ALJDEC decisions subject to certification as final

2019A-05347-RFA-ROC-RES · Registrar of Contractors · 2021-05-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kathryn L Del Real,

COMPLAINANT

Cityluxe Companies LLC

License No. ROC 286561,

RESPONDENT

No. 2019A-05347-RFA-ROC-RES

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: March 15, 2021

APPEARANCES: Patrick D. White, Esq. for Complainant; Sarah A. Asta, Esq. for the Registrar of Contractors; no one appeared for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On February 10, 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 at 9:00 a.m. on March 15, 2021.

No representative for Respondent Cityluxe Companies LLC appeared at the scheduled time and the matter was convened in its absence at about 9:15 a.m.

Complainant Katheryn L. del Real appeared through counsel and presented her own testimony and that of Steve Sellers a licensed contractor with 50 years’ experience in the roofing industry.

ROC appeared and presented the testimony of Marcy Bernasconi, a Legal Assistant II who evaluated Ms. del Real’s recovery fund claim.

ROC’s Notice of Hearing shows that the hearing was to be held “to determine if an award and payment from the Contractors’ Recovery Fund pursuant to A.R.S. § 32-1131 et seq., is justified by the evidence.”

The issue is under consideration is Ms. del Real’s claim for a payment from the residential contractors’ recovery fund.

In prior recovery fund hearings in which a contractor has exercised its right to a hearing, ROC and the Administrative Law Judge have not agreed as to which party has the burden of proof, with ROC taking the position that the contractor/Respondent has that burden and the ALJ taking the position that the homeowner/Complainant does because she filed the recovery fund claim at issue.

Ms. del Real was aware of this difference of legal opinion.

After the hearing was convened in Respondent’s absence, the ALJ raised with the parties the question of whether as a matter of administrative economy and convenience discussion should be had as to whether an Administrative Law Judge Decision could be issued without taking time to hear evidence from each party (understanding that ROC would find in favor of Ms. del Real based on Respondent’s failure to appear).

Ms. del Real’s position was to the effect that Respondent had waived its right to a hearing by its failure to appear and that no evidence was required.

ROC however opted to present limited evidence and as such, Ms. del Real also presented evidence on her own behalf.

Ms. del Real hired Respondent to perform roofing work at her house. ROC determined that Respondent’s work did not meet the minimum standards and suspended Respondent’s license.

Ms. del Real filed her recovery fund claim on April 17, 2020 through which she requested a payout of $21,407.76.

Ms. Bernasconi evaluated Ms. del Real’s recovery fund claim and recommended that a payout of $15,995 be made to Ms. del Real.

Ms. Bernasconi’s opinion was that a bid of $24,995 from L & R Roofing Solutions LLC “aligned” with the Directive ROC issued and was the appropriate bid to use.

From the L & R bid of $24,995, Ms. Bernasconi deducted $9000 because Ms. del Real had received that amount from Respondent’s bonding company.

Ms. Bernasconi did not use a bid of $15,385.25 from Gurr Brothers Construction LLC because that bid included work on a 200 square foot area that was not the subject of ROC’s Directive (i.e., her opinion was that the bid did not align with ROC’s Directive).

Mr. Sellers provided credible testimony that the scope of work set out in the Gurr Brother’s bid was not sufficient to properly repair the roof and that the scope of work set out in the L & R bid was work that was reasonable to make the necessary repairs to the roof.

On April 16, 2021, ROC and Ms. del Real filed their respective written Closing Arguments. Respondent filed a short statement on April 5, 2021.

CONCLUSIONS OF LAW

Unless otherwise provided by law: the party asserting a claim, right, or entitlement has the burden of proof. 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).

The same rules in are used to construe both statutes and rules." Smith v. Arizona Citizens Clean Elections Comm'n, 212 Ariz. 407, 412, ¶ 18, 132 P.3d 1187, 1192 (2006).

The tribunal is required to give a statute’s words their ordinary meaning; when a statute is unambiguous, its terms should be applied without resort to secondary principles of construction. Secure Ventures, LLC v. Gerlach, 249 Ariz. 97, 466 P.3d 874 (Ariz. App. 2020).

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).

“Contested case means any proceeding ... in which the legal rights, duties or privileges of a party are required or permitted by law, other than [Title 41, Chapter 6], to be determined by an agency after an opportunity for an administrative hearing.” Ariz. Rev. Stat. § 41-1001(5) (underscore added).

“‘Appealable agency action’ means an action that determines the legal rights, duties or privileges of a party and that is not a contested case.” Ariz. Rev. Stat. § 41-1092(3).

Ariz. Rev. Stat. section 32-1133.01 provides in pertinent part:

A. 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.

B. The registrar must serve the contractor with a notice setting forth the amount claimed or to be awarded.

C. If the contractor contests the amount or propriety of the payment, the contractor must ... request[ ] a hearing to determine the amount or propriety of the payment. The contractor's failure to respond in writing within ten days after the date of service may be deemed a waiver by the contractor of the right to contest the amount claimed or to be awarded.

(Bolding and underscoring added.)

Ariz. Rev. Stat. section 32-1139(B) provides in part:

If any amount is paid from the fund in settlement of a claim arising from the act, representation, transaction or conduct of a residential contractor, the license of the contractor shall be automatically suspended by operation of law until the amount paid from the fund is repaid in full, plus interest at the rate of ten per cent a year.

(Bold added.)

Ariz. Rev. Stat. section 32-1132(A) provides that: “The residential contractors' recovery fund is established ... for the benefit of a claimant damaged by an act, representation, transaction or conduct of a residential contractor....” (Underscoring and bolding added.)

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

Respondent’s contractor’s license is a property right that cannot be suspended without due process. See Comeau v. Board of Dental Examiners, 196 Ariz. 102, 993 P.2d 1066 (App. 1999).

By definition, a contested case is a proceeding in which: (1) a party’s legal rights, duties or privileges are determined; (2) after the party has an opportunity for a hearing; and (3) provided that the party’s hearing-right arises from a statute outside of Title 41, Chapter 6. Ariz. Rev. Stat. § 41-1001(5).

All three elements are present in this matter: (1) Respondent’s legal right and privilege to engage in contracting will be suspended if ROC actually makes a payout from the fund. Ariz. Rev. Stat. § 32-1139(B); (2) Before such a payout could be made, ROC had to provide Respondent with notice of the proposed payout and Respondent had a right to request a hearing to contest the proposed payout (subject to waiver if the request for hearing was not made in a timely manner). Ariz. Rev. Stat. § 32-1133.01; and (3) Respondent’s opportunity for a hearing is found in Title 32 at Ariz. Rev. Stat. section 32-1133.01.

ROC argues that the matter is an appealable agency because: (1) an award can be made without a hearing and no hearing is required for a payout to be made; (2) Respondent can avoid suspension by preemptively paying any award before ROC actually makes a payout; and (3) because this matter is similar to other matters in which a license may be suspended by operation of law. ROC’s arguments are not persuasive.

ROC’s argument that no hearing is required before a payout is made, is correct. But the definition of a contested case requires only that the Respondent have an opportunity for a hearing before its rights, duties or privileges are affected. Ariz. Rev. Stat. section 32-1133.01 gave Respondent the right to a hearing, subject to waiver for failure to submit a timely request.

ROC’s argument that Respondent can avoid suspension by preemptively paying any award after ROC issues its Final Order but before ROC makes the actual payout is not persuasive because that Final Order will affect or determine Respondent’s legal rights, duties or privileges. This is seen by the fact that Respondent now has a right engage in contracting activities, but is under no obligation to make a payment to Ms. del Real, whereas under ROC’s scenario, Respondent will be required to make a payment to her in order avoid suspension of its license. Put another way, under ROC’s scenario, Respondent would have a duty to pay Ms. del Real as a condition to retain its legal right or privilege to act as a contractor, which is not now the case.

ROC argues that a recovery fund matter is like others matters in which the statutes allow for a summary suspension to be issued by operation of law. But the three statutes ROC cites are readily distinguishable from this recovery fund matter because those statutes do not provide the licensee with a right to a hearing before any suspension takes place, whereas subsection 32-1133.01(C) provides Respondent with a right to a hearing in recovery fund matters.

Ms. del Real argues that Respondent has the burden of proof because “ROC has issued an award in Ms. del Real’s favor.” But this misstates the evidence because no award has been issued, but rather the Notice of Claim at issue shows only that Ms. del Real “is to be awarded $15,995 in the form of a payment issued by the Fund.” (Underscore added.)

ROC and the ALJ agree that Ariz. Admin. Code section R2-19-119(B) is applicable in determining who has the burden of proof, but disagree as to which party bears that burden.

The preponderance of the evidence presented at the hearing shows that Ms. del Real should be awarded $15,995 in the form of a payout from the recovery fund. Consequently, it is not necessary to resolve that difference of legal opinion.

RECOMMENDED ORDER

IT IS RECOMMENDED that the Registrar of Contractors issue a Final Decision and Order directing the Fund to make a payment of $15,995 to Katheryn L. del Real.

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.

-54864001

001

-137160-45720000Done this day, May 18, 2021.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

-54864001

001

-137160-45720000