ALJDEC decisions subject to certification as final

2017A-5599-RFA-ROC · Registrar of Contractors · 2021-02-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Marina Radman,

COMPLAINANT,

v.

Borman Construction Enterprises Inc.,

License No. 172469,

RESPONDENT.

No. 2017A-5599-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 13, 2021 at 11:30 PM.

APPEARANCES: Marina Radman (“Complainant”) appeared on her own behalf. Assistant Attorney General John Tellier, Esq., appeared on behalf of the Arizona Registrar of Contractors (“Registrar” and “Respondent”) with Marcy Bernasconi as a witness. No appearance(s) by or on behalf of Borman Construction Enterprises Inc. (“Respondent”).

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 Registrar.

FINDINGS OF FACT

Background and Procedure

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website. According to the Registrar’s public website, on or about February 26, 2002, the Registrar issued License No. 172469 for General Dual KB-2 Residential and Small Commercial contracting license to Respondent. The license is active and currently renewed through February 28, 2022. Thomas Henry Borman is listed on the license as the Qualifying Party and Officer, along with Lynette Rae Borman who is also listed on the license as an Officer. Respondent’s address of record on the license is 40 Crystal Sky Drive Sedona, AZ 86351-3266. The license had been disciplined on 2 prior occasions, and there are currently 2 open cases against Respondent’s license. There is also an active $24,000.00 surety bond listed for the license issued by RLI Insurance Company, effective January 15, 2013, of which the full amount remains available.

On October 30, 2017, Complainant filed a complaint against Respondent with the Registrar alleging poor workmanship. In the complaint, Complainant asserted that on or about February 01, 2017, Complainant and Respondent entered into a $50,000.00 residential remodeling contract, and Complainant’s home later sustained severe damage due to leaks in the roof. The Registrar received the complaint on November 07, 2017, whereby it was designated Complaint No. 2017-5599 and assigned to Beau Cruz (“Investigator Cruz”) for investigation.

On November 07, 2018, Complainant filed a second complaint against Respondent stemming from alleged damage caused by remediation efforts taken by Respondent when he attempted to comply with a Directive issued on December 27, 2017, in Complaint No. 2017-5599. The Registrar received the complaint on November 13, 2018, whereby it was designated Complaint No. 2018-5575 and assigned to Investigator Cruz for investigation.

The Registrar’s December 27, 2017, Directive for Complaint No. 2017-5599 specifically notes the following: Permit required for project. When permit is pulled by the owner or owner’s agent and inspected, if the local jurisdiction determines that there are corrective issues during the inspection the Respondent will have to Correct by Appropriate Means.

Complaint items 1-2, 4-6, 8-10, and 12-13 were to be remediated by Respondent.

January 12, 2018, was the Directive’s compliance deadline date.

On December 20, 2017, Investigator Cruz completed his inspection of the Complaint No. 2017-5599 project with both parties present. Ultimately, Investigator Cruz substantiated 11 of Complainant’s 19 complaint items and held that the work Respondent performed on the project fell below the Registrar’s minimum standards.

On January 30, 2019, Investigator Cruz completed an inspection of the Complaint No. 2018-5575 project with both parties present. Ultimately, Investigator Cruz substantiated 7 of Complainant’s 13 complaint items and held that the work Respondent performed on the project fell below the Registrar’s minimum standards.

On February 04, 2019, the Registrar issued a Directive for Complaint No. 2017-5599. The Directive specifically notes the following: Permit required for project. When permit is pulled by the owner or owner’s agent and inspected, if the local jurisdiction determines that there are corrective issues during the inspection the Respondent will have to Correct by Appropriate Means.

Complaint items 1, 3-6, and 8-9 were to be remediated by Respondent.

February 19, 2019, was the Directive’s compliance deadline date.

On February 13, 2018, a Citation was issued for Case No. 2017-5599 and sent certified mail to Respondent’s address of record charging Respondent with departure from or disregard of plans or specifications or building codes in violation of Ariz. Rev. Stat. § 32-1154(A)(2), failure to meet minimum construction standards in violation of Ariz. Rev. Stat. § 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and minimum elements of a contract in violation of Ariz. Rev. Stat. § 32-1158(A). Respondent was advised to submit a written Answer to the Registrar by February 28, 2018, and that failing to do so would constitute an admission pursuant to Ariz. Rev. Stat. § 32-1155(B).

On February 26, 2019, a Citation was issued for Case No. 2018-5575 and sent certified mail to Respondent’s address of record charging Respondent with failure to meet minimum construction standards in violation of Ariz. Rev. Stat. § 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and failure to take appropriate corrective action after receiving a written directive from the Registrar in violation of Ariz. Rev. Stat. § 32-1154(A)(22). Respondent was advised to submit a written Answer to the Registrar by March 13, 2019, and that failing to do so would constitute an admission pursuant to Ariz. Rev. Stat. § 32-1155(B).

On April 03, 2020, the Registrar issued a Final Administrative Decision and Order for consolidated Complaint Nos. 2017-5599 and 2018-05575 which held Respondent in violation of Ariz. Rev. Stat. §§ 32-1154(A)(2), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(12), 32-1154(A)(22), 32-1158(A), effective May 13, 2020. As such, the Registrar suspended Respondent’s license for 45 days and levied a $500.00 civil penalty against Respondent pursuant to Ariz. Rev. Stat. § 32-1154(E).

On or about April 16, 2020, the Registrar received a claim for payment with the Residential Contractors’ Recovery Fund (“the Fund”) from Complainant. Complainant indicated that she anticipated receiving $30,000.00 from the Fund, but did not request a deposit refund. Attached was a denial of claim letter from Respondent’s bond insurance issued to Complainant.

On August 13, 2020, the Registrar issued a Notice of Claim for Administrative Payout (“Notice”) which held Complainant was awarded $10,222.00 from the Fund.

On an unknown date the Registrar received an appeal letter from Complainant contesting his award amount from the Fund.

On August 28, 2020, the Registrar referred the matter to the Office of Administrative Hearings (“OAH”) for an independent evidentiary hearing on September 23, 2020. 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.

On September 24, 2020, the Registrar issued a Recovery Fund Quash Order rescinding its August 13, 2020, Notice.

On September 24, 2020, the Registrar issued an Amended Notice of Claim for Administrative Payout which held Complainant was awarded $11,622.00 from the Fund.

On October 22, 2020, Respondent submitted a Notice of Non-Defense to OAH which noted, in pertinent part, that Respondent would not participate in the hearing because it was “contractually prohibited (due to a February 2020 legal civil settlement)”.

Hearing Evidence

At the hearing, the Registrar presented the testimony of Marcy Bernasconi and submitted Exhibits 1-9, 10, 12 and 14-24-29. Complainant testified on her own behalf. The Notice of Hearing, electronic hearing file (“Agency File”), and Respondent’s Notice of Non-Defense were also admitted into the record as their own exhibits. The parties stipulated to Complainant’s eligibility to access to the Recovery Fund. The substantive facts of record are as follows:

Complainant owns residential property located at 920 N. Barkley Mesa AZ 85203. On or about February 01, 2017, Complainant and Respondent entered into a $50,000.00 residential remodeling contract for Respondent to replace Complainant’s roof, front foyer, guest bathroom, and front porch and lattice.

On or about April 16, 2020, after the Final Administrative Decision in this matter became effective, Complainant submitted 3 estimates and 11 invoices to the Registrar in support of her Recovery Fund petition that had been issued to her by Respondent. Also included was a copy of an invoice that had been issued to Respondent for the project from Salvador Clemente Electric (“SCE”). Complainant also provided copies of checks she paid to Respondent and SCE.

Repair bids from Arizona Elite Builders for $17,192.00, Caliber Roofing Services for $29,115.00, and Prowest LLC for $40,450.00 were provided to the Registrar by Complainant.

Between May 27, 2020, and July 21, 2020, Ms. Bernasconi confirmed with Investigator Cruz that several (i) line items from bids Complainant obtained required removal as they were not originally included in Respondent’s scope of work, and (ii) only outstanding substantiated complaint items from Case No. 2018-05575 were at issue.

An Amended Notice of Claim for Administrative Payout, which increased Complainant’s award by $1,400.00, was issued by the Registrar because it was discovered that Complainant made a payment on an electrical invoice that Respondent should have covered.

To calculate Complainant’s payout, the Registrar accepted Arizona Elite Builders’ repair bid for $32,172.00 ; less disallowed line items that were outside the scope of the Directive or had already been corrected, deducted an unpaid balance of $20,550.00 from the compensable repair costs, and added the electric invoice payment resulting in an award total of $11,622.00

In closing, the Registrar argued that Complainant failed to sustain her burden of proof in the matter and therefore her appeal should be denied. The Registrar asserted that it accepted all allowable considerations permitted by law to determine Complainant’s award, and that Complainant had not presented any evidence to rebut or refute the Registrar’s evidence.

In closing, Complainant argued that invoices she had not intended to provide the Registrar should not have been considered to determine her payout amount, and if they had not she would have been found eligible to receive the maximum award amount of $30,000.00, which still would not have covered her remediation costs.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction and was properly brought before OAH for adjudication.

Complainant bears the burden of establishing by a preponderance of the evidence that the Fund’s payout amount was incorrect.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

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. 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(B) provides, in pertinent part, that only “individuals who are owners of residential property damaged by the failure of a contractor to adequately build or improve a residential structure, who reside at the property as their primary residence” are eligible for an award from the Recovery Fund.

Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Recovery Fund is $30,000.00.

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.”

Based on the credible and available evidence of record, the Tribunal concludes that the Registrar soundly established Complainant’s eligibility to access the Recovery Fund and also correctly determined Complainant’s administrative award amount.

Here, Complainant did not establish by a preponderance of the evidence that the amount she received from the Recovery Fund was inappropriately issued or miscalculated as supported by the record in adherence with Ariz. Rev. Stat. § 32-1131 et seq. Additionally, Complainant’s arguments that documents she provided to the Registrar were considered in error are technically and legally incorrect. Because Complainant did not sustain her burden of proof in this matter his appeal must be denied.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar affirm the Amended Notice of Claim for Administrative Payout dated September 24, 2020, and deny Complainant’s request for an increased administrative payout from the Recovery Fund.

IT IS FURTHER RECOMMENDED that Complainant’s appeal be dismissed.

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, February 01, 2021.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors