Opinion
19-P-46
11-01-2019
Mary-Lee FORD v. Joanne F. CAMPO.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff, Mary-Lee Ford, filed a claim against the Residential Contractors' Guaranty Fund (Fund) pursuant to G. L. c. 142A, § 7, seeking compensation for poor workmanship in the installation of vinyl siding on her home and other miscellaneous improvements. The Fund administrator, Joanne F. Campo, denied Ford's claim because Ford had failed to obtain a final judgment against the contractor. Ford then commenced an action under G. L. c. 249, § 4, alleging that the decision denying her claim was arbitrary and capricious and based on an error of law. After a hearing, a judge of the Superior Court denied Ford's motion for judgment on the pleadings and entered judgment for the Fund. We affirm.
1. Background. a. The Fund. The Fund was created as a fund of last resort for consumers with unpaid final judgments against contractors. When a contractor refuses to pay on a claim for unlawfully deficient work or a failure to perform, homeowners may apply to the Fund to recoup the lesser of $10,000 or their actual losses. See G. L. c. 142A, §§ 5, 7. In order to make a claim on the Fund, a homeowner first must file an action against the contractor, either in court or through an arbitration process approved by the Office of Consumer Affairs and Business Regulation. See G. L. c. 142A, § 3. After obtaining a court judgment or arbitration award, the homeowner has six months to file a claim with the Fund. See G. L. c. 142A, § 7. A homeowner may obtain compensation only upon a showing that she "has exhausted all such customary and reasonable efforts to collect the judgment or award." Id. Once the Fund pays a claim to a homeowner, the Fund subrogates the claim and the homeowner must assign her rights, title, and interest in the claim to the Fund up to the amount paid. See G. L. c. 142A, § 8. The Fund then may obtain reimbursement from the contractor in the amount of the paid claim, with interest, and is deemed a creditor of the contractor. Id.
b. Procedural history. On July 31, 2013, Ford engaged a contactor to install vinyl siding on her home and to perform miscellaneous work in a bathroom. Ford became dissatisfied with the work and asked the contractor to leave the property. After subsequent negotiations, the work remained unfinished. The local building inspector issued a violation notice on the project, noting that the vinyl siding was installed incorrectly in violation of the provision of the Massachusetts Building Code on workmanship, see 780 Code Mass. Regs. §§ R105.1, R105.2, R105.8.1, and R108.6 (2009), and would need to be replaced.
Ford filed a request for arbitration and received a favorable award on January 12, 2016. The award included actual losses of $23,705 for the amount paid on the contract and the cost of repairs for the defective work, as well as arbitration fees. The contractor neither paid the award nor sought to vacate it.
Ford timely filed an application for compensation with the Fund on June 2, 2016. At that time, Ford acknowledged that she had not yet demonstrated efforts to collect the award as required by the statute, but stated that she would supplement her application at a later date. By letter dated June 20, 2016, Ms. Jacqueline Chandler, program administrator of the Fund, informed Ford that her application was incomplete, and that she was required to convert the award into a judgment in order to receive compensation from the Fund.
Ford initiated proceedings to convert her arbitration award into a court judgment in District Court on June 27, 2016. Shortly thereafter, the contractor filed for bankruptcy. Consequently, the proceedings were stayed. Ford then submitted the District Court filings to the Fund on September 7, 2016. Chandler responded on behalf of the Fund by e-mail the same day, informing Ford that she still would need to confirm the award in court and instructed her to ask the Bankruptcy Court to lift the stay. Ford responded a week later, on September 13, stating that she and her attorney believed that the documents she had sent to the Fund satisfied the requirements for a claim. Chandler replied on September 19, restating that in order to obtain compensation from the Fund, Ford would have to confirm the award in court. Chandler attached a sample form motion for relief from automatic stay to her e-mail.
In her brief, Ford states that she initiated proceedings in the District Court on August 29, 2017, but the complaint is dated June 24, 2016, and the docket shows that it was filed on June 27, 2016. Nothing turns on this discrepancy.
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Ford filed a proof of claim in the bankruptcy case on September 29, 2016. Shortly thereafter, on October 7, the bankruptcy trustee issued a report of no distribution, stating that there was no nonexempt property in the bankruptcy estate available for distribution.
Ford next contacted the Fund on November 6, 2016, and informed Chandler that she had filed a proof of claim in the bankruptcy case. Chandler again noted the requirement that the award be converted into a judgment and the need first to petition the Bankruptcy Court to lift the stay in order to obtain a judgment.
The contractor subsequently was discharged in bankruptcy by order dated December 6, 2016, and the bankruptcy case was closed.
On January 18, 2017, Ford's attorney contacted the Fund and informed Chandler that Ford took the position that filing for relief from the stay in the bankruptcy proceeding would have been "fruitless" given the lack of nonexempt assets in the estate and would have resulted only in further legal expenses, which would have reduced her net recovery. Ford disagreed with the Fund's position that c. 142A requires an award to be reduced to a judgment and asserted that she had undertaken reasonable efforts to collect. Chandler indicated that she would confer with the Fund's administrator, Campo, regarding whether payment could be made on Ford's claim.
Campo informed Ford by letter dated July 6, 2017, that the Fund was reaffirming its decision that her application was incomplete. Ford appealed the Fund's decision under the certiorari statute, G. L. c. 249, § 4. The parties cross-moved for judgment on the pleadings. The judge concluded that G. L. c. 142A, § 5, requires a claimant to obtain execution on a judgment to be eligible for compensation from the Fund, even where a claimant has obtained a favorable result after arbitration, and that the Fund's decision on Ford's application was consistent with that requirement. Consequently, the judge entered judgment in favor of the Fund.
2. Discussion. Our review of an administrative body's interpretation of a statute that it is charged with implementing is deferential. See Peterborough Oil Co., LLC v. Department of Envtl. Protection, 474 Mass. 443, 449 (2016), quoting Dowling v. Registrar of Motor Vehicles, 425 Mass. 523, 525 (1997) ("While the 'duty of statutory interpretation is for the courts, ... an administrative agency's interpretation of a statute within its charge is accorded weight and deference'"). "Where the [agency's] statutory interpretation is reasonable ... the court should not supplant [the agency's] judgment." Peterborough Oil Co., LLC, supra, quoting Dowling, supra. The reasonableness of an interpretation depends in part on whether it is "consistent with the statutory scheme." Amherst-Pelham Regional Sch. Comm. v. Department of Educ., 376 Mass. 480, 492 (1978). Where, as here, "the action being reviewed is not a decision made in an adjudicatory proceeding and where the action entails matters committed to or implicating a board's exercise of administrative discretion, the court applies the 'arbitrary and capricious' standard." Garrity v. Conservation Comm'n of Hingham, 462 Mass. 779, 792 (2012).
In this case, we agree in all material respects with the Fund's contention that under the authority of G. L. c. 142A, §§ 5, 7, it may require a homeowner to reduce an arbitration award to a court judgment as a prerequisite to obtaining payment from the Fund. This interpretation is consistent with the statutory requirement of § 7 that the homeowner "exhaust[ ] all ... customary and reasonable efforts to collect the ... award." G. L. c. 142A, § 7. Furthermore, requiring a homeowner to perfect her claim against a contractor prior to obtaining relief from the Fund and assigning the claim to the Fund is consistent with the statutory scheme of providing the Fund with the necessary tools to enforce the award, not only against the contractor, but against any third parties or alter egos, and protects the Fund's limited resources. While this bankruptcy was ultimately a no asset bankruptcy, that outcome was not apparent at the time the request to enforce the award was made, and the fact that the contractor may be judgment proof does not mean that the Fund should not be able to pursue a judgment in its favor in the event that assets are later discovered. Finally, as we agree with the Fund's interpretation of the statute as requiring a claimant to reduce an arbitration award to a court judgment, the Fund's decision to deny Ford's application on the grounds that she did not so was not arbitrary and capricious.
Accordingly, we affirm the judgment of the Superior Court affirming the Fund's decision to deny Ford's claim.
So ordered.
affirmed