FINACT2016A-1723-RFA-ROC.pdf

2016A-1723-RFA-ROC · Registrar of Contractors · 2017-10-11

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Donnie Gene Patrick, Case No. 2016-1723 COMPLAINANT,

v.

Diamond B Steel Shades and More Inc, License No. 221194, Docket No. 2016A-1723RFA-ROC 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 In this case, a hearing was held, and the administrative law judge issued a written decision. See Administrative Law Judge Decision, attached as Exhibit 1. The Registrar reviewed that decision and rejects it. 1. The Purpose of the Arizona Residential Contractors’ Recovery Fund is to Make a Claimant “Whole.”

The Arizona Residential Contractors’ Recovery Fund (the “Fund”) was established in 1981 “ to provide improved protection for owners and lessees of property who contract for the construction or

alteration of residential structures.” 1981 Ariz. Sess. Laws, ch. 221, § 1. Under A.R.S. § 32-1132(A):

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.

1 of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Moreover, “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.” Id. (emphasis added). 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. 1st Div. 2016). This interpretation was adopted by the Arizona Court of Appeals in Ramsey v. Arizona Registrar of Contractors. Id. at 322. Thus, the purpose of the Fund is to make a claimant “whole” by putting the

claimant in the position they would have been in had the contract been fully performed.

2. The Administrative Law Judge Incorrectly Applied the “Actual Damages” Calculation.

As noted above, the Court of Appeals adopted the Registrar’s interpretation of actual damages

which requires a calculation of “the reasonable cost of completing the contract and repairing the

contractor’s defective performance, less the part of the contract price still unpaid.” Id. (emphasis added).

Here, the administrative law judge concluded that “Actual damages means the reasonable cost of

completing the contract or repairing the contractor’s defective performance less the contract price

unpaid.” See Exhibit 1, at 6:4-5. (emphasis added). Because the administrative law judge incorrectly

applied the actual damages calculation as adopted by the Appellate Court in Ramsey, the Registrar rejects

the administrative law judge’s recommended decision. The contract between the parties provided that the building “would meet code requirements.” See Exhibit 1, at 4:10-16. However, the administrative law judge in the underlying disciplinary hearing determined that “The evidence established that the building violated the setback, height, and size restrictions and that no permits were pulled for the project. Therefore, Complainant established Respondent disregarded building codes of Pima County in violation of A.R.S. § 32-1154(A)(2).” See ALJ Dec. (disciplinary hearing) 3:20-23, attached as Exhibit 2. Given the conclusions that Respondent agreed to build the structure per code and violated A.R.S. § 32-1154(A)(2), the proper analysis before the administrative law judge on remand is: 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 any remaining unpaid balance owed under the contract? As noted in the Ramsey case, this may result in a situation where “The homeowner requires additional funds to be made ‘whole’ because she has to pay more than originally anticipated to obtain the contracted-for-product.” See Ramsey, 384 P.3d at 321. CONCLUSION The Registrar, therefore, rejects the ALJ Decision and remands the case back to the Office of Administrative Hearings for a further hearing. This hearing must apply the correct calculation for “actual damages” as described in this rejection.

Dated this 10th day of October 2017.

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 10th day of October 2017 to:

Respondent Diamond B Steel Shades and More, Inc. Hc 2 Box 467 Tucson, AZ 85735-9719 Respondent’s Attorney Brian A. Laird Esq. LAIRD LAW FIRM, PLLC. La Paloma Corporate Center 3573 E. Sunrise Dr., Ste. 215 Tucson, AZ 85718-3206

Complainant Donnie Gene Patrick 3148 W. Las Palmas Dr. Tucson, AZ 85741-3648 Complainant’s Attorney Douglas J. Newborn S. Church Ave., Ste. 1200 Tucson, AZ 85701-1601

3 of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Case No. 2016-1723