ALJDEC decisions subject to certification as final

2011A-355-ROC · Registrar of Contractors · 2011-06-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 10, 2011, at 8:00 a.m.

APPEARANCES: Complainant Judy Rogers appeared on her own behalf; Respondent Absolute Value Heating & Cooling, L.L.C. appeared through Jason M. Kelly, Esq., Schneider & Onofry, P.C.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In May 2007, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC233003, Class C39R for residential air conditioning and refrigeration excluding solar to Absolute Value Duct Cleaning and Sanitizing, L.L.C. On or about April 11, 2011, the Registrar redesignated the license holder as Absolute Value Heating & Cooling, L.L.C. (“Respondent”). On January 19, 2011, the Registrar received a complaint from Judy Rogers (“Complainant”) that requested that the Registrar require Respondent to reimburse her for the $6,255.53 that she had paid it for work on a heat pump that she later learned was still under the manufacturer’s warranty. According to the complaint form, in September 2008, Complainant closed escrow on and moved into her house at 2040 West Half Moon Circle, San Tan Valley, Arizona. On January 20, 2011, the Registrar notified Respondent that its operation of its contracting business under the name, “Absolute Value Heating & Cooling,” instead of the name listed on its license at that time, “Absolute Value Duct Cleaning and Sanitizing,” appeared to violate A.R.S. § 32- 1154(A)(15). On February 25, 2011, Complainant requested a hearing because she felt that Respondent had defrauded her. On March 28, 2011, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(3), namely A.A.C. R4- 9-108, (7), and (15). Respondent filed a timely written answer to the Citation and Complaint, denying any violations of A.R.S. § 32-1154(A)(3) or (7), and affirmatively alleging that it had remedied any violation of A.R.S. § 32-1154(A)(15). The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on June 10, 2011. Complainant submitted ten exhibits and testified on her own behalf. Respondent submitted five exhibits and presented the testimony of four witnesses: (1) Philip (“Phil”) Perrino, Respondent’s qualifying party and member; (2) Vincent (“Vince”) Perrino, Phil Perrino’s son and one of Respondent’s technicians who performed work at Complainant’s house; (3) Robert Paul Lockwood, another of Respondent’s technicians who performed work at Complainant’s house; and (4) John Goff, Respondent’s administrative manager. Hearing Evidence Complainant purchased a newly constructed home. Because Complainant lives on a fixed income of $1,247.00 per month, she wanted to avoid expensive maintenance and repairs on her home. On February 26, 2010, Complainant entered into a three-year maintenance agreement with Respondent. Pursuant to the agreement, Complainant paid Respondent $399.99, and Respondent agreed to perform two annual checkups and to clean the heat pump’s coils at no additional cost and to discount the costs of labor, parts, and air conditioner replacement. On February 26, 2010, Respondent inspected Complainant’s heat pump, cleaned its coils, and performed a “tune-up,” for an additional cost of $39.99. On March 3, 2010, Complainant called Respondent after her heat pump stopped working. Vince Perrino, on behalf of Respondent, informed Complainant that she needed a new motor that cost a total of $575.48, including available discounts. Complainant authorized the repair. Respondent does not train or require its technicians to investigate the warranty status of equipment that they service unless the customer requests that they do so. Phil Perrino explained at the hearing that the warranty belongs to the property owner and that it can be very time-consuming and confusing to track down warranty information. Complainant did not ask Vince Perrino to investigate the warranty status of the heat pump, and he did not do so. After ten months, Complainant’s heat pump quit working again. On January 3, 2011, Mr. Lockwood informed Complainant that the new motor that Respondent had installed had “seized up” and would have to be replaced again. Mr. Lockwood made a telephone call to the distributor of the motor, Temp Star, and learned that the motor that Respondent had installed was no longer under warranty. When Mr. Lockwood informed Complainant that the motor was no longer under warranty, she said that she could not afford repeated repairs to keep her heat pump running. Complainant did not ask Mr. Lockwood to investigate the warranty status of the heat pump, and he did not do so. Mr. Lockwood suggested that Complainant purchase a new heat pump with a ten-year warranty to avoid having to replace parts piecemeal. Complainant authorized Respondent to install a new 13-seer heat pump, at a total cost of $5,649.10, after discount. After Respondent replaced the heat pump, and Complainant paid Respondent in full, on the advice of her neighbors, she started investigating the warranty status of her old heat pump. After Complainant contacted Respondent, Phil Perrino offered to refund the cost of the motor and to provide a lifetime maintenance warranty to Complainant. On January 10, 2011, Respondent sent Complainant a check for $575.48. After Complainant made numerous calls, on January 26, 2011, a representative of the old heat pump’s manufacturer, Carrier, informed Complainant that the heat pump that Respondent had replaced was manufactured in 2007, and had a 5-year warranty on parts and a 10-year warranty on the compressor. Complainant did not immediately negotiate Respondent’s check because she felt that it should reimburse her for the cost of the new heat pump. Complainant later needed money and tried to cash Respondent’s check, but on March 16, 2011, Respondent had stopped payment on the check. Respondent submitted exhibits to establish that it filed a notice of amendment to the Arizona Corporation Commission (“ACC”) on January 25, 2011, to change its business name to “Absolute Value Heating & Cooling, L.L.C.” and published notice of the amendment, as the ACC requires. ACC amended Respondent’s corporate record, and on April 11, 2011, the Registrar amended Respondent’s license to show the name of the licensee as “Absolute Value Heating & Cooling, L.L.C.” CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish cause to discipline Respondent’s license 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] Complainant established that on the date of her complaint to the Registrar, the records of the Registrar did not show the name under which Respondent was doing business, in violation of A.R.S. § 32-1154(A)(15).[5] Respondent established that it promptly remedied this violation. Complainant, not Respondent, was the beneficiary of Carrier’s manufacturer’s warranty for the original heat pump on Complainant’s home. Although Respondent may have had a moral obligation to investigate the status of the manufacturer’s warranty before it charged Complainant for repairing and replacing the heat pump, no statute, regulation, or industry standard required it to do so. Rather, Complainant had the legal responsibility to ascertain the warranty status of her heat pump before she authorized Respondent to repair and replace it. Therefore, Complainant did not establish that Respondent violated A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108,[6] by failing to perform its work in a professional and workmanlike manner and in compliance with industry standards, or that Respondent violated A.R.S. § 32-1154(A)(7)[7] by defrauding Complainant. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order in this matter, the Registrar dismiss Case No. 2011-355 against Respondent Absolute Value Heating & Cooling, L.L.C.’s License No. ROC233003. 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, June 30, 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. § 41-1092.07(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] 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.” [6] 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.” [7] A.R.S. § 32-1154(A)(7) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[t]he doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

-----------------------

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