ALJDEC

98F-M0020-ROC · Registrar of Contractors · 1998-02-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 28, 1998

APPEARANCES: Mathew Bevak appeared on behalf of the Complainants. Attorney Guy P. Wolf represented the Respondent.

ADMINISTRATIVE LAW JUDGE: Casey J. Newcomb _____________________________________________________________________

On January 28, 1998, a hearing was held to determine if the Respondent had violated provisions of A.R.S. §32-1154(A). Mathew Bevak appeared on behalf of the Complainants. Attorney Guy P. Wolf appeared on behalf of the Respondent. Evidence and testimony were presented. Prior to the conclusion of this Administrative Hearing, Attorney Guy P. Wolf motioned this tribunal to dismiss the Complainants’ Complaint relying on the Doctrine of Res Judicata. The undersigned Administrative Law Judge granted the Motion to Dismiss. Upon a review of the entire record, the following Findings of Fact, Conclusions of Law and Recommended Decision are made.

FINDINGS OF FACT

1. Although the record is not entirely clear, the Complainants and the Respondent apparently entered into an agreement in 1993 to build a home located at 1368 S. Winchester, Apache Junction, Arizona (the “Home”). The Complainants moved into the Home in August of 1993. See Complainants’ Second Complaint, dated May 4, 1995.

2. Hershel Eugene Wilson was the Respondent’s owner and qualifying party. G & H Construction is no longer in existence. See Respondent’s Answer.

3. In 1993, the Complainants filed a Complaint with the Registrar of Contractors (the “ROC”) regarding a problem with the kitchen’s vinyl floor. See Case M94-0236. Although the record is not entirely clear on this first Complaint, the Respondent apparently performed corrective action on the Home to resolve this problem on November 19, 1994. See Complainants’ Second Complaint, dated May 4, 1995.

4. On May 4, 1995, the Complainants filed a second Complaint with the ROC alleging that the kitchen’s vinyl floor was “starting to bubble and bruise.” See Complainants’ Second Complaint, dated May 4, 1995. The Complainants further alleged that an inspector from the Carpet Company stated that the bubbling was due to a crack in the kitchen’s cement floor. Id. Finally, the Complainants alleged that their warranty on the kitchen floor was due to expire by November 19, 1996. Apparently, the Respondent was arguing that the warranty had already expired. Id.

5. On or about July 27, 1995, the Respondent performed additional corrective work on the Home. See Complainants’ Third Complaint, dated July 8, 1997.

6. On or about August 30, 1995, an ROC Inspector contacted the Complainants about the Respondent’s corrective action. See ROC Inspector’s Notes for Case M95-1560. The ROC Inspector wrote that the Complainants said that “everything is fixed.” Id. However, the ROC Inspector noted that the Complainants were not sure if they still wanted a hearing on this matter. Id.

7. On May 7, 1996, an Administrative Hearing was held on the Complainants’ Second Complaint. Mr. Wilson appeared on behalf of the Respondent. No person appeared on behalf of Complainant Cindy Bevak. Administrative Law Judge Mark Silver recommended that the Complaint and Citation No. M95-1560 be dismissed. The Director of the ROC adopted Judge Silver’s Recommendation. See the Director’s Order (the “Order”), dated May 20, 1996 (M95-1560). The Complainants did not appeal this Order.

8. The Complainant initially testified that his wife, Complainant Cindy Bevak, did appear for the May 7, 1996 Administrative Hearing. However, Judge Silver’s Recommended Decision clearly states that no person appeared on behalf of the Complainants. Mr. Wilson also testified that no person appeared on behalf of the Complainants for the May 7, 1996 Administrative Hearing.

9. The Complainant also testified that he (and his wife) failed to appear for the May 7, 1996 Administrative Hearing because they felt that the only issue before this tribunal was the unreasonable amount of time that it took the Respondent to correct the problem. The Complainant testified that he felt that he had already lost on this issue (because the ROC kept granting the Respondent deadline extensions for correcting the kitchen floor) so he and his wife did not appear for the Administrative Hearing.

10. The Complainant further testified that it never occurred to him that the actual problems with the kitchen floor (as stated in the Complainants’ second Complaint) were at issue at the May 7, 1996 Administrative Hearing.

11. The undersigned Administrative Law Judge finds that the Complainants acted unreasonably in assuming that their appearance at the May 7, 1996 Administrative Hearing was unnecessary. The Complainants should have requested that the May 7, 1996 Administrative Hearing be vacated which would have closed their case. However, by failing to appear for the Administrative Hearing, the Complainants have now exposed themselves to a Doctrine of Res Judicata or Collateral Estoppel defense.

12. On or about July 8, 1997, the Complainants filed a third Complaint with the ROC stating that the previous repairs (made pursuant to their first and second Complaints) were “performed inadequately both times.” See Complainants’ Third Complaint, dated July 8, 1997.

13. Respondent’s counsel argued that the Complainants’ third Complaint should be dismissed under the Doctrine of Res Judicata. Counsel argued that the Complainants had the opportunity to argue all of the issues (that are in their third Complaint) at the May 7, 1996 Hearing before Administrative Law Judge Mark Silver. However, the Complainants failed to appear. Consequently, the ROC’s final Order, dated May 20, 1996, bars the Complainants from re-litigating these same issues (that were also the basis of the Complainants’ second Complaint).

14. Respondent’s counsel further argued that if the Complainants’ third Complaint involves new issues (that were not previously raised in the Complainants’ first and second Complaint), then the Complainants’ third Complaint is barred by the 2 year statute of limitations pursuant to A.R.S. §32-1155(A).

15. The Complainant argued that the statute of limitations should not bar the Complainants’ third Complaint because the third Complaint was filed on July 8, 1997 (which is within two years of the corrective work performed on July 27, 1995).

16. The undersigned Administrative Law Judge finds that the statute of limitations does not bar the Complainants’ third Complaint because it was filed within the two year limitation.

17. The undersigned Administrative Law Judge further finds that pursuant to the Doctrines of Res Judicata and/or Collateral Estoppel, the ROC’s Order, dated May 20, 1996 bars the Complainants from re-litigating the issues pertaining to the problems with the Home’s kitchen floor.

18. Upon further reflection, the undersigned Administrative Law Judge finds that the Doctrines of Res Judicata and/or Collateral Estoppel may not apply if the Respondent’s July 27,1995 corrective work deteriorated or became flawed after the May 7, 1996 Administrative Hearing. Under such a scenario, the Complainants could not be expected to litigate an issue (i.e. flawed corrective work) that did not exist at the time of the hearing. This is true even if the Complainants would have appeared for the May 7, 1996 Administrative Hearing. Unfortunately, it is not entirely clear from the record when the Complainants became aware that there were problems with the July 27, 1995 corrective work. If the problems with the corrective work appeared after the May 7, 1996 Administrative Hearing, then the Complainants would not be precluded from filing another Complaint.

CONCLUSIONS OF LAW

1. The undersigned Administrative Law Judge finds that the statute of limitations does not bar the Complainants’ third Complaint because it was filed within the two year statute of limitations pursuant to A.R.S. §32- 1155(A).

2. The Doctrine of Res Judicata applies only to a final decision by a trier of fact. Reed v. Frey, 10 Ariz.App. 292, 294, 458 P.2d 386, 388 (App. 1969). In order for a decision to be final, it must be written and signed by a judge. Focal Point, Inc. v. Court of Appeals, 149 Ariz. 128, 129, 717 P.2d 432, 433 (Ariz. 1986). Furthermore, the Doctrine of Res Judicata applies to administrative agencies as well as the courts. Hawkins v. State, Dept. of Economic Security, 183 Ariz. 100, 103-104, 900 P.2d 1236, 1239-1240 (App. 1995). Finally, when a party to an Administrative Hearing “does not appeal a final administrative decision, that decision becomes final and res judicata.” Id.

3. The “clear weight of authority is that a dismissal without prejudice has no res judicata effect.” Oldenburger v. Del E. Webb Dev. Co., 159 Ariz. 129, 133, 765 P.2d 531, 535 (App. 1988). However, a “default judgment has the same res judicata effect as a judgment on the merits where the issues were litigated.” Technical Air Products Inc. v. Sheridan-Gray, Inc., 103 Ariz. 450, 452, 445 P.2d 426, 428 (Ariz. 1968). The ROC’s Order, dated May 20, 1996, is silent as to whether it is a dismissal with prejudice or without prejudice.

4. The undersigned Administrative Law Judge finds that the ROC’s Order, dated May 20, 1996 (which was never appealed by the Complainants) is a final decision for the purposes of the Doctrine of Res Judicata.

5. The Doctrine of Res Judicata binds both parties standing in the same capacity in subsequent litigation on every issue decided in a prior action. Norriega v. Machado, 179 Ariz. 348, 351, 878 P.2d 1386, 1389 (App. 1994). It is also binding to both parties on every issue that could have been decided. Id.

6. The undersigned Administrative Law Judge finds that the Complainants could have raised the issues (set forth in their third Complaint) at the May 7, 1996 Administrative Hearing before Administrative Law Judge Mark Silver. Therefore, the Doctrine of Res Judicata bars the Complainants from raising these issues at the Administrative Hearing scheduled for January 28, 1998.

7. Based upon the foregoing, the undersigned Administrative Law Judge finds that the Complainants’ third Complaint, dated July 8, 1997, should be dismissed.

RECOMMENDED DECISION

Based upon the foregoing, the undersigned Administrative Law Judge recommends that the entire Citation and Complaint in Case No. M98-0020 be dismissed. Done this day, February 11, 1998.

______________________________________ Casey J. Newcomb Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 1998 to:

Mr. Michael P. Goldwater, Director Registrar of Contractors 800 West Washington, 6th Floor Phoenix, AZ 85007

ATTN: Joyce Armijo

By ___________________________ -----------------------

Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826