ALJDEC decisions subject to certification as final

04F-2454-ROC · Registrar of Contractors · 2004-08-09

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 20, 2004 APPEARANCES: Futura Stone, Complainant in Docket No. 04F-2454-ROC and Respondent in Docket No. 04F-2323-ROC, appeared through Robert Southerland, partner and qualifying party, pro per. Futura Stone of Colorado, Complainant in Docket No. 04F-2323-ROC and Respondent in Docket No. 04F-2454-ROC, failed to appear either personally or by authorized representative.[1] ADMINISTRATIVE LAW JUDGE: Brian E. Smith _____________________________________________________________________ Evidence and testimony were presented and, based on the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT 1. Arizona’s Only Decorative Futura Stone, LLC (“AODFS”) is an Arizona limited liability company doing business in Arizona as Futura Stone of Arizona.[2] Jeffrey Scott Jenkins, member and qualifying party, holds license number 191021, Class K-05 (Dual Concrete Coating). Roger and Debra Bacon are also members. A review of the licensing database maintained by the Registrar of Contractors confirms that this license was issued December 4, 2003 and is current. 2. Futura Stone is an Arizona partnership (“FS”). Michael James Fahmie, partner and qualifying party, holds license number 077629, Class C- (Residential Epoxy coated stone surfaces). Robert Stanley Southerland is also a partner. A review of the licensing database maintained by the Registrar of Contractors confirms that this license was issued April 26, 1988 and is current. 3. AODFS filed a complaint against FS with the Registrar of Contractors on or about January 20, 2004 (Case Number 04-2323). FS filed its complaint against AODFS with the Registrar of Contractors on or about February 4, 2004 (Case Number 04-2454). On July 13, 2004, AODFS filed a motion to consolidate these two matters. By Order dated July 16, 2004, the undersigned granted said motion and ordered that both matters come for hearing on the above-referenced date, the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated June 9, 2004 for Docket No. 04F-2454-ROC. 4. Robert Southerland (“Southerland”) testified on behalf of FS and submitted Exhibits A through G which were marked, admitted and considered.

5. No one appeared or testified on behalf of AODFS. 6. Southerland testified that, prior to participating in the Phoenix Home and Garden Show (“show”) on January 9, 10 and 11, 2004, he reviewed the show’s website to ensure his company’s name was listed and determine which exhibitors and participants would be present. While doing so, Southerland discovered that a company by the name of “Futura Stone of Arizona (“FSA”)” would be present. 7. While at the show on January 9, 2004, Southerland located and approached the FSA booth and introduced himself and his company. A discussion ensued regarding which company had the right to use the “Futura Stone” name and sell that product. According to Southerland, his discussion with AODFS’ Debra Bacon became somewhat strained and ended with both parties asserting the right to the “Futura Stone” name. 8. During and subsequent to the above-referenced conversation, Southerland obtained from the FSA booth brochures, business cards and flyers (Exhibits C, D, and E) that depicted the FSA name. Southerland also took photographs of the FSA banner (Exhibits B-1 and B-2). Other evidence of the use of the FSA name obtained and entered into evidence by Southerland was the show’s website list of exhibitors (Exhibit A), Better Business Bureau website information (Exhibit F) and an estimate sheet (Exhibit G). 9. Southerland alleged that use of the FSA and “Futura Stone” names in Arizona by anyone other than his company constituted violations of the Registrar of Contractors’ regulations though he did not cite to any specific provision. 10. Southerland further asserted that FSA was actually Futura Stone of Colorado (“FSC”) dba FSA and that the use of FSA by FSC also violated his company’s name rights and Registrar of Contractors regulations. 11. In its January 20, 2004 complaint, AODFS alleged that FS was in violation of trademark and trade name laws pertaining to the “Futura Stone” name and that FS was misleading customers as to the sale and marketing of the actual “Futura Stone” product. 12. On or about June 17, 2004, the Registrar of Contractors issued a Citation and Complaint against FS wherein were alleged possible violations of A.R.S. §32-1154A 7 and 16. 13. In its answer dated July 2, 2004, FS asserted that it was in compliance with, and denied any violation of, all current Registrar of Contractors rules and regulations. 14. In its February 4, 2004 complaint, FS alleged, inter alia, that FSA (now AODFS) was in violation of trade name laws and engaged in false or misleading advertising. 15. On or about May 6, 2004, the Registrar of Contractors issued a Citation and Complaint against AODFS wherein were alleged possible violations of A.R.S. §32-1154A 7, 15 and 3 (R4-9-108). 16. In its answer dated May 11, 2004 (received by the Registrar of Contractors on May 17, 2004), AODFS affirmatively asserted that it was the only authorized dealer of “Futura Stone” in Arizona pursuant to rights granted it by Futura Companies, the purported owner of the “Futura Stone” Federal Trademark and trade name. AODFS further alleged that FS had been previously ordered by the Futura Companies to cease and desist in the use of the “Futura Stone” name but has failed to do so.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors against FS charged it with possible violations of A.R.S. §32-1154A 7 and 16. Those statutory sections require that the holder of a license or person listed on the license shall not commit the following: 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. … 16. False, misleading or deceptive advertising whereby any member of the public may be misled and injured.

The CITATION AND COMPLAINT issued by the Registrar of Contractors against AODFS charged it with possible violations of A.R.S. §32-1154A 7, 15 and 3 (R4-9-108). Those statutory sections require that the holder of a license or person listed on the license shall not commit the following: 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.

… 15. Acting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth upon the license.

… 3. Violation of any rule adopted by the Registrar.

CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over this matter pursuant to A.R.S. § 32-1101, et. seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. . To warrant such sanctions by the Registrar, each complainant must demonstrate by a preponderance of the evidence that the applicable respondent violated any one, or more, of the statutory sections cited. Proof by a “preponderance” means that “the evidence is sufficient to persuade the finder of fact that the proposition is more likely true than not.” In re Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994). See also, Culpepper v. State of Arizona, 187 Ariz. 43, 930 P.2d 508 (App. 1996). It is “evidence which is of greater weight or more convincing than the 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 1182 (Rev. 6th ed. 1990). 3. As heretofore noted, AODFS failed to appear at the hearing and present any evidence is support of its claims in matter number 04F-2323-ROC or in defense of FS’ claims in matter number 04F-2454-ROC. 4. Based on the record in this matter, it is determined and concluded that AODFS failed to demonstrate by a preponderance of competent, probative and credible evidence that FS’ actions constituted violations of any of the enumerated provisions of A.R.S. §32-1154A, as charged in the issued Citation in Case Number 04-2323 (Docket Number 04F-2323-ROC). 5. With regard to Case Number 04-2454 (Docket Number 04F-2454-ROC), it is determined that FS demonstrated by a preponderance of competent, probative and credible evidence that, as of January 2004, AODFS was doing business as and advertising under the monikers “Futura Stone of Arizona, LLC” and/or “FSOA, LLC.” It is also determined and concluded that, according to Registrar of Contractors’ records, until March 12, 2004 AODFS operated as and its license was issued to Futura Stone of Colorado dba FSOA, LLC.[3] 6. It is further determined and concluded that, though FS was first licensed in Arizona in 1988 and AODFS in 2003, AODFS previously advertising as “FSOA, LLC” did not violate A.R.S. §32-1154A (16) as that was a “dba” under which Futura Stone of Colorado was licensed by the Registrar of Contractors in Arizona.[4] 7. It is also determined and concluded that the methods by which AODFA previously advertised, which set forth “Futura Stone of Arizona” only and did not specifically denote “Futura Stone of Colorado dba FSOA, LLC” and/or “FSOA, LLC” (Exhibits A, C and D), were methods by which “any member of the public may be misled” and, therefore, constituted violations of A.R.S. §32-1154A (16). 8. The above-referenced violations of A.R.S. §32-1154A (16) constitute “wrongful acts” by a licensee under A.R.S. §32-1154A (7). However, the weight of credible evidence in this case did not establish that FS was “substantially injured” as alleged. Southerland testified that he felt “damaged somewhat” by confusion that may arise from two businesses using the same name and by “slanderous statements” made by AODFS in its prior advertising. No other evidence of injury was proffered by FS. Absent such evidence, it is determined and concluded that an unsupported claim of being “damaged somewhat” does not equate to substantial injury. In addition, slander is “[t]he speaking of base and defamatory words tending to prejudice another in his reputation, office, trade, business, or means of livelihood.” Black’s Law Dictionary 1244, (Rev. 6th ed. 1990). FS provided no evidence of words spoken by anyone affiliated with AODFS, much less slanderous statements.

RECOMMENDED ORDER On the basis of the foregoing, IT IS RECOMMENDED that the entire Citation in Case Number 04-2323 be dismissed. IT IS FURTHER RECOMMENDED that, commencing forty-five (45) days following the effective date of the Order entered in this matter, the Class K-05 license of Respondent AODFS in Case Number 04-2454 be suspended until the Registrar of Contractors receives written confirmation from AODFS that it has ceased using “Futura Stone”, “Futura Stone of Arizona” and/or “FSOA LLC” in all of its advertising in the State of Arizona. IT IS FURTHER RECOMMENDED that, if Respondent AODFS provides the requisite written confirmation to the Registrar of Contractors on or before the expiration of the forty-five (45) days following the effective date of the Order, the above license suspension shall not take place.[5] Done this day, August 9, 2004.

______________________________________ Brian E. Smith Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2004, to:

Registrar of Contractors Israel G. Torres ATTN: Jennifer Brown 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________ -----------------------

[1] Jim Bunting was also present at the hearing. Mr. Bunting advised the undersigned that his company, Futura Companies, was the owner of the “Futura Stone” Federal Trade Mark. Mr. Bunting further advised this tribunal that the owners of Futura Stone of Colorado, Roger and Debra Bacon, could not attend the hearing and that he was present on their behalf to observe and, possibly, facilitate a resolution between the parties to these consolidated matters. The Administrative Law Judge apprised Mr. Bunting that, because he was not an owner, designated employee or other authorized representative of Futura Stone of Colorado or an Arizona licensed attorney retained thereby, he could not act on that company’s behalf or in the Bacons’ stead. [2] According to the Registrar of Contractors’ records, AODFS operated as Futura Stone of Colorado dba FSOA, LLC (“FSA”) until March 12, 2004 when it changed its name. [3] From the documents contained in this tribunal’s file provided by the Registrar of Contractors, it appears there exists an issue regarding the parties’ respective rights to the “Futura Stone” name under Federal Trademark and/or trade name laws. This dispute is beyond the scope of this tribunal’s jurisdiction and, if necessary, should be addressed in the proper forum. [4] The undersigned Administrative Law Judge cannot find a violation of A.R.S. §32-1154A (16) where a company advertises under a name or dba approved and licensed by the Registrar of Contractors. [5] In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order in this matter will be forty (40) days from the date of that certification.

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