ALJDEC decisions subject to certification as final

2018A-1522-RFA-ROC · Registrar of Contractors · 2020-03-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Michael and Barbara Delfino,

COMPLAINANT

O C C Woodworking LLC,

DBA: Oswalt S Custom Cabinets and Woodworking,

License No. ROC 242840,

RESPONDENT

No. 2018A-1522-RFA-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: January 10 and February 19, 2020

APPEARANCES: Michael and Barbara Delfino on their own behalf; Todd Oswalt for Respondent; John Tellier, Esq. for the Registrar of Contractors

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On January 7, 2020 the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above captioned matter for hearing at the Office of Administrative Hearings on February 10, 2020. The matter was convened on that date and concluded on February 19, 2020.

The issue is whether an award and payout from the residential contractors’ recovery fund is justified by the evidence.

Respondent O C C Woodworking LLC, d.b.a. Oswalt S Custom Cabinets and Woodworking holds license number 242840 issued by ROC.

In June 2017, Michael and Barbara Delfino hired Respondent to construct and install cabinets in a house in Apache Junction.

Mr. and Ms. Delfino filed with ROC a complaint against Respondent alleging poor workmanship.

Though a Final Administrative Decision and Order dated October 10, 2018, ROC adopted an Administrative Law Judge Decision finding that Respondent had violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22). Based on these proven violations ROC suspended Respondent’s license for two days and assessed against it a civil penalty of $250.

On February 4, 2019, Mr. and Ms. Delfino submitted to ROC a Recovery Fund Claim that included bids to perform corrective work from licensed contractors.

The Delfinoes’ Recovery Fund Claim shows that the original contract price was $22,863.16, which they had paid to Respondent, and that they had collected $4250 from Respondent’s bonding company. The Delfinoes’ Recovery Fund Claim shows that the lowest bid to complete the work was $19,601.

ROC’s Daniel Edwards evaluated the Delfinoes’ Recovery Fund Claim.

Mr. Edwards determined that a bid of $19,101 from Nakedwood Finishes LLC was the lowest bid that covered the work at issue.

On November 25, 2019, ROC issued a Notice of Claim for Administrative Payout showing that the Delfinoes would be awarded $14,851 in the form of a payout from the Recovery Fund unless either the Delfinoes or Respondent requested a hearing contesting the amount or propriety of the payment.

The proposed payout of $14,851 was determined by deducting the $4250 the Delfinoes had collected from Respondent’s bond from the Nakedwood bid of $19,101.

Respondent requested a hearing, which led to this matter being scheduled.

At the hearing, Todd Oswalt testified as to his opinion that the cost to repair bid of $19,101 was excessive. Respondent had entered into evidence exhibits showing that new doors and drawer fronts could be purchased for $4037.20, and the material required to stain or shellac the cabinets could be purchased for $922.63. Mr. Oswalt testified that he had spoken to a representative from Ray of Light, which had provided the Delfinoes with one of the bids they submitted with their Recovery Fund Claim, and had been informed that Ray of Light would perform all the required labor for $10,000.

As such, based on Mr. Oswalt’s testimony, the required work could be completed for $14,959.83.

CONCLUSIONS OF LAW

Unless otherwise provided by law: the party asserting a claim, right, or entitlement has the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense; and the proponent of a motion shall establish the grounds to support the motion. Ariz. Admin. Code § R2-19-119(B).

The Delfinoes filed a claim asserting that they were entitled to a payout from the Recovery Fund pursuant to Ariz. Rev. Stat. section 32-1132. Respondent has a right to a hearing contesting any proposed payment before ROC may actually make a payment from the Fund. Ariz. Rev. Stat. § 32-1154(G); see also Ariz. Rev. Stat. § 41-1001(5)(defining contested case).

Consequently, the Delfinoes bear the burden of proof show that they are a person injured who meets the requirements for a payout from the Recovery Fund. Ariz. Admin. Code § R2-19-119(B); see also Harvest v. Craig, 195 Ariz. 521, 524, ¶¶ 14-15 (App. 1999) (the party seeking a right granted by statute generally has the “burden of proving that he comes within the ambit of the statute”).

The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119(A).

A preponderance of the evidence is:

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).

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.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

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).

“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.

“‘Person injured’ means “any owner of residential real property which is classified as class three property under [a section of the tax code] 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).

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).

“‘Actual damages’ ... mean[s] the reasonable cost of completing the contract and repairing the contractor's defective performance ‘less the part of the contract price still unpaid.’” Ramsey v. Ariz. Registrar of Contractors, 241 Ariz. 102, ¶ 8 (App. 2016)(adopting ROC’s definition of actual damages).

The preponderance of the evidence shows that the Delfinoes suffered actual damages of $19,101 as a result of Respondent’s violation of ROC’s workmanship standards. Although Respondent presented evidence to the effect that the Delfinoes’ damages were only $14,959.83, this evidence was not persuasive because Respondent did not support Mr. Oswalt’s testimony that the labor could be completed for $10,000 with a written cost estimate.

Because the Delfinoes have collected $4250 from Respondent’s bond, ROC’s determination that they should be awarded a payout of $14,851 is supported by a preponderance of the evidence.

RECOMMENDED ORDER

IT IS ORDERED that on the effective date of the final Order in this matter, the Registrar of Contractors shall order the Fund to make a payout of $14,851 to Michael and Barbara Delfino.

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.

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-137160-45720000Done this day, March 4, 2020.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000