ALJDEC

99F-022-ROC · Registrar of Contractors · 1999-04-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 21, 1999 at 1:30 p.m. APPEARANCES: Plaintiffs appeared on their own behalf; Defendant did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The sole issue in this administrative proceeding is the amount Plaintiffs should recover from the Registrar of Contractors’ Residential Contractors’ Recovery Fund under A.R.S. § 32-32-1151 et seq. Plaintiffs presented evidence and testimony and, based upon the entire record, the undersigned makes the following Findings of Fact, Conclusions of Law and Recommended Order. FINDINGS OF FACT The Registrar of Contractors issued License No. 097390, Class B, to Defendant, a corporation, on May 12, 1993. On or about July 5, 1996, Defendant contracted with Plaintiffs to construct their residence in Sedona at a cost to Plaintiffs of $222,000. After the residence was substantially constructed and Plaintiffs had paid Defendant the full contract price, on October 24, 1997, Plaintiffs made a complaint to the Registrar alleging that Defendant had failed to complete certain items of construction and that its workmanship on other items was deficient. The Registrar designated this complaint Case No. F98-0122. The Registrar’s inspector Mark Schweiger performed a jobsite inspection and, on behalf of the Registrar, directed Defendant to correct numerous items. Defendant did not comply with the Registrar’s directive and, on April 24, 1998, the Registrar issued the Citation and Complaint in Case No. F98-0122 to Defendant, the second paragraph of which provided that “YOU ARE DIRECTED TO FILE YOUR WRITTEN ANSWER . . . NO LATER THAN TEN (10) DAYS after the date this Citation was mailed, as shown below.” (Emphasis in original.) The Registrar did not receive any answer to the Citation and Complaint in Case No. F98-0122 and, on May 19, 1998, the Registrar issued its Decision and Order revoking Defendant’s license on its effective date, unless prior thereto Defendant performed the corrective work and paid a civil penalty of $150.00. Because Defendant did not perform the corrective work, pay the civil penalty, or move to set aside the Registrar’s decision and order in Case No. F98-0122, on June 26, 1998, the Registrar revoked its license. On or about July 9, 1998, Plaintiffs made a claim to the Residential Contractors’ Recovery Fund (“Recovery Fund”), alleging that, in addition to failing to perform the corrective work at issue in Case No. F98-0122, Defendant had failed to pay approximately $62,000 owed to subcontractors for work on the residence. The Manager of the Residential Contractors’ Recovery Fund subsequently made a good faith offer to Plaintiffs of $5,256.04, the total of the lowest of three estimates to perform the repairs, $2,295, and a $2,961.04 payment that Plaintiffs had made to Foxworth-Galbraith Lumber Co. for materials it supplied to Defendant for construction of the residence. On January 8, 1999, the Registrar Issued a Notice to Contractor of Claim for Administrative Payout, which notified Defendant that Plaintiffs had submitted a claim to the Recovery Fund payable in the amount of $5,256.04 and that an award may have been made without a hearing unless Defendant requested a hearing in writing. Defendant timely requested a hearing. On April 14, 1999, the amount of the claim was amended to include a $16,156.50 lien that Wabeke Enterprises, LLC, dba Tile Interiors N’Abbey Carpets and dba Tile Interiors N’More had foreclosed since Plaintiffs made their claim to the Recovery Fund. In support of their motion to amend, Plaintiffs submitted the Coconino County Superior Court’s judgment against Plaintiffs and Defendant in Case Nos. CV 98-0049 and CV 98-0179 (Consolidated) foreclosing Wabeke Enterprises’ mechanic’s lien in the amount of $16,156.50. Although the beginning of the hearing was delayed fifteen minutes to allow Defendant’s qualifying party or duly authorized representative additional travel time, she neither appeared, contacted the Office of Administrative Hearings to request a continuance, nor presented any evidence at the hearing to contest Plaintiffs’ entitlement to a payout in the amount requested from the Recovery Fund. CONCLUSIONS OF LAW In this administrative proceeding, Plaintiffs bear the burden of proof and must establish the amount of their damages by a preponderance of the evidence. See A.A.C. R2-19-119; see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App. 1996). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). A preponderance of the evidence is “evidence which is of greater weight or more convincing than evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary at page 1064 (6th ed. 1990). Defendant’s default in F98-0122, which charged Defendant with a violation of A.R.S. § 32-1154(A)(7),[1] (23)[2] and (3)[3] resulted in a determination that Defendant had violated these statutes, which determination required the Registrar to revoke its license. If Defendant failed to pay the subcontractors and suppliers who furnished materials and labor to construction of the residence, it would be in violation of A.R.S. § 32-1154(A)(11), since Plaintiffs have paid Defendant the full contract price.[4] The judgment that Wabeke Enterprises obtained against Defendant and Plaintiffs in the amount of $16,156.50 establishes that Defendant failed to pay this amount. In Arizona, “‘[p]ublic policy dictates that there be an end to litigation; that those who have contested the issue shall be bound by the result of the contest; and that matters once tried shall be considered forever settled as between the parties.’” Lofts v. Superior Court, 140 Ariz. 407, 410, 682 P.2d 412, 415 (1984) (quoting Baldwin v. Iowa State Traveling Men’s Ass’n., 283 U.S. 522, 525, 51 S. Ct. 517, 518, 75 L. Ed. 1244 (1931)). “That the judgment was rendered by default does not affect its validity, for such a judgment admits as true all the material allegations properly set forth in the complaint and is just as binding and conclusive as to them as though it had been rendered after answer and contest.” Collister v. Inter-State Fidelity Building and Loan Ass’n, 44 Ariz. 427, 435, 38 P.2d 626 (1934) (citations omitted). This law conclusively establishes that Defendant violated A.R.S. § 32-1154(A)(3), (7), (11), and (23) in its construction of Plaintiffs’ residence and that its failure to pay Wabeke Enterprises for labor and materials on the project damaged Plaintiffs in the amount of $16,156.50. The evidence submitted at the hearing establishes that Defendant’s violations of A.R.S. § 32-1154(A)(3), (7), and (23) damaged Plaintiffs in the amount of $2,295.00. The evidence also establishes that Defendant violated A.R.S. § 32- 1154(A)(11) by failing to pay Foxworth-Galbraith Lumber for materials used in construction of the residence, and that its failure damaged Plaintiffs at least in the amount of $2,961.04. The Registrar may make an award from the Recovery Fund in “any amount of not more than twenty thousand dollars for damages sustained by the act, representation, transaction of conduct” of a residential contractor that violates statutes governing contractors or the rules the Registrar has adopted pursuant to those statutes. See A.R.S. § 32-1132(A). Since Plantiffs have established that Defendant’s various statutory violations of their residence damaged them at least in the amount of $21,712.54, they are entitled to the maximum amount allowed from the Recovery Fund. RECOMMENDED ORDER In view of the foregoing, it is recommended that the Registrar of Contractors order the Residential Contractors’ Recovery Fund to pay $20,000.00 to Plaintiffs. Done this day, April 22, 1999.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of April, 1999, to:

Registrar of Contractors Mr. Michael P. Goldwater ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

[2] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving written directive from the registrar.”

[3] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar.” The rule violated here was A.A.C. R4-9-108, which requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”

[4] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.”

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826