Inconsistency among Arizona’s trial courts in how the 2021 statutory revisions are to be applied make legal strategies difficult for contractors to employ statewide.
By Jamie Hanson
In September 2021, the Arizona legislature amended A.R.S. § 12-910, which governs appeals of administrative decisions by the Registrar of Contractors and allows for a trial de novo after an ROC hearing. We discussed the effects of those amendments in two previous articles:
Good News for Arizona Businesses: Appealing a State Regulatory Ruling Now Leads to a Fresh Trial in Superior Court (December 2021)
ROC Hearings and Arizona's "New Trial" Statute: Two Years Later, the Impact for Contractors (September 2023)
In September 2024, we now know more about how Arizona trial courts apply this statute. This article shares some of that knowledge and discusses some important differences in how the statute has been applied from county to county.
Despite the new statutory language, the Maricopa County Superior Court views a trial de novo under A.R.S. § 12-910 as essentially an appellate review. In early 2024, the Superior Court in Maricopa County ruled that, even though A.R.S. § 12-910 was revised in 2021 to allow for access to a trial de novo, the statute still governs a process that is fundamentally an appellate review, not a brand-new proceeding.
Further, the Court held that, because the statutory process remains an appeal, the licensed contractor, rather than the homeowner, bears the burden of meeting the appellate standard. This is surprising, as A.R.S. § 12-910(F) prohibits the trial court’s deference to prior determinations of fact and law. (“[The] court shall decide all questions of law … without deference to any previous determination that may have been made on the question by the agency.”)
According to the Maricopa County Superior Court, the standard in an A.R.S. § 12-910 trial de novo is unchanged by the 2021 revisions. Consequently, the Court believes it must uphold the Registrar’s decision unless the licensed contractor can show that the Registrar’s decision “is contrary to law, is not supported by substantial evidence, is arbitrary and capricious or is an abuse of discretion.” A.R.S. § 12-910(F).
The Maricopa County Superior Court also ruled that the disclosure and discovery that are available in civil lawsuits under the Arizona Rules of Civil Procedure are not automatically available in these trial de novo cases. This is disappointing, because a provision states explicitly and without qualification that the Rules of Civil Procedure are applicable: “The rules of civil procedure apply to all proceedings in which the superior court orders a trial de novo pursuant to section 12-910.” A.R.S. § 12-914(B).
The Maricopa County Superior Court recognizes that a jury trial is required for a trial de novo, if such a trial is demanded. No one seems to disagree that a trial de novo, even if it is somehow a review or an appeal, nevertheless needs to be a real trial of some kind. That leads to the question: Is the trial de novo under the revised A.R.S. § 12-91 supposed to be a jury trial? Or does it need to be a trial with only a judge (i.e., a bench trial)?
After the Maricopa County Superior Court received briefing on whether or not a jury trial is required, the Court criticized certain arguments in favor of the jury trial but also asked for additional briefing. Ultimately, the Court decided that, if a jury trial is properly demanded, the jury trial is required. The Court found the decisive point in A.R.S. § 12-910(C), which states: “On demand of any party, if a trial de novo is available under this section, it may be with a jury[.]”
The Maricopa County Superior Court ruled that the record before the Registrar and the Registrar’s findings must be part of the evidence considered by the jury. But in its ruling, the Court did not clarify what the practical implications for such a jury trial would be. The Court stated that the process for establishing jury instructions prior to trial would need to clarify what questions would be presented to the jury for decision.
At the moment, then, there is uncertainty about the precise role of the jury in a trial de novo under A.R.S. § 12-910.
The Maricopa County Superior Court is willing to permit a deposition of the Registrar’s personnel. Even though the Maricopa County Superior Court did not allow the disclosure and discovery portions of the Arizona Rules of Civil Procedure to apply to a trial de novo automatically, the Court nevertheless did allow the parties to ask the Court for permission to conduct any discovery that a party believed it needed.
After the Court received a stipulation between the homeowner and the licensed contractor, the Court granted the licensed contractor permission to depose the Registrar of Contractors under Arizona Rule of Civil Procedure 30(b)(6). A deposition under that rule requires an organization (such as the Registrar) to identify a person to answer questions about specific subjects. In this case, the Court gave permission for a deposition about (1) the Registrar's disciplinary policy for licensed contractors in general, and (2) that policy’s application to the licensed contractor in that particular case.
Because of that case’s peculiarities, the licensed contractor did not actually depose anyone from the Registrar. But it remains noteworthy that the Maricopa County Superior Court was willing to permit such a deposition. It should be further noted, however, that the Registrar was never served with a notice of the deposition, and so it’s not yet known whether the Registrar would submit to such a deposition or object to it.
The superior courts in Maricopa County and Mohave County have approached the revised trial de novo statute differently. The discussion above relates to the Superior Court in Maricopa County. But the Superior Court in Mohave County has also handled a trial de novo for an ROC case under A.R.S. § 12-910, and the Mohave County court reached some very different conclusions.
The Mohave County Superior Court was much more inclined to see A.R.S. § 12-910 as prohibiting the court from simply deferring to the Registrar’s findings. As the Court put it, the court “may not and will not accord any deference to the agency’s factual findings (who, what, where, why, and when).” But the Court was unwilling to treat that mandatory lack of deference as a requirement to completely ignore the administrative record. The Court ruled that it would need to consider both the record from the administrative proceeding and the record created by the trial de novo. (The Court did not clarify what it meant by the administrative proceeding’s record, which could be simply the Final Administrative Decision supported by the administrative law judge’s written recommendation or, much more broadly, all the exhibits and audio recordings from the evidentiary hearing.)
Importantly, the Mohave County court parted ways with the Maricopa County court on the issue of which party bears the burden in the trial de novo. Where the Maricopa County court had insisted that the licensed contractor bore the burden in an essentially appellate review, the Mohave County court ruled explicitly that the homeowners bore the burden of proving the elements of their original ROC complaint, which was the subject of the administrative hearing. In other words, the homeowner needed to present their case again, which is in keeping with the ordinary meaning of the Latin phrase de novo (i.e., “again”) in the legal term “trial de novo.”
The Mohave County court went on to explain that it viewed the trial de novo as having two possible outcomes:
If the court determines that the state agency’s factual and legal determinations are correct (based on the record and evidence presented in the trial de novo), the court can permissibly give deference to the agency’s prescribed discipline arising from those determinations.
If the court determines that the state agency’s factual or legal determinations are flawed (or not supported by the evidence presented by the homeowner), then no such deference can be afforded to the agency’s disciplinary decision, and it is then appropriate for the court to modify or vacate the agency’s decision.
But the Mohave County court apparently did not want to require the homeowner to establish, explain, or justify the ROC’s disciplinary policy for licensed contractors. The Court left the ROC’s disciplinary policy as something for the contractor to challenge (as opposed to something that the homeowner is primarily responsible for addressing). As the Court stated: “If the contractor wishes to argue that the discipline prescribed by the agency was arbitrary or an abuse of discretion, then it is incumbent upon the contractor to make such a showing in the trial de novo.
This was disappointing, because the bottom line for an ROC complaint and hearing is what does or does not happen to the contractor’s license. Should that license be disciplined for one day or ten days? Should restitution be required as a condition of continued licensure? Those are important questions, and providing solid answers should be part of the homeowner’s burden of proof. Requiring the contractor to explain why the discipline is inappropriate appears to shift the burden back to the contractor, in way that does not make sense in a trial de novo in superior court.
Conclusion. Trial courts have been applying the revisions in A.R.S. § 12-910 for several years now, but we do not yet have guidance from the Arizona Court of Appeals about what exactly is or is not required or allowed in a trial de novo. Important differences in how Arizona’s trial courts are applying those revisions could lead – hopefully soon – to a helpful opinion from the Court of Appeals.
Until we have that opinion, anyone involved in a Registrar of Contractors case – at whatever stage that case happens to be – should be aware of the possibility of a trial de novo following the Registrar’s final administrative decision.
For anyone litigating such a case or considering such litigation, it would be prudent to consult with a knowledgeable attorney about the possibilities and risks associated with the trial de novo, so that the litigation strategy can be as informed and successful as possible.
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