FINACT2018A-2528-ROC.pdf

2018A-2528-ROC · Registrar of Contractors · 2019-04-08

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Luke and Diana Abell, Case No. 2018-2528 COMPLAINANTS, Docket No. 2018A-2528-ROC v. Omega Construction Services LLC, FINAL ADMINISTRATIVE DECISION License No. ROC 282943, AND ORDER RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an

administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the

Registrar must provide written justification setting forth the reasons for the modification or rejection.

MODIFICATION

In this case, a hearing was held, and the administrative law judge issued a written decision. See

Administrative Law Judge Decision, attached.

WRITTEN JUSTIFICATION

Complainants Luke and Diana Abell filed a claim with the Arizona Residential Contractors’ Recovery

Fund. ALJ Dec. 2:3-4. After reviewing the claim, the Registrar issued its Notice and Order of Recovery Fund

Ineligibility, advising the parties that the Registrar had determined that the Abells did not meet the eligibility

criteria outlined in A.R.S. 32-1131, et seq. ALJ Dec. 2:9-10. The Abells filed a request for hearing to appeal

the Registrar’s determination.

The Administrative Law Judge Decision states that “The Abells have filed a claim asserting that they

meet the requirements to receive a payout from the recovery fund. As such, they bear the burden of proof in

this matter.” ALJ Dec. 3:15-18 (citing Ariz. Admin. Code § R2-19-119; Magness v. Ariz. Registrar of

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Contractors, 234 Ariz. 428 (App. 2014)) 1. To the extent that the Administrative Law Judge Decision

concludes that the Abells bear the burden in this administrative appeal merely because they are the claimants

to the fund, this conclusion is incorrect as a matter of law and is inconsistent with prior Administrative Law

Judge Decisions.

Claimants to the recovery fund must initially persuade the Registrar that they are entitled to a payout

from the fund pursuant to A.R.S. §§ 32-1131 and -1132. However, once the Registrar makes a determination

on a recovery fund claim and issues a Notice and Order of Recovery Fund Ineligibility (or Eligibility), this

determination is a prima facie showing of the amount that a complainant is (or is not) entitled to recover. The

burden of proof then shifts to any party that appeals that determination. A.R.S. § 41-1092.03(B) (providing a

party’s right to appeal an agency action); A.A.C. R2-19-119(B)(1) (“A party asserting a claim, right, or

entitlement has the burden of proof.”).

Here, the Abells failed to meet their initial burden to prove that they are entitled to a fund payout, and

the Registrar issued a determination of ineligibility. The Abells then asserted their statutory right to appeal the

Registrar’s determination. Accordingly, they bear the burden of proof as appellants challenging the

Registrar’s determination, not merely because they are the claimants to the fund.

This conclusion is consistent with previous Administrative Law Judge Decisions and the Registrar’s

Final Administrative Decisions finding that the party appealing the agency action (whether Claimant or

Respondent) bears the burden of proof. For example, the following decisions correctly stated the burden of

proof for a Recovery Fund proceeding:

• “Complainants bear the burden of proof in this appeal because they are appealing the Registrar’s

determination that they did not suffer compensable damages.” Ewer v. Badabo Construction,

2018A-281-ROC, Final Administrative Decision and Order at 3:10-14.

1 Magness is inapposite because it found that a recovery fund claimant bears the initial burden to establish fund eligibility in a civil case brought pursuant to A.R.S. § 32-1136. Magness does not address the burden of proof in an administrative appeal where the Registrar has already made a determination regarding fund eligibility. Thus, while not dispositive, Magness is compatible with the Registrar’s position here.

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 • “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 the Complainant is entitled to recover as a payout from the Fund. The burden

shifts to Respondent to establish that the Registrar’s calculations were erroneous or not

supported by a preponderance of the evidence.” Smith v. Seven Foot Construction, 2017A-2190-

ROC, 11:2. ALJ Mihalsky (citing A.A.C. R2-19-119 (A) and (B)(1); Vazzano v. Superior Court,

74 Ariz. 369, 372 (1952)).

• “Respondent bears the burden of proof to establish that the Registrar’s calculations on the proper

amount of the payout were erroneous or not supported by a preponderance of the evidence.”

Byrd v. Landscape Images, 2016A-4546-ROC, 8:3, ALJ Mihalsky (citing A.R.S. § 41-

1092.07(G)(2); A.A.C R2-19-119 (A) and (B)(1); Vazzano v. Superior Court).

• “After the Registrar has determined the amount of the payout from the Fund to which

Complainants are entitled, Respondent bears the burden of proof to establish that the Registrar’s

calculations were erroneous or not supported by a preponderance of the evidence.” McDaniel v.

Kieran Brothers, 2017A-3888-ROC, 5:2, ALJ Geddes (citing A.A.C. R2-19-119(A) and (B)(1);

Vazzano v. Superior Court).

CONCLUSION AND ORDER

The Registrar hereby modifies the Administrative Law Judge Decision by:

• Replacing p. 3, ¶ 2 with “Complainants bear the burden of proof in this appeal because they

are appealing the Registrar’s determination that they did not meet the eligibility criteria

outlined in A.R.S. 32-1131, et seq. Therefore, the Abells bear the burden to prove that the

Registrar’s determination was either erroneous or that the determination was unsupported by

the preponderance of the evidence. A.A.C. R2-19-119(A) and (B)(1).”

The Registrar hereby accepts the remainder of the Administrative Law Judge Decision, which

becomes effective on May 18, 2019.

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 FINAL NOTE

On page 2, line 8 replace “December 20, 2017” with “December 21, 2017”.

Dated April 8, 2019.

Registrar of Contractors /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund

Copy mailed via USPS First Class mail April 8, 2019 to: Respondent Omega Construction Services LLC 5521 E Fairmount St Tucson, AZ 85712

Complainants Luke and Diana Abell 201 N Bunker Hill Dr Tucson, AZ 85748 AND copy electronically mailed this same date to: Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar

Office of Administrative Hearings Thomas Shedden, Administrative Law Judge Office of the Attorney General John Tellier, Assistant Attorney General

Case No. 2018-2528 / mm

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 3.12.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Luke and Diana Abell, No. 2018A-2528-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION v.

Omega Construction Services LLC, License No. ROC 282943,

RESPONDENT HEARING: February 26, 2019 APPEARANCES: Luke and Diana Abell on their own behalf; no one appeared for Respondent; John Tellier, Esq. for the Registrar of Contractors ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

1. On January 4, 2019, the Registrar of Contractors (“ROC”) issued a NOTICE OF RECOVERY FUND HEARING setting the above captioned matter for hearing at the Office of Administrative Hearings at 1:00 p.m. on February 26, 2019. 2. The issue is whether an award and payout from the Contractors’ Recovery Fund pursuant to ARIZ. REV. STAT. section 32-1154([G]) is justified by the evidence. 3. Respondent Omega Construction Services LLC did not appear at the scheduled hearing time, and the matter was convened in its absence at about 1:15 p.m. 4. Complainants Luke and Diana Abell entered a contract with Respondent in which Respondent was to perform roofing work at Complainants’ house. 5. On June 5, 2018, Mr. Abell filed with ROC a complaint against Respondent alleging abandonment. In his complaint, Mr. Abell stated that the date of the contract with Respondent was December 30, 2017. 6. On July 24, 2018, ROC issued to Respondent a CITATION alleging violations of ARIZ. REV. STAT. sections 32-1154(A)(1), (A)(3), and (A)(22).

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 3.12.2019 ROC LEGAL

7. On August 22, 2018, ROC suspended Respondent’s license as a direct result of Mr. Abell’s complaint. 8. On September 13, 2018, the Abells filed with ROC a Recovery Fund Claim

requesting a payout of $27,945.26. In their Claim, the Abells stated that the date of

their contract with Respondent was December 30, 2017, and that contract was written,

not verbal.

9. Based on a matter unrelated to this one, Respondent’s license was suspended

from December 20, 2017 through March 30, 2018.

10. On December 13, 2018, ROC issued a NOTICE AND ORDER OF RECOVERY FUND

INELIGIBILITY.

11. ROC denied the Abells’ Claim because it determined that Respondent’s license

was suspended on December 30, 2017, which as a matter of law precludes any payout

from the fund for damages resulting from contracts entered into on that date.

12. At the hearing, Mr. Abell testified to the effect that the parties actually had a

verbal contract that was effective on December 18, 2017.

13. In support of this position, the Abells had admitted into evidence an undated and

unsigned proposal showing that Respondent would complete certain work for $15,341.40. Mr. Abell referred to this as the initial contract, and he testified to the effect that the parties had a meeting of the minds as of December 18, 2017, and that there was offer, acceptance and consideration for the formation of the contract. Complainant Exhibit A. 14. Complainant Exhibit A shows “Deposit of 50% down at time of signing of contract and scheduling”. 15. ROC’s Exhibit 7 at Bates page 28 includes a second proposal or contract that was signed by Mr. Abell and by a representative for Respondent, and a copy of a check from Mr. Abell to Respondent for $10,000. The contract/proposal is not dated and the check is dated December 30, 2017. 16. The contract/proposal in ROC Exhibit 7 is for a total of $13,149.77 and shows “Deposit of $10,000 down at time of signing contract and scheduling”. RECEIVED 3.12.2019 ROC LEGAL

17. Mr. Abell testified that the second proposal/contract was signed by the parties on December 19, 2017. He testified that the check was not signed until December 30, 2017 because there was a delay in getting the funding required.

18. Mr. Abell testified to the effect that the parties had an oral contract as of

December 18, 2017, which was modified by the signed proposal on December 19,

2017.

19. According to Mr. Abell, the reason his original complaint and the Abells’

Recovery Fund Claim show a contract date of December 30, 2017 was because he

used the date the first check was written to Respondent.

CONCLUSIONS OF LAW

1. Unless otherwise provided by law, a party asserting a claim, right, or

entitlement bears the burden of proof; a party asserting an affirmative defense has the

burden of establishing the affirmative defense. The standard of proof on all issues in

this matter is that of a preponderance of the evidence. ARIZ. ADMIN. CODE § R2-19-119. 2. The Abells have filed a claim asserting that they meet the requirements to receive a payout from the recovery fund. As such, they bear the burden of proof in this matter. ARIZ. ADMIN. CODE § R2-19-119; Magness v. Ariz. Registrar of Contractors 234 Ariz. 428 (App. 2014). 3. 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). 4. 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.").

RECEIVED 3.12.2019 ROC LEGAL

5. “Statutes shall be liberally construed to effect their objects and to promote justice.” ARIZ. REV. STAT. § 1-211(B). 6. 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, 63 P.3d 1082 (App.

2003).

7. “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.

8. “Person injured” means “any owner of residential real property which is

classified as class three property … 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).

9. 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 shall not be available to persons injured by an act, representation, transaction or conduct of a residential contractor who was not licensed pursuant to this chapter or whose license was … suspended … at the time of the contract.” ARIZ. REV. STAT. § 32-1132(A)(underscore added). 10. The Abells’ recovery fund claim-form and Mr. Abell’s original complaint both show that the Abells entered a contract with Respondent on December 30, 2017. Contrary to Mr. Abell’s testimony, the Abells’ recovery fund claim form shows that the parties had a written contract. The signed contract shows that $10,000 was due on signing, and that sum was paid to Respondent by a check dated December 30, 2017. 11. The preponderance of the evidence shows that the Abells entered a contract with Respondent on December 30, 2017. Respondent’s license was suspended on December 30, 2017, and the Abells are not eligible to receive a payout from the recovery fund. RECOMMENDED ORDER RECEIVED 3.12.2019 ROC LEGAL

IT IS ORDERED that the Registrar of Contractor’s decision to deny Luke and

Diana Abell’s recovery fund claim is affirmed and that the Abells’ appeal is 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 40 days from the date of that certification.

Done this day, March 12, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors