FINACT2017A-6081-ROC.pdf

2017A-6081-ROC · Registrar of Contractors · 2019-03-21

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Jessica and Ryan Cox, Case No. 2017-6081 COMPLAINANTS, Docket No. 2017A-6081-ROC v. Golden Developing Solutions LLC, FINAL ADMINISTRATIVE DECISION License No. ROC 308901, AND ORDER RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the Registrar must provide written justification setting forth the reasons for the modification or rejection. MODIFICATION In this case, a hearing was held, and the administrative law judge issued a written decision. See Administrative Law Judge Decision, attached. The Registrar reviewed that Decision and hereby modifies it. WRITTEN JUSTIFICATION Complainants Jessica and Ryan Cox filed a claim with the Arizona Residential Contractors’ Recovery Fund. ALJ Dec. 2:11-12. After reviewing the claim, the Registrar issued its Notice and Order of Recovery Fund Ineligibility, advising the parties that the Registrar had determined that Complainants did not meet the eligibility criteria outlined in A.R.S. § 32-1131, et seq. ALJ Dec. 2:13-16. The Coxs filed a request for hearing to appeal the Registrar’s determination. The Administrative Law Judge Decision states that “The Coxs have filed a claim asserting they meet the requirements to receive a payout from the recovery fund. As such, they bear the burden of proof in this matter.” ALJ Dec. 2:24-25 (citing Ariz. Admin. Code § R2-19-119; Magness v. Ariz. Registrar of

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Contractors, 234 Ariz. 428 (App. 2014)). 1 To the extent that the Administrative Law Judge Decision

concludes that the Coxs bear the burden merely because they are the claimants to the fund, this

conclusion is incorrect as a matter of law and is inconsistent with prior Administrative Law Judge

Decisions.

Once the Registrar makes a determination on a recovery fund claim and issues a Notice and Order

of Recovery Fund Ineligibility, the party challenging that determination bears the burden of proof.

A.A.C. R2-19-119(B)(1). This differs from a hearing on an action by the Registrar to suspend, revoke,

terminate or modify the material conditions of a license. In that case, the agency has the burden of

persuasion. See A.R.S. § 41-1092.07(G)(2). Here, the Coxs bear the burden of proof because they are

appealing the Registrar’s recovery fund determination of ineligibility, not because they are the

Claimants, as the administrative law judge concluded.

This interpretation is consistent with previous Administrative Law Judge Decisions. The Registrar

and the Arizona Office Administrative Hearings have both recognized that the party appealing the agency

action bears the burden of proof. For example, the following decisions correctly stated the burden of proof

for a Recovery Fund proceeding:

• “When the Registrar has calculated the amount of a Complainant’s compensable damages

and proposed a payout from the Fund to which he is entitled, the calculation is a prima facie

showing of the amount that the Complainant is entitled to recover as a payout from the

Fund. The burden shifts to Respondent to establish that the Registrar’s calculations were

erroneous or not supported by a preponderance of the evidence.” Smith v. Seven Foot

Construction, 2017A-2190-ROC, 11:2, ALJ Mihalsky (citing A.A.C. R2-19-119(A) and

(B)(1); Vazzano v. Superior Court, 74 Ariz. 369, 372 (1952)).

• “Respondent bears the burden of proof to establish that the Registrar’s calculations on the

proper amount of the payout were erroneous or not supported by a preponderance of the

1 A.R.S. § 41-1092.07(G)(2) does not apply to this matter because the hearing is not “on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit.”

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 evidence.” Byrd v. Landscape Images, 2016A-4546-ROC, 8:3, ALJ Mihalsky (citing A.R.S.

§ 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); Vazzano v. Superior Court).

• “After the Registrar has determined the amount of the payout from the Fund to which

Complainants are entitled, Respondent bears the burden of proof to establish that the

Registrar’s calculations were erroneous or not supported by a preponderance of the

evidence.” McDaniel v. Kieran Brothers, 2017A-3888-ROC, 5:2, ALJ Geddes (citing

A.A.C. R2-19-119(A) and (B)(1); Vazzano v. Superior Court).

CONCLUSION AND ORDER

The Registrar hereby modifies the Administrative Law Judge Decision by:

• Replacing p. 2, ¶ 2 with “After the Registrar determines a complainant is ineligible for an

award from the recovery fund, the complainant, as the appealing party, bears the burden of

proof to establish that the Registrar’s ineligibility determination was either erroneous or

that the determination was unsupported by the preponderance of the evidence. A.R.S.

§ 41-1092.07(G)(2); A.A.C. R2-19-119(A).””

The Registrar hereby accepts the remainder of the Administrative Law Judge Decision, which

becomes effective on April 29, 2019.

FINAL NOTE

Replace all instances of “Lato Glass” with “Stav LLC DBA: Lato Glass Service”. On page 1, line

25 replace “Lato Glass is not licensed by the ROC” with “Stav LLC DBA: Lato Glass Service is no

longer licensed by the ROC. Stav LLC DBA: Lato Glass Service voluntarily cancelled its license on

September 23, 2016”. On page 2, line 12 replace “$6,638.77” with “$6,651.00”.

Dated March 19, 2019. Registrar of Contractors /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Copy mailed via USPS First Class mail March 19, 2019 to: Respondent Golden Developing Solutions LLC 2517 W McDowell Rd Ste 111 Phoenix, AZ 85009 Golden Developing Solutions LLC 900 RR 620 s # 143 Austin, TX 78734 Complainants Jessica and Ryan Cox 1110 W Creek Canyon Rd Phoenix, AZ 85086

AND copy electronically mailed this same date to:

Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar Office of Administrative Hearings Thomas Shedden, Administrative Law Judge

Office of the Attorney General John Tellier, Assistant Attorney General Case No. 2017-6081 / mm

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 3/12/19 LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Ryan and Jessica Cox, No. 2017A-6081-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION v.

Golden Developing Solutions LLC, License No. ROC 308901

RESPONDENT HEARING: February 28, 2019 APPEARANCES: Ryan and Jessica Cox on their own behalf; no one appeared for Respondent; John Tellier, Esq. for the Registrar of Contractors ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

1. On January 9, 2019, the Registrar of Contractors (“ROC”) issued a NOTICE OF RECOVERY FUND HEARING setting the above captioned matter for hearing at the Office of Administrative Hearings at 9:00 a.m. on February 28, 2019. 2. The issue is whether an award and payout from the Contractors’ Recovery Fund pursuant to ARIZ. REV. STAT. section 32-1154([G]) is justified by the evidence. 3. No representative for Respondent Golden Developing Solutions LLC appeared and the matter was convened in its absence at about 9:15 a.m. 4. Respondent holds license number 308901. ROC’s website shows that Respondent’s license has been revoked. 5. Respondent owns Lato Glass. Lato Glass is not licensed by ROC. 6. Complainants are Ryan and Jessica Cox. 7. Ryan Cox owns Cox Cactus Farm LLC. 8. Cox Cactus Farm paid to Lato Glass $22,000 to have work completed at a house located at 1110 West Creek Canyon Road in Phoenix.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 3/12/19 LEGAL

9. Mr. Cox owns the West Canyon Creek property as his “sole and separate property.” 10. At all times pertinent to this matter, the West Canyon Creek property was a

“class 4 non-primary” property. As of the hearing date, Mr. Cox had begun the process

to have the property reclassified as a “class 3” residential property.

11. On December 7, 2017, Ms. Cox filed with ROC a complaint alleging poor work

on Lato Glass’s part. ROC issued a CITATION to Respondent, which resulted in a

hearing being conducted on May 7, 2018. As a result of that hearing, ROC determine

that Respondent had violated ARIZ. REV. STAT. sections 32-1154(A)(3) and (A)(22) and

it suspended Respondent’s license.

12. On October 18, 2018, the Coxes filed with ROC a RECOVERY FUND CLAIM

requesting a payout of $6638.77.1

13. On December 17, 2018, ROC issued a NOTICE AND ORDER OF RECOVERY FUND

INELIGIBILITY.

14. ROC denied the Coxes’ claim because the property was not a class 3 property

and because Cox Cactus Farm LLC, not the Coxes, made the payments to Lato Glass.

15. At the hearing, ROC also argued that the Coxes do not qualify for a payout from the fund because Lato Glass is not a licensed contractor. CONCLUSIONS OF LAW 1. 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. 2. The Coxs have filed a claim asserting that they meet the requirements to receive a payout from the recovery fund. As such, they bear the burden of proof in this matter. ARIZ. ADMIN. CODE § R2-19-119; Magness v. Ariz. Registrar of Contractors 234 Ariz. 428 (App. 2014). 3. A preponderance of the evidence is: Although only Ms. Cox’s name appears as the “person injured,” both Mr. and Ms. Cox signed the claim form. RECEIVED 3/12/19 LEGAL

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). 4. 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."). 5. “Statutes shall be liberally construed to effect their objects and to promote justice.” ARIZ. REV. STAT. § 1-211(B). 6. 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 (App. 2003). 7. “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. 8. “Person injured” means “any owner of residential real property which is classified as class three property … and which is actually occupied or intended to be occupied by the owner as a residence . . . who [is] damaged by the failure of a residential contractor . . . to adequately build or improve a residential structure or appurtenance on that real property.” McMurren at ¶ 8; see also ARIZ. REV. STAT. § 32- 1131(3). 9. 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). 10. The Coxes have not shown that they are eligible for a payout from the recovery fund because the property is not a class 3 residential property as required. In RECEIVED 3/12/19 LEGAL

addition, because it was Cox Cactus Farm LLC that made payments to Lato Glass, not the Coxes, the Coxes have not shown that they suffered any injury. 11. Because Lato Glass is not a licensed contractor, any conduct by Lato

Glass cannot form the basis for a payout from the fund. See ARIZ. REV. STAT. § 32-

1132(A).

12. Considering the above, the Coxes’ recovery fund claim should be denied.

RECOMMENDED ORDER

IT IS ORDERED that on the Registrar of Contractor’s decision to deny Ryan and

Jessica Coxes’ recovery fund claim is affirmed and that the Coxes’ appeal is 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 40 days from the date of that certification.

Done this day, March 11, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors