ALJDEC decisions subject to certification as final

2016A-3177-ROC · Registrar of Contractors · 2017-07-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Karen Lee Mathews,

COMPLAINANT,

v.

Kia Ty Lam

DBA: Kia's Air Conditioning and Heating

License No. R39R.093820-R,

RESPONDENT.

No. 2016A-3177-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 25 and July 11, 2017

APPEARANCES: Karen Lee Mathews on her own behalf; John Tellier, Esq. for the Registrar of Contractors; Kia Ty Lam and Phuong Lam for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

_____________________________________________________________________

FINDINGS OF FACT

On March 10, 2017 the Registrar of Contractors (“ROC”) issued a Notice of Recovery Fund Eligibility/Payout Hearing setting the above captioned matter for hearing at the Office of Administrative Hearings on April 25, 2017.

The matter was convened on April 25, 2017, and was concluded on July 1, 2017.

Respondent Kia Ty Lam d.b.a. Kia's Air Conditioning and Heating holds license number R39R.093820-R issued by ROC. Kia Ty Lam is Respondent’s qualifying party.

Complainant is Karen Lee Mathews.

With a check dated April 14, 2016, Audrey Mathes paid to Respondent $4500 for work to be conducted at 2153 North Chilean Avenue, Casa Verde Estates – SP#154, Casa Grande, Arizona. The work included replacing an existing heating and cooling unit with a 3.5-ton gas/electric package unit.

The North Chilean address is for a mobile home that Ms. Mathews took title to on April 22, 2016.

On August 22, 2016, ROC received from Ms. Mathews a complaint against Respondent. Ms. Mathews’s complaint shows that she moved into the mobile home on May 1, 2016.

After an investigation, on October 3, 2016, ROC issued to Respondent a Directive ordering Respondent to make certain repairs.

On November 1, 2016, ROC issued to Respondent a Citation alleging that Respondent may have violated various statutes.

On December 1, 2016, ROC issued a Final Administrative Decision and Order in which it determined that Respondent failed to respond to the Citation and that Respondent had violated Ariz. Rev. Stat. sections 32-1154(A)(2), (A)(3), (A)(12), and (A)(22). ROC ordered that Respondent’s license was to be suspended for one day and it assessed a civil penalty of $250 against Respondent.

On December 19, 2016, Ms. Mathews submitted to ROC a Recovery Fund Claim related to the work for which ROC suspended Respondent’s license. With her claim, Ms. Mathews provided a June 8, 2016 “Personal Property NOTICE OF VALUATION” for the mobile home at issue. That Notice of Valuation shows that the mobile home was classed as “0401MP.” The Notice was addressed to Ms. Mathews at 2377 East Santiago Trail, Casa Grande.

Other property tax information provided to ROC by Ms. Mathews shows that the land on which the mobile home is located was classified as “0402L – Rental Residential.”

Through a Notice dated December 20, 2016, ROC denied Ms. Mathews’s claim because the information she provided did not show that the property at issue had been designated as “class three” at any relevant time, meaning that Ms. Mathews did not meet the statutory definition of a “person injured.”

In a letter dated January 27, 2017, the Pinal County Assessor, Mobile Homes Department, wrote: the mobile home at issue had never been classified as a rental property; the 0401mp designation is that of non-primary residence; and that as of January 27, 2017, the unit was classified as a “primary residence (03mp).”

On February 21, 2017, ROC issued a Notice of Claim for Administrative Payout showing that the ROC had determined that Ms. Mathews was eligible to be awarded a $6556 in the form of a payment issued from the Fund.

Respondent filed a request for an administrative hearing, which led to this matter being scheduled.

ROC’s Doug Ulmer, who processed Ms. Mathews’s recovery fund claim, testified to the effect that ROC’s Directive had required Respondent to make repairs that were set out in a Correction Notice issued by City of Casa Grande on October 27, 2016. That Correction Notice listed the required corrections as: (1) properly support gas-line; (2) replace nipple at unit with shorter one so as not to intrude into access to crawl space; (3) oversized unit was to be replaced with 21⁄2 ton package unit; (4) access to crawl space is required to be treated wood for ground contact; (5) repair/correct duct work and balance; and (6) properly support the water-tight flex conduit.

Mr. Ulmer considered three bids or proposals received by ROC and, based on the low bid of $6556 prepared by Desert Sun Heating, Cooling & Refrigeration, Inc., concluded that Ms. Mathews should be awarded $6556.

At the first day if the hearing, Respondent had entered into evidence a November 16, 2016, letter from Casa Grande to Ms. Mathews showing that Respondent’s heat-load calculations had proven to the City that there was no code requirement for the 3.5 ton unit Respondent installed to be replaced with a 2.5 ton unit (i.e., item 3 on the City’s Correction Notice was no longer an issue from the City’s perspective). In addition, at the hearing Mr. Ulmer acknowledged that Desert Sun’s bid of $6556 included work that was not listed in the City’s Correction Notice. The matter was adjourned to allow ROC time to consider this information.

At the second day of hearing, Mr. Ulmer testified to the effect that ROC had determined that the Desert Sun estimate was not valid because it included replacing the 3.5 ton unit and because it included tasks that were not part of Respondent’s scope of work. Consequently, Mr. Ulmer had contacted Desert Sun and through a series of emails received estimates to complete items 1, 2, 4, 5 and 6 from the City’s Correction Notice and item # 5 on ROC’s Directive (installing a concrete pad for the unit) that was not included in the City’s Notice.

Desert Sun’s emails show that it proposed to: support the gas line, replace the nipple and support the flex conduit for $150; revise and redo the crawl space entry with treated wood for $350; revise the existing ductwork for proper & even air flow, including adding eight supply registers with return supply and air tight sealing of all duct work for $2210; and install a concrete pad for $200. (Underscoring added.)

Subsequently, Desert Sun provided ROC with a revised cost of $1930 to do the duct work without adding the eight registers, because these registers were not part of Respondent’s scope of work.

Although Mr. Ulmer testified to the effect that the emails ROC received from Desert Sun were sufficient to show that Ms. Mathews should be awarded $2630, the emails do not correspond to the City’s Correction Notice because that Notice does not include an explicit requirement to “revise the existing duct work” and does not mention “air tight sealing” at all.

Mr. Lam and Respondent’s employee Pelon Sotelo testified to the effect that Respondent had made all the repairs listed in the City’s Notice of Correction with the exception of using treated wood at the crawl space, but neither could say with any certainty when these repairs were made and Respondent provided no documentation in support of this testimony. Ms. Mathews testified that Respondent had made some of these repairs, but that was before the City issued the Notice of Correction (which would mean that the City’s inspector did not believe the work was done appropriately).

CONCLUSIONS OF LAW

Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

“At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2).

A preponderance of the evidence is:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Black’s Law Dictionary 1373 (10th ed. 2014).

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

The purpose of the recovery fund is to provide improved protection for owners and lessees of property who contract for the construction or alteration of residential structures. McMurren v. JMC Builders, 204 Ariz. 345, 63 P.3d 1082 (2003 App.).

“The assessments received by the registrar for deposit in the fund shall be held in trust for carrying out the purposes of the fund.” Ariz. Rev. Stat. § 32-1135.

Any “person injured” by a licensed residential contractor’s violation of ROC’s statutes or rules may be awarded up to $30,000 from the residential recovery fund. But an “award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation ....” Ariz. Rev. Stat. § 32-1132(A).

“‘Person injured’ means any owner of residential real property which is classified as class three property under section 42-12003 [who is damaged by the contractor.] Included in this definition are lessees of residential real property who contract directly with a residential contractor .... Ariz. Rev. Stat. § 32-1131(3) (underscoring added).

Because Ms. Mathews’s mobile home is personal, not real, property, and she did not contract directly with Respondent, Ms. Mathews is not a “person injured” within the meaning of Ariz. Rev. Stat. section 32-1131(3) and is not eligible for an award from the recovery fund.

Even if Ms. Mathews was a “person injured,” the preponderance of the evidence shows that Ms. Mathews’s recovery fund claim for $6556 is in excess of the actual damages she suffered. In addition, because the emails from Desert Sun that ROC relied on for its revised estimate of damages include work that is not explicitly part of Casa Grande’s Correction Notice, there is not sufficient evidence to show that ROC’s revised figure of $1930 represents “actual damages” to Ms. Mathews. Consequently, Ms. Mathews does not qualify for an award based on the requirements of Ariz. Rev. Stat. section 32-1132(A).

Ms. Mathews’s recovery fund claim should be denied.

RECOMMENDED ORDER

IT IS ORDERED that Karen Lee Mathews’s recovery fund claim is denied.

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 Order will be 40 days from the date of that certification.

Done this day, July 28, 2017

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors