ALJDEC - Licensing
2023A-11164-RFA-LS-ROC · Registrar of Contractors · 2025-03-04
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Mahmoud Mahafzah,
COMPLAINANT,
v.
Fine Food Inc.
dba Scottsdale Window Coverings
ROC License No. 336483,
RESPONDENT.
No. 2023A-11164-RFA-LS-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: February 21, 2025 at 1:00 PM.
APPEARANCES: Assistant Attorney General Charles Hover III, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Douglas Ulmer as a witness. Mahmoud Mahafzah (“Complainant”) appeared on his own behalf with his wife, Safvah Mahaftaz, as a co-representative. No appearance(s) by or on behalf of Scottsdale Window Coverings (“Respondent”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: Registrar Exhibits 1-16 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 January 28, 2022, the Registrar issued ROC License No. 336483 Specialty Dual CR-65 Glazing contracting license to Respondent, a corporation. Vincent Charles Georges Deshayes is listed on the license as Qualifying Party and President. Respondent’s address of record for the license is 20875 N. Pima Rd., Ste. C-110. Scottsdale, Arizona 85255. 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 September 25, 2023, the Registrar received a complaint against ROC License No. 336483 alleging poor work of Complainant’s $14,030.15 residential semi-custom roller shade project. The Registrar designated it Complaint No. 2023-11164 and assigned to Jack Grimm (“Investigator Grimm”) for investigation.
On November 07, 2023, Investigator Grimm inspected the work that had been performed on the project to date. Respondent was not present. Investigator Grimm also reviewed the contract-related correspondence between the parties, and took 4 photographs of the project site. When he was finished, Investigator Grimm drafted his Inspection Notes. Ultimately, Investigator Grimm derived a single complaint item from Complainant’s submission, of which he was able to substantiate based on his firsthand observations. Specifically, Investigator Grimm noted that Respondent incorrectly measured the installation area and ordered materials that were too small for the intended space, which it subsequently attempted to install at Complainant’s residence. At that tim, Complainant agreed for Respondent to reorder the correct size, and further agreed to upgrade the materials used for an additional fee. As of the date of the inspection, Respondent had failed to return to the project site with properly ordered materials or attempt installation.
On November 08, 2023, Investigator Grimm 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 November 28, 2023, to notify the Registrar of its compliance with the Directive; specifically, that Respondent needed to perform corrective work and complete the project by appropriate means, or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On February 28, 2024, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until March 14, 2024, 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 March 20, 2024, 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 that it was in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). The Registrar suspended ROC License No. 336483 for three (3) days, effective the date of the order, and assessed a $500.00 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 April 25, 2024, ROC License No. 336483 was revoked by the Registrar. Respondent did not appeal the revocation.
On April 11, 2024, 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, an attestation from Complainant and accompanying proof of payment regarding payment made to Respondent for the project, a bond denial letter dated April 09, 2024, from Respondent’s insurance company, and proof of the parties’ underlying contract. Complainant also provided the Registrar with three (3) repair bids: a $7,303.64 bid from Arcadia Blinds & Shutter LLC (“Arcadia”) dated July 03, 2024, a $9,661.49 bid from AmeriZona Products (“AmeriZona”) dated August 22, 2024, and a bid from Elite Shutters & Blinds LLC (“Elite”) dated September 04, 2024, that did not quote or estimate an amount.
On November 15, 2024, the Registrar issued a Notice and Order of Recovery Fund Claim Denial (“Notice of Denial”) to the parties which held that Complainant was denied payment from the Fund because he had not sustained “actual damages.”
On November 18, 2024, the Registrar received a timely appeal of the Notice of Denial on behalf of Complainant. Respondent did not submit an appeal.
On November 30, 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 Hearing on Appealable Agency Action (“Notice of Action”) sent to the parties on December 10, 2024, the issue(s) for hearing were to determine if the Registrar’s denial of Complainant’s Recovery Fund petition was appropriately made pursuant to Ariz. Rev. Stat. § 32-1131 et seq. as justified by the evidence.
Hearing Evidence
At the hearing, the Registrar called Douglas Ulmer as a witness. Complainant testified on his own behalf. The substantive evidence is as follows:
Complainant owns a residential property located at 5775 N. 44th St. Phoenix, Arizona 85018.
On February 23, 2023, Complainant and Respondent entered into a $6,505.51 window covering contract for the installation of 4-part automatic Hunter Douglas roller shades. Complainant paid the contract in full.
On or about March 01, 2023, the window covering were installed, but were the incorrect size. Respondent removed the coverings and agreed to reorder the correct size for Complainant, and install them upon delivery. At that time, Complainant decided to upgrade the window covering material which incurred $7,524.47 in additional costs, bringing the project total to $14,029.98.
On May 03, 2023, Complainant paid for the upgrade in full.
On November, 28, 2023, after several months of inaction by Respondent, in an attempt to satisfy the Directive issued by the Registrar, Respondent tendered a partial refund to Complainant of $7,527.47.
At that time, Respondent assured Complainant that it would deliver the outstanding product to Complainant and complete installation.
Respondent never delivered the window coverings Complainant ordered, or refunded the remaining $6,502.51 that Complainant had paid towards their contract.
Complainant testified that he is unable to recoup his loss on the underlying contract with Respondent because the business closed.
Additional Evidence
Mr. Ulmer is a Legal Assistant II for the Registrar. Mr. Ulmer made the determination that Complainant was eligible to access the Fund pursuant to Ariz. Rev. Stat. §§ 32-1132(C-D), 32-1132(B)(1)(a), and 32-1132(B)(1)(b), but that he was ineligible to receive an administrative payout from the Fund pursuant to Ariz. Rev. Stat. §§ 32-1132.01(B) and 32-1132.01(B)(1). Mr. Ulmer testified that another legal assistant had been assigned to review Complainant’s petition to the Fund, but it was reassigned to him after she left the Registrar’s employ prior to completing the review. Specifically, Mr. Ulmer 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, when Respondent first received payment from Complainant for the project, and from November 08, 2023, to November 28, 2023, during the Directive’s compliance period.
Complainant paid the full contract price. There was no unpaid balance remaining between the parties.
As a result of Complaint No. 2023-11164 being filed with the Registrar, Respondent’s license was suspended for three (3) days, assessed a $500.00 civil penalty, and ultimately revoked by the Registrar.
Though he applied, Complainant did not received a bond payout for the underlying project from Respondent’s insurance company.
Mr. Ulmer did not verify with Investigator Grimm as to whether Respondent ever delivered Complainant’s window coverings or refunded the $6,502.51 Complainant had paid Respondent on the underlying contract.
Ultimately, Mr. Ulmer selected the Arcadia bid as satisfying the terms of the underlying contract in compliance with the issued Directive, and deducted that amount from the $0.00 unpaid balance due on the contract, and further subtracted the $7,524.47 refund Complainant received from Respondent, resulting in $0.00 in “actual damages.”
Mr. Ulmer testified that the purpose of the Fund was to make homeowners aggrieved by licensees “whole,” and that Ariz. Rev. Stat. § 32-1131 et seq. was specifically limited to the cost of actual construction work, labor and materials.
Closing Arguments
In closing, Complainant argued that he had been the victim of a scam because he lost $6,502.51 to Respondent and never received the window coverings he ordered. Per Complainant, he was further aggrieved by the Registrar’s refusal to make him whole or hold their licensee accountable for its misconduct.
In closing, the Registrar argued that while Complainant was eligible to access the fund, the amount of Complainant’s refund from Respondent had to be deducted as “less monies received,” and because the price of the contract and amount of payments were undisputed it resulted in zero dollars of compensable damages rendering Complainant ineligible for a 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 Notice of Action the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter. Because the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Registrar as well.
Complainant bears the burden of establishing by a preponderance of the evidence that the Registrar’s Notice of Denial was incorrectly and/or 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.
The crux of the matter is whether the Registrar properly calculated Complainant’s “actual damages,” and if so, whether its Notice of Denial should be upheld. After careful review of the credible and relevant evidence of record, the Tribunal is not in agreement with the Registrar’s calculations or its determination to deny Complainant a payout from the Fund.
While the Registrar soundly established Complainant’s eligibility to access the fund, it miscalculated his actual damages. The record reflects that the underlying contract was amended so that the product Complainant ordered was upgraded, resulting in contract amount increase from $6,505.51 to a total of $14,029.98. However, once Respondent refunded $7,527.47 in upgrade costs to Complainant, and promised to deliver materials and complete installation consistent with the terms of the remaining contract, the contract total reduced from $14,029.98 down to $6,502.51. The $7,303.64 Arcadia bid, akin to Complainant’s upgraded contract with Respondent, was obtained on July 03, 2024, prior to Respondent’s upgrade refund. It should not have been used. Instead, the Registrar should have required Complainant to submit a minimum of two (2) bids from appropriately licensed contractors that satisfied the terms of the original contract between the parties and also complied with the Directive.
To leave Complainant without the product he paid for, and at a loss of $6,502.51, is an inequitable and unconscionable result.
In the interest of securing a just outcome in the matter, the Tribunal must remand this matter back to the Registrar with the specific instruction that Complainant be granted reasonable leave to submit new bids to the Fund for the its consideration of the petition at issue.
RECOMMENDED ORDER
In consideration of the record,
IT IS ORDERED that this matter is hereby remanded to the Registrar for action consistent with the foregoing.
IT IS FURTHER ORDERED that the Registrar, when appropriate, shall issue an amended Notice of Denial or Notice of Administrative Award in this matter, if necessary, based on its review of newly submitted bids by Complainant.
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, March 05, 2025.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Tom Cole, Director
c/o Legal Department
Registrar of Contractors
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
Charles S. Hover, III, Esq., Assistant Attorney General
Office of the Attorney General
2005 N. Central Ave., SGD/LES
Phoenix, AZ 85004-1592
[email redacted]
Mahmoud Mahafzah, Complainant
5775 N. 44th St.
Phoenix, AZ 85018
[email redacted]
Find Food Inc., Respondent
dba Scottsdale Window Coverings
20875 N. Pima Rd., Ste. C-110
Scottsdale, AZ 85255
[email redacted]
By: OAH Staff