ALJDEC decisions subject to certification as final

2018A-281-ROC · Registrar of Contractors · 2019-03-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 27, 2019 APPEARANCES: Lorrie and Dan Ewer on their own behalf; D. Barry Dickey for Respondent; Thomas Raine, Esq. for the Registrar of Contractors ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT 1. On January 7, 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 9:00 a.m. on February 27, 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 Badabo Construction LLC holds license numbers 295873 and 296145, both of which were suspended as of the hearing date in this matter. Barry Dickey is a member of the LLC. 4. Complainants Lorrie and Dan Ewer purchased a house in Tucson, with the close of escrow occurring on September 11, 2017. The seller of that home was Eugene Hildreth. 5. On January 22, 2018, Ms. Ewer filed with ROC a complaint against Mr. Dickey alleging that he was an unlicensed contractor and that he had performed deficient work related to tile flooring in the house. Ms. Ewer’s complaint shows that any contract for the work at issue was between Mr. Dickey and the seller Mr. Hildreth. 6. Although Ms. Ewer named Mr. Dickey in her complaint, on May 16, 2018, ROC issued to Respondent a Citation alleging violations of Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22). On August 12, 2018, ROC suspended Respondent’s licenses as a direct result of Ms. Ewer’s complaint. 7. On October 9, 2018, the Ewers filed with ROC a Recovery Fund Claim requesting a payout of $7170. 8. On December 27, 2018, ROC issued a Notice and Order of Denial of Recovery Fund Claim. 9. ROC denied the Ewers’ claim because it determined that they did not suffer any compensable “actual damages.” 10. ROC determined that Respondent had completed the work at issue in December 2016, which was before the Ewers purchased the house. The Ewers’ Purchase Agreement for the house shows that the Ewers agreed that they were purchasing the house in “its present physical condition as of the date of the contract acceptance.” Exhibit ROC 10 at page 5. Consequently, ROC determined that the Ewers had not suffered any actual damages, and it denied their claim. 11. The Administrative Law Judge Decision resulting from Ms. Ewer’s underlying complaint, which was adopted by ROC, shows that before the close of escrow the Ewers were aware that there were problems with the flooring, and that the listing agent had apparently had someone take care of those problems. 12. At the hearing, ROC’s Marlee McCormick testified to the effect that because the Ewers were aware of the problems with the floor before the close of escrow and they bought the house “as is” they accepted the poor work and the recovery fund cannot make a payout to the Ewers. 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 Ewers 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."). 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 (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 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). 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 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). 10. “‘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). 11. The Ewers have not shown that they suffered any actual damages as a direct result of Respondent’s work because they purchased their house with the knowledge that the flooring issues for which they seek a payout were in existence at the time of the purchase and they agreed that they were accepting the house in that condition. 12. Considering the above, the Ewers’ recovery fund claim should be denied. RECOMMENDED ORDER IT IS ORDERED that on the Registrar of Contractor’s decision to deny Lorrie and Dan Ewer’s recovery fund claim is affirmed and that the Ewers’ 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 11, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors -----------------------

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