ALJDEC decisions subject to certification as final

2014A-1144-ROC-rf · Registrar of Contractors · 2016-07-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 12, 2016, at 10:00 a.m. APPEARANCES: Richard B. Marx and Cynthia Marx (“Complainants”) appeared through Richard B. Marx (“Mr. Marx”); Solid Rock Roofing LLC (“Respondent”) appeared through Juan Torres (“Mr. Torres”), its qualifying party/ member; the Arizona Registrar of Contractors (“the Registrar”) was represented by Thomas Raine, Esq., Assistant Attorney General. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background 1. The Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing to determine the amount of the payout that Complainants should recover for their January 29, 2016 claim to the Registrar’s Residential Contractors’ Recovery Fund (“the Fund”).[1] The Registrar submitted 16 exhibits and presented the testimony of James L. Barbour, its Claims Reviewer. Complainants submitted one exhibit and presented Mr. Marx’s testimony. Respondent presented Mr. Torres’ testimony. 2. On December 10, 2002, the Registrar issued License No. CR42.181190-D for roofing to Respondent. 3. On or about March 24, 2014, Complainant Mr. Marx filed a complaint against Respondent with the Registrar that alleged various construction deficiencies in the flat and tile roofs that Respondent had installed at Complainants’ residence at 3015 E. Columbus Ave., Phoenix, Arizona 85016 (“the project”).[2] According to the complaint, Complainants had paid Respondent $6,315.00 on the contract price of $5,665.00.

4. The Registrar assigned the complaint to Investigator Tim Pennington (“Investigator Pennington”). Investigator Pennington performed a jobsite inspection and on June 24, 2014, issued a Directive to Respondent to correct by appropriate means certain workmanship deficiencies, in relevant part as follows: 1. New tile underlayment left inches shy of edge of roof. . . . .

2. Replaced scuppers are cheap, ugly and one spills water onto the block fence. . . . .

3. Leaking in front of fireplace and ceiling. . . . .

4. Substantial pooling of water on flat roof over ½” minimum standard from front to back of roof. . . . .

5. Raised tiles in some areas.[3] . . . .

5. Mr. Marx requested a hearing on the complaint and on June 11, 2015, the Registrar issued a Citation[4] that charged cause to discipline Respondent’s license under A.R.S. § 32- 1154(A)(3),[5] namely A.A.C. R4-9-108,[6] and A.R.S. § 32- 1154(A)(22).[7] 6. A hearing was held before Administrative Law Judge (“ALJ”) M. Douglas in the Office of Administrative Hearings. ALJ Douglas concluded that Respondent had not corrected any of the five items on the Directive and that Complainants’ roof leaked in several areas. As a result, ALJ Douglas recommended that Respondent’s license be suspended for five days.[8] Subsequently, the Registrar accepted the recommendation and suspended Respondent’s license for the contracting law violations that were established in Mr. Marx’s workmanship complaint. Complainants’ Claim to the Fund 7. Complainants’ initial claim to the Fund was in the amount of $12,337.00.[9] The Registrar determined that Complainants were eligible to recover a potential payout under A.R.S. § 32- 1131(3) because they owned and resided at the property where Respondent performed the project and the property was classified as class three property.[10] 8. Complainants submitted cancelled checks to establish that they had paid Respondent $2,850.00 and $3,465.00, which included an extra $650.00 added to the $5,665.00 contract amount to replace plywood roof decking.[11] Mr. Barbour testified that it was not unusual for additional plywood to be needed in a roof replacement. Complainants therefore established that no amounts remained due to Respondent under the project. 9. Complainants did not recover anything from Respondent’s surety bond holder because they had not obtained a court judgment against it.[12] 10. Complainants submitted an invoice dated November 17, 2015, in the amount of $6,754.00 from Roofing Consultants of Arizona (“Roofing Consultants”) to install a flat foam roof on their house and their cancelled check to Roofing Consultants in that amount.[13] 11. Mr. Marx testified that because none of the contractors whom Complainants contacted felt that the roofs could be repaired, all of the bids that they submitted were for replacement of the roofs. 12. Mr. Barbour testified that Respondent installed a bitumen flat roof, not a foam roof, on Complainants’ house and that a foam roof was more expensive. Mr. Barbour testified that because Complainants were only entitled to a payout in the amount that a licensed contractor would charge to install a bitumen roof, he requested that Complainants submit bids for the repair or replacement of a bitumen roof. 13. Complainants submitted proposals to replace the flat roof on their house with a bitumen roof in the amounts of $5,778.00 from Roofing Consultants, $7,522.00 from Jack the Roofer Inc., and $5,712.55 from Roofstar of Arizona (“Roofstar”).[14] 14. Complainants submitted proposals to replace the tile roof on their house in the amounts of $8,500.00 from Overton Roofing, $12,847.70 from Roofstar, and $6,612.00 from Roofing Consultants.[15] 15. Mr. Barbour testified that he prepared an excel spreadsheet of the information that Complainants had provided[16] and based on the information that Complainants had submitted, calculated their compensable damages based on the two lowest bids to replace the bitumen roof and the tile roof, which were $5,712.55 from Roofstar and $6,612.00 from Roofing Consultants, for a total proposed payout in the amount of $12,324.55. 16. On March 28, 2016, the Registrar issued a Notice of Claim for Administrative Payout, informing the parties that “[a]fter a review of the claim and all supporting documentation, the Fund has determined that Complainants are to be awarded $12,324.55 in the form of a payment issued by the Fund.”[17]

17. Respondent timely requested a hearing on the amount of the intended payout, stating that he was willing to repay Complainants only the amount that they had paid him to replace the roofs, $6,315.00.[18] 18. Mr. Torres testified that his specialty is bitumen roofing and that Respondent does not install foam roofs. Respondent did not submit any evidence that any appropriately licensed roofing contractors would be willing to repair or replace the roofs on Complainants’ house for less than the amount of the Registrar’s proposed payout. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[19] After the Registrar has determined the amount of the payout from the Fund to which Complainants are entitled, Respondent bears the burden of proof to establish that the Registrar’s calculations were erroneous or not supported by a preponderance of the evidence.[20] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[21] 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.”[22] The record in this matter establishes that Respondent performed poor workmanship that did not comply with the Registrar’s standards on Complainant’s project, furnishing cause to suspend its license under A.R.S. §§ 32-1154(A)(3) and 32-1154(A)(22). A.R.S. § 32-1132(A) describes the measure of damages that an eligible homeowner is entitled to recover from the Fund in relevant part as follows: 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. . . .

(Emphasis added.) Respondent did not present any evidence to establish that any licensed contractor was willing to replace or repair the roofs on Complainants’ house for less than the Registrar’s proposed payout of $12,324.55. Therefore, the proposed payout must be affirmed. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the final order in this matter, the Residential Contractors’ Recovery Fund shall pay $12,324.55 to Complainants Richard B. Marx and Cynthia C. Marx. It is further recommended that under A.R.S. § 32-1139(B), the Registrar shall charge $12,324.55, plus interest at a rate of ten percent a year, to Respondent Solid Rock Roofing LLC’s License No. CR42-181190-D. 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, July 22, 2016.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 6. [2] See the Registrar’s Exhibit 1. [3] The Registrar’s Exhibit 3. [4] See the Registrar’s Exhibit 4. [5] 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.” [6] 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.” [7] 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.” [8] See the Registrar’s Exhibit 5. [9] See the Registrar’s Exhibit 7. [10] See the Registrar’s Exhibits 8 and 9. [11] See the Registrar’s Exhibit 2. [12] See the Registrar’s Exhibit 7. [13] See the Registrar’s Exhibit 10. [14] See the Registrar’s Exhibit 11. [15] See the Registrar’s Exhibit 11. [16] See the Registrar’s Exhibit 14. [17] The Registrar’s Exhibit 15. [18] See the Registrar’s Exhibit 16. [19] See 32-1101 et seq. [20] 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). [21] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [22] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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