ALJDEC

99F-C989101-BFS · Department of Building and Fire Safety · 1999-01-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 7, 1999 APPEARANCES: Complainant appeared on his own behalf; Respondent appeared through its owner and qualifying party, Francis Clayton Cox. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

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.

STATEMENT OF FACTS

The Assistant Director of the Office of Administration of the Department of Building and Fire Safety (“the Assistant Director”) has issued License No. 7007, Class D-12, to Respondent Clayco Homes, a combination dealer. On January 6, 1998, Complainant signed a listing agreement giving Martin Nunez of Desert View Mobile Home Sales (“Desert View”) the exclusive right to sell his manufactured home, which was located at a park operated by M&M Mobile Villa in Mesa, Arizona. The agreement provided a selling price of $18,500, which included a $2,500 commission to Desert View and $16,000 net payment to Complainant from which the lien on the residence could be satisfied. On January 24, 1998, M&M Mobile Villa hand-delivered to Complainant’s daughter a “Notice Prior to Transfer of Ownership.” The only repairs or maintenance activities that the notice required Complainant to undertake were (1) repair the torn screen on the porch room; (2) repair a bent awning post on the stanchions; (3) take down lattice by the car port; (4) pull weeds in the lot; and (5) remove the oil stain on the concrete. Sometime thereafter, M&M Mobile Villa upgraded the park and adopted more comprehensive criteria for the exteriors of residences in the park. On April 24, 1998, M&M Mobile Villa delivered to Complainant a form entitled “Criteria which Must Be Met in Order for Dwelling Unit to Be Sold and Remain on Site.” Additional maintenance and repairs to the manufactured residence that M&M Mobile Villa required to approve a prospective tenant were typed on the form as follows: (1) paint edge of roof; (2) repair dents, holes, rusty screws in the siding and bent and torn trim near the south end of porch enclosure; (3) repaint the trim after it was repaired; (4) repair metal and wood under the room addition; (5) repair the exterior door; (6) add landscaping rock to 4” over black plastic; (7) repair the dents and repaint the storage shed; and (8) paint the bare wood under the air conditioner. The form did not require Complainant to perform the repairs and maintenance to sell the manufactured residence while it was located at the park; instead, the form required that, for a new owner to obtain tenancy in the park, the residence must comply with the criteria. Around the time that M&M Mobile Villa adopted the more comprehensive criteria, Complainant received an offer to purchase the manufactured residence. Because the repairs were not yet complete, Complainant lowered his net asking price to $14,500 to provide the prospective purchaser with an allowance to complete the repairs. After the proposed sale fell through for reasons unrelated to the condition of the residence, Complainant reinstated his original net asking price of $16,000. By summer of 1998, Complainant had completed 90% of the repairs and maintenance that M&M Mobile Villa required for a purchaser to obtain tenancy. In mid-June 1998, Respondent informed Complainant through Desert View that Respondent represented a prospective purchaser, but that Complainant would have to reduce his net price on the manufactured residence for the purchaser to obtain financing. Complainant agreed to the reduction and, on June 16, 1998, signed an addendum to his listing agreement with Desert View in which he agreed to accept a net price of $14,500. As before, Complainant reduced his price to give the purchaser an allowance to complete the required repairs and maintenance, but did not consent to any further reduction in the amount he would receive if the residence were sold. Respondent consulted M&M Mobile Villa’s manager regarding the repairs and maintenance it would require to approve the sale. To meet M&M Mobile Villa’s requirements, Respondent arranged for its workmen to paint and make other improvements to the manufactured residence. When Complainant asked him about the repair work being performed on the residence, Mr. Nunez, Complainant’s broker at Desert View, said that Respondent had ordered the improvements to be made to facilitate the sale and that individual salesmen would pay for the improvements from their commissions. Mr. Nunez left Desert View’s employment before the sale was consummated. At some point, Respondent agreed to reimburse Complainant for July rent at M&M Mobile Villa and one-half the 1998 personal property tax on the manufactured residence. On July 21, 1998, Complainant received Respondent’s check for $4,534.95. The settlement statement that accompanied the check showed a listing price of $14,500, additions of $304.95 for July rent and $50.00 for one-half the 1998 personal property tax, and deductions of $9,578.13 for the lien payoff and $741.87 for “park upgrades expenses.” The contract of sale shows that the buyer paid $20,828 for the manufactured home, which included a base price of $19,500 plus $1,000 for a new carpet and $350 for a home warranty. Respondent’s owner and qualifying party, Francis Clayton Cox, testified at the hearing that he was not involved in the transaction at issue and that all of his sales employees are independent contractors. Sharon Austin, who handles Respondent’s sales, testified that the improvements were necessary to obtain M&M Mobile Villa’s approval and to consummate the transaction. Ms. Austin testified further that, although she had not seen Complainant’s listing agreement with Desert View before the sale closed, at a meeting among herself, Mr. Cox, Desert View’s owner, Richard A. Squadere, Sr., and Complainant held subsequent to the Assistant Director’s issuance of the Citation and Complaint in this matter, Mr. Squadere produced a copy of the listing agreement that required Complainant to pay for any upgrades that M&M Mobile Villa required. Neither the original nor any copies of the listing agreement produced at the hearing included this term, however.

CONCLUSIONS OF LAW

In this administrative proceeding, Complainant bears the burden of proof and must establish a statutory violation by a preponderance of the evidence. See 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). Respondent’s Class D-12 license allowed it to act as the purchaser’s broker in the sale of Complainant’s manufactured residence. See A.A.C. R4-34-502. Ms. Austin or any other salesperson could not have been involved lawfully in this transaction unless they were acting under the authority of Respondent’s license. See A.R.S. § 41-2194(4). A licensee which authorizes its agents to engage on its behalf in transactions for which a license is required is responsible for its agents’ conduct of those transactions, whether the licensee actually supervises the agents or not. Cf. Gibralter Escrow Co. v. Thomas J. Grosso Investment, Inc., 4 Ariz. App. 490, 495, 421 P.2d 923 (1966) (quoting Restatement (Second) of Agency § 271). The listing agreement between Complainant and Desert View showed that Complainant authorized sale of the manufactured residence if he received net sale proceeds of $14,500, which would be used to satisfy the lien. The listing agreement corroborates Complainant’s testimony that he only authorized a reduction to $14,500 and did not authorize further deductions from his portion of the sale proceeds to pay for improvements or repairs to the residence as required by the purchaser, M&M Mobile Villa, Respondent, or anyone else. Although the Arizona Rules of Evidence do not strictly apply in administrative hearings, administrative agencies’ decisions should be supported by evidence that is “substantial, reliable, and probative.” See A.R.S. § 41-1062(A)(1). Mr. Squadere and Complainant authenticated the listing agreement admitted into evidence and testified that it accurately set forth the terms of their contract. Ms. Austin was not a party to that contract and has an interest in this proceeding. Moreover, her account of the terms of listing agreement she allegedly saw is hearsay. Ms. Austin’s possibly self-serving testimony of her recollection of a document she may have seen for a few seconds cannot overcome Complainant’s and Mr. Squadere’s direct sworn testimony concerning their agreement, which the actual listing agreement corroborated. See, e.g., Gomez v. Industrial Comm’n, 72 Ariz. 265, 267-68, 233 P.2d 827 (1951) (Where circumstances of hearsay testimony undermine its reliability, it should not be admitted in administrative hearing); Simpkins v. State Banking Dept., 45 Ariz. 186, 190- 91, 42 P.2d 47 (1935) (Hearsay evidence from source that is not subject to cross-examination cannot create a conflict in the evidence, and agency award based on such evidence cannot be sustained). The record in this matter shows that Respondent violated A.R.S. § 41- 2186(19) by deducting unauthorized expenses from Complainant’s share of the sales proceeds and by failing to deliver to Complainant the amount of the sales proceeds he required to authorize the sale.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the Assistant Director suspend Respondent’s License No. 7007, Class D-12 license, effective February 12, 1999, unless prior thereto the Assistant Director receives written proof that Respondent has paid Complainant $741.87. If such written proof is timely received, it is recommended that no license suspension be imposed and that the entire citation and complaint against Respondent in Case No. 98-9/101 be closed. It is further recommended that, whether or not the Assistant Director suspends Respondent’s license, the probation imposed on November 17, 1998, be extended an additional six months and cease on November 17, 1999.

Done this day, January 8, 1999.

_________________________________ Diane Mihalsky Administrative Law Judge

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

Mr. N. Eric Borg, Director, Director Department of Building & Fire Safety E. Virginia, Suite 100 Phoenix, AZ 85004 ATTN: Michelle M. Castañeda

By _______________________________

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