ALJDEC decisions subject to certification as final

2011A-1691-ROC · Registrar of Contractors · 2011-09-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 2, 2011, at 1:00 p.m. APPEARANCES: Complainant Maurer Sealing and Striping, L.L.C. appeared through Jennifer Maurer, its qualifying party and member; Respondent Caymus Corporation appeared through Randy Ringleb, its qualifying party and officer. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In January 2004, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC192323, Class KB-1 for dual residential building contracting to Caymus Corporation (“Respondent”). In May 2007, the Registrar issued License No. ROC232575, Class K-66 for dual seal coating to Maurer Sealing and Striping, L.L.C. (“Complainant”). On March 9, 2011, the Registrar received a complaint from Complainant against Respondent that alleged that Respondent owed Complainant $2,802.88 for asphalt repairs, seal coating, and striping that Complainant performed under its subcontract with Respondent on a project for Northern Arizona University on South San Francisco Street in Flagstaff, Arizona (“the project”). Complainant requested that the Registrar issue a citation against Respondent because it had not paid Complainant anything for its performance of the subcontract. On June 28, 2011, the Registrar issued a Citation and Complaint against Respondent, charging a violation of A.R.S. § 32-1154(A)(11). Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violation. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held on September 2, 2011. Complainant submitted six exhibits and presented the testimony of two witnesses: (1) Jennifer Maurer, Complainant’s qualifying party and member; and (2) Max Maurer, Complainant’s project manager on the project. Respondent submitted five exhibits and presented the testimony of one witness, Randy Ringleb, its qualifying party. According to the Registrar’s electronic record, Respondent’s license is current and in good standing. Three complaints are pending against the license, and two complaints have been resolved, settled, or withdrawn. Hearing Evidence On or about September 20, 2010, Complainant faxed to Respondent a proposal to perform asphalt striping and to reseal or repair five areas of approximately 148 square feet of asphalt at the project, for a total price of $930.00. Complainant attached to its proposal copies of plans that Respondent had provided to Complainant that showed the location and size of the areas of asphalt that Complainant was to repair. On or about September 24, 2010, Mr. Ringleb, on Respondent’s behalf, signed to accept Complainant’s proposal and faxed it back to Complainant. Pursuant to the subcontract, Complainant named Respondent as an additional insured on Complainant’s insurance policy and submitted evidence to Respondent of Complainant’s current workers’ compensation insurance. Mr. Ringleb denied that Respondent had a subcontract with Complainant, despite Mr. Ringleb’s signature on Complainant’s proposal. Instead, Mr. Ringleb testified that he took Mr. Maurer around the project with an unnamed concrete subcontractor, and showed Mr. Maurer areas that needed to be repaired, with the understanding that the concrete subcontractor would be responsible for paying Complainant. Mr. Maurer credibly testified that no one other than Mr. Ringleb was present when he showed Mr. Maurer the areas of asphalt that needed to be repaired on the project. Mr. Maurer also testified that Mr. Ringleb never told him that Complainant was to look to anyone other than Respondent for payment for Complainant’s work on the project. Mr. Maurer also credibly testified that the areas that needed repair were much larger than were shown on Respondent’s plans. Mr. Maurer testified that when he asked Mr. Ringleb about the additional repairs, Mr. Ringleb said that he was in a hurry to have the job done, instructed Complainant to repair the additional areas, and assured Mr. Maurer that Respondent would pay Complainant for the extra work. Complainant completed the work described in its proposal to Respondent, as well as the additional areas. On October 1, 2010, Complainant submitted an invoice to Respondent in the amount of $2,164.53.[1] Respondent did not pay anything on the invoice. Mr. Ringleb testified that the Registrar’s inspector, Eric Ulinger, told him that Complainant was not properly licensed for asphalt repair. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[2] Respondent moved to dismiss the complaint because if Respondent contracted with Complainant, A.R.S. §§ 32-1151 and 32-1153 prevent Complainant from prosecuting its complaint because it was not properly licensed. The proponent of a motion bears the burden to establish grounds to support the motion.[3] Complainant’s K-66 license allowed it to perform the scope of work permitted by a commercial A-15 Seal Coating license and a residential C-13R Asphalt Coating and Parking Appurtenances license.[4] A commercial A-15 license allows a licensee to apply seal coating to asphalt paving surfaces, including repair of surface cracks and application of painted marking symbols.[5] A residential C-13R license allows the licensee to install and repair paved areas using materials and methods common to the industry, including striping.[6] Therefore, Complainant’s K-66 license allowed it to contract to repair, reseal, and stripe asphalt at the project.[7] Even if Complainant was not licensed to perform the work that Mr. Ringleb, on Respondent’s behalf, subcontracted to Complainant, A.R.S. § 32-1153 specifically concerns court actions.[8] Under well-established authority, an administrative complaint to the Registrar is not a court action.[9] A.R.S. § 32-1153 therefore does not prevent Complainant from making a complaint to the Registrar for monies that Respondent owes it for contracting. In the alternative, Respondent argued that if Complainant is not properly licensed and is allowed to prosecute its complaint, Complainant should recover no more than $1,000.00 under A.R.S. § 32-1121(A)(14). That statute concerns “[p]ersons who are not required to be licensed” and includes the so-called “handyman’s exemption,” as follows: Any person other than a licensed contractor engaging in any work or operation on one undertaking or project by one or more contracts, for which the aggregate contract price, including labor, materials and all other items . . . is less than one thousand dollars. . . . The work or operations which are exempt under this paragraph shall be of a casual or minor nature. . . .

“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.”[10] The handyman exemption allows an unlicensed person to file a court action for nonpayment against a property owner if he meets A.R.S. § 32- 1121(A)(14)’s requirements, notwithstanding A.R.S. § 32-1153, and to avoid liability under A.R.S. § 32-1151[11] because he is not required to be licensed. By its terms, A.R.S. § 32-1121(A)(14) does not limit an unlicensed person’s recovery under A.R.S. § 32-1154(A)(11)[12] from a licensed contractor like Respondent who contracted with the unlicensed person. With respect to the statutory violation charged in the Registrar’s Citation and Complaint, Complainant bears the burden of proof to establish Respondent’s violation by a preponderance of the evidence.[13] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[14] Mr. Ringleb’s testimony that Respondent did not have a subcontract with Complainant, even though he signed Complainant’s proposal on Respondent’s behalf, and that some unnamed concrete subcontractor is responsible for paying Complainant, was not credible. Because Complainant established that its subcontract was with Respondent and that Complainant completed the project under the terms of the written contract and the verbal addendum, Complainant established that Respondent violated A.R.S. § 32-1154(A)(11) by failing to pay Complainant $2,164.53. As a factor in aggravation of the penalty, Respondent’s asserted defenses were utterly unsupported by the law or fact. The Respondent, a licensed general contractor, elected to hire the Complainant subcontractor to perform certain work, knowing the subcontractor’s license classification; only after the Complainant has fully performed the work did the Respondent refuse to pay the Complainant based on the scope of its license. This demonstrates a lack of business or personal ethics on the part of the Respondent. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order in this matter, Respondent Caymus Corporation’s License No. ROC192323 be suspended for a period of seven calendar days. It is further recommended that after seven days have passed, Respondent’s license remain suspended until the Registrar receives satisfactory proof in writing from Respondent that it has paid Complainant Maurer Sealing and Striping, L.L.C. the sum of $2,164.53 by certified or cashier’s check. After the Registrar receives such satisfactory written proof, Case No. 2011-1691 shall be closed. It is further recommended that, in addition to any license suspension that may result from this matter, Respondent’s Class KB-1 license be placed on disciplinary probation for a period of 30 days, commencing on the effective date of the Registrar’s order or the date on which Respondent files notice of compliance, whichever is later. 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, September 20, 2011. /s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to: William A. Mundell, Director Registrar of Contractors ----------------------- [1] On November 11, 2010, Complainant submitted a second invoice to Respondent in the amount of $638.35 for 135 additional square feet of paving. Complainant’s complaint to the Registrar included this invoice. However, Mr. Maurer testified at hearing that Complainant finished the subcontract in September or October 2010, and that he did not know what the November 11, 2010 invoice was for. [2] See 32-1101 et seq. [3] See A.A.C. R2-19-119(B)(3). [4] See A.A.C. R4-9-104(B). [5] See A.A.C. R4-9-102(B). [6] See A.A.C. R4-9-103(B). [7] Mr. Ringleb’s testimony about Inspector Ulinger’s advice to him was also not credible and, in any event, is hearsay. Hearsay testimony about a Registrar’s inspector’s alleged advice cannot overcome the plain language of the Registrar’s administrative regulations. [8] This statute concerns “Proof of license as prerequisite to a civil action” and provides:

No contractor as defined in section 32-1101 shall act as agent or commence or maintain any action in any court of the state for collection of compensation for the performance of any act for which a license is required by this chapter without alleging and proving that the contracting party whose contract gives rise to the claim was a duly licensed contractor when the contract sued upon was entered into and when the alleged cause of action arose.

(Emphasis added.) [9] See Semple v. Tri-City Drywall, Inc., 172 Ariz. 608, 611-612, 838 P.2d 1369, 1372-73 (App. 1992) (Prevailing party in administrative claim before Registrar of Contractors was not entitled to attorney’s fees from its opponent under A.R.S. § 12-341.01(A) because administrative hearing is not an “action”). [10] Mid Kansas Federal Savings and Loan Ass’n of Wichita v. Dynamic Development Corp., 167 Ariz. 122, 128, 804 P.2d 1310, 1316 (1991). [11] A.R.S. § 32-1151 prohibits engaging in contracting without a license and provides in relevant part as follows:

It is unlawful for any person . . . to engage in the business of, submit a bid or respond to a request for qualification or a request for proposals for construction services as, act or offer to act in the capacity of or purport to have the capacity of a contractor without having a contractor's license in good standing in the name of the person, firm, partnership, corporation, association or other organization as provided in this chapter, unless the person, firm, partnership, corporation, association or other organization is exempt as provided in this chapter. . . .

(Emphasis added.) [12] A.R.S. § 32-1154(A)(11) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.” [13] 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). [14] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

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