ALJDEC

99F-412-ROC · Registrar of Contractors · 1999-08-19

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 19, 1999.

APPEARANCES: Plaintiff, John H.W. Cleland, appeared in his own behalf.

Defendant, Roxxon Construction, Inc., failed to appear.

Third party entities or individuals possibly or necessarily impacted by any decision in this matter appeared through Gary Wayne Libby, on behalf of La Purisima Construction, Inc. as its principal officer and owner, and on his own individual behalf.

ADMINISTRATIVE LAW JUDGE: Robert. I. Worth _____________________________________________________________________

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

FINDINGS OF FACT

1. Plaintiff qualifies under the definition of an "injured person" as defined in the statute and are entitled to receive payment from the Residential Contractor's Recovery Fund for proven damages sustained as a result of Defendant's acts or omissions.

2. The Class B contracting license of Roxxon Construction, Inc. (herein called "Roxxon") has been previously revoked by Order of the Registrar. Such revocation is determined to render this Defendant unable to remedy the violation of the State's contracting laws which gave rise to the instant claim for damages.

3. The Registrar has received advance notice of the existence and amount of the above-named Plaintiffs' claim for an administrative payout from the aforesaid Fund and has neither objected nor requested a hearing as to such claim, as subsequently amended.

4. Notice of the proposed administrative payout from the Fund to Plaintiff in the total amended amount of $7,133.00 has been properly served upon Defendant according to the case file. Defendant neither requested a hearing as to Plaintiffs' entitlement to the total Fund payout originally requested and subsequently amended nor otherwise appeared at or participated in the scheduled hearing.

5. Defendant, Roxxon, was shown to be a corporate entity owned and controlled by Barbara Libby who also served as its qualifying party. Her former husband, Gary Wayne Libby had been listed on Defendant's license as an officer. Mr. Libby presently is an officer, major stockholder and the qualifying party for La Purisima Construction, Inc. (herein called 'La Purisima"), another corporate entity holding a Class B residential general contractor's license.

6. Since Gary Libby was a person listed on the license of Roxxon until his formal disassociation on September 1, 1997, potential responsibility exists with respect to a duty of replenishing the Recovery Fund for payouts of awards for damages caused by or attributable to Defendant at a time period when Gary Wayne Libby's name was still on the license. More specifically, the provisions of A.R.S. §32-1139(B) mandate that

any person who, at the time of the act or omission leading to a Fund payout, was named on a license that is suspended because of a Fund payout is not eligible to retain another existing license until the amount paid from the Fund is replenished. This potential exposure of Mr. Libby and/or his corporate entity, facing the possibility of an automatic suspension by operation of law, serves to provide a sufficient future interest and proper standing on the part of Mr. Libby to appear at and participate in the instant administrative hearing.

7. At the outset of the scheduled hearing Mr. Libby stated that he did not object to any portion of the amount claimed by Plaintiff nor to Plaintiff’s entitlement to receive such amount from the Fund. The sole purpose of his request for the hearing and for his appearance was to seek a declaration that neither he nor his company was responsible for the damages sustained by Plaintiff or for replenishment of the Fund in the event of any future award paid in this matter.

8. Plaintiffs evidence demonstrated that his original contract with Roxxon was entered into on June 8, 1996, and an addendum was concluded on January 3, 1997. The total contractual price for the contemplated construction, including extra cost items, was $275,919.58, all of which was ultimately paid by Plaintiff by periodic remittances. A final balance of $7,628.53 had been paid by Plaintiff, with the express concurrence of Roxxon's principal officer, directly to a named supplier or subcontractor who had filed a lien on the property in a higher amount. The actual filing of this lien and its ultimate satisfaction was subsequent to the date of Mr. Libby's disassociation from Defendant.

9. The elements of the Plaintiff’s $7,133.00 total Recovery Fund claim consisted, respectively, of the following component elements:

(a) the sum of $2,562.72, representing the additional monies payable to satisfy the lien holder’s unpaid balance, never paid by Roxxon;[1]

(b) the sum of $916.00 for completion of certain electrical work;

(d) the sum of $95.00 to complete an omitted file drawer in the kitchen cabinetry; and

(e) the sum of not less than $2,266.80 for replacement of an excessively scratched picture window and for buffing out smaller scratches on other windows.

10. Notice is taken of the Registrar's prior case records, especially of a proceeding by the Registrar on his own motion against the license of La Purisima. Not only was the date of formal severance of Mr. Libby's position established as September 1, 1997, but also it was held that no financial responsibility should exist with respect to Roxxon's failure to pay or satisfy monetary obligations to subcontractors and/or suppliers. Although the underlying disciplinary complaint in the Cleland matter did not appear to be part of the prior decision, the facts, circumstances and timing of the failure of Roxxon to pay its supplier or subcontractor who filed a lien on the Cleland project is determined not to warrant any different result or treatment. Consequently, neither Gary

Wayne Libby nor his corporate entity, La Purisima, is held to be responsible for any portion of the plaintiffs damages traceable to Roxxon's monetary obligation that was satisfied by Plaintiff, as set forth in Finding of Fact No. 9 (a).

11. Mr. Libby was shown to have been effectively precluded since May, 1997, by virtue of a Court Restraining Order in his divorce action, from remaining on site for further work-in-progress on Plaintiffs residence. Consequently, some of the other elements of the instant claim from the Fund should not properly be chargeable against Mr. Libby as a former officer of Roxxon, and consideration must be given to his legally imposed inability to exercise control over the actions of Roxxon even before the date of his formal disassociation.

12. The inclusion of the kitchen cabinetry file drawer was the result of a verbal specification agreed to by Mr. Libby's former wife. The omission of this feature, together with the incomplete electrical work, fireplace and column work are found and determined to constitute incompletely constructed items or construction omissions attributable solely to Roxxon and its principal owner, officer and qualifying party, Barbara Libby. No portion of the damages relating to these component elements of the within Fund claim by Plaintiff, set forth and described in Finding of Fact Nos. 9 (b), (c) and (d) should be chargeable against Mr. Libby or La Purisima.

13. Upon consideration of the applicable dates and also of the surrounding circumstances relating to the individual items comprising the Fund claim hereunder, it is found that the sole component element or item of the Fund claim asserted by Plaintiff for which Gary Wayne Libby and/or La Purisima has or shares responsibility relates to the costs of repair or replacement of the scratched windows in the amount of $2,266.80, as set forth in Finding of Fact No. 9 (e).

14. Plaintiffs' uncontroverted evidence indicated, and it is determined from the entire case file, that the sum of $7,133.00 represents a proper and reasonable monetary amount to remedy the aforesaid violations by Defendant, Roxxon.

CONCLUSIONS OF LAW

1. Under the facts and circumstances of this case, the Registrar of Contractors is empowered to determine and award proper payment to Plaintiff from the Residential Contractor's Recovery Fund pursuant to A.R.S. § 32- 1154 (E).

2. The undisputed testimony and the within record adequately supports an award to Plaintiffs of $7,133.00, all of which shall be appropriately chargeable against Defendant, Roxxon, and/or persons on the license as set forth in A.R.S. § 32-1139 (B); provided however, that the monetary amount properly chargeable against Gary Wayne Libby, one of Roxxon's former officers, or against any entity listing Mr. Libby on its license, was not shown by the evidence to have been greater or less than $2,266.80.

3. If the within recommendations are approved by the Registrar, any payment by the Fund to Plaintiff need not and should not await the outcome of an appeal or petition for rehearing, if any, filed by Mr. Libby with respect to any determination of his partial responsibility as to a portion of the total Fund award attributable to one of the component elements of Plaintiff’s claim. Mr. Libby has expressly not interposed any objections to the amount claimed or to Plaintiff’s entitlement, but only asserts an absence of his personal or corporate responsibility for any part of such Fund award payment., The Registrar's implementation of a suspension by operation of law against the license presently held by Mr. Libby under the name of La Purisima does not necessarily have to commence immediately upon the occurrence of a payout but instead may properly await the outcome of action on any petition or judicial review action. The Plaintiff has waited long enough for receipt of monies from the Fund to compensate for damages caused by his dealings with a licensed contractor, and further delays should not be perpetuated pending a final decision as to all other persons or entities ultimately responsible, in whole or in part, for replenishment to the Fund.

RECOMMENDED ORDER

In view of the foregoing, it is recommended on the effective date of this Order (thirty-five [35] days after the date of mailing by the Registrar) that the Registrar shall commence and finalize payment procedures from the Residential Contractor’s Recovery Fund to Plaintiff in the amount of $7,133.00 for damages.

It is further recommended, on and after the date of payment of the aforesaid monetary sum to Plaintiff, that the Registrar stay any license suspension, automatic or otherwise, against the Class B license presently held by La Purisima until 30 days after the date of payment from the Fund in this matter and that the Registrar’s records reflect the imposition of a suspension only in the event that La Purisima or Gary Wayne Libby has not partially replenished or has not concluded mutually acceptable arrangements for the partial replenishment to the Fund in the amount of $2,266.80 representing a portion of the Fund’s award to this Plaintiff

It is further recommended that a copy of the Order entered in this matter be sent to Gary Wayne Libby and to La Purisima.

Dated: August 27, 1999. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert. I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

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

ATTN: Joyce Armijo ----------------------- [1] The total lien amount, as filed by Tile Interiors 'N More against Roxxon’s project, based upon previously past due and unpaid billings, was $10,191.25. Plaintiff transmitted his last payment under his construction contract with Roxxon in the sum of $7,628.53 directly to the lien holder (See Finding of Fact Number 8, above), thereby leaving an unpaid balance of $2,562.72 which was also ultimately paid by Plaintiff in order to obtain a satisfaction and release of the filed lien.

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