ALJDEC decisions subject to certification as final

2016A-1440-RFA-ROC · Registrar of Contractors · 2017-09-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Freddy J Kirkegaard & Carol Childers

Complainant,

v.

Artistic Floors and Construction LLC,

License No: 235402

Respondent.

No. 2016A-1440-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 7, 2017, at 8:30 am

APPEARANCES: Scott Welty (“Respondent” for Artistic Floors and Construction, LLC); Thomas Raine (“Mr. Raine”) attorney for Registrar of Contractors (“Registrar”) Recovery Fund Administration “Recovery Fund”); Jessica Ortiz (“Ms. Ortiz”, Witness for the Registrar Recovery Fund); and Doug Ulmer (“Mr. Ulmer” observer for the Registrar Recovery Fund).

TELEPHONIC APPEARANCE: Carol Childers (“Complainant”)

ADMINISTRATIVE LAW JUDGE: Linda Marie Brown

_____________________________________________________________________

In accordance with A.R.S. § 32-1154(G) Respondent timely files his Notice to request an administrative hearing to contest the amount for administrative payout to Complainant as excessively high. The Recovery Fund issued Notice that in review of the claim, it determined to payout Complainant the amount of $12,504.11. Based upon testimony and evidence, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order.

FINDINGS OF FACT

Respondent is the holder of License No. 235402 issued by the Arizona Registrar of Contractors.

Complainant filed a Complaint alleging poor workmanship issues against Respondent with the Registrar on or about May 2, 2016. The Complainant stated a contract date of June 22, 2014, in the amount of $1,200.00 to install hardwood flooring. No written contract was provided.

The Registrar assigned the Complaint to Investigator Jim Dimond. Investigator Dimond performed a jobsite inspection and substantiated minimum workmanship, failure to provide a written contract for work performed over $1,000.00, and lapse in workers compensation policy, and issued a Directive on July 5, 2016 for corrective action to be complete no later than July 20, 2016.

On August 25, 2016, the Registrar issued Citation against Respondent citing violations, in part, of A.R.S. §32-1154(A)(2) departure from or disregard of plans and specifications or any building codes; A.A.C. R9-9-108 minimum construction standards; and A.R.S. §32-1154(A)(22) failure to take appropriate correction action.

An evidentiary hearing was held on November 4, 2016. Both Respondent and Complainant were present. Upon testimony and evidence, the Administrative Law Judge (ALJ) issued its findings and recommended the Respondent be disciplined and subjected to a three (3) day suspension and $500.00 civil penalty. The Registrar, after modifications, accepted the ALJs recommendation.

On or about April 6, 2017, Complainant submitted a claim to the Registrar’s Recovery Fund for damages in the amount of $12,504.11. In Complainant’s claim documents was a Home Depot special services customer invoice no. 0452-470925, sold to Complainant on May 17, 2014, noting 43.00 CT of (20 sq.ft./case) PF9394 Hickory Natural 3/6 in thick x 4 flooring. The price for each case is listed at $577.22 for a total price of $3,320.46, and enough material to install 860 sq. ft. of flooring (43 quantity x 20 sq. ft.). Additional material were purchased to include molding. The invoice showed a refund for labor of $1,747.79, and noted by the supplier/installer “No. 3 . . . go over all warnings/issues w/customer. Discuss unforeseen issues as installers will quote prepwork (if required) after existing floor is removed.”

Included in Complainant’s Recovery Fund Claim was a Claim Denial letter dated March 22, 2017, from RLI Surety in response to Complainant’s claim against Respondent’s bond stating that work was performed June 2014 and the claim filed on March 22, 2017, exceeds the two years for actions on the bond.

Complainant provided receipts for the 2014 flooring project to include materials and labor totaling $6,704.75. This amount appears to be in close comparison to the initial total of $6,325.97 that Home Depot listed in its May 14, 2014, invoice for materials and labor for installing a hickory floor on or about an 860 sq. ft. area.

Complainant provided three (3) bids to install corrective flooring to include: (1) 5 Brothers Discount in the amount of $12,504.11 to install 1074.90 sq. ft of American Hickory flooring at $10.98 per sq. ft. This quote included removal of underlay, adhesive, T-molding and reducer; (2) Desert Hardwood Flooring in the amount of $12,572.00 to install 890 sq. ft. of Camino Hickory flooring at $5.39 per sq. ft. Additional costs added were attributed to installation and labor; and (3) Primera who was found to not be a licensed contractor and did not indicate in its bid the square feet it used in its quote.

Upon review of Complainant’s claim, on June 19, 2017, the Registrar Recovery Fund issued its Notice of Claim for Administrative Payout in the amount of $12,504.11.The Notice provided a 15 day window for either party to contest the determination.

Respondent timely filed his notice to request an administrative hearing on June 26, 2017, contesting the Registrar’s Recovery Fund determination.

At hearing, Jessica Ortiz, Claims Reviewer, testified that Complainants’ payout in this matter is determined upon a full evaluation of the jobsite inspection, the underlying Directive issued and findings from the Administrative hearing held on November 4, 2016.

Ms. Ortiz further testified that upon an information analysis and review of the scope of work, she then compares her findings with the bids the Complainant submitted and in this instance only two (2) were considered as compensable bids. The third quote was disallowed because the company was not a licensed contractor. In comparison, the lowest bid of the two was selected as set forth in the Recovery Fund cost calculation spreadsheet and determined to be the eligible amount to be paid to Complainants for actual harm at their residence in the amount of $12,504.11.

Respondent asked Ms. Ortiz why he was given an opportunity to bid on the project, or provided copies of the bids, to which she replied that the Complainant provides the bids and the Recovery Fund verifies whether the bid is from a licensed contractor, if the scope of the work aligns with the Directive and the findings from the evidentiary hearing. Additionally, persons can request public records.

Respondent asked Ms. Ortiz if in her job assessment she would take note to any discrepancies in square footage between the two bids of 1074 sq. ft. which is the one selected, and the other job quote at 890 sq. ft.? He further asked if this would not raise a red flag given that contractors customarily add approximately 10% or so to the actual square footage of a project to which she replied she does not have an opinion.

Respondent testified he was not properly heard at the evidentiary hearing as he was not the party who performed the work. However, he was reminded the underlying matter has already been decided and today’s hearing is to determine why you are contesting the $12,504.11 award, and should you prevail in your contest.

Respondent testified that the amount quoted is overinflated, and that the square footage is over what is customary for overage in floor installation. He stated that the square foot area in the bid provided is overestimated even if allowing 10% for errors.

Complainant telephonically testified that she provided Respondent with more than an adequate opportunity to repair the flooring, and not hearing from Respondent filed the Complaint. She stated she recently lost her husband and needed to sell the home and for this reason needed to have the hardwood floor complete so that she could sell the home.

When asked about the size of her 3 bedroom home, Complainant stated it was approximately 2,200 sq. ft. and that the hardwood flooring was to be installed in the living room, dining room and kitchen. She estimated the three (3) rooms to collectively be about 810 sq. ft.

In closing, Mr. Raine stated that whether 1074.90 or 890 square feet, the quote by Desert Hardwood Flooring using the lower square footage was actually higher and; therefore, the Notice of Administrative Payout should issue as based on the quote obtained from 5 Brothers Discount in the amount of $12,504.11.

CONCLUSIONS OF LAW

The burden of proof at an administrative hearing is generally upon the person who brings the action. Utah Construction Company v. Berg et al., 68 Ariz. 285, 205 P.2d 367 (1949); A.A.C. R2-19-119(B). Further, the standard of proof at hearing is by preponderance of the evidence. Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A). The Notice of Claim for Administrative Payout states that the party contesting bears the burden of proof to show entitlement to any amount other than that in the Notice. In this instance, Respondent bears the burden of showing, by a preponderance of the evidence, that the proposed payout amount is not reasonable and proper.

Complainants are injured persons 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,” but “[n]o more than the maximum individual award from the fund shall be made on any individual residence or to any injured person.” “Actual damages” are those that will put the injured party in the position in which he was before he was injured. United States Fidelity & Guaranty Co. v. Davis, 3 Ariz. App. 259, 263, 413 P.2d 590, 594 (1966).

Under the facts and circumstances of this case, the Fund is empowered to determine and award, based on actual damages, an appropriate payment to Complainants pursuant to A.R.S. § 32-1132 and A.R.S. § 32-1154(F).

Because payouts from the Fund are limited to $30,000.00 per residence and per injured person, the Fund cannot pay Complainants more than $30,000.00 in total for actual damages suffered as a result of Respondent’s acts or omissions.

The evidence established that Complainant is entitled to an award, however this Tribunal finds the Respondent meet his burden of proof as to the payout amount being excessive. In this instance, Complainant testified the area was 810 sq. ft. Respondent provided testimony that the amount to cost out a job is the actual square footage and approximate 10 percent. In this instance, that would be approximately 890 sq. ft. for the job which is the square footage listed in the unused bid provided by Desert Hardwood Floorings. No third bid was obtained to further assess the actual square footage of the project and no measurements provided or taken during the jobsite inspection. Therefore, this Tribunal relies on the Home Depot invoice and finds that 860 sq. ft. to be near to or approximate square footage. Materials provided by Home Depot listed in its Customer Order Report of 0452-470925 dated 05/17/2014 purchased by Complainant and provided to Respondent to perform the initial install covered 860 sq. ft. (43 cases x 20 sq. ft./case). Therefore, this Tribunal finds that the Registrar’s Recovery Fund should base its payout on the initial 860 square feet of materials purchased by Complainant from Home Depot and used in the underlying job to reflect the following adjustments in payout from 1074.8 sq. ft. to 860 sq. ft. (Home Depot) times $10.98 quote rate used for the determination for a subtotal of $9,442.80 plus $563.45 (.05967 tax rate) for a total payout of $10,006.25.

The evidence of record supports an award to Complainant in the amount $10,006.25, which shall be chargeable against Respondent and persons on the license as set forth in A.R.S. § 32-1139(B).

RECOMMENDED ORDER

In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors make payment from the Residential Contractors’ Recovery Fund to Complainant in the amount of $10,006.25.

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 40 days from the date of that certification.

Done this day, September 27, 2017.

/s/ Linda Marie Brown

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors