ALJDEC decisions subject to certification as final

2010A-308475115-ROC · Registrar of Contractors · 2011-03-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 18, 2011, at 1:00 p.m. APPEARANCES: Complainant Archicon, L.C. appeared through Jere Planck, its managing partner; Respondent Murphy Home Maintenance, Inc., dba M H M Builders appeared through James D. Murphy, its qualifying party and president. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In January 2009, the Registrar of Contractors (“the Registrar”) issued License No. ROC251714, Class K-61 for dual carpentry, remodeling, and repairs to Murphy Home Maintenance, Inc., doing business as (“dba”) M H M Builders (“Respondent”). James D. Murphy is Respondent’s qualifying party and president. The scope of Respondent’s K-61 license allows it to perform commercial contracts for remodeling that do not exceed $50,000.00. On August 12, 2010, the Registrar received a complaint from Jere W. Planck of Archicon, L.C., an architectural firm (“Complainant”). The complaint alleged that Respondent performed work that was beyond the scope of its K- license when it undertook to perform a $450,000.00 contract for tenant improvements at a commercial building located at 18499 North 25th Drive, Phoenix, Arizona (“the SS/GSA project”). The complaint alleged further that because the tenant improvements were supposed to be certified under the Leadership in Energy & Environmental Design (“LEED”) system, Respondent’s improper licensure “exposed my client & myself (architect) to a potential default base[d] on misrepresentation.” Complainant subsequently requested that a citation be issued against Respondent. On October 13, 2010, the Registrar issued a Citation and Complaint against Respondent, charging a violation of A.R.S. § 32-1154(A)(17). Mr. Murphy, on Respondent’s behalf, submitted a timely written answer to the Citation and Complaint, admitting that Respondent had performed work that was beyond the scope of its K-61 license, but affirmatively alleging that before it contracted to perform the work, it had submitted an application for a B-1 license and that the Registrar’s Legal Department had told him that the application would be processed in 10-15 days. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held on February 18, 2011. Mr. Planck testified on Complainant’s behalf and submitted four exhibits. Mr. Murphy testified on Respondent’s behalf and submitted three exhibits. Additional Evidence Wilson Property Services, Inc. owned the building that contained the SS/GSA project. Wilson Property Services, Inc.’s representatives on the project were Mike Wilson and Lance Clodfelter (collectively, “Wilson”). Wilson accepted Complainant’s proposal to act as the architect on the SS/GSA project for tenant improvements. Because Respondent had completed other tenant improvement projects for Wilson in the past, it hired Respondent as the general contractor for the SS/GSA project. Mr. Murphy testified that Wilson and Complainant knew that Respondent lacked a B-1 license when it was awarded the contract for the SS/GSA project, but also knew that Respondent had applied for a B-1 license and that the Registrar’s employees had assured Respondent that the application would be processed in 10-15 days. Mr. Planck testified that he did not know that Respondent was not properly licensed until it was well into performing its contract. Respondent started demolition at the SS/GSA project in April 2010. Mr. Planck testified that the project was required to be LEED certified, a process that required coordination and cooperation between the owner, the architect, and the general contractor on the project. Mr. Planck testified that Respondent failed to submit timely reports, and that as a result, LEED certification for the SS/GSA project was in jeopardy. Respondent’s contract with Wilson was not submitted. Mr. Murphy testified that the contract did not require Respondent to achieve LEED certification, but that Respondent nonetheless did the best it could to meet certification requirements. On or about July 20, 2010, the Registrar rejected Respondent’s application for B-1 License No. ROC264573. Mr. Murphy testified that the Registrar rejected Respondent’s license application due to the expiration of the results of the licensing examination that he had taken in 2007. A certificate of occupancy was issued for the SS/GSA project and the tenant moved into the space. As of the date of the hearing, LEED certification had not been obtained, although the certification process was still pending. Respondent submitted the letter that Wilson wrote in support of Respondent’s B-1 license application, blaming Complainant for the problems on the SS/GSA project. On November 16, 2010, the Registrar issued License No. ROC267667, Class B- to Respondent. According to the Registrar’s record, the amount of the bond for Respondent’s B-1 license is $5,000.00. The Registrar’s record shows that Respondent’s K-61 license is current and in good standing. This is the only complaint pending against the license.

CONCLUSIONS OF LAW The matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s statutory violation by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[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] Mr. Murphy knew that Respondent needed a B-1 license before it undertook the $450,000.00 contract for tenant improvements at the SS/GSA project. The Registrar’s unnamed employee’s alleged verbal assurance that Respondent’s license application would be processed in 10-15 days does not estop the Registrar from enforcing A.R.S. § 32-1154(A)(17) or mitigate Respondent’s statutory violation.[5] Respondent should not have submitted a bid on or commenced the SS/GSA project until after the Registrar issued the B-1 license. Therefore, Complainant established that Respondent violated A.R.S. § 32- 1154(A)(17)[6] when it submitted a bid for and commenced work on the SS/GSA project without a valid B-1 license. The eventual issuance of License No. ROC267667, Class B-1 to Respondent is a factor in mitigation of the penalty to be assessed as a result of the proven statutory violation in this case.[7] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s order in this matter, the Registrar impose a disciplinary suspension on Respondent Murphy Home Maintenance, Inc., dba M H M Builders’ License No. ROC251714, Class K-61 for a period of seven 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 40 days from the date of that certification. Done this day, March 8, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1101 et seq. [2] 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). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] See Hansson v. State Board of Dental Examiners, 195 Ariz. 66, 70, 985 P.2d 551, 555 (App. 1999) (Estoppel should not apply against the government if its application “would frustrate the purpose of . . . licensing requirements, which is to promote uniform standards of quality”); see also Valencia Energy Co. v. Arizona Dept. of Revenue, 191 Ariz. 565, 577, 959 P.2d 1256, 1268 (1998) (For estoppel to lie against a state agency, the agency’s communication giving rise to the estoppel must be formal, usually in writing, and made by “a person authorized to act in the area under consideration”). [6] This statutory subsection includes among the grounds for suspension, revocation, and other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.” [7] Although it appears that the amount of the bond for Respondent’s B-1 license was insufficient for the amount of the SS/GSA project, that license was not cited in Complainant’s complaint. See A.A.C. R4-9-112(A)(1) (requiring a $10,000.00 bond for estimated annual volume of more that $150,000.00, but less than $500,000.00).

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