ALJDEC decisions subject to certification as final

2019A-00158-RFA-ROC · Registrar of Contractors · 2020-01-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Deborah Susan Jacobs,

COMPLAINANT

LDO Custom Renovation LLC,

ROC License: ROC 272552,

RESPONDENT

No. 2019A-00158-RFA-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: January 6, 2020, 9:00 A.M.

APPEARANCES: Complainants Deborah and Jay Jacobs appeared on their own behalf. Assistant Attorney General John R. Tellier appeared on behalf of the Arizona Registrar of Contractors. No appearance was made on behalf of Respondent.

ADMINISTRATIVE LAW JUDGE: Roger A. Geddes

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

1. LDO Custom Renovation, LLC (Respondent), is the holder of License Number 272552 issued by the Registrar of Contractors (Registrar).

2. On or about January 10, 2019, Complainants Deborah and Jay Jacobs filed a Complaint with the Registrar against Respondent alleging poor work in connection with construction of a residence in Scottsdale, Arizona, purchased by Complainants. (Registrar’s Exhibit 1).

3. Thereafter on February 22, 2019, the Registrar issued a Citation charging Respondent with a violation of A.R.S. § 32-1154(A)(3). (Registrar’s Exhibit 3).

4. Due to Respondent’s failure to file a timely Answer, the Registrar issued a Final Administrative Decision and Order on March 21, 2019, finding that Respondent had violated A.R.S. § 32-1154(A)(3) as charged in the Complaint. (Registrar’s Exhibit 4). Pursuant to the Order, the Registrar revoked Respondent’s license.

5. On or about September 5, 2019, Complainants filed a claim in an amount between $24,000.00 and $30,000.00 to the Residential Contractors’ Recovery Fund (“Recovery Fund”) with the Registrar. (Registrar’s Exhibit 5).

6. On November 5, 2019, the Registrar issued a Notice of Claim for Administrative Payout in which the Registrar determined that Complainants would receive a payout of $30,000.00 from the Recovery Fund. (Registrar’s Exhibit 13).

7. Respondent filed a timely request for hearing on the Registrar’s Notice of Claim for Administrative Payout. (Registrar’s Exhibit 14).

8. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing regarding the amount and/or propriety of the payment from the Recovery Fund. A hearing was held on January 6, 2020, at 9:00 A.M.

9. At hearing, the Registrar presented the testimony of Doug Ulmer, Legal Assistant in the Claims Department. Complainant Deborah Jacobs appeared and testified on her own behalf. No appearance was made by or on behalf of Respondent. The Tribunal received and admitted Registrar’s exhibit numbers 1 - 16 and Complainants’ exhibit numbers 1 - 9.

10. Doug Ulmer testified on behalf of the Registrar that he had personally reviewed Complainants’ claim for payment from the Recovery Fund and determined that Complainants were eligible. Mr. Ulmer said that even though Complainants had not contracted with Respondent, he determined that Respondent had been listed on the building permit as the contractor performing the subject work at the residence purchased by Complainants. He also stated that he determined that Complainants had paid the full amount of the contract with Respondent. (Registrar’s Exhibit 12).

11. Mr. Ulmer further testified that in order to determine the proper payout amount from the Recovery Fund, he reviewed bids in the amounts of $10,581.82 from Todd Whittaker Drywall Inc., and $17,528.00 from Avanti Pools and Decks, LLC, (Registrar’s Exhibit 12), submitted to remedy the defective work of Respondent. He stated he added to the bid amounts the compensable repair costs incurred by Complainants in the amount of $8,328.48, (Registrar’s Exhibit 12), to arrive at the amount of $36,438.30 as the total damages incurred by Complainants as a result of Respondent’s defective work.

12. Complainant Deborah Jacobs testified that she attempted to secure other bids from other contractors but such other contractors were unwilling to do so. She further testified that the subject residence is owned by a revocable trust with Complainants as trustors and trustees. (Registrar Exhibit 16).

CONCLUSIONS OF LAW

1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq.

2. After the Registrar has determined the amount of the payout from the Recovery Fund to which Complainant is 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. See Arizona Administrative Code Rule 2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372 (1952).

3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 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.” BLACK’S LAW DICTIONARY at p. 1220 (8th ed. 1999).

4. The Registrar’s final decision in the underlying workmanship case established that Respondent did not comply with the Registrar’s workmanship standards and that Complainants potentially were persons who had been injured by Respondent’s violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. The only issue in the hearing on Complainants’ claim to the Recovery Fund is the measure of their damages.

5. A.R.S. § 32-1132(A) in effect at the time relevant to this claim formerly described the measure of damages that an eligible homeowner was entitled to recover from the Recovery Fund in 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. . . .

6. In addition, A.R.S. § 32-1131(3)(a) formerly stated that a "Person injured":

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.

7. In determining whether a claimant qualifies as a person injured, there is no requirement of privity between a property owner claimant whose property was damaged and the contractor alleged to have caused the damage. Pinnamaneni v. Ariz. Registrar of Contractors, 237 Ariz. 147 (App. 2015)

8. In failing to attend the hearing and submit evidence, Respondent has failed to establish that the Registrar’s calculations of Complainants’ actual damages were erroneous or not supported by a preponderance of the evidence.

9. Accordingly, the Tribunal finds that the Registrar did not err in proposing a payout in the amount of $30,000.00 from the Recovery Fund to compensate Complainants for their actual damages caused by Respondent’s violations.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that on the effective date of the final order in this matter, the Recovery Fund shall pay $30,000.00 to Complainants.

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, January 27, 2020.

/s/ Roger Geddes

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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