ALJDEC decisions subject to certification as final

2016A-1723-RFA-ROC-RHG · Registrar of Contractors · 2018-02-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Donnie Gene Patrick,

COMPLAINANT,

v.

Diamond B Steel Shades and More Inc.,

License No: 221194

RESPONDENT.

No. 2016A-1723-RFA-ROC-RHG

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 7, 2017, with the record left open until January 29, 2018

APPEARANCES: Complainant Donnie Gene Patrick was represented by Douglas J. Newborn. Respondent Diamond B Steel Shades and More Inc. was represented by Brain A. Laird. The Arizona Registrar of Contractors was represented by Assistant Attorney General Thomas Raine.

ADMINISTRATIVE LAW JUDGE: Heard by Suzanne Marwil, reviewed and written by Tammy L. Eigenheer after a complete review of the record including oral argument and post-hearing briefs.

_____________________________________________________________________

PROCEDURAL HISTORY

A hearing on the complaint against Respondent filed by Complainant was heard before Administrative Law Judge Tammy L. Eigenheer on October 17, 2016. On November 7, 2016, Judge Eigenheer issued an Administrative Law Judge Decision in which she found that Respondent had committed a violation of A.R.S. § 32-1154(A)(2) and recommended Respondent’s license be suspended for a period of three days. On December 8, 2016, the Arizona Registrar of Contractors (Registrar) issued a Final Administrative Decision and Order in which it accepted the Administrative Law Judge Decision. Neither party appealed the Final Administrative Decision.

A hearing on the Residential Contractors’ Recovery Fund (Recovery Fund or Fund) claim was held on August 24, 2017, before Administrative Law Judge Pro Tem Roger Geddes. After issuing an Administrative Law Judge Decision, the Registrar rejected the Administrative Law Judge Decision in so far as the manner in which Judge Geddes calculated Complainant’s actual damages. The matter was referred back to the Office of Administrative Hearings for rehearing on the limited question of “What is the cost to repair Respondent’s violation and complete the project according to code, as provided for in the contract, minus the amount of nay remaining unpaid balance owed under the contract?” During the argument presented by counsel, the parties agreed that the Findings of Fact issued by Judge Geddes were accepted by the Registrar and did not need to be revisited in this proceeding. As such, Judge Geddes are set forth as the Findings of Fact below.

FINDINGS OF FACT

The Registrar issued License No. 221194 to Respondent.

On May 20, 2016, Complainant filed a complaint with the Registrar against Respondent for abandonment with regard to a construction of a garage at Complainant’s residence. According to the complaint, Complainant had entered into a contract with Respondent on April 6, 2016, for the construction of a garage structure on a pre-existing concrete slab at Complainant’s residence.

On July 14, 2016, the Registrar issued a Directive to Respondent to complete the project per the contract, per properly executed change orders, and and in accordance with local building codes.

When no further work was performed by Respondent, on August 3, 2016, the Registrar issued a Citation and Complaint charging Respondent with a violation of A.R.S. § 32-1154(A)(2).

A hearing was held on October 17, 2016, before the Arizona Office of Administrative Hearings. On November 7, 2016, Judge Tammy L. Eigenheer issued a ruling finding that Respondent had violated A.R.S. § 32-1154(A)(2) for building a structure without a permit and in non-compliance of local building codes and recommended that Complainant’s license be suspended for three days. (Registrar’s Ex. 1).

On December 8, 2016, the Registrar issued a Final Administrative Decision and Order finding that Respondent had violated A.R.S. § 32-1154(A)(2) as charged in the complaint, effective as of January 17, 2017. (Registrar’s Ex. 1). Pursuant to the order, the Registrar suspended Respondent’s license for a period of three days.

On or about March 13, 2017 Complainant filed a claim to the Residential Contractors’ Recovery Fund (“Recovery Fund”) with the Registrar. (Registrar’s Ex. 2). The claim form indicated that that he sought recovery from the Recovery Fund in an amount at least $15,695.00. Complainant also indicated he had not received and would not receive any payment from Respondent’s bond company.

The claim was supported by three bids from Performance Steel Buildings LLC, dated December 23, 2016 (Registrar Ex. 3), Harris Steel Buildings, LLC, dated January 5, 2017 (Registrar Ex. 4), and Home Builders, LLC, dated September 11, 2015 (Registrar Ex. 5). The bid amounts were $26,727.66, $35,875.00, and $35,932.00, respectively, for the removal of the existing structure and the building of a new structure. The bids of Performance Steel Buildings LLC, and Harris Steel Buildings, LLC, also segregated the cost to remove the existing structure in the amounts of $5,190.69 and $6,137.00, respectively.

On June 13, 2017, the Registrar issued a Notice of Claim for Administrative Payout. The Registrar determined that Complainant would receive a payout of $27,242.65 from the Recovery Fund. (Registrar’s Ex. 7).

Respondent filed a timely request for hearing on the Registrar’s Notice of Claim for Administrative Payout.

Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing regarding the amount and/or propriety of the payment from the Recovery Fund. A hearing was held on August 24, 2016.

At the hearing, the Registrar presented the testimony of the Claims Reviewer of the Recovery Fund, Jessica Ortiz (hereinafter “Ms. Ortiz”), and submitted seven exhibits.

Ms. Ortiz stated that she had personally reviewed Complainant’s claim for payment from the Recovery Fund. Ms. Ortiz said that she determined that Complainant was eligible for payment from the Fund for his actual damages.

Ms. Ortiz testified that the Registrar must review all documentation that is necessary on a claim for a payout from the Fund before the Registrar makes a decision for a payout. Ms. Ortiz stated that she reviewed the entire file in this matter, including the three bids. Ms. Ortiz determined that a proper payout from the Recovery Fund for Complainant’s actual damages is the sum of $27,242.65.

Ms. Ortiz testified that she created a Recovery Fund Cost spread sheet in order to determine Complainant’s’ actual damages. (Registrar Ex. 6). Ms. Ortiz testified that the original contract amount was $9,350.70, of which Complainant had paid $4,675.00. Ms. Ortiz testified that she calculated Complainant’s actual damages by subtracting the amount Complainant had yet to pay on the contract ($4,675.70) from the lowest of the three bids, Performance Steel Buildings, LLC ($31,918.35). Ms. Ortiz stated that $4,675.70 was disallowed from Complainant’s actual damages because $4,675.70 was the amount still owing on Complainant’s contract with Respondent.

All exhibits submitted by Complainant and Respondent were admitted into evidence. The Tribunal took administrative notice of the Registrar of Contractor’s file.

Respondent submitted into evidence three bids from Extreme Metalworks, LLC, dated August 8, 2017 (Respondent’s Ex. 1), Mata Construction, LLC, dated July 31, 2017 (Respondent’s Ex. 2), and Shotcrete Specialties, dated August 9, 2017 (Respondent’s Ex. 3). The bid amounts were for $4,750.00, $2,500.00, and $5,000.00, respectively, and represented the cost of removal of the structure built by Respondent. Respondent presented no bids for the repair or replacement of the structure Respondent had built. According to Mr. Bishop, these contractor’\s did not visit the site, but instead prepared their bids from photographs.

Respondent contends that the Administrative Payout in the amount of $27,242.65 would result in a windfall to Complainant. Specifically, he argues that Respondent contracted to build a structure for $9,350.70 and now Complainant seeks a replacement structure to be built at a cost $21,536.97 (lowest bid of $26,727.66 less cost of $5,190.69 to remove structure built by Respondent).

Robert Bishop on behalf of Respondent testified that the scope of work in the bids to build a new structure went well beyond the scope of the contract between Complainant and Respondent. He testified that the new bids involved saw cutting existing concrete and pouring six foot columns and that his structure only involved 18 inch footings around the perimeter of the structure and a 4 by 4 center column. He further testified that the structure he built merely sat on the slab but that the structures proposed actually was supported by the columns.

Mr. Bishop further testified regarding the signed original contract. (Registrar Ex. 2, p. 5). The contract provides for a “40’ x 43’ garage written by Mr. Bishop but does not include detailed specifications. He indicated further on the contract in his handwriting that there would be no engineering drawings and that the “Building only will meet code.” He testified that he was responsible for the building only, and that he was not responsible for the pre-existing slab upon which he was placing the building and which he believed would not conform to local building codes.

Complainant contends that there is no windfall in awarding $27,242.65 and that that amount represents his actual damages due to Respondent’s defective performance. He argues that Respondent contracted to build a structure and that that amount represents the cost to remove the structure built by Respondent with a replacement garage structure built by a new contractor.

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). In this matter, Respondent is contesting the proposed payout from the Fund; therefore, Respondent bears the burden of showing, by a preponderance of the evidence, that the proposed payout amount is not reasonable and proper.

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,” 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 Complainant pursuant to A.R.S. § 32-1132 and A.R.S. § 32-1154(F).

The Registrar interprets “actual damages” to mean the reasonable cost of completing the contract and repairing the contractor’s defective performance, subtracted by the part of the contract price that is still unpaid. See Ramsey v. Arizona Registrar of Contractors, 384 P.3d 316, 320 (Ariz. App. 2016).

To make Complainant whole, Complainant should receive the building he contracted for at the total price for which it was contracted. In this case, Complainant contracted for a 40’ x 43’ garage with three 10’ x 10’ roll up doors on a concrete slab for a total price of $9,350.00.

Pursuant to the evidence presented, the lowest of the three bids submitted by Complainant for the removal and rebuilding of the structure was from Performance Steel Buildings, LLC for $31,918.35.

Complainant still owed $4,675.70 on the contract with Respondent.

Thus, Complainant’s actual damages, that which will make Complainant whole is $31,918.35 less the $4,675.70 still owing on the contract, or $27,242.65.

The evidence of record supports an award to Complainant in the amount $27,242.65, 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 $27,242.65.

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, February 20, 2018

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors