ALJDEC decisions subject to certification as final

2021A-01932-RFA-LS-ROC · Registrar of Contractors · 2022-06-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Steven Douglas Palm ,

COMPLAINANT

Peter Reginald Austen

DBA: Austens Masonry,

License No. ROC 154692,

RESPONDENT

No. 2021A-01932-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: April 29 and June 16, 2022

APPEARANCES: Alisha Palm for Complainants; Peter Austen on his own behalf; Sarah Asta, Esq. for ROC on April 19, 2022; Seth Hargraves, Esq. for ROC on June 16, 2022

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On March 25 2022, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Appealable Agency Action setting the above captioned matter for hearing at the Office of Administrative Hearings on April 29, 2022. The matter was convened on that date and further hearing was conducted on June 16, 2022.

ROC’s Notice of Hearing’s “Statement of Matters Asserted” provides: “Respondent [Peter Reginald Austen] has appealed the Registrar’s determination regarding Steven Douglas Palm’s Recovery Fund Claim. The Registrar’s determination was made pursuant to A.R.S. §§ 32-1132 to 32-1133.01.”

At the hearing, ROC acknowledged that the purpose of the hearing was to determine the amount or propriety of any payment from the fund. See Ariz. Rev. Stat. § 32-1133.01(C).

Mr. Palm’s wife, Alisha Palm, is also a party this matter.

Respondent appeared and testified on his own behalf.

ROC presented the testimony of Tedi Quezada, a Legal Assistant II who evaluated Complainants’ recovery fund claim.

Complainants appeared and cross-examined ROC’s and Respondent’s witnesses, but presented no evidence of their own.

In November 2020, Complainants entered a contract with Respondent that called for Respondent to perform contracting work at their house.

The original contract was for $15,384 and the parties agreed to change orders totaling $37,622.50. The operative contract including the change orders is in evidence as ROC exhibit 14 at Bates page 093.

Complainants have made payments of $31,692 to Respondent.

On May 3, 2021, Complainants filed with ROC a complaint against Respondent.

On May 24, 2021, ROC issued a Directive to Respondent that is in evidence as ROC exhibit 3. Respondent did not make the corrections that ROC ordered it to make.

On June 29, 2021, ROC issued to Respondent a Citation alleging that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(3), (A)(12), (A)(16) and (A)(22).

A hearing was conducted (the workmanship hearing) at which ROC’s allegations were addressed.

In a Final Administrative Decision and Order dated October 8, 2021, ROC adopted an Administrative Law Judge Decision finding that Respondent had committed the alleged violations.

Through its Final Administrative Decision, ROC suspended Respondent’s license and imposed against Respondent a civil penalty.

Complainants filed with Respondent’s bonding company a claim that was denied.

Complainants submitted to ROC a Recovery Fund Claim on November 18, 2021 in which they verified that the original contract amount was $15,384, that they entered change orders totaling $37,622.50, that they had paid Respondent $31,692, that the lowest bid to complete the project or repairs was $32,659, and that they anticipated receiving from the fund $30,000.

Ms. Quezada processed Complainants’ recovery fund claim. Any payout from the fund to the Complainants is limited to their actual damages.

Ms. Quezada prepared a spreadsheet that included pertinent facts and the calculation of a recommended or proposed payout to Complainants of $10,365.50.

Although ROC typically accepts the lowest bid for repair work, Ms. Quezada did not strictly adhere to that protocol for each item requiring repair, but rather she considered which bid covered most of the items. Consequently, although other bids submitted by Complainants included portions of the work that were also included in Amazing Scapes LLC’s bid for a lower cost than Amazing Scapes, Ms. Quezada accepted Amazing Scapes’ bid rather than those other bids.

In addition, Amazing Scapes’ bid included $9569 for artificial turf that Ms. Quezada determined was not compensable because it was not included in the work for which Respondent’s license was suspended. Consequently, she deducted this amount from Amazing Scapes’ bid.

Ms. Quezada determined that the following bids covered work that ROC had ordered Respondent to repair:

Mochomo’s Landscaping LLC, $680 to replace a cactus;

R&A Landscape Designs LLC, $485 to clean up the side yard;

Amazing Scapes, $29,265 for travertine tile, the fireplace, a wall, and rip rap; and

Mochomo’s Landscaping LLC, $1250, for rip rap.

The bids Ms. Quezada accepted total $31,680, from which she deducted Complainants’ outstanding balance of $21,314.50, leaving $10,365.50.

At the hearing, Ms. Quezada acknowledged that she had counted the rip rap twice and agreed that a reduction of $1250 in the proposed award was appropriate. Making that adjustment results in actual damages of $9115.50.

Mr. Austen testified as to his opinion that the project was almost complete when Respondent stopped work and estimated that there was less than $2000 worth of work left to do. He also testified that there was sufficient material onsite to finish the job.

But ROC’s findings in the workmanship matter show that some of the travertine tile was not properly installed and the bids Complainants provided show that tiles would need to be removed and the bedding reworked to properly correct Respondent’s work.

CONCLUSIONS OF LAW

Complainants have filed a recovery fund claim asserting that they are entitled to a payout from the recovery fund. Consequently, Complainants bear the burden of proof. Ariz. Admin. Code § R2-19-119(B)(“The party asserting a claim, right or entitlement has the burden of proof.”).

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).

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.

(Underscoring added.)

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

***

B. 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:

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

***

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.

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.

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 licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter.” (Underscoring 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....”

“’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).

“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(6).

Respondent has a right to a hearing “to determine the amount or propriety of the payment” before ROC may actually make a payment from the Fund and no payment will be issued unless and until ROC issues an Order directing the Fund to make such a payment. See Ariz. Rev. Stat. § 32-1133.01. Respondent’s license will be suspended if ROC does issue a payout from the Fund. Ariz. Rev. Stat. § 32-1139. Consequently, this matter is a contested case.

The preponderance of the evidence presented shows that Complainants suffered actual damages of $9115.50. Consequently, ROC should issue a Final Order directing the Recovery Fund to make a payout of $9115.50 to Complainants.

RECOMMENDED ORDER

IT IS RECOMMENDED that the Registrar issue a Final Order directing the Recovery Fund to make a payout of $9115.50 to Complainants.

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, June 30, 2022.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

-54864001

001

-137160-45720000By Miranda Alvarez

Legal Secretary