ALJDEC decisions subject to certification as final

2019A-05271-RFA-LS-ROC · Registrar of Contractors · 2021-02-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Mansar Mansar and Amanda Yasso,

COMPLAINANT

Floorpro Direct Inc.,

License No. ROC 200953,

RESPONDENT

No. 2019A-05271-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: February 4, 2021

APPEARANCES: Amanda Yasso for Complainants; Martin Hurtado for Respondent; John Tellier, Esq. for the Registrar of Contractors

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On January 4, 2021, the Registrar of Contractors (“ROC”) issued a Notice of Recovery Fund Hearing setting the above captioned matter for hearing at the Office of Administrative Hearings on February 4, 2021.

The Notice of Hearing shows that the hearing was to determine whether an award and payment from the contractors’ recovery fund pursuant to Ariz. Rev. Stat. section 32-1131 et seq. is justified by the evidence.

Complainants are Mansar Mansar and Amanda Yasso who filed a claim with ROC’s residential contractors’ recovery fund requesting a payout of $30,000. ROC denied Complainants’ claim in a Notice and Order of Recovery Fund Claim Denial dated November 5, 2020 that was subsequently quashed by ROC.

ROC issued a second Notice and Order of Recovery Fund Claim Denial on November 18, 2020; Complainants requested a hearing resulting in this matter be scheduled.

Complainants’ recovery fund claim identifies Respondent Floorpro Direct Inc. as the contractor that performed the work. Respondent holds license number 200953 issued by ROC.

On or about July 21, 2019, Complainants entered a contract with Respondent in which Respondent was to install travertine tile and a hardy backer on an existing structure or deck. The contract price was $19,250, and Complainants made a payment of $9500, leaving a balance due of $9750.

On or about July 29, 2019, Complainants and Respondent entered a second contract that called for Respondent to install drywall in a garage and the main house. The contract price was $45,980, and on August 25, 2019, Complainants made a payment of $10,000, leaving a balance due of $35,980.

On October 17, 2019, Complainants filed with ROC a complaint alleging abandonment and poor work on Respondent’s part.

ROC issued to Respondent a citation and an administrative hearing was conducted to address the allegations.

In an Administrative Law Judge (ALJ) Decision dated April 28, 2020, the ALJ concluded that: (1) the evidence did not demonstrate that Respondent’s installation of drywall, which was not completed, was in violation of ROC’s workmanship standards, and that the evidence did not establish cause to revoke or suspend Respondent’s license as related to that drywall work; and (2) that Respondent’s work related to the travertine deck was in violation of Ariz. Admin. Code section R4-9-108, which is also a violation of Ariz. Rev. Stat. section 32-1154(A)(3). The ALJ also found that Respondent had violated Ariz. Rev. Stat. sections 32-1154(A)(17) and (A)(22).

On May 15, 2020, ROC issued a Final Administrative Decision and Order through which it adopted the ALJ’s Decision, which included suspending Respondent’s license for seven days.

On July 31, 2020, Complainants filed their Recovery Fund Claim. In their claim, Complainants provided that they had entered the contract for the deck on July 21, 2019 and the contract for the drywall on July 29, 2019, and that they had a balance due of $9750 on the deck contract and $35,980 on the drywall contract.

Complainants’ claim shows that they had collected money from Respondent’s bonding company, but did not provide the amount, which was subsequently determined to be $4250.

ROC treated the two contracts as one project and evaluated Complainants’ claim on that basis. As such, ROC considered the contract amount to be $65,230 and that Complainants had an unpaid balance of $45,730.

On November 5, 2020, ROC issued its first Notice and Order of Recovery Fund Claim Denial. In its first Notice, ROC found that Complainants’ valid expenditures to complete/repair the project were $42,600, which is less than the total of their unpaid balance plus their recovery from the bonding company. Consequently, ROC determined that Complainants had no compensable “Actual Damages” and their claim was denied.

After ROC’s first Notice and Order of Recovery Fund Claim Denial was issued, Complainants submitted to ROC additional information showing that they had additional repair costs that had not been provided to ROC, and ROC quashed the first Notice and Order.

ROC reevaluated Complainants’ claim and determined that: (1) Complainants had paid to Saloman Graham $58,300 to perform repair work and that because Mr. Graham is not licensed, these payments were not compensable by statute. (2) Complainants had paid to Firesky Coating LLC $12,600, which ROC found was not compensable because Firesky’s work was to correct work performed or altered by Mr. Graham. (3) Complainants paid to Economy Drywall LLC $17,000 that was not compensable because it was for work that “was not aligned with the original contract” with Respondent and was work performed to correct Mr. Graham’s work. (4) That Complainants had paid to Economy Drywall LLC $14,000 to correct drywall work that was compensable.

ROC determined that Complainants’ valid expenditures to complete/repair the project were $14,000, which is less than the total of their unpaid balance plus their recovery from the bonding company. Consequently, ROC again determined that Complainants had no compensable “Actual Damages.”

On November 18, 2020, ROC issued its second Notice and Order of Recovery Fund Claim Denial, which is the Order at issue in this matter.

At the hearing, Ms. Yasso testified to the effect that Complainants had done their due diligence, but had been duped by Mr. Graham, who represented that he was a business out of Flagstaff. Her opinion was that it was not fair to require Complainants to bear the loss in this case.

Complainants filed with ROC an Unlicensed Complaint against Mr. Graham. ROC’s investigation shows that Saloman Graham apparently used another Mr. Graham’s license without permission and recommended that ROC submit the matter to the County Attorney for possible prosecution.

CONCLUSIONS OF LAW

Complainants bear the burden of proof to show that their claim requesting a payout from the recovery fund should be granted. Ariz. Admin. Code § R2-19-119(B).

The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119(A).

A preponderance of the evidence is:

The 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 1373 (10th ed. 2014).

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

“The assessments received by the registrar for deposit in the fund shall be held in trust for carrying out the purposes of the fund.” Ariz. Rev. Stat. § 32-1135.

“Notwithstanding any other provision in this chapter, if a contractor license has been revoked or 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.” Ariz. Rev. Stat. § 32-1133.01(A).

Ariz. Rev. Stat. section 32-1132.01 provides in part:

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:

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[(B)(2)]. 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.

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F. If the claimant has recovered a portion of the claimant's loss from sources other than the fund, the registrar shall deduct the amount recovered from other sources from the amount of actual damages suffered pursuant to subsection B of this section and direct the difference, not to exceed $30,000, to be paid from the fund.

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H. For the purposes of this section, "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 preponderance of the evidence shows that Complainants and Respondent entered into two separate contracts. Consequently, ROC should have evaluated each contract separately rather than treating the two contracts as a single project. As set out below, Complainants have not shown that they suffered any actual damages within the meaning of the statute regardless of whether their contracts are treated as one project or two.

Ariz. Rev. Stat. section 32-1132.01(B)(2) limits actual damages to bids from, or costs paid to, licensed contractors. Consequently, ROC appropriately determined that payments made to Saloman Graham were not compensable because Mr. Graham is not a licensed contractor. That Complainants were duped by Mr. Graham does not provide a basis on which the tribunal can ignore the plain language of the statute.

ROC appropriately determined that $12,600 Complainant’s paid to Firesky and $17,000 paid to Economy Drywall for work in the main house were not compensable because those entities were correcting work that had been altered by an unlicensed contractor. See Ariz. Rev. Stat. section 32-1132.01(B)(2).

ROC determined that Complainant’s compensable costs-to-repair were $14,000 and Complainants have not proven that this was in error. ROC was required to deduct from that cost-to-repair the unpaid balance under the parties’ contract(s) plus the Complainants’ recovery from Respondent’s bond. Because Complainants unpaid balance plus their recovery from the bonding company is greater than $14,000, Complainants have no actual damages.

Considering the two contracts separately also results in a finding that Complainants have no actual damages.

Regarding the drywall contract, Complainants have not proven that they have actual damages within the meaning of section 32-1133.01 because their allowable expenses are $14,000, which is less than the outstanding balance of $35,980 on the drywall contract.

Regarding the tile/deck contract, Complainants have not proven that they have any actual damages because they have not proven that they had any allowable expenses and they have a balance due of $9750 on that contract.

Consequently, Complainants have not met their burden to show that their recovery fund claim should be approved.

ROC’s second Notice and Order of Recovery Fund Claim Denial should be affirmed and Complainants’ claim for a payout from the recovery fund should be denied.

RECOMMENDED ORDER

IT IS ORDERED that ROC’s second Notice and Order of Recovery Fund Claim Denial is affirmed and Complainants’ claim for a payout from the recovery fund is 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 40 days from the date of that certification.

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-137160-45720000Done this day, February 24, 2021.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000