ALJDEC decisions subject to certification as final

2018A-4143-RFA-ROC · Registrar of Contractors · 2020-06-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Shelby Rae Fletcher,

COMPLAINANT,

v.

Platinum Preservations LLC,

License No. ROC 292429,

RESPONDENT.

No. 2018A-4143-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING DATES: June 3, 2020, at 9:00 a.m. and June 18, 2020, at 9:00 a.m.

APPEARANCES: Shelby Rae Fletcher (“Complainant” or “Ms. Fletcher”) appeared through Shawn Aksamit, her partner and the owner of the house where the work was performed, at the June 3, 2020 hearing date; Complainant and Mr. Aksamit were represented by Michael J. “Mick” McGirr, Esq., Phocus Law at the June 18, 2020 hearing date; Platinum Preservations LLC (“Respondent”) failed to appear at both hearing dates; the Arizona Registrar of Contractors (“the Registrar”) was represented by Sarah A. Asta, Esq., Assistant Attorney General, at the June 3, 2020 hearing date; the Registrar was represented by John Tellier, Esq., Assistant Attorney General at the June 18, 2020 hearing date.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

On March 11, 2020, the Registrar issued a Notice and Order of Denial of Recovery Fund Claim from the Residential Contractors’ Recovery Fund (“the Fund”), notifying the parties that “[a]fter a review of the claim and all supporting documentation, the Fund determined that Complainant is denied payment from the Fund” because (1) Mr. Aksamit, a single man, not Complainant, owned the house where Respondent had performed the work; (2) Top Notch Transportation (“Top Notch”), not Complainant, had paid Respondent; and (3) Respondent’s license was suspended of the dates of the contract, when the first payment was made, and when the work was completed.

After Complainant requested a hearing on her eligibility to receive a payout from the Fund, the Registrar referred Complainant’s claim to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing.

A hearing on the merits of was held on June 3, 2020. The Registrar presented the testimony of Katelyn Rolling, a Legal Assistant in the Registrar’s Legal Department/Fund who had analyzed Complainant’’s claim, and submitted nine exhibits. Mr. Aksamit wished to represent Complainant and the Registrar’s attorney did not oppose the Administrative Law Judge’s suggestion that his name be added to the caption to avoid a possible unauthorized practice of law issue. During Ms. Rolling’s direct testimony, Mr. Aksamit requested a further hearing so that he could retain an attorney. The Registrar did not oppose the request and a further hearing was scheduled.

A further hearing was held on June 18, 2020. The Registrar continued presenting Ms. Rolling’s testimony and submitted five more exhibits. Ms. Fletcher and Mr. Aksamit testified.

All notices and orders were sent to Respondent at its address of record. Respondent did not appear telephonically or through Google Meet at either hearing date. Consequently, Respondent did not present any evidence to contest Complainant’s claim to the Fund.

Background: The Underlying Workmanship Complaint

On or about September 4, 2018, Ms. Fletcher filed a complaint with the Registrar against Respondent’s license. According to the complaint, the “Contract Date” was July 11, 2018, the “Contract Amount” was $9,000.00, the “Amount Paid” was $10,000.00, the “Date Work Started” was July 12, 2018, and the “Date Worked Stopped” was August 12, 2018. The contract and change orders were oral and written.

Complainant attached a 2-page narrative to the complaint. Among other things, Complainant stated in relevant part as follows:

We took a vacation . . . so they could have the house to themselves. [Respondent] wanted payment upfront so he could pay for the tile, supplies, and have money to pay his workers so we gave him a check for $14,000. When we got back in town he came to Shawn and got another $3,000 that exceeded the original amount agreed to.

On October 15, 2018, the Registrar’s assigned Investigator Timothy Pennington performed a jobsite inspection. Investigator Pennington’s jobsite inspection notes stated that the persons present were “Complainant: Shelby and Shawn Fletcher” and “Respondent: Russell Ferguson.”

On February 14, 2019, the Registrar issued a Citation against Respondent’s license. Mr. Ferguson on behalf of Respondent filed a timely written answer, stating that Respondent had a contract with Mr. Aksamit, not Ms. Fletcher. The contract was verbal because Mr. Ferguson was long-term friends with Mr. Aksamit. Ms. Fletcher and Mr. Aksamit were planning to be out of town between July 11, 2018, and July 25, 2018, but returned on July 16, 2018. Respondent arrived early on July 17, 2018, but was told to leave because the household was still sleeping. In November 2018, Mr. Ferguson asked Mr. Aksamit for an estimate to complete Respondent’s work, but Mr. Ferguson never received such estimate.

On May 2, 2019, an evidentiary hearing was held in OAH. Respondent failed to appear. On May 15, 2019, Administrative Law Judge (“ALJ”) Velva Moses-Thompson issued a decision, finding that cause existed to suspend or revoke Respondent’s license under A.R.S § 32-1154(A)(1), A.R.S § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S § 32-1154(A)(22). As a result, ALJ Moses-Thompson revoked Respondent’s license and required it to pay a $500.00 civil penalty. Paragraph 16 of the decision stated as follows:

During the compliance job-site inspection, Ms. Fletcher’s fiancé, Shawn [Aksamit], informed Mr. Ferguson that he had obtained an invoice stating that it would cost approximately $9,000 to correct the work. Mr. Ferguson stated that he would pay for the work to be corrected. However, [neither] Mr. Ferguson nor Platinum paid for the work to be corrected.

On May 31, 2019, the Registrar accepted the decision, effective July 10, 2019.

Complainant’s Claim to the Fund

On November 1, 2019, Ms. Fletcher submitted a claim to the Fund to recover the damages that were allegedly caused by Respondent’s statutory violations, in the amount of $9,521.73, based on the monies that Complainant paid others to repair and complete the project. According to the claim, Complainant had paid Respondent $17,000.00 on a $9,000.00 contract. The date of the contract July 11, 2019.

Complainant attached to her claim bids from three contractors to correct Respondent’s work totaling $9,521.73, which Ms. Fletcher collectively called “finish totals to finish home improvements.”

Ms. Rolling explained that since the Registrar found Complainant to be ineligible to recover a payout from the Fund, she did not analyze Complainant’s bids to determine whether they described work that the Registrar had found to be deficient in the underlying workmanship complaint.

Complainant attached to her claim to the Fund two checks drawn on Top Notch Transportation Inc.’s account made payable to Respondent, as follows: (1) A check dated July 11, 2019, in the amount of $14,000.00; and (2) A check dated July 27, 2019, in the amount of $3,000.00.

Additional Hearing Evidence

Ms. Rolling testified that, to be eligible for a payout from the Fund, the claimant must have paid the respondent contractor for its work to be an injured person under the Fund statute. Ms. Rolling could not cite the specific statute but stated that after the Fund statutes had been amended effective August 27, 2019, the Registrar had adopted a substantive policy statement that, under the amendments, the Registrar would accept claims for a payout from the Fund even if others, not the homeowner or claimant, had paid for the contractor’s work.

The Registrar submitted a printout from the Maricopa County Assessor that identified Shawn Aksamit as the owner of the property where the work was performed.

The Registrar submitted a warranty deed conveying the property to Shawn Aksamit, a single man, in March 2015.

Ms. Rolling testified that the warranty deed and assessor’s printout were significant because, if Ms. Fletcher and Mr. Aksamit married after he acquired the house as his separate property, Ms. Fletcher would not have an ownership interest in the property. Ms. Rolling noted that Mr. Aksamit had never filed a complaint with the Registrar against Respondent’s license that caused the Registrar to discipline the license.

The Registrar submitted a printout from Respondent’s license history from the Registrar’s database. On July 1, 2018, Respondent’s license was administratively suspended for non-renewal. On July 11, 2018, Respondent’s license was revoked as discipline. Although Respondent’s license underwent subsequent suspensions and revocations, the license was never again in good standing after July 1, 2018.

On March 27, 2020, after the Registrar issued the Notice and Order of Recovery Fund Claim Denial, Mr. Aksamit sent a letter disagreeing with the denial. According to Mr. Aksamit, (1) He had been with Ms. Fletcher for 10 years and she was his fiancée; his house was her house; (2) After he and Ms. Fletcher went on vacation, Respondent contacted them to say it needed money to start work; because Mr. Aksamit was out of town, he sent Respondent to his place of business and directed an employee to issue a check to Respondent; and (3) He or Ms. Fletcher had checked Respondent’s license at “the contractor’s of Az” website both before the parties made their contract and after Respondent started work and had seen that the license was in good standing.

Ms. Rolling testified that if Complainant and Mr. Aksamit had gone to the Registrar’s website at any time after July 1, 2018, they would have known that Respondent’s license was suspended and, later, revoked. Ms. Rolling testified that information that a contractor’s license had been suspended or revoked was automatically uploaded to the website and that a person looking at information about a suspended or revoked contractor’s license on the website would have seen a warning.

Ms. Rolling acknowledged that the Registrar had not submitted any printouts from the website on the dates that Mr. Aksamit or Complainant said they consulted the website about Respondent’s license status. Ms. Rolling explained that the Registrar did not have the capability to go back years to see what someone would have seen on the website on a given date.

Ms. Rolling testified that she is aware of the procedure for uploading disciplinary and other actions against a contractor’s license on the Registrar’s website, but acknowledged that she did not manage the website.

Mr. Aksamit testified consistently with his response. He and Ms. Fletcher were co-owners of the house. He sent Respondent to his business, Top Notch, to get paid because he was out of town, Respondent needed money, and that was the only way to get the job done.

Ms. Fletcher testified that she had been in a relationship with Mr. Aksamit for 10 years, six months. She had lived with him in the house since they had bought it five years ago. Ms. Fletcher testified she contributed to the mortgage, maintenance, and upgrades. Their finances, expenses, and assets were shared. Ms. Fletcher worked for Top Notch for free because the money Top Notch would have paid her went to the house.

Mr. Aksamit testified that this was the third house that he and Ms. Fletcher had lived in together. His son was ill at the time, causing him to rely more on Ms. Fletcher, but otherwise he and Ms. Fletcher did everything together. Mr. Aksamit testified that his handwriting was horrible and he does not do well with with paperwork so Ms. Fletcher generally filled out forms for the couple. Mr. Aksamit testified he reviewed the complaint and claim that Ms. Fletcher had filed.

Ms. Fletcher explained that she stated that the contract and change order were written and verbal because part of Respondent’s contract was set forth in Mr. Ferguson’s texts. She and Mr. Aksamit started discussing the job with Respondent on June 12, 2018.

Ms. Fletcher testified that Respondent provided a quote for the job in a text dated June 18, 2018. Ms. Fletcher testified that she and Mr. Aksamit paid Respondent $10,000.00 in cash on June 18, 2018, based on the text. Ms. Fletcher acknowledged that she did not have a bank statement or receipt to evidence the cash payment and that her testimony on the second day of hearing was the first mention of the $10,000.00 cash payment.

Ms. Fletcher explained that she and Mr. Aksamit made the $10,000.00 cash payment on a contract whose initial amount was $9,000.00 because they decided that they wanted everything done in the house, not just the floors. The $9,000.00 was just a down payment; the whole job would be $27,000.00. She later explained that she was confused; the $9,000.00 was the cost of repairs. She and Mr. Aksamit had paid $10,000.00 in cash to Respondent on June 18, 2018, as a deposit.

Mr. Aksamit testified that he and Ms. Fletcher started discussing the project with Respondent on June 12, 2018, and agreed on a price on June 18, 2018. Mr. Aksamit testified that he opened his safe at approximately 8:00 and pulled out the cash for Respondent. He did not get a receipt. Mr. Aksamit denied ever receiving a written quote from Respondent.

Mr. Aksamit explained that, ten years ago, he had another project done by Mr. Ferguson’s uncle. Mr. Ferguson had been on the crew. Mr. Aksamit had paid Mr. Ferguson’s uncle in cash and he had done the job perfectly. Then the uncle moved out of state. When he bought a new house that needed work, he got bids from various contractors, including Mr. Ferguson’s company, Respondent. Mr. Ferguson told him he had worked for him before and Respondent got the job.

Ms. Fletcher testified that the other two payments were made by her and Mr. Aksamit’s business, Top Notch, while they were out of town. She and Mr. Aksamit had paid Respondent a total of $27,000.00 for work on the house. Ms. Fletcher testified that after she and Mr. Aksamit returned from their vacation, she repaid the monies that Top Notch had paid Respondent. Ms. Fletcher acknowledged that she did not have a receipt or statement from Top Notch that showed the repayment.

Mr. Aksamit testified that after Respondent asked for more money on July 11, 2018, after he and Ms. Fletcher had left for vacation, he called Tim at Top Notch and told him to forge Mr. Aksamit’s signature on a check to Respondent and give the check to Respondent to start the project. Mr. Aksamit testified that he personally paid Top Notch back.

Ms. Fletcher testified that the $9,000.00 contract amount on the complaint that she filed with the Registrar was the amount she and Mr. Aksamit had discussed with Respondent. A lot of changes had been made to the contract and they ended up paying more for the work.

Ms. Fletcher testified that she checked Respondent’s license on the Registrar’s website in early June 2018 and found that it was good. Toward the end of the July 2019, when she began having doubts about Respondent’s abilities, she again checked the website and found that the license was still good. When Investigator Pennington performed the jobsite inspection, he did not mention that Respondent’s license was suspended.

Mr. Aksamit acknowledged that he never personally checked the Registrar’s website for Respondent’s license status, but testified that Ms. Fletcher checked the website after they started getting suspicious and that Ms. Fletcher had shown Respondent’s license status to him. Mr. Aksamit testified that the license suspension was not shown for more than a month.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

The notices and orders that the Registrar and OAH mailed to Respondent at its address of record were reasonable and Respondent is deemed to have received notice of the hearing on Complainant’s eligibility to receive a payout from the Fund.

Complainant bears the burden to establish that she is 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.”

The Fund statutes that were in effect on the date of the effective date of the Registrar’s final order revoking Respondent’s license based on Complainant’s workmanship complaint, July 10, 2019, which established the statutory violation required by former A.R.S. § 32-1132(A), govern Complainant’s claim to the Fund. Former A.R.S. § 32-1131(3)(a) defined 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 the residential property.

Complainant did not personally own the property where Respondent performed the work when the contract was made and performed, when she filed the workmanship complaint, or when she filed the claim to the Fund. There is no evidence that Ms. Fletcher ever married Mr. Aksamit and Arizona does not recognize common-law marriage. Nonetheless, Complainant and Mr. Aksamit, who legally owns the property, established that they are a long-term couple who work together for the benefit of each other. Mr. Aksamit could have filed the complaint in his own name, but relied on Complainant to file the complaint and the claim to the Fund. The Registrar did not object when the Administrative Law Judge proposed amending the caption of this matter so that he could represent the couple at the first hearing date. The fact that Complainant is not the legal owner of the property does not render Mr. Aksamit ineligible to receive a payout from the Fund under former A.R.S. § 32-1131(3)(a).

Former A.R.S. § 32-1132(A) provided in relevant part as follows:

The residential contractors' recovery fund is established, to be administered by the registrar, from which any person injured by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter may be awarded in the county where the violation occurred an amount of not more than thirty thousand dollars for damages sustained by the act, representation, transaction or conduct. An award from the fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines. . . .

(Emphasis added.) For a claimant to recover a payout from the Fund, the contractor’s license must have been in good standing on the date of the contract. For the purposes of A.R.S. § 32-1132(A), “actual damages” are the actual cost that the eligible person spent to correct the contractor’s defective work and complete the project, minus any portion of the contract price still unpaid to the original contractor.

Mr. Aksamit’s and Ms. Fletcher’s testimony that they paid Respondent $10,000.00 in cash on June 18, 2018, was not credible. The hearing was the first time either of them mentioned the alleged cash payment. No receipt or other document showed the payment was made. Although Ms. Fletcher testified that the payment was based on a bid sent by text; Mr. Aksamit denied that Respondent had ever prepared a written bid. The evidence shows the date of the contract was more likely July 11, 2018, as stated on the complaint and claim to the Fund, not June 18, 2018, the date of the alleged cash payment.

The Registrar’s evidence established that on July 1, 2018, Respondent’s license was suspended and the license was never reinstated. Ms. Rolling’s testimony that the Registrar’s website would have almost immediately have shown the suspension was credible. Complainant and Mr. Aksamit also did not submit printouts to show what they allegedly saw on the Registrar’s website, even though they had more cause than the Registrar to preserve such evidence. Complainant’s and Mr. Aksamit’s testimony on this point was not credible and does not establish that the Registrar should be estopped from denying their claim to the Fund because its website did not accurately show Respondent’s license status. Complainant did not establish that the Registrar’s denial of her claim to the Fund because Respondent’s license was suspended when the contract was made, when payments were made, and when Respondent performed work was improper.

In Arizona, “[p]roof of the fact of damages must be of a higher order than proof of the amount of damages.” Ms. Fletcher’s and Mr. Aksamit’s testimony that they repaid Top Notch back for the $17,000.00 that it paid Respondent to begin the work was not credible, especially in the absence of any receipt or other documentary evidence. Therefore, Complainant and Mr. Aksamit have not established that they suffered any actual damages under Arizona law. Complainant has not established that the Registrar’s denial of the claim to the Fund due to the absence of damages was improper.

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. Before authorizing a payout, the Registrar must have conclusive proof that the claimant not only is eligible because the respondent contractor’s license was in good standing on the date of the contract, but that the claimant has incurred actual, compensable damages and that the contractor was licensed when the claim accrued. Such proof is lacking in this case.

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 Complainant Shelby Rae Fletcher’s claim to the Fund shall be affirmed and Complainant’s 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, June 26, 2020.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors