ALJDEC

99F-234-ROC · Registrar of Contractors · 1999-04-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 7, 1999 at 1:30 p.m. APPEARANCES: Plaintiff appeared on her own behalf; Defendant appeared on his own behalf; the Registrar of Contractors appeared through Inspector Dick North. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The sole issue in this administrative proceeding is the amount Plaintiff should recover from the Registrar of Contractors’ Residential Contractors’ Recovery Fund under A.R.S. § 32-32-1151 et seq. The parties 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. 123677, Class C-21, to Defendant, an individual, on May 30, 1997. Plaintiff and her husband’s residence in Payson has a circular driveway. The parties agree that the horse-shoe shaped area inside the driveway is approximately 40' x 25', or 1,000 square feet. Before Defendant contracted to landscape this area, it had been terraced and partially planted in flowers and partially left in the scrub vegetation indigenous to the area. The area had never been cleaned out. One drip irrigation line had been laid. On or about January 21, 1998, Defendant contracted with Plaintiff and her husband to transform the horseshoe-shaped area into a “dry wash” at a cost of $2,395, $1,395 down. The only writing to memorialize the parties’ agreement was a rough sketch Defendant drew, which Plaintiff signed. Shortly thereafter, Defendant and his employee arrived at the jobsite and work proceeded for two and a half days. Plaintiff alleges that Defendant was at the jobsite only about three hours; Defendant alleges that, although he left his employee at the site unsupervised some of the time because he had other things to do, he was present at the jobsite most of the time. Defendant and/or his employee cleared the area, cut the terraces, raked, and moved rocks to form a border along the driveway. According to Plaintiff, they left a small pile of vegetation. According to Defendant, he and his employee hauled a truckload of debris from the jobsite. Defendant and/or his employee also installed all the fittings on the drip irrigation line, moved a faucet and laid about 200' of water line in a trench. Plaintiff testified that the water line was not for irrigation, but to provide water to an RV pad on the property. Although the Uniform Plumbing Code requires potable water lines to be at least 12" underground, according to Plaintiff, the water line that Defendant laid was only 3" underground in some places.[1] After Plaintiff and Defendant got into an argument about the water line and the job in general, Plaintiff ordered Defendant off the jobsite. Defendant removed the pipe from the trench, loaded it into his truck, and left. Plaintiff and her husband, with the help of various unlicensed laborers working at $8 to $10 dollars per hour, subsequently completed the landscaping work themselves. The landscaping project became more extensive than Defendant’s contract contemplated. In completing it, Plaintiff and her husband incurred the following costs: $453 in checks plus an undisclosed amount of cash for labor, $510 to backhoe owner/operator Dennis Stutzman, $137.41 for electrical and plumbing parts, $75.10 for various equipment rental, $22.39 for 7.83 tons of fill dirt, and $581.17 for plants, potting soil, fertilizer, and insecticide.[2] On March 16, 1998, Plaintiff made a complaint to the Registrar, which was designated Case No. M98-1280, alleging that “[w]e received almost nothing for our money . . . except moving a faucet down and over a foot and some raking and cleaning of the area to be landscaped, which a pile in the middle of the driveway was left for me to clean up.” Case No. M98-1280 was assigned to the Registrar’s inspector Van Bagley to investigate. On June 12, 1998, the Registrar issued the Citation and Complaint in Case No. M98-1280 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. M98-1280 and, on July 8, 1998, the Registrar issued its Decision and Order suspending Defendant’s license on its effective date, August 12, 1998, unless prior thereto Defendant paid Plaintiff $1,395. Because Defendant did move to set aside the Registrar’s decision and order in Case No. M98-1280, on August 13, 1998, the Registrar suspended his license. According to Defendant, he has been doing maintenance and work that does not require a license since then. On or about October 15, 1998, Plaintiff made a claim for $1,395 to the Residential Contractors’ Recovery Fund. After Plaintiff submitted the documentation described above at Finding of Fact No. 8, the Registrar’s inspector Dick North recommended that the Residential Contractors’ Recovery Fund pay the full amount of Plaintiff’s claim. The Registrar Issued a Notice to Contractor of Claim for Administrative Payout, which notified Defendant that Plaintiff had submitted a claim for a $1,395 and that an award may have been made without a hearing unless Defendant requested a hearing in writing. Defendant timely requested a hearing. At the duly noticed hearing in this matter, the Registrar’s Case No. 99/234, Defendant testified that he furnished information in response to the Citation and Complaint in Case No. M98-1280 to Inspector Bagley and thought that the issue at the hearing would be whether he should be required to return any portion of the retainer to Complainant, since the Registrar had not determined whether Plaintiff was justified in ordering him off the job. The administrative law judge explained to the parties the law set forth below at Conclusion of Law No. 2, below, and informed them that the only issue referred for her recommendation was the amount of Plaintiff’s damages. Defendant testified that, in his opinion, he should only have to return $400 of the $1,395 retainer to Plaintiff.[3] Plaintiff entered into evidence three photographs of Defendant’s work. Contrary to Plaintiff’s complaint allegation that no significant work had been performed, these photographs show a 20- or 30-square foot area, smoothly raked, with medium sized rocks stacked three or four deep around the perimeter and a 3" or 4" deep cut in the photographed area. The parties agreed that the entire 1,000 square foot area had been similarly prepared. Plaintiff testified that she thought Defendant paid his employee only $6 per hour, that she picked up 40 cigarette butts from the area where he had been working, and that she could have completed all of Defendant’s work that was later incorporated in her completion of the project in 3 hours.[4] The faucet leaked after Defendant moved it, which overwatered a medium sized pine tree and caused it to die. CONCLUSIONS OF LAW In this administrative proceeding, Plaintiff bears the burden of proof and must establish the amount of her 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 M98-1280, which charged Defendant with a violation of A.R.S. § 32-1154(A)(7)[5] and (3)[6] resulted in a determination that Defendant had violated these statutes, which determination required the Registrar to assess a penalty against his license. 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). [7] “An award from the fund is limited to the actual damages suffered by the claimant as a direct result of the residential contractor’s violation but shall not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines . . . .” A.R.S. § 32-1132(A) (emphasis added). Plaintiff is entitled to recover from the Residential Contractors’ Recovery Fund no more than the amount of the actual damages she suffered as a direct result of Defendant’s statutory violations. She is not entitled to recover the value of any work Defendant and his employee performed that was incorporated into Plaintiff’s expanded landscaping project. As to the pine tree, Defendant never had an opportunity to inspect his work and remedy any problems after Plaintiff ordered him from the jobsite. Plaintiff, unlike Defendant, was in a position to monitor the jobsite and to see that the ground around the pine tree was getting soaked. By ordering Defendant from the jobsite and choosing not to hire a licensed contractor to complete the job, Plaintiff assumed responsibility not only for completion of the project but for any remedial work for which Defendant otherwise would have been responsible. Defendant’s actual labor costs more likely than not were higher than what Plaintiff paid the unlicensed laborers who ultimately completed the project because, as a licensed contractor, Defendant was required to pay federal FICA, state workers’ compensation, and other employer taxes imposed by various governmental bodies, unlike Plaintiff. See A.R.S. § 32-1154(A)(4) and (12). The evidence shows that Plaintiff received the value of at least $395 in labor costs in exchange for the $1,395 retainer she gave Defendant. She therefore should be awarded $1,000 from the Residential Contractors’ Recovery Fund. Defendant’s contracting license should remain suspended until he repays this amount. See A.R.S. § 32-1139(B). RECOMMENDED ORDER In view of the foregoing, it is recommended that the Registrar of Contractors order the Residential Contractors’ Recovery Fund to pay $1,000 to Plaintiff. Done this day, April 13, 1999.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

ATTN: Joyce Armijo

By ___________________________

----------------------- [1] Laying a water line would have been beyond the scope of Defendant’s C- license. Defendant apparently thought that Plaintiff meant for him to lay an irrigation line.

[2] Plaintiff submitted approximately 26 receipts from WalMart, Ace Hardware, Catalina Heights Nursery, and Mesquite Valley Growers. Most but not all of the receipts showed itemized totals and Plaintiff had adjusted some to remove personal items.

[3] The testimony established that one or two workman spent 2-½ days at the jobsite, or a combined total of between 23 hours (Plaintiff’s version) and hours (Defendant’s version), assuming 8-hour days, mostly raking, weeding and manually moving rocks and dirt, and that Defendant did not leave any construction materials. Defendant’s proposal would result in an hourly wage of between $43.26 (Plaintiff’s version) and $24.88 (Defendant’s version).

[4] If Plaintiff is correct that Defendant and his employee actually and competently worked only 3 hours of the two and one-half days spent on the project, calculations similar to those performed above at footnote no. 3 above would require a payment of $1,377 to Plaintiff.

[5] 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.”

[6] 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.”

[7] Defendant can only seek relief from the default order in M98-1280 by asking the Registrar for a rehearing, which request the Registrar may deny as untimely. See Arizona Administrative Code (“A.A.C.”) R4-9-120 (allowing aggrieved parties only 20 days after the Registrar has mailed his decision to file a motion for rehearing).

-----------------------

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