ALJDEC decisions subject to certification as final

2019A-01967-RFA-LS-ROC · Registrar of Contractors · 2021-08-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Ginger Shaw,

COMPLAINANT

Sunset Design Build, LLC,

License No. ROC 315155,

RESPONDENT

No. 2019A-01967-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 20, 2021

APPEARANCES: Complainant Ginger Shaw appeared on her own behalf. Respondent Sunset Design Build, LLC did not appear. Assistant Attorney General John Tellier represented the Arizona Registrar of Contractors. Shaquira Adebule appeared as a witness for the Arizona Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

The Arizona Registrar of Contractors (“Registrar”) issued License No. 315155 to Sunset Design Build, LLC (“Respondent”).

On or about April 15, 2019, the Registrar received a Complaint against Respondent from Ginger Shaw (“Complainant”) alleging that Respondent abandoned the construction project that Respondent contracted to perform. The contract price was $194,202.00. The parties also executed an addendum to the contract that included change orders.

Following a jobsite inspection, the Registrar’s investigator issued a Directive from the Registrar ordering Respondent to complete the project.

As a result of the Complaint, the Registrar issued a Citation against Respondent charging possible violations of A.R.S. § 32-1154(A)(1) and A.R.S. § 32-1154(A)(22).

Respondent failed to file a timely answer to the Citation. Consequently, on June 12, 2019, the Registrar issued a Final Administrative Decision and Order in which the Registrar found pursuant to A.R.S. § 32-1155(B), that Respondent’s failure to timely answer the Citation was deemed an admission to Respondent’s commission of the acts charged in the Complaint. The Registrar ordered that Respondent’s license be revoked.

Complainant then filed a claim with the Residential Contractors’ Recovery Fund (“Fund”) to recover the cost of completing the project. As part of the claim process, Complainant submitted the payments made to Respondent, as well as the invoices paid to complete the project.

The Registrar issued a Notice and Order of Recovery Fund Claim Denial, finding that after review of all the documentation related to this matter, Complainant did not suffer actual damages as the project was completed by others for an amount less than the balance due on the original contract and addendum thereto. Further, the Registrar determined that some of the work performed on the project was performed by unlicensed contractors.

Complainant requested a hearing regarding the claim denial. The Registrar referred the matter to the Office of Administrative Hearings for an evidentiary hearing. A hearing was held on July 20, 2021.

Shaquira Adebule, Legal Assistant with the Registrar, testified that she reviewed all of the relevant documents concerning this matter, including the Complaint, the contract and addendum, and the proof of payments to Respondent and the entities subsequently hired by Complainant to complete the project. Ms. Adebule utilized this information in calculating Complainant’s actual damages.

Ms. Adebule testified at length about her calculations and the amounts that were disallowed. Ms. Adebule testified that the original contract amount plus the change orders equated to $225,163.42. Complainant provided proof of payments to Respondent in the amount of $133,273.00, leaving an unpaid balance on the contract of $91,890.42. Ms. Adebule found that Complainant submitted proof of valid expenditures in the amount of $28,333.87. When the valid expenditures were subtracted from the unpaid contract balance, Ms. Adebule found that Complainant did not have any “actual damages.”

Ms. Adebule testified that she disallowed amounts paid by Complainant to Humberto Amador, Julio Ruiz, Juan Iguado, Jose Aguino, Omar Perez, Tucson Granite, Perceptive Fabrications, LLC, and Cabinet Answers, as all were unlicensed contractors. Ms. Adebule further testified that she disallowed amounts paid by Complainant for the building permit as the contract calls for Complainant to be responsible for that amount, as well as payments to Home Depot and Ace Hardware for various reasons including a lack of proof of payment and an inability to determine whether the items were purchased for the project as they did not align with the contract. The payments to Dusty Duds Excavation and Construction, Cummings Plumbing, and Benjamin Plumbing Supply were disallowed due to Complainant failing to provide proof of payment. Ms. Adebule further testified that the amount of $10,950.00 to Custom Solar and Leisure, LLC for a solar system was disallowed as such was not specified in the parties’ contract. The total compensable amount equated to $28,333.87. The total amount disallowed due to Complainant utilizing unlicensed contractors, failing to submit proof of payment, or requesting payment be made for items not aligned with the contract equated to $56,001.34.

Complainant submitted to the Tribunal proof of payments toward completion of the project that were issued by her bank from her construction loan in the total amount of $37,503.14. Complainant testified that the payment in the amount of $4,400.00 to Julio Ruiz should be compensable because he is the contractor for JRR roofing, and asserted that he is a licensed contractor. However, Complainant did not establish that Julio Ruiz is a licensed contractor. Complainant further requested compensation to herself in the amount of $15,000.00 representing $2,500.00 per month for six months during which time she acted in the capacity of owner/builder.

Complainant testified that the addendum to the contract was verbally modified to exclude all but two items, however, Complainant did not provide any documentation establishing a purported modification to the addendum.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish by a preponderance of the evidence that the denial of her claim by the Fund is erroneous.

“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.”

A.R.S. § 32-1132(A) provides that “[a]n 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.)

A.R.S. § 32-1132.01(H) defines "actual damages" as “the reasonable cost of completing the contract and repairing the contractor's defective performance, minus the part of the contract price still unpaid.”

Pursuant to A.R.S. § 32-1132.01(B), “[a]n award from the residential contractors' recovery fund may not exceed the actual damages suffered by the claimant as a direct result of a contractor's violation.” A.R.S. § 32-1132.01(B)(2), provides that actual damages: “[m]ust be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.”

Complainant did not cite to any statutory authority establishing that she is entitled to compensation for her time spent as owner/builder. Complainant further failed to establish that any of the contractors that the Registrar determined were unlicensed, were licensed at the time they performed work on her project.

Complainant provided evidence of payments in the amount of $37,503.14, made by her financial institution from her construction loan, that were not provided to the Registrar to utilize in its calculations. However, even allowing those payments as valid expenditures and adding those amounts to the previously allowed $28,333.87, the total amount of valid expenditures equates to $65,837.01, which is still an amount less than the unpaid contract balance of $91,890.42. Even assuming arguendo, that the Registrar had allowed a $15,000.00 payment to Complainant and the $4,400.00 payment to Julio Ruiz (and to be clear, these amounts are prohibited by statute), including those amounts would still not have brought the expenditures up to an amount exceeding the unpaid balance on the contract. Therefore, Complainant did not establish that she has any compensable “actual damages.” Accordingly, Complainant failed to sustain her burden to establish that the denial of her claim to the Fund was in error.

After review of all the evidence, the Tribunal concludes that the denial of Complainant’s claim to the Fund was appropriate.

RECOMMENDED ORDER

Based on the foregoing, it is recommended 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.

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-137160-45720000Done this day, August 2, 2021.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000