ALJDEC

99F-R989009-BFS · Department of Building and Fire Safety · 1999-04-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 14, 1999 at 1:30 p.m. APPEARANCES: Complainant appeared on his own behalf; Respondent did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

Respondent and his wife, Angel Lee Cope, 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 Assistant Director of the Office of Administration of the Department of Building and Fire Safety has issued License No. 6684, Class D-12, to Respondent Golden East Home Sales, Inc., a combination dealer. Complainant and his wife are looking to purchase a home. They responded to an advertisement in the newspaper for a manufactured home and, on January 5, 1999, Complainant entered into a contract to purchase a 1982 Palm Harbor, 26 by 56 manufactured home located in Country Club Village from Respondent for $32,900.00. Because Respondent’s salesman told Complainant and his wife that they would be “better off” if they put down more earnest money, they tendered a check to Respondent in the amount of $2,700.00. Respondent’s salesman wrote “to be inserted” in the space for “V.I.N. #” on the Purchase Contract and Deposit Receipt that he gave to Complainant and his wife. According to the bank records for the account on which Complainant’s check was drawn, which they showed to the administrative law judge at the hearing, Respondent cashed the earnest money check on January 6, 1999, the day after it was tendered. Shortly after tendering the $2,700.00 to Respondent, Complainant and his wife completed an application to Country Club Village to be approved as tenants. Because Respondent never supplied the serial number for the manufactured home or paid rental arrearage for the space it occupied, however, the application could not be processed. Respondent’s qualifying party Earlena J. Lawrence assured them that the back rent would be paid and matters resolved by February 1, 1999. Georgia C. Tenberg, the manager of Country Club Village, advised Complainant and his wife that she had several tenants or prospective tenants who had “suspicious dealings” with Respondent and that they should try to get their earnest money back. On January 28, 1999, Complainant and his wife requested that Respondent return their earnest money and, on January 30, 1999, Mrs. Lawrence issued a check in the amount of $2,700.00, payable to Complainant and drawn on Respondent’s account. Complainant and his wife went to the bank on which the check was drawn and were told that the account contained insufficient funds to cover it. Mrs. Lawrence told them to wait a week before depositing the check because she expected to make a $5,000.00 deposit within that time. Complainant waited a week and then deposited the check in his account. On February 9, 1999, his bank returned the check to him with a stamp from Respondent’s bank showing insufficient funds. Complainant and his wife contacted the Arizona Attorney General’s Office about the bounced check and were advised not to accept return of any lesser amount. Over the next week or so, they attempted to contact Mrs. Lawrence, who was usually unavailable. At one point, however, she offered them a return of $500.00 of their earnest money, which they refused. After Complainant made this complaint against Respondent, Donna Grant of the Department of Building and Fire Safety verified it on February 17, 1999. On February 26, 1999, the Department sent copies of the notice of this hearing to Complainant and to Mrs. Lawrence at Golden East Home Sales, Inc., 2702 East University, Suite #2, Mesa, Arizona 85213, the same address shown on the salesman’s business card and the last address of record for Respondent. Although the beginning of the duly noticed hearing was delayed thirty minutes to allow Respondent additional travel time, it neither appeared through a duly authorized representative or attorney, contacted the Office of Administrative Hearings to request a continuance or that the time scheduled for the hearing to begin be delayed, nor presented any evidence at the hearing to dispute Complainant’s verified complaint and claim to the Consumer Recovery Fund under A.R.S. § 41-2190(A). Respondent has neither performed its contract to convey title to the 1982 Palm Harbor, 26 by 56 manufactured home located in Country Club Village to Complainant, nor returned his earnest money deposit. In addition to the evidence and testimony described above, Complainant introduced into evidence at the hearing and asked the administrative law judge to take administrative notice of a videotape of a “Channel 12 Investigates” segment, which aired the evening of Thursday, April 8, 1999. According to the taped segment, many of Respondent’s clients have received nothing in return for the money they gave it. Mrs. Lawrence’s attorney told Channel 12’s reporter that her husband was the cause of the cash flow problem, that she was divorcing him, and that she would return the missing funds to the clients. Mrs. Lawrence’s husband, Robert Lawrence, did not return the reporter’s telephone call. 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 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). The evidence establishes that Respondent violated A.R.S. § 41-2180(A) or (I) by failing to deposit Complainant’s earnest money into an escrow or trust account established for that purpose or, if such deposit was made, by failing to hold such funds until the sale transaction had been consummated. The evidence also establishes that Respondent violated A.R.S. § 41-2180(L) by using Complainant’s earnest money for a purpose other than the sales transaction. Complainant has been damaged by Respondent’s violation of A.R.S. § 41-2180 in the amount of $2,700.00. The Department has verified Complainant’s claim and, therefore, his claim to the Consumer Recover Fund should be granted and Respondent’s license should be suspended under A.R.S. § 41- 2190. If in the future Respondent’s qualifying party or any other person listed on Respondent’s license applies to the Department of Building and Fire Safety for another license, this suspension may be considered as evidence of lack of good character and reputation and furnish grounds for denial of the license. See A.R.S. § 41-2175(E). The purpose of the hearing was to allow Complainant to present evidence on his claim to the Consumer Recovery Fund and to assess whether Respondent’s license should be penalized as a result of the claim. Although the evidence suggests that Respondent used Complainant’s earnest money deposit for its own purposes and may be guilty of fraud, theft, or conversion, a criminal prosecution lies beyond the scope of the jurisdiction of the Department of Building and Fire Safety and, therefore, cannot be included in the undersigned’s recommendation. However, Complainant’s assertion of this claim does not preclude him or his wife from making a criminal complaint against Respondent or its qualifying party to the Attorney General or another governmental entity having appropriate jurisdiction. See A.R.S. § 41-2180(M). RECOMMENDED ORDER In view of the foregoing, it is recommended that $2,700.00 be paid to Complainant from the Consumer Recovery Fund under A.R.S. § 41-2190(A). It is further recommended that, pursuant to A.R.S. § 41-2190(D), Respondent’s License No. 6684, Class D-12 be suspended until it has repaid $2,700.00 to the Consumer’s Recovery Fund, plus interest at a rate of 10% annually. Done this day, April 15, 1999.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

By ___________________________

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

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