ALJDEC

02F-UT0025-ROC · Registrar of Contractors · 2002-01-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: Friday, December 21st, 2001; 9:00 a.m. APPEARANCES: The Registrar of Contractors was represented by Ms. Eva K. Bacal, Assistant Attorney General. The respondent, Mr. Elwood T. Stagakis, represented himself. ADMINISTRATIVE LAW JUDGE: Grant Winston. _____________________________________________________________________

The administrative hearing of this matter was held in the Office of Administrative Hearings, Tucson, Arizona. Testimony was heard and other evidence admitted to the 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 respondent herein, Mr. Elwood T. Stagakis, was a contractor licensed by and doing business in the State of Arizona. Respondent held Class L- License number 096473 restricted to the installation and repair of backflow prevention assemblies. That license expired on January 31st, 2000. Prior to the expiration of respondent’s license, respondent had never filed with the registrar any application to renew his license. Respondent did not possess any other license from the registrar. 2. Respondent went to the Tucson Water offices several times in February, March, April, and June, of 2001, to procure backflow assembly permits. Tucson Water is the City of Tucson’s water supply authority. Respondent applied for and obtained ten such permits from Tucson Water during this time frame. Such permits are required by Tucson Water, the local permitting authority for backflow prevention devices. 3. Copies of the ten permits obtained by the respondent are evidence of record in this case. Respondent admits that he signed the applications and submitted them. Each application requires a licensed contractor who is making the application to affirm that he or she is in fact a licensed contractor. Respondent completed the applications by affirming that he or his business, A-1 Independent Testing, was a licensed contractor. He signed all the applications. 4. On July 20th, 2001, the City of Tucson, Tucson Water, through its agent and employee, Mr. Craig H. Adams, filed an administrative complaint with the Registrar of Contractors. The complaint was against the respondent for allegedly contracting without a license, inasmuch as respondent had applied for the backflow permits after his license had expired. 5. The complaint was investigated by Registrar of Contractors Investigator, Mr. Matthew L. Perry. Investigator Perry discovered the above-found facts of respondent’s application and receipt of the ten permits. The investigator consulted the registrar’s records concerning the respondent, and they revealed to him that the respondent held at one time Class L-05 License number 096473, but that that license had expired on January 31st, 2000. The record also revealed to the investigator that there was in the registrar’s office no other active or inactive license information, or license application information pertaining to respondent or respondent’s business entity. 6. Therefore, Investigator Perry issued a Cease and Desist Order to the respondent on August 3rd, 2001, therein commanding him to cease and desist all unlawful, unlicensed contractor activity. Covering the order was a notice from the investigator to the respondent of the particular statute addressing contracting without a license. 7. Investigator Perry issued a Civil Citation for violations of the law against contracting without a license, as well as an assessment of a civil penalty in the amount of $1,500.00. The investigator mailed the assessment to the respondent by United States Postal Service, certified mail, on September 13th, 2001. Respondent signed for and received the notice, citation and assessment on September 14th, 2001. The notice advised the respondent that if he would apply for a license, there was a possibility that most of the civil penalty would be waived. Respondent did not apply for a license. 8. Respondent requested an administrative hearing to appeal against the decision to assess a civil penalty against him. Notice of the hearing was issued on October 17th, 2001, and this hearing ensued. 9. Respondent produced copies of the invoices his company billed for the installation of the backflow prevention devices, noting in testimony that each was for an amount less than $750.00. Therefore, according to respondent, he did not even need a license to do this work. 10. Respondent argued that the registrar’s office erred by failing to give him proper notice that his license was about to expire, in order that he could have taken steps to renew the license, before it was suspended, and then ultimately expired. Respondent cited in his testimony A.R.S. §41-1064.C. Respondent’s license, on its face, stated its expiration date. 11. Respondent argued that evidence of his acting in good faith may be seen in the fact that he did go through the application process to obtain these permits, although any such good faith becomes more difficult to discern while one is looking at the respondent’s own material falsification on each of the permits themselves. 12. Respondent argued in mitigation that owing to his own poor health he was unable to perform the installation of the ten devices subject of this hearing, and he hired properly licensed contractors to do the installation work. He further testified that the workmanship on each of the ten projects was good, and no member of the public was harmed by any of his actions. This evidence is uncontradicted by the registrar and is found as factual. 13. Respondent finally argued his record as a licensed contractor (when he was one) was a good record, without a single blemish. It is found that the respondent did have a good license record with the registrar. CONCLUSIONS OF LAW 1. This administrative hearing was held under authority of and pursuant to A.R.S. §32-1156, and A.R.S. §41-1092. 2. Respondent was issued a civil citation and assessed a civil penalty in the amount of $1,500.00 under A.R.S. §32-1166, for violation of A.R.S. §32-1151, engaging in contracting without a license. 3. A.R.S. §32-1151 provides in part that evidence of “securing a permit from a governmental agency. . . . shall be accepted in any court as prima facie evidence of existence of a contract.” Respondent obtained ten such permits from the City of Tucson’s water authority agency. As found, the City of Tucson requires permits to install backflow prevention devices. 4. A.R.S. §32-1151 prohibits a person from engaging in the business of, or purporting to have the capacity of, a contractor without having a contractor’s license in good standing. It is clear and undisputed from the record that the respondent’s license had expired on January 31st, 2000, and that he procured the ten permits long after that date by purporting on each application to be a licensed contractor, when, in fact, he was not. 5. It is true that A.R.S. §32-1121.14. does make an exception to the licensing requirement for projects costing less than $750.00. For such work, no license generally is required. However, the respondent cannot avail himself of this exception because there is an exception to the exception at 14.a. Even if the work is for less than $750.00, a valid contractor’s license is still required in cases where a local building permit is required. Beyond that point, respondent still falsely held himself out as a licensed contractor. 6. Respondent was not denied any procedural due process of required notice under A.R.S. §41-1064.C. That statute requires notice of administrative hearing when an agency is taking action on its own motion to suspend a license, not notice that a contractor’s license is about to be suspended for respondent’s own failure to renew, or any other sort of notice as construed by the respondent. 7. Licensed contractors are by law charged with the responsibility of knowing when their license is about to expire, and for taking the necessary steps to timely renew that license. It is not the registrar’s responsibility to remind the contractor that this license is about to expire, and that there can be a hearing to adduce evidence of what? When the expiration date is? 8. A.R.S. §32-1125.A. provides that a license “shall be suspended on the day following its renewal date by operation of law.” Renewal of the license must be performed in a timely manner, i.e. before the renewal date. If the licensee fails to seek renewal within one year after the suspension by operation of law, the license will expire. A.R.S. §32- 1125.B. 9. Importantly, A.A.C. R4-9-116 makes it “the sole duty and responsibility of the licensee to timely renew his license. . . . . “ 10. Therefore, based on the facts and above-cited law, the registrar was entirely correct to cite the respondent for unlicensed activity, and to assess a civil penalty. 11. A.R.S. §32-1166.A. provides that for violating A.R.S. §32-1151, contracting without a license, the registrar may assess a civil penalty “in an amount of at least two hundred dollars for each violation but not more than two thousand five hundred dollars for the multiple violations committed on the same day.” That statute also requires the registrar to adopt rules covering the assessment of the civil penalty. That rule is A.A.C. R4-9-131. 12. In this case there were ten violations committed by the respondent; one by each permit application. The evidence shows that no harm was done to the public, and that the installations were performed by properly licensed contractors. There is no evidence of prior violations. It would seem that the minimum permissible fine for each violation is in order. Thus, ten violations at $200.00 per violation, totals $2,000.00. Therefore, the appropriate civil penalty assessment should be $2000.00. The amount originally assessed by the registrar, $1,500.00, appears to be below the statutory minimum permissible penalty amount for ten violations. RECOMMENDED ORDER In view of the foregoing Findings of Fact and Conclusions of Law, it is hereby recommended that a civil penalty against the respondent be assessed in the amount of $2,000.00. Done this day, January 8th, 2002.

________________________________ GRANT WINSTON Administrative Law Judge

Original transmitted by mail this ____ day of January, 2002, 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