ALJDEC

00F-A990019-BFS · Department of Building and Fire Safety · 2000-04-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 21, 2000. APPEARANCES: APPELLANT: Trenton Lund, Qualifying Party and member, on his own behalf. DEPARTMENT OF BUILDING AND FIRE SAFETY: by Marc Harris, Assistant Attorney General; with Michelle Castaneda, Administrative Assistant.

ADMINISTRATIVE LAW JUDGE: Anthony Halas _____________________________________________________________________ Hearing was convened as duly scheduled to consider the appeal by Appellant Net Results Builders, LLC, Trenton N. Lund, Q.P. and Member, of the denial by the Department of Building and Fire Safety of the company’s application for an installer’s license. Upon consideration of the testimony and evidence presented by the parties, and the entire record, the undersigned administrative law judge of the Office of Administrative Hearings makes the following Findings of Fact, Conclusions of Law, and Recommended Decision: FINDINGS OF FACT 1. Administrative notice is taken of the following procedural history: A. On November 15, 1999, Trenton Lund (Lund), as Qualifying Party and Member for Net Results Builders, LLC, (Net Results Builders) filed that company’s APPLICATION for a I-10C Installer’s license with the Office of Administration of the Arizona Department of Building and Fire Safety (Department). B. On that same day, November 15, 1999, the Department issued AGREEMENT FOR CONDITIONAL LICENSE, subject to the terms and conditions of A.A.C. R4-34-301.J and A.R.S. § 41-2176.B, .C, and .D, and pending the outcome of the background investigation. C. On February 10, 1999, the Department issued a notification letter to Lund advising that the application was denied, for the reason that Lund, as applicant, had failed to prove himself to be of good character and reputation, as required by A.R.S. § 41-2175.E. The letter further advised regarding appeal rights. D. On February 16, 2000, Lund timely appealed the denial by requesting a hearing, pursuant to A.R.S. § 41-2176.G. 2. At hearing, Lund appeared and testified as Qualifying Party and Member of Net Results Builders, LLC, and offered Exhibit A, which was marked and admitted, without objection. 3. The Department was represented by Marc Harris, Assistant Attorney General, who presented the testimony of Michelle Castaneda (Castaneda), an administrative assistant for the Department. The Department also offered Exhibits 1 through 4, which were marked and admitted without objection. 4. In conjunction with Castaneda’s testimony, the Department referred to a copy of the APPLICATION (Exhibit 1) Lund had filed as Qualifying Party for Net Results Builders, LLC, and particularly Section E of the application, to demonstrate that the Department, in performing due diligence to analyze the information therein, had confirmed that at the time he filed the application with the Department of Building and Fire Safety, Lund was also the Qualifying Party on License No. 134799, Class B, issued by the Arizona Registrar of Contractors (Registrar) and held by Future Builders, Inc. 5. The Department referenced documents in Case No. P99-0287 before the Registrar of Contractors (Exhibit 2) to confirm that the Registrar, in its DECISION AND ORDER issued October 7, 1999, revoked License No. 134799, to be effective November 16, 1999, after that license holder had failed to answer the Registrar’s CITATION AND COMPLAINT issued September 9, 1999, in which the Registrar had alleged violations of Arizona contractor’s laws. By operation of law, those allegations were then deemed admitted as a result of the licensee’s default in answering. 6. The Department contrasted that license revocation by the Registrar of Contractors (per Exhibit 2), with Lund’s actual or imputed knowledge (as Qualifying Party) of that imminent revocation the very day before, on November 15, when he was completing the Department of Building and Fire Safety Installer’s License APPLICATION, and had answered “no” to Question 3 in Section E: “Has any person listed under Section D [listing the Qualifying Party and LLC members or managers] within three years prior to date of the application had a license refused or revoked?” (Emphasis added). 7. On the basis of that chronology, the Department contended that because Lund was therefore on notice that the Registrar’s license was to be revoked the very next day based on actions or omissions occurring sometime earlier, his APPLICATION answer was not forthright, was disingenuous at best, and was therefore lacking in the character required of a Qualifying Party before the Department of Building and Fire Safety pursuant to A.R.S. § 41-2175.E. 8. The Department then referenced documents in Case No. P00-0076 before the Registrar of Contractors (Exhibit 3) to confirm that the Registrar, in its DECISION AND ORDER issued December 16, 1999, once again revoked License No. 134799, effective January 25, 2000, after the license holder had failed to respond to the Registrar’s CITATION AND COMPLAINT issued November 10, 1999, in which the Registrar had alleged violations of Arizona contractor’s laws. By operation of law, those allegations were then deemed admitted as a result of the licensee’s default in answering. 9. Finally, the Department referenced documents in Case No. P99-0304 before the Registrar of Contractors (Exhibit 4) to confirm that the Registrar, in its ORDER issued February 17,2000, again revoked License No. 134799, effective March 28, 2000, by adopting a RECOMMENDED DECISION upon hearing for revocation of the Registrar’s license for violations of the Arizona contractor’s laws, at which hearing (on January 24, 2000) the licensee had failed to appear. 10. On the basis of Exhibits 2 through 4, documenting multiple acts and omissions by the Registrar of Contractors’ licensee prior to the APPLICATION herein, and during which time Lund was Qualifying Party, and which acts and omissions resulted in revocation of that license, the Department contended that Lund’s lack of good character was established, since the proof of such acts would also be grounds, per A.R.S. § 41-2175.E, for suspension or revocation if committed by a licensee of the Department of Building and Fire Safety. 11. Lund did not dispute the essential accuracy of the Department’s record of the several disciplinary proceedings before the Registrar of Contractors, per Exhibits 2 through 4, or the ultimate revocation of that Registrar of Contractors license on which he was Qualifying Party, but instead asserted that his ability to act - to defend the license against the citations for wrongful acts relative to workmanship (Exhibit 2) and failure to pay (Exhibits 3 and 4), and prevent its revocation - had been constrained and limited by the structure and dynamics of the corporate licensee, of which he was just one individual without sufficient say, for which reason he finally resigned as Qualifying Party from that entity as of December 5, 1999 (Exhibit A), before the revocation was actually effected. 12. Lund also maintained that despite the Registrar of Contractors license revocation, that licensee had completed several hundred installations under its Registrar’s license without complaint. He stated that the one particular “Bickmore” matter before the Registrar referenced in Exhibit 2 had created a frustrating situation in which his company had been forced to address complaints before both the Registrar of Contractors (directly as respondent) and the Department of Building and Fire Safety (indirectly, as the respondent-Installer’s sub-contractor). 13. Lund also asserted - consistent with certain information in Exhibit 2 - that the initial revocation of the Registrar’s license in Case No. P99-0287 became effective only on January 3, 2000, rather than November 16, 1999, although he presented no evidence from which it might be determined whether that delayed effective date was the result of any intended stay by the Registrar, or simply the result of the Registrar’s inadvertence or oversight in formalizing the prospective revocation. 14. Lund then argued, somewhat by implication, that he therefore wasn’t really on sufficient notice of the Registrar of Contractors’ pending revocation at the time he completed the Department of Building and Fire Safety APPLICATION at issue herein on November 15, 1999 at least to the extent he would be required to answer affirmatively to Question 3, Section E, since the revocation didn’t take effect until January 3, 2000. 15. Nevertheless, Lund conceded that even after that date of revocation he did not amend or supplement Section E of the APPLICATION at any time prior to the Department’s denial on February 10, 2000, a date over five weeks later.

APPLICABLE LAW The licensing provisions pertinent herein are provided in Article 4, Office of Administration, of Chapter 16, Department of Building and Fire Safety, of the Arizona Revised Statutes:

41-2175. Qualifications and requirements for license.

A. A manufacturer, dealer, broker, salesperson or installer license shall be issued by the assistant director. B. The assistant director shall: 1. Classify and qualify applicants for a license. 2. Conduct such investigations as the assistant director deems necessary. 3. Establish and administer written examinations for the applicable class license. . . . D. To obtain a license pursuant to this article, the applicant shall submit to the assistant director a notarized application on forms prescribed by the office together with the required license fee. Such application shall contain the following information: 1. A designation of the classification of license sought by the applicant. 2. The name, birth date and address of an individual applicant. 3. If the applicant is a partnership, the name, birth date and address of all partners with a designation of any limited partners. 4. If the applicant is a corporation, association or other organization, the names, birth dates and addresses of the president, vice-president, secretary and treasurer. 5. For all licenses, except those for salespersons, the name, birth date and address of the qualifying party. The qualifying party must reside within the state of the principal place of the licensee's business and shall not act in the capacity of a qualifying party for more than one license in the same classification. 6. If the applicant is a corporation, evidence that the corporation is in good standing with the Arizona corporation commission. 7. Whether the owner, if the applicant is a sole proprietorship, all partners, if the applicant is a partnership, all officers, if the applicant is a corporation or other type of association, the general partner, if the applicant is a limited partnership, or the individual, if the applicant is a salesperson, has ever been charged or convicted of a felony, or has ever received an adverse final decision in a civil action alleging fraud or misrepresentation, and, if so, the nature of the action and the final disposition of the case. . . . E. Prior to the issuance of any license pursuant to this article, the owner, if the applicant is a sole proprietorship, all partners, if the applicant is a partnership, the general partner, if the applicant is a limited partnership, the president, vice-president, secretary, and treasurer, if the applicant is a corporation or other type of association, the individual, if the applicant is a salesperson, and the qualifying party shall be of good character and reputation and shall submit a fingerprint card for background analysis. Lack of good character and reputation may be established by showing that such person has committed any act which, if committed by any licensee, would be grounds for suspension or revocation of such license. F. To obtain a license pursuant to this article, a person shall not have had a license refused or revoked within one year prior to the date of the application nor have engaged in the business without first having been licensed nor shall a person act as a licensee between the filing of the application and actual issuance of the license. As used in this subsection, "person" means an applicant, an individual, a qualifying party, any partner of a partnership or any officer, director, qualifying party or owner of forty per cent or more of the stock or beneficial interest of a corporation. (Emphasis added.)

41-2176. Issuance of a license.

A. Upon receipt by the assistant director of the nonrefundable fee required by this article, an application furnishing complete information as required by the assistant director and upon the applicant taking and passing the applicable examination required by § 41-2175, the assistant director shall issue a license to the applicant, pending completion of the background analysis, permitting the applicant to engage in business pursuant to the terms of this article for one year. . . . D. On completion of the background analysis, the director may issue either a permanent or a probationary license, depending on the results of the background analysis. . . . G. If, before the issuance of the license, information brought to the attention of the assistant director concerning the qualifications of the applicant is such that in the assistant director's discretion it might be proper to deny the license, the assistant director may notify the applicant that the license is denied and that the applicant may request in writing a hearing if it so desires. (Emphasis added.) CONCLUSIONS OF LAW

1. In this administrative proceeding, Trenton Lund, as Qualifying Party for the prospective installer’s licensee, Net Results Builders, LLC, bears the burden of proof and must establish by a preponderance of the evidence that the license denial was improper or contrary to law. See Arizona Revised Statutes (A.R.S.) § 41-1065; Arizona Administrative Code (A.A.C.) R2-19-119; see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App. 1996). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). A preponderance of the evidence is “evidence which is of greater weight or more convincing than evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary at page 1064 (6th ed. 1990). 2. In applying a statute, “. . . words are to be given their ordinary meaning, unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.” Mid Kansas Federal Sav. and Loan Ass’n v. Dynamic Dev. Corp., 167 Ariz. 122, 128, 804 P.2d 1310, 1316 (1991). “A cardinal rule of statutory interpretation is to give full effect to each statutory word or phrase so that no part is rendered void, superfluous, contradictory or insignificant.” Westburne Supply, Inc. v. Diversified Design and Construction, Inc., 170 Ariz. 598, 600, 826 P.2d 1224, 1226 (App. 1992). As set forth above, A.R.S. § 41-2175.E requires the Department to ascertain that a license applicant is of “good character and reputation” before it issues a license to that person as Qualifying Party. “Reputation” is “the estimation in which a person or thing is held, esp. by the community or the public generally . . . .” Webster’s Encyclopedic Unabridged Dictionary of the English Language at 1218 (1989). “Reputation . . . is the word which refers to the position one occupies or the standing that he has in the opinion of others, in respect to attainments, integrity, and the like . . . . Character is the combination of moral and other traits which makes one the kind of person he actually is (as contrasted with what others think of him) . . . .” Id. at 1218-19. 4. It is noted by this tribunal that the language of A.R.S. § 41- 2175.F does not specify that the particular “license refused or revoked within one year prior to the date of application” have been refused or revoked only by the Department of Building and Fire Safety. In this matter, the license revocation in question was instead accomplished by order of the Registrar of Contractors relative to the license that state agency had previously issued. 5. However, given the similar policy considerations and concerns for protection of the public addressed by the Arizona legislature in providing each of these two agencies the authority to issue licenses and discipline licensees, the undersigned concludes that the statutory language addressing a “license. . .revoked within one year prior to application” per A.R.S. § 41-2175.F would contemplate and include a license revoked by the Registrar of Contractors. 6. Then, Appellant Lund’s further argument is that because the Registrar’s license revocation, presumably first occurring on January 3, 2000, rather than November 16, 1999, did not in any event occur until after the application at issue was filed on November 15, 1999, such that his failure to disclose revocation (after at least disclosing the license existed) did not constitute sufficient grounds for denying the installer’s license application by reason of a lack of good character, because the statute only defined revocation prior to application. 7. However, the undersigned concludes that the determination herein does not turn on such a narrow focus relative to the exact date of revocation per A.R.S. § 41-2175.F. Rather, A.R.S. § 41-2175.E provides that a lack of good character and reputation may be established by a showing that the person seeking the license has committed an act which “…if committed by any licensee, would be grounds for suspension or revocation of such license.” 8. In this instance, the undersigned concludes that the acts - both of commission and omission - by the Registrar’s licensee with Lund as Qualifying Party through at least December 5, 1999, and as documented in Exhibits 2 through 5, resulted in revocation of that license because the licensee, for all intents and purposes, choose to simply ignore and walk away from, rather than defend, not one but three complaints before the Registrar. 9. As a means of doing business, such an approach to addressing customer complaints - which Lund did not dispute were valid, at least with regard to Exhibits 3 and 4 - is not to be condoned, and would very appropriately result in suspension or revocation, if committed by a Department of Building and Fire Safety licensee. This is so, notwithstanding Lund’s attempt, too late in the game, to disassociate himself from the Registrar’s licensee by resigning as Qualifying Party. 10. The undersigned therefore determines that to allow Lund to resume the same type of business as an installer of manufactured housing in the guise of a new company merely by applying for one agency’s license as Qualifying Party while resigning that position on a license already or without doubt about to be revoked by another agency is contrary to the spirit and intent of the law requiring that a licensee of the Department of Building and Fire Safety be of good character. 11. Therefore, it is concluded that the Department did not abuse the discretion that the legislature granted in A.R.S. § 41-2175.E in denying a installer’s license to Mr. Lund as Qualifying Party for Net Results Builders, LLC based on the APPLICATION filed on November 15, 1999.

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the appeal in Case No. AAA 99-0/019 be dismissed. Done this day, April 28, 2000.

______________________________________ Anthony Halas Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2000, to:

Department of Building and Fire Safety N. Eric Borg ATTN: Michelle M. Castaneda East Virginia, Suite 100 Phoenix, AZ 85004

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826