ALJDEC decisions subject to certification as final

20F-REC1920001-ADH · Arizona State Department of Housing · 2019-10-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 16, 2019 APPEARANCES: The Arizona Department of Housing was represented by Assistant Attorney General Valerie Marciano. Complainant Paul Richardson appeared on his own behalf. Janet Stivers appeared on behalf of Respondent Sun Valley Mobile Homes LLC doing business as Sun Valley Mobile Homes. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT 1. On or about May 28, 2019, Complainant Paul Richardson filed a Complaint Form with the Arizona Department of Housing (Department) alleging that Respondent Sun Valley Mobile Homes LLC doing business as Sun Valley Mobile Homes withheld $786.20 from his closing proceeds without his knowledge or permission. 2. The Department proceeded to review Complainant’s claim regarding verification and possible recovery from the Department’s Consumer Recovery Fund (Fund). 3. On or about June 18, 2019, the Department issued a Verified Complaint & Sign-Off Form in which the Department verified that Respondent had paid $786.20 to Rincon Mobile Home Park Village, but did not have any documentation to show that Respondent advised Complainant in writing, prior to the Sellers Closing Statement, that any back rents/utilities that Complainant may have owed to the park would be deducted from Complainant’s proceeds. Additionally, the Department determined that Respondent improperly paid the park from Respondent’s trust account. The Department stated that if Complainant agreed to the deduction, Respondent should have transferred the funds from the trust account into a general account and paid the park from the general account. 4. By Notice of Hearing dated July 23, 2019, the Department notified the parties of the recovery fund hearing and the parties’ opportunity to present evidence. 5. On or about August 26, 2019, Complainant submitted a filing to the Office of Administrative Hearings “to increase monetary award beyond actual damages noted in original filing to maximum allowed by AZ law; punitive damages for the illegal conversion of claimant’s funds as shown clearly in AZDOH verified original submission.” 6. On or about September 12, 2019, the Department filed a Clarification and Motion to Intervene. In the filing, the Department asserted that punitive damages are not subject to recovery from the Fund pursuant to A.R.S. § 41-4041(D), which limits recovery from the Fund to actual or compensatory damages, including costs, but excluding interest or attorney fees. 7. On or about September 14, 2019, Complainant submitted a filing arguing that A.R.S. § 41-4041 did not prohibit punitive damage awards and, in the alternative, punitive damages are “substantially a sub-type of compensatory relief when paid to the aggrieved party.” 8. At the time of the hearing, Respondent acknowledged that it failed to notify Complainant that back rent due may be withheld from the proceeds of the sale. Respondent admitted that Complainant was owed $786.20 in actual damages. 9. Complainant argued that the emotional and physical harm he suffered as a result of Respondent’s actions should be considered part of his “actual damages” and that to limit his claim to $786.20 would be contrary to the spirit of the law establishing the Fund. Complainant also argued that the statute allowed for “costs”, which should be read to include punitive damages. 10. The Department argued that the plain language of the statute limited Complainant’s claim to his actual damages, those funds that were improperly withheld from the proceeds of the sale and paid to a third party without notifying Complainant. CONCLUSIONS OF LAW This matter lies within the Department’s jurisdiction. The burden of proof at an administrative hearing is generally upon the person who brings the action. Utah Construction Company v. Berg et al., 68 Ariz. 285, 205 P.2d 367 (1949); A.A.C. R2-19-119(B). Further, the standard of proof at hearing is by preponderance of the evidence. Smith v. Ariz. Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2- 19-119(A). The Notice of Hearing regarding Fund payouts provides for a party contesting the departmentally-determined amounts to demonstrate the determined amount is inaccurate, unreasonable, or improper. In this instance, Complainant bears the burden of showing, by a preponderance of the evidence, that the determined Fund payout amount is not accurate, reasonable, or proper. The evidence presented established Respondent’s violation of A.R.S. §§ 41- 4030(N) and 41-4030(Q). Pursuant to A.R.S. § 41-4043, Complainant is a person entitled to make a claim against Respondent as he was harmed by the actions, inactions, and violations of applicable statutes by Respondent. A.R.S. § 41-4041(D) provides that “[r]ecovery from the consumer recovery fund is limited to actual or compensatory damages, including costs but excluding interest or attorney fees.” While Complainant argued that he suffered emotional and physical harm as a result of Respondent’s actions, those alleged harms are not recoverable from the Fund. Under the facts and circumstances of this claim, the Administrative Law Judge concludes that the Department is authorized to, and shall, award the Fund payment to Complainant in the amount of $786.20 pursuant to A.R.S. § 41-4043(D). The Administrative Law Judge further concludes, pursuant to A.R.S. § 41- 4043(D), that until Respondent has paid in full the amount determined, plus interest at the rate of ten percent per year, that Respondent’s License No. 8270, Class D-8B shall remain in suspended status. RECOMMENDED ORDER The Director of the Department of Housing shall make payment from the Consumer Recovery Fund to Complainant in the amount of $786.20. Respondent’s License No. 8270, Class D-8B shall remain in a suspended status until Respondent has paid in full the Fund amount determined, plus interest at the rate of ten percent per year. 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 5 days from the date of that certification. Done this day, October 9, 2019.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Carol Ditmore, Arizona Department of Housing -----------------------

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826