ALJDEC decisions subject to certification as final

2021A-02741-RFA-LS-ROC · Registrar of Contractors · 2023-08-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Rita Marie Stiller,

COMPLAINANT

Luis Edgardo Magana Magana,

DBA: J & L Plastering,

License No. ROC 313882,

RESPONDENT

No. 2021A-02741-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 5, 2023, 9:00 A.M.

APPEARANCES: Claimant Rita Marie Stiller appeared on her own behalf; Luis Magana appeared on behalf of Respondent; Assistant Attorney General Wesley M. Cox appeared on behalf of the Arizona Registrar of Contractors;

ADMINISTRATIVE LAW JUDGE: Roger A. Geddes

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

A. Claim against General Contractor BCLD, LLC (Respondent in Case No. 2019A-04441)

1. On or about August 31, 2019, Rita Stiller (Complainant or Claimant) filed a Complaint with the Registrar of Contractors (Registrar) against her general contractor, BCLD, LLC (BCLD), License No. 296383, in Case No. 2019A-04441 alleging poor work in connection with a residence in Mojave Valley, Arizona. (Registrar’s Exhibit no. 10).

2. Ultimately, on or about February 14, 2020, the Registrar issued a Final Administrative Order and Decision finding, among other things, a violation of A.R.S. 32-1154(a)(3) and issued a suspension of the BCLD license. (Registrar’s Exhibit no. 10).

3. On June 28, 2020, Complainant filed a claim with the Residential Contractors’ Recovery Fund (“Recovery Fund”) to recover the cost of repairing BCLD’s deficient work. (Registrar’s Exhibit no. 10).

4. On March 28, 2022, the Registrar issued a Notice of Claim for Administrative Award, finding that Complainant’s actual damages were $23,914.10. (Registrar’s Exhibit no. 10).

5. Complainant appealed the sufficiency of the award and during the pendency of the appeal, the Registrar discovered that Complainant had received a judgment in her favor in the principal amount of $82,255.62 including interest, costs, and attorney’s fees against BCLD. (Judgment) (Registrar’s Exhibit no. 9).

6. Thereafter on June 8, 2022, the Registrar issued a Notice and Order of Recovery Fund Denial finding that Complainant did not have any compensable actual damages in large part because the Judgment amount was considered recovery of her loss from “sources other than the fund” and exceeded Complainant’s claimed damages attributable to BCLD. (Registrar’s Exhibit no. 8).

7. Complainant appealed, and the Administrative Law Judge after a hearing on August 17, 2022, found the denial of an award from the Recovery Fund was appropriate in an Administrative Law Decision, dated September 6, 2022. (Registrar’s Exhibit no. 10).

8. A Final Administrative Order and Decision was issued on September 30, 2022, accepting the Administrative Law Judge’s decision. (Registrar’s Exhibit no. 10).

B. Claim against Subcontractor J & L Plastering (Respondent herein)

9. Luis Edgardo Magana, DBA: J & L Plastering (Respondent), is the holder of License Number 313882 issued by the Registrar and was alleged to be a subcontractor of BCLD.

10. On or about June 17, 2021, Complainant Rita Stiller filed a Complaint with the Registrar against Respondent alleging poor work in connection with stucco work performed by Respondent at the residence in Mohave Valley, Arizona. (Registrar’s Exhibit no. 1).

11. Thereafter, on August 23, 2021, the Registrar issued a Citation charging Respondent with a violation of A.R.S. § 32-1154(A)(3) and A.R.S. § 32-1154(A)(22). (Registrar’s Exhibit no. 1).

12. After a hearing before an Administrative Law Judge held on October 25, 2021, the Registrar issued a Final Administrative Decision and Order on December 2, 2021, finding that Respondent had violated A.R.S. § 32-1154(A)(3) and A.R.S. § 32-1154(A)(22) as charged in the Complaint. (Registrar’s Exhibit 2). Pursuant to the Order, the Registrar suspended Respondent’s license for seven days and imposed a civil penalty in the amount of $500.00.

13. On or about April 24, 2023, Complainant filed a claim in an amount of $30,000.00 to the Recovery Fund with the Registrar. (Registrar’s Exhibit no. 3).

14. On May 18, 2023, the Registrar issued a Notice and Order of Recovery Fund Claim Denial in which the Registrar determined that Complainant had no compensable actual damages. (Registrar’s Exhibit no. 8). Complainant filed a timely appeal on May 18, 2023. (Registrar’s Exhibit no. 11).

15. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing regarding the denial of an award from the Recovery Fund. A hearing was held on July 5, 2023, at 9:00 A.M.

16. At the July 5, 2023, hearing, the Registrar presented the testimony of Katelyn Rolling, Legal Assistant II, for the Registrar. Complainant Rita Stiller appeared and testified on her own behalf. Luis Magana appeared and testified on behalf of Respondent. The Tribunal received and admitted Registrar’s exhibit numbers 1 - 12. No exhibits were submitted by Complainant or Respondent.

17. Katlynn Rolling testified on behalf of the Registrar that Complainant was otherwise an eligible claimant with regard to the Recovery Fund but that she had determined that Claimant had no compensable actual damages as required for an award to be issued. She further testified that Claimant’s damages claimed to have been caused by Respondent were in part duplicative of damages claimed to have been caused by BCLD and all such damages resulted from the same project.

Ms. Rolling testified that some of the Complaint items in the Written Directive, dated October 3, 2019, against BCLD (BCLD Directive) are identical to some of the Complaint items in the Written Directive, dated July 13, 2021, against Respondent. (J & L Directive) (Registrar’s Exhibit No. 12). Specifically, she testified that Complaint item no. 25 in the BCLD Directive (“Poor taping (masking) around windows overspray”) was the same as Complaint item no. 1 in the J & L Directive (“Stucco oversanded...”); that Complaint item no. 26 in the BCLD Directive (“Stucco on window flanges, can and will peel up, needs to be cut and cleaned.”) was the same as Complaint item no. 4 in the J & L Directive (“Stucco on widow flanges.’); that Complaint item no. 27 in the BCLD Directive (“Synthetic coating blocking window drain vents from poor masking almost all windows.”) was the same as Complaint item no. 5 in the J & L Directive (“Synthetic coating blocking window weep vents.”).

Due to these duplications, she stated she concluded that the Judgment amount (as well as the payout on BCLD’s bond) should be considered as a recovery of a loss from a source other than the Recovery Fund in calculating compensable actual damages. Ms. Rolling further stated she determined there were no compensable actual damages because the Judgment amount and BCLD bond payout related to the same project involving Respondent, and that those amounts far exceeded the claimed damages caused by Respondent, and in fact the claimed damages caused by BCLD collectively.

18. Claimant Rita Stiller testified that the case filed against Respondent was filed prior to submitting a claim to the Recovery Fund against BCLD. While she admitted some of items in the J & L Directive were duplicative of items in the BCLD Directive, she contended the primary item for her current claim of damages, oversanding of the stucco, is not part of her Complaint against BCLD, is not included in the BCLD Directive, and is not part of the Judgment. She stated she discovered the oversanded stucco in October or November 2020 due to a failed beam, which she admitted was part of the arbitration proceeding.

19. Luis Magana testified on behalf of Respondent that there was no oversanding of stucco and that he did not have a contract with BCLD or Claimant and did not do the original job which he stated was done by his father. He further stated Claimant asked for a bid for repair work to the stucco but that he never heard from her again.

CONCLUSIONS OF LAW

1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq.

2. After the Registrar has determined the amount of the payout from the Recovery Fund to which Complainant is entitled, Respondent bears the burden of proof to establish that the Registrar’s calculations were erroneous or not supported by a preponderance of the evidence. See Arizona Administrative Code Rule 2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372 (1952).

3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 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.” BLACK’S LAW DICTIONARY at p. 1220 (8th ed. 1999).

4. The Registrar’s final decision in the underlying workmanship case established that Respondent did not comply with the Registrar’s workmanship standards and that Complainant potentially was a person who had been injured by Respondent’s violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108. The only issue in the hearing on Complainant’s claim to the Recovery Fund is the measure of her damages.

5. A.R.S. § 32-1132.01 describes the measure of damages that an eligible homeowner is entitled to recover from the Recovery Fund:

...

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.

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.

...

D. The maximum individual award from the residential contractors' recovery fund is $30,000. An individual claimant may not be awarded more than the maximum individual award.

E. Monies in the residential contractors' recovery fund may not be awarded for attorney fees or costs, except in contested cases appealed to the superior court.

...

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.

6. A.R.S. § 32-1133 reflects the effect of a judgment with regard to a claim to the Recovery Fund.

A. An action for a judgment that may subsequently result in an order for collection from the residential contractors' recovery fund may not be commenced later than two years after the date of the commission of the act by the contractor that is the cause of the injury or from the date of occupancy.

B. When a claimant commences an action for a judgment that may result in collection from the fund, the claimant must notify the registrar in writing to this effect within thirty calendar days after the commencement of the action. The registrar at any time may intervene in and defend the action.

C. When any claimant recovers a valid judgment against any residential contractor for an act, representation, transaction or conduct that is in violation of this chapter or the rules adopted pursuant to this chapter, the claimant, on twenty days' written notice to the registrar, may apply to the court for an order directing payment out of the fund, of the amount unpaid on the judgment, subject to the limits stated in this article. If the claimant fails to notify the registrar within thirty calendar days after commencement of the action as required by this subsection, the court may direct payment out of the fund on receipt of a consent to payment signed on behalf of the registrar. If the claimant gives notice to the registrar as required by this subsection, the court may direct payment out of the fund either on receipt of a consent to payment signed on behalf of the registrar or, in the absence of any written consent, after the notice period required by this subsection. If the court receives written objections by the registrar, the court may not direct payment from the fund without affording the registrar a reasonable opportunity to present and support the registrar's objections.

D. The court may proceed on an application in a summary manner and, on the hearing, the claimant is required to show that the claimant has done all of the following:

1. Given notice as required by subsections B and C of this section.

2. Obtained a judgment that has become final, as provided in subsection C of this section, stating the amount and the amount owing at the date of the application.

3. Proceeded against any existing bond covering the residential contractor.

E. The court may make an order directed to the registrar requiring payment from the fund of whatever sum it finds to be payable on the claim, in accordance with this section, if the court is satisfied on the hearing of the truth of all matters required to be shown by the claimant by subsection D of this section. The recovery limits established under this article apply to all judgments awarded beginning September 1, 2002. If the claimant has recovered a portion of the claimant's loss from sources other than the fund, the court shall deduct the amount recovered from other sources from the amount of actual damages suffered pursuant to section 32-1132.01, subsection A and direct the difference, not to exceed $30,000, to be paid from the fund.

F. On receipt of a certified copy of the order specified in subsection E of this section, the registrar may authorize payment from the residential contractors' recovery fund even if an appeal has been instituted but not completed.

7. Claimant has not shown by the preponderance of the evidence that she is entitled to any award from the Recovery Fund relating to Respondent. She conceded that Respondent was a subcontractor of BCLD against which she has a Judgement in the principal amount of $82,255.62. She further does not dispute that this amount is a recovery for a loss from sources other than the fund. Rather, she argued that the stucco oversanding was not part of her claim against BCLD in her Complaint to the Registrar or her claim in the arbitration proceeding from which the Judgment was entered. While it appears she is correct that the oversanding was not part of her Complaint against BCLD, she provided no documentary evidence that it was not part of her claim in her arbitration proceeding or that her arbitration award, which was ultimately entered as the Judgment, did not include an award for damages for oversanding. Neither the arbitration award nor the Judgment specified her damages, other than perhaps the amount.

Claimant stated she discovered the oversanding in October or November 2020, which was well before her arbitration hearing on March 16-17, 2021, or the issuance of the arbitration award in April 2021. She further testified she discovered the oversanding due to a fallen beam, which she stated was part of her arbitration proceeding. (Respondent’s Exhibit no. 9). If in fact damages for oversanding were not sought in the arbitration proceeding as she claimed, she offered no explanation as to the reason for not claiming those damages.

8. Accordingly, the Registrar did not err in determining that Claimant was ineligible to make a claim to the Recovery Fund due to a finding there was no compensable actual damages. Claimant’s appeal is therefore denied.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that on the effective date of the final order in this matter, that Claimant’s claim to the Recovery Fund be denied with no payment to Claimant from the 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 forty (40) days from the date of that certification.

Done this day, August 1, 2023.

/s/ Roger Geddes

Administrative Law Judge

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

Martín Quezada, Director

Registrar of Contractors

c/o Legal Department

1700 W. Washington Street, Suite 105

Phoenix, AZ 85007

[email redacted]

Luis Edgardo Magana Magana

DBA: J & L Plastering

[email redacted]

Rita M Stiller

[email redacted]-54864001

001

-137160-45720000

By: OAH Staff