ALJDEC decisions subject to certification as final

2017A-3101-RFA-ROC · Registrar of Contractors · 2018-10-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 09, 2018 at 9:00 AM. APPEARANCES: Assistant Attorney General John Tellier, Esq., appeared on behalf of the Arizona Registrar of Contractors (“the ROC”) with Douglas Ulmer, and Gerald Adelbert and Joan Michelbrink (“Complainants”) as witnesses. Adam Stafford, Esq., appeared on behalf of RGB Restoration and Builders LLC (“Respondent”) with George Alper and Christopher Muzio as witnesses. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the ROC. FINDINGS OF FACT Background and Procedure 1. Administrative notice is taken that on or about April 26, 2012, the ROC issued License Nos. B.277891-R for residential general contracting and B-1.277890-C for commercial general contracting to Respondent.[1] George Alper is noted as a Member on both licenses, as is Michael Manone.[2] 2. On or about June 19, 2017, Complainants filed a complaint with the ROC alleging fifteen specific allegations of poor workmanship in Respondent’s performance of its contract to replace the roof on Complainants’ house located at 2830 College Heights Rd., Prescott, Arizona 86301.[3] 3. The complaint was assigned to Investigator Chris Allison. Investigator Allison conducted a Jobsite Inspection on June 28, 2017, and substantiated eight workmanship complaints. In a Directive From The Registrar issued on June 30, 2017, Respondent was advised to remedy the eight specified violations and provide written proof of completion to the ROC no later than 5:00pm on July 17, 2017.[4] 4. On July 24, 2017, and August 01, 2017, Investigator Allison performed jobsite compliance inspections. Inspector Allison reported that Respondent had fully corrected six of the items identified in the Directive, but that the following required some form of correction:

Item 1: There was a section of roof that had to be removed by Respondent to correctly nail the base layer. This section of roof was leaking into the master bedroom.

Item 8: The transition from the flat roof to the parapet was not done per manufacture[r] installation. There should be a cant strip and the roofing should be torched down. [sic]

5. Investigator Allison referred the complaint to the ROC’s legal department. 6. On August 08, 2017, a Citation was issued and sent certified mail to Respondent’s address of record charging cause to revoke or suspend the license, specifically alleging violations of failure to meet minimum construction standards per Ariz. Rev. Stat. § 32-1154(A)(3) and Ariz. Admin. Code R4-9-108, and for failing to take corrective action after a written Directive was issued by the ROC per Ariz. Rev. Stat. § 32- 1154(A)(22).[5] 7. On or about August 22, 2017, Respondent filed a timely Answer to the Citation, stating that Respondent’s license should not be suspended because Complainants were difficult, Respondent had repaired the leak as identified in the complaint, and Respondent had installed a cant strip underneath the transition area of the modified bitumen roof that Respondent had installed. 8. The ROC referred the matter to the Office of Administrative Hearings (“OAH”), an independent State agency, for an evidentiary hearing which took place on October 16, 2017. Complainants testified on their own behalf, and called Investigator Allison as a witness. George Alper and project manager Eric Person testified on behalf of Respondent, and submitted one exhibit. Administrative Law Judge Diane Mihalsky issued her Recommended Order on October 19, 2017.[6] 9. The ROC issued a Final Administrative Decision and Order on November 14, 2017, accepting ALJ Mihalsky’s Recommended Order.[7] 10. On April 27, 2018, Complainants filed a claim for payment with the Residential Contractors’ Recovery Fund (“the Fund”), in the amount of $27,011.00, pursuant to Ariz. Rev. Stat. § 32-1154(G).[8] 11. On May 21, 2018, the ROC issued a Notice of Claim for Administrative Payout which held Complainants were awarded $13,243.32 from the Fund.[9] 12. On May 21, 2018, the ROC received an electronic mail appeal letter from Respondent contesting Complainants’ award amount from the Fund.[10] 13. Again, the ROC referred the matter to OAH for an independent evidentiary hearing. The issue at hearing was to determine if the Complainant’s award from the Fund was appropriately issued and properly calculated pursuant to Ariz. Rev. Stat. § 32-1154(F), as justified by the evidence.[11] The hearing took place on October 09, 2018.[12] Hearing Evidence 14. At the hearing, ROC presented the testimonies of Douglas Ulmer and Joane Michelbrink, and submitted twelve exhibits. Respondent presented the testimonies of George Alper and Christopher Muzio, and submitted four exhibits. The electronic hearing file was also admitted into the record. Douglas Ulmer’s testimony 15. Mr. Ulmer is a Legal Assistant II for the ROC. Mr. Ulmer testified that he made the determination that Complainants were eligible for a payout from the Fund, and that he also determined Complainants’ payout award. 16. Mr. Ulmer testified that the Fund’s award to Complainants for $13,243.32 was calculated by taking adding three separate checks Complainants had issued to remediation contractors and one bid provided by Complainants for the final repair necessary to make Complainants “whole” on their original contract with Respondent, which totaled $27,011.00, and then reduced that amount by a $9,000.00 payout Complainants received from Respondent’s bond company, as well as a $4,767.68 payout Complainants received from their homeowners insurance.[13] 17. Mr. Ulmer also testified that the ROC did not, and does not, evaluate the “reasonableness” of how much homeowners pay for remediation of projects as a matter of policy or law. Regarding the case at bar, Mr. Ulmer noted that the ROC did not request additional bids from Complainants for their final painting project. Joane Michelbrink’s testimony 18. Mrs. Michelbrink testified that she did not ask Respondent to make the outstanding repairs that were not completed by the Directive deadline because she was afraid they would not be performed correctly. Mrs. Michelbrink clarified that she originally had not wanted a new roof, as she thought it could be repaired, but once the rood was not repaired properly after Respondent tried to fix it she decided she wanted a new roof. 19. Mrs. Michelbrink further testified that the reason she and her husband chose to go with the remediation contractors who repaired her home was because they had been in business for approximately thirty-six years and did not have any complaints or disciplinary action noted on their license at the time the work was performed. George Alper’s testimony 20. Mr. Alpert is a Member on Respondent’s license and performed work on Complainants’ project. Mr. Alpert testified that Respondent obtained bids from other contractors for Complainants that came in for less than Complainants paid.[14] Although Mr. Alpert admitted that none of those contractors visited Complainants’ project site, he argued that Complainants should be barred from payout from the Fund because their project could have been completed for less. 21. Mr. Alpert also testified that Complainants had not fully paid on its contract with Respondent.[15] Christopher Muzio’s testimony 22. Mr. Muzio is a Sales Manager for a roofing company. He is not a Qualified Party on that company’s license with the ROC. 23. Mr. Muzio opined that Complainants overpaid to have their project completed, as he believed that the price for labor and materials per square foot should not exceed $350.00. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[16] 2. Respondent bears the burden of establishing by a preponderance of the evidence that the Fund’s payout amount was incorrect. [17] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[18] A preponderance of the evidence is “[t]he 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.”[19] 4. 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.[20] 5. 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.” 6. 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.”[21] “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.”[22] 7. Here, the ROC soundly established Complainant’s eligibility and how Complainant’s payout award amount was properly calculated at $27,011.00 and then appropriately reduced to $13,243.32. 8. The ROC was not required, as Respondent repeatedly argued, to determine whether the price Complainants paid for remediation of their contract with Respondent was “reasonable” and/or hold that Complainants are ineligible to receive a payout from the Fund because they paid “too much” to complete their project. Respondent did not provide any evidence to support its argument that Complainants’ payout award amount should be decreased or nullified, per operation of law, because of its belief that Complainants could have completed their project in a less expensive manner. 9. The Tribunal is required to apply equitable principles when rendering decisions.[23] The application of equity entails offering a remedy to avoid an unconscionable or unjust result.[24] Here, the evidence is clear regarding when, to whom, and how much Complainants paid to remediate their contract with Respondent. Moreover, the evidence is also clear regarding why and by how much the ROC’s reduced Complainants’ award from the Fund. 10. Based on the credible and available evidence in the record, Respondent has not sustained its burden of proof in this matter. Complainants were properly awarded their $13,243.32 payout from the Fund. As such, Respondent’s appeal should be denied. RECOMMENDED ORDER Based on the foregoing facts and conclusions of law, it is recommended that the ROC affirm the Notice of Claim for Administrative Payout dated May 21, 2018, and deny Respondent’s request to amend, nullify, or otherwise quash Complainant’s $13,243.32 payout amount from the 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 forty (40) days from the date of that certification. Done this day, October 29, 2018.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACTlREAX. [2] Id. [3] See ROC Exhibit 1. [4] See ROC Exhibit 2. [5] See ROC Exhibit 4. [6] See ROC Exhibit 5. Respondent was assessed a $250.00 civil penalty and had its license suspended for one day. [7] See ROC Exhibit 5. [8] See ROC Exhibit 6. [9] See ROC Exhibit 12. [10] See the ROC’s electronic file at Rf Hearing Docs1.pdf. [11] See the ROC’s electronic file at _hearing_request.pdf. [12] See Notice of Hearing. [13] See ROC Exhibits 7, 8, 9, 10 and 11. [14] See Respondent Exhibits 2 and 3. [15] See the ROC’s electronic file at Lg Citation1.pdf. [16] See Ariz. Rev. Stat. §§ 32-1131 to 32-1140. [17] See Ariz. Rev. Stat. § 41-1092.07(G)(2); Ariz. Rev. Code R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [18] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [19] Black’s Law Dictionary, pg. 1220 (8th ed. 1999). [20] This fourth requirement is only applied at the time the contract was executed, not at the time of injury. See McMurren v. J.M.C. Builders, Inc., 204 Ariz. 345 (App. 2003). [21] McMurren v. JMC Builders, Inc., 204 Ariz. 345, 350 ¶ 12, 63 P.3d 1082, 1087 (App. 2003) (citing Norgord v. State ex rel. Berning, 201 Ariz. 228, P7, 33 P.3d 1166, ¶ 7 (App. 2001), quoting Hobson v. Mid-Century Ins. Co., 199 Ariz. 525, P8, 19 P.3d 1241, ¶ 8 (App. 2001)). [22] Mid Kansas Federal Savings and Loan Ass’n of Wichita v. Dynamic Development Corp., 167 Ariz. 122, 128, 804 P.2d 1310, 1316 (1991). [23] Seitz v. Industrial Commission of Arizona, 184 Ariz. 599, 603 (Ariz. Ct. App., Div. 1, 1995). [24] Sanders v. Folsom, 104 Ariz. 283, 289, 451 P.2d 612 (Ariz. 1969), quoting Merrick v. Stephens, 337 S.W.2d 713, 719 (Mo. App. 1960).

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826