ALJDEC decisions subject to certification as final

09F-4273-ROC · Registrar of Contractors · 2009-10-13

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 6, 2009.

APPEARANCES: > The Complainant appeared through James E. Gardner, Jr., its sole owner and qualifying party. > The Respondent appeared through its President and qualifying party, Edward J. Larkin.

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. Respondent, a licensed corporate entity holding both commercial and residential painting licenses, became an approved specialty contractor for repair and maintenance work for the City of Mesa, entering into a written Proposal Solicitation agreement in March 2006 followed by the signing of a Painting Services agreement several months later. The spirit and intent of such agreements appeared to contemplate the performance by Respondent of painting work only on commercial public structures and appurtenances. Such agreements were subsequently extended beyond their original terms.

2. The contracting license relating to the above-described work held at that time and still held by Respondent was and is a Class L-34 commercial painting license issued by the Registrar of Contractors. Respondent’s corporate entity also was issued and still holds a residential Class C-34 painting license. These licenses were issued in 1996.

3. Complainant, a sole proprietorship, at all times held a general contracting license, and was also on the approved list for work to be bid upon and performed for City of Mesa projects.

4. Respondent was shown by the evidence to have been the selected contractor for several substantial City of Mesa projects. It was not effectively disputed that numerous aspects of the performed work, as ultimately invoiced by Respondent and paid by the City, consisted not only of the contemplated painting work that was the predominant portion of the overall construction activities but also of a significant amount of drywall, stucco and carpentry work.

5. The performance by Respondent under the specialty painting license it then had held was impermissible. The quantum, extent and monetary value of Respondent’s non-painting work was shown to have been far more than could be treated as having been or otherwise deemed to have been merely incidental and supplemental to the basic painting work on these projects. In point of fact, one aspect of an identified Conference Center project, as bid and invoiced by Respondent, was shown to be for stucco work shown to have a total value of $98,000.00, representing a significant portion of the overall contract amount of approximately $250,000.00.

6. Despite an apparent good faith, albeit mistaken, belief on the part of Respondent’s qualifying party and key principal officer that the non-painting work could be subcontracted out by Respondent to another properly licensed specialty contractor

who would actually perform such work, as it was in all of these instances, it must be found and determined that Respondent had inappropriately bid and performed contracting work that was outside the proper scope of its painting license.

7. The award of the commercial project contract by the City of Mesa to Respondent resulted in the potential and perhaps actual loss of business for Complainant and also possibly other licensed contractors who were properly licensed to have bid and performed the drywall, stucco and carpentry work under their general contracting licenses.

8. The underlying complaint in this administrative disciplinary action was filed by Complainant in early February, 2009. By way of a matter in mitigation, when being informed about the filed complaint as to its allegedly out-of-scope activities, Respondent prudently took immediate steps to secure an appropriate qualifying party and to apply for and obtain issuance by the Registrar of both a commercial Class B-2 and also a residential Class B- general contracting license. These added licenses were issued respectively in April, 2009 and August, 2009. Credible testimony tended to indicate that any and all non-painting work forming a portion of subsequent bids and performances by Respondent would be submitted under its general contracting licenses doing business under the separate name of E J L Construction (apparently utilizing the initials of Respondent’s qualifying party and President).

9. Further consideration in mitigation must be given to Respondent’s prior exemplary and complaint-free record as a contractor in this State. However, the mitigating impact of its subsequent application for and obtaining of proper licenses must be diminished to some degree in light of the prolonged time period during which out-of-scope work had been bid and performed, as well as of the substantial volume and monetary value of the non-painting work undertaken and invoiced by Respondent and for which it had subsequently received significant compensation.

10. While highly commendable, the subsequent belated obtaining of the proper general contracting licenses does not wholly erase the prior contracting law violations nor does it rectify the potential loss of business sustained by Complainant or by other appropriately licensed entities.

CONCLUSIONS OF LAW

1. The evidence of record adequately established that Respondent has violated the provisions of §32-1154(A)(7) and (17), as charged in the issued Citation.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order that the Class L-31 license of Respondent be placed on disciplinary probation for a period of thirty (30) days.

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: October 14, 2009. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

William A Mundell, Director Registrar of Contractors Legal Department 3838 North Central Avenue (Suite 400) Phoenix, AZ 85012 - 1906

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