ALJDEC decisions subject to certification as final

2017A-1396-RFA-ROC · Registrar of Contractors · 2018-07-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Mij Lynn Baker,

COMPLAINANT,

v.

Davis Construction LLC,

License No: 295230,

RESPONDENT.

No. 2017A-1396-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 06, 2018 at 1:00 PM.

APPEARANCES: Andrew Fowler appeared on behalf of Mij Lynn Baker (“Complainant”), and presented Complainant as a witness. No appearance(s) on behalf of David Construction LLC (“Respondent”). Assistant Attorney General John Tellier appeared on behalf of the Registrar of Contractors (“ROC”), with Marlee McCormick as a witness.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Order to the Director of the ROC.

FINDINGS OF FACT

BACKGROUND AND PROCEDURE

On May 07, 2015, Brent R. Baker entered into a residential construction contract totaling $7,650.00 with Davis Construction LLC (“Respondent”) for the repair of a driveway located at 5725 E Saguaro Road in Cave Creek, Arizona. Repairs commenced that same day.

On or about January 27, 2017, Mij Lynn Baker (“Complainant”) filed a complaint with the ROC alleging poor workmanship. On May 01, 2017, after an investigation into the complaint was complete, the ROC issued a Citation to Respondent, which resulted in the revocation of Respondent’s license on May 25, 2017.

On August 25, 2017, Complainant filed a claim with the ROC’s Recovery Fund alleging $24,224.70 in actual damages by Respondent. At the time of filing, Complainant noted that she was filing the claim on behalf of her father, Brent R. Baker. The request was assigned to Marlee McCormick, Recovery Fund Reviewer, who reviewed all of the documents associated with the request. In her review, Ms. McCormick noted that Complainant did not own the property at issue, as it had been owned by the Brent R. Baker Trust since June 24, 2014, of which Brent R. Baker was the sole Trustor, Trustee, and Beneficiary. Ms. McCormick also discovered that Brent R. Baker’s son, Brent B. Baker, had originally paid Respondent $7,650.00 for the work on the property at issue on May 11, 2015, but had later been reimbursed by the Brent R. Baker Trust.

Complainant filed a claim against Respondent’s bond as well. Complainant was notified by Respondent’s insurer on October 02, 2017, that her request was denied as being submitted untimely.

On April 05, 2018, Complainant informed Ms. McCormick that her father, Brent R. Baker, passed away on November 01, 2017.

On April 19, 2018, the Recovery Fund notified Complainant that she was ineligible for payment because she did not meet the criteria of a “person inured” under Ariz. Rev. Stat. § 32-1131(3).

Complainant filed an appeal with the ROC on May 04, 2018. On May 05, 2018, the Office of Administrative Hearings received a request for hearing. A Notice of Hearing was mailed to the parties on June 01, 2018, which listed the issue for hearing as follows:

[T]he sole issue to be adjudicated will be the threshold issue of whether Complainant is eligible to access the Fund under A.R.S. § 32-1131 et seq.

Hearing Evidence

At the hearing, Complainant testified on her own behalf and admitted three exhibits. Respondent failed to appear. The ROC presented the testimony of Ms. McCormick and admitted eleven exhibits. The electronic hearing file was also admitted into the record.

Complainant testified that she was given Power of Attorney over her father on June 12, 2012, and when she filed her initial Workmanship complaint with the ROC, she believed that she was “stepping in the shoes” of her father as he was unable to file. Complainant further testified that when she filed a claim with the Recovery Fund, she was again “stepping in the shoes” of her father. In both instances, Complainant noted, she explicitly indicated that she was filing on behalf of Brent. R. Baker. Complainant noted that her father was still alive at the time both filings were submitted to the ROC.

Complainant conceded that she was never a Trustor, Trustee, or Beneficiary of the Brent R. Baker Trust, and that when her father passed in Fall of 2017 it became irrevocable. Complainant did note that she became Executor of her father’s estate after his passing.

Complainant also testified that she grew up on the property in question, and although she moved out in her early adulthood, she returned five to six years prior to her father’s passing to care for him. Complainant remained on the property until on or about January 02, 2018, but was forced to relocate because the residence was declared a total loss as a result of a fire. Complainant acknowledged that she was not sure if she intended to return and reside at the property as she had not made plans to rebuild the damaged residence.

Ms. McCormick testified that she believed “person injured” requirement would have been met if Brent R. Baker had signed the recovery fund request, and conceded that a Power of Attorney submission would be valid as long as the other party was living at the time of the request.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

The Notice of Recovery Fund Eligibility/Payout Hearing that the ROC mailed to Respondent at its address of record was reasonable, and Respondent is deemed to have received it.

Complainant bears the burden of proof and must establish eligibility to recover from the Recovery Fund by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).

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).

Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet four eligibility criteria. See McMurren v. J.M.C. Builder, Inc., 204 Ariz. 345 (App. 2003). First, an applicant must meet the definition of a “person injured” set forth at Ariz. Rev. Stat. § 32-1131(3) which requires that the applicant be the owner of the residential real property at issue. Second, the property must have had a classification of three under Ariz. Rev. Stat. § 42-12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a resident that is damaged by a [residential or dual licensed] contractor who has paid for financial protection from the Recovery Fund. These criterion must be met at either the time the contract was executed or at the time the injury accrued. Fourth, as set forth in Ariz. Rev. Stat. § 32-1132(A), the applicant must have contracted with a residential contractor whose license was in good standing at the time of contract execution.

Ariz. Rev. Stat. § 32-1132(A) allows persons “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” to recover a payout from the Recovery Fund.

Ariz. Rev. Stat. § 32-1154(B) requires the ROC to investigate “the written complaint of any owner . . . that is a party to a construction contract or a person who suffers a material loss or injury as a result of a contractor's failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards . . . .” (Emphases added.) The statute also requires the ROC to investigate written complaints received from persons who claim injury “as a result of a contractor's failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards . . . .”

Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”

In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.” “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”

Thus, a Recovery Fund applicant must have filed a Workmanship complaint with the ROC and occupy (or intend to occupy) the home as a residence when the contract with the residential contractor was entered into or when a claim resulting from a violation of Ariz. Rev. Stat. § 32-1154 accrued, to qualify as a “person injured” under Ariz. Rev. Stat. § 32-1131(3).

An owner who occupies or intends to occupy a residence, and who is a Trustor, Trustee, and Beneficiary of a revocable trust that owns the property, meets the statutory owner-occupant requirement of Ariz. Rev. Stat. § 32-1131.

In this case, the ROC’s only reason for finding Complainant ineligible for payment from the Recovery Fund was because it determined that she did not qualify as a “person injured.” By doing so the ROC acquiesced to Complainant’s sustainment of the other three criterion for payment under Ariz. Rev. Stat. § 32-1131 et seq. Thus, the only underlying issue to address is whether Complainant meets the criteria for a “person injured” by statutory definition.

Here, Complainant clearly qualifies for a payment from the Recovery Fund.

At all times relevant Complainant had a durable Power of Attorney for Brent R. Baker, which means that she stood in his place as he would have in his own right.

The contract between the parties was entered into in 2015, through the Trust, and the contracted work was executed that same year. Mr. Baker was the owner and occupier of the property in question at that time. It is indisputable that Mr. Baker was injured by Respondent, that Respondent was a licensed contractor at the time of contract execution and subject to the jurisdiction of the ROC, or that Complainant filed a successful Workmanship complaint against Respondent.

The Brent R. Baker Trust was a living revocable trust. Up to and until his passing, Brent R. Baker was the Trustor, Trustee, and sole Beneficiary of that Trust. When Complainant acted on his behalf under color of her Power of Attorney authority, she acted as a Trustor, Trustee and sole Beneficiary of said Trust.

Mr. Baker’s passing in November of 2017 is irrelevant to this issue.

On August 25, 2017, when Complainant petitioned the Recovery Fund she did not do so on her behalf or on Brent R. Baker’s behalf as an individual, she did so as Brent R. Baker in fact – Trustor, Trustee, and Beneficiary of the Brent R. Baker Trust.

The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result. Because Mr. Baker would have been deemed a “person injured” in this matter, so too should Complainant be deemed a “person injured” as she stood in his place at the time the claim to the Recovery Fund was submitted.

RECOMMENDED ORDER

Based on the foregoing findings of fact and conclusions of law,

IT IS RECOMMENDED that that on the effective date of the final order in this matter, that Complainant’s claim to the Residential Contractors’ Recovery Fund be approved for payment in an amount to be determined by the Recovery Fund.

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 23, 2018.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors