ALJDEC decisions subject to certification as final

07F-2683-ROC · Registrar of Contractors · 2008-06-24

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 5, 2008 APPEARANCES: Complainant: Tyrone Hill, corporate officer, appeared on behalf of Complainant, pro per. Respondent: John Scatterday, corporate officer and qualifying party, appeared and was represented by counsel, William A. Kozub. 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. This matter convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated May 5, 2008. 2. Ultimate Visions Contractors, Inc. (“Complainant”) is a corporation doing business in Arizona. Tyrone Hill (“Hill”), corporate officer, appeared on behalf of Complainant. 3. J L S Development Enterprises, Inc. (“Respondent”) is a corporation which holds Arizona Contractor’s License No. 167786, Class KB- (Dual Residence and Small Commercial) issued by the Registrar of Contractors (“ROC”) August 21, 2001. John Samuel Scatterday (“Scatterday”) is a corporate officer and the qualifying party for the license. A review of the licensing data base maintained by the Registrar indicates that this license was suspended March 28 through April 6, 2005 for lack of bond. 4. Complainant filed a complaint with the ROC on May 14, 2007 wherein it alleged, inter alia, that it had “no contract with [Respondent]” and that on May 10, 2007 Scatterday called Complainant’s office “screaming and yelling,” represented that he was an agent of and/or “arbitrator” for the Registrar of Contractors, requested “sensitive documents that concerned the Corrine[1] project so he could compare legal notes so the you could give an honest objective opinion of the workmanship of the project for the AZ ROC,” made harassing phone calls to Hill which included threats of arrest and taking of Complainant’s ROC license. 5. Complainant filed a request for hearing June 12, 2007. 6. On January 16, 2008, the Registrar issued a CITATION AND COMPLAINT in Case No. 07-2683 charging Respondent with possible violations of A.R.S. §32-1154A 7. 7. Respondent filed an answer on January 31, 2008 wherein it asserted a general denial of all allegations. 8. At the hearing, Hill testified and submitted Exhibits C-1, C-2, C- 3, C-4, C06 and C-7 which were marked, admitted and considered. Exhibit C- was admitted over objection. Rob Bogard (“Bogard”) also testified on behalf of Complainant. 9. Scatterday testified on behalf of Respondent and submitted Exhibits R-4, R-8 and R-9 which were marked, admitted and considered. Exhibits R-1, R-2, R-3 and R-5 were admitted over objection. 10. Prior to the presentation of any testimony or evidence, counsel for Respondent moved to dismiss the case due to, inter alia, a “violation of Respondent’s due process rights” as set forth in its Motion to Dismiss filed with this tribunal at the time. Respondent asserted that, despite written requests for same, the Registrar of Contractors failed and/or refused to provide it with a copy of Complainant’s complaint and, as a result, Respondent was “unable to specifically address or prepare for the allegations set forth in [the] complaint.” After allowing Complainant to respond, Respondent’s motion to dismiss was denied.[2] 11. Hill testified that he was part owner of and investor in the Corrine project with a James Maida (“Maida”) and also served as the general contractor thereon to perform renovation work pursuant to an Agreement dated October 1, 2006. (Exhibit C-3)[3] 12. Hill testified that on or about May 10, 2007, Scatterday telephoned Respondent’s office and spoke to Bogard.[4] Bogard testified that Scatterday represented himself as being with the Registrar of Contractors and was trying to contact Hill on an urgent matter. Bogard further testified that Scatterday related that Hill’s failure to return the call could result in “legal action being taken.” 13. Hill further testified that Scatterday proceeded to call Respondent’s office two more times on May 10, 2007 during which he, among other things, requested that Hill provide construction documents on the project, demanded that Complainant remit to Maida $180,000.00 and stated that he acted as an “arbitrator” for the Registrar of Contractors. 14. Hill’s testimony regarding the number of telephone calls he had with Scatterday was conflicting. Nonetheless, Hill testified that during the course of these conversations on May 10, 2007 he did some investigation and determined that Scatterday was not with the ROC and that no one at that agency knew who he was. 15. Hill asserts that Scatterday’s actions regarding the project, including consultation with Maida regarding construction work Respondent performed, constituted contractual interference with his agreement with Maida, were fraudulent and/or wrongful and harassed Respondent. Hill also testified that such actions caused Respondent to lose its position as general contractor and any attendant monetary gain therefrom as well as the return of approximately $80,000.00 claimed due Respondent. 16. Hill further asserts that Scatterday rendered legal advice to Maida thereby causing Maida to stop the project which also constituted fraudulent and/or wrongful conduct. 17. Scatterday testified that he was contacted by Diane Minkner, an Arizona real estate agent, to review renovation construction work performed on the project by Complainant and/or its subcontractors pursuant to the request of the premises’ owners included Maida. According to Scatterday, Maida related he was no longer in business with Complainant and had shut the project down due to subcontractors not being paid. 18. Scatterday further testified that in order to conduct such review he first attempted to contact Hill on or about May 10, 2007 to secure information and documents regarding its work on the project including those related to a reported $180,000.00 released to Complainant by M & I Bank. Scatterday further stated that during his first telephone call he related that he was calling as an Arizona licensed contractor on behalf of Maida and wanted to speak with Hill. 19. Scatterday denied ever representing himself as an agent/employee of the ROC but was acting as a representative of the ROC in his capacity as a general contractor and as a consultant on the project at the homeowners’ request. 20. Scatterday further related that during his second telephone conversation he asked Hill to meet him at the jobsite and Hill related that the money was in escrow and would remain there until subcontractor issues were resolved. According to Scatterday, Hill refused to and never did provide any information and/or documents on the project. 21. Hill also testified that Maida stopped the project because he wanted to sell the property.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. 07-2683 charged Respondent with possible violations of A.R.S. §32- 1154A 7. That statutory section requires 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.

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, Complainant must demonstrate by a preponderance of the evidence that 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. The purpose of licensing Arizona contractors is to regulate the conduct of contracting and protect the public from unscrupulous acts. Beazer Homes Ariz., Inc. v. Goldwater, 196 Ariz. 98, 101, 993 P.2d 1062, 1065 (App. 1999); Better Homes Constr. v. Goldwater, 203 Ariz. 295, 300, 53 P.3d 1139 (App. 2002). The statutory purpose is to prevent unscrupulous or financially irresponsible contractors from deceiving and taking advantage of those who engage them to build. Sobel v. Jones, 96 Ariz. 297, 394 P.2d 415 (1964). 4. It is determined and concluded that Complainant failed to establish by a preponderance of probative, credible and relevant evidence that Respondent violated A.R.S. §32-1154A (7). The retention of a contractor by a homeowner to serve as a consultant to review a contractor’s work on a project is commonplace and does not constitute fraudulent or wrongful conduct. Moreover, Complainant failed to establish any element of fraud by the requisite weight of the evidence and did not elicit any credible, probative or relevant evidence of substantial injury.

RECOMMENDED ORDER On the basis of the foregoing, IT IS RECOMMENDED that the entire Citation and Complaint in Case No. 07-2683 be dismissed.[5] Done this day, June 24, 2008.

_______________________ Brian E. Smith Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2008, to:

Registrar of Contractors Fidelis V. Garcia 3838 N. Central Ave., Ste. 400 Phoenix, AZ 85012-1906

By ___________________________ ----------------------- [1] The project listed on the complaint by Complainant was located at 8290 E. Corrine Street, Scottsdale, Arizona (“premises/project”). [2] Respondent counsel’s re-urging of the motion at the close of Complainant’s case-in-chief was similarly denied. [3] The subject agreement denotes the “Desert Hawk Holdings, LLC” as the contractor on the project. Although its relationship with Respondent, Hill and the project was never clearly established, Hill related that he was also part owner and member of, as well as the qualifying party for, Desert Hawk which hired Respondent to work on the project. [4] Bogard testified that he was an independent contractor who worked for Complainant as a “field supervisor.” Bogard related he was unlicensed and received neither a Form 1099 nor W-2 from Complainant. [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