Ramsey v. Ariz. Registrar Contractors

• Decision Date: 01 November 2016
• Docket Number: No. 1 CA–CV 15–0355,1 CA–CV 15–0355
• Citation: 241 Ariz. 102,384 P.3d 316,751 Ariz. Adv. Rep. 35
• Parties: Jo Ella Ramsey, an individual, Plaintiff/Appellee, v. Arizona Registrar of Contractors, Defendant/Appellant.
• Court: Arizona Court of Appeals

241 Ariz. 102

384 P.3d 316

751 Ariz. Adv. Rep. 35

Jo Ella Ramsey, an individual, Plaintiff/Appellee,

v.Arizona Registrar of Contractors, Defendant/Appellant.

No. 1 CA–CV 15–0355

Court of Appeals of Arizona, Division 1.

FILED November 1, 2016

Sanders & Parks, P.C., Phoenix, By G. Gregory Eagleburger, Nicholas A. Bender, Counsel for Plaintiff/Appellee

Arizona Attorney General's Office, Phoenix, By Michael Raine, Counsel for Defendant/Appellant

Presiding Judge Kenton D. Jones delivered the Opinion of the Court, in which Judge Randall M. Howe and Judge Donn Kessler joined.

OPINION

JONES, Judge:

¶ 1 The Arizona Registrar of Contractors (ROC) appeals the trial court's order directing the ROC to issue payment from the Arizona Residential Contractors' Recovery Fund (the Fund), Ariz. Rev. Stat. (A.R.S.) §§ 32–1131

to –1140,¹ to Jo Ella Ramsey. The ROC argues the court erred by: (1) granting Ramsey's application for recovery when it did not contain evidence required by Arizona Rule of Civil Procedure 56 to support a motion for summary judgment; (2) interpreting the statutes governing recovery from the Fund in a manner that did not account for the amount left unpaid under the underlying contract; (3) declining to hold a hearing on the ROC's objection to Ramsey's application; and (4) finding the ROC had conceded a minimum amount Ramsey spent to complete the project at issue.

¶ 2 For the following reasons, we hold that an application for recovery from the Fund need not comply with Rule 56

. We also adopt the ROC's interpretation of “actual damages” and hold that damages for purposes of A.R.S. § 32–1132(A) are limited to the reasonable cost of repairing the contractor's defective work and completing the project, minus any portion of the contract price still unpaid to the original contractor. Additionally, we hold that a hearing is unnecessary when the ROC's objection presents a purely legal issue which it has had adequate opportunity to brief, and that, in the immediate case, substantial evidence supports the trial court's determination that the ROC conceded Ramsey spent at least $52,101.29 to complete her residential construction project. Accordingly, we vacate the court's order and remand for further proceedings consistent with this Opinion.

FACTS AND PROCEDURAL HISTORY

¶ 3 In May 2010, Ramsey filed a complaint against Michael and Barbara Edens and Edens Contracting, L.L.C. (collectively, the Edens), seeking damages for deficiencies in the Edens' performance of a contract to build a residence for Ramsey (the Residence). The ROC timely intervened to address whether Ramsey was eligible to recover from the Fund. See A.R.S. § 32–1136(A)

. In June 2013, the trial court entered a $111,000 judgment in Ramsey's favor against the Edens.

¶ 4 In August 2014, the ROC moved to dismiss the case, alleging Ramsey was not eligible for compensation from the Fund because she had not suffered any “actual damages” within the meaning of A.R.S. §§ 32–1132

and –1136(E) because the amount she spent to complete the Residence—$52,101.29—was significantly less than the approximate $130,000 balance owed on her contract with the Edens. Ramsey objected to the request for dismissal and applied for an order directing the ROC to compensate her from the Fund.

¶ 5 The trial court treated the ROC's motion as an objection to Ramsey's application and, after the matter was fully briefed, entered an order directing the ROC to pay Ramsey $30,000, the maximum allowable amount, from the Fund. See A.R.S. § 32–1132(A)

. The court rejected the ROC's interpretation of the applicable statutes and held no hearing was necessary because the ROC had conceded Ramsey spent more than $30,000 to complete the Residence. The ROC timely appealed, and we have jurisdiction pursuant to A.R.S. §§ 12–120.21(A)(1) and –2101(A)(1).

DISCUSSION

I. Arizona Rule of Civil Procedure 56

Does Not Apply to an Application for Recovery from the Fund.

¶ 6 The ROC first argues the trial court erred in granting Ramsey's application without an evidentiary hearing because she did not provide evidence within the application to prove the facts supporting her entitlement to payment from the Fund. The interpretation and application of statutes present questions of law, which we review de novo . See First Fin. Bank, N.A. v. Claassen , 238 Ariz. 160, 162, ¶ 8, 357 P.3d 1216 (App. 2015)

(citing Schwarz v. City of Glendale , 190 Ariz. 508, 510, 950 P.2d 167 (App. 1997) ). When a statute is unambiguous, we apply its terms as written. Berndt v. Ariz. Dep't of Corr. , 238 Ariz. 524, 528, ¶ 11, 363 P.3d 141 (App. 2015) (quoting Fleming v. Dep't of Pub. Safety , 237 Ariz. 414, 417, ¶ 12, 352 P.3d 446 (2015) ).

¶ 7 Pursuant to A.R.S. § 32–1136(B)

, a homeowner who obtains a valid judgment against a residential contractor for misconduct in violation of Title 32, Chapter 10, of the Arizona Revised Statutes, may apply to the trial court for an order directing payment out of the Fund for the amount unpaid on the judgment, up to $30,000. The ROC contends summary adjudication of a request for payment from the Fund is appropriate only if the applicant complies with Arizona Rule of Civil Procedure 56(c)(3), which requires a motion for summary judgment be accompanied by a statement of the “specific facts relied upon in support of the motion” and “refer[ence] to the specific portion of the record where the fact may be found.” No such requirement appears in the statute. Instead, A.R.S. § 32–1136(B) provides that the application for an order directing payment from the Fund should be granted “either on receipt of a consent to payment ... or, in the absence of any written consent, after the notice period required by this subsection.” If the ROC objects to payment, it is entitled to an opportunity to present and support its objections. A.R.S. § 32–1136(B). Thus, the statute contemplates the application will be granted—without any testimony, evidence, proof, or hearing—if there is no objection.

¶ 8 It necessarily follows that testimony, documentary evidence, or other proof is required only as to those portions of the application to which the ROC has objected. This interpretation is consistent with the direction that the application be addressed without delay. See A.R.S. § 32–1136(D)

(“The court shall proceed on an application [for recovery from the Fund] in a summary manner....”); Chaffin v. Comm'r of Ariz. Dep't of Real Estate , 164 Ariz. 474, 477, 793 P.2d 1141 (App. 1990)

(defining the phrase “summary manner” within statutes governing the Real Estate Recovery Fund “to mean that the court must proceed on the application without delay or formality and in a short, concise and immediate proceeding”) (citation omitted). Indeed, this Court has already determined the trial court may limit the scope of a hearing on the applicant's eligibility to recover from the Fund after consideration of the ROC's specific challenges and the need to expedite its review. See

Magness v. Ariz. Registrar of Contractors , 234 Ariz. 428, 433 n.3, ¶ 18, 323 P.3d 711 (App. 2014). Because the requirements of Arizona Rule of Civil Procedure 56 do not apply to an application for recovery from the Fund, there was no error in the procedure used by the court here.

II. The Proper Measure of Damages Under A.R.S. § 32–1132(A)

is the Cost of Completion of the Project Less the Unpaid Portion of the Original Contract Price.

¶ 9 The ROC argues the trial court erred in interpreting the governing statutes to prevent the ROC from offsetting the cost to complete a project by the amount left unpaid to the original contractor, an issue we review de novo . See supra ¶ 6.

¶ 10 By statute, “[a]n award from the [F]und is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation but shall not exceed an amount necessary to complete or repair a residential structure.” A.R.S. § 32–1132(A)

.² The phrase “actual damages” is not defined; therefore, we defer to the implementing agency's interpretation so long as it is “based on a permissible construction of the statute.” Kobold v. Aetna Life Ins. , 239 Ariz. 259, 262, ¶ 9, 370 P.3d 128 (App. 2016) (quoting Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. , 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ). “The relevant inquiry is whether the agency's interpretation is reasonable.” Id. (citing United States v. Mead Corp. , 533 U.S. 218, 229, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) ). In addition, if the literal interpretation of a statute would lead to an absurd result, it is this Court's duty to construe it, if possible, so it is readable and workable. Pendergast v. Ariz. State Ret. Sys. , 234 Ariz. 535, 541, ¶ 18, 323 P.3d 1186 (App. 2014) (quoting State Farm Auto Ins. v. Dressler , 153 Ariz. 527, 531, 738 P.2d 1134 (App. 1987), and citing A.R.S. § 1–211(B) (“Statutes shall be liberally construed to effect [uate] their objects and to promote justice.”)).

¶ 11 The ROC interprets “actual damages” to mean the reasonable cost of completing the contract and repairing the contractor's defective performance “less the part of the contract price still unpaid.”³ This interpretation comports with both Arizona law and the Restatement of Contracts. See Maricopa Cty. v. Walsh & Oberg Architects, Inc. , 16 Ariz.App. 439, 441, 494 P.2d 44 (1972)

; Sorensen v. Robert N. Ewing, Gen. Contractor , 8 Ariz.App. 540, 544, 448 P.2d 110 (1968) (citing Green Manor Constr. Co. v. Highland Painting Serv., Inc. , 345 F.2d 657, 661 (1st Cir. 1965) ); Restatement (First) of Contracts § 346(1)(a)(i), illus. 1, 4, 5 (1932) (“For a breach by one who has contracted to construct a specified product, the other party[ ] can get judgment for compensatory damages for all unavoidable harm that the builder had reason to foresee when the contract was made, less such part of the contract price as has not been paid and is not still payable....”), adopted by Blecick v. Sch. Dist. No. 18 of Cochise Cty. , 2 Ariz.App. 115, 122–23, 406...