ALJDEC

99F-R989006-BFS · Department of Building and Fire Safety · 1999-03-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 3, 1999 APPEARANCES: The Complainant, Thomas Lawson represented himself No one appeared on behalf of the Respondent ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________ FINDINGS OF FACT On December 20, 1997, the Complainants executed a contract for the purchase of their manufactured home from the Respondent. The total contract price including sales tax was $87,330.00. The sale of the home was in conjunction with the sale of the lot for the home. The contract included “set up” and was to be a “turn key operation”. The Complainants had paid a deposit of $8,700.00 on December 14, 1997. The Respondent did not deposit the $8,700.00 in an escrow account but rather placed the money in a personal account which was seized or otherwise frozen by Merrill-Lynch. The contract terms included a four-ton air conditioner at a value of approximately $1,750.00 and provided that $16,000.00 was for “Lay out- concrete-awnings-front landscaping-permits”. In addition to the deposit of $8,700.00, the Complainants paid $43,691.50 at the time of closing on August 6, 1998. Unless a contract specifies otherwise, closing costs are generally paid by the buyer. The Complainant financed $36,312.00. However, the actual amount financed for the home exclusive of the closing, finance and prorated costs, was $35,217.06. Based on the above amounts, the total paid by the Complainants on the contract was $87,608.56 which is $278.56 more than the contract amount. No evidence was presented to show the reason for the additional cost. Absent such a showing no additional finding can be made. In December, 1998, the Complainants received a preliminary lien notice form Sunland Distributors, Inc. and in the amount of $2,300.00 for air conditioning-heating equipment and related parts. The air conditioning was part of the original contract and had been paid for by the Complainant. A billing in the amount of $14,000.00 was submitted to Sun Garden Estates from L.A. Development, Inc., for various costs associated with the set up of the Complainant’s home. Of the $14,000.00 bill, $9,178.00 was acknowledged as paid leaving $4,813.00 owing. The Complainant is liable for this latter sum which had been paid to the Respondent by the Complainant pursuant to the contract but remains unpaid to L.A. Development, Inc. Additional amounts expended by the Complainant for landscaping (scalloped borders, edging, drip system, tree stakes, a cover for the ground and gravel), total $713.83. An amount of $1,855.00 asserted as owing for the awning which was installed on the Complainant’s home but purportedly not completely paid for is too speculative to consider as competent evidence. The Complainant testified that the figure was given to him by Tom Darwin (Darwin) of Sun Garden Estates and an owner of the Respondent. The awning was installed in March of 1998, and the Complainant has never received a bill or other reliable information of how much may be owing for the awning. The company, which according to Darwin, the money is owed, is listed in the metro Phoenix business pages of the telephone directory. The asserted cost of the awning is not proven by competent evidence. Total verified costs for which the Complainant is liable and for which he already paid under the contract are $7,831.83. This amount does not include the closing and related costs, asserted remaining cost of the awning nor the unexplained difference in the contract price and the price paid by the Complainants. The Complainant filed his complaint in August of 1998. The complaint was verified by Carla Anderson (Anderson), an investigator-auditor with the Department of Building and Fire Safety (Department), for the air conditioning and the bill from L.A. Development, Inc. The Respondent was to correct the condition although the Respondent was no longer licensed by the Department and had been suspended in June of 1998. Although the Complainant testified competently that the deposit of $8,700.00 was essentially converted by the Respondent, the damages are limited to those items listed as verified costs in the above findings of fact . Conclusions of Law A.R.S. §41-2190 (A) provides in pertinent part that if a consumer is damaged by an act or omission of a licensed dealer or broker as part of a purchase or sale of a manufactured home which is a violation of A.R.S. §41- 2180, the consumer may file a claim with the Consumer Recovery Fund (Fund).

A.R.S. §41-2180 provides in pertinent part that a licensed dealer shall deposit earnest money received in conjunction with the sale of a manufactured home in a trust or escrow account. A.R.S. §41-2190(B) provides that a consumer who is damaged by the failure of the principal to perform a sales agreement or repairs under warranty may file a claim with the Fund. The claim shall be verified by the Office of Manufactured Housing (Office). The evidence establishes a violation of A.R.S. §41-2180 and the consequent claim for relief from the Fund under A.R.S.§412190(A). The fact that the Complainant’s $8,700.00 was seized or frozen as part of the of the Respondent’s personal account and therefore not applied as required by the Complainant’s contract with the Respondent, gives practical meaning to the statutory intent of the trust and escrow account provisions. The evidence also establishes the right to claim from the Fund under A.R.S. §41-2190(B), a failure to perform a sales agreement. The damages are limited to those which were verified and do not include those which are excluded in Finding of Fact number eight. The Complainant is informed that should he receive any reimbursement of the $8,700.00 deposit which was seized or frozen by Merrill Lynch, and the reimbursement is applicable to any damages paid from the Fund, then it is the legal responsibility of the Complainant to contact the Department and inform them of this fact. Recommended Order In view of the foregoing, it is recommended commencing on the effective date of the Preliminary Order entered in this matter that the Consumer Recovery Fund commence and finalize payment to the Complainant in the amount of Seven Thousand - Eight Hundred and Thirty One and 83/100’s ($7,831.83) Dollars; It is further recommended that the Complainant inform the Department of Building and Fire Safety, Office of Manufactured Housing Consumer Recovery Fund of any reimbursement whether partial or full of the $8,700.00 deposit within seven (7) days of the receipt of any such reimbursement; It is further recommended upon payment by the Consumer Recovery Fund to Complainants of the amount recommended for damages, that the Class D-8 license number 7040, be suspended until such time that the licensee has repaid in full, plus interest at ten percent per year, the amount paid by the Consumer Recovery Fund. Done this day, March 4, 1999.

_______________________________ ALLEN REED Administrative Law Judge

Original transmitted by mail this ____ day of March, 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 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826