ALJDEC decisions subject to certification as final

2023A-05236-RFA-LS-ROC · Registrar of Contractors · 2024-08-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Dustin Matz,

COMPLAINANT

Skill Set Inc.

DBA: Skill Set Remodeling

License No. ROC 323036,

RESPONDENT

No. 2023A-05236-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 26, 2024

APPEARANCES:

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

EXHIBITS ADMITTED INTO EVIDENCE:

_____________________________________________________________________

FINDINGS OF FACT

The Arizona Registrar of Contractors (Registrar) issued License No. 323036 to Respondent.

On or about May 4, 2023, the Registrar received a Complaint against Respondent from Complainant alleging abandonment and poor work (the workmanship complaint).

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

Respondent filed a timely answer to the Citation. An administrative hearing was held. In her October 5, 2023 Decision, Administrative Law Sondra J. Vanella considered Respondent’s arguments and concluded that “Respondent did not complete the project in a workmanlike manner in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-19-108(a)” and that “Respondent failed to take appropriate corrective action following a Written Directive from the Registrar in violation of A.R.S. § 32-1154(A)(22).”

On or about November 1, 2023, the Registrar issued a Final Administrative Decision and Order finding the violations and imposing a five day suspension.

Complainant then filed a claim with the Residential Contractors’ Recovery Fund (the Fund) to recover the cost of completing or repairing the project. As part of the claim process, Complainant submitted proof of expenditures and a bid from a different contractor that Complainant had received to correct the project.

During its review of Complainant’s claim, the Registrar determined that the contract between Complainant and Respondent was for an original amount of $49,759.06. Based on the statements of the parties, the Registrar determined that the parties agreed to a verbal change order to remove certain elements of the scope of work. The Registrar calculated the updated contract amount by deducting the line item cost for the eliminated scope of work. The Registrar did not make any related reductions to the Overhead or Profit on the contract.

The Registrar calculated Complainant’s actual damages as follows:

Original contract price:

Change order amount:

(Remove roofing, windows, plumbing, insulation, and interior doors)

Less payment on contract:

Total unpaid balance:

Valid expenditures to complete or repair project:

Total Compensable Bid Amount:

Less the unpaid balance on the contract:

Compensable Actual Damages:

$73,250.51

-$12,832.50

-$46,062.50

$14,355.51

$22,251.50

$1,926.50

-$14,355.51

$9,822.49

The Registrar issued a Notice of Administrative Award, finding that Complainant’s actual damages were $9,822.49. Respondent requested a hearing, believing the payout was too high. Complainant contested that the administrative award was too low. The Registrar referred the matter to the Office of Administrative Hearings (OAH) for an evidentiary hearing.

Hearing was held on July 26, 2024.

Shaquira Adebule, Legal Assistant II for the Fund, testified that she reviewed the written directive from the Registrar that had been issued, Judge Vanella’s Decision regarding the underlying complaint, and the documentation submitted by Complainant in calculating Complainant’s actual damages. Ms. Adebule stated both parties agreed that the scope of work had been reduced by a verbal change order. Ms. Adebule stated that $14,355.51 unpaid balance on the contract was deducted from Complainant’s expenditures and estimates to complete or repair the project to arrive at Complainant’s actual damages of $9,822.49.

Complainant asserted that, at a minimum, the verbal change order amount should have been increased to account for the overhead and profit on the contract. Such changes would have increased the change order by $1,283.25 for overhead and $1,924.88 for profit. As such, the total change order amount should have been $16,040.63.

Using the increased change order amount advanced by Complainant would result in the following calculation of his damages.

Original contract price:

Change order amount:

(Remove roofing, windows, plumbing, insulation, interior doors, overhead, and profit)

Less payment on contract:

Total unpaid balance:

Valid expenditures to complete or repair project:

Total Compensable Bid Amount:

Less the unpaid balance on the contract:

Compensable Actual Damages:

$73,250.51

-$16,040.63

-$46,062.50

$11,147.39

$22,251.50

$1,926.50

-$11,147.39

$13,030.62

Alternatively, Complainant asserted that Respondent accepted the $46,062.50 paid on the contract as the new contract amount. Complainant pointed to an April 17, 2023 email from Respondent that stated, “[b]ased on the current situation we are going to finish the framing work and get it inspected to bring us current to the monies we have been given.” Complainant argued that, based on Respondent’s statement, there was no remaining balance owed on the contract. Therefore, Complainant concluded his expenditures of $22,251.50 and bid of $1,926.50 would be compensable actual damages totaling $24,178.00.

Lisa Garcia, Respondent’s owner, testified that her husband sent the email Complainant referenced and she did not know what he meant when he sent it. Ms. Garcia maintained that, because Respondent did not complete the framing and get it inspected, the email was not in effect as to changing the agreed upon contract price.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132.01(B) provides, in pertinent part, 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:

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.

A.R.S. § 32-1132.01(H) provides, in pertinent part, as follows:

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.

The party challenging an award from the Fund bears the burden of proof by a preponderance of the evidence to establish that the proposed payout from the Fund was erroneous.

“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.”

In this matter, Complainant established by a preponderance of the evidence that Respondent accepted the $46,062.50 paid by Complainant to be the new contract amount for the reduced scope of work. Accordingly, Complainant did not have an unpaid balance owing on the contract.

Based on the revised contract amount, which was paid in full, Complainant’s compensable actual damages were $24,178.00.

After review of all the evidence, the Tribunal concludes that the award provided by the Fund failed to accurately reflect Complainant’s actual damages. Accordingly, Complainant is entitled to a payout from the Fund in the amount of $24,178.00.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, Complainant receive a payout from the Residential Contractors’ Recovery Fund in the amount of $24,178.00.

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.

-54864001

001

-137160-45720000Done this day, August 15, 2024.

/s/ Tammy L. Eigenheer

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

Skill Set Inc.

DBA: Skill Set Remodeling

[email redacted]

Dustin Matz

[email redacted]

Registrar of Contractors

[email redacted]

By: OAH Staff