ALJDEC decisions subject to certification as final

2018A-2226-RFA-ROC · Registrar of Contractors · 2021-01-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Flavio Enrique Gonzalez and Jefferson Roosen,

COMPLAINANTS

Matrix Contracting LLC,

License No. ROC 303861, 279406,

RESPONDENT

No. 2018A-2226-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 8, 2021

APPEARANCES: Flavio Enrique Gonzalez and Jefferson Roosen (“Complainants”) were represented by Kiri Semerdjian, Esq. via Google Meet; Matrix Contracting LLC (“Respondent”) was represented by Christopher Zarda, Esq. via Google Meet; the Arizona Registrar of Contractors (“the Registrar”) was represented by Assistant Attorney General John Tellier, Esq.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

_____________________________________________________________________

FINDINGS OF FACT

Procedural Background

The Registrar referred to the Office of Administrative Hearings (“OAH”), an independent state agency, Complainants’ appeal of the Registrar’s determination that Complainants were not eligible to receive a payout from the Residential Contractors’ Recovery Fund (“the Fund”) for an evidentiary hearing.

On October 16, 2020, the Registrar issued a Notice of Hearing, setting a hearing on November 17, 2020. The Registrar sent the Notice of Hearing to Respondent at its address of record.

On November 10, 2020, the Respondent’s attorney moved to continue the hearing. On November 12, 2020, the Administrative Law Judge (“ALJ”) issued an order continuing the hearing to January 8, 2021. OAH staff sent the order continuing the hearing to Respondent’s email address of record.

A hearing was held on January 8, 2021. All exhibits provided by the parties were admitted into evidence. The attorneys proceed by avowal and no additional testimony was taken from witnesses. Thus, the facts are not in dispute.

According to the Registrar’s public website, the Registrar issued License No. ROC 303861 for General Dual KB-2 Dual Residential and Small Commercial license to Respondent on March 19, 2016.

On May 17, 2018, Complainant filed a complaint against Respondent for poor workmanship.

On March 29, 2019, after hearing, the Registrar issued a Final Administrative Decision and Order. The Registrar found that, under A.R.S. § 32-1155(B), Respondent was deemed to have violated A.R.S. § 32-1154(A)(3), and (22), as charged in the Citation. As a result, the Registrar suspended Respondent’s contractor’s License No. 303861 for six days and imposed a $500.00 civil penalty.

On April 20, 2020, Complainants filed a claim to the Fund in the amount of $21,630.00 to recover the damages that Respondent’s proven violations of contracting statutes caused them to incur.

On August 25, 2020, the Registrar issued a Notice and Order of Denial of Recovery Fund Claim from the Fund, notifying the parties that Complainants did not meet the eligibility criteria of A.R.S. § 32-1131(3) as it was in existence at the time of the contract.

The Registrar concluded that the work done on the property was completed in 2016, while the purchase agreement between Complainants and seller was dated February 9, 2018, and the warranty deed was dated March 8, 2018.

At hearing, Complainants attorney argued that Complainants did everything correctly throughout the Registrar’s process and it was against public policy to not allow Complainants to recover from the fund. Counsel argued that this was a “loophole” that contractors and sellers of property could use to prevent access to the Recovery Fund. Counsel further argued that the statute should be “liberally construed” and the purpose of the Registrar is to protect the public and to prevent recovery would lessen the trust in the Registrar.

However, Complainants’ attorney acknowledged that at the time the work was completed, Complainants did not own the property, nor did they pay Respondent for the work.

The Registrar argued that the Statute was not against public policy as the Legislature enacted the same and set forth the criteria for recovery. Further, the Registrar argued that Complainants purchased the property “as-is”, and thus while it may create a remedy against the seller or their real estate agent, it does not qualify for a Recovery Fund payout.

Finally, the Registrar argued that the work performed was done by an unlicensed contractor, which too would disqualify Complainants from recovery under A.R.S. § 32-1132(A).

The Respondent’s position was that it essentially agreed with the Registrar’s argument that the claim against the Recovery Fund should be denied.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainants bear the burden to establish that they are eligible to receive a payout from the Fund 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.”

Former A.R.S. § 32-1131(3)(a) defines an “injured person” who is entitled to a payout from the Fund as follows:

“Person injured":

(a) 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.) Under this statute, to be eligible for a Fund payout, at the time the contract was made or the injury accrued, the claimant must have owned as his primary residence and actually occupied the property.

Although A.R.S. § 32-1131(3)(a) was amended in 2019, under A.R.S. § 32-1132(B)(1)(a) and (b), still requires claimants to own the residential property and occupies or intends to occupy the property. The Arizona Legislature did not expressly provide that the amendments were retroactive. In Arizona, “[n]o statute is retroactive unless expressly declared therein.”

Further, an applicant of the Fund must have had the work completed performed by licensed contractors.

The Registrar owes a fiduciary duty to manage the Fund for the benefit of all eligible homeowners who have suffered actual damages caused by a licensed contractor’s statutory violations as defined by the statutes in effect when the injury accrued. Before authorizing a payout, the Registrar must determine whether a claimant is eligible under the statutes that govern his claim.

In this case, there was no dispute from Complainants that they did not own the property at the time the work was completed in 2016. Further, there was no dispute that the work performed was completed by an unlicensed contractor. Thus, despite the impassioned argument from counsel, Complainants did not establish that applicable statute required the Registrar to find them eligible to receive a payout from the Fund.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that on the effective date of the final order in this matter, the Registrar’s denial of Complainants Flavio Enrique Gonzalez and Jefferson Roosen’s claim to the Fund shall be affirmed and Complainants’ appeal of the Registrar’s denial 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, January 13, 2021.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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