ALJDEC decisions subject to certification as final

2011A-1951-ROC · Registrar of Contractors · 2011-10-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 14, 2011, at 1:00 p.m. APPEARANCES: Complainants Louis Simmons and Alfreda Wilson-Simmons appeared on their own behalf; Respondent Arizona Solar Water and HVAC, L.L.C. did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In October 2009, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC259900, Class C-11 for residential electrical contracting to Arizona Solar Water and HVAC, L.L.C. (“Respondent”). Raymond Henry Baxter is listed on Respondent’s license as a member. Respondent’s address of record is 2008 East 5th Street, Tempe, Arizona 85281-3040. On April 1, 2011, the Registrar received a complaint from Louis Simmons and Alfreda Wilson-Simmons (“Complainants”) against Respondent about its construction of a 4.32 kilowatt solar energy collection system, electric meter, and energy monitoring system at their home at 26250 South Jardin Drive, Sun Lakes, Arizona. According to the complaint, Complainants paid the full $21,600.00 contract price to Respondent. The gravamen of Complainants’ complaint was that although Complainants paid Respondent in full, Respondent did not pay the supplier of the solar collection system, Consolidated Electrical Distributors, Inc. (“CED”), resulting in CED’s placing a lien on Complainants’ home. After Respondent did not resolve Complainants’ complaint, they requested that the Registrar issue a citation against Respondent. On July 1, 2011, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(2), (3), namely A.A.C. R4-9-108, and (11). Mr. Baxter, on Respondent’s behalf, filed a timely written answer to the Registrar’s Citation and Complaint, denying any statutory violations and affirmatively alleging that “[d]ue to economic conditions beyond the control of Respondent, and the severe restriction of incentives provided by the utility companies for solar power, Respondent has been struggling to pay [CED].” The Registrar referred the matter to the Office of Administrative Hearings (“the OAH”), an independent state agency, for an evidentiary hearing. On August 4, 2011, the Registrar issued a Notice of Hearing, setting a hearing on September 14, 2011, at 1:00 p.m. The Registrar sent a copy of the Notice of Hearing to Respondent at its address of record. A hearing was held on September 14, 2011. Complainants presented six exhibits and testified on their own behalf. Respondent did not request to appear telephonically at the hearing and did not request that the hearing be continued. Although the start of the duly noticed hearing was delayed fifteen minutes to allow Respondent additional travel time, Respondent did not appear, through an authorized member, employee, or attorney, and did not contact the OAH to request that the start of the hearing be further delayed. Consequently, Respondent did not present any evidence to defend its license. According to the Registrar’s electronic record, on April 8, 2011, Respondent’s license was suspended for lack of a qualifying party, and remained suspended on the date of the hearing. / / / / / / / / Hearing Evidence On or about May 12, 2010, Mr. Baxter, on behalf of Respondent, contracted to install a 4.32 kilowatt solar energy collection system, electric meter, and energy monitoring system on Complainants’ home. Respondent’s contract provided that Complainants would pay the $21,600.00 contract price as follows: (1) A $6,156.00 down payment to begin the work; (2) Another payment of $6,156.00 upon completion; and (3) Assignment to Respondent of the $9,288.00 utility incentive for the installation of the solar energy collection system from Salt River Project, the utility company that provides Complainants’ electricity. On May 12, 2010, Complainants gave Respondent their first personal check in the amount of $6,156.00. Respondent negotiated the check. Respondent subcontracted design of the project to Arizona Power Save, L.C. (“Arizona Power Save”). The Registrar has issued three licenses to Arizona Power Save: (1) License No. ROC250671, Class B for residential general contracting, currently suspended for non-renewal; (2) License No. ROC250672, Class C-11 for residential electrical contracting, currently revoked; and (3) License No. ROC250673, Class L-11 for commercial electrical contracting, currently suspended for non-renewal. Mr. Baxter is listed as a member on all three of Arizona Power Save’s licenses. On or about June 21, 2010, CED sent an Arizona twenty-day lien notice to Complainants for the solar panels and other equipment that Respondent installed on their home. On July 1, 2010, Complainants gave Respondent their second personal check in the amount of $6,156.00. Respondent negotiated the check. On or about September 9, 2010, Mr. Baxter, on behalf of Arizona Power Save, asked Complainants to pay CED for the solar equipment that Respondent installed on their home and offered to make payments to Complainants to reimburse them for their payment to CED. Complainants did not accept Respondent’s offer or agree to pay CED. On or about October 21, 2010, CED recorded a lien against Complainants’ home in the amount of $13,553.04. On or about February 24, 2011, CED filed a first amended complaint in Maricopa County Superior Court Case No. CV2010-029879 against Respondent, Arizona Power Save, Complainants, and seven other named property owners to foreclose mechanic’s liens on eight properties, including Complainants’ home, for solar cells that CED had sold to Respondent and Arizona Power Save for installation on the properties. On May 18, 2011, Phoenix Channel 3, “Arizona Family,” ran a story on Complainants’ and other property owners’ disputes with Respondent and CED entitled, “Homeowners Caught in Legal Battle between Solar Company and Supplier.” On September 4, 2011, Mr. Baxter filed for personal bankruptcy under Chapter 11 of the United States Bankruptcy Code in Case No. 2:11-bk-25438- CGC in the bankruptcy court for the federal District of Arizona. Complainants testified that they hired an attorney to defend them in Maricopa County Superior Court Case No. CV2010-029879, and that CED’s lien on their home had been removed without any additional payment from them. Complainants requested that the Registrar revoke Respondent’s license so that it could not do the same thing to other homeowners. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] The Notice of Hearing that the Registrar mailed to Respondent at its address of record was reasonable, and it is deemed to have received notice of the hearing.[2] The administratively suspended status of Respondent’s license does not preclude Complainants from pursuing their administrative remedy nor preclude the Registrar from conducting this disciplinary proceeding.[3] Complainants bear the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] Complainants established that Respondent violated A.R.S. § 32- 1154(A)(11)[6] by failing to pay CED $13,553.04 for electrical materials that it installed on Complainants’ home, despite Complainants’ full compliance with the contractual requirements for payment. Complainants did not present any evidence that Respondent violated A.R.S. § 32-1154(A)(2)[7] or (3), namely, A.A.C. R4-9-108.[8] Respondent’s failure to pay its supplier, conversion of the monies it received for the project at Complainants’ home, and failure to appear at the hearing to present any evidence in mitigation of the penalty demonstrates that at this time Respondent and Mr. Baxter cannot be regulated. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order in this matter, Respondent Arizona Solar Water and HVAC, L.L.C.’s License No. ROC259900 be revoked. 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, October 4, 2011.

/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. §§ 41-1092.04; 41-1092.05(D). [3] See A.R.S. § 32-1154(C), which provides that “[t]he expiration, cancellation, suspension or revocation of a license . . . shall not deprive the registrar of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such license, or to render a decision suspending or revoking such a license . . . .” [4] 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). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] This statutory subsection 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.” [7] A.R.S. § 32-1154(A)(2) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of plans or specifications or any building codes of any state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.” [8] A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”

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