ALJDEC decisions subject to certification as final

2018A-1108-ROC · Registrar of Contractors · 2019-03-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 31, 2019, 8:30 A.M. APPEARANCES: Complainant Edward Saba appeared on his own behalf; Assistant Attorney General Thomas C. Raine appeared on behalf of the Arizona Registrar of Contractors; no appearance was made on behalf of Respondent ADMINISTRATIVE LAW JUDGE: Roger A. Geddes _____________________________________________________________________ FINDINGS OF FACT Background and Procedure 1. Great Gates, Inc. (Respondent), is the holder of License Number 254698 issued by the Registrar of Contractors (Registrar). 2. On or about March 9, 2018, Edward Saba (Complainant) filed a Complaint against Respondent alleging poor workmanship in connection with the replacement of fencing by Respondent at a residence located at 31 South Fairway Court, Chandler, Arizona (“subject property”). (Registrar Exhibit 2). The Complaint reflected a contract date of April 12, 2016, with worked performed by Respondent in June and July 2016. (Registrar Exhibit 2). 3. After an inspection of the work by the Registrar on April 18, 2018 (Registrar’s Exhibit 3), the Registrar on April 20, 2018, issued a Directive requiring Respondent to correct various alleged deficiencies in the work by May 7, 2018. (Registrar’s Exhibit 4). 4. Thereafter, the Registrar issued a Citation to Respondent, dated May 11, 2018, for the alleged violations of A.R.S. § 32-1154(A)(3) and A.R.S. § 32-1154(A)(22). (Registrar Exhibit 5). 5. After Respondent failed to timely answer, the Registrar issued a Final Administrative Decision and Order on June 8, 2018, finding, among other things, that Respondent had violated A.R.S. § 32-1154(A)(3) and A.R.S. § 32-1154(A)(22) as charged in the Complaint. (Registrar’s Exhibit 6). Pursuant to the Order, Respondent’s License was suspended for one day and a civil penalty of $250.00 was imposed. (Register Exhibit 6). 6. On or about September 24, 2018, Complainant filed a claim to the Residential Contractors’ Recovery Fund (“Recovery Fund”) seeking the amount of $8,395.00 (Registrar’s Exhibit 7). 7. On November 20, 2018, the Registrar issued a Notice and Order of Recovery Fund Ineligibility denying Complainant’s claim because Complainant was not a “person injured” under A.R.S. 32-1131(3) based on Complainant’s lack of ownership of the subject property. (Registrar’s Exhibit 1). The Registrar determined that the subject property had been owned by the Christine Corey Saba Qualified Personal Residence Trust (“Irrevocable Trust”) since March 12, 2003. (Registrar’s Exhibit 1). 8. Complainant filed a timely request for hearing on the Registrar’s Notice of Claim for Administrative Payout. (Registrar’s Exhibit 5). 9. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing regarding the amount and/or propriety of the payment or lack thereof from the Recovery Fund. 10. The Registrar issued a Notice of Hearing that set a hearing for January 31, 2018, at 8:30 A.M. At the hearing, Complainant Edward Saba testified on his own behalf and presented the testimony of Stephanie Saba. The Registrar presented the testimony of Marlene McCormick. The Tribunal received and admitted the Registrar’s exhibit numbers 1 - 13 and Complainant’s exhibit number 1 - 8.[1] The Tribunal held the record open until March 1, 2019, to afford Complainant an opportunity to present additional evidence regarding ownership of the subject property. 11. Marlene McCormick, Legal Assistant for the Registrar with Recovery Fund matters, testified on behalf of the Registrar that documents submitted by Complainant reflected that the subject property had been owned by the Irrevocable Trust since at least 2003. (Registrar’s Exhibit 10 - 11). The Irrevocable Trust also reflected that the trust was in fact irrevocable, that the settlor was Christine Corey Saba, and that the trustees were Stephanie Susan Saba, Lisa Saba Root, and Corey Saba Basha. (Registrar’s Exhibit 12). 12. Stephanie Saba, daughter of Complainant, testified on behalf of Complainant as to the existence of The Edward Saba Family Revocable Trust Dated March 20, 1991, as Amended and Restated in its Entirety on December 11, 2012, (“Revocable Trust”) with Complainant and Christine Corey Saba as sole settlors and sole trustees. (Complainant’s Exhibit 4). She submitted that the Revocable Trust owned the subject property. 13. Complainant testified that the Revocable Trust was amended in its entirety in 2012. (Complainant’s Exhibit 5). He also testified that there is a reference in the Revocable Trust to the subject property. (Complainant’s Exhibit 4). He further claimed that the Irrevocable Trust had been terminated, even though he provided no written evidence of such. 14. During the hearing, the Tribunal accessed Maricopa County Recorder’s records which reflected that the subject property was owned by the Irrevocable Trust. Further, Complainant’s submission after the hearing from Hope Leibsohn, Esq., indicated that the owner of the subject property since 2003 was the Irrevocable Trust. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq. 2. In order to obtain an award from the Recovery Fund, an applicant must provide proof to establish by a preponderance of evidence that they are eligible pursuant to A.R.S. § 32-1131, et seq. Further, if eligible, an applicant must establish by a preponderance of evidence that damages sought are within the limitations of compensability as set forth in A.R.S. § 32-1132(A). See Arizona Administrative Code Rule 2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372 (1952). 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 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.” BLACK’S LAW DICTIONARY at p. 1220 (8th ed. 1999). 4. The Registrar’s final decision in the underlying case established that Respondent did not comply with the Registrar’s Directive and that Complainant potentially was a person who had been injured by Respondent’s violation of A.R.S. § 32-1154(A)(3) and A.R.S. § 32- 1154(A)(22). As Complainant has potentially established that he is a person injured by Respondent’s violations, the issue remains whether Complainant has complied with the other criteria to be eligible to access the Recovery Fund. 5. A.R.S. § 32-1132(A) describes the measure of damages that an eligible homeowner is entitled to recover from the Recovery 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 the county where the violation occurred 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. . . . (emphasis added). 6. A.R.S. § 32-1131(3)(a) reads that a "Person injured":

Means any owner of residential real property that is either noncommercial historic property as defined in section 42-12101 or classified as class three property under section 42-12003. The property must also be actually occupied or intended to be occupied by the owner as a residence including community property, tenants in common or joint tenants who are damaged by the failure of a residential contractor or a dual licensed contractor to adequately build or improve a residential structure or appurtenance on that real property.

(emphasis added). 7. A.R.S. § 32-1101(A)(6) provides that in Chapter 10 of Title 32 the Arizona Revised Statutes (A.R.S. § 32-1101 et seq.), unless the context otherwise requires:

‘Person’ means an applicant, an individual, a member of a limited liability company, a qualifying party, any partner of a partnership or limited liability partnership or any officer, director, qualifying party, trustee of a trust, beneficiary of a trust or owner of at least twenty-five per cent of the stock or beneficial interest of a corporation.

(emphasis added). 8. When interpreting a statute, the court is required to follow and apply its plain language. State ex rel. Romley v. Maricopa County Superior Court, 184 Ariz. 409, 411 (App.1995). Only if the statute is unclear do we consider such other factors as “the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.” McMurren v. JMC Buiklders, Inc., 204 Ariz. 345, 350 (App. 2003). The Tribunal does not find the statute to be unclear. To constitute a person injured under A.R.S. § 32-1131(3)(a), one must be, among other things, both the owner and the occupant (or intended occupant) of the residential property. Complainant has not satisfied the owner and occupant requirements of A.R.S. § 32-1131(3)(a) and is therefore not eligible for compensation as a “person injured” thereunder. The evidence was uncontradicted that although Complainant has resided in the subject property at all relevant times, the Irrevocable Trust has owned the subject property at all times since 2003. Further, Complainant was not and has not been the trustee of the Irrevocable Trust, and therefore cannot claim he as trustee resided in the subject property. Lastly, while Complainant argued that the Revocable Trust owned the subject property, there was no competent evidence presented that the Revocable Trust has ever owned the subject property. Accordingly, the Registrar did not err in determining that Complainant was ineligible to make a claim to the Recovery Fund. /// ///

RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the final order in this matter, that Complainant’s claim to the Residential Contractors’ Recovery Fund be denied with no payment to Complainant from the Recovery Fund. 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 21, 2019.

/s/ Roger Geddes Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] The Tribunal also took administrative notice of all documents submitted by the Registrar to the Arizona Office of Administrative Hearings.

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826