ALJDEC decisions subject to certification as final

07F-2350-ROC · Registrar of Contractors · 2007-12-11

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 6, 2007.

APPEARANCES: >The Complainant appeared through John C. Mandler, an authorized member of the LLC entity. >The Respondent failed to appear.

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. The instant hearing was duly scheduled on advance written notice duly sent to both parties. Although the start of the scheduled hearing was delayed for over thirty minutes to afford added time in which to make an appearance, the Respondent failed to appear either through and authorized corporate officer or through any proper legal representative.

2. Complainant’s uncontroverted evidence revealed that, pursuant to a verbal agreement, Respondent fabricated and delivered three separate decorative glass articles to Complainant between October 31, 2006 and December 20, 2006. The mutually agreed cost prices for each of the delivered products were $1,090.00, $1,272.00, and $390.00, respectively, totaling an aggregate sum of $2,752.00.

3. At the express request of Respondent, Complainant was urged to and did authorize payment for each of the purchased glass products by allowing Respondent to submit the charges through Complainant’s Chase Visa credit card account.

4. Although Complainant remained unaware for a prolonged time period, Respondent continued to submit wholly false and perhaps fraudulent charges to the credit card company over the following several months, none of which were authorized or otherwise involved the furnishing of products to Complainant. In point of fact, it appeared that Respondent had even improperly added $500.00 to the very first invoiced item of $1,090.00 when submitting such item to Complainant’s credit card company for payment.

5. All of the unauthorized and wholly improper charges submitted either separately or added on to otherwise appropriate charges, were paid to Respondent by the credit card company, and all such charges thereafter appeared on monthly statements received by Complainant for which it continued to be obligated to and ultimately did remit periodic payments and finance charges. The fact that such wrongful actions may have been initiated or committed by one of Respondent’s employees does not operate to relieve Respondent of responsibility or the duty to return all monies wrongfully obtained from the credit card company and improperly charged to Complainant’s account.

6. The credible documentary evidence indicated that a total of ten separate instances had occurred, in addition to the one instance where the amount submitted

was substantially in excess of the agreed unit purchase price, whereby Respondent had submitted ongoing claims for payment using Complainant’s credit card information that had been obtained for the sole purpose of enabling payment to be made only for the three agreed purchases. The combined aggregate monetary sum of these ten unauthorized charges was $8,108.18. Stated alternatively, out of a total of $10,860.18 in aggregate charges submitted over the course of several months by Respondent to Complainant’s credit card company, only $2,752.00 was legitimate, and the entire remaining balance so submitted by or on behalf of Respondent, or $8,108.18, was unauthorized and wholly inappropriate.

7. When ultimately confronted with the unauthorized invasion into Complainant’s credit card account, Respondent’s principal operating officer did repeatedly communicate an intention to return all funds received from the credit card company that were improperly claimed and received. Initially, three rather small improperly charged items were caused to be reversed, but all of these reversals were subsequently canceled and reappeared on Complainant’s billing statements. Additionally, Respondent was shown to have delivered several checks to Complainant on two occasions. The first such payment check in the sum of $6,918.00 was given purportedly to satisfy the balance then thought to be outstanding (The check’s amount was for the total of all improper charges less the three items that had been temporarily reversed). This check was not honored by Respondent’s bank and was returned because of insufficient funds.

8. Following the report from the bank that the initially delivered check was being returned due to insufficient funds, Respondent communicated its express and prompt assurances, coupled with arrangements with Complainant, that the entire balance then thought to be in the amount needed to return all improperly collected funds would be transmitted in three separate installment payments dated one week apart. Respondent thereafter delivered to Complainant two other checks. The first dated check for

$3,000.00 was never signed, and therefore was never attempted to be negotiated by Complainant. The second check for $2,000.00 was signed, but although Complainant did promptly deposit same, such check also was not honored by Respondent’s bank for reason of insufficient funds. In each instance where a payment check given by Respondent to Complainant was returned for insufficient funds, Complainant was charged a returned check fee by its own bank in the amount of $6.00 for each check, thereby incurring avoidable expenses in the total sum of $12.00 due to Respondent’s actions. The repeated delivery by Respondent of the above-described bad checks is found to constitute an aggravating circumstance in this matter.

9. Complainant has not received any funds from or on behalf of Respondent or from other sources applicable to the unauthorized charges submitted by Respondent. Nor has Complainant received any credits on his credit card account. The three temporary credits for a few of the unauthorized charges were subsequently reversed and ultimately paid to the credit card company by Complainant.

10. The evidence revealed that in all dealings with Complainant, Respondent was regularly utilizing the name of “Art Glass and Mirror Studio.” This was a business name that was neither on Respondent’s contracting license nor on its license bond.

11. The overall course of conduct on the part of Respondent in submitting wrongful credit card claims and retaining received monies for a prolonged time period and never returning the improperly collected funds is found to constitute a wrongful and perhaps even fraudulent act resulting in financial detriment to Complainant within the meaning of the provision of the State’s contracting laws charged hereunder as having been violated by Respondent.

12. Although it is not a proper function of either the Office of Administrative Hearings or the Registrar of Contractors to adjudicate and award money damages

which must be recovered, if at all, through pursuit of a civil court action, the Registrar is empowered by statute to impose reasonable conditions which may serve to reduce or eliminate any otherwise appropriate disciplinary penalties for proven violations of the State’s contracting laws. Whenever the performance of further corrective or remedial measures on a jobsite by the original contractor is no longer warranted or desired, the inclusion of a condition in the nature of restitution, total or partial, is fully appropriate and equitably justified. Such authorization to provide for restitution from a contractor to a prevailing party in an administrative action has been legally upheld in Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (1990), and subsequently was expressly confirmed by the statutory enactment of A.R.S. §32-1156.01. In this way, a Complainant in an administrative action who has sustained the burden of proving contracting law violations does not have to await the outcome of protracted civil litigation in order to recover at least a portion of a demonstrated loss and, of equal or perhaps greater significance, a licensed contractor/Respondent is given the means to control, to some extent, the severity of any otherwise appropriate disciplinary penalty.

13. The evidence at the hearing supports a determination that a reasonable condition in the Registrar’s Order in this matter should consist of the payment of the sum of $8,120.00 (An amount which includes the bad check charges) by Respondent to Complainant by way of partial restitution.

14. By the failure of Respondent to appear at and participate in the scheduled hearing of this matter, no evidence in defense or in mitigation of the charged violations was presented to the tribunal. In point of fact, mitigating circumstances in this case were conspicuous by their absence.

15. Notice is taken of the Registrar’s license files which reveal that Respondent’s Class L-65 license, held by a corporate entity, has been suspended by

operation of law since May 3, 2007 for lack of a proper bond. Such license suspension does not prevent the Registrar from conducting these administrative disciplinary proceedings which are expressly authorized by statute.[1] Similarly, the suspended license does not prevent Complainant from continuing to pursue available administrative remedies. Moreover, since little or no motivation would exist for any entity to undertake and accomplish remedial actions, whether of a construction or restitutionary nature, to avoid the imposition of a suspension of an already-suspended license, the Registrar must necessarily consider the propriety of imposing a provisional revocation when formulating reasonable conditions for possible inclusion in the Order to be entered in this case.

CONCLUSIONS OF LAW

1. The undisputed evidence of record adequately established that Respondent has violated the provisions of A.R.S.§32-1154(A) (7) and (15), as charged in the issued Citation.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class L- license shall be revoked on the effective date of the Order entered in this matter by the Registrar of Contractors.

It is further recommended that if written proof is filed with the Registrar on or before this Order’s effective date that Respondent has paid or tendered to Complainant

the sum of $8,120.00, then no revocation shall be imposed, but instead that Respondent’s Class L-65 license shall be placed on active suspension for a period of 15 days, followed immediately by a period of disciplinary probation for 120 days. This alternative penalty shall commence if at all on the effective date of the Registrar’s Order.

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: December 12, 2007. OFFICE OF ADMINISTRATIVE HEARINGS

____________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Fidelis V. Garcia, Director Registrar of Contractors Legal Department 800 West Washington Street (6th Floor) Phoenix, AZ 85007 ----------------------- [1] See A.R.S.§32-1154(C).

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