ALJDEC

00F-T0219-ROC · Registrar of Contractors · 2000-04-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: Tuesday, April 6th, 2000; 9:00 a.m. APPEARANCES: The Complainant Registrar of Contractors was represented by Marjorie Becklund, Assistant Attorney General. The Complainant American Conditioned Air, Inc. was represented by Mr. Melvin C. Cohen, attorney-at-law. The Respondent Advance Air Cleaning American Air, Inc. was represented by Mr. Roger C. Decker, attorney-at-law. ADMINISTRATIVE LAW JUDGE: Grant Winston. _____________________________________________________________________ This matter was brought on for administrative hearing April 6th, 2000. Testimony was taken and other evidence admitted to record, and, based on the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made. FINDINGS OF FACT 1. The Complainant American Conditioned Air, Inc., is, and during all times material hereto was, a contractor licensed by and doing business in the State of Arizona, holding Class L-39 License number 071836-009, Class C- License number 046247-010, Class L-11 License number 124187, and Class C-11 License number 134091. 2. The Respondent Advance Air Cleaning American Air, Inc. is, and during all times material hereto was, a contractor licensed by and doing business in the State of Arizona, holding Class L-39 License number 121302 and Class C-39 License number 103213. 3. Complainant has been doing business in Arizona, including the Tucson area, since 1977 under the name of American Conditioned Air. 4. Respondent has been doing business in Arizona since 1993, and until recently in the Phoenix area, but not in the Tucson area. When Respondent moved into the Tucson area in 1999, it began using the name American Air, Inc., in its business practices, despite the fact that Respondent’s licenses issued by the Complainant Registrar of Contractors were issued in the name of Advance Air Cleaning American Air, Inc. 5. This practice caused much confusion in the Tucson area population, with many people confounding Complainant “American Conditioned Air” with “American Air, Inc.” The Respondent’s practice also had a detrimental effect on the business of American Conditioned Air. Respondent engaged in aggressive telephone solicitation campaigns; on the other hand, Complainant American Conditioned Air, has never engaged in that activity. This caused not only additional confusion, but negatively impacted Complainant American Conditioned Air’s goodwill in the community. Members of the public would call complainant’s business, very angry and upset as a result of Respondent’s practice, but thinking Complainant was Respondent. 6. In many instances and forms of its advertising the Respondent had used its full name as it appears on its contractor’s license, but had printed the words “Advance Air Cleaning” in exceedingly small print type, but in the same advertisement had printed the words “American Air, Inc.,” in much larger type size. Sometimes a different type font was used for the two portions of the name. 7. Respondent proved that during the time period in question it had sought and obtained from the Arizona Secretary of State a change to its trade name, making it “American Air.” It was Respondent’s testimony that in entering the Tucson market it in no way intended to create confusion or draw off the Complainant’s customer base, but, rather, simply to use its new trade name. Be that as it may, the fact remains that at all times Respondent’s licenses with the Registrar were in the name of “Advance Air Cleaning American Air, Inc.,” a name substantially different from “American Air, Inc.” Changing one’s trade name with the Secretary of State does not alter one’s contractor’s license name one jot or tittle. 8. As soon as the Complainant Registrar of Contractors became aware of the Respondent’s business practices, his office personnel in Tucson, namely Mr. Alex Jacome, Southern Arizona Regional Manager, and Mr. James R. Morris, Inspector, (and witness at the hearing) began communicating with the Respondent. Those individuals made it clear to the Respondent that Respondent must cease using any name other than the name appearing on its contractor’s licenses. 9. To Respondent’s credit, the evidence clearly shows that Respondent has, between the time of the complaint and the time of the administrative hearing, made good faith efforts to redo all of its print advertising, business cards, truck and building signs, and had ceased to verbally identify itself by a name other than its licensed name. It was the testimony of the Respondent’s president at the hearing that as of the hearing date all that lacked correction were Respondent’s advertisement in the telephone yellow pages, the name appearing on some of the Respondent’s employees uniforms, approximately 5% of the fleet trucks, Respondent’s website address, and a sign on the back of Respondent’s office building. Respondent’s president testified that he has notified the publishers of the yellow pages to change the Respondent’s name to its licensed name in the next publication. Again, many of these non- conforming usages of Respondent’s name are of the type where the first words in the name appear very small, and are followed by the remaining words that appear very large. Others are use of different fonts which serve to accentuate “American Air” over the other words in the name. 10. Respondent’s use of less than its full licensed name, and its use of different print, or use of different colors for different words serving to accentuate the words “American Air, Inc.,” while camouflaging the words “Advance Air Cleaning,” all are examples of not using the contractor’s name as it appears on the license, or of misleading or deceptive advertising. All of this is so because there is American Conditioned Air doing the same business in Tucson. Had the Complainant not been in Tucson, had Respondent entered a virgin market where no business such as its own was operating, its use of different sized words or different colors for different words would not have been misleading in this respect. 11. Businesses such as Respondent choose which markets to enter, and when they enter a particular market they must take it as they find it. Respondent entered the Tucson market, and when it did it knew or should have known that there was already another same type of business there under the name of “American Advanced Air.” Therefore, it must assume the responsibility of taking unusual steps in order to avoid misleading the public. Simply using its full licensed name and, when using that name in printed material or signs, using the same type size and font, and colors, is not too onerous a burden to ask in these circumstances. 12. Notice is taken of the Respondent’s prior license record with the Registrar of Contractors. CONCLUSIONS OF LAW 1. This hearing was held under authority of and pursuant to A.R.S. §32- 1156, and A.R.S. §41-1092. 2. The Respondent herein is charged in the Citation and Complaint with possible violations of A.R.S. §32-1154.A.7., 13., 15., and 16. 3. A.R.S. §32-1154.A.15., prohibits a license contractor from “[a]cting in the capacity of a contractor under any license issued under this chapter in a name other than that as set forth upon the license.” This prohibition was clearly violated by the Respondent when in its business practices it identified itself as simply “American Air,” or “American Air, Inc.,” all the while being licensed by the registrar as “Advance Air Cleaning American Air, Inc.” 4. A.R.S. §32-1154.A.16., prohibits a licensed contractor from practicing any “[f]alse, misleading or deceptive advertising whereby any member of the public may be misled and injured.” Respondent violated this section when in its business practices it identified itself simply as “American Air,” or “American Air, inc.,” and when it identified itself in different type for “Advance Air Cleaning,” and larger type size for “American Air, Inc.” in the same advertisement or printed material, or in any instance where it may have used different color printing ink to accentuate the words “American Air, “ over the remaining words of its licensed name. As found, these practices misled and injured the public, and would continue to do so in the future if permitted. 5. A.R.S. §32-1154.A.7., prohibits a licensed contractor from any wrongful or fraudulent act, as a contractor, which results in another person being substantially injured. Respondent’s conduct described above, already concluded as a violation of A.R.S. §32-1154.A.15., and 16., would constitute a violation of this subsection, as Complainant American Conditioned Air was substantially injured. 6. A.R.S. §32-1154.A.13., prohibits a licensed contractor from “fail[ing] in any material respect to comply with the provisions of this chapter.” As already concluded, Respondent violated A.R.S. §32-1154.A.15., 16, and thereby 7 as well. By those violations it may be concluded that this subsection was violated as well. 7. Complainant American Conditioned Air urged the Administrative Law Judge at hearing to recommend an order whereby the Registrar would remove the word “American” from Respondent’s licensed name. The ALJ does not believe that is within his jurisdiction to do. The ALJ believes he is circumscribed to conclude only as to the legal issues presented in the Citation and Complaint, that is, whether or not Respondent violated the sections of the contractor laws therein appearing. RECOMMENDED ORDER Wherefore, it is hereby recommended that Respondent’s Class L-39 License number 121302, and Class C-39 License Number 103213, be suspended until such time as the Registrar receives proof that the Respondent has completed converting all advertisements to include its full name as it appears on Respondent’s license, using the same type size and font, and color scheme for all the words. In the case of not-yet-published telephone directories, it shall be sufficient to provide the Registrar proof, in writing, that Respondent has directed any appropriate publisher(s) to make the change. It is further recommended that if the Respondent properly accomplishes the above described corrective action, on or before the effective date of this order, then the above described license suspension shall not take place, and the instant Citation and Complaint be closed. It is further recommended, since print advertising is much easier to confirm than telephonic or other verbal advertising, that following any period of suspension, or in the event of no suspension following the effective date of this order, that Respondent’s licenses be placed on disciplinary probation status for a period of six months in order to allow for the Registrar’s office’s continued monitoring of such activities, e.g. telephone solicitations. Done this day, April 26th, 2000.

________________________________ GRANT WINSTON Administrative Law Judge

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

Michael P. Goldwater, Director Registrar of Contractors ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By _______________________________

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Office of Administrative Hearings 100 N. Stone Ave., Suite 704 Tucson, Arizona 85701 (520) 628-5488