ALJDEC decisions subject to certification as final

2017A-983-RFA-ROC · Registrar of Contractors · 2018-03-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Cody Lynn Larson,

PLAINTIFF,

v.

Stunning Pools & Spas Inc.,

License No: 283600,

DEFENDANT.

No. 2017A-983-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 8, 2018, at 1:00 p.m.

APPEARANCES: Cody Lynn Larson (“Plaintiff”) appeared telephonically on his own behalf; Stunning Pools & Spas Inc. (“Defendant”) failed to appear; the Arizona Registrar of Contractors (“the Registrar”) was represented by Thomas Raine, Esq., Assistant Attorney General.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background

According to the Registrar’s public website, on February 25, 2013, the Registrar issued License No. CR21.283600-D for dual hardscaping and irrigation systems to Defendant. Defendant’s address of record is 34623 S. Bronco Dr., Red Rock, Arizona 85145-6083.

On November 17, 2017, the Registrar issued a Notice and Order of Denial of Recovery Fund Claim, notifying the parties that “[a]fter a review of the claim and all supporting documentation, the Fund has determined that [Plaintiff] is denied payment from the Fund . . . .”

After Plaintiff requested a hearing on the denial, the Registrar referred Plaintiff’s claim to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing. On December 13, 2017, the Registrar issued a Notice of Hearing setting a hearing on February 5, 2018, which was sent to Respondent at its address of record.

After Plaintiff stated that he had not received the Registrar’s exhibits at the hearing that was commenced on February 5, 2018, the Administrative Law Judge set a further hearing on March 8, 2018. OAH staff sent the order setting the further hearing to Defendant at its address of record.

A hearing on the merits of was held on March 8, 2018. The Registrar presented the testimony of Marlee McCormick, the Legal Assistant in the Registrar’s Legal Department/Fund who had analyzed Plaintiff’s claim, and submitted fourteen exhibits. Plaintiff testified on his own behalf and submitted three exhibits.

Defendant did not request to appear telephonically at the hearing and did not request that the hearing be continued. Defendant did not appear, through an authorized officer, employee, or attorney, and did not contact the OAH to request that the start of the hearing be further delayed. Consequently, Respondent did not present any evidence to contest Plaintiff’s claim.

Background: The Underlying Workmanship Complaint

On or about February 21, 2017, Plaintiff filed a complaint with the Registrar against Defendant alleging that “[t]ravertine pavers were installed and shortly after the pavers began to separate” at Plaintiff’s house at 8785 W. Moon Spring Rd., Marana, Arizona 85653. According to complaint, Plaintiff had paid Defendant $22,763.35 on its $23,109.98 contract.

Plaintiff attached to the complaint a copy of his February 12, 2016 contract with Defendant, which required Defendant to perform various to construct a pool at Plaintiff’s house, including 206 square feet of travertine pavers for a price of $22,763.35.

The Registrar assigned the complaint to its Investigator, John Smith, for investigation. Investigator Smith performed a jobsite inspection on March 14, 2017. Plaintiff’s wife was present at the inspection, but Respondent did not attend. Inspector Smith’s jobsite inspection notes stated that Defendant “was hired to install a pool and travertine paver decking around the pool.”

On March 15, 2017, Investigator Smith issued a directive to Defendant to correct the pavers that were beginning to separate on or before 5:00 p.m. on March 31, 2017.

On April 19, 2017, the Registrar issued a Citation against Defendant’s license, charging cause to revoke or suspend Defendant’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22), as well as other statutes that did not involve workmanship.

On May 12, 2017, after Defendant failed to file a written answer to the Citation, the Registrar issued a Final Decision and Order, finding that Defendant’s failure to file a written answer was deemed an admission of the charges in the Citation under A.R.S. § 32-1155(B). As a result of the Final Decision and Order, Defendant’s license was suspended for seven days and a civil penalty was assessed. On June 16, 2017, Defendant’s license was revoked as a result of its failure to pay the civil penalty.

Plaintiff’s Claim to the Fund

On or about September 21, 2017, Plaintiff submitted a claim to the Residential Contractors’ Recovery Fund (“the Fund”) to recover the damages that were allegedly caused by Defendant’s poor work on the travertine pavers, requesting a payout in the amount of $2,236.75. Plaintiff claimed that he had paid Respondent the full $22,763.35 contract amount. Plaintiff acknowledged that he had received $4,250.00 from Defendant’s bond.

Ms. McCormick testified that if a homeowner pays a contractor in cash, the Fund will request that the homeowner provide an affidavit. On or about November 9, 2017, Plaintiff submitted an affidavit stating that he had paid a total of $18,263.35 in cash and $4,500.00 by check to Defendant.

Plaintiff also submitted a letter from Defendant’s bond company that accompanied its payment of $4,250.00.

Plaintiff attached to his claim to the Fund a bid from Desert Valley Landscaping to remove and re-install 922 square feet of pavers for a cost of $6,200.00. Plaintiff also submitted a bid from Amazing Scapes to replace 833 square feet of pavers for a total price of $9,286.60. Ms. McCormick testified that both Desert Valley Landscaping and Amazing Scapes were properly licensed.

Ms. McCormick testified that because it only appeared that Defendant had installed 200 square feet of pavers that were found to be defective in the underlying workmanship complaint, she asked Plaintiff to submit a bids that itemized the cost of repairing the area.

Plaintiff provided a revised bid from Desert Valley Landscaping that provided that the cost of $6,200.00 for 922 square feet of pavers was based on an itemized cost of $6,72/square foot.

Plaintiff also provided a revised bid from Amazing Scapes for “136 sq. ft. @ 10.50 plus grading $1791” to cover replacement of pavers around the pool.

Ms. McCormick testified that because Plaintiff’s claim to the Fund was claiming a larger area of pavers than the 206 square feet that Defendant had contracted to install under the contract, she contacted Investigator Smith to find out if it was necessary that all the pavers in the backyard be removed and replaced. Investigator Smith informed Ms. McCormick that because Defendant did not attend the jobsite inspection, he could not determine whether it was responsible for more than 206 square feet of pavers and that the contract stated that there were existing pavers at the site.

Ms. McCormick later informed Investigator Smith that she had contacted Plaintiff and that he informed her that under a revision to the contract, Defendant had contracted to install around 1,000 square feet of pavers. Investigator Smith responded that Plaintiff’s wife had only pointed out the pavers that were around the pool when he asked her to identify deficiencies and had stated that the other areas seemed to be fine.

Ms. McCormick explained that because Plaintiff’s bids repair or replacement of more pavers than had been found to be deficient in the workmanship complaint, the Registrar attempted to ascertain the cost of repairing or replacing the pavers that had been found to be deficient. Because the $4,250.00 that Plaintiff had received from Defendant’s bond exceeded the cost of repairing or replacing the pavers that had been found to be deficient, the Registrar denied Plaintiff’s claim to the Fund.

Plaintiff submitted a revised schematic drawing for the project that showed a larger area of pavers than just around the pool. Plaintiff also submitted Defendant’s April 9, 2017 addendum to the contract that required it to install an additional 340 square feet of travertine on the existing patio and 270 square feet of travertine decking around the barbeque. Plaintiff also submitted Defendant’s April 21, 2017 addendum to the contract that, among other things, required Defendant to install extra travertine decking in the barbeque area.

Plaintiff testified that Respondent’s former construction manager provided the documents that he submitted because he did not have the documents at his house. Plaintiff testified that most of the ground beneath the pavers needed to be regraded due to heaving. Plaintiff testified that most of the travertine pavers needed to be repaired and/or replaced due to their poor appearance.

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CONCLUSIONS OF LAW

The Notice of Hearing that the Registrar mailed to Defendant and the order setting a further hearing that the OAH mailed to Defendant at its address of record were reasonable and Defendant is deemed to have received notice of the hearing.

This matter lies within the Registrar’s jurisdiction.

After the Registrar determined that Plaintiff did not incur any compensable damages as a result of Defendant’s proven statutory violations, Plaintiff bears the burden of proof to establish that the Registrar’s calculations were erroneous 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.” 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.”

A.R.S. § 32-1132(A) describes the measure of damages that an eligible homeowner is entitled to recover from the 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 . . . 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. . . . If the claimant has paid a deposit or down payment and no actual work is performed or materials are delivered, the award of actual damages shall not exceed the exact dollar amount of the deposit or down payment plus interest at the rate of ten per cent a year from the date the deposit or down payment is made or not more than thirty thousand dollars, whichever is less. . . .

(Emphasis added.) For the purposes of A.R.S. § 32-1132(A), “actual damages” are the reasonable cost of repairing the contractor’s defective work and completing the project, minus any portion of the contract price still owed to the original contractor.

The underlying workmanship action determined the nature and extent of Defendant’s deficient workmanship. The documents that Plaintiff provided with his complaint indicated that Respondent only contracted to install 206 square feet of pavers. Plaintiff’s wife only pointed out deficient workmanship in Defendant’s installation of pavers around the pool.

Plaintiff credibly testified that the parties entered into addendums to the contract that expanded Defendant’s scope of work and his exhibits showed that Defendant prepared addendums to the contract that required it to install additional areas of pavers. As of the date of the hearing on Plaintiff’s claim to the Fund, however, the Registrar’s investigator has not had an opportunity to inspect these additional areas to determine whether they comply with the Registrar’s minimum workmanship standards or industry standards. Because A.R.S. § 32-1132(A) only allows the Registrar to make a payout from the Fund for work that has been found to be deficient, a payout from the Fund cannot compensate a claimant for work that has not been established to be deficient. Plaintiff must make another workmanship complaint to allow the Registrar’s investigator to determine whether additional areas of pavers are deficient before the Fund can make a payout to cover the cost of repairing these additional deficient areas.

The amount of Amazing Scapes’ low bid of $1,791.00 to replace the pavers around the pool is the measure of damages under A.R.S. § 32-1132(A) to repair the workmanship deficiencies determined in the underlying workmanship complaint. Because the $4,250.00 that Plaintiff recovered from Defendant’s bond exceeds the cost to repair areas of the pavers that were found to be deficient, the Registrar’s decision to deny Plaintiff’s claim to the Recovery Fund was proper.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the final order in this matter, Plaintiff Cody Lynn Larson’s appeal of the Registrar of Contractors’ denial of his claim to the Residential Contractors’ Recovery Fund shall 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 five days from the date of that certification.

Done this day, March 23, 2018.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors