ALJDEC decisions subject to certification as final

2019A-01511-RFA-ROC · Registrar of Contractors · 2020-10-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

LaVerne Theis,

COMPLAINANT,

v.

Sun N Fun Construction LLC,

License No. ROC 280824,

RESPONDENT.

No. 2019A-01511-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 10, 2020 at 9:00 AM and September 29, 2020 at 1:30 PM.

APPEARANCES: Assistant Attorney General Sarah Asta, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with witnesses Kaitlyn Rolling and Gregory Johndrow. LaVerne Theis (“Complainant”) appeared on her own behalf. James Sullivan appeared on behalf of Sun N Fun Construction LLC (“Respondent”). Shirley Sullivan observed.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Registrar.

FINDINGS OF FACT

Background and Procedure

According to the Registrar’s public website, on or about September 17, 2012, the Registrar issued License No. 280824, B General Residential contracting license to Respondent. James Francis Sullivan is the Qualifying Party and Member on the license. Respondent’s address of record on the license is 6500 N. White Deer Ln. Tucson, AZ 85743-8756.

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website. There are no open complaints against the license, however, the license was disciplined by the Registrar on October 04, 2019. The record also reflects that Respondent has an active $9,000.00 surety bond for listed for License No. 280824 through RLI Insurance Company, effective September 02, 2014.

On March 26, 2019, the Registrar received a complaint from Complainant alleging poor workmanship. In the complaint, Complainant asserted that on or about February 16, 2019, Complainant and Respondent entered into a contract agreement whereby Respondent agreed to enclose Complainant’s patio located and convert the space into a livable area for the sum total of $5,898.00. The Registrar designated Complaint No. 2019-01511 and assigned to Gregory Johndrow (“Investigator Johndrow”) for investigation.

On April 26, 2019, Investigator Johndrow completed his inspection of the underlying project. Ultimately, he determined that the work Respondent had done on the project failed to meet minimum workmanship standards.

On May 03, 2019, a Directive From The Registrar (“Directive”) was issued by the Registrar which instructed Respondent to complete the project per contract and provide written proof of completion to the Registrar no later than 5:00pm on May 28, 2019. Respondent was also put on notice that if its license had been revoked it was only permitted to remedy the listed violation(s) by paying a licensed contractor as hired by Complainant or by entering into a financial settlement agreement with Complainant.

Complainant and Respondent did not execute a financial agreement on or by May 28, 2019, to resolve Complaint No. 2019-01511.

On June 07, 2019, a Citation was issued and sent to Respondent’s address of record charging Respondent with departure of plans or building codes in violation of Ariz. Rev. Stat. § 32-1154(A)(2), failure to meet minimum construction standards in violation of § 32-1154(A)(3); Ariz. Admin. Code R4-9-108, failure to satisfy minimum elements of a contract in violation of § 32-1154(A)(12); namely § 32-1158, and for failing to take corrective action after a written directive was issued by the Registrar in violation of § 32-1154(A)(22).

On June 17, 2019, the Registrar received Respondent’s written Answer whereby Respondent conceded the poor workmanship allegation, accused Complainant of denying access to the project site to perform corrective work, and alleged that Complainant asked Respondent to move forward with the project despite not having a permit and that Complainant refused to obtain one afterwards because she could not afford it.

On October 04, 2019, the Registrar issued a Final Administrative Decision and Order to the parties whereby Respondent was held to be in violation of Ariz. Rev. Stat. §§ 32-1154(A)(2), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(12); 32-1158, and 32-1154(A)(22). As such, the Registrar suspended Respondent’s license for 1 business day.

On February 03, 2020, the Registrar received a claim for payment with the Recovery Fund from Complainant whereby she indicated a $2,000.00 anticipated deposit refund, and a $12,494.48 payout from the Recovery Fund.

On May 06, 2020, the Registrar issued a Notice of Claim for Administrative Award to the parties which held that Complainant was eligible for a $6,522.00 administrative awarded from the Fund.

On May 20, 2020, the Registrar issued a Recovery Fund Quash Order to the parties which held that an additional review of the proposed administrative award was necessary, therefore the May 06, 2020, Notice of Claim for Administrative Award was quashed.

On May 20, 2020, the Registrar issued a second Notice of Claim for Administrative Award to the parties which held that Complainant was eligible for a recalculated administrative award of $7,022.00 from the Fund. Specifically, the Registrar determined that Complainant was owed an additional $500.00 because of a condition regarding electrical work in her underlying contract with Respondent.

On June 03, 2020, the Registrar received a timely appeal request from Complainant contesting his Recovery Fund award amount. No appeal request was received from Respondent.

On June 15, 2020, the Registrar referred the matter to the Office of Administrative Hearings (“OAH”) for an independent evidentiary hearing on August 10, 2020. The issue at hearing was to determine if an award and payment from the Recovery Fund pursuant to Ariz. Rev. Stat. § 32-1131 et seq. is justified by the evidence.

Hearing Evidence

At the hearing, the Registrar presented the testimonies of Kaitlyn Rolling and Investigator Johndrow, and submitted Exhibits 1-28 and 30-34. Complainant testified on her own behalf and submitted Exhibits 1-45. James Sullivan testified on behalf of Respondent. The Notice of Hearing was also admitted into the record as its own exhibits. The substantive facts are as follows:

Investigator Johndrow’s testimony

The “Arizona Room,” as originally installed by Respondent, required repair or replacement as it failed to meet the Registrar’s minimum workmanship standards and was not built to code. Specifically, Investigator Johndrow attested that the Directive had been issued for Respondent to obtain a permit and remove and re-pour the concrete slab, the incorrectly framed wall, and repair damage caused to the patio doors as a result of the concrete pour. The electrical work on the project needed to be exposed for the local building inspection authority to inspect, it also needed to be removed and replaced in the wall that was framed incorrectly. The drywall ceiling will need to be redone. Any corrections to the electrical or plumbing on the project would be the Respondent’s responsibility for proceeding without a permit and for not obtaining inspections to meet code compliance requirements. Respondent was also responsible for completing installation of sliding patio door and the tile.

Investigator Johndrow noted that Respondent’s corrective responsibility went insofar as the “finish work,” which would “bring the project up to the current state without paying for work that was not yet completed.”

Kaitlyn Rolling’s testimony

Ms. Rolling is a Legal Assistant II for the Registrar. She made the determination that Complainant was eligible for a payout from the Fund, and also determined Complainant’s payout award.

There is no statute of limitations on recovery fund claims.

On February 03, 2020, the Registrar received Complainant’s Recovery Fund application and request for a $12,494.48 payout.

In order to be eligible for an administrative payout applicant(s) must meet several requirements. First, the underlying contractor’s license must have been in good standing at the time the contract between the parties was executed. Second, the applicant(s) must own the property at issue as their primary residence, and occupy it. Third, the legal classification of the property must be a 3 or a 6. Fourth, the contractor must have been disciplined by either the Registrar, a Final Order issued by an Administrative Law Judge, or pursuant to a duly entered Consent Order between the contractor and the Registrar.

Here, Complainant satisfied all statutory requirements for an administrative payout from the Fund.

The underlying contract between the parties was largely illegible. After speaking with the parties and reviewing supplemental documents, Ms. Rolling determined that the contract execution date between the parties was February 16, 2019, and the contract price was $5,898.00, of which Complainant had paid $2,000.00. Ms. Rolling also noted that $500.00 had been deducted from the price of the contract to allow Complainant to secure an electrician of her choice.

In order to calculate Complainant’s damages, Complainant was required to obtain bids from other contractors so that the lowest one could be chosen by the Registrar, and then permissible remediation costs could be tallied to calculate Complainant’s award.

Although Complainant submitted 3 repair bids to the Registrar, from Kingman Constructors, S&S Constructors Inc., and Madera Construction and Remodeling LLC, respectively, on or about February 06, 2020, Complainant hired a different contractor to remediate her project, Woodward Construction Inc. (“Woodward”).

Woodward’s “Re-Work Enclosure” bid was for $11,900.00, with $3,000.00 due upon commencement of work and upon completion of framing and door installation, with the balance due once the project was complete.

On February 17, 2020, Complainant issued Woodward a down payment check for $3,000.00.

On April 02, 2020, Complainant issued Woodward a progress payment check for $6,000.00.

On April 27, 2020, Complainant issued Woodward a final payment check for $2,900.00.

Ms. Rolling asked Complainant to obtain an itemized contract from Woodward that explicitly detailed the entire scope of work performed by the contractor on the project, because that information was missing from the bid Complainant submitted to the Registrar.

On April 10, 2020, Complainant provided a “Work Scope Description” to the Registrar that outlined Woodward’s 17-step remediation process of Complainant’s patio enclosure project.

Items 6, 12, 14, and 16-17 were all disallowed because they were either not a part of Respondent’s original contract with Complainant or not included for correction as outlined by the Directive.

Ultimately, Ms. Rolling determined that Complainant had $10,420.00 in compensable damages, $1,480.00 in non-compensable damages, and an unpaid balance of $3,398.00 on her original contract with Respondent.

Complainant’s testimony

Complainant owns residential property located at 264 N Camino Del Vate, Green Valley, AZ 85614, which is the site of the underlying project at issue.

Complainant gave Respondent a hand-drawn design plan for her patio enclosure, to which Respondent assured Complainant that he could perform the work requested.

Regarding the $500.00 contract credit, Complainant used the money to hire an unlicensed friend to perform the electrical work on the project.

After Respondent began work on the project Complainant attempted to obtain a permit from her local building authority, but her request was denied.

Prior to filing an application with the Fund, Complainant filed a claim with Respondent’s bond. Complainant’s application was denied under Ariz. Rev. Stat. § 32-1152(E) because the bond company required that a “suit be filed, and a judgement obtained, against [Respondent] and surety” before payment could be issued.”

Complainant did not submit any receipts or invoices with her Recovery Fund application, but did provide them upon Ms. Rolling’s request.

Respondent’s testimony

Respondent knew that a permit was required for Complainant’s project.

In closing, the Complainant opined that her Recovery Refund award should have been $8,767.08, a difference of $1,745.08, because the Registrar incorrectly disallowed items from her Woodward contract that should have been included in her contract with Respondent. Although Complainant admitted she signed her contract with Respondent, Complainant argued that she did not review the terms because she could not read them clearly and therefore should not be bound to them.

In closing, the Registrar argued that if it had not permitted Complainant to resubmit a corrected contract from Woodward, Complainant’s entire contract would have been disallowed and she would not have received a payout. The Registrar further argued, that as a steward for the State, it closely adhered to applicable statutes regarding the calculation of Complainant’s administrative payout, and noted that Complainant failed to provide sufficient evidence in support of her argument that her award should have been $1,745.08 higher.

In closing, the Respondent argued that he would have liked to have been given the opportunity to remediate the project, but did not address Complainant’s administrative payout award eligibility or award amount.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction and was properly brought before OAH for adjudication.

Complainant bears the burden of establishing by a preponderance of the evidence that the Fund’s payout amount was incorrect.

“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.”

Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet four eligibility criteria. First, an applicant must meet the definition of a “person injured” set forth at Ariz. Rev. Stat. § 32-1131(3) which requires that the applicant be the owner of the residential real property at issue. Second, the property must have had a classification of three under Ariz. Rev. Stat. § 42-12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a resident that is damaged by a [residential or dual licensed] contractor who has paid for financial protection from the Recovery Fund. These criterion must be met at either the time the contract was executed or at the time the injury accrued. Fourth, as set forth in Ariz. Rev. Stat. § 32-1132(A), the applicant must have contracted with a residential contractor whose license was in good standing at the time of contract execution.

Ariz. Rev. Stat § 32-1132(B) provides, in pertinent part, that only “individuals who are owners of residential property damaged by the failure of a contractor to adequately build or improve a residential structure, who reside at the property as their primary residence” are eligible for an award from the Recovery Fund.

Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Recovery Fund is $30,000.00.

Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”

In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.” “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”

Based on the credible and available evidence of record, the Tribunal concludes that the Registrar soundly established Complainant’s eligibility to access the Recovery Fund and also correctly determined the administrative award amount that Complainant was eligible to receive from the Recovery Fund. The $7,022.00 award is an accurate calculation of the payout Complainant is entitled to under all applicable laws.

Here, Complainant did not establish by a preponderance of the evidence that an increase to her award and payment from the Recovery Fund is justified and supported by the record in adherence with Ariz. Rev. Stat. § 32-1131 et seq. Because Complainant did not sustain his burden of proof in this matter her appeal should be denied.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar affirm the Notice of Claim for Administrative Award dated May 20, 2020.

IT IS FURTHER ORDERED that Complainant’s appeal be denied.

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 forty (40) days from the date of that certification.

Done this day, October 19, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors