ALJDEC decisions subject to certification as final
2025A-10732-RFA-LS-ROC · Registrar of Contractors · 2026-05-21
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
April Murphy,
COMPLAINANT,
v.
ELEGO Contracting LLC
ROC License No. 322419,
RESPONDENT.
No. 2025A-10732-RFA-LS-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: May 06, 2026 at 9:00 AM.
APPEARANCES: Assistant Attorney General Mona Baskin, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Tedi Quezada as a witness. April Murphy (“Complainant”) appeared on her own behalf. No appearance(s) by or on behalf of ELEGO Contracting LLC (“Respondent”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: Registrar Exhibits 1-10, including the Notice of Hearing on Appealable Agency Action (“Notice of Action”), was 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 October 24, 2018, the Registrar issued License No. 322419 to Respondent for General Dual KB-1 Building contracting. Although the license was renewed through October 31, 2026, on February 09 2026, the license was revoked by the Registrar. Hugo Gomez. is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 419 N. 41st St. Phoenix, Arizona 85008. There is an active $14,000.00 surety bond for the license issued by Merchants Bonding Company, effective January 23, 2019. The license reflects discipline by the Registrar on two (2) prior occasions, one of which is presumed to be related to this matter.
On or about October 17, 2025, the Registrar received a brief 3-item complaint from Complainant against Respondent’s License No. 322419 alleging abandonment of newly constructed residential property. The Registrar designated it Complaint No. 2025-10732 and assigned to James Carter (“Investigator Carter”) for investigation.
On November 06, 2025, Investigator Carter inspected the work that had been performed on the project to date, and took fifteen (15) photographs. Ultimately, Investigator Carter substantiated all three (3) complaint items based on his firsthand observations. Specifically, Investigator Carter concluded that the work Respondent performed on complaint items 1-3 failed to meet the Registrar’s minimum workmanship standards.
On November 06, 2025, Investigator Carter issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated all of Complainant’s allegations against Respondent. The Directive put Respondent on notice that the licensee had until 5:00 p.m. on December 01, 2025, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-1154(A), 32-1154(A)(22), and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On December 10, 2025, Investigator Carter drafted Compliance Notes whereby he documented that he had not performed a Compliance Jobsite Inspection of the project because Respondent had admitted to him that no corrective work had been attempted.
On or about December 10, 2025, Investigator Carter forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On December 11, 2025, 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 December 26, 2025, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.
On January 07, 2026, because Respondent failed to submit a timely Answer to the Registrar, a Final Administrative Decision and Order (Default) (“Default Decision”) was issued that held Respondent in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(22), and 32-1155. License No. 322419 was suspended by the Registrar for two (2) days, beginning January 14, 2026, and assessed a $250.00 civil penalty. Respondent did not appeal the Default Decision.
On January 13, 2026, Complainant submitted a petition for payment from the Residential Contractors’ Recovery Fund (“Fund”) to the Registrar, pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G). Complainant subsequently submitted copies of her Warranty Deed, bond denial letter dated January 30, 2026, and the Warranty issued by Respondent on August 04, 2023, (valid through August 04, 2024) for the property in question. Complainant later submitted a Home Inspection Report, Residential Seller Disclosure Advisory residential sales contract with title statement, and three (3) roof repair proposals from late-2025.
On February 05, 2026, the Registrar issued a Notice and Order of Recovery Fund Denial Award (“Notice of Denial”) to the parties which held that Complainant was ineligible for a payout from the Fund. Specifically, that Complainant was statutorily barred as a Subsequent Purchaser per the Registrar’s Substantive Policy Statement 2021.01 since she bought the subject property “as is” and had not suffered actual damages.
On February 27, 2026, the Registrar received a timely appeal from Complainant contesting the Notice of Denial. By that same date, DOX ROX LLC submitted a Request for Reconsideration on behalf of Complainant to the Registrar.
On March 13, 2026, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”) for an independent evidentiary hearing. Per the Notice of Action sent to the parties on March 17, 2026, the issue(s) for hearing are to determine whether the Notice of Denial was lawfully and properly issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01, as justified by the evidence.
On May 06, 2026, an administrative evidentiary hearing in the above-captioned matter took place before OAH.
Hearing Evidence
At the hearing, the Registrar called Tedi Quezada as a witness. Complainant testified on her own behalf. The substantive evidence is as follows:
Complainant owns single family residential property located at 33311 W. Ardmore Rd. Tonopah, Arizona 85354.
On or about September 07, 2023, Complainant and [J.F.] entered into a Purchase Agreement for the aforementioned residential new build sold by South Central Holding LLC.
On or about October 17, 2023, Complainant and [J.F.] closed escrow on the property. After putting $50,000.00 down, Complainant took out an Federal Housing Administration loan for the $355,000.00 balance.
The Residential Real Estate Purchase Contract, at Sec. 5a WARRANTIES, provides the following, in pertinent parts:
[COMPLAINANT] and seller agree the premises are being sold in its present physical condition as of the date of contract acceptance. Seller makes no warranty to [Complainant], either express or implied, as to the condition, zoning, or fitness for any particular use or purpose of the Premises. [Complainant] and Seller acknowledge and understand they may, but are not obligated to, engage in negotiations or address repairs/improvements to the Premises. Any/all agreed upon repairs/improvements will be addressed pursuant to Sec. 6j.
[Complainant] is advised to conduct independent inspections and investigations regarding the Premises within the Inspection Period as specified in Section 6a.
(Emphasis in original.)
The Residential Real Estate Purchase Contract, at Sec. 6a DUE DILIGENCE, provides the following, in pertinent parts:
Inspection Period: [Complainant’s] Inspection Period shall be ten (10) days. During the Inspection Period [Complainant], at [Complainant’s] expense, shall: (i) conduct all desired physical, environmental, and other types of inspections and investigations to determine the value and condition of the Premises; (ii) make inquiries and consult governmental agencies, lenders, insurance agents, architects, and other appropriate persons and entities concerning the suitability of the Premises and the surrounding area. [Complainant] shall provide Seller and Broker(s) upon receipt, at no cost, copies of all inspection reports concerning the Premises obtained by [Complainant]. [Complainant] is advised to consult the Arizona Department of Real Estate Buyer Advisory to assist in [Complainant’s] due diligence inspections and investigations.
(Emphasis in original.)
During a pre-closing walkthrough on October 17, 2024, the following observation was noted by Complainant:
Foam patio roof is uneven and has several cracks and areas where active leaks are present. Foam roof to be evaluated by a licensed roofer, and all cracks and active leaks repaired. (Item 3.0 (2) and 3.3 of Inspection Report)
Additional Evidence
Ms. Quezada is a Legal Assistant II for the Registrar. She made the determination that Complainant was eligible to access the Fund but ineligible for an administrative payout from the Fund because Complainant did not suffer any “actual damages.” Specifically, Ms. Quezada determined the following:
Complainant owns and occupies the residential property at issue.
Respondent is not listed on the Closing Statement or Purchase Agreement. Neither documents notes who the contractor was.
As a result of Complaint No. 2025-10732 being filed with the Registrar, License No. 322419 was suspended for a period of two (2) days by the Registrar.
Complainant did not receive a bond payout from Respondent’s insurance company.
Although Complainant submitted three (3) repair bids, none of them were materially reviewed by the Registrar.
Substantive Policy Statement 2021.01, which is advisory only, provides that while recovery fund statutes do not require that a claimant contract directly with a licensed residential contractor, a purchaser of residential property damaged by a licensed residential contractor may not receive a payout if (1) the purchaser knew of the defect prior to purchasing the property; (2) the purchaser could have discovered the defect by reasonable inspection; or (3) The sales contract included an “as-is” clause which included the claimed defective work. Prohibiting awards in these situations is consistent with the purpose of the Fund, which is established “for the benefit of a claimant damaged by an act, representation, transaction or conduct of a residential contractor.
Ultimately, Ms. Quezada concluded that because Complainant had not suffered actual damages that her petition to the Fund was denied..
Ms. Quezada testified that the purpose of the Fund was to make homeowners aggrieved by licensees “whole,” and that because had purchased her property “as is” she could not receive a payout from the Fund because she had not suffered actual damages.
Complainant testified that she submitted her petition to the Fund after Respondent failed to perform corrective work as promised. Complainant understood, based on the bids she obtained, that Respondent’s work could not be corrected and had to be replaced, which is why they fell outside scope of the Directive issued by Inspector Carter. Complainant clarified that she received $4,067.00 from a related homeowner’s insurance claim, but that the monies did not cover payment for any of the bids in question.
Closing Arguments
In closing, the Registrar argued that Complainant had not sustained her burden of proof and was statutorily barred from receiving a payout from the Fund. The Registrar also argued that Complainant was ineligible for a payout from the Fund because she signed an as-is clause, and opined that she had already received recompense in the matter from her homeowner’s insurance company.
In closing, Complainant argued that although she was made aware of the roof defect prior to the close of escrow, but assumed that proper repairs had been made. Complainant opined that it would be “unfortunate” to be prohibited access to the Fund simply because she signed an “as is” clause in her Purchase Agreement.
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.
Complainant bears the burden of establishing by a preponderance of the evidence that the Registrar’s Notice of Denial was incorrectly and/or otherwise improperly issued. Both Respondent and the Registrar bear 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.
In the case at bar, however, a detailed factual analysis is not necessary because Complainant failed to present any compelling evidence at hearing.
While the credible evidence of record clearly establishes that Complainant was legally eligible to access the Fund, the record is devoid of any credible evidence to establish that any actual calculable damages were sustained. Complainant’s assertion that she had a contract with Respondent is not supported by the record. Exhibits she provided clearly state that South Central Holding LLC sold her the property in question, and Complainant provided no evidence to establish that Respondent owns any portion of that company. Moreover, Complainant admitted that she purchased the property “as is” and “assumed” roof repairs made, after she obtained an inspection report identifying deficiencies, pursuant to her warranty were sound. In sum, Complainant failed to sustain her burden of proof.
Therefore, the undersigned Administrative Law Judge must conclude that Complainant was properly denied an administrative payout from the Fund.
Accordingly, Complainant’s appeal must be denied.
RECOMMENDED ORDER
Based on the foregoing,
IT IS RECOMMENDED that the Registrar affirm the Fund’s February 05, 2026, Notice of Denial.
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, May 21, 2026.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Tom Cole, Director
c/o Tedi Quezada - 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, Counsel for the Registrar
2005 N. Central Ave.
Phoenix, AZ 85004-1592
[email redacted]
April Murphy, Complainant
33311 W. Ardmore Rd.
Tonopah, AZ 85354
[email redacted]
ELEGO Contracting LLC, Respondent
c/o Hugo Gomez, Agent
419 N. 41st St.
Phoenix, AZ 85008
[email redacted]
By: OAH Staff