ALJDEC decisions subject to certification as final

2011A-2495-ROC · Registrar of Contractors · 2012-04-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING DATES: November 2, 2011, at 8:00 a.m., January 11, 2012, at 8:00 a.m., and January 12, 2012, at 8:00 a.m.; the record was held open until April 6, 2012, to allow the parties to submit written closing arguments. APPEARANCES: The Registrar of Contractors was represented by Elizabeth A. Campbell, Esq., Assistant Attorney General; Respondent Express Home Services, L.L.C. was represented by Fidelis V. Garcia, Esq., Attorney- at-Law. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background On September 13, 2004, the Arizona Registrar of Contractors (“the Registrar”) issued License No. K-8.200037-D for dual floor covering to Express Home Services, L.L.C. (“Respondent”). On May 18, 2011, the Registrar on its own motion issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32- 1154(A)(15), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-109(A), A.R.S. § 32- 1154(A)(13), namely § 32-1124(B), A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1158(B), and A.R.S. § 32-1154(A)(16). The Citation and Complaint showed Respondent’s license number and name as it appeared on the Registrar’s records on May 18, 2011. The Citation and Complaint did not specifically allege that Respondent installed flooring for compensation. Instead, the Citation and Complaint alleged that Respondent “frequently advertises on television and on the internet.” The Registrar attached as exhibits to the Citation and Complaint copies of warning letters regarding various statutory violations that the Registrar had sent over the years during its investigations of consumer complaints against Respondent. The Citation and Complaint stated as the basis of the Registrar’s jurisdiction over Respondent “A.R.S. § 32-1101 et seq., which authorize(s) the Registrar to impose disciplinary sanctions against licensees for violations of Title 32, Chapter 10, Arizona Revised Statutes.” The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing on the charged violations. A hearing was held on November 2, 2011, January 11, 2012, and January 12, 2012. The Registrar submitted ten exhibits and presented the testimony of Jim Dimond, the Registrar’s inspector who performed its investigation. Respondent submitted 18 exhibits and presented the testimony of five witnesses: (1) Jackson Wright, Vice President and Director of Advertising Consulting at Larry John Wright, Inc., the advertising firm that produced and placed Respondent’s television advertising; (2) John N. Wright, Jackson Wright’s father and the president and part-owner of Larry John Wright, Inc.; (3) Henry Jaffe, Respondent’s operations manager; (4) Michael Hirsch, Respondent’s assistant general manager; and (5) Jerry Lederer, Respondent’s managing member of operations. The record was held open until April 6, 2012, to allow the parties to submit written closing arguments. / / / / / / / / / / / / Hearing Evidence Respondent’s Business Model, Consumer Complaints, and the Registrar’s Investigation Respondent engages in a high-volume business selling flooring materials and installing floors, largely generated by heavy television advertising. John Wright testified that Respondent runs 4,000 television advertisements per week in the Phoenix and Tucson areas. Most of these advertisements are only 30 seconds long. In 2009, the Arizona Attorney General’s Office (“AGO”) conducted a consumer fraud investigation into Respondent’s business practices. After Respondent provided the documents and records that the AGO requested, the AGO closed the investigation. The assistant attorney general who conducted the consumer fraud investigation stated in a letter to the Registrar’s attorney that “closure of an investigation does not constitute an endorsement or approval of the target’s past, present or future practices . . . .”[2] Inspector Dimond was asked to perform an investigation, including keeping a log of Respondent’s television advertisements that he saw when he was watching television in the evening that did not comply with applicable statutes and regulations. According to Mr. Lederer, Respondent enters into contracts with property owners to install an average of 500 floors per month, for an average of 6,000 floors per year. Mr. Jaffe testified that Respondent does not install the floors using its employees. Instead, Respondent subcontracts floor installations to properly licensed subcontractors. Respondent offers customers a lifetime installation warranty on floors that they purchase from Respondent and if possible, Respondent hires the same subcontractors who installed the floors to perform warranty work. If the original subcontractor is no longer licensed or in business, Respondent hires another properly licensed subcontractor to perform warranty work. In addition to providing work for subcontractors, Mr. Lederer testified that during the time Respondent has been in business, it has paid more than $1 million in income, sales, and other taxes to the United States government, the State of Arizona, and other governmental entities. Mr. Lederer testified that Respondent also has made generous contributions to various charity and community organizations in Arizona, including St. Mary’s Food Bank, ChildHelp Prevention and Treatment of Child Abuse, United Fire Fighters’ Association, Make-A-Wish Foundation, Habitat for Humanity, Let’s Move Together Arthritis Foundation, National Football Charitable Foundation, Community Food Bank, and the St. Vincent de Paul Society. As of the third hearing date, January 12, 2012, consumers had filed a total of 186 complaints to the Registrar against Respondent. There were two consumer complaints that were open, in addition to the Registrar’s own motion complaint. Twenty-one complainants had been closed as resolved, settled, or withdrawn. The Registrar either did not confirm or did not issue a Citation and Complaint in the remaining consumer complaints. None of the consumer complaints resulted in the Registrar imposing discipline on Respondent.[3] Administrative notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website. Such prior License record reflects that as of April 30, 2012, Respondent’s license was current and in good standing, only one complaint, apparently the matter at issue was pending against the license, and 21 complaints had been closed as resolved, settled, or withdrawn. / / / / / / / / / / / / Charged Violations of A.R.S. § 32-1154(A)(15)[4] and (3), Namely, A.A.C. R4-9-109(A)[5] Inspector Dimond testified that after Respondent was licensed in 2004, Respondent started doing business under the name, “Express Flooring,” rather than under the name on its license, “Express Home Services, L.L.C.” Inspector Dimond testified that A.R.S. § 32-1154(A)(15) and A.A.C. R4-9- 109(A) require licensees to do business under the name on their licenses to protect the public by allowing its members to easily identify the licensed contractors with whom they do business. Mr. Hirsch testified that Respondent wants people to be able to find it, and that Respondent did not operate under an unauthorized name to mislead the public. Mr. Hirsch testified that due to Respondent’s extensive television and internet advertising, it is easy for anyone to find Respondent. In November 2004, the Registrar issued License No. L-8.201260-C to Express Flooring Demolition, L.L.C. (“Express Flooring Demolition”). Inspector Dimond testified that although Respondent regularly requested that the Registrar authorize Respondent to use the name, “Express Flooring,” in the conduct of its business, the Registrar denied the requests because it deemed the name could confuse the public because it was too similar to the name, “Express Flooring Demolition.” During the course of the Registrar’s investigation into various consumer complaints, it sent letters to Respondent to warn that its continued use in its business of the name, “Express Flooring,” violated A.R.S. § 32- 1154(A)(15) and (3), namely A.A.C. R4-9-109. Such letters were sent on January 9, 2006, June 5, 2006, August 28, 2009, December 16, 2009, January 27, 2010, and July 15, 2011.[6] On January 18, 2006, and May 23, 2011, Respondent registered the trade name, “Express Flooring,” with the Arizona Secretary of State. The registrations stated that Respondent had been using the trade name since May 1, 2004.[7] On December 9, 2009, Respondent as sole member filed articles of incorporation for Express Flooring, L.L.C., with the Arizona Corporation Commission.[8] On January 27, 2010, Inspector Dimond sent Respondent a warning letter specifically referencing Respondent’s use on its website of the name, “Express Flooring.” Inspector Dimond testified that as of November 1, 2011, Respondent continued to use the name, “Express Flooring,” on its website. In March 2011, Inspector Dimond attended the Maricopa County Home Show, where Respondent had a booth. Inspector Dimond testified that many items at Respondent’s booth, including the banner, an entry form for a contest to win free flooring, and a water bottle, displayed the name, “Express Flooring,” instead of the name on Respondent’s license. Inspector Dimond testified that every advertisement that he logged between January 6, 2011, and April 22, 2011, improperly used the name, “Express Flooring.” Jackson Wright agreed that Respondent’s advertisements used the name, “Express Flooring,” but testified that Respondent instructed Larry John Wright, Inc. to stop using the name sometime after April 22, 2011. In September 2011, Respondent used the name, “Express Flooring,” in a printed Val-Pak advertisement.[9] Mr. Lederer testified that Respondent was not responsible for the violation because Val-Pak’s advertising department decided to use the name, contrary to Respondent’s instructions. On January 3, 2012,[10] the Registrar amended the name on Respondent’s license to “Express Home Services, L.L.C. [doing business as (“dba”)] Express Flooring formerly known as Express Home Services, L.L.C.”[11] Charged Violation of A.R.S. § 32-1154(A)(13), Namely, A.R.S. § 32- 1124(B)[12] Inspector Dimond testified that A.R.S. § 32-1124(B) requires licensees to place their license numbers on documents and advertising that they use in their contracting business to protect the public by helping them identify licensees and informing them of the Registrar’s regulatory authority. Mr. Hirsch testified that Respondent failed to put its license number on advertisements and other documents used in its business through an oversight, not to mislead the public or to evade the Registrar’s regulation. During the course of the Registrar’s investigation into various consumer complaints, it sent letters to Respondent to warn that its failure to place its license number preceded by the acronym “ROC” on bids, advertising, and other documents used in its contracting business violated A.R.S. § 32- 1154(A)(13), namely A.R.S. § 32-1124(B). Such letters were sent on January 9, 2006, June 5, 2006, March 10, 2008, September 23, 2008, December 5, 2008, December 16, 2009, January 13, 2010, January 27, 2010, March 31, 2010, July 22, 2010, and August 31, 2010.[13] The entry forms and the water bottles that Respondent gave away to the public at the Maricopa County Home Show did not show its license number preceded by the acronym “ROC.” Mr. Lederer acknowledged that the purpose of the contest was to obtain business for Respondent, but testified that the only reason that Respondent provided water bottles was because it was hot. Inspector Dimond logged 37 advertisements in which he did not see a license number. Jackson Wright testified that Respondent instructed Larry John Wright, Inc. in mid-2010 to begin showing Respondent’s license number in its advertisements. Jackson Wright obtained still shots that showed a display of Respondent’s license number preceded by the acronym “ROC” in 23 of the advertisements, but did not find a license display in the remaining 14 advertisements. Mr. Lederer and Jackson Wright testified that Respondent’s current advertisements all display its license number preceded by the acronym “ROC.” Charged Violation of A.R.S. § 32-1154(A)(13), Namely A.R.S. § 32- 1158(B)[14] During the course of the Registrar’s investigation into various consumer complaints, it sent letters to Respondent to warn that its failure to include certain elements in its contracts with property owners violated A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1158(B). Such letters were sent on January 13, 2010, June 22, 2010, July 1, 2010, September 1, 2010, November 22, 2010, June 24, 2011, and October 26, 2011.[15] The Registrar submitted two contracts that consumers had provided with their complaints to the Registrar against Respondent. The Smith contract was dated May 1, 2010, and did not include an estimated completion date or any information about the property owner’s right to file a complaint to the Registrar. The Bishop contract was dated July 27, 2011, and also did not include an estimated completion date or any information about the property owner’s right to file a complaint to the Registrar.[16] Respondent submitted a form contract that Mr. Lederer testified was used beginning in 2010. Respondent’s revised form contract also lacked a completion date. Respondent’s revised form contract included in regular type the following bullet point: • Please inspect flooring and installation while the installers are at your home, they will be happy to correct any problem before leaving. You have the right to file a written complaint with the ROC within 2 years, www.azroc.gov.[17]

Respondent’s revised contract did not advise property owners that they had a right to file complaints to the Registrar about Respondent’s violations of A.R.S. § 32-1154(A) or that the two-year period began to run at the time set forth in 32-1155(A),[18] or provide the Registrar’s telephone number. Respondent also submitted a second revised form contract that Mr. Lederer testified was used from the end of 2010, or the beginning of 2011, that included the following bullet point in bold type: • You have the right to file a written complaint with the ROC within 2 years, www.azroc.gov 602-542-1525.[19]

Respondent’s second revised contract did not advise property owners that they may file complaints to the Registrar for Respondent’s violations of A.R.S. § 32-1154(A) within the two-year period set forth in A.R.S. § 32- 1155(A). Charged Violation of A.R.S. § 32-1154(A)(16)[20] In January 2011, Respondent broadcast an advertisement that made an offer that had expired in December 2010. Mr. Lederer testified that no one contacted Respondent to complain after the advertisement with the expired offer was broadcast. Mr. Lederer testified that Respondent was running the same offer in January 2011, and if a member of the public had called about the expired offer, Respondent would have honored the offer. CONCLUSIONS OF LAW Jurisdiction and Other Preliminary Matters At the hearing and in Respondent’s closing argument, it argued that the Registrar lacked jurisdiction over Respondent because (1) The Citation and Complaint did not allege that Respondent received compensation as required by A.R.S. § 32-1101(A)(3); and (2) Respondent did not need a license under the so-called “materialman’s exemption” set forth at A.R.S. § 32- 1121(A)(4). Respondent also moved to dismiss the complaint as moot because it had corrected all statutory violations. A.R.S. § 41-1092.05(D) requires that agencies provide the following notice to regulated parties of charges against them: 1. A statement of the time, place and nature of the hearing.

2. A statement of the legal authority and jurisdiction under which the hearing is to be held.

3. A reference to the particular sections of the statutes and rules involved.

4. A short and plain statement of the matters asserted. . . .

The Registrar’s May 18, 2011 Citation and Complaint stated Respondent’s license status and number, described the television and promotional materials about which Inspector Dimond testified, provided copies of some of the Registrar’s warning letters to Respondent over the years, and cited the statutes and regulations under which the Registrar charged Respondent. The Registrar’s Citation and Complaint complied with A.R.S. § 41- 1092.05(D). Under the fourteenth amendment of the United States Constitution, “[p]rocedural due process requires notice and an opportunity to be heard in a meaningful manner and at a meaningful time.”[21] The Registrar’s Citation and Complaint provided to Respondent all the notice that due process required about the matters that would be at issue at the hearing. A.R.S. § 32-1101(A)(3) defines “contractor” as follows: "Contractor" is synonymous with the term "builder" and means any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that, for compensation, undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid or responds to a request for qualification or a request for proposals for construction services to, does himself or by or through others, or directly or indirectly supervises others to:

(a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or any other structure or work in connection with the construction.

(Emphasis added). Respondent acknowledged that the purpose of its extensive advertising campaigns was to make offers to members of the public to secure contracts for installation of flooring, that it subcontracts its contracts to appropriately licensed subcontractors, and that it receives substantial compensation from its performance of contracts to install flooring, some of which it returns to the community in tax payments and charitable contributions. Therefore, Respondent is subject to the Registrar’s authority over its contracting activities. The materialman’s exemption set forth at A.R.S. § 32-1121(A)(4)[22] does not apply to Respondent because although it may occasionally provide materials to others for installation, for the most part, Respondent acknowledged that it provides flooring materials to its subcontractors to install to allow them to perform Respondent’s contracts with property owners for such installation.[23] Because Respondent is a licensed contractor and the actions alleged in the Citation and Complaint involved Respondent’s contracting activities, the Registrar has personal and subject-matter jurisdiction over Respondent to determine whether it violated the charged subsections of A.R.S. § 32- 1154(A).[24] Charged Violations The Registrar bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[25] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[26] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[27]

Only the Registrar may penalize a contractor’s license and “[t]he mere commission of a prohibited act is insufficient in and of itself to invalidate [a] license.”[28] Since the AGO did not and could not determine whether Respondent violated A.R.S. § 32-1154(A) or whether adverse action should be taken against Respondent’s license, the AGO’s closure of the consumer fraud complaint is not relevant to the charged violations in this matter. Respondent committed to use the name, “Express Flooring,” before it secured the right to use that name in its contracting business. Therefore, the Registrar established that before January 3, 2012, Respondent repeatedly violated A.R.S. § 32-1154(A)(15) and (3), namely A.A.C. R4-9-109(A), by doing business under the name “Express Flooring,” rather than the name on Respondent’s license. As a factor in mitigation of the penalty, Respondent established that it has added the name, “Express Flooring,” to its license. The Registrar established that until November 2011, Respondent repeatedly violated A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1124(B), by failing to display its license number preceded by the acronym “ROC” in numerous television advertisements and on its website. The Registrar also established that the entry forms and water bottles that Inspector Dimond saw at the Maricopa County Home Show were advertisements that Respondent used in the conduct of its contracting business. Therefore, A.R.S. § 32-1154(A)(15) and (3), namely A.A.C. R4-9- 109(A), required the entry forms and water bottles to show the name on Respondent’s license, and A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32- 1124(B), required the entry forms and water bottles to show Respondent’s license number preceded by the acronym “ROC.” As a factor in mitigation of the penalty, Mr. Lederer and Jackson Wright credibly testified that Respondent lists its license number preceded by the acronym “ROC” on advertisements, its website, and other promotional materials. The Registrar established that Respondent violated A.R.S. § 32- 1154(A)(13), namely A.R.S. § 32-1158(B), because to date, Respondent’s form contract does not include all the terms that A.R.S. § 32-1158(B) requires. Although Respondent has improved its form contract to make it more compliant with A.R.S. § 32-1158(B), it still is not in complete compliance. The Registrar did not establish that Respondent violated A.R.S. § 32- 1154(A)(16) by making false or misleading advertising whereby a member of the public could be misled or injured. Mr. Lederer credibly testified that Respondent would have honored the expired offer in the January 2011 advertisement. Respondent built an extraordinarily successful contracting business through a heavy advertising campaign that prominently featured the name, “Express Flooring,” before Respondent had the right to contract under that name. Respondent’s repeated failures to heed the Registrar’s numerous written warnings about business practices that violated applicable statutes support an inference that Respondent was more concerned with building its contracting business than with complying with the Registrar’s statutes and regulations. Respondent’s repeated violations are factors in aggravation of the penalty. The Registrar did not establish that Respondent’s cavalier attitude toward regulation actually harmed any member of the public. Considering Respondent’s large volume of business, relatively few customers have made complaints against it to the Registrar, Respondent appears to have responded appropriately to consumer complaints and to date, Respondent has avoided discipline based on poor workmanship or failure to respond to consumer complaints. Respondent’s license record is a factor in mitigation of the recommended penalty. Respondent established that it can be regulated and that it has modified its business practices to conform to statutory requirements, with the exception of its form contract that remains in violation of A.R.S. § 32- 1158(B). Based on the evidence that was presented at hearing, including factors in aggravation and mitigation of the penalty, an unconditional suspension of Respondent’s license for any length of time would be an excessive penalty. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order, the Registrar suspend License No. K- 8.200037-D previously issued to Respondent Express Home Services, L.L.C., now known as Express Home Services, L.L.C. dba Express Flooring, until Respondent corrects its form contract to comply with A.R.S. § 32- 1158(B)(9)’s requirements. It is further recommended that the Registrar not suspend Respondent’s license and, instead, close the complaint in Case No. 2011-2495 if prior to the effective date of the order, the Registrar receives written proof from Respondent that is satisfactory to the Registrar that Respondent has revised its form contract to comply with A.R.S. § 32-1158(B)(9)’s requirements. It is further recommended that in addition to any license suspension that may result from this matter, Respondent’s Class K-8 license be placed on disciplinary probation for a period of 180 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, January 30, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The Citation and Complaint and Notice of Hearing in this matter showed Respondent’s name as, “Express Home Services, L.L.C.,” the name on Respondent’s license at the time the Registrar of Contractors issued those documents. As noted infra at Finding of Fact No. 29, on January 3, 2012, the Registrar amended the name on Respondent’s license to “Express Home Services, L.L.C. [doing business as (“dba”)] Express Flooring formerly known as Express Home Services, L.L.C.” Therefore, the caption has been amended to conform to Respondent’s license.

[2] The Registrar’s Ex. 10. [3] Mr. Lederer testified regarding a complaint made by Mary Ellen Smith. Mr. Lederer testified that Respondent’s work conformed to workmanship standards and that Mrs. Smith’s husband accepted its work. The Registrar submitted documents from its investigation into Mary Ellen Smith’s complaint against Respondent, including the certified flooring inspector’s report and the Registrar’s inspector’s Corrective Work Order, to show that there was evidence of a workmanship deficiency. See the Registrar’s Ex. 9. The merit of Mrs. Smith’s complaint was not at issue in the hearing in this matter and in any event, it appears Respondent eventually resolved Mrs. Smith’s complaint without discipline against its license. [4] A.R.S. § 32-1154(A)(15) 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.” [5] 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. R4-9-109(A) requires that “[a] licensee shall do business under the name on the license issued and ensure that the same name is used on the license bond.” [6] See the Registrar’s Ex. 4. [7] See Respondent’s Ex. D and E. [8] See Respondent’s Ex. F. [9] See the Registrar’s Ex. 7. [10] According to the Registrar’s public website, on December 1, 2011, Express Flooring Demolition’s License No. L-8.201260-C expired. [11] See Respondent’s Ex. C. [12] A.R.S. § 32-1154(A)(13) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” A.R.S. § 32-1124(B) provides as follows: The license number appearing on any licenses held by the licensee shall be preceded by the acronym "ROC" and shall be . . . placed on all broadcast, published, internet or billboard advertising, letterheads and other documents used by the licensee to correspond with the licensee's customers or potential customers in the conduct of business regulated by this chapter. A violation of this subsection relating to posting and placement of license numbers shall be, at the discretion of the registrar, grounds for disciplinary action pursuant to section 32-1154, subsection A, paragraph 13 . . . . [13] See the Registrar’s Ex. 3. [14] A.R.S. § 32-1154(A)(13) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” A.R.S. § 32-1158(B) provides that any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved after December 31, 2007, must be in writing and include certain minimum terms, including the following: 4. The estimated date of completion of all work to be performed under the contract. . . . . 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type . . . . [Emphasis added.] [15] See the Registrar’s Ex. 6. [16] See the Registrar’s Ex. 5. [17] Respondent’s Ex. K (footnote added). [18] A.R.S. § 32-1155(A) allows the filing of a complaint “within two years prior to the date of filing the complaint, of an act that is cause for suspension or revocation of a license” under A.R.S. § 32-1154(A). [19] Respondent’s Ex. N (emphasis in original, footnote added). [20] A.R.S. § 32-1154(A)(16) includes among the grounds for suspension, revocation, and other disciplinary action against a contractor’s license, “[f]alse, misleading or deceptive advertising whereby any member of the public may be misled and injured.” [21] Webb v. Arizona Board of Medical Examiners, 202 Ariz. 555, 558, ¶ 9, P.3d 505, 508 (App. 2002) (citing Comeau v. Arizona State Board of Dental Examiners, 196 Ariz. 102, 106, ¶ 18, 993 P.2d 1066, 1070 (App. 1999)). [22] A.R.S. § 32-1121(A)(4) provides that the Registrar’s statutes do not apply to “[a]ny materialman, manufacturer or retailer who furnishes finished products, materials or articles of merchandise and who does not install or attach such items . . . .” (Emphasis added.) [23] As noted by the Registrar’s attorney, the case that Respondent cited for lack of jurisdiction involved an unlicensed subcontractor’s right to make a claim in civil court against a general contractor’s surety for materials under A.R.S. § 32-1153, not the Registrar’s ability to prosecute a licensed contractor for charged violations of A.R.S. § 32-1154(A). See Butch Randolph & Assoc. v. International Fid. Ins. Co., Inc., 212 Ariz. 550, 553 ¶ 15, 136 P.2d 232, 235 (App. 2006) (“Butch Randolph”). [24] See, e.g., Beazer Homes Arizona, Inc. v. Goldwater, 196 Ariz. 98, 101 ¶ 13, 993 P.2d 1062, 1065 (App. 1999). [25] 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). [26] See A.A.C. R2-19-119(B)(2). [27] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [28] See Hunter Contracting Co. v. Sanner Contracting Co., 16 Ariz. App. 239, 243, 492 P.2d 735 (1972).

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