ALJDEC decisions subject to certification as final

2009A-100554439-ROC · Registrar of Contractors · 2010-09-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 26, 2010 at 8:00 a.m. APPEARANCES: The Arizona Registrar of Contractors appeared through Mary DeLaat Williams, Esq., Assistant Attorney General; Respondent Roland Harvey Olson appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT On May 14, 2009, the Arizona Registrar of Contractors (“the Registrar”) received a complaint from homeowners Larry and Marian Warren that Respondent Roland Harvey Olson, doing business as Custom Cabinets and Woodworks, failed to complete the kitchen remodel at their home at 400 Riata Valley in Kingman, Arizona. The Registrar’s investigator, James Shull, checked the Registrar’s records and determined that neither Mr. Olson nor Custom Cabinets and Woodworks possessed a contractor’s license. Investigator Shull interviewed Mrs. Warren when she filed the complaint. Mrs. Warren told Investigator Shull that the project required Mr. Olson to install new cabinets and flooring. Mrs. Warren told Investigator Shull that a friend, whom she declined to identify, recommended Mr. Olson and told her that he was not a licensed contractor. Mrs. Warren said that Mr. Olson also told her that he was not a licensed contractor. Mrs. Warren provided to Investigator Shull copies of canceled checks in the total amount of $14,950.00, dated between March 5, 2008 and May 1, 2008, that she and her husband used to pay Mr. Olson for his work on the project. Mrs. Warren also provided to Investigator Shull a copy of Mr. Olson’s April 22, 2008 invoice for extras consisting of tile and drywall work. The invoice had “Custom Cabinets & Woodworks” printed on it but did not include the words “not a licensed contractor.” On May 26, 2009, Investigator Shull sent Mr. Olson a warning letter that informed Mr. Olson that the Registrar had obtained evidence that he may have violated Arizona law by submitting a bid on a construction project in the aggregate amount of more than $1,000.00 without being properly licensed. The warning letter also informed Mr. Olson that pursuant to A.R.S. § 32-1123(D) future violations would prevent him from obtaining a contractor’s license for a year after the date of the violation. On May 26, 2009, Investigator Shull sent Mr. Olson a second letter that stated that he may have violated contracting laws because “[t]he business in which you are engaged appears to require an Arizona contractor’s license and the records of this office reveal no license issued in your name.” The letter also advised Mr. Olson to contact Investigator Shull or risk civil or criminal charges being brought against him. On May 26, 2009, Investigator Shull sent Mr. Olson two Cease and Desist Orders to immediately cease certain activities, to wit: (1) All unauthorized advertising activity in violation of A.R.S. §§ 32-1165 and 32- 1121(A)(14)(c); and (2) All unlicensed contracting activity in violation of A.R.S. § 32-1151. On June 3, 2009, Mr. Olson went to Investigator Shull’s office to be interviewed. Mr. Olson told Investigator Shull that he had not finished the project because Mr. and Mrs. Warren had gone to England on vacation and, when they returned, Mr. Olson was too busy with other jobs to immediately complete the project. On June 3, 2009, when Investigator Shull explained the so-called “handyman’s exception” under A.R.S. § 32-1121(A)(14), Mr. Olson said that he was aware of statutes that required contractors to be licensed to be able to perform certain contacting work. On June 3, 2009, Investigator Shull issued a civil citation against Mr. Olson, imposing a civil penalty in the amount of $2,500.00 for his violation of A.R.S. § 32-1151. Investigator Shull testified that he did not impose any penalty for Mr. Olson’s unauthorized advertising because $2,500.00 was the maximum civil penalty that could be imposed for multiple violations committed on the same day under A.R.S. § 32-1166(A). Mr. and Mrs. Warren subsequently withdrew their complaint for abandonment against Mr. Olson. On June 10, 2009, Mr. Olson sent a letter to the Registrar, protesting the citation and requesting a hearing because Mr. and Mrs. Warren had withdrawn their complaint and because the $2,500.00 civil penalty was excessive. The Registrar subsequently referred the matter to the Office of Administrative Hearings, an independent agency, to schedule and to conduct a fair hearing. A hearing was held on August 26, 2010. The Registrar presented Investigator Shull’s testimony and submitted seven exhibits. Mr. Olson testified on his own behalf, presented the testimony of his wife, Patricia Olson, and submitted nine exhibits. Mr. Olson testified that he was not licensed because he could not read or write and could not take the required written test for licensure. Mr. Olson admitted that he knew that an employee could qualify for the license. Mr. Olson testified that he is 69 years old and that, after the citation was issued, he retired. Mr. Olson credibly testified that he no longer operates Custom Cabinets and Woodworks or performs contracting activities. Mr. Olson testified that the person who referred Mr. and Mrs. Warren to him was the Registrar’s inspector in Kingman, William Redman. Investigator Shull testified that he suspected that Inspector Redman had referred the Warrens to Mr. Olson because Inspector Redman and Mr. Olson were good friends. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] The Registrar bears the burden of proof and must establish Mr. Olson’s statutory violations by a preponderance of the evidence.[2] The Registrar also bears the burden to establish factors in aggravation of any penalty that it imposes as a result of proven statutory violations. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[3] A.R.S. § 32-1101(A)(7)(a) defines the term “residential contractor” to include a person who undertakes a project to substantially remodel a customer’s kitchen by installing new cabinets, drywall, and flooring. The so-called “handyman’s exemption” under A.R.S. § 32-1121(A)(14) provides that if the aggregate contract price for a project is less than $1,000.00, including labor and materials, a contractor need not be licensed. A.R.S. § 32-1151 makes it unlawful for an unlicensed contractor to perform contracting projects whose aggregate price exceeds $1,000.00. The canceled checks that the Registrar submitted established that Mr. Olson’s contract price for the substantial remodel of Mr. and Mrs. Warren’s kitchen exceeded $1,000.00. Therefore, the Registrar established that Mr. Olson committed the offense of unlicensed contracting, in violation of A.R.S. § 32-1151. A.R.S. § 32-1121(A)(14)(c) allows unlicensed contractors who comply with the requirements of subsection (A)(14) to advertise if they include the words “not a licensed contractor” on the advertisement. A.R.S. § 32-1165 makes it unlawful for a person to advertise that he is able to perform contracting work unless he is exempt and complies with the requirements of A.R.S. § 32-1121(A)(14)(c). “In applying a statute, . . . its words are to be given their ordinary meaning, unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”[4] “A cardinal rule of statutory interpretation is to give full effect to each statutory word or phrase so that no part is rendered void, superfluous, contradictory or insignificant.”[5] “Statutory provisions are to be read in the context of related provisions and of the overall statutory scheme. . . . The goal is to achieve consistency among the related statutes.”[6] “Advertising” is “[t]he action of attracting public attention to a product or business.”[7] Contracting statutes distinguish between advertisements and other documents, such as invoices, that a contractor uses in his business.[8] Mr. Olson’s April 22, 2008 invoice was a statement of amounts due for work already performed for Mr. and Mrs. Warren, not advertising to the public to solicit future work. Therefore, the Registrar has not established that Mr. Olson violated A.R.S. § 32-1165 in providing the April 22, 2008 invoice to Mr. and Mrs. Warren or in failing to include the words “not a licensed contractor” on the invoice. A.R.S. § 32-1166(A) allows the Registrar to assess “a civil penalty in an amount of at least two hundred dollars for each violation but not more than two thousand five hundred dollars for the multiple violations committed on the same day.” Mr. Olson credibly testified that when he received the two Cease and Desist Orders, he retired and closed the business of Custom Cabinets and Woodworks and no longer performs contracting. Therefore, the Registrar did not establish that Mr. Olson violated the Cease and Desist Orders or committed a continuing or repeated violations of A.R.S. § 32-1151. With regard to the appropriate amount of the civil penalty for Mr. Olson’s single violation of A.R.S. § 32-1151, A.R.S. § 32-1166(A) also required the Registrar to “adopt rules covering the assessment of a civil penalty that give due consideration to the gravity of the violation and any history of previous violations.” Pursuant to this directive, the Registrar adopted A.A.C. R4-9-131.[9] Mr. Olson disclosed his unlicensed status to the Warrens. The Registrar did not establish a history of prior violations against Mr. Olson or that he failed to complete Mr. and Mrs. Warren’s project for the contract amount. The Registrar did not establish that Mr. Olson’s work was not good and workmanlike or that he violated applicable codes or industry standards. Because the Registrar has not established any factor in aggravation of the civil penalty under A.A.C. R4-9-131 that justifies imposition of the maximum penalty, the $2,500.00 civil penalty that the Registrar imposed against Mr. Olson was excessive. Because Mr. Olson did not attempt to obtain a license after the Cease and Desist Orders and citation were issued to vitiate the violation of A.R.S. § 32-1151, imposition of the minimum penalty under A.R.S. § 32-1166(A) is not appropriate. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Roland Harvey Olson, doing business as Custom Cabinets and Woodworks, violated A.R.S. § 32-1151 and, on that basis, assess a civil penalty under A.R.S. § 32-1166(A) in the amount of $1,000.00 against him, to be paid on or before the effective date of the Registrar’s final order in this matter. 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 8, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See 32-1101 et seq. [2] See A.R.S. § 41-1092.07(G)(3); 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). [3] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [4] Mid Kansas Federal Savings and Loan Ass’n of Wichita v. Dynamic Development Corp., 167 Ariz. 122, 128, 804 P.2d 1310, 1316 (1991). [5] Westburne Supply, Inc. v. Diversified Design and Construction, Inc., 170 Ariz. 598, 600, 826 P.2d 1224, 1226 (Ct. App. 1992). [6] Goulder v. Arizona Department of Transportation, 177 Ariz. 414, 416, 868 P.2d 997, 999 (App. 1993) (citations omitted). [7]The American Heritage Dictionary of the English Language at 19 (1973); see also Black’s Law Dictionary, supra, at 59 (Advertising is “[t]he action of drawing the public’s attention to something to promote its sale”). [8] Compare A.R.S. §§ 32-1121(A)(14)(c) and 32-1165 with A.R.S. § 32- 1124(B) (requiring licensed contractors to include their license number preceded by the acronym “ROC” on “all written bids submitted by the licensee and . . . on all advertising, loan forms, lending institution forms, letterheads and other documents used by the licensee in the conduct of business regulated by this chapter”). [9] This regulation sets forth permissible aggravating and mitigating factors to be considered, in relevant part as follows:

In assessing a civil penalty as provided for under A.R.S. § 32- 1166.A, the registrar shall give due consideration to whether the person cited or any individual acting on that person’s behalf has committed one or more of the following acts in determining the gravity of the cited violation:

1. Falsely represented to be a licensed contractor. 2. Failed to perform any work for which money was received. 3. Executed or used any false or misleading documents for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 4. Made false or misleading statements for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 5. Failed or neglected to apply funds which were received for the purpose of obtaining or paying for services, labor, materials, or equipment. 6. Performed work that was or had the potential to become hazardous to the health, safety, or general welfare of the public. 7. Performed work that deliberately was in violation of building codes, safety laws, labor laws, workers' compensation laws, or unemployment insurance laws. 8. Performed work that failed to meet minimum acceptable trade or industry standards or practices or was not performed in a good and workmanlike manner. 9. Has committed any other act which would otherwise be cause for disciplinary action if the person cited had been properly licensed pursuant to A.R.S. Title 32, Chapter 10. 10. Has committed two or more prior violations. 11. Performed work that has caused loss or damage to the structure, its appurtenances, or property being worked upon or has caused loss or injury to any person.

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