ALJDEC decisions subject to certification as final

2017A-4930-RFA-ROC · Registrar of Contractors · 2018-10-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 6, 2018, 9:00 A.M. APPEARANCES: Complainant Brandon Copeland appeared on his own behalf; the Arizona Registrar of Contractors was represented by Assistant Attorney General Thomas Raine; Ray Bratton appeared on behalf of Respondent ADMINISTRATIVE LAW JUDGE: Roger A. Geddes _____________________________________________________________________ FINDINGS OF FACT Background and Procedure 1. Bratton Construction, LLC (Respondent), is the holder of License Number 298187 issued by the Registrar of Contractors (Registrar). 2. On or about September 25, 2017, Complainant filed a Complaint against Respondent alleging poor workmanship. (Registrar Exhibit 2). Thereafter, a Directive, dated October 17, 2017, was issued by the Registrar requiring corrective work to be undertaken by Respondent by November 3, 2017. (Registrar Exhibit 4). When it was determined by the Registrar that all Directive items were not timely corrected, a Citation was issued to Respondent, dated November 8 2017, for the alleged violations of A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(3), and A.R.S. § 32- 1154(A)(22). (Registrar Exhibit 5). 3. After a hearing before the Arizona Office of Administrative Hearings, the Registrar issued a Final Administrative Decision and Order on March 6, 2018, finding that Respondent had violated A.R.S. § 32-1154(A)(1) and A.R.S. § 32-1154(A)(22) as charged in the Complaint. (Registrar’s Exhibit 6). Pursuant to the Order, Respondent’s License Number 298187 was suspended for one day and Respondent was required to pay a civil penalty of $250.00. 4. On or about May 10, 2018, Complainant filed claim 2017A- 4930 against license number 298187 with the Residential Contractors’ Recovery Fund (“Recovery Fund”) seeking the amount of $30,000.00 (Registrar’s Exhibit 7). The claim indicated a contract date of May 22, 2017. 5. Claims Reviewer of the Recovery Fund Jessica Ortiz reviewed all documentation in claim 2017A-4930. In Ms. Ortiz’s review, she reviewed Respondent’s bid for the project, dated October 25, 2016, in the amount of $93,000.00. (Register’s Exhibit 8). She also noted two checks issued from Complainant to Respondent in the amount of $12,000.00, dated June 9, 2017, and the amount of $25,000.00, dated June 28, 2017. (Registrar’s Exhibit 9).

6. On June 1, 2018, the Registrar issued a Notice and Order of Recovery Fund Ineligibility determining that Complainant was not eligible for recovery from the Recovery Fund. (Registrar’s Exhibit 1). 7. Complainant filed a timely request for hearing on the Registrar’s Notice and Order of Recovery Fund Ineligibility. 8. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing regarding the eligibility for payment from the Recovery Fund. A hearing was held on September 6, 2018, at 9:00 A.M. 9. At the hearing, Complainant testified on his own behalf and presented the testimony of Amanda Copeland. The Registrar presented the testimony of Jessica Ortiz. Respondent presented the testimony of Ray Bratton, its owner. The Tribunal received and admitted Complainant’s exhibit numbers 1 - 12 and the Registrar’s exhibit numbers 1 - 9.[1] 10. Jessica Ortiz testified on behalf of the Registrar that she had personally reviewed Complainant’s claim for payment from the Recovery Fund. Ms. Ortiz said that she determined that Complainant was not eligible for the Recovery Fund because at the time Complainant entered into the subject contract with Respondent, Respondent’s license was suspended for non-renewal, specifically from the dates from June 1 to June 19, 2017. She stated that the first deposit payment was made from Complainant to Respondent on June 9, 2017, and she was otherwise unable to confirm that that contract between the parties was entered into before that date, or more significantly, before June 1, 2017. She further stated that if there is no written contract, the Registrar utilizes the first payment date to the contractor as the date of the contract for purposes of determining eligibility for a claim to the Recovery Fund. 11. Amanda Copeland, wife of Complainant, testified on behalf of Complainant that there was no signed written contract with Respondent. She stated that conversations with Respondent started in October 2016, and that Respondent sent her a written bid on May 12, 2017, in the amount of $93,040.50 for the project. (Complainant’s Exhibit 8). This was the same estimate amount from a previous estimate provided to Complainant, dated October 25, 2016. (Complainant’s Exhibit 9). 12. Ms. Copeland further testified that on May 23, 2017, she transferred $25,000.00 to her checking account with the “intent to contract” with Respondent. (Complainant’s Exhibit 11). She further stated that she had entered into a contract with Respondent on May 27, 2017, based on the following text exchange with Respondent:

Ray Bratton: So if we can get started on the project when we get back on the date we had discussed, we can do everything for 93 even. It was my mistake with the…..[s]tucco after all. Amanda Copeland: Ok, Sounds good. We are heading to Az tile today to hopefully pick out materials we like. (Complainant’s Exhibit 5). She stated she then paid a deposit of $12,000.00 to Respondent on June 9, 2017. 13. Complainant testified that June 28, 2017, a date that he had included in the Recovery Fund claim, was the date he had paid Respondent $25,000.00 for the cabinets. Complainant also presented a Residential Resale Real Estate Purchase Contract with an acceptance date as of May 27, 2017, for the purchase of the subject property between Complainant and sellers who were family members. (Complainant’s Exhibit 12). The property ultimately was transferred to Complainant by Warranty Deed, dated June 13, 2017. (Complainant’s Exhibit 3). He further testified that he had had permission to allow Respondent to begin work before the close of escrow because the residence was empty and he was buying the residence from family members. 14. Ray Bratton testified on behalf of the Respondent that there was a signed contract between the parties but that he had not brought it to the hearing. He presented a text he received on June 8, 2017 (which he read into the record) from Ms. Copeland in which Ms. Copeland stated that Complainant did not want to do anything until their appraisal came back. Mr. Bratton then presented another text he received from Ms. Copeland on June 9, 2017, in which she stated that the appraisal was back and that Respondent could get started. In that text, Ms. Copeland further asked if Mr. Bratton could meet that day for a check and further asked if $12,000.00 was the amount. Mr. Bratton stated that he replied by text that day that that amount was sufficient, but that he would need the whole amount within two weeks. He further stated that Ms. Copeland replied by text that day that they could do that. 15. Mr. Bratton further testified that he met that day, June 9, 2017, with Complainant to pick up the check and have the parties sign the contract. He stated that he would not have moved forward with the project unless he had had a signed contract and had received a deposit. He further stated he would not have moved forward with the project until Complainant had actually owned the subject property. 16. The record was left open until September 12, 2018, to give Respondent an opportunity to submit the signed contract and to allow any further evidence regarding the contract date. Respondent later indicated that after his search he determined he no longer had a copy of the signed contract. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq. 2. In order to obtain an award from the Recovery Fund, an applicant must provide proof to establish by a preponderance of evidence that they are eligible pursuant to A.R.S. § 32-1131, et seq. Further, if eligible, an applicant must establish by a preponderance of evidence that damages sought are within the limitations of compensability as set forth in A.R.S. § 32-1132(A). See Arizona Administrative Code Rule 2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372 (1952). 3. “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 “[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.” BLACK’S LAW DICTIONARY at p. 1220 (8th ed. 1999). 4. The Registrar’s final decision in the underlying abandonment case established that Respondent did not comply with the Registrar’s Directive and that Complainant potentially was a person who had been injured by Respondent’s violation of A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(3), A.R.S. § 32-1154(A)(8), A.R.S. § 32-1154(A)(12), and A.R.S. § 32-1154(A)(22). As Complainant has potentially established that he is a person injured by Respondent’s violations, the issue remains whether Complainant has complied with the other criteria to be eligible to access the Recovery Fund. 5. A.R.S. § 32-1132(A) describes the criteria to recover from the Recovery Fund in relevant part as follows: 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. 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. . . . An award from the fund shall not be available to persons injured by an act, representation, transaction or conduct of a residential contractor who was not licensed pursuant to this chapter or whose license was in an inactive status, expired, cancelled, revoked, suspended or not issued at the time of the contract.….

(emphasis added). The determination of the contractor’s license status at the “time of the contract” refers to the time the parties entered into the contract. McMurren v. JMC Bulders, Inc., 204 Ariz. 345 (App. 2003). 6. A.R.S. § 32-1131(3)(a) reads that a "Person injured": Means any owner of residential real property that is either noncommercial historic property as defined in section 42-12101 or classified as class three property under section 42-12003. The property must also be actually occupied or intended to be occupied by the owner as a residence including community property, tenants in common or joint tenants who are damaged by the failure of a residential contractor or a dual licensed contractor to adequately build or improve a residential structure or appurtenance on that real property.

7. The Tribunal finds that Complainant is a person injured within the meaning of A.R.S. § 32-1131(3)(a). However, an award from the Recovery Fund is subject to the limitation under A.R.S. § 32-1132(A) that it is not available to a person injured if the contractor’s license was inactive or suspended at the time the subject contract was entered into. There was no signed written contract between Complainant and Respondent presented into evidence. Respondent’s testimony that there was a signed contract, which was contradicted by Complainant, is insufficient alone to support a finding that there was such a signed contract. Therefore, the Tribunal finds that there was only an oral contract between the parties. The evidence presented established that Respondent’s license was inactive from June 1 through June 19, 2017. Complainant contended that an oral contract was entered into on May 27, 2017 (a date on which Respondent’s license was active), when Ms. Copeland by text sent to Respondent agreed to the start date of the project and the contract amount. The Registrar and Respondent contended that the contract was not entered into until June 9, 2017 (a date on which Respondent’s license was not active), the date of Complainant’s deposit check written to Respondent. 8. The Tribunal finds that Complainant has failed to establish that the contract between the parties was entered into on May 27, 2017, or on a date on which Respondent’s license was not inactive or suspended. For an enforceable contract to exist, there must be an offer, an acceptance, consideration, and sufficient specification of terms so that the obligations involved can be ascertained. Savoca Masonry Co. v. Homes & Son Construct. Co., 112 Ariz. 392, 394 (1975) (finding only price and work involved verbally agreed upon to be insufficient to form a contract). The Tribunal does not find that the May 27, 2017, text was sufficiently definite to establish an oral contract, and rather finds that the text evidences an agreement as to some of the terms of an impending contract as part of a continuing negotiation. It bears noting that with respect to the two terms Ms. Copeland agreed to in the text, price and start date, the evidence suggested that Respondent did not begin work on the start date referenced in the text, which would have been a date before Respondent’s license became inactive. In fact, later texts between Respondent and Ms. Copeland reflect that Respondent’s start date was still open to negotiation as the date was extended from Mr. Bratton’s return from vacation (referenced in the May 17, 2017, text) to a date after Complainant obtained an appraisal. 9. That the May 17, 2017, text was lacking sufficient specification of terms to form a contract is also evidenced by the continuing negotiation of other material terms. The payment schedule was still apparently unresolved as various bids provided by Respondent showed different down payments required by Respondent to start the job in the amount of $35,000.00 (Registrar’s Exhibit 8), and then the amount of $53,324.30 (Complainant’s Exhibit 8). It appears from the evidence that the parties did not agree on a payment schedule term until the textual exchange of June 8 - 9, 2017, when they agreed on yet a different down payment of $12,000.00 with the rest to be paid within two weeks thereafter. 10. Further, to find that the parties had a contract, each must have manifested assent or intent to be bound by the agreement, and that intention must have been known to the other party. Schade v. Diethrich, 158 Ariz. 1, 9 (1988). The Tribunal does not find that each party intended to be bound by an agreement prior to June 9, 2017, the date Complainant paid the down payment or deposit to Respondent. Respondent contended that there was no contract until there was a signed contract, until a deposit was paid, and until Complainant owned the subject property. On the other hand, Ms. Copeland testified that the parties had an oral contract as a result of the May 17, 2017, text and that she believed she was contractually bound at that time. However, even though there was no signed written contract presented into evidence and Complainant and Ms. Copeland maintained they did not sign a contract, the written bids prepared by Respondent and presented to Complainant included a signature line for Complainant’s acceptance. Thus, it is difficult to conceive how Complainant or Ms. Copeland would believe they were contractually bound when they had not signed the bid presented to them. Further, Complainant put off Respondent’s start date awaiting an appraisal for the close of escrow. Although Ms. Copeland testified that the purchase of the residence would have gone forward regardless of the outcome of the appraisal, had the purchase for some reason not gone forward, it is also difficult to envision that she would have still believed she was contractually obligated to Respondent solely based on a text and having not signed a contract. 11. Accordingly, the Registrar did not err in denying a payout to Complainant from the Recovery Fund.

RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the final order in this matter, that Complainant’s claim to the Residential Contractors’ Recovery Fund be denied with no payment to Complainant from 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 five days from the date of that certification. Done this day, October 8, 2018.

/s/ Roger Geddes Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] The Tribunal also took administrative notice of the Registrar’s file.

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