ALJDEC

99F-R989018-BFS · Department of Building and Fire Safety · 1999-06-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 3, 1999. APPEARANCES: COMPLAINANT: Andrea Scott, on her own behalf. RESPONDENT: No appearance.

ADMINISTRATIVE LAW JUDGE: Anthony Halas _____________________________________________________________________ Hearing in this matter convened on June 3, 1999, as duly scheduled before the undersigned administrative law judge of the Office of Administrative Hearings, to consider the claim of Complainant Andrea Scott (Scott) from the Consumer Recovery Fund administered by the Department of Building and Fire Safety (Department) pursuant to A.R.S. § 41-2190. Ms. Scott appeared and presented evidence and sworn testimony, and based on that and administrative notice of the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Order are made to the Director of the Department:

FINDINGS OF FACT

1. Respondent Golden East Home Sales, Inc., (Golden East) is the holder of License No. 6684, Class D-12, issued by the Department of Building and Fire Safety. 2. On April 27, 1998, Complainant Andrea Scott and her husband Thomas Scott executed a PURCHASE CONTRACT AND DEPOSIT RECEIPT with Golden East’s salesman to purchase a 1987 Fuqua 24’ x 42’ manufactured home, VIN # FH4111023U87, located at 245 South 56th, Space 239, Aspenwood Mobile Home Park, in Mesa, Arizona. The purchase price was $42,000.00, with “Earnest Money Deposit: Received $500.00” that day, with “Deposit to be increased to $3500.00 on or before June 1st 1999”. Administrative notice is taken of the copy of that document as contained in the file maintained by the Department, after review of and comparison by the undersigned with the true copy of the contract produced and credibly identified as such by Scott at hearing. 3. The $500.00 deposit referenced in the Purchase Contract is documented by administrative notice of the file copy of Receipt No. 224158, dated 4-27-98, in that amount, designated “for D-pay on Aspenwood” . The undersigned finds and determines that “D-pay” means “down-payment”. 4. An additional deposit by Scott of $2000.00 is documented by administrative notice of the file copy of Receipt No. 224153, dated 5-12- 98, designated “for D-pay on Aspenwood #239”. 5. A third deposit by Scott of $1000.00 is documented by the file copy of Receipt No. 224170, dated 5-21-98, designated “for D-pay on Aspenwood #239”. 6. The three receipts total $3500.00, and the file copies are confirmed as true and accurate copies by review and comparison at hearing by the undersigned to the originals produced and identified at that time by Scott, and by consideration of her sworn and credible testimony that she and her husband paid the money to Golden East’s salesperson as a down payment on the housing described in the Purchase Contract. 7. Scott further confirmed that the personal checks used to pay the $3500.00 had all been negotiated by Golden East and paid by her bank. 8. Administrative notice is also taken of the claim file copy of the Lease Purchase Agreement executed by Complainant and Respondent on May 28, 1998, with the lien holder identified as “BankAmerica Loan # [number redacted]”, with “approximate payoff as of 5-28-98 is $37,000.00”. That claim file copy is determined to be a true and accurate copy of the original provided by Scott at hearing for review and consideration by the undersigned. 9. The record confirms Scott’s original complaint was confirmed by the Department’s investigator/auditor, Donna Grant (Grant), after her verification inspection of documents on September 24, 1998, which verified, among other violations, Respondent’s violation of A.R.S. § 41-2180.A (earnest monies not deposited into dealer’s trust or escrow account). 10. Consistent with the narrative contained in Grant’s complaint verification report, Scott testified at hearing that she had entered into the Purchase Contract and the Lease/Purchase agreement with Golden East for a home not owned by Golden East but by an individual named Joseph Howard (Howard), with Golden East then responsible for payoff of his mortgage to BankAmerica, and eventually, for a free and clear title in her name. 11. Scott testified that she provided the down payment of $3500.00 in good faith, as well as timely payment to Golden East of the monthly amounts due under terms of the agreement, but that Golden East failed to properly either hold those monies in the required trust account or apply them to paying off Howard’s mortgage, such that she was evicted from the home in August 1998 by the bank when the mortgage was not paid. 12. Administrative notice of claim file documents produced by BankAmerica corroborates Scott’s testimony. 13. Finally, Scott testified, and it is so found, that despite the Order issued by the director of the Department on March 10, 1999 (adopting the Recommended Decision of the administrative law judge presiding at prior hearing over the original complaint in this matter), Respondent had not yet returned or provided restitution of any portion of the $3500.00 Scott had paid as a deposit on the purchase price of the manufactured housing at issue. For that reason Scott then timely filed her claim with the Consumer Recovery Fund in April, 1999.

CONCLUSIONS OF LAW

1. The convening of the hearing in this matter was delayed more than minutes to allow Respondent, through its authorized representative, to make its appearance, and although the record then remained open for more than an hour after the scheduled start of the hearing, no such appearance was made to dispute Complainant's verified complaint or her claim to the Consumer Recovery Fund, nor was any information provided this office to explain the absence of Respondent’s representative, or to request a continuance. 2. Reference to the Notice of Hearing issued by the Department on April 29, 1999, confirms that it was issued by certified mail to : Earlena J. Lawrence Qualifying Party GOLDEN EAST HOME SALES, INC. 2702 East University Suite #2 Mesa, Arizona 85213

This is the last known address Respondent has provided the Department, and there is no indication that Respondent did not receive the Notice, so it is found and concluded herein that the notice and opportunity to be heard required by the demands of due process have been fully and fairly met. 3. In this administrative proceeding, Complainant bears the burden of proof such that she 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). 4. 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 deposit or earnest money for a purpose other than the sales transaction. 5. Complainant has been damaged by Respondent’s violation of A.R.S. § 41-2180 in the amount of $3500.00. The Department has verified Complainant’s original complaint and, therefore, her claim arising from that complaint 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 and should 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. 6. The purpose of the hearing was to allow Complainant to present evidence on her 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 her 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 $3500.00 be paid to Complainant from the Consumer Recovery Fund pursuant to 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 $3500.00 to the Consumer’s Recovery Fund, plus interest at a rate of 10% annually. Done this day, June 3, 1999.

______________________________________ Anthony Halas Administrative Law Judge

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

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

By ___________________________

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

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