ALJDEC

99F-C989132-BFS · Department of Building and Fire Safety · 1999-02-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 8, 1999 APPEARANCES: Andrea Scott, Complainant, in her own behalf Earlena and Robert Lawrence, Officers, on behalf of the Golden East Home Sales, Inc. ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________

Findings Of Fact On April 27, 1998, the Complainant signed a Purchase Contract and Deposit Receipt (Contract) for the purchase of a manufactured home which was listed for sale by the Respondent. The price of the home was $42,000.00. The Contract was signed by Kem Mathauser (Mathauser), a salesman for the Respondent . The Complainant paid a $500.00 deposit to the Respondent. The home was owned by a Joseph Howard (Howard) and Bank of America (Bank) held a purchase money security interest in the home in the amount of approximately $33,281.00. The Contract as executed by the parties specified that it was subject to the above security interest (mortgage). On May 12th and May 21st , 1998, the Complainant paid the Respondent additional amounts of $2,000.00 and $1,000.00 for the down payment on the home. . . . . . . On May 23, 1998, Howard signed the home over to the Respondent and apparently left the state. At that time, Howard was in arrears $780.87 (including insurance) to the Bank. On May 28, 1998, the Complainant and the Respondent (Robert Lawrence) signed a 15 year lease-purchase for the home. The 170 monthly payments were to be $345.21 each for a total amount of $58,685.70, not including the $3,500.00 already paid by the Complainant. Under paragraph 6(B) of the lease-purchase agreement, failure of either party to perform is a breach of the agreement. The Complainant paid three monthly payments of $345.21, for June, July and August 1998, to the Respondent for a total of $1,035.63. By three checks dated May 5, 1998, May 22, 1998, and July 20, 1998, the Respondent paid a total of $1,155.95 to the bank of America. By letter dated August 19, 1998, the Bank informed the Complainant that the Bank intended to take possession of the home under its mortgage. The letter threatened legal remedies including court proceedings to take possession of the home. The Complainant’s call to the Bank disclosed the Bank was taking possession because of the default in payments on the mortgage. According to the Bank statement dated August 22, 1998, the principal amount owing on the home was $33,281.78. The amount past due was $750.70 plus a $5.00 late charge and a scheduled payment of $337.11 for a total due of $1,092.81. The total amount listed as due to the Bank is $342.00 more than when the Complainant entered into the lease-purchase agreement on May 28, 1998. The evidence shows the $3,500.00 paid to the Respondent by the Complainant, was not properly applied to amounts owing to the Bank. The Complainant contacted the Respondent and was told the matter would be taken care of by the Respondent. The matter was not resolved by the Respondent and the Complainant moved out of the home on September 20, 1998. No competent evidence was presented that the Respondent responsibly attempted to correct the situation with the Bank. Placing some phone calls to a Bank employee is not considered sufficiently responsible under the facts of this case. The Complainant filed her complaint with the Department of Building and Fire Safety-Office of Manufactured Housing (Office) which issued a 30 Day Notice to the Respondent on September 30, 1998. The Notice required the Respondent to correct the condition complained of. The Notice alleged violations of A.R.S. §41-2186.14, false, misleading or deceptive sales practices by a licensee in the sale or offer of sale of a manufactured home, and A.R.S.§41-2180(A), failure to deposit earnest money in an escrow account. Conclusions Of Law The Citation and Complaint alleges violation of A.R.S.§41-2186.1, failure to comply with Articles two or four, .12, failure to respond relative to a verified complaint after notice, .19, failure to provide all agreed on goods or services, and .20, failure to install in a workmanlike manner. The alleged violation of A.R.S. §41-2186.20 is inapplicable to this case since the issues do not concern workmanship. The evidence fully supports violation of .19 in that it is concluded that the Contract and lease-purchase agreement required the Respondent to pay the Bank on the underlying mortgage. Although this is not specifically referenced in the documentation, it is implied in the law in light of the nature of the Contract and lease purchase and the parties dealings with each other. Therefore, the failure of the Respondent to timely pay the amounts due the Bank and the Respondent’s failure to make the payments current after the initial payment of $3,500.00 by the Complainant, establishes the failure to provide a service as charged in the Citation and Complaint. The evidence also supports the conclusion that the Respondent failed to deposit earnest money in an escrow account and was guilty of false and deceptive practices as alleged in the 30 Day Notice from the Office to the Respondent. This being the case, the violations of A.R.S. §§ 41-2180(A) and 41-2186.14 would constitute violations of A.R.S.§41-2186.1 as charged in the Citation and Complaint. The allegation that the failure to respond to the 30 Day Notice by the Office constitutes a violation of A.R.S. §41-2186.12, is not sustained. Although the Notice could be construed to be a verified complaint, it is not specific in what response the Respondent is to make. Furthermore, the Complainant had moved out a week prior to the Notice and it is difficult to determine what the Office was directing the Respondent to do with respect to the Complainant. The Respondent’s evidence consisting of hearsay regarding what he was informed of by persons at the Bank is not considered reliable. The attempt to somehow shift the responsibility for what transpired on the Bank is without merit. The Respondent acknowledges receipt of the initial $3,500.00 from the Complainant plus the three monthly payments in the amount of $1,035.63. Total payments by the Complainant to the Respondent amount to $4,535.63 and the Respondent paid $1,155.95 to the Bank. The question is therefore what happened to the remaining $3,379.68 in light of the $1,092.81 owing to the Bank as of August 22, 1998. Had the Respondent paid the Bank for the amount due, the Respondent still would have been $2,286.87 to the good in this transaction based on the expenses to that time. Respondent’s violations were not satisfactorily explained or mitigated. Recommended Order In view of the foregoing, it is recommended commencing on the effective date of the Order entered in this matter that the Class D-12 License No. 6684 of the Respondent be suspended until such time as the Office of Manufactured Housing receives written proof that the Complainant has received payment from the Respondent in the amount of $3,500.00 as restitution; It is further recommended that if the Respondent fails to pay the Complainant restitution in the amount of $3,500.00 within 90 days of the effective date of the Order entered in this matter then the Class D-12 License No. 6684 shall be automatically revoked as of said date; It is further recommended that upon the payment of the $3,500.00 to the . . . . . . Complainant or the conclusion of any period of suspension in this case that the Respondent be placed on probation for a period of 120 days. Done this day, February 11, 1999.

______________________________________ ALLEN REED Administrative Law Judge

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

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

By _______________________________

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