Magness v. Arizona Registrar of Contractors
234 Ariz. 428
| Ariz. Ct. App. | 2014Background
- Magness contracted with Lendo for residential remodeling in 2008; numerous change orders followed and work continued into 2009. Lendo was unlicensed when the initial contracts were made but obtained a license March 4, 2009.
- Magness paid Lendo $366,123.27; Lendo ceased work in December 2009 before completion. Magness paid other contractors to finish the job and sought relief.
- ROC administratively cited Lendo; an ALJ revoked Lendo’s license after Lendo failed to respond. Magness later obtained a default judgment in superior court against Lendo for $17,461.45 on various claims.
- Magness applied for payment from the Residential Contractors’ Recovery Fund (the Fund) for $17,461.45 (reduced to $14,067.39 after bond recovery). ROC timely objected, arguing Magness was not an eligible “person injured,” Lendo was unlicensed at contract formation, and the award exceeded actual statutory damages.
- The superior court summarily ordered Fund payment to Magness without holding a hearing; ROC appealed, asserting it was denied the statutory opportunity to present and support its objections.
Issues
| Issue | Magness's Argument | ROC's Argument | Held |
|---|---|---|---|
| Whether ROC’s statutory right to a hearing was satisfied before court-ordered payment from the Fund | No hearing required because the superior court’s judgment and the application satisfied statutory prerequisites | § 32-1136(B) requires the court to afford ROC a reasonable opportunity to present and support objections; a hearing is required when ROC timely objects | Court vacated payment order: ROC was entitled to a meaningful opportunity to present and support objections; summary grant was error |
| Whether default judgment against contractor bars ROC from challenging eligibility for Fund payment | Default judgment establishes damages and forecloses ROC challenges to amount and eligibility | ROC’s pre-existing answer preserved its rights; default against contractor does not preclude separate Fund-eligibility review | Court held default judgment against contractor did not eliminate ROC’s right to contest Fund eligibility |
| Whether Magness met statutory eligibility requirements to recover from Fund ("person injured", contractor licensed at contract formation, actual damages) | Trust beneficiary status and later change orders (post-license) make Magness eligible; default judgment fixes damages | Magness (as trustee) may not qualify as both owner and occupier; initial contracts formed while contractor was unlicensed; requested amount may exceed actual damages | Court declined to resolve merits on appeal and remanded for hearing to determine statutory eligibility and proper award amount |
| Whether attorney fees are recoverable from Fund or under A.R.S. § 12-348 | Sought fees under § 12-348 | ROC opposed; statutory scheme and precedent limit fee awards from the Fund and § 12-348 does not apply | Denied: Magness not prevailing on appeal and fees from the Fund are generally unavailable per Shelby precedent |
Key Cases Cited
- Bonito Partners, L.L.C. v. City of Flagstaff, 229 Ariz. 75, 270 P.3d 902 (statutory interpretation principles; look to statutory language and context)
- Baker v. Univ. Physicians Healthcare, 231 Ariz. 379, 296 P.3d 42 (statutory interpretation and legislative intent)
- Guzman v. Guzman, 175 Ariz. 183, 854 P.2d 1169 (give effect to each statutory provision)
- State v. Gaynor-Fonte, 211 Ariz. 516, 123 P.3d 1153 (construe related statutes together)
- Koss Corp. v. Am. Exp. Co., 233 Ariz. 74, 309 P.3d 898 (avoid statutory constructions that produce absurd results)
- Shelby v. Ariz. Registrar of Contractors, 172 Ariz. 95, 834 P.2d 818 (limitations on attorney-fee awards from the Fund)