FINACT2018A-04778-RFA-ROC-FinalAgencyAction-6704.pdf

2018A-04778-RFA-ROC · Registrar of Contractors · 2019-12-23

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Sally A Kokes, Case No. 2018-04778 COMPLAINANT, Docket No. 2018A-04778-RFA-ROC v. Lil' Painter Girl LLC FINAL ADMINISTRATIVE License No. ROC 306349, DECISION 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 of each finding of fact or conclusion of law. MODIFICATION AND WRITTEN JUSTIFICATION 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 modifies it. 1. The Administrative Law Judge Erroneously Concluded That the Recipient of a Proposed Recovery Fund Payout Always Bears the Burden of Proof. The Administrative Law Judge Decision held that it was the Complainant’s (the non- moving party’s) “burden of proof to show that she meets the eligibility requirements for such a payout.” ALJ. Decision p. 5:5-6. The Decision further notes that over ten years ago the Registrar presented a different position as to who bears the burden of proof at the hearing. See

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 ALJ Decision, pg. 5 fn. 3. To the extent the Administrative Law Judge Decision concludes that the Complainant always bears the burden of proof in a recovery fund hearing, that conclusion is incorrect as a matter of law and is inconsistent with prior Administrative Law Judge Decisions. 2. In a Hearing Contesting the Registrar’s Proposed Payout, The Party Asserting the Registrar Erred Bears the Burden of Proof. Once the Registrar makes a determination on a recovery fund claim and issues a Notice of Claim, the party challenging that determination bears the burden of proof. A.A.C. R2-19-119(B)(1). This is consistent with the language of A.R.S. § 32-1133.01(C), which provides that after the claimant makes a showing to the Registrar that it is eligible for a payout from the Recovery Fund, and the Registrar issues a Notice of Claim, the “contractor [has a] right to contest” the Registrar’s determination in a hearing. 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 would bear the ultimate burden of persuasion. A.R.S. § 41-1092.07(G)(2). But in the case at bar—Respondent’s appeal from the Registrar’s recovery fund determination—Respondent, as the party asserting a claim, bears the burden of proof, not Complainant. 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.”

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 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 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 modifies the Administrative Law Judge Decision by: (1) Striking page 5, lines 4-9, and replacing it with: “When the Registrar calculates 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 then shifts to Respondent, if it chooses to contest the payout, to demonstrate that the Registrar’s determination of eligibility and damages were incorrect by a preponderance of the evidence.” (2) Striking footnote 3, which begins on page 5 line 26 and continues in page 6 line 30. The Registrar accepts the remained of the Administrative Law Judge Decision, which becomes effective January 29, 2020.

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 FINAL NOTES Replace all instances of “Ms. Chloral” with “Ms. Chlarson”. Dated December 20, 2019. By: /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund Copy mailed via USPS First Class mail December 20, 2019 to: Respondent Lil' Painter Girl LLC 8725 E Chimney Spring Dr Tucson, AZ 85747 Complainant Sally A Kokes 163 E Via Chica Huachuca City, AZ 85616 Copy sent electronically this same date to: Registrar’s Counsel John Tellier, Assistant Attorney General Office of Administrative Hearings Thomas Shedden, Administrative Law Judge Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar Case No. 2018-04778 / SA

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19