ALJDEC decisions subject to certification as final

2021A-02121-RFA-LS-ROC · Registrar of Contractors · 2022-08-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

John Howard Creveling III,

COMPLAINANT

B A S Construction and Drywall LLC,

DBA: R N Construction and Payne Concrete

License No. ROC 247812,

RESPONDENT

No. 2021A-02121-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 12, 2022.

APPEARANCES: Complainant John Howard Creveling appeared on his own behalf. Assistant Attorney General, Justin Larson appeared via Google Meet representing the Registrar of Contractors. Gail Matthews appeared telephonically for the Registrar of Contractors. No representative from Respondent appeared.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (Registrar) issued License No. 247812 to Respondent.

On or about May 12, 2021, the Registrar received a Complaint against Respondent from Complainant alleging, among other things, that Respondent received $23,000.00 as a down payment for work on Complainant’s roof, however the roof was never started and Respondent failed to refund Complainant’s money.

As a result of the workmanship complaint, on August 10, 2021, 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.R.S. § 32-1154(A)(8); and A.R.S. § 32-1154(A)(22).

Respondent failed to file a timely answer to the Citation. On August 31, 2021, the Registrar issued a Final Administrative Decision and Order finding violations and revoked Respondent’s license.

Complainant then filed a claim on September 14, 2021, with the Residential Contractors’ Recovery Fund (Fund) to recover the cost of the $23,000.00 down payment for the roof.

On April 1, 2022, The Registrar issued a Notice and Order of Recovery Fund Claim Denial. Complainant requested a hearing, believing that he should be able to recover the $23,000.00 as no work was completed on the roof. The Registrar referred the matter to the Office of Administrative Hearings (OAH) for an evidentiary hearing.

Hearing was held on August 21, 2020.

The Directive from the Registrar specified in pertinent part that:

DIRECTIVE REQUIREMENTS

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

Compliance Item: 1 - On 02/05/21, Brad Schupbach asked us for $23,000.00 to order the metal for our roof. He told us it would take 10 days to get metal and he needed 2 days to pick it up and install.

He cashed the check immediately and we have been waiting 3 months for our roof. He cashed the check immediately and we have been waiting 3 months for our roof. I have asked him repeatedly for a copy of the invoice all i get are fantastic excuses, unreturned calls and texts-they got the wrong color, can't get enough, cut it wrong etc and no invoice.

Now he is not even returning calls-we hired Arrow Roofing to put a comp roof on- Brad owes us $23K. Then we found out his license is suspended...After 3 months the paper on roof was in rough shape + had to be fixed also

Investigator’s Observation: The complainant's presented a check to the respondent for $23K on 02/06/21.

A metal roof was not received or installed.

As stated, the complainant's had a composition shingle roof installed as the home was under construction.

The metal roofing is listed on the original contract.

The respondent's license became suspended on 12/18/20 for lack of bond, suspended again until compliance on 03/19/21 and was revoked on 06/17/2021.

This respondent cannot contract or make corrections as he is now unlicensed.

Governing Rule: Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

Compliance Item: 2 - Brad Schupbach was paid $23K to buy metal...We have not seen him since...We had to hire a roofing co.

Investigator’s Observation: Refer to item # 1 regarding this item.

Governing Rule: Refer to item #1

Compliance Item: 3 - Brad was also paid for other work that we are now paying for again...He has been paid for the concrete work in front...the apron...He told us the cement guy was paid and just give him a call...he has not been paid for this work...His bid it between 3 and 4 thousand...

Investigator’s Observation: There is no concrete apron as required.

This work has not been completed.

Governing Rule: Violation of any rule adopted by the Registrar;

Namely A.A.C. R4-9-108(a): A contractor shall perform all work in a professional and workmanlike manner.

Compliance Item: 4 - He was also paid to dig sewer line, water line, gas line...Clint the dirt man that has done out work jus quoted us 2K to finish this job.

Investigator’s Observation: None of these lines were installed at the time of inspection.

The trenches have not been dug.

Governing Rule: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(a): A contractor shall perform all work in a professional and workmanlike manner.

Compliance Item: 5 - We also brought $3800.00 of material to the job but that should be included in framing costs...You have the contracts to verify all of these and lumber invoices

Investigator’s Observation: The complainant's have provided documentation to support their claim and those invoices have been uploaded to the complaint

Governing Rule: Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.

(All errors contained in the original)

At hearing, Gail Matthews, Claims Reviewer for the Fund, testified on behalf of the Registrar. She testified that she reviewed the Directive from the Registrar that had been issued, the Registrar’s Final Administrative Decision dated August 31, 2021, payments made to Respondent and payments made to repair the rood and unfinished work submitted by Complainant in calculating Complainant’s actual damages.

Specifically, Ms. Matthews determined that the original contract price was $200,000.00. Further, the payments made to Respondent as supplied to the Registrar from Complainant totaled $147,500.00. Ms. Matthews testified that there was a remaining balance on the contract of $52,500.00. However, because the cost to repair the roof and Directive issues was $37,600.00, Ms. Matthews testified that there were no “actual damages”, and thus the Recovery Fund claim was denied.

Finally, Ms. Matthews testified that although there were two cash payments totaling $20,000.00 which were not supported by documentation, she included those as proof that they were paid.

Mr. Creveling testified that there was a confusion in the numbers. First, he argued that the contract price was $161,000.00. He explained that while the contract stated $200,000.00, the contract also acknowledged that $29,000.00 was already paid, leaving a total of $171,000.00. The contract then broke down the following payment structure:

Foundation $50,000.00

Framing $75,000.00

Metal Roof $36,000.00

Stucco stucco not in price of bid.

Mr. Creveling testified that while the numbers above totaled $161,000.00, he informed Respondent of that same and that Respondent acknowledged that $161,000.00 was the cost to finish the project.

In reviewing the payments made and supplied to the Registrar, Mr. Creveling testified that check number 1575 ($5,000.00) and check number 1580 ($14,000.00) were for part of the down payment.

In addition, Mr. Creveling testified that he paid the foundation in full, the framing in full, and $23,000.00 as the down payment for the roof. Thus, the true amount of the amount owed was $13,000.00.

Finally, while going through the numbers, Mr. Creveling admitted that there may have been up to three payments not submitted to Ms. Matthews for her review, namely, $10,000.00 towards the down payment, $10,000.00 towards the foundation, and approximately $9,000.00 windows.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132.01(B)(1) provides that “[a]n 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.”

Complainant bears the burden of proof to establish that the proposed payout from the Fund is incorrect by a preponderance of the evidence.

“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.”

The first issue to resolve is the contract price. The contract clearly stated $200,000.00 and Complainant used that number on all of his Complaint forms. Therefore, the tribunal finds that $200,000.00 was the contracted price. As to the payments made, it was also clear from the contract that $29,000.00 was already paid and accepted by Respondent, thus that entire amount should have been included as paid right off the top without further proof.

Therefore the tribunal makes the following calculation:

Contract price $200,000.00 - $157,500.00 (initial $29,000.00 plus subsequent payments as listed in the spreadsheet) = $42,500.00 (remaining balance).

However, because the cost to repair ($37,600.00) was less than the remaining balance, the claim should be denied. While the tribunal understands that this is not the outcome Complainant was seeking, the evidence provided to Ms. Matthews and to the tribunal support this calculation. Complainant may have other avenues to collect the $23,000.00 he was seeking, unfortunately it is not from the Recovery Fund.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, Complainant be denied a payout from the Residential Contractors’ Recovery Fund.

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 30 days from the date of that certification.

-54864001

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-137160-45720000Done this day, August 29, 2022.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

-54864001

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-137160-45720000By Miranda Alvarez

Legal Secretary