ALJDEC decisions subject to certification as final

2018A-4158-RFA-ROC · Registrar of Contractors · 2020-03-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Ronald Steven Maddox,

COMPLAINANT

B & G Contracting LLC,

License No. ROC 292114,

RESPONDENT

No. 2018A-4158-RFA-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: February 12, 2020

APPEARANCES: Ronald Steven Maddox on his own behalf; John Tellier, Esq. for the Registrar of Contractors; no one appeared for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On November 19, 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 on December 20, 2019.

The matter was continued and the hearing was re-set to convene at 8:30 a.m. on February 12, 2020. No one appeared for Respondent B & G Contracting LLC and the matter was convened in its absence at about 8:45 a.m.

The issue for hearing is whether an award and payout from the Contractors’ Recovery Fund pursuant to Ariz. Rev. Stat. section 32-1131 et seq. is justified by the evidence.

Complainant Ronald Steven Maddox appeared and testified on his own behalf; ROC presented the testimony of Legal Assistant Shaquira Adebule.

Respondent B & G built a house on Soledad Lane in Florence and sold it to Garrett Holderman in January 2017. Mr. Maddox and his wife purchased the house from Mr. Holderman in December 2017.

The Maddoxes’ Purchase Agreement for the house shows that the Maddoxes agreed that they were purchasing the house in “its present physical condition as of the date of the contract acceptance.”

On September 4, 2018, Mr. Maddox filed with ROC a complaint against Respondent B & G alleging poor workmanship. As pertinent to this matter, Mr. Maddox alleged that the house and property were being damaged by rain and floodwater from an arroyo on the property; that the contractor’s application for a permit contained false information as to the distance from the house to the arroyo; and that tile flooring was uneven, with excess lippage.

On September 24, 2018, ROC’s Randy Morris inspected Mr. Maddox’s property.

Mr. Morris found that there was evidence of flooding, but not enough evidence to show that Respondent B & G committed a workmanship violation. He noted that Pinal County had issued the permit and approved the certificate of occupancy, that building permits are not within ROC’s jurisdiction, and that Pinal County conducted an inspection of the property on June 25, 2018 and it determined that the wash was not a jurisdictional wash and did fall under the Floodplain Ordinance or the Flood Control District’s jurisdiction.

Mr. Morris did find a workmanship violation related to the tile lippage and one regarding an exhaust fan. ROC ordered Respondent B & G to repair the tile and the exhaust fan. B & G failed to do so and ROC issued to B & G a Citation alleging that it had violated Ariz. Rev. Stat. sections 32-1154(A)(3) and (A)(22).

B & G failed to answer the Citation and through an Order dated January 10, 2019, ROC suspended B & G’s license and assessed against it a $500 civil penalty. B & G failed to pay the penalty and its license was revoked.

On April 30, 2019, Mr. Maddox filed with ROC a Recovery Fund Claim requesting a payout of between $7236.12 and $8585.53 to repair only the tile-lippage.

On October 4, 2019, ROC issued a Notice and Order of Denial of Recovery Fund Claim. ROC found that Mr. Maddox did not show any “actual damages” because he purchased the house “as-is,” and in “its present physical condition as of the date of the contract acceptance.”

At the hearing, Mr. Maddox testified that the current condition of the house is not the condition that it was in when the Maddoxes purchased it and to the effect that they could not have known that the damage would occur.

Mr. Maddox provided evidence about damage that has occurred at the house since he filed the underlying workmanship complaint, which included cracking in tile floors and walls and separation of a patio cover from the house.

Mr. Maddox had admitted into evidence a report by Ralph M. Pattison, P.E.

Mr. Pattison described damage to the house including cracks in the tile floors and stucco. Mr. Pattison’s opinion was that good drainage is essential, yet the Maddoxes’ house was seemingly built without regard to the proximity to the arroyo and the poor drainage all around the house, and that water was likely infiltrating under and around the house causing soil movement that resulted in the cracks and other damage to the house.

CONCLUSIONS OF LAW

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.

Mr. Maddox has filed a claim asserting that he meets the requirements to receive a payout from the recovery fund. As such, he bears the burden of proof in this matter. Ariz. Admin. Code § R2-19-119(B); see also Harvest v. Craig, 195 Ariz. 521, 524, ¶¶ 14-15 (App. 1999) (the party seeking a right granted by statute generally has the "burden of proving that he comes within the ambit of the statute").

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).

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.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

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).

“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.

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).

“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).

To qualify as a “person injured” under § 32–1131(3), the recovery fund claimant must (1) be an owner of residential real property; (2) actually occupy or intend to occupy the property as a residence; and (3) be damaged by the failure of a residential contractor to adequately build or improve a residential structure. Pinnamaneni v. Ariz. Registrar Contractors, 237 Ariz. 147, ¶ 12, (App. 2015) (citing McMurren at ¶ 15).

An “owner is injured, and the claim accrues, when a contractor inadequately builds or improves the property, thereby violating the chapter. If this occurs when the owner actually occupies or intends to occupy the property as a residence, then the owner qualifies as a person injured.” McMurren at ¶ 16 (underscoring added).

Because the Maddoxes did not own the house at the time Respondent B & G performed the work for which ROC suspended its license, and there was no evidence adduced to show that they intended to occupy the house at that time, Mr. Maddox is not eligible to receive a payout from the Fund.

ROC argues that because the Maddoxes purchased the home “as-is” and in the condition it was in at the time of their purchase, they have not suffered any actual damages. Mr. Maddox argues that the condition of the home has changed since they purchased it and that the Maddoxes could not have known that problems would accrue.

In this case, the evidence at hearing shows that the damage to the home is the result of B & G’s deficient grading and drainage work, which is a condition that existed when the Maddoxes made their purchase. Moreover, even if one were to accept that the defects at issue were latent, Mr. Maddox presented no legal authority to show that these latent defects provide the Maddoxes with a cause of action to sue B & G. Consequently, Mr. Maddox has not shown that he is a person injured within the meaning of section 32-1131. See McMurren at ¶ 16 (“a relevant time for considering whether a claimant is a person injured is when the right accrues to a residential owner to sue a contractor who has violated the chapter.”)

Considering the above, Mr. Maddox’s recovery fund claim should be denied.

RECOMMENDED ORDER

IT IS ORDERED that the Registrar of Contractor’s decision to deny Ronald Steven Maddox’s recovery fund claim is affirmed and that Mr. Maddox’s 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.

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-137160-45720000Done this day, March 3, 2020.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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001

-137160-45720000