ALJDEC decisions subject to certification as final

2018A-2243-ROC · Registrar of Contractors · 2019-05-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 15, 2019 APPEARANCES: Complainant represented himself; Respondent did not appear. The Registrar of Contractors was represented by Assistant Attorney General Thomas Raine. ADMINISTRATIVE LAW JUDGE: Kay Abramsohn _____________________________________________________________________ Complainant challenges a proposed zero payout by the Residential Contractors’ Recovery Fund (“Fund”). The Fund has issued notice that it denied a payout to Complainant from the Fund. Complainant requested a hearing, challenging the denial of any payout. Based upon the record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order. FINDINGS OF FACT 1. Respondent was the holder of a CR21 Dual License No. CR.21290620, which was issued by the Registrar of Contractors (“Registrar”) in April 2014. 2. On or about May 17, 2018, Respondent voluntarily canceled License No. CR.21290620. 3. On August 17, 2018, Respondent executed a Consent Order regarding the Registrar’s authority over Respondent’s license and Respondent waived its right to a hearing, and judicial review or appeal regarding the Consent Order. Based on the terms of the Consent Order, Respondent consented to revocation of License No. CR.21290620 in multiple matters, including the above captioned matter, and waived any right to contest such revocation. 4. On August 20, 2018, the Registrar revoked Respondent’s License No. CR.21290620; such revocation enabled “injured parties” to proceed against the Fund.[1] 5. Complainant is an “injured party” as a result of Respondent’s prior actions or inactions, for which Complainant filed his complaint to the Registrar on May 18, 2018. 6. Thereafter, and as a result of the Consent Order, Complainant made a claim to the Fund in August 2018 for a recovery of $20,116.02.[2] With the claim, Complainant submitted documentation regarding his underlying contract, payments made by Complainant for uncompleted work by Respondent, and copies of the checks he executed in payment for the contract and work to complete the contract. 7. After reviewing the claim, in November 2018, the Registrar requested that Complainant submit additional documentation.[3] 8. In December 2018, Complainant responded with additional documents.[4] 9. By letter dated February 5, 2019, the Registrar denied Complainant a payout from the Fund. In its review, the Registrar found that there were payments to several unlicensed persons: Complainant as the unlicensed homeowner;[5] Roberto Aguire, lead worker; Jose Rodriguez, framing; and Raymundo Salgado, roofing.[6] 10. In its determination, the Registrar indicated that “actual damages” could not be determined using the value of (i.e., the amounts paid for) work performed by unlicensed persons who would be required to have been licensed to perform such work. Based on the supporting documentation, the Registrar determined that $30,258.29 had been paid to unlicensed persons and was, therefore, disallowed to be considered. 11. In its determination, the Registrar indicated that the amount of “valid” expenditures for completion of the project had been $41,477.21. Per the supporting documentation, based on the contract price of $102,468.08, the payments to Respondent in the amount of $55,000.00, the remaining unpaid balance of $47,468.08, and the $41,477.21 in “valid” expenditures, the Registrar then determined that Complainant had no actual damages because the remaining unpaid balance on the contract exceeded the “valid” expenditures. 12. At hearing, Complainant credibly testified regarding the project and the difficulties experienced on the job, primarily due to Respondent having spread itself thin on multiple other projects and, essentially, running out of money to complete Complainant’s project. Complainant indicated that, at that time, he had recently paid Respondent $40,000.00. In November of 2017, Complainant and Carlo Papazian (“Carlo”) of Scapes & Stones[7] came to an agreement wherein Complainant would, from that point on, pay the workers directly when they were working on the project.[8] 13. Complainant demonstrated that Roberto Aguire, Jose Rodriguez, and Raymundo Salgado were workers or subcontractors sent to work on the project by Carlo.[9] 14. At hearing, the Registrar gave additional information to the hearing record, due to the revocation of Respondent’s license and in the event that Complainant is determined to be eligible for a payout from the Fund because Roberto Aguire, Jose Rodriguez, and Raymundo Salgado are determined to be working under Respondent. In such event, the Registrar indicated that the amount of $20,460.50 would lower the unpaid balance on the contract to $27,001.58. Utilizing that amount and the allowable repair amount would then result in a payout of $14,475.63; however, should the one payment of $3,086.50 on May 18, 2018 be utilized in the calculations, the amount of the payout would be $11,389.13. 15. Based on the credible new information obtained through the hearing record, the Administrative Law Judge finds that the Registrar erroneously determined that Complainant was ineligible for payout from the Fund by determining that Roberto Aguire, Jose Rodriguez, and Raymundo Salgado were simply unlicensed contractors; the hearing record demonstrated that those persons were workers of Respondent or subcontractors of Respondent. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person who brings the action. Utah Construction Company v. Berg et al., 68 Ariz. 285, 205 P.2d 367 (1949); A.A.C. R2-19- 119(B). Further, the standard of proof at hearing is by preponderance of the evidence. Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2- 19-119(A). The Notice of Claim for Administrative Payout states that Complainant bears the burden of proof to show entitlement to any amount other than that in the Notice. Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that the proposed zero payout amount is not reasonable and proper. 2. Complainant is an injured person within the definition in A.R.S. § 32-1131(3) and is, therefore, entitled to recovery from the Fund. 3. According to A.R.S. § 32-1132(A), an award from the Fund is limited to “actual damages suffered by the complainant as a direct result of the contractor’s violation . . .,” not to exceed the cost of repair or replacement. “Actual damages” are those that will put the injured party in the position in which he was before he was injured. United States Fidelity & Guaranty Co. v. Davis, 3 Ariz. App. 259, 263, 413 P.2d 590, 594 (1966). 4. Under the facts and circumstances of this case, the Fund is empowered to determine and award, based on actual damages, an appropriate payment to Complainant pursuant to A.R.S. § 32-1132 and A.R.S. § 32-1154(F). 5. The Administrative Law Judge concludes that Roberto Aguire, Jose Rodriguez, and Raymundo Salgado were not simply unlicensed persons but were workers or subcontractors sent by Carlo/Respondent to work on the project on all the dates on which they performed construction work on Complainant’s project.[10] Therefore, the Administrative Law Judge concludes that Complainant is entitled to a payout from the Fund in the amount determined by the Registrar, the final amount for which is chargeable against Respondent and persons on the license as set forth in A.R.S. § 32-1139(B). RECOMMENDED ORDER Based on the foregoing findings of fact and conclusions of law, IT IS RECOMMENDED that, on the effective date of the final order in this matter, that Complainant’s eligible claim to the Fund be approved by the Registrar of Contractors for payout in the amount determined by the 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 Decision will be 40 days from the date of that certification. Done this day, May 6, 2019.

/s/ Kay Abramsohn Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Exhibit 4. [2] Exhibit 5. [3] Exhibit 6. [4] Exhibit 7. [5] At the time of that work, Complainant was unlicensed in Arizona. [6] Registrar determined that they were unlicensed based on a search of its active licensee information. [7] Carlo had indicated to Complainant that he “ran” the Arizona division of Respondent. [8] The hearing record indicated that there was a short time period after November 2017 when Respondent Carlo was able to pay its workers or subcontractors and Complainant was not paying the workers or subcontractors directly. [9] Complainant’s text message history (51 pages) from 9-8-17 to 5-18-18, found in his disclosure filing. [10] Complainant’s text message history (51 pages) from 9-8-17 to 5-18-18.

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