ALJDEC decisions subject to certification as final

2018A-05494-RFA-ROC · Registrar of Contractors · 2020-09-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Tak Kwan,

COMPLAINANT

C P R & R LLC,

License No. 290082,

RESPONDENT

No. 2018A-05494-RFA-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: September 9, 2020

APPEARANCES: Complainant Tak Kwan appeared on his own behalf. Chad Preece appeared on behalf of Respondent C P R & R, LLC. Assistant Attorney General John Tellier represented the Arizona Registrar of Contractors. Doug Ulmer was a witness for the Arizona Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (“Registrar)” issued License No. 290082 to Respondent C P R & R, LLC (“Respondent”).

On or about January 11, 2019, the Registrar received a Complaint against Respondent from Complainant Tak Kwan (“Complainant”) alleging, among other things, that Respondent failed to complete the parties’ contract for the renovation of three bathrooms and other home improvements, and that work that was accomplished was done poorly.

As a result of the Complaint, the Registrar issued a Citation against Respondent charging possible violations of A.R.S. §§ 32-1154(A)(2), (A)(3), namely, A.A.C. R4-9-108, (A)(8), and (A)(22).

Respondent filed a timely answer to the Citation. An administrative hearing was held. In his October 7, 2019 Decision, Administrative Law Judge Randolph D. Wolfson considered Respondent’s arguments and concluded, among other things:

The credible evidence presented at hearing established that at the time of the Complaint there were items of Complainant’s project that needed to be completed. Specifically, no building permit from local building authority had been pulled and none of the necessary inspections or approved final inspection have been obtained; the 3-bathroom remodel and water heater replacement per contract were not complete; the grout at the master shower walls and floor were uneven and incomplete; and, the color of grout at the master bathroom floor was inconsistent. To date, it has been more than ten months since the promised end of October, 2018 promised date of completion of this project – yet none of the work promised has been completed.

On October 29, 2019, the Registrar issued a Final Administrative Decision and Order finding violations of Arizona’s contracting laws and imposing a two day suspension, as well as a civil penalty. Complainant thereafter filed a claim with the Residential Contractors’ Recovery Fund (“the Fund”) to recover the cost of completing the renovation of the three bathrooms. As part of the claim process, Complainant submitted bids from two different contractors that Complainant had received to complete the project.

The Registrar issued a Notice of Claim for Administrative Payout, finding that Complainant’s actual damages were $30,000.00. Respondent requested a hearing, believing the payout was too high. Complainant did not contest the amount of the administrative payout. The Registrar referred the matter to the Office of Administrative Hearings (“OAH”) for an evidentiary hearing.

A hearing was held on September 9, 2020.

Hearing Evidence

The Written Directive from the Registrar specified that:

After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). . . .

You are hereby directed to remedy the following violations by the appropriate means:

Obtain building permit from local building authority and get necessary inspections and approved final inspection.

Complete 3-bathroom remodel and water heater replacement per contract.

Correct incomplete and inconsistent grout at master shower walls and floor.

Correct inconsistent color of grout at master bathroom floor.

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.

Doug Ulmer, Claims Reviewer for the Fund, testified that he reviewed the Written Directive from the Registrar that had been issued, Judge Wolfson’s October 7, 2019 Decision regarding the underlying complaint, the parties’ contract, the payments made by Complainant, the letter from Respondent’s bonding company, and bids submitted by Complainant in calculating Complainant’s actual damages.

Mr. Ulmer testified that the Registrar requires a Complainant file a claim with a Respondent’s bonding company as a prerequisite to obtaining a payout from the Fund. Complainant did so and received the requisite letter from Respondent’s bonding company informing Complainant that his claim was denied.

Mr. Ulmer testified that his calculations took into account the contract price of $21,000.00 and the payments made toward the contract price in the amount of $20,460.00, and concluded that the remaining balance on the contract was $540.00.

Complainant submitted two estimates for completion of the project to the Fund. The bid from Regal Bath and Kitchens was in the amount of $32,759.00. The bid from HomeConcepts Custom Remodeling, LLC was in the amount of $31,588.00. Mr. Ulmer testified that both estimates were within the parameters set forth in the Written Directive. Mr. Ulmer concluded that the lowest bid of $31,588.00 for the completion of the project was appropriate. Mr. Ulmer subtracted the amount remaining due on the contract of $540.00 from the amount of the lowest estimate, $31,588.00, which equated to $31,048.00. However, the maximum allowable payout from the Fund is $30,000.00. Mr. Ulmer recommended a payout from the Fund to Complainant in the amount of $30,000.00.

Respondent attempted to argue issues that related to the underlying case in which a Final Order has been issued. Respondent argued that his contract price was as low as it was because Complainant was only willing to pay $18,000.00 for three bathrooms. Respondent asserted that the estimates obtained by Complainant are inflated, that Complainant had $7.000.00 worth of materials at the site, and that only a day to a day and a half of work remained uncompleted on the project.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132(A) provides that “[t]he residential contractors' recovery fund is established, to be administered by the registrar, for the benefit of a claimant damaged 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.” The Registrar’s final decision in the underlying workmanship case giving rise to the instant matter establishes that Respondent’s work violated the sections of A.R.S. § 32-1154(A) that were charged in the Citation.

For the purposes of an award under A.R.S. § 32-1132(A), A.R.S. § 32-1133.01(B) provides as follows:

An award from the residential contractors' recovery fund may not exceed the actual damages suffered by the claimant as a direct result of a contractor's violation. Actual damages:

May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.

Must be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.

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 Complainant is entitled to recover as a payout from the Fund. The burden shifts to the party challenging the amount of the payout to establish that the Registrar’s calculations were erroneous or not supported by a preponderance of the evidence. In this case, Respondent requested a hearing challenging the Recovery Fund payout. Therefore, the burden was on Respondent to establish by a preponderance of the evidence that Complainant was not entitled to a payout or that the amount of the proposed payout was erroneous or inappropriate.

“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.”

Respondent had an opportunity to complete the project following the Written Directive from the Registrar and failed to do so.

After review of all the evidence, the Tribunal concludes that the award provided by the Fund accurately reflected Complainant’s actual damages. Accordingly, Complainant is entitled to a payout from the Fund in the amount of $30,000.00.

RECOMMENDED ORDER

In view of the foregoing, IT IS ORDERED that on the effective date of the final Order in this matter, the Residential Contractors’ Recovery Fund shall pay $30,000.00 to Complainant Tak Kwan.

IT IS FURTHER ORDERED that under A.R.S. § 32-1139(B), the Registrar shall charge $30,000.00, plus interest at a rate of ten percent a year, to Respondent C P R & R, LLC’s License Number 290082.

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.

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-137160-45720000Done this day, September 14, 2020.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000