ALJDEC

01F-U0202-ROC · Registrar of Contractors · 2001-01-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 9, 2001

APPEARANCES: Defendant appeared on his own behalf; the State of Arizona was represented by Assistant Attorney General Montgomery Lee and witness Michael Cantrell, Investigator for the Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

The State of Arizona brings this action alleging that Defendant Russell Skousen engaged in the business of contracting without a license and without being exempt from licensure. The parties presented evidence and testimony at the hearing and, based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding a violation and recommending a $1000.00 civil penalty. FINDINGS OF FACT 1. On October 6, 2000, Douglas Robinson, Qualifying Party for Registrar of Contractors (ROC) license 158054, filed a complaint with the ROC against Defendant, claiming that in September 2000 Defendant had worked as a subcontractor on a construction project without a license. The case was assigned to ROC Investigator Michael Cantrell. 2. Cantrell first checked ROC records and found that Defendant was not licensed as a contractor, nor was he authorized under any other license, including that of B. W. Skousen Contracting. (Exhibit 1.) 3. Cantrell then spoke to both Robinson and Defendant. Robinson had been hired to rebuild a bathroom in Scottsdale and was not familiar with building a shower pan. He stated that he hired Defendant (a neighbor of Robinson’s) as a subcontractor for $760.00, after Defendant informed him that he could operate under the B. W. Skousen Contracting license because it was the license of Defendant’s brother. Robinson stated that Defendant did a lousy job and this caused Robinson to doubt Defendant’s story. Robinson received an “invoice” from Defendant, which he gave to Cantrell. (Exhibit 2.) 4. The invoice from Defendant states that it is for “consulting fees” then lists “rebuilding showerstall [sic],” “project cost estimate,” “parts list estimate,” and “field consultations.” (Id.) The amount billed is $760.00. There is no price breakdown of the variously listed “activities,” just a single amount of $760.00. (Id.) Defendant submitted three pages of his handwritten calculations and estimations that he testified were his “accounting” service that he provided Robinson. (Exhibit A.) 5. Defendant admits that he performed “labor” on the project for Robinson. He admitted such to Cantrell and at the hearing. Both Robinson and Defendant told Cantrell that Defendant built the shower pan and installed framing and drywall. The evidence shows that Defendant did construction work on the project. 6. Despite his admission, Defendant maintains that he was only providing a service to Robinson, not functioning as a contractor. At the hearing, he downplayed his “hands on” role and emphasized that he did design, estimating, and accounting for Robinson. He admitted that he was not an employee of Robinson, but was merely a “laborer.” 7. On October 23, 2000, Cantrell served Defendant with a Cease and Desist Order and Citation for a $1500.00 civil penalty. Defendant requested a hearing. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the party bringing the allegations. Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). Further, the standard of proof at hearing is by preponderance of the evidence. Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). Therefore, the State bears the burden of showing, by a preponderance of the evidence, that Defendant has violated the statutes cited in the Cease and Desist Order and Citation. Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). The State has met that burden. 2. Arizona Revised Statutes (A.R.S.) § 32-1151 prohibits contracting without a license. Specifically, it declares that it is unlawful for anyone without a license to engage in the business of contracting, to submit a bid or respond to a request for proposal, to act as a contractor, or to hold oneself out as a licensed contractor. Contracting includes construction, alteration, repair, or improvement of a structure. A.R.S. § 32-1101(A)(3). The evidence supports, by a preponderance, a conclusion that Defendant performed contracting work for Robinson under the pretense of licensure. Thus, Defendant acted as a contractor and held himself out as a licensed contractor. 3. There are several exemptions to the licensure requirement, one of which has been appealed to by Defendant. A.R.S. § 32-1121(A)(14) is the so- called “handyman” exemption. That provision allows a person to perform “casual or minor” work without a license if “the aggregate contract price, including labor, materials, and all other items, is less than [$750.00].” In Defendant’s instance, the contract price, as evidenced by the invoice, is $760.00. There is no provision in the handyman exemption for dividing out consulting from labor; the aggregate amount is to be used. Thus, although part of the invoice may have been for “consulting,” the contract between Robinson and Defendant included contracting activity and was for a total amount of $760.00. Moreover, the work that Defendant performed was not “casual or minor.” No exemption applies to Defendant. 4. The evidence establishes the validity of the Cease and Desist Order; Defendant violated the statutes. In these circumstances, the Registrar is authorized to impose a civil penalty of at least $200.00 per violation, but no more than $2,500.00 per day. A.R.S. § 32-1166. The Citation imposes a $1500.00 penalty. When asked at the hearing how that number was arrived at, Cantrell stated that $1500.00 was the “standard” penalty. This seems rather arbitrary. 5. The Registrar is mandated by A.R.S. § 32-1166 to adopt rules for assessing civil penalties. The Registrar has done so at Arizona Administrative Code (A.A.C.) R4-9-131. That rule lists eleven factors that the Registrar must weigh when determining the “gravity” of any violation. Two of those factors have been shown by the evidence in this case. Factors and 4 of R4-9-131 concern false statements made to others -- either falsely claiming to be licensed or making a false statement in order to induce the making of a contract. These both occurred when Defendant led Robinson to believe that he could operate under the B.W. Skousen license. 6. No other factors are supported by the evidence before this tribunal. The State did not show by a preponderance of credible evidence that the work performed by Defendant violated building codes, was potentially hazardous, or was substandard. 7. There are several considerations to take into account to determine an appropriate penalty. First, the statutory range is $200.00 up to $2500.00. Next, only two of the eleven factors have been shown. Finally, the nature of the violation is important. This includes consideration of Defendant’s conduct as well as the nature and scope of the work that is the basis of the violation. Given these considerations, the appropriate penalty in this case is $1000.00.

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. . . RECOMMENDED ORDER IT IS RECOMMENDED that the Registrar of Contractors uphold the Cease and Desist Order issued against Russell Skousen, finding that he operated as a contractor without a license on September 13, 2000. IT IS FURTHER RECOMMENDED that the Registrar of Contractors impose a civil penalty of $1000.00 pursuant to A.R.S. §32-1166, to be paid on or before 30 days following the effective date of the Registrar’s Order entered in this matter. No future license shall be issued to any entity consisting of persons associated with Defendant, as defined in A.R.S. § 32- 1101(A)(5), unless payment of any outstanding prior civil penalty is made.

Done this 17th day of January 2001.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Eric A. Bryant Administrative Law Judge

Original mailed this ___ day of January 2001, to:

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

By ___________________________

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