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Raising Cane Rob Perez |
Red tape tangles process
to get contractor refunds
The judge's order was exceedingly clear: The contractor must make restitution. It was simple and to the point.
Seeking relief
Homeowners may recover up to $12,500 per contract on any court judgment obtained against a licensed contractor. To seek relief:>> File lawsuit to obtain judgment.
>> Notify Contractors License Board when filing.
>> Submit claim to board once all other collections options exhausted.
>> Board phone: 586-2700.
Yet Oahu homeowner Bill Woods was baffled as to why the court order wasn't good enough for the state to pursue his case.
To Woods, this is a prime example of a state regulation that makes absolutely no sense. It's a prime example of a state bureaucracy cast in a terribly unflattering light, making it appear wasteful and of little help to the little guy, not the kind of image the government wants to project.
Are bureaucrats out there paying attention?
Here's the scoop:
At the request of the state Department of Commerce and Consumer Affairs, a circuit judge in August ordered Sikula David Taliauli, a local contractor, to pay the state $9,653 so Woods could be repaid for a retaining wall project that Taliauli failed to finish. The contractor also was fined $11,300 for violating several state statutes and was prohibited from doing any contracting work until he resolved his licensing problems.
When Taliauli failed to make restitution, Woods sought repayment through a state contractors fund established for cases like his. The purpose of the fund, which is financed by the industry, is to reimburse homeowners up to $12,500 per contract for financial harm caused by licensed contractors who mess up or bail out on residential projects.
But the DCCA's Contractors License Board, which administers the fund, rebuffed Woods' request. He was told that he needed to get his own court judgment against Taliauli and try to collect on that. The judgment obtained by the DCCA's Regulated Industries Complaints Office wasn't sufficient because the agency represented the state, not Woods.
It didn't matter that RICO's case was based on a complaint filed by Woods.
It didn't matter that the contractors recovery fund and RICO are part of the same department.
It didn't matter that the court, after having examined the evidence and given Taliauli the opportunity to present his case, ordered restitution for Woods, and the homeowner unsuccessfully tried getting paid from that judgment.
No, Woods had to jump through legal hoops on his own. He had to obtain a separate judgment. That's what the law requires.
"This is ridiculous," Woods said. "Why should the homeowner be forced to go through another court action that will only add to the costs?"
Evan Shirley, the attorney Woods hired to pursue a lawsuit against Taliauli and obtain the required judgment, questioned the policy in light of an already overburdened court system.
"Why should you have to duplicate what RICO did?" Shirley asked. "That's a waste of scarce judicial resources."
Gary Lee, a private attorney who represents the contractors board on recovery fund cases, said the board is simply following procedures established by state statute. Lee said the board would be open to considering ways to make the process simpler and more beneficial to homeowners, but he cautioned that changing one part of the system could have unforeseen effects elsewhere.
"You've got to look at the whole process rather than just one piece," Lee said.
He also noted that legislators, not board members, have the power to change statutory requirements.
OK, so legislators should look into making the changes. Are legislators paying attention?
At least one is. Sen. Ron Menor, chairman of the Senate's consumer protection committee, said he intends to introduce legislation next session that will permit homeowners to use RICO judgments to pursue claims with the recovery fund.
"Clearly, there's a flaw or loophole in the law," said Menor, who was unaware of the extra steps required until I told him about the Woods case. "The whole intent behind the law is to assist the homeowner, and what this homeowner has to go through ... is not right. It doesn't make any sense."
Unless someone can make an effective argument on why making such a change would be bad public policy, lawmakers would be wise to make reforms happen next session, making bureaucracy a bit less bureaucratic.
The ease or difficulty in which people can get reimbursed from the recovery fund is important given that contractors generate the most consumer complaints of any industry regulated by RICO. Year in and year out, contractor complaints top the list.
Yet the recovery-fund process is not consumer-friendly, and all but requires the hiring of a lawyer, not an insignificant expense since $12,500 is the most one can recover, Woods said.
"The average person who is not a fighter would give up," he said. "I almost gave up. The process is really set up to be a barrier to the average person."
But Verna Oda, executive officer of the contractors license board, said the process is straightforward and doesn't deviate from case to case.
The homeowner gets a judgment or arbitration award, exhausts all other options for collecting from the contractor and then, as a last resort, gets a court order for payment from the recovery fund.
"There's not much discretion on the board's part," Oda said.
Over the past five years, the board has approved an average of roughly $96,000 annually in payouts from the fund, which currently has about $500,000. Contractors pay $150 into the fund when they initially get licensed, and the state can collect special assessments if the fund level gets too low.
In the Taliauli case, Woods did all the right things before he signed a contract for the retaining wall. The day he signed the contract, he even called RICO to check if Taliauli's license was still current. He was told it was, according to Woods, even though the license had been suspended in a previous RICO case and had not been restored.
Taliauli could not be reached for comment and didn't respond in court documents to the lawsuit or the RICO charges.
Woods eventually spent thousands more to hire another contractor to shore up work performed by Taliauli and to finish the retaining wall.
Even if he gets the maximum amount from the recovery fund, Woods figures the $12,500 won't cover his attorney fees plus what he paid Taliauli.
But if publicity about his case results in changes to the law, the story at least will have a happy ending.
See the Columnists section for some past articles.
Star-Bulletin columnist Rob Perez writes on issues
and events affecting Hawaii. Fax 529-4750, or write to
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. He can also be reached
by e-mail at: rperez@starbulletin.com.
