ALJDEC decisions subject to certification as final

06F-2520-ROC · Registrar of Contractors · 2007-01-22

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 16, 2007.

APPEARANCES: > The Complainant appeared through its sole owner, Daniel C. Demland. > The Respondent was represented by its attorney, Kent A. Lang, Esq.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

Evidence and testimony were presented, and based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. At all times material herein, Respondent was and still is the holder of a Class B residential general contracting license issued by the Registrar of Contractors. The sole business name listed on the license is “T C and T Management LLC” and Charlene Anne Davis (herein called “Char Davis”), the managing member of the LLC entity, is listed as the licensee’s qualifying party.

2. Complainant is a business entity owned and operated by Daniel C. Demland who is a professional architect, duly licensed in this State.[1] A major aspect of the business of all architects, such as Complainant, was shown to be the formulation, evaluation and/or modification of construction- related plans and specifications that are effective and appropriate so as to enable the contemplated structure to be properly built in accordance with all applicable standards and in compliance with all applicable building codes. When completed, such plans and specifications, representing the work-product of and usually owned by the architect, are customarily signed and sealed by the architect who retains responsibility for the correctness and propriety of the prepared and submitted plans.

3. Complainant had been retained by Respondent to perform architectural services relating to several residential structures, or portions thereof, being constructed or remodeled by Respondent. Agreed payments for such services were duly made on each occasion. On another contemplated construction project for a custom “Spec” home, Char Davis on her own had developed generalized design drawings with the assistance of and consultation with several specialty engineering professionals and a draftsman who was a university graduate. Prior to submission to the local building authority, the City of Phoenix, for plan approval and issuance of the required permit, verbal contractual arrangements were concluded between the parties pursuant to which Complainant was to transform the rough design drawings previously developed by or on behalf of Respondent into appropriate published plans and specifications, duly sealed by Complainant, for submission to the City, and Respondent was to pay Complainant the sum of $6,000.00 for the services rendered..

4. It was not disputed that the specified monetary consideration for the contractual work performed by Complainant was fully paid by Respondent. The testimony at the hearing was conflicting with respect to the events, conversations and overall dealings between the parties, especially at the time of the agreement setting the Complainant’s fee amount for the requested professional services, more specifically as to the presence or absence of binding promises by Respondent to utilize the architectural services of Complainant on two future custom construction projects contemplated by Respondent. No valid basis is found to exist for the disbelief of either party’s version, but the evidence tended to indicate that either no specific subsequent custom projects were commenced by Respondent or, to the extent that there were such future projects, all needed professional services were obtained by Respondent from sources other than Complainant.

5. Ultimate approval of the published and sealed plans formulated by Complainant was not obtained from the City for a prolonged time period approaching nine months. The extended delay appeared likely to have been traceable to a degree of shared responsibility on the part of both parties. In any event, all changes or modifications required by the City were made to the Complainant’s originally published plans, thereby resulting in final permitted or field plans. It did appear that at the present time the subject residence has passed all required periodic local inspections and that the issuance of a final Certificate of Occupancy is imminent.

6. It was not effectively disputed that Respondent had started to use another business name instead of the name set forth on its issued contracting license. The name of Cameo Homes was selected as a purported beneficial marketing tool, upon the suggestion of a realtor, and such name appeared to be either a doing business name (“d.b.a.”) of the same entity, T C and T Management LLC, or, more likely, the name of another separate LLC entity, owned and controlled by Char Davis. The Cameo Homes name was reflected, together with Respondent’s license number, on signs posted at jobsites, on business cards and on various other business documents.

7. Licenses issued by the Registrar are not transferable, and whether or not such name was that of a separate entity or merely a “d.b.a.” name of the same entity, the different name usage was impermissible and violative of applicable statutory provisions that require a license holder to do business only under the name appearing on its license and bond.[2] Another contracting law provision mandating the display of the licensee’s correct name and license number on all construction projects and on all business documents would also have been violated by the aforesaid use of the Cameo Homes name.

8. It is recognized that the usage or display by any residential or commercial builder of on-site signs identifying the entity that is constructing a structure, as well as the use of business cards and printed forms, does constitute a form of advertising. Although the information on such signs, cards or other documents with respect to the license and license number purportedly held by Cameo Homes was shown to have been false and is also held to have been misleading, the evidence at the administrative hearing failed to adequately prove that the Complainant herein or any member of the public was damaged in any way by the Respondent’s use of a name not on its license. In point of fact, the arrangements with Respondent to produce and deliver signed and sealed custom plans, as well as the actual payments for such services, were shown to have been concluded with Respondent under the business name of T C and T Management LLC, and not with Cameo Homes. Consequently, no finding of any violation of the advertising provisions of the State’s contracting laws would be supportable.

9. When learning of the above-described impermissible name usage, Respondent’s personnel undertook prompt remedial action to collect, destroy and

cease further use of any and all signs or other printed cards and documents reflecting the Cameo Homes name. While any claimed unawareness by Respondent’s principals of any impropriety would not be and is not a legal defense to two of the code provisions charged herein as having been violated by Respondent, the subsequent actions by or on behalf of the LLC entity may properly be accorded some measure of consideration in mitigation of any otherwise appropriate disciplinary penalties to be imposed by the Registrar.

10. Another equally or perhaps more serious infraction by or attributable to Respondent was demonstrated by the uncontroverted showing that Char Davis had subsequently altered the previously permitted plans for the custom Spec home that had been developed, sealed and modified by Complainant during the approval process with the City. Respondent had effectively erased certain title blocks that identified Complainant as the named architect, including an ownership legend, and also had deleted the site information that had been used on the original plans to reflect the physical location of the Spec home. Respondent then submitted the altered plans as part of a permit application seeking the City’s approval of a “standard plan,” after having deleted all references to Complainant.

11. It is noted that each page of both the published and the ultimately permitted plans utilized for the construction of the custom Spec home had contained an expressly worded block that confirmed the fact that ownership of the plans remained with Complainant’s business entity. Little or no merit is found to Respondent’s contention that the plans and specifications utilized for the custom Spec home became the property of Respondent after the agreed payment was transmitted. In point of fact, the City declined to further process the standard plan application until or unless consent by Complainant, as the architect, was obtained and filed.

12. Complainant admittedly did not, either before filing its application with the City or after the City had declined to continue processing such application, conclude or

even explore arrangements for a mutually agreed compensation payment by Respondent for the further use of plans deemed to have been owned by Complainant, shown by credible testimony to likely have resulted in a significantly higher fee amount for a standard plan than for single custom plan. Instead, Respondent decided to and did withdraw the entire filed application and discontinued all efforts to obtain a permit for an approved standard plan. A reasonable inference from the overall testimony would be that, under all the circumstances surrounding Respondent’s standard plan application, at least one of the underlying motivations was to save or avoid the cost of further professional architect’s fees.

13. The by-passing of Complainant by filing the standard plan application with the City utilizing the plans sealed and owned by Complainant without permission or authority is found to have effectively deprived Complainant of any otherwise payable compensation. Credible testimony revealed that an architect’s entitlement to receive payment of appropriate professional fees would be generated by the prior completion and the subsequent re-use of the drafted and sealed custom plans as part of the standard plan filing process involving an application filed with the municipality, irrespective of whether or not the standard plan permit application was subsequently approved, rejected or withdrawn.

14. The Registrar of Contractors is not empowered to adjudicate and award monetary damages which must be sought and obtained by Complainant, if at all, by pursuing available remedies before a civil court of competent jurisdiction. However, it is found from the presented evidence that the minimum reasonable cost for obtaining a standard plan from a licensed architect would be significantly in excess of $750.00, thereby serving to support a determination of a statutory violation consisting of Respondent’s failure or refusal to pay monies properly payable in connection with its contracting activities, as charged in the within Citation.

15. It was not disputed that Char Davis, Respondent’s qualifying party and the managing member of the LLC entity, has faced a separate disciplinary action by the Arizona Board of Technical Registration (herein called “the Board”) based upon substantially the same allegations of wrongdoing alleged in this case; namely, the allegedly unauthorized alteration of sealed single-use plans and specifications developed by and owned by a licensed architect. The allegations of misconduct on the part of Char Davis, found to have been in furtherance of the contracting activities of Respondent, were expressly deemed admitted and proven following the entry into a Consent Order before that agency, enabling the Board to impose a monetary fine of $1,000.00 against Ms. Davis together with an express requirement the she not alter or modify any architect’s signed and sealed documents in the future. Such fine was fully paid, together with the Board’s costs for the investigation, and the required assurances of future lawful conduct were given.

16. At the hearing, the testimonial evidence tended to indicate that Char Davis once again claimed to have been under a misapprehension as to her rights and other applicable requirements or prohibitions with respect to the propriety of altering the single-use plans that had been prepared, sealed and owned by Complainant and thereafter filing such altered plans as part of Respondent’s standard plan application. Ms. Davis claimed to have obtained such supporting advice from one of the City’s employees, although the hearing testimony of a supervisory official of the City opined that the giving of such advice was highly unlikely.

17. Any single instance, standing alone, of demonstrated wrongful conduct of a license holder or its personnel that is asserted to be the result of a good faith but erroneous belief that such conduct was not illegal or otherwise improper may often be minimized or overlooked. However, when considered in combination with other similarly explained instances of impermissible actions, a pattern of conscious or semi-willful ignorance of the law or perhaps indifference to the consequences starts to

emerge. In any event, any overall evaluation of the course of conduct attributable to Respondent appears to warrant treatment as a circumstance in aggravation tending to generate some extent of reduction or offset to any mitigating effect of subsequently recognizing, regretting and discontinuing the improper course of conduct. In this case, the use of a wrong business name, the alteration of professionally prepared and sealed plans and the attempted filing of such altered plans without the consent of or separate payment to the owner/architect of the plans, are found and determined to warrant some measure of disciplinary action against Respondent by the Registrar.

17. Although the unauthorized changes and/or deletions made by or on behalf of Respondent to the published or permitted plans as part of its filing for the standard plan authorization did reflect deviations from the original set of plans in several respects, the charged provision of the State’s contacting laws requires that any departure or deviation be both material and prejudicial. It is found that any such violation must be founded upon actual construction that is contrary to plans or specifications and not merely upon the documentary differences between the altered plans and the original set. With respect to any asserted deviations from the single-use plans that may have existed in the construction by Respondent of the custom Spec home, the ultimate approval of the as-built construction resulting from the City’s periodic inspections and the likelihood of its issuance of a Certificate of Occupancy would render any such deviations neither material nor prejudicial.

18. It is found and determined that the Respondent’s impermissible and unauthorized altering and filing of plans obtained from and owned by Complainant constituted a wrongful (but not fraudulent) act resulting in significant financial detriment to Complainant within the meaning of another contracting law provision charged hereunder as having been violated by Respondent. ……. …….

CONCLUSIONS OF LAW

1. The evidence of record sufficiently established that Respondent has violated the provisions of A.R.S. §32-1154(A)(7), (11), (15), and (13); namely, A.R.S. §32-1124(B). However no violations by Respondent of the provisions of A.R.S. §32-1154(A)(2) or (16) were sufficiently proven hereunder.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order that Respondent’s Class B license be suspended for a period of sixty (60) days; provided however, in consideration of certain matters in mitigation, only the first fifteen (15) days shall consist of active license suspension and the remaining forty- five (45) days shall be in the nature of disciplinary probation.

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 will be forty (40) days from the date of that certification.

Dated: January 24, 2007. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Fidelis V. Garcia, Acting Director Registrar of Contractors Legal Department 800 West Washington Street (6th Floor) Phoenix, AZ 85007

----------------------- [1] On January 11, 2007, shortly before the hearing date, Complainant filed written notice with this tribunal that its business office had moved to a new address at 4420 North Saddlebag Trail (Suite 202); Scottsdale, Arizona 85251. It is not known whether or not Complainant has notified the Registrar of Contractors of this address change. [2] A valid name change or the legitimate use of a name under which the licensee will be doing business, a "d.b.a" name, is permitted by the Registrar upon proper request and application by the license holder. Any new or different name, which also must be changed on the license bond, would then be reflected on the Registrar’s license records. Neither a name change nor a selection and approval of a d.b.a. name was sought or obtained in this case by Respondent.

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