FINACT2015A-3660-RFA-ROC.pdf

2015A-3660-RFA-ROC · Registrar of Contractors · 2018-04-16

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Virgil Stan, Case No. 2015-3660 COMPLAINANT,

v.

Lyle Lee Hemphill DBA: White Mountain Roofing, License No. 151129, Docket No. 2015A-3660-RFA-ROC FINAL ADMINISTRATIVE DECISION AND ORDER RESPONDENT.

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. REGISTRAR’S REJECTION In this case, a hearing was held, and the administrative law judge issued a written decision. See Administrative Law Judge Decision, attached. The Registrar reviewed that decision and hereby rejects it. WRITTEN JUSTIFICATION On March 19, 2018, the administrative law judge issued a recommended decision holding that Complainant was ineligible to access the Residential Contractor’s Recovery Fund. See ALJ Dec. 3:24-26. The Administrative Law Judge Decision concluded that, “Because the [Complainant’s] property was not classified as a class three property at the time of the contract or at the time the claim accrued, Complainant was not a ‘person injured’ as defined by the statute. Therefore, Complainant is not eligible for a payout from the Fund.” See ALJ Dec. 3:19-22. The Administrative Law Judge Decision’s Conclusions of Law and Recommended Order are contrary to applicable statute and existing case law and thus must be rejected.

1 of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Conclusion of Law No. 5 notes that the Arizona Court of Appeals has ruled that there are two relevant times for determining whether a claimant is a “person injured” as defined under A.R.S. § 32- 1131(3): first, when a claimant and contractor enter into a contract; and second, when a claim accrues. See ALJ Dec. 3:12-15. Conclusion of Law No. 7 notes that because the subject property in this case was not a class three property at either the time of the contract or at the time the claim accrued, Complainant was not a “person injured” and was therefore ineligible to recover from the Fund. See ALJ Dec. 3:20-22. In support of this conclusion, the administrative law judge cited to the Arizona Court of Appeals case McMurren v. JMC Builders, Inc. 204 Ariz. 345 (App. 2003). However, McMurren does not stand

for the proposition that there are only two relevant times for determining whether a person is injured. 1

Rather, McMurren merely held that there are at least two relevant times for making such a determination.

See McMurren v. JMC Builders, Inc., 204 Ariz. at 349 (“For the following reasons, we conclude that at

least two legally relevant times when an owner may be a person injured as defined in § 32-1131(3) by

either occupying or intending to occupy the damaged property are when the contract is entered into or

when the claim accrues.”) (emphasis added).

Here, the Registrar initially denied Claimant’s claim because the property was not classified as a

class three property. See ALJ Dec. 2:5-8. The Claimant reclassified the property as a class three property

and reapplied to the Fund. See ALJ Dec. 2:9-16. The Registrar then approved Claimant’s claim. Id.

Notably, no Arizona court has held that a claimant is ineligible to apply to the Fund when the property’s classification is changed prior to applying to the Recovery Fund. Moreover, the statutory language contains no such prohibition. Under A.R.S. § 32-1131(3)(A), person injured means “any owner of residential real property that is . . . . classified as class three property under section 42-12003.” (emphasis added). The Administrative Law Judge’s Findings of Fact are clear; Claimant’s property is classified as a class three property. See ALJ Dec. 2:9-10. Therefore, it is inappropriate to find Claimant ineligible on the basis of the claimant’s property classification.

1 Nor does it stand for the proposition that the property must be properly classified at either of those two times. Notably, McMurren v. JMC Builders, Inc. focused on the occupancy requirement of A.R.S. § 32-1131(3), not the property classification requirement.

CONCLUSION AND ORDER For the foregoing reasons, the Registrar rejects the Administrative Law Judge’s Decision and remands Case No. 2015-3660 back to the Office of Administrative Hearings to determine whether the Registrar’s proposed payout of $15,600 is appropriate. Nothing in this Order requires the administrative law judge to uphold the Registrar’s payout, nor find Claimant eligible to receive a payout. This Order only corrects an error in the Decision and remands back to the Office of Administrative Hearings for further action.

A Notice of Hearing will be issued to the parties in due course.

Dated this 12th day of April 2018.

Registrar of Contractors

/s/ Nicole Sornsin ----------------------------------------------------------- Nicole Sornsin Assistant Director, Legal and Recovery Fund Copy mailed via USPS First Class mail and via electronic mail this 12th day of April 2018 to:

Respondent Lyle Lee Hemphill DBA: White Mountain Roofing PO Box 1828 Lakeside, AZ 85929-1828

Respondent’s Attorney Gregory J. Larson, Esq. Larson & Simpson, PLC. PO Box 359 Lakeside, AZ 85929-0359

Complainant Virgil Stan 5141 N Sabino Fairway Pl Tucson, AZ 85749-7139 Complainant’s Attorney Eric Hawkins, Esq.

3 of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Durazzo Eckel & Hawkins, PC. N. Tucson Blvd. Tucson, AZ 85719-4737

John Riesgo PO Box 843 Pinetop, AZ 85935-0843

Case No. 2015-3660/jo