ALJDEC decisions subject to certification as final

09F-4423-ROC · Registrar of Contractors · 2009-09-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 30, 2009 at 8:00 a.m. APPEARANCES: Complainants Andrew P. Bernal and Delia A. Bernal appeared on their own behalf; Respondent Distinctive Secure Door Inc. did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On October 17, 2001, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC169293, Class K-05 for Dual Security Doors, Sunscreens and Gates to Respondent Distinctive Secure Door, Inc., a corporation. Respondent’s qualifying party is James Arthur Rohrer, Jr.; its president is James Arthur Rohrer, Sr. Respondent’s current address of record with the Registrar is P.O. Box 13370, Mesa, AZ 85216. On February 17, 2009, the Registrar received a complaint against against Distinctive Iron from Complainants Andrew P. and Delia A. Bernal, which the Registrar treated as a complaint against Respondent’s license. According to the complaint, Complainants paid a $5,160.00 down payment for a decorative entry door for their home on September 30, 2008. Respondent neither fabricated nor installed the door. It also did not return Complainants’ down payment. On March 6, 2009, the Registrar received Complainants’ request for an administrative hearing because Respondent had not responded to the complaint. On April 28, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging A.R.S. § 32-1154(A)(1) and (7). The Registrar mailed a copy of the Citation and Complaint to Respondent at its address of record, P.O. Box 13370, Mesa, AZ 85216. On May 8, 2009, the Registrar received Respondent’s written answer to the Citation and Complaint, which denied any statutory violation and affirmatively alleged that Respondent “installs products for Distinctive Iron which is a separate corporation that only manufactures products” and that Respondent had “never received the products to install.” Respondent finally alleged all monies had been collected by Distinctive Iron, not it. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, to schedule and to conduct a fair hearing. On July 29, 2009, the Registrar issued a Notice of Hearing, setting a hearing on September 30, 2009 at 8:00 a.m. at the Office of Administrative Hearings. The Registrar mailed a copy of the Notice of Hearing to Respondent at its address of record, P.O. Box 13370, Mesa, AZ 85216. A hearing was held on September 30, 2009. Complainants appeared, testified, and submitted documents to establish their claim. Although the beginning of the duly noticed hearing was delayed fifteen minutes to allow Respondent additional travel time, it did not appear through a duly authorized employee or attorney, did not contact the Office of Administrative Hearings to request a continuance or that the time for the hearing be further delayed, and did not present any evidence to defend its license. Evidence On June 29, 1999, Respondent Distinctive Secure Door Inc. was incorporated as a construction business at the Arizona Corporation Commission. Respondent’s president/CEO James A. Rohrer is Respondent’s statutory agent. Respondent’s current address of record with the Arizona Corporation Commission is P.O. Box 13370, Mesa, AZ 85216. The statutory agent Mr. Rohrer’s address is 819 W. Fairmont Dr., Tempe, AZ 85282. On June 26, 2007, Distinctive Iron Inc. (“Distinctive Iron”) was incorporated by the Arizona Corporation Commission to conduct business. Distinctive Iron’s statutory agent and president/CEO James Rohrer, Jr.’s address is 44 N. 45th Ave., Phoenix, AZ 85043. Other directors are Brian Rohrer, vice president, at 819 W. Fairmont Dr., Tempe AZ 85282. Complainants were building a new residence. They decided to retain Respondent to fabricate and to install a custom front entry door at the new residence. Complainants submitted a contract dated September 30, 2008, under which Distinctive Iron contracted to fabricate a custom entry door for Complainants’ residence at a cost of $10,320.00. A deposit of half that amount was required to begin fabrication. The second page of the contract showed that Respondent would install the custom entry door at no cost. The first page of the contract showed an address for Distinctive Iron of N. 45th Avenue, Phoenix, AZ 85043 and the second page showed Respondent’s address of record with the Registrar. Both contracts are signed by Steve Brody. Complainants testified that they went to the showroom at 819 W. Fairmont Drive, Tempe, AZ 85282 and viewed samples of Distinctive Iron or Respondent’s work. Based on those samples, they signed the contract at the showroom on W. Fairmont. They had “no idea” that they were dealing with two different companies. Complainants submitted a copy of their check no. 302, dated September 30, 2008, payable to Distinctive Iron, in the amount of $5,160.00. The copy of the back side of the check showed that Distinctive Iron had endorsed the check for deposit into its account at Bank of America. Complainants testified that Mr. Brody promised that it would take eight to ten weeks to fabricate and install the door and that someone would contact them soon to measure the door opening. After two weeks, Complainants called the telephone number on the contract. J.C. Connolly came out and measured the opening. Mr. Connolly told Complainant that he was the owner and job superintendent at Distinctive Iron. For the next two months, Complainants attempted to contact Distinctive Iron, Mr. Brody, or Mr. Connolly through leaving telephone messages and e- mails. They received no response. Complainant Mr. Bernal drove to the Fairmont address and found it abandoned. He found another address on the Distinctive Iron contract. He found the address “tucked in the back of” an industrial area of Phoenix with a Distinctive Iron truck parked out front. Workers assured Complainants that Distinctive Iron was still in business and that the door would be completed. By the middle of November 2008, Mr. Brody told Complainants that Distinctive Iron had to move production of the door to Nogales, Sonora, Mexico. Mr. Bernal asked for the address of the factory, because he is bilingual and could enquire about the door. Mr. Brody said he would try to arrange someone to take Mr. Bernal to Nogales. By this point, construction of Complainants’ new home had progressed to the point where they needed to secure the front door to protect electrical and plumbing fixtures and other construction materials from theft. They had had to put plywood across the front opening. The general contractor had to have the subcontractors finish the exterior stucco and interior drywall around the plywood. Complainants did not hear anything from Distinctive Iron or Respondent. Finally, they could wait no longer. On February 9, 2009, Complainants sent a letter to Mr. Connelly at Distinctive Iron, cancelling the contract and requesting the return of their $5,160.00 deposit. Complainants then entered a contract with Rustic Elegance of Tucson for it to fabricate and install the custom front entry door at their new home, at a cost of more than $10,000. Rustic Elegance was “a dream to work with” and fabricated and installed “a beautiful door” at Complainants’ residence in three or four weeks. After Complainants canceled their contract with Distinctive Iron and contracted with Rustic Elegance, someone from Distinctive Iron called Complainants’ general contractor, who was their brother-in-law, to say the door was finished and ready to be installed. The door was never supplied. Complainants’ down payment was never returned. Sometime later, Mr. Connelly contacted Complainants and said he no longer worked for Distinctive Iron, but that he could build and install a door for them for $5,100. Complainants declined his offer. Complainants then filed their complaint to the Registrar. Complainants testified that neither Distinctive Iron nor Respondent ever refunded the $5,160.00 down payment and never provided the door that they had ordered. Complainant Mrs. Bernal testified that she felt “threatened” by the people she had dealt with at Distinctive Iron. On March 11, 2009, Distinctive Iron filed for protection under Chapter 7 under the Bankruptcy Code in Case No. 2009-04437-GBN in the United States Bankruptcy Court, District of Arizona. Distinctive Iron’s corporate status with the Arizona Corporation Commission has not been in good standing since June 26, 2009, when it failed to file the annual report that was due. Respondent’s corporate status with the Arizona Corporation Commission has not been in good standing since June 29, 2009, when it failed to file the annual report that was due. According to the Registrar’s record, there are 24 complaints pending against Respondent’s license, 8 complaints that were resolved or withdrawn by the complainant, and two complaints that resulted in discipline. On September 4, 2009, the Registrar revoked Respondent’s license after it failed to comply with the final order in Case No. 07-2436. CONCLUSIONS OF LAW 1. The notice of the hearing that the Registrar mailed to Respondent at its address of record was reasonable and Respondent is deemed to have received notice of the hearing.[1] 1. This matter lies within the Registrar’s jurisdiction.[2] 2. Complainants bear the burden of proof and must establish Respondent’s contracting law violations by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[5] 3. The only issue for hearing set forth on the Registrar’s Citation and Complaint is whether Respondent violated A.R.S. § 32-1154(A)(1) and (7). 4. The legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages.[6] The Registrar may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation cannot be remedied by corrective work, as in this case due to the revoked status of Respondent’s license.[7] 5. The revoked status of Respondent’s license does not preclude Complainants from pursuing this administrative remedy nor preclude the Registrar from conducting these disciplinary proceedings.[8] 6. Design and fabrication of a custom entry door for installation on a residential real property is contracting as defined by Arizona statute.[9] Design and fabrication of a custom entry door for installation on a residential property therefore requires a contractor’s license.[10] 7. The same persons who operated and controlled Distinctive Iron operated and controlled Respondent out of the same address at the same business telephone number. The evidence shows that Respondent violated A.R.S. § 32-1154(A)(15)[11] by contracting in the name of Distinctive Iron. Because this violation was not charged in the Citation and Complaint, it is considered solely as a factor in aggravation of the recommended penalty. 8. The evidence also supports an inference that the persons listed on Respondent’s license and other family members formed Distinctive Iron solely to evade the requirements of the contracting statutes. Complainants therefore have established that Respondent violated A.R.S. § 32-1154(A)(1)[12] and (7)[13] by refusing to refund their deposit or to provide and to install the custom entry door pursuant to its contract. Complainants have also established that their loss is the $5,160.00 down payment. 9. Respondent has not filed for protection under the bankruptcy code. Distinctive Iron’s bankruptcy does not prevent the Registrar from requiring Respondent to return Complainant’s deposit or have its license disciplined. RECOMMENDED ORDER Based on the foregoing, it is recommended that, on the effective date of the Registrar’s final order in this matter, that the Registrar again revoke License No. ROC169293, Class K-05 previously issued to Respondent Distinctive Secure Door Inc. It is further recommended that the Registrar not revoke Respondent’s license as a result of the proven violations and, instead, close Case No. 09-4423 if, on or before the effective date of the Registrar’s final order, it receives written proof from Respondent that it has paid $5,160.00 to Complainants Andrew P. and Delia A. Bernal. If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be forty days from the date of certification. Done this day, September 30, 2009.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2009, to:

William A. Mundell, Director Registrar of Contractors c/o Legal Department 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________ ----------------------- [1] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [2] See 32-1101 et seq. [3] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984). [7] See A.R.S. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (Ct. App. 1990). [8] See A.R.S. § 32-1154(C). [9] See A.R.S. § 32-1101(A)(7)(a) (“‘Residential contractor’ is synonymous with the term ‘residential builder’ and means any . . . corporation . . . or any officer, director, [or] qualifying party . . . that undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid to, or does himself or by or through others, within residential property lines . . . [c]onstruct, alter, repair, add to, subtract from, [or] improve . . . any residential structure. . . . Residential structures also include . . . any appurtenances on or within residential property lines.”). [10] See A.R.S. § 32-1151. [11] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[a]cting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth upon the license.” [12] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [13] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

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