ALJDEC

99F-197-ROC · Registrar of Contractors · 1999-04-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 9, 1999 APPEARANCES: Plaintiff appeared on her own behalf. Defendant, David Johnstone Carpet (hereinafter referred to as “Johnstone”), failed to appear and Defendant, Precision Ceramic Tile and Carpet (hereinafter referred to as “Precision”, also failed to appear. The Contractors’ Recovery Fund was represented by Assistant Attorney General, Patti Shelton. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Order are made:

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FINDINGS OF FACT

1. The above-captioned matters were consolidated for the purpose of hearing since both involved similar issues of fact and entailed the use of the same witnesses. Precision was the original contractor that sold and installed new carpet for Plaintiff’s home. Johnstone was the contractor that purchased Precision’s business establishment at a time subsequent to Precision completing the installation of Plaintiff’s new carpet. 2. Precision and Johnstone’s contracting licenses have been previously revoked by final Order of the Registrar of Contractors. The revocations are determined to render these Defendants unable to remedy the alleged violations of the State's contracting laws, which gave rise to the instant claim for damages. 3. The Registrar of Contractors has received advance notification of the existence and amount of the above named Plaintiff’s claim for an administrative payout from the Contractors' Recovery Fund. 4. This hearing was convened following Plaintiff’s express request therefor, subsequent to refusal of the Contractors’ Recovery Fund to pay on the claim filed by Plaintiff. 5. Plaintiff seeks to recover the sum of $3,049.87.00 from the Contractors’ Recovery Fund. 6. The following undisputed salient facts were established at the instant hearing and are important to note: a. On or about May 1995, Plaintiff purchased new carpet for her home from Precision and same was installed by Precision at that time. The cost for the material and installation was shown to be $2,633.65 (192.66 yards of carpet at a cost of $11.17 per yard plus the labor costs to install). b. The carpet in question was sold with a twenty (20) year stain resistance warranty. Nevertheless, within a year of owning the carpet, stains that occurred from normal wear and tear were not coming out of the carpet after normal cleaning procedures were applied. In addition, it was shown that within a year of owning the carpet same was evidencing pile reversal in specified areas. c. Due to the above-described problems that she experienced with her new carpet, Plaintiff decided to contact Precision in 1996 to see if anything could be done to remedy the problems that she was having with the use and enjoyment of her new carpet. It was at this point in time that Plaintiff discovered that Precision had sold its retail business establishment to Johnstone and apparently Precision was no longer in the carpet business. d. Notwithstanding the fact that Johnstone had absolutely nothing to do with the sale or installation of Plaintiff’s carpet, it agreed to file a claim on Plaintiff’s behalf with the manufacturer of the carpet. e. Sometime in the late summer of 1996, Johnstone filed the appropriate claim form with the manufacturer, seeking a credit for the claimed deficient carpet. In August 1996, the manufacturer issued a credit for $896.89, which for some unknown reason only reflected a credit for 90 yards of carpet instead of the required 192.66 yards which were originally installed in Plaintiff’s home. f. Upon realizing that the manufacturer failed to issue a credit for the full yardage of the carpet in Plaintiff’s home, in October 1996 Johnstone made another claim to the manufacturer to issue a credit for the total yardage required to replace the carpet installed in Plaintiff’s home. At this point in time, nothing was done with the above-described 90 yard credit. g. In December 1996, the manufacturer erroneously applied the original 90 yard credit ($896.89), that was to be for the benefit of Plaintiff, to a separate carpet purchase made by Johnstone on behalf of another customer. Thus, on this purchase of carpet material for another customer, Johnstone received the cost benefit of Plaintiff’s 90 yard credit. h. While continuing to wait for her full credit to come through, in March 1997 Plaintiff was advised that the manufacturer had filed for bankruptcy protection. Although Plaintiff has made a claim in the bankruptcy court for the amount of her credit, none has been issued as of the date of the instant hearing. i. Plaintiff was unaware of the Contractors’ Recovery Fund until 1998 when she finally elected to replace a portion of the deficient carpet. The contractor that performed the work in 1998 advised Plaintiff about the Contractors’ Recovery Fund and thus, in September 1998 she filed the instant claim against Johnstone. In December 1998, she filed the claim against Precision. j. At the time that Plaintiff filed the instant claims against the licenses of Precision and Johnstone, both of their respective contractor’s licenses had been revoked on other cases before the Registrar of Contractors. Thus, Plaintiff never filed any disciplinary complaints against either of the Defendants named herein. k. The Contractors’ Recovery Fund denied the claim filed against Johnstone, citing the fact that Plaintiff had contracted with Precision. l. The claim against Precision was denied by the Contractors’ Recovery Fund based on their determination that Plaintiff filed this claim beyond the 2 year statute of limitation. 6. After being apprised at the hearing of the applicable statute of limitation for filing claims from the Contractors’ Recovery Fund, Plaintiff averred that she did not believe she had a valid claim, at this time, against Precision. However, she contends that Johnstone’s act of receiving and benefiting from her 90 yard carpet credit in the latter part of 1996 constituted an act by a licensed contractor that caused her an injury. 7. Although Johnstone had nothing to do with the original carpet contract, by virtue of agreeing to seek a credit from the manufacturer, it became involved. After seeking the credit on Plaintiff’s behalf, Johnstone improperly became the beneficiary of Plaintiff’s 90 yard carpet credit and therefore, should have issued its own credit to Plaintiff for said amount of carpet. It is this action or failure to act that constitutes a wrongful act within the meaning of the applicable provision of the State’s Contracting laws and the conduct of Johnstone which exposes it to a payout from the Contractors’ Recovery Fund. Nevertheless, Johnstone is not found to have any other responsibility for the balance of Plaintiff’s claim. 8. Based on the foregoing findings, it is adjudicated and determined that Plaintiff should be awarded a payout from the Contractors’ Recovery Fund, against Johnstone only, in the total amount of $896.89. It is further determined that no award should be issued against the license of Precision.

CONCLUSIONS OF LAW

1. A.R.S. § 32-1132A provides, in pertinent part, “…any person injured by an act, representation, transaction or conduct of a residential contractor, which is in violation of this chapter…may be awarded…an amount of not more than twenty thousand dollars for damages sustained by the act, representation, transaction or conduct.” Johnstone’s receipt of the 90 yard carpet credit for another customer’s carpet and its failure to reissue the credit to Plaintiff is deemed to be the type of conduct, act, or transaction contemplated by this section of the State’s Contracting laws. 2. Plaintiff is an injured person as that term is defined in A.R.S. § 32-1131 (3). 3. Under the facts and circumstances of this case, the Registrar of Contractors is empowered to determine and award proper payment to Plaintiff from the Contractors' Recovery Fund pursuant to A.R.S. § 32-1154(E). 4. The within record supports an award to Plaintiff, and against Johnstone only, in the amount of $896.89, all of which shall be appropriately chargeable against Johnstone and/or persons on the license as set forth in A.R.S. § 32-1139(B). 5. A.R.S. § 32-1136 is entitled: “Statute of limitations; recovery from fund.” This provision of the State’s Contracting laws is deemed to set forth a two (2) year statute of limitation, requiring that any claim against the Contractors’ Recovery Fund must be filed no later than “two (2) years from the date of the commission of the act by the contractor that is the cause of the injury.” Since Precision performed its work on the contract in 1995 and the instant claim was not filed against its license until 1998, it is clear that the statute of limitation would bar any claim against Precision. Therefore, the claim for a payout against the license of Precision must be dismissed. . . . . . . . . . RECOMMENDED ORDER

In view of the foregoing, it is recommended that case no. 99/311 shall be dismissed. In view of the foregoing, it is recommended in regard to case no. 99/197 (claim against Johnstone), that on the effective date of the Order entered in this matter the Registrar of Contractors shall commence and finalize payment procedures from the Contractors' Recovery Fund to Plaintiff in the amount of $896.89.

Done this day: April 16, 1999.

______________________________________ MARK A. SILVER Administrative Law Judge

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

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

By _______________________________

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