IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

DR. KRISHNA M. PINNAMANENI, individually, and as Trustee of THE 

KRISHNA M. AND BHAVANI K. PINNAMANENI REVOCABLE 

LIVING TRUST, Plaintiffs/Appellants,

v.

ARIZONA REGISTRAR OF CONTRACTORS, an Arizona administrative

agency; THE UNTOUCHABLES, INC., an Arizona corporation,

Defendants/Appellees.

No. 1 CA-CV 14-0006

Appeal from the Superior Court in Maricopa County

No. LC2013-000147-001

The Honorable Crane McClennen, Judge

REVERSED AND REMANDED

COUNSEL

The Butler Law Firm, Phoenix

By Everett S. Butler, Matthew Williams

Counsel for Appellants

Arizona Attorney General’s Office, Phoenix

By Michael D. Raine

Counsel for Appellee Arizona Registrar of Contractors
PINNAMANENI v. ROC, et al.

Opinion of the Court

2

OPINION

Judge Kent E. Cattani delivered the opinion of the Court, in which 

Presiding Judge Jon W. Thompson and Judge Donn Kessler joined.

C A T T A N I, Judge:

¶1 In this appeal, we construe the statutory requirements for 

eligibility to assert a claim for compensation from the Residential 

Contractors’ Recovery Fund (“Fund”) as a “person injured” by a residential 

contractor’s violation of the rules governing registered contractors. See

Ariz. Rev. Stat. (“A.R.S.”) §§ 32-1132(A), -1131(3).1 The statutes define a 

“person injured,” as relevant here, as the owner of residential real property, 

who occupies or intends to occupy the residence, and who is damaged by 

a residential contractor’s deficient work. A.R.S. § 32-1131(3). We conclude 

that an individual who occupies or intends to occupy the residence, and 

who is the trustor, trustee, and beneficiary of a revocable trust that owns 

the property, meets the statutory owner–occupant requirement of § 32-

1131. We also conclude that the statute does not require contractual privity 

between an owner of property and the residential contractor as a 

prerequisite to recovery from the Fund. See A.R.S. § 32-1131(3). Finally, we 

hold that participation in the underlying complaint to the Arizona Registrar 

of Contractors (“ROC”) that established the contractor’s violation is not a 

statutory prerequisite to recovery from the Fund. Accordingly, and for 

reasons that follow, we reverse the ROC’s denial of the claim.

FACTS AND PROCEDURAL BACKGROUND

¶2 In 2003, Krishna Pinnamaneni (“Pinnamaneni”) began 

designing a home for himself and his family to be built on property owned 

by the Krishna M. and Bhavani K. Pinnamaneni Revocable Living Trust 

(“Trust”). During the home’s construction, Pinnamaneni acted through his

limited liability company, Pioneer Family Investments (“Pioneer”), as his 

agent to negotiate all contractual and financial matters, including a contract 

with The Untouchables, Inc. (the “Contractor”) on behalf of himself and the 

Trust.

 

1 Absent material revisions after the relevant date, we cite a statute’s 

current version.
PINNAMANENI v. ROC, et al.

Opinion of the Court

3

¶3 Because of problems caused by the Contractor during 

construction, Pinnamaneni—through Pioneer—filed an ROC complaint. In 

the section titled “Person Filing the Complaint,” Pinnamaneni checked the 

box next to “homeowner” and listed his name. The complaint also included 

a line to designate a “Company name (If filing on behalf of a company)” 

under which Pinnamaneni listed “Pioneer Family Investments, LLC.” 

Before submitting the complaint, Pinnamaneni sought clarification on how 

to complete this portion of the form from the ROC, and he asserts that 

someone at the ROC advised him that “if Pioneer is your agent, and your 

family is the sole owner, you can use Pioneer as the complainant, because 

you will be coming as the sole owners, family owner’s agent.” Shortly after 

filing the complaint, Pinnamaneni submitted a supplement to request

additional damages, signing the supplement in his capacity as “Managing 

Member, Pioneer Family Investments, LLC.”

¶4 Following a hearing on the ROC complaint, an administrative 

law judge found that the Contractor had performed deficient work and 

recommended revoking the company’s license. The ALJ’s recommended 

decision, which listed Pioneer as the complainant, was subsequently 

adopted by the ROC.

¶5 After the Contractor filed for bankruptcy, Pinnamaneni (on 

his own behalf and as trustee) and Pioneer filed a joint claim to recover 

payment from the Fund for damages incurred as a result of the deficient 

construction. The ROC denied the claim, however, on the basis that 

“[Pinnamaneni, the Trust, and Pioneer] do not meet the legal definition of 

a ‘person injured’ as required by § 32-1131.3.”

¶6 Pinnamaneni, the Trust, and Pioneer requested an 

administrative hearing to contest the ROC’s eligibility determination. 

Pinnamaneni testified at the hearing that he used Pioneer as his agent 

during the construction, and that he lives in the house, which is owned by 

the Trust. Pinnamaneni also indicated that he had filed the original 

complaint against the Contractor both on his own behalf and on behalf of 

Pioneer.

¶7 Following the eligibility hearing, the ROC ruled that because 

only Pioneer (and not the Trust) filed the underlying complaint, 

Pinnamaneni did not meet the statutory qualification for obtaining a 

recovery from the Fund. The ROC further found that Pinnamaneni’s lack 

of contractual privity with the Contractor (because only Pioneer was a party 
PINNAMANENI v. ROC, et al.

Opinion of the Court

4

to the contract) also rendered Pinnamaneni ineligible to recover from the 

Fund.2

¶8 Pinnamaneni, individually and as trustee, appealed the 

denial of his claim to the superior court, which affirmed the ROC’s order.

He then timely appealed to this court, and we have jurisdiction under 

A.R.S. §§ 12-2101(A)(1) and -913.

DISCUSSION

¶9 Pinnamaneni argues that the superior court erred by 

upholding the denial of his claim, arguing in particular that (1) he qualifies 

for recovery from the Fund as a “person injured” by the Contractor’s

deficient work, and (2) A.R.S. § 32-1154 does not require the injured party 

to have filed the underlying ROC complaint to receive compensation from 

the Fund.

¶10 “When reviewing a superior court judgment affirming 

administrative action, we will determine whether there is substantial 

evidence to support the decision.” Sunpower of Ariz. v. Ariz. State Registrar 

of Contractors, 166 Ariz. 437, 439, 803 P.2d 430, 432 (App. 1990). We review 

questions of statutory interpretation de novo, looking first to the language 

of the statute, then to the Legislature’s intent. Magness v. Ariz. Registrar of 

Contractors, 234 Ariz. 428, 432, ¶ 15, 323 P.3d 711, 715 (App. 2014).

¶11 Under A.R.S. § 32-1154(G), “if a contractor’s license has been 

revoked or has been suspended as a result of an order to remedy a violation 

of this chapter, the registrar may order payment from the residential 

contractors’ recovery fund to remedy the violation.” The Fund thus

provides a mechanism to compensate “any person injured” by an act, 

representation, transaction, or conduct of a licensed residential contractor 

in violation of the rules governing contractors. A.R.S. § 32-1132(A); see also 

Shelby v. Ariz. Registrar of Contractors, 172 Ariz. 95, 97–98, 834 P.2d 818, 820–

21 (1992). A person injured by the violation may be awarded up to $30,000

for actual damages suffered as a direct result of the contractor’s violation. 

A.R.S. § 32-1132(A).

¶12 Under A.R.S. § 32-1131(3), a “person injured” is defined as:

any owner of residential real property which is classified as 

class three property under § 42-12003 and which is actually 

 

2 The ROC also denied Pioneer’s claim to recovery from the Fund; 

Pioneer did not appeal that determination.
PINNAMANENI v. ROC, et al.

Opinion of the Court

5

occupied or intended to be occupied by the owner as a 

residence including community property, tenants in common 

or joint tenants who are damaged by the failure of a 

residential contractor or a dual licensed contractor to 

adequately build or improve a residential structure or 

appurtenance on that real property. Included in this 

definition are lessees of residential real property who contract 

directly with a residential contractor or indirectly with a 

subcontractor of that contractor and homeowners’ or unit 

owners’ associations after transfer of control from the builder 

or developer for damages to the common elements within the 

complex.

Thus, to qualify as a “person injured” under § 32-1131(3), the claimant must 

(1) be an owner of residential real property; (2) actually occupy or intend to 

occupy the property as a residence; and (3) be damaged by the failure of a 

residential contractor to adequately build or improve a residential 

structure. McMurren v. JMC Builders, Inc., 204 Ariz. 345, 350, ¶ 15, 63 P.3d 

1082, 1087 (App. 2003).

¶13 The residential property at issue here is owned by the Trust,

and Pinnamaneni (not the Trust) occupies the property as a residence. The 

Trust, however, is revocable, and Pinnamaneni created the Trust and is both 

the trustee and a beneficiary. As both the trustor and trustee of a revocable 

trust, Pinnamaneni had complete control over the property in the Trust. 

See, e.g., A.R.S. § 14-10603(A) (“While a trust is revocable by the settlor, the 

rights of the beneficiaries are subject to the control of, and the duties of the 

trustee are owed exclusively to, the settlor.”). We therefore conclude that 

under these circumstances—where the property is owned by a revocable 

trust and the occupant is the trustor, trustee, and beneficiary of that 

revocable trust—the trustee acting on behalf of the trust satisfies the owner 

and occupant requirements of § 32-1131(3). Accordingly, Pinnamaneni is 

entitled to compensation as a “person injured” under § 32-1131.

¶14 The ROC and the superior court alternatively concluded that, 

under § 32-1131, Pinnamaneni’s lack of contractual privity with the 

Contractor precludes him from asserting a claim for recovery from the 

Fund. Although that statute does not include any reference to a contract 

between a property owner and the contractor alleged to have caused the 

damage, the ROC asserts that a contractual privity requirement is 

evidenced by the legislative history of § 32-1131, which noted that the Fund 

was established as part of a broad scheme “to provide improved protection 

for owners and lessees of property who contract for the construction or 
PINNAMANENI v. ROC, et al.

Opinion of the Court

6

alteration of residential structures.” 1981 Ariz. Sess. Laws, ch. 221, § 1

(emphasis added). But the definition of “person injured” has changed since 

the statute was initially enacted in 1981. The 1981 version of § 32-1131 

defined “person injured” as:

any owner of real property or his successor in interest or 

lessee who contracts directly with a licensed contractor or 

indirectly with a licensed subcontractor of such contractor for 

the construction of or improvements or alterations to a 

residential structure and appurtenances thereto.

In contrast, as set forth above, the current version of § 32-1131 includes no 

such reference to contractual privity between a property owner whose 

property is damaged and the contractor alleged to have caused the damage

(although the statute retains such a requirement for a lessee). In light of this 

change removing the contractual privity requirement for property owners 

seeking recovery from the Fund, the legislative history does not support the 

ROC’s interpretation of the current version of the statute.

¶15 The ROC further asserts that, although there is no express 

statutory requirement that an injured property owner have had a 

contractual relationship with the contractor, the contrary interpretation 

improperly “isolates one part of the entire recovery fund scheme.” The 

ROC references “other Fund statutes” that “expressly require a contractual 

relationship,” and concludes that such provisions suggest an overall 

requirement that there be a contractual relationship. But the statute that 

contains such a requirement, § 32-1131(3), includes in the definition of 

“person injured” “lessees of residential real property who contract directly 

with a residential contractor or indirectly with a subcontractor of that 

contractor.” A contractual privity requirement for lessees who seek 

recovery from the Fund is logical because faulty construction on a residence 

presumably damages the owner of the residence, rather than the lessee, 

unless the lessee is the person who contracted for the work at issue.

¶16 Moreover, the fact that the Legislature imposed a contractual 

privity requirement for one category of persons injured while leaving out 

such a requirement for another category supports the conclusion that the 

requirement does not apply to the other category. See Luchanski v. Congrove, 

193 Ariz. 176, 179, ¶ 14, 971 P.2d 636, 639 (App. 1998) (“When the legislature 

has specifically included a term in some places within a statute and 

excluded it in other places, courts will not read that term into the sections 

from which it was excluded.”). Thus, we conclude that the contractual 

privity requirement applies only to lessees, and not to property owners.
PINNAMANENI v. ROC, et al.

Opinion of the Court

7

¶17 Finally, the ROC argues that Pinnamaneni is not eligible for 

recovery from the Fund because he was not a party to the ROC complaint 

against the Contractor. The ROC acknowledges that the statutory scheme 

is silent as to whether recovery is contingent on participation in the 

underlying complaint against a contractor, but asserts that “[i]t is axiomatic 

that to recover under a complaint, one must be a party to the action in which 

the complaint is filed.” We disagree. In this context, resolution of a 

complaint simply establishes a violation, which is a question independent 

of who was damaged by the violation.

¶18 Furthermore, A.R.S. § 32-1154(G) provides that recovery 

funds are available “to remedy the violation.” Subsection (G) is not 

contingent on who files a complaint, and, significantly, A.R.S. § 32-1154(B) 

permits investigation and punishment of a violation on the ROC’s own

motion. The ROC’s interpretation would frustrate § 32-1154(G)’s intended 

compensatory purpose in any case in which the ROC initiated proceedings 

on its own motion. Given the absence of an express requirement that a 

“person injured” have taken part in the underlying complaint against the 

contractor, and interpreting the statutory scheme as a whole, we conclude 

that a “person injured” as defined in § 32-1131 is entitled to recover from 

the Fund even if not a party to the underlying ROC complaint.

¶19 Because Pinnamaneni, as trustee of the Trust and occupant of 

the residence, qualifies for recovery from the Fund as a “person injured,” 

the superior court erred by upholding the ROC’s denial of Pinnamaneni’s

claim for recovery from the Fund under A.R.S. § 32-1132. Pinnamaneni has 

requested attorney’s fees on appeal under A.R.S. § 12-348. As the prevailing 

party, Pinnamaneni is entitled to an award of reasonable attorney’s fees and 

costs upon compliance with ARCAP 21.

CONCLUSION

¶20 For the forgoing reasons, we reverse the superior court’s 

judgment affirming the ROC order and remand for further proceedings 

consistent with this opinion.