ALJDEC decisions subject to certification as final

2019A-01512-RFA-ROC · Registrar of Contractors · 2020-05-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Brian Thomas Flanigan,

COMPLAINANT

R & C Development LLC,

ROC License: ROC 296418,

RESPONDENT

No. 2019A-01512-RFA-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

TELEPHONIC HEARING: May 11, 2020

APPEARANCES: The Arizona Registrar of Contractors was represented by Assistant Attorney General Sarah Asta. Complainant Brain Thomas Flanigan was represented by attorney Dan Kloberdanz. Respondent R&C Development LLC was represented by Crystal Garcia.

ADMINISTRATIVE LAW JUDGE: Kay Abramsohn

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FINDINGS OF FACT

1. The Arizona Registrar of Contractors (Registrar) issued License No. 296418 to Respondent.

2. Complainant contracted with Respondent in November of 2018 for a remodeling project of property located at 5625 South 23rd Avenue in Phoenix, Arizona.

3. Subsequently, on or about March 26, 2019, the Registrar received a Complaint against Respondent from Complainant alleging, among other things, abandonment and contracting work did not comply with the Registrar’s workmanship standards (the workmanship complaint).

4. As a result of the workmanship complaint, and an investigation through its standard procedures which substantiated workmanship issues, the Registrar issued a Citation against Respondent charging possible violations of statue and rule.

5. Respondent did not file a timely answer to the Citation as was required under A.R.S. § 32-1155(A). As a result, the Registrar issued a Final Administrative Decision and Order on July 25, 2019, in which the Registrar found violations by Respondent, and the Registrar suspended Respondent’s license for a period of two days as a result of Complainant’s Complaint.

6. On or about October 21, 2019, Complainant filed a claim (“Claim”) with the Residential Contractors’ Recovery Fund (“Fund”) to recover the costs of repairing/completing the Respondent’s uncompleted work.

7. During review of Complainant’s Claim, the Registrar determined that the subject property was not classified as a Class 3 property with the Maricopa County Assessor’s office but was a Class 4.2 property (Residential Rental) since 2016 (ergo, in 2018 and 2019) and was reclassified, by the date of the Registrar’s review, as 4.1 (Non-primary/Not in other Classes Residential) in 2020.

8. On January 24, 2020, the Registrar issued its Notice and Order of Recovery Fund Ineligibility. See Exhibit 14. The Registrar indicated that Complainant did not meet one of the four criteria set forth in A.R.S. § 32-1131(3), that one criteria requiring that the subject property have either a classification of Noncommercial Historic property (under A.R.S. § 42-12101) or a classification of Class 3 (under A.R.S. § 42-12003).

9. After the Registrar notified Complainant regarding ineligibility, Complainant filed an appeal. See Exhibit 15.

10. In the appeal, Complainant argued that A.R.S. § 32-1131(3) had been amended and no longer contained a definition of “person injured” for access to the Fund, and instead, new A.R.S. § 32-1131(B) required that individuals eligible for access to the Fund (a) own “residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure ...”, and (b) occupy or intend to occupy that property. Complainant argued that the law had been amended on April 29, 2019 and that Registrar, therefore, erred in determining ineligibility based on statutory language that was no longer in effect.

11. On February 13, 2020, the Registrar issued its Notice of Recovery Fund Hearing to the parties, indicating the sole issue for hearing is “the threshold issue of whether Complainant is eligible to access the Fund under A.R.S. § 31-1131 et seq. ...”

12. Complainant’s position regarding the inapplicability of former A.R.S. § 32-1131(3), and Registrar error in determining ineligibility, was the same at the hearing as set forth in his appeal.

13. The subject property is one of many properties owned by the Flanigan Family Trust (Trust) of which Complainant is the Trustee (since Complainant’s father’s death). The Trust is still in existence, not having gone through its final accounting. The Trust was a lender on the instant property and the Trust foreclosed on the property in June of 2018 (at the time of Complainant’s father’s death) when one Mr. Villareal stopped paying on the loan. Complainant is also a beneficiary of the Trust; Complainant indicates that he is the person who is to receive this particular property at the final accounting.

14. At hearing, the Registrar’s position was that Complainant’s access to the Fund and, therefore, Complainant’s eligibility parameters, accrued as of the date and operation of the Registrar’s Final Administrative Decision and Order on July 25, 2019, which results in the now-former “person injured” criteria being applicable to Complainant. The Registrar further argued that the amendment to A.R.S. § 32-1131(3) was not effective until August 27, 2019 and contained no retroactivity provisions and, therefore, the Registrar’s ineligibility determination was appropriately made under former A.R.S. § 32-1131(3).

15. A.R.S. § 32-1131 was amended by the Arizona Legislature, which amendment became effective, by law, on August 27, 2019.

16. Neither party cited to any case law that might be relevant or persuasive.

CONCLUSIONS OF LAW

1. This matter lies within the Registrar’s jurisdiction.

2. The burden of proof at an administrative hearing is generally upon the person who brings the action. Utah Construction Company v. Berg et al., 68 Ariz. 285, 205 P.2d 367 (1949); A.A.C. R2-19-119(B). Further, the standard of proof at hearing is by preponderance of the evidence. Smith v. Ariz. Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2-19-119(A).

3. As of the Registrar’s Final Administrative Decision and Order on July 25, 2019, Complainant’s access to the Fund, as a “person injured” or not a “person injured,” was subject to the provisions of former A.R.S. § 32-1131(3). At that time, Complainant’s property was neither Noncommercial Historic property (under A.R.S. § 42-12101) nor a classification of Class 3 (under A.R.S. § 42-12003). Therefore, the Administrative Law Judge concludes that the Registrar appropriately determined Complainant’s ineligibility for access to the Fund under former A.R.S. § 32-1131(3).

4. Pursuant to former A.R.S. § 32-1131(3), in order to have been eligible to access the Recovery Fund an applicant must have met four eligibility criteria. First, the applicant must have met the definition of a “person injured” set forth at A.R.S. § 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 A.R.S. § 42-12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a resident that was damaged by a [residential or dual licensed] contractor who has paid for financial protection from the Recovery Fund. These first three criterion must have been met at either the time the contract was executed or at the time the injury accrued. Fourth, as set forth in A.R.S. § 32-1132(A), the applicant must have contracted with a residential contractor whose license was in good standing at the time of contract execution.

5. In the instant case, the Administrative Law Judge concludes that Complainant failed to meet each of the four criteria set forth in former A.R.S. § 32-1131(3), the statutory provision in effect at the time of accrued availability to, and possible eligibility or not, for the Fund. As a result, the Administrative Law Judge concludes that Complainant’s appeal should be denied.

RECOMMENDED ORDER

It is recommended that the Registrar of Contractors affirm and uphold its determination of Complainant’s ineligibility for access to the Residential Contractors’ Recovery Fund, and that the Registrar of Contractors deny Complainant’s appeal.

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, May 31, 2020

/s/ Kay Abramsohn Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors-54864001

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