ALJDEC decisions subject to certification as final

08F-G0424-ROC · Registrar of Contractors · 2008-08-04

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 30, 2008 APPEARANCES: Complainants appeared pro per; Respondent failed to appear. ADMINISTRATIVE LAW JUDGE: Michael G. Wales _____________________________________________________________________ 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. The matter convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated June 23, 2008. 2. At all times here relevant, Jon Whalen and Robin Wahlen (“Complainants”) were occupants of a residence located at 9566 W. Runion, Peoria, Arizona. 3. Respondent Floor Ever Designs, LLC (“Respondent”) is a limited liability company which holds Arizona Contractor’s License No. 228155, Class C-08 (Residential Floor Covering) issued by the Registrar of Contractors (“ROC”) on January 7, 2007. Thadius Chester Wind (“Mr. Wind”) is a member of the limited liability company and is the qualifying party for the license. A review of the licensing database maintained by the ROC indicates that this license has two (2) other open complaints lodged against it and that the license was canceled on March 4, 2008. 4. Complainants filed a complaint with the ROC on September 11, 2007, wherein they alleged that they entered into a written contract with Respondent on July 31, 2007 to have Respondent install new flooring in their home in return for payment of $12,000.00. Mr. Wind told Complainants they could cancel the contract orally no later than midnight on Friday, August 3, 2007. Complainants opened a line of credit in the amount of $6,500.00 with Respondent through a financing company and were approved on July 31, 2007. Respondent withdrew the $6,500.00 the very next day. Complainants alleged they orally canceled the contract on Friday, August 3, 2007. Respondent performed no services for Complainants, but Respondent refused to return the $6,500.00 to Complainants. 5. On September 19, 2007 Respondent answered Complainants’ initial complaint and asserted that Complainants were bound by a written contract which stated all cancellations must be in writing, sent via certified mail, and postmarked before midnight on the third day after signing the contract. Furthermore, the contract calls for stipulated damages of no less than 50% of the contract price if the customer cancels after the expiration of the cancellation period. Thus, Respondent claimed the binding contract legally allowed Respondent to keep the $6,500.00 deposit as stipulated damages. 6. On September 27, 2007, Complainants filed a correspondence with the Registrar of Contractors wherein they requested an administrative hearing. 7. On March 12, 2008, the Registrar issued a CITATION AND COMPLAINT in Case No. G08-0424 charging Respondent with possible violations of A.R.S. §32-1154A 1, 7 and 13 (namely, A.R.S. §32-1124 (B)). 8. Respondent filed an answer on March 19, 2007 wherein it asserted the same “binding contract” defense as discussed above. 9. At the hearing, Complainant Robin Wahlen (“Ms. Wahlen”) testified and presented the contract entered into by Complainants and Respondent for review by the administrative law judge. While the hearing was delayed for 15 minutes to allow a representative for Respondent to appear, no one appeared on behalf of Respondent. 10. At the hearing, Ms. Wahlen testified that on July 31, 2007, Thadius Wind, owner of Respondent Floor Ever Designs, LLC came to her home and submitted a proposal to have Respondent install new flooring in their home in return for payment of $12,000.00. Ms. Wahlen asked Mr. Wind whether the proposal would be binding if she signed the proposal. Ms. Wahlen informed Mr. Wind she intended to have another contractor bid the job on Friday and she would like to call Mr. Wind with her decision on Friday. Mr. Wind told Ms. Wahlen that Complainants could cancel the contract orally, by telephone, no later than midnight Friday, August 3, 2007. Complainants opened a line of credit in the amount of $6,500.00 with Respondent through a financing company and were approved on July 31, 2007. Respondent withdrew the $6,500.00 the very next day. Ms. Wahlen telephoned Mr. Wind and left a message on his cellular telephone orally cancelling the contract at 6:00 p.m. on Friday August 3, 2007, the third day after accepting the proposal. Complaints sent Mr. Wind written notice of the cancellation on August 12, 2007. Respondent performed no services for Complainants and Respondent refused to return the $6,500.00 he had withdrawn from the Complainants’ line of credit. 11. From the evidence elicited at the hearing, the following salient facts are important to note: a. Complainants did enter into, and were bound by, a written contract with Respondent which contained the following material terms: all cancellations must be in writing, sent via certified mail, and postmarked before midnight on the third day after signing the contract and, the parties agree to stipulated damages of no less than 50% of the contract price if the customer cancels after the expiration of the cancellation period. b. Complainants failed to cancel the contract in writing, sent via certified mail, and postmarked before midnight on the third day after signing the contract c. The uncontested testimony of Ms. Wahlen was that Thadius Wind, as an agent for Respondent, orally misrepresented the terms of the contract when he told her that he would accept a cancellation by telephone on Friday, August 3, 2007. APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. H07-0397 charged Respondent with possible violations of A.R.S. §32- 1154A 2, 7 and 13 (specifically A.R.S. §32-1124(B)). Those statutory sections require that the holder of a license or person listed on the license shall not commit the following:

1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

…

7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.

… 13. Failure in any material respect to comply with the provisions of this chapter.

A.R.S. §32-1124(B) is named as the statute violation charged pursuant to A.R.S. §32-1154A (13). That statute provides that every license and/or renewal must be signed by the Registrar or the Registrar’s designated representative and the licensee. It further provides that every license number must be preceded by the acronym “ROC” and be posted in a conspicuous place on premises where any work is being performed, on all written bids submitted by the licensee and on all advertising, letterheads and other documents used by the licensee in the conduct of business.

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, Complainants 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. This tribunal determines and concludes that Complainant failed to establish by a preponderance of credible, probative and relevant evidence that Respondent abandoned the contract with Complainants. Complainants were the ones who canceled the contract. Thus, Complainants have not established that Respondent violated A.R.S. §32-1154A(1). 5. It is further determined and concluded that Complainants failed to present any evidence that Respondent violated A.R.S. §32-1154A(13), namely, A.R.S. §32-1124(B). 6. This tribunal does, however, determine and conclude that Complainants did establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A(7). 7. If the determination of a violation of A.R.S. §32-1154A(7) was based solely on the question of whether or not Respondent breached the terms of the contract between the parties, this Tribunal would clearly conclude that Respondent did not violate A.R.S. §32-1154A(7). A written contract cannot be legally modified by oral amendments. Complainants signed the contract and were bound by its terms, including the term allowing stipulated damages. 8. The wrongful act which forms the basis for this Tribunals’ conclusion that Respondent violated A.R.S. §32-1154A(7) is the Respondent’s affirmative oral misrepresentations of the terms of the proposal presented to Complainants. Respondent made such misrepresentations knowing the Complainants would rely on those misrepresentations. Respondent failed to come to the hearing. The uncontested testimony of Ms. Wahlen was sufficient evidence for this Tribunal to conclude that the misrepresentations were made by Mr. Wind, and were made in the context of his knowledge that the misrepresentations would be relied upon by the Complainants. 9. This tribunal considers the following factors in aggravation: Respondent failed to attend the hearing; a review of the licensing database maintained by the ROC indicates that Respondent’s license has two (2) other open complaints lodged against it; and Respondent’s license was canceled on March 4, 2008.

RECOMMENDED ORDER In view of the foregoing, it is recommended that Floor Ever Designs, LLC’s C-08 license shall be revoked on the effective date of the Order entered in this matter. It is further recommended that if Respondent refunds Complainants $6,500.00 on or before the effective date of the Order entered in this matter, then the above-provided license revocation shall not take place but instead Respondent’s Class C-08 license, if reactivated, shall be placed on a period of disciplinary probation for ninety (90) days.[1]

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.

Done this day, August 4, 2008.

Office of Administrative Hearings

__________________________ Michael G. Wales 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] 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