ALJDEC - Licensing
2022A-10871-RFA-LS-ROC · Registrar of Contractors · 2024-12-18
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Waylon Gates,
COMPLAINANT,
v.
Timothy David Loscar
dba Loscar Countertops and Cabinets
ROC License No. 324080,
RESPONDENT.
No. 2022A-10871-RFA-LS-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: December 05, 2024 at 9:00 AM.
APPEARANCES: Marc Saric, Esq. appeared on behalf of Waylon Gates (“Complainant”) with Complainant as a witness. Assistant Attorney General Mona Baskin, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Tedi Quezada as a witness. No appearance(s) by or on behalf of Timothy David Loscar (“Respondent”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: Registrar Exhibits 1-9, including the Notice of Hearing on Appealable Agency Action (“Notice of Action”), Complainant Exhibit H, and October 24, 2024, Hearing Order were admitted into the evidentiary record.
_____________________________________________________________________
After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Registrar.
FINDINGS OF FACT
Background and Procedure
Pursuant to Arizona Administrative Code (“Ariz. Admin. Code”) R4-9-117, Administrative Notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website. On April 13, 2019, the Registrar issued ROC License No. 324080 Specialty Dual CR-60 Finish Carpentry contracting license to Respondent, a sole proprietorship. Tim David Loscar is listed on the license as Qualifying Party and Owner. Respondent’s address of record for the license is 740 W. Upjohn Ave. Ridgecrest, California 93555. Respondent had a $6,750.00 surety bond on the license issued by RLI Insurance Company, which was cancelled on an unknown date. The license has been disciplined on one (1) prior occasion.
On or about November 28, 2022, the Registrar received a complaint against ROC License No. 324080 alleging abandonment and poor work of Complainant’s $75,000.00 residential cabinetry project. The Registrar designated it Complaint No. 2022-10871 and assigned to Cliff Corlett (“Investigator Corlett”) for investigation.
On December 16, 2022, Investigator Corlett inspected the work that had been performed on the project to date. Respondent was not present. Investigator Corlett also reviewed the contract-related correspondence between the parties, and took 6 photographs of the project site. When he was finished, Investigator Corlett drafted his Inspection Notes. Ultimately, Investigator Corlett derived a single complaint item from Complainant’s submission, of which he was able to substantiate based on his firsthand observations. Specifically, Investigator Corlett noted that the project, which had been scheduled for completion July 31, 2022, needed to properly be completed by Respondent “in a good workmanlike manner.”
On December 16, 2022, Investigator Corlett issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on January 08, 2023, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On January 19, 2023, Complainant reported to Investigator Corlett that no corrective work had been performed by Respondent. As a result, Investigator Corlett escalated Complaint No. 2022-10871 to the Registrar’s legal department with the issuance of a Citation Recommendation.
On January 25, 2023, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until February 09, 2023, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155. Correspondence was not returned as undeliverable to Respondent.
On February 14, 2023, because Respondent failed to submit a timely Answer to the Citation, the Registrar issued a Final Administrative Decision and Order (Default) to Respondent, which held him in violation of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). The Registrar suspended ROC License No. 324080 for two (2) days, beginning February 21, 2023, and assessed a $250.00 civil penalty.The Registrar further advised Respondent as follows:
If Respondent fails to pay this civil penalty amount in full within 30 days of the issuance of this Order, the Registrar shall automatically revoke Respondent’s license, with no further notice.
(Emphasis added.)
Respondent did not appeal the Default Order.
On March 17, 2023, ROC License No. 324080 was revoked by the Registrar. Respondent did not appeal the revocation.
On December 05, 2023, the Registrar received Complainant’s petition for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G). Attached was a copy of Complainant’s Warranty Deed for the underlying property, a Certification of Trust, a bond denial letter from Respondent’s insurance company, and proof of the parties’ underlying contract including plans and payment(s) made to Respondent for the project. Complainant also provided the Registrar with two (2) repair bids: a $48,490.00 bid from FL Construction Inc. (“FL Construction”) dated October 05, 2023, and a $58,200.00 bid from Cabinets by Accurate Measures (“Accurate Measures”) dated September 28, 2023.
On September 26, 2024, the Registrar issued a Notice of Administrative Award (“Notice of Award”) to the parties which held that Complainant was awarded $7,990.00 from the Fund.
On October 01, 2024, the Registrar received a timely appeal of the Notice of Award on behalf of Complainant. Respondent did not submit an appeal.
On October 11, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an independent evidentiary hearing. Per the Notice of Action sent to the parties on October 18, 2024, the issues for hearing are to determine whether Complainant’s award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.
Hearing Evidence
At the hearing, the Registrar called Tedi Quezada as a witness. Complainant testified on his own behalf. The substantive evidence is as follows:
Complainant owns a residential property located at 1016 Cala Rosa Dr. Lake Havasu City, Arizona 86403.
On or about July 01, 2022, the parties entered into a $75,500.00 contract for the custom build and installation of cabinets at Complainant’s residence. The parties agreed that a $35,000.00 material deposit was due at signing, followed by progress payments until the project’s scheduled completion on July 31, 2022. The parties’ contract also included the following term:
Late completion will have Late Damages of 7% per Day of Remaining Balance.
(Emphasis added.)
No Change Orders were executed for the project.
On or about November 12, 2022, Respondent stopped work on Complainant’s project sans explanation.
From December 16, 2022, to January 08, 2023, ROC License No. 324080 was active and in good standing with the Registrar.
Ms. Quezada is a Legal Assistant II for the Registrar. Ms. Quezada made the determination that Complainant was eligible to access the Fund, and also eligible to receive an administrative payout from the Fund, because he satisfied all statutory requirements for an award. Specifically, Ms. Quezada determined the following:
Complainant owns and occupies the residential property at issue.
Respondent’s license was active and in good standing with the Registrar when the underlying contract was entered into, as well as when Respondent first received payment from Complainant for the project.
Complainant did not pay the contract in full. There is a $40,500.00 unpaid balance remaining.
As a result of Complaint No. 2022-10871 being filed with the Registrar, ROC License No. 324080 was disciplined by the Registrar and assessed a civil penalty.
Though he applied, Complainant did not received a bond payout for the underlying project from Respondent’s insurance company.
Ms. Quezada was able to verify with Investigator Crosby that the Accurate Measures was excessive and out of scope with the underlying contract and Registrar’s Directive, but that the FL Construction bid was appropriate to address the deficiencies in Respondent’s workmanship and complete the underlying project.
Ultimately, Ms. Quezada calculated Complainant’s compensable damages by subtracting Complainant’s down payment from the original contract price, and then deducting that amount from the cost of the FL Construction bid. Thus, Ms. Quezada deduced that Complainant’s actual damages totaled $7,990.00.
Additional Evidence
As of the date of the hearing, Complainant had not filed a civil lawsuit against Respondent.
Per Complainant, the Registrar incorrectly disregarded the Late Damages clause in the parties’ contract, which would render $0.00 owed to Respondent by August 14, 2022; couched as Method #1, or March 08, 2023; couched as Method #2, for Respondent’s failure to complete the project in a workmanlike manner.
Ms. Quezada testified that Late Damages clause in the parties’ contract was inapplicable to her calculation to determine Complainant’s compensable damages. Per Ms. Quezada, she conferred with the General Counsel for Registrar, who advised that she was correct because the clause was civil in nature whereas Ariz. Rev. Stat. § 32-1131 et seq. was specifically limited to the cost of actual construction work, labor and materials, not damages. Ms. Quezada clarified that the purpose of the Recovery Fund was to make homeowners aggrieved by licensees “whole.”
Closing Arguments
In closing, the Registrar opined that Complainant failed to sustain its burden of proof in the matter, and that no facts had been presented by Complainant to rebut the Registrar’s credible evidence. The Registrar argued that Complainant could not use the Late Damages clause from its contract to be awarded more from the Fund, as the only means by which the amount could be reduced was from establishing one or more additional payments Complainant tendered to Respondent on the project, which he admittedly had not. The Registrar opined that the Late Damages argument was a red herring, and while it may be pertinent in a civil proceeding it was inapplicable and inappropriate to raise in an administrative Tribunal. As such, the Registrar asked that it’s be Notice of Award upheld.
In closing, Complainant argued that the Tribunal should disregard the State’s argument of “this is how we’ve always done it, so it’s right” and instead rely on Method #1 or #2 of Complainant’s calculations to determine that there was an unpaid balance on his contract with Respondent, which would yield a higher payout from the Fund.
CONCLUSIONS OF LAW
This matter lies within the Registrar’s jurisdiction. The matter was properly brought before OAH.
The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.
The Arizona legislature established the Fund “to provide improved protection for owners and lessees of property who contract for the construction or alteration of residential structures.”
Complainant bears the burden of establishing by a preponderance of the evidence that the Fund’s claim award amount was incorrect or otherwise improperly issued. The Registrar bears the burden to establish factors in mitigation by the same evidentiary standard.
“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.”
Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet specific eligibility criteria. An individual is eligible for an award from the residential contractors’ recovery fund if they both: (1) own residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance, and (2) actually occupy or intend to occupy the residential real property as the individual’s primary residence. Additionally, the applicant must have contracted with a residential contractor who was appropriately licensed either at the time of contract execution, when the first payment on the project was made, or when the work on the project first began.
Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been 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.”
Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “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. The maximum individual award from the Recovery Fund is $30,000.00.
Statutes should be interpreted to provide a fair and sensible result. Statutes shall be liberally construed to affect their objects and to promote justice. In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.” “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”
The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result.
Neither party here contends that Complainant was not eligible to access the Fund. The crux of the matter is whether the Registrar correctly calculated Complainant’s $7,990.00 administrative award from the fund. To put it a more pointed way, whether the Registrar erred in disregarding the Late Damages clause from Complainant’s construction contract with Respondent, and further erred in finding that there was an unpaid balance on said contract. The Tribunal is not swayed by Complainant’s arguments.
Here, the Registrar soundly established Complainant’s eligibility to access the fund, as well as the calculation and resulting award therefrom. In making a homeowner “whole” the Registrar is simply required to identify the reasonable cost of repairing or replacing a licensee’s defective workmanship, less any unpaid balance owed on their agreement – which is exactly what the Registrar did in the case at bar. there is no statute, regulation, precedent, or binding authority that requires the Registrar to do anything more.
Based on the credible and relevant evidence of record, the Tribunal must conclude that the Registrar soundly established Complainant’s eligibility to access the Recovery Fund, as well as the amount of his administrative award. Therefore, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded an administrative payout from the Fund.
Thusly, Complainant’s appeal is denied.
RECOMMENDED ORDER
Based on the foregoing,
IT IS RECOMMENDED that the Registrar affirm the Fund’s September 26, 2024, $7,990.00 Notice of Award.
IT IS FURTHER RECOMMENDED that the Registrar dismiss Complainant’s appeal.
NOTICE
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, December 19, 2024.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Tom Cole, Director
c/o Legal Department
Registrar of Contractors
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
Mona Baskin, Esq., Assistant Attorney General
Office of the Attorney General
2005 N. Central Ave.
Phoenix, AZ 85004
[email redacted]
Timothy David Loscar, Respondent
dba Loscar Countertops and Cabinets
740 W. Upjohn Ave.
Ridgecrest, CA 93555
[email redacted]
Waylon Gates, Complainant
3103 London Bridge Rd.
Lake Havasu City, AZ 86404
[email redacted]
By: OAH Staff