ALJDEC - Licensing

2021A-01064-RFA-LS-ROC · Registrar of Contractors · 2023-04-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Brianna Scudder,

COMPLAINANT,

v.

LHH/Amarillas Bros Construction, LLC

License No. ROC 323310,

RESPONDENT.

No. 2021A-01064-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 1, 2023, with further hearing on March 27, 2023

APPEARANCES: Assistant Attorney General Elizabeth Campbell represented the Arizona Registrar of Contractors. Dylan Warwick appeared as a witness for the Arizona Registrar of Contractors. Complainant Brianna Scudder appeared on her own behalf. Stephen Amarillas appeared on behalf of Respondent LHH/Amarillas Bros Construction, LLC.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (“Registrar)” issued License No. 323310 to LHH/Amarillas Bros Construction, LLC (“Respondent”).

On or about March 11, 2021, the Registrar received a Complaint against Respondent from Brianna Scudder (“Complainant”) alleging abandonment and poor work with respect to the scope of work delineated in the parties’ contract.

As a result of the Complaint, the Registrar issued a Citation against Respondent charging possible violations of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, (A)(12), namely A.R.S. § 32-1158, and (A)(22).

Respondent filed a timely answer to the Citation. An administrative hearing was held. Respondent failed to appear for the hearing. In her August 10, 2021 Decision, Administrative Law Judge Velva Moses-Thompson concluded that Respondent violated provisions of this State’s contracting laws.

On August 17, 2021, the Registrar issued a Final Administrative Decision and Order imposing upon Respondent a three day suspension, as well as a $250.00 civil penalty. The effective date of that Order was September 26, 2021.

On August 17, 2021, Respondent filed a Request for Rehearing with the Registrar. On September 27, 2021, the Registrar issued an Order Denying Request for Rehearing or Review. Respondent did not appeal the Final Administrative Decision and Order.

Complainant thereafter filed a claim with the Residential Contractors’ Recovery Fund (“the Fund”) to recover the cost of performing the corrective work. As part of the claim process, Complainant submitted bids from three different contractors that Complainant had received to perform the repair/completion of the project. Complainant also submitted proof of the claim filed with Respondent’s bond company, the Beneficiary Deed for the property, the corresponding death certificate, and proof of payments made to Respondent and for materials for the project.

The Registrar issued a Notice of Administrative Award, finding that Complainant’s actual damages were $24,764.59. Respondent requested a hearing, believing the award was too high. Complainant did not contest the amount of the administrative award. The Registrar referred the matter to the Office of Administrative Hearings for an evidentiary hearing.

A hearing was held on March 1, 2023, with further hearing on March 27, 2023.

Hearing Evidence

Dylan Warwick, Legal Assistant II and Claims Reviewer for the Fund, testified regarding the above-delineated procedural history and documents. Mr. Warwick testified that once he determined Complainant’s eligibility for an award from the Fund, he calculated actual damages. Mr. Warwick reviewed the parties’ contract, the receipts for payment to Respondent submitted by Complainant, the Complaint, Written Directive, Judge Moses-Thompson’s Decision regarding the underlying Complaint, the letter from Respondent’s bonding company, the beneficiary deed to the property and corresponding death certificate, and bids submitted by Complainant, in determining Complainant’s eligibility and calculating Complainant’s actual damages.

Mr. Warwick testified that some of the items on the receipts submitted by Complainant did not correspond with Respondent’s scope of work, and therefore, were not included in his calculation of actual damages. Mr. Warwick testified that he reviewed the estimates submitted by Complainant with Investigator Springer, the Investigator who investigated the underlying Complaint. Based on input from Investigator Springer, Mr. Warwick found that the estimate from Mitchell’s Remodeling, LLC (“Mitchell’s”) was most “in line” with the original contract and the Written Directive, minus an $84.71 discrepancy.

During the course of the hearing, it was determined that Mr. Warwick erroneously calculated the proposed award by including receipts/payments that were either duplicative or not related to the project, such as beverages and appliances. The matter was set for further hearing in order to afford Mr. Warwick an opportunity to further investigate the matter and recalculate Complainant’s actual damages.

At the time set for further hearing, the Registrar asserted that the issues identified during the course of re-investigation include: i) Complainant’s actual payments to Respondent; ii) the Home Depot receipts for materials for the project; and iii) items in Mitchell’s estimate that do not correspond with the parties’ contract and the Written Directive.

Respondent does not dispute that Complainant paid Respondent three payments in the amounts of $650.00, $650.00, and $200.00, for a total amount paid to Respondent in the amount of $1,500.00. However, Respondent disputed additional payments that Complainant claimed to have made toward the parties’ contract. The Registrar determined, after re-review, that Complainant failed to provide proof of payments on April 13, 2020, in the amounts of $1,200.00 in cash, and $600.00 by credit card, as well as a cash payment of $600.00 on May 24, 2020. Therefore, the Registrar has deducted those amounts from the award, totaling $2,400.00.

Regarding the Home Depot receipts, Mr. Warwick testified that the receipt in the amount of $1,557.48 was properly included in the calculation because he verified that it was for flooring which was within the scope of the parties’ contract and Written Directive. However, the receipt in the amount of $2,805.49 was erroneously included in the calculation and must be deducted, as it is for appliances that are not within the scope of the parties’ contract and Written Directive.

Mr. Warwick further testified in detail regarding further deductions for receipts for items originally included in the award that should have been excluded. Upon re-calculation, Mr. Warwick determined that Complainant paid a total of $2,177.58 toward materials and supplies that are within the scope of the parties’ contract and the Written Directive.

Mr. Warwick added the $1,500.00 Complainant paid directly to Respondent, to the $2,177.58 Complainant paid to Home Depot for materials and supplies, which equals $3,677.58, and subtracted that amount from the parties’ contract amount of $11,400.00, leaving a remaining contract balance of $7,722.42.

Upon further review of the accepted estimate from Mitchell’s, Mr. Warwick determined that certain items that were initially included in the proposed award should be deducted as not within the scope of the parties’ contract or Written Directive, including the kitchen faucet, kitchen sink, and one bathroom sink, as well as one half of the labor price for the installation of these items, reducing Mitchell’s estimate from $25,964.98 to $23,669.69, from which Mr. Warwick deducted $7,722.42, the unpaid amount of the parties’ contract, which calculated to a revised proposed award from the Fund in the amount of $15,947.27.

Respondent further contested the amount of $1,500.00 in Mitchell’s estimate for removing, storing, and replacing the furniture, as this was not included in the parties’ contract or the Written Directive. Written Directive, item number 6, states, “over spray of texture all over my light fixtures, television, doors, and floors. Did not complete paint in areas. Did not move anything. Just painted around.” Therefore, it appears that Complainant’s belongings and furnishings remained in place during the course of Respondent’s work and the removal of such was not within the scope of the parties’ contract. The Administrative Law Judge finds that this amount should also be deducted from the proposed award amount.

Complainant asserted that her receipts for payments to Respondent were valid. Complainant further contended that the countertops for the kitchen and bathroom in Mitchell’s estimate were not comparable and are lesser in value than the countertops that she would have had installed pursuant to the parties’ contract, and therefore, Complainant argued that she should be further compensated.

Respondent acknowledged that it did not comply with the Written Directive, however, argued that the amount of the award remains excessive. Respondent acknowledged that the discrepancies that existed were “addressed for the most part.”

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. § 32-1133.01(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 to which s/he is entitled, the calculation is a prima facie showing of the amount that the complainant is entitled to recover as a payout from the Fund. In this case, Respondent requested a hearing challenging the Recovery Fund payout.

“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. Respondent failed to appear for the hearing regarding the filed Complaint, which resulted in discipline being imposed on Respondent’s license. Respondent did not file an appeal of the Registrar’s Final Order. Respondent brought to light several errors/discrepancies in the calculation of the proposed award. Consequently, the Registrar conducted a thorough re-review of Complainant’s claim to the Fund which resulted in a substantial reduction of the proposed award, as set forth above, from $24,764.59 to $15,947.27. Also, as set forth above, the Administrative Law Judge concludes that a further reduction in the amount of $1,500.00 is warranted.

After review of all the credible, substantial, probative, and relevant evidence, and considering the arguments presented at hearing, the Tribunal concludes that an award in the amount of $14,447.27 accurately reflects Complainant’s actual damages. Accordingly, Complainant is entitled to a payout from the Fund in the amount of $14,447.27.

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 $14,447.27 to Complainant Brianna Scudder.

IT IS FURTHER ORDERED that under A.R.S. § 32-1139(B), the Registrar shall charge $14,447.27, plus interest at a rate of ten percent a year, to Respondent LHH/Amarillas Bros Construction, LLC’s License Number 323310.

Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.

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.

Done this day, April 6, 2023.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Martín Quezada, Director

Registrar of Contractors

[email redacted]

Elizabeth Campbell

Assistant Attorney General

[email redacted]

Brianna Scudder

[email redacted]

LHH/Amarillas Bros Construction, LLC

[email redacted]

By: OAH Staff