FINACT2014A-4964-ROC-RF.pdf

2014A-4964-ROC-RF · Registrar of Contractors · 2016-07-26

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Sylvia A and Ronny G. Sprague, Case No. 2014-4964 COMPLAINANT, v. Standard Eco LLC, License No. 290548, Docket No. 2014A-4964-ROC-RF RESPONDENT. FINAL ADMINISTRATIVE DECISION AND ORDER

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the Registrar must provide written justification setting forth the reasons for the modification or rejection. REJECTION AND WRITTEN JUSTIFICATION The Registrar accepts in part and rejects in part the Administrative Law Judge Decision, attached as Exhibit 1. The Registrar accepts the Findings of Fact, Hearing Evidence, Post Hearing Evidence, and Conclusions of Law ¶¶ 1-3. The Registrar rejects Conclusion of Law ¶ 4 and the Recommended Order for the following reasons: I. Background and Procedural History The Registrar determined that Respondent performed poor work at Complainant’s residence. After a hearing confirming Respondent’s poor workmanship, Respondent was disciplined by a suspension of its license. Complainant then submitted a claim to the Residential Contractors’ Recovery Fund to correct Respondent’s poor work. Complainant’s claim was supported by three separate bids from qualified residential contractors whose licenses are in good standing. After reviewing the claim and the supporting bids, the Registrar determined that $13,379.08 represented an appropriate award from the Recovery Fund

1 of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 to address “the actual damages suffered by the claimant as a direct result of the contractor’s violation.” A.R.S. § 32-1132(A). The Registrar based the $13,379.08 award on the lowest bid from the three licensed contractors. Notably, none of these three licensed contractors were willing to accept Respondent’s poor workmanship as the basis for their own work. Respondent subsequently contested the appropriateness of the $13,379.08 award. Respondent’s main arguments were (1) that Respondent itself can perform the corrective work that it asserts Complainant needs, and (2) that in the alternative, the award should be no more than the original contract price. See Exhibit 1, Finding of Fact ¶ 19.

II. The ALJ’s Conclusion Regarding the Three Bids from the Licensed Contractors

After the hearing, the administrative law judge concluded that the $13,379.08 award was an

inaccurate reflection of Complainant’s actual damages and resulted in a windfall for Complainant. See

Exhibit 1, Conclusions of Law ¶ 4. That conclusion relied on the premise that the supporting bids from all

three licensed contractors were inaccurate measures of Complainant’s actual damages. Id. The supposed

inaccuracy of the bids follows from a “misperception” shared by all three licensed contractors – namely,

that they would be responsible for a warranty that would in fact be provided by the manufacturer. Id.

But the administrative law judge’s basis for asserting the “misperception” of the three licensed

contractors is a manufacturer’s letter obtained by Respondent. The letter from the manufacturer regarding

the warranty is addressed to Respondent and is dependent on Respondent (“If Standard Eco purchases new coils . . . .”). See Exhibit 1, Findings of Fact ¶ 17. Nothing suggests that the letter constitutes a warranty that any other contractor can rely on or use to perform good repair work. Therefore, the ultimate disposition recommended by the administrative law judge is inappropriate. That disposition is to remand the matter to the Registrar “for recalculation of an award that is consistent with this decision.” See Exhibit 1, Recommended Order. III. Basing the Award on the Market Cost to Repair Respondent’s Poor Work The record does not suggest that the three bids from the licensed contractors are inaccurate measures of Complainant’s “actual damages.” The three bids reflect Complainant’s market cost of hiring a replacement contractor to complete or repair Respondent’s poor work. The manufacturer’s letter offering a warranty to Respondent does not affect what the replacement contractors in this case would charge in order to undertake their own repair or completion of Respondent’s poor work. The letter is limited to Respondent. Therefore, the recommended disposition of the case — recalculating the award on remand — is unnecessary. The record already establishes what another licensed residential contractor is going to charge to complete Respondent’s poor work and provide its own warranty: $13,379.08. IV. Respondent’s Arguments

Respondent asserts that it could perform the work and obtain a warranty from the manufacturer

for less than the $13,379.08 now awarded from the Recovery Fund. The record shows that Respondent —

when it first took the contract — had the chance to perform the work and warranty it, but that Respondent

failed to do so, and that Respondent’s license was disciplined for that workmanship failure.

CONCLUSION AND ORDER

Respondent performed poor work that injured Complainant, and an award of $13,379.08 is

necessary to pay another contractor to perform and warrant corrective work. The Recovery Fund exists to

pay that kind of award in this kind of case.

For the foregoing reasons, the Registrar rejects Conclusion of Law ¶ 4. The Registrar also rejects

the Recommended Order and substitutes the following Order: IT IS ORDERED that Respondent’s appeal is denied. Respondent offered insufficient evidence in opposition of the Recovery Fund’s proposed payout. Therefore, the greater weight of evidence in this matter supports the decision by the Recovery Fund. IT IS FURTHER ORDERED the Residential Contractors’ Recovery Fund issue an award of $13,379.08 to Complainant. The Final Administrative Decision and Order in this case becomes effective on September 4, 2016.

Dated this 26th day of July 2016.

Registrar of Contractors

/s/ James N. Hanson

3 of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 James N. Hanson

Assistant Director, Legal Department Copy mailed via USPS First Class mail this 26th day of July 2016 to:

Respondent Standard Eco LLC 106 S Hazelton Dr. Chandler, AZ 85226-3837 Respondent’s Attorney Trysta M. Puntenney 7301 North 16th Street, Ste. 103 Phoenix, Arizona 85020-5297

Complainant Sylvia A Sprague 4580 E Karsten Dr. Chandler, AZ 85249-7077 Copy electronically sent to: Office of Administrative Hearings Suzanne Marwil, Administrative Law Judge 1400 West Washington, Suite 101 Phoenix, AZ 85007

Attorney General’s Office Thomas Raine, Assistant Attorney General 1275 West Washington Street Phoenix, AZ 85007 Case No. 2014-4964

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762