ALJDEC decisions subject to certification as final

2019A-05103-RFA-LS-ROCRES · Registrar of Contractors · 2021-11-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Myron James Rambousek,

COMPLAINANT

Kenneth Knock Development LLC,

License No. ROC 289067,

RESPONDENT

No. 2019A-05103-RFA-LS-ROCRES

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: October 27, 2021

APPEARANCES: Assistant Attorney General Sarah Asta represented the Arizona Registrar of Contractors. Shaquira Adebule appeared as a witness for the Arizona Registrar of Contractors. Complainant Myron Rambousek appeared on his own behalf with Sandra O’Connor. Andrew Jolly, Esq. represented Respondent Kenneth Knock Development, LLC. Kenneth Knock appeared on behalf of Respondent.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (“Registrar”) issued License No. 289067 to Kenneth Knock Development, LLC (“Respondent”).

On or about October 9, 2019, the Registrar received a Complaint against Respondent from Myron James Rambousek (“Complainant”) alleging that Respondent abandoned the construction of the newly constructed home that Complainant had purchased, as well as poor work and incomplete work with regard to the construction.

As a result of the Complaint, the Registrar issued a Citation against Respondent charging possible violations of A.R.S. §§ 32-1154(A)(2)(a), (A)(3), namely, A.A.C. R4-9-108, and (A)(22).

Respondent filed a timely answer to the Citation. An administrative hearing was held. In her May 15, 2020 Decision, Administrative Law Judge Tammy L. Eigenheer considered Respondent’s arguments and concluded that Respondent had violated the charged provisions of the State’s contracting laws and recommended that Respondent’s license be suspended for a period of five days and that Respondent pay a $500.00 civil penalty.

On June 11, 2020, the Registrar issued a Final Administrative Decision and Order accepting the Administrative Law Judge Decision, finding violations of Arizona’s contracting laws and imposing a five day suspension, as well as a $500.00 civil penalty.

Complainant thereafter filed a claim with the Residential Contractors’ Recovery Fund (“the Fund”) to recover the cost of completing and repairing the work. As part of the claim process, Complainant submitted bids from two different contractors that Complainant had received to complete the project.

Initially, the Registrar issued a Notice and Order of Recovery Fund Claim Denial, denying Complainant’s claim. However, upon further review, the Registrar subsequently issued a Recovery Fund Quash Order quashing the Notice and Order of Recovery Fund Claim Denial.

After further review, on August 17, 2021, the Registrar issued a Notice of Claim for Administrative Award, determining that Complainant should be awarded $6,780.00 from the Fund. Respondent requested a hearing, believing the payout was too high. Complainant did not contest the amount of the administrative payout. The Registrar referred the matter to the Office of Administrative Hearings for an evidentiary hearing.

A hearing was held on October 27, 2021.

Hearing Evidence

The Written Directive from the Registrar specified the following:

After investigation, the Registrar has verified that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). . . .

You are directed to remedy the following violations by the appropriate means:

Complaint Item 1: Install soft close drawer rails in cabinets.

Investigator’s Observation: The cabinet doors are soft close per the complainant. The drawers don’t appear to be soft close and if soft close rails are installed, they aren’t functioning as intended.

Complaint Item 2: Repair torn window screens/scratched frames

Investigator’s Observation: The front window has a screen that has pulled from the track. No scratched frames were pointed out. The screens shall be corrected in an appropriate manner, one time in the first year

Complaint Item 5: Install ceiling fan switches

Investigator’s Observation: The complainant relayed that he provided a schematic to the contractor (at the contractor’s behest) showing the desired locations for electrical fixtures. This included can lighting, fan locations, garage lighting and switch locations. At issue is the ceiling fan ‘dimmer’ switches for operating the fans. They don’t appear to be installed.

Complaint Item 7: Add 2 garage lights

Investigator’s Observation: The complainant relayed that he provided a schematic to the contractor (at the contractor’s behest) showing the desired locations for electrical fixtures. This included can lighting, fan locations, garage lighting and switch locations. There are 2 J boxes installed over the garage opener rails but no fixture is installed. The fixtures appear on the hand written schematic

Complaint Item 9: Install access door for Jacuzzi tub plumbing

Investigator’s Observation: Pursuant to IRC 2012 P2720.1, the plumbing equipment shall be accessible by way of a door. No access door was noted at the time of inspection.

Complaint Item 11: Rework fire sprinkler pipe behind garage door.

Investigator’s Observation: There is an overflow pipe directly behind the garage service door to the rear yard. This pipe and the pressure relief pipe for the water heater prevent the door from opening to 90 degrees. The door only opens just past 3⁄4’s The respondent shall correct this condition in an appropriate manner.

Complaint Item 13: Provide fire sprinkler instructions/maintenance

Investigator’s Observation: It is customary for all manuals to be included in a packet at move-in. The respondent shall provide any fire sprinkler documents in an appropriate manner.

Complaint Item 19: Add can light dimmer switches over family room and patio

Investigator’s Observation: The complainant relayed that he provided a schematic to the contractor (at the contractor’s behest) showing the desired locations for electrical fixtures. This included can lighting, fan locations, garage lighting and switch locations. The respondent shall correct the condition in an appropriate manner.

All errors in original.

Shaquira Adebule, Legal Assistant II for the Registrar, testified that she reviewed the Complaint, the purchase contract for the home, the jobsite inspection notes, the Written Directive, the invoices issued by Respondent, the Citation, Judge Eigenheer’s May 15, 2020 Decision regarding the underlying Complaint, the Registrar’s Final Administrative Decision and Order, Complainant’s Claim to the Fund, the letter from Respondent’s bonding company, the Warranty Deed, the Yavapai County Assessor documents, and bids submitted by Complainant, in calculating Complainant’s actual damages.

Ms. Adebule testified that the Registrar requires a complainant to file a claim with a respondent’s bonding company as a prerequisite to obtaining a payout from the Fund. Complainant did so and received the requisite letter from Respondent’s bonding company informing Complainant that his claim was denied. Ms. Adebule testified that the Warranty Deed established that Complainant owns the property and the County Assessor records established that the home is Complainant’s primary residence.

Ms. Adebule testified that her calculations took into account the contract price of $520,000.00 and the payments made toward the contract price in the amount of $520,000.00, which were verified by Respondent, and concluded that there was no remaining balance on the contract.

Complainant submitted two estimates for completion/repair of the project to the Fund. The September 28, 2020 bid from Handyman & Construction Services LLC was in the amount of $5,700.00. Complainant submitted an updated bid from Handyman & Construction Services LLC dated August 2, 2021, in the amount of $6,500.00. The October 5, 2020 bid from Reed Brothers Construction was in the amount of $6,780.00. Ms. Adebule testified that the bids from Handyman & Construction Services LLC included items that were not in line with the Written Directive, and that the bid from Reed Brothers Construction was the bid most aligned with the Written Directive. Ms. Adebule testified that she compared the line items in the bids to the items required to be addressed by the Written Directive and that the scope of work contained in the Reed Brothers Construction bid “matched up.”

Ms. Adebule testified that typically, the Registrar chooses the lowest bid, however in this case, the higher bid was most aligned with the Written Directive. Ms. Adebule recommended a payout from the Fund to Complainant in the amount of $6,780.00. Ms. Adebule testified as to the calculation of the award which is summarized in an August 18, 2021 email she sent to Respondent’s counsel. That email indicates the following:

I calculated “actual damages” by comparing the directive to the bids provided with the claim. I reviewed the Administrative Law Judge decision and it states the Investigator Dimond “testified that on May 11, 2020, he conducted a prehearing inspection at which time he notes items 1, 5, 7, 9, 11, and 19 remained uncompleted.” (ALJ dec. 4:4-6). Complainant provided an updated bid from Handyman & Construction Services LLC in the amount of $6,500.00. After reviewing the bids with Investigator Dimond, it was determined that the Handyman & Construction Services LLC strayed from the directive. The bid from Reed Brothers Construction was more aligned with the directive.

All errors in original.

Ms. Adebule explained at hearing that Complainant’s claim was initially denied because the home was sold “as is,” however, upon further review, the Registrar determined that because the home was newly constructed and is covered under warranty, Complainant was eligible to apply for an award from the Fund. Ms. Adebule further explained that actual damages equate to the cost of repair or completion of the project, and are limited to those items verified in the Written Directive.

Respondent attempted to argue issues that related to the underlying Complaint in which a Final Order has been issued. Kenneth Knock testified that he reviewed the Administrative Law Judge Decision and paid the civil penalty. Mr. Knock testified that he “thought he only had to fix the functional parts of the home” and that “everything else was cosmetic” and “just not up to the homeowner’s standards.” Mr. Knock asserted that Respondent addressed the issues that were “not cosmetic.” Mr. Knock testified that he spoke with Investigator Dimond regarding what needed to be addressed pursuant to the Written Directive. Those conversations were in January 2020, prior to the underlying hearing in this matter, and Respondent did not call Investigator Dimond to testify in the instant proceeding. Respondent argued that the award was too high and requested that it be reduced to $3,500.00, however, presented no evidence establishing that such a reduction was appropriate or upon what basis such request was made.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132(A) provides that “[t]he residential contractors' recovery fund is established, to be administered by the registrar, for the benefit of a claimant damaged 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.” The Registrar’s final decision in the underlying workmanship case giving rise to the instant matter establishes that Respondent’s work violated the sections of A.R.S. § 32-1154(A) that were charged in the Citation.

For the purposes of an award under A.R.S. § 32-1132(A), A.R.S. § 32-1132.01(B) provides as follows:

An 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. Actual damages:

May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.

Must 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.

When the Registrar has calculated the amount of a complainant’s compensable damages and proposed a payout from the Fund, the calculation is a prima facie showing of the amount that a complainant is entitled to recover as a payout from the Fund. The burden shifts to the party challenging the amount of the payout to establish that the Registrar’s calculations were erroneous or not supported by a preponderance of the evidence. In this case, Respondent requested a hearing challenging the Fund payout. Therefore, the burden was on Respondent to establish by a preponderance of the evidence that Complainant was not entitled to a payout or that the amount of the proposed payout was erroneous or inappropriate.

“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.”

Respondent had an opportunity to complete the project following the Written Directive from the Registrar and failed to do so. Further, Respondent had an opportunity at the instant hearing to present evidence establishing that the award was inappropriate or erroneous, and failed to do so.

After review of all the evidence, the Tribunal concludes that the award provided by the Fund accurately reflected Complainant’s actual damages. Accordingly, Complainant is entitled to a payout from the Fund in the amount of $6,780.00.

RECOMMENDED ORDER

In view of the foregoing, IT IS ORDERED that on the effective date of the final Order in this matter, the Residential Contractors’ Recovery Fund shall pay $6,780.00 to Complainant Myron James Rambousek.

IT IS FURTHER ORDERED that under A.R.S. § 32-1139(B), the Registrar shall charge $6,780.00, plus interest at a rate of ten percent a year, to Respondent Kenneth Knock Development, LLC’s License Number 289067.

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 shall be forty (40) days from the date of certification.

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-137160-45720000Done this day, November 12, 2021.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000