or scope of work in the original contract. Because Complainant was unable to reconcile the numerous inconsistencies between the Work Authorization, the additional invoice, the Pro Claim scope of work, the umpire’s award, the payment records, and other documentation provided by Complainant. CONCLUSIONS OF LAW The burden of proof at an administrative hearing is generally upon the person who brings the action.[1] Further, the standard of proof at hearing is by preponderance of the evidence.[2] The Notice and Order of Denial of Recovery Fund Claim states that Complainant bears the burden of proof to establish eligibility and compensable actual damages. Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that the denial was improper. Complainant has not met that burden. Complainant is an injured person within the definition in A.R.S. § 32- 1131(3) and is, therefore, entitled to recovery from the Fund. 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.[3] 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). Here, the Administrative Law Judge concludes that the documentation presented was unclear as to the original scope of work that was contracted, any changes to the scope of work resulting from the umpire award or Complainant’s request, and any changes to the amount of the contract that resulted from those changes. This is not to say that Complainant did not suffer a loss as a result of Respondent’s actions or failure to act, but that the exact amount of that loss cannot be determined. Because the scope of work could not be determined and the amount of the contract could not be determined, the Registrar could not properly determine the proper amount of an award from the Fund. Accordingly, Complainant failed to establish that her claim is eligible for a payout from the Fund in any amount. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the final Order in this matter, Complainant Katalin Csiba-Spindler’s claim to the Residential Contractors’ Recovery Fund be closed as Complainant did not establish that she was eligible for a payout from the Residential Contractors’ Recovery Fund in any amount. 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 five days from the date of that certification. Done this day, December 4, 2014.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949); A.A.C. R2-19-119(B). [2] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). [3] United States Fidelity & Guaranty Co. v. Davis, 3 Ariz. App. 259, 263, 413 P.2d 590, 594 (1966).

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