ALJDEC

00F-Y0197-ROC · Registrar of Contractors · 2000-11-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 15, 2000 APPEARANCES: Complainant Julio Coto appeared on his own behalf, with assistance in Spanish/English translation from Ignacio Alvarez. Respondent Hy Cool Refrigeration appeared through its owner and qualifying party, Jimmy D. Hammack. ADMINISTRATIVE LAW JUDGE: Daniel G. Martin _____________________________________________________________________ The issue presented by this matter is whether Respondent Hy Cool Refrigeration is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: FINDINGS OF FACT Respondent Jimmy Daniel Hammack, doing business as Hy Cool Refrigeration (“Hy Cool”), is the holder of a Class C-39R license (No. 111746) issued by the Registrar of Contractors (“ROC”). On April 4, 2000, Pablo Garay, a Hy Cool sales representative, made a sales call at Complainant Julio Coto’s residence in Yuma, Arizona. Based on information presented by Mr. Garay during that sales call, Mr. Coto entered into an agreement with Hy Cool to purchase a new air conditioning unit. The purchase price for the new unit (including installation) was $3,937.00. As part of his transaction with Hy Cool, and through documentation provided and processed by Hy Cool, Mr. Coto applied to finance his purchase of the new air conditioning unit through Household Retail Services, Inc. (“HRS”). Mr. Coto’s financing arrangement included a 12 month “promotional period” during which no payments would be due and no interest would accrue. Part of Mr. Coto’s agreement with Hy Cool included an unconditional right to cancel the transaction within three business days. On April 8, 2000, Mr. Coto notified Hy Cool that he was exercising his right to cancel. Mr. Coto did not fully articulate all of the reasons for his decision to cancel, but two significant factors were (a) his discovery that Hy Cool had not received a license to conduct business in Yuma, and (b) the fact that at the time Mr. Garay visited Mr. Coto on April 4, 2000, Hy Cool’s ROC license had been suspended for non-renewal. Upon receipt of Mr. Coto’s notice, Hy Cool canceled the transaction. The financing agreement had already been processed (and approved), so Hy Cool submitted a credit slip to HRS requesting that Mr. Coto’s account be credited for the amount of his purchase (i.e., $3,937.00). HRS was slow to act on Hy Cool’s request (in fact, Hy Cool had to submit a second request before HRS completed the credit), and in the interim HRS issued several statements to Mr. Coto indicating a balance due of $3,937.00. However, as these statements fell within the promotional period, no interest accrued and the statements clearly indicated that no payments were due. Mr. Coto, believing that Hy Cool had failed to properly cancel the transaction and that HRS was looking to him for payment, filed a complaint against Hy Cool with the ROC on June 12, 2000. Mr. Coto alleged: “1) Work canceled when discovered that Hy Cool’s license was suspended, 2) Job in City [of Yuma] & Hy Cool not licensed by City, 3) Hy Cool did not do work yet collected money from finance company, 4) homeowner is being billed anyway.” At some point after filing his complaint, Mr. Coto obtained copies of the documents that Hy Cool had submitted to HRS in support of Mr. Coto’s credit application. One of these documents is titled “Completion Certificate,” and purports to certify completion of the work for which the financing was sought. Mr. Coto adamantly denied having signed this document, and alleged that Hy Cool forged his signature in order to obtain early payment from HRS. At the hearing, it was upon this allegation that Mr. Coto most heavily focused. Jimmy D. Hammack testified in his own behalf. Mr. Hammack acknowledged that during the relevant period Hy Cool’s ROC license had been suspended for non-renewal and that Hy Cool had not obtained a business license from the City of Yuma. Regarding Hy Cool’s ROC license, Mr. Hammack explained that Hy Cool had changed its address (without notifying the ROC), and therefore failed to receive the ROC’s renewal form. Regarding the City of Yuma business license, Mr. Hammack stated that he had inquired with the City, and that although he had been instructed to obtain a business license, he had not been told that he could not conduct business until the license was issued. In both cases, Hy Cool promptly rectified its delinquency. Hy Cool renewed its ROC license on April 10, 2000, and obtained its Yuma business license on April 11, 2000. Mr. Hammack testified that Hy Cool’s normal business practice in sales such as the one at issue is to call for payment authorization on a financing arrangement as soon as the paperwork is signed. Although Mr. Hammack did not participate in the sales presentation to Mr. Coto, Mr. Hammack testified that he believed this procedure was followed in Mr. Coto’s case. Mr. Hammack asserted that Mr. Coto’s signature on the “Completion Certificate” was genuine. However, upon further questioning, Mr. Hammack acknowledged that as he had not been present for the sale, he had no independent knowledge to support this assertion. As of the close of the presentation of evidence, there was no dispute between the parties that (a) HRS had credited Mr. Coto’s account for the full amount of the purchase price, (b) that HRS is not looking to Mr. Coto for payment on that account, and (c) that Mr. Coto has not suffered any financial damage as a result of the Hy Cool transaction. Mr. Coto stated that he was not asking for discipline to be imposed against Hy Cool’s license, but that he did believe Hy Cool’s forgery of his signature was improper and that Hy Cool’s conduct needed to be brought out into the open. Having reviewed all of the evidence, the Administrative Law Judge finds that only one factual dispute exists: Whether Mr. Coto’s signature on the “Completion Certificate” is genuine. Although the signature bears a close resemblance to other of Mr. Coto’s signatures that are admittedly genuine, the Administrative Law Judge is unable to draw any firm conclusions from this comparison as neither party offered into evidence any substantive handwriting analysis. Mr. Hammack was not present at the sales presentation; therefore, he could not testify to the genuineness of the signature. Thus, the only probative evidence regarding the genuineness of Mr. Coto’s signature consists of Mr. Coto’s denial that the signature is his. On this point, the Administrative Law Judge found Mr. Coto’s testimony credible and, therefore, in the absence of any contradicting evidence, determinative of the question: Someone from Hy Cool forged Mr. Coto’s signature on the “Completion Certificate.” CONCLUSIONS OF LAW In this proceeding, Mr. Coto bears the burden to prove, by a preponderance of the evidence, that Hy Cool is subject to discipline for violations of A.R.S. § 32-1154(A)(1), (A)(2), (A)(7) and/or (A)(18) as charged by the ROC in its July 14, 2000 Citation and Complaint.[1] 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). The Administrative Law Judge concludes that Mr. Coto sustained his burden to prove that Hy Cool violated A.R.S. § 32-1154(A)(18), but not (A)(1), (A)(2) or (A)(7). Under A.R.S. § 32-1154(A)(1), a contractor is subject to discipline for “abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” Hy Cool neither abandoned its agreement with Mr. Coto, nor did it refuse to perform. Therefore, Hy Cool did not violate A.R.S. § 32-1154(A)(1). Under A.R.S. § 32-1154(A)(2), a contractor is subject to discipline for “departure from or disregard of plans and specifications . . . in any material respect which is prejudicial to another. . . .” Because Mr. Coto canceled the agreement, there was no installation of the subject air conditioning system, and therefore no basis upon which to conclude that Hy Cool departed from or disregarded plans or specifications. Therefore, Hy Cool did not violate A.R.S. § 32-1154(A)(2). Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The evidence demonstrated that someone from Hy Cool forged Mr. Coto’s signature on the “Completion Certificate.” This action was both a wrongful and a fraudulent act. However, in order for there to be a violation of A.R.S. § 32- 1154(A)(7), the wrongful or fraudulent act must result in substantial injury. Here, Mr. Coto did not suffer any injury because HRS credited Mr. Coto’s account for the full amount of the purchase price, HRS is not looking to Mr. Coto for payment on that account, and Mr. Coto did not suffer any financial damage as a result of the Hy Cool transaction. In the absence of such injury, a statutory prerequisite to the imposition of discipline under this subsection, the Administrative Law Judge concludes that Hy Cool did not violate A.R.S. § 32-1154(A)(7). Under A.R.S. § 32-1154(A)(18), a contractor is subject to discipline for “contracting or offering to contract or submitting a bid while the license is under suspension or while the license is on inactive status.” Hy Cool admitted that its license had been suspended for non-renewal during the relevant time period. Therefore, Hy Cool violated A.R.S. § 32- 1154(A)(18). The ROC’s July 14, 2000 Citation and Complaint advised Hy Cool that in the event of a finding of a violation against it, Hy Cool’s prior disciplinary record of final Registrar of Contractors’ orders could be considered in mitigation or aggravation. Accordingly, subsequent to the conclusion of the instant hearing, the Administrative Law Judge took notice of prior final disciplinary orders against Hy Cool in the ROC’s official records. Those records revealed several prior complaints, none of which had resulted in a final disciplinary order. Therefore, Hy Cool’s prior record is deemed to be good. The Administrative Law Judge considered this mitigating factor when determining appropriate recommended discipline in this case. Upon considering the nature of the established violation in this case, and all of the evidence presented, the Administrative Law Judge concludes that it is appropriate for the ROC to impose discipline against Hy Cool. However, under the particular facts and circumstances presented, the Administrative Law Judge believes the most appropriate form of discipline to be probation as opposed to suspension or revocation. Hy Cool is advised, however, that it should consider itself on notice that any future violations of a similar nature may be grounds for the imposition of more severe discipline, including suspension or revocation. RECOMMENDED ORDER Based on the foregoing, the Administrative Law Judge makes the following recommended Order: Commencing on the effective date of the Order entered in this matter, Hy Cool’s Class C-39R shall be placed on disciplinary probation for a period of 15 days. Done this day, December 5, 2000.

______________________________________ Daniel G. Martin Administrative Law Judge

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

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

By ___________________________ ----------------------- [1] The ROC’s July 14, 2000 Citation and Complaint also charged Hy Cool with violating A.R.S. § 32-1154(A)(13), which subjects a contractor to discipline for “failure in any material respect to comply with [Title 32, chapter 10].” The Administrative Law Judge did not consider this charge, however, because the ROC’s citation and complaint did not specify the provision of Title 32, chapter 10 with which Hy Cool allegedly failed to comply, and therefore did not provide adequate notice to Hy Cool of the grounds upon which the ROC was seeking to impose discipline against Hy Cool’s license.

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