ALJDEC decisions subject to certification as final

04F-T1237-ROC · Registrar of Contractors · 2005-03-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: Friday, February 18th, 2005; 9:00 a.m. APPEARANCES: Complainant, Temple Emmanuel, was represented by Mssrs. David J. Dwyer and Melvin C. Cohen, Attorneys-at-Law. Respondent, Tri-City Mechanical, Inc., was represented by Mr. Michael J. Holden, Attorney-at- Law. ADMINISTRATIVE LAW JUDGE: Grant Winston _____________________________________________________________________ The administrative hearing of this matter was held in the Office of Administrative Hearings, Tucson. Based on the parties’ stipulations and legal memoranda filed in this case, the following Findings of Fact, Conclusions of Law and Recommended Order are made. FINDINGS OF FACT 1. Respondent Tri-City Mechanical, Inc., is, and during all time material hereto was, a contractor licensed by and doing business in the State of Arizona, holding Class L-39 License Number 072973. 2. This matter concerns work performed to the heating and cooling system at Temple Emmanuel, in Tucson, Arizona, the Complainant herein. The parties stipulated that there is corrective work needing to be performed to the subject work, and further stipulated, in writing, for the record, the precise scope and nature of that corrective work. (See: Stipulation of Parties Re: Scope of Remedial Work, February 28th, 2005.) 3. The sole issue presented, then, is: Does jurisdiction lie in the Registrar of Contractors to hold this Respondent responsible for properly correcting the defective work performed at the temple, or not? This issue was raised by the Respondent’s purchase of the licensed contractor who had performed the defective work, at a point in time after that contractor had performed the defective work. Respondent maintains that it cannot be properly held responsible for the defective work performed by the company it purchased before it had purchased that company. Complainant, of course, disagrees. 4. The predecessor company that had performed the defective work at the temple is Andros Refrigeration. It had performed this work up to January 31st, 2003, which is a key date in this case. January 31st, 2003, is the date on which Respondent’s purchase of Andros became effective. Respondent maintains it is not responsible for the bad work Andros did at the temple before that date. 5. Material facts from the Respondent’s perspective include that already mentioned relative to the purchase not occurring until after Andros had performed the subject work. Respondent also offered the record the facts that it is undisputed that Respondent never worked on the project before January 31st, 2003, and that no work post-January 31st, 2003, has been the subject of this complaint. Also, Respondent points out, when Respondent purchased Andros, it specifically excluded purchase of Andros’s design liabilities and warranty obligations in excess of $2,000.00. 6. Complainant informed the record of other facts it wishes to be considered. On January 31st, 2003, the same date Respondent’s purchase of Andros became effective, Respondent sent a letter to the Complainant informing that Andros had “joined forces” with Respondent, and Respondent had retained Andros’s employees, and that “all work going forward will be under the contracting licenses of [Respondent].” On or about February 26th, 2003, Complainant points out, Respondent sent another letter to Complainant stating therein that Respondent affirmatively “guarantees all work performed and material and equipment furnished under the [contract with Andros] against defect due to faulty or defective materials or workmanship, or failure of the work to conform to the Contract Documents as it appears within a period of one year from the date of final acceptance of the completed work…..” Complainant’s project representative, Mr. Kenneth Goodman affied that Respondent’s associate on the project, Mr. Rob Larson, had assured him that Respondent would work to rectify all problems on the project that had been created by Andros. Respondent was compensated by Complainant for the project from February 2003, until the work’s cessation. 7. It is further found that pursuant to this complaint, Registrar of Contractors Inspector Bob Gibson did inspect the project and did issue a written Corrective Work Order to this Respondent, dated September 8th, 2004, directing Respondent to make essentially the same corrections as those stipulated by the parties to be necessary, and to do so within 15 calendar days. 15 days is a reasonable amount of time for a responsible contractor to comply with Inspector Gibson’s CWO. 8. It is further found that these parties are currently embroiled in Superior Court in and for the County of Pima, litigating the same project. Issues of contract law have been put before that tribunal, but, as will be seen herein-below, those issues do not, after all, bear directly on the conclusions reached or recommendations made in this case 9. Notice is taken of the Respondent’s prior license record with the Arizona Registrar of Contractors.

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 is charged in the instant Citation and Complaint with possible violations of A.R.S. 32-1154.A.2., 7., 23., and 3. 3. The legal issue raised by the Respondent is jurisdictional. Does the Arizona Registrar of Contractors have jurisdiction to discipline the Respondent’s license for work performed by another licensed contracting firm before Respondent purchased that firm? The answer is yes. 4. First, Respondent is a licensed contractor under A.R.S. 32-1101. It holds a Class L-39 License properly issued by the Arizona Registrar of Contractors. But that recognition alone does not resolve the issue of whether this licensed contractor is to be held by the Registrar responsible for Andros’s early work at the temple. 5. Dispositive of this legal question are the purpose and intent behind the very creation of the Registrar of Contractors as a state regulatory agency, and the legally desired liberal interpretation and application of any such statutory creation so as to achieve that purpose when it is one of public protection. It has long since been held that the purpose of licensing is to protect the public from unscrupulous acts. See, e.g. Beazer Homes Arizona, Inc. v. Goldwater, 196 Ariz. 98, 101, 993 P.2d 1062, 1065 (1999). See also: Security Insurance Co. of New Haven v. Day, 6 Ariz.App. 403, 433 P.2d 54 (1967). Further, courts, and state regulatory agencies for that matter, ought to liberally construe a statute having pubic protection as its reason for being. See: State v. Sanner Contracting Co., 109 Ariz. 522, 524, 514 P.2d 443, 445 (1973). 6. To allow Respondent’s argument to prevail would create a great deal of mischief by leaving the public unprotected at times when the legislature meant for the Registrar to be its protector. Instances can be easily envisaged in which an unscrupulous contractor, after leaving a trail of defective construction projects behind, shrewdly sells his company to another licensed contractor while he is still one step ahead of the Registrar’s enforcement authority, and then promptly skips the state, handsome profit in hand. Where would the public then be? Where would its recourse lie? Ought the public be told when turning to the Registrar that nothing is to be done by that agency because the selling contractor who did the work is gone, and the purchasing contractor who is here did not do the work? 7. The conclusion must be that the Arizona Registrar of Contractors does have jurisdiction over this and similarly situated licensees, and the subject matter of work performed by the company they purchased before the purchase took effect. A licensed contractor ought to be held to account to the Registrar, and the public, for the work of a company it bought, even before the purchase became effective. 8. These conclusions having been reached, the rest of the case falls neatly into place. Respondent therefore did violate A.R.S. 32- 1154.A.2., 23., and 3., (A.A.C. R4-9-108), as set forth in the Citation and Complaint. The Respondent must be ordered to correct the full scope of stipulated work. 9. There is no evidence of any violation of A.R.S. 32-1154.A.7., (wrongful or fraudulent act) independent of the violations already concluded.

RECOMMENDED ORDER In view of the foregoing Findings of Fact and Conclusions of Law it is hereby recommended that Respondent’s Class L-39 License number 072973 be suspended until such time as the Registrar receives written proof that the Respondent has complied with the Inspector’s Corrective Work Order (as detailed in the parties’ stipulation regarding the scope of remedial work).

It is further recommended that if the Respondent properly accomplishes the above-described corrective action, on or before the effective date of this order (40 days after the date of service shown by the Registrar’s certification on the order), then the above-provided license suspension shall not occur, and Citation and Complaint No. T04-1237 shall be closed. In the event of certification of the Administrative Law Judge’s Decision and Order by the Director of the Office of Administrative Hearings, then the effective date of the order shall be 40 days from the date of that certification. Done this day, March 17th, 2005.

______________________________________ Grant Winston Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2005, to:

Registrar of Contractors Israel G. Torres ATTN: Jennifer Brown 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