ALJDEC decisions subject to certification as final

2011A-4036-ROC · Registrar of Contractors · 2012-01-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 27, 2011 APPEARANCES: Rosa Maria Leon Aldana appeared personally. Design Builders West, L.L.C. was represented by its authorized representative, Herbert Shepard. Gabriela Contreras was the Spanish/English translator. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT 1. Design Builders West, L.L.C. (“Respondent”) is the holder of License No. KB-1.173328-D issued by the Registrar of Contractors (“Registrar”). The persons listed on Respondent’s license are Herbert Shepard and Robert Kay as members. Mr. Shepard is also the qualifying party. 2. On July 11, 2011, Rosa Maria Leon Aldana (“Complainant”) filed a written Complaint against Evolution, and stated on the Complaint form that Evolution held License No. 510686 issued by the Registrar. The Registrar designated the Complaint as Case No. 2011-4036. 3. After investigating Complainant’s Complaint, the Registrar issued a Citation and Complaint charging Respondent, rather than Evolution, with violating the provisions of A.R.S. § 32-1154(A) (1), for abandonment, and (15), for contracting in a name other than the one appearing on Respondent’s license. 4. The Registrar forwarded Case No. 2011-4036 to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 5. On October 5, 2010, the roof on Complainant’s residence sustained hail damage. 6. Complainant filed a claim with her insurance carrier for the damage to her roof. 7. By check dated January 4, 2011, Complainant’s insurance carrier paid her the sum of $4,501.05 on her claim. 8. On February 28, 2011, Complainant executed a written Contract with Evolution Restoration Services (“Evolution”) for repairs to her roof.

9. The Contract listed Evolution’s contracting license number as Registrar-issued “ROC #510686.” That is not a valid number for a contractor’s license. 10. On February 28, 2011, Complainant paid the sum of $4,501.05 to a representative of Evolution for the roof repairs. 11. Evolution never performed the scope of work set forth in Evolution’s contract with Complainant. 12. As a result of the roof not having been repaired, mold is now present in wood on parts of the roofing system. 13. At hearing, Respondent’s member, Mr. Shepard, testified that Respondent’s other member, Mr. Kay, had contracted with Evolution’s principals to allow Evolution to perform work under Respondent’s contractor’s license prior to Evolution’s contract with Complainant. Mr. Shepard further testified that Mr. Kay’s actions were outside the provisions of Article X, paragraph 10.43 of the Operating Agreement (“Operating Agreement”) between Mr. Kay and Mr. Shepard that established the rules that Mr. Shepard and Mr. Kay agreed to follow in Respondent’s contracting business. Mr. Shepard opined that the agreement with Evolution was not valid because it violated Respondent’s principals’ Operating Agreement. 14. Article X, paragraph 10.4 provides as follows: “No member, without the consent of the other members, shall: 10.4.5 Sell, assign, pledge, or mortgage his/her interest in the company.” 15. Mr. Shepard stated that he became aware of Mr. Kay’s contract with Evolution in late March to early April of 2011. After discovering the agreement, Mr. Shepard took steps to terminate it. 16. Mr. Shepard testified that neither he, Mr. Kay, nor anyone employed by Respondent had seen the Contract between Complainant and Evolution. Mr. Shepard testified that Respondent never received any proceeds from that Contract. 17. On this date, the Registrar’s official electronic records reveal that Respondent’s License No. KB-1.173328-D had been suspended by operation of law as of October 30, 2011. There are seven open complaints and two resolved/settled/withdrawn complaints against that license. CONCLUSIONS OF LAW 1. Pursuant to A.R.S. § 32-1154(C), the suspension of Respondent’s contracting license does not deprive the Registrar of jurisdiction in this matter. The Registrar has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. A.A.C. R2-19-119(A). 3. Because the Operating Agreement is between Respondent’s two members, it cannot affect the rights of persons who are not parties to the Operating Agreement. Mr. Kay, as a member who is listed on Respondent’s contracting license, can undertake actions on its behalf, and Respondent is bound by Mr. Kay’s actions. 4. The evidence at hearing established that when Evolution entered into the contract to repair Complainant’s roof, it was using Respondent’s contracting license with Respondent’s permission. Respondent contracted with Evolution to perform contracting using Respondent’s contracting license. Evolution was therefore acting as Respondent’s agent when it contracted with Complainant. Respondent was ultimately responsible for the work Evolution contracted to perform for Complainant. 5. Complainant established that Respondent violated the provisions of A.R.S. § 32-1154(A) (1), as charged in the Citation and Complaint issued by the Registrar. 6. Respondent also violated the provisions of A.R.S. § 32-1154(A) (15), as charged in the Citation and Complaint issued by the Registrar. Respondent contractually agreed with Evolution to conduct business using Respondent’s contracting license in a name not appearing on that license. 7. Pursuant to A.R.S. § 32-1156.01, Complainant established an entitlement to restitution from Respondent in the amount of $4,501.05 paid that she paid for roof work that has never been performed. RECOMMENDED ORDER Respondent’s License No. KB-1.173328-D shall be revoked on the effective date of the Order entered in Case No. 2011-4036. If Respondent presents written proof to the Registrar that Respondent has paid restitution to Complainant in the amount of $4,501.05 by certified check or cashier’s check on or before the effective date of the Order entered in Case No. 2011-4527, and the Registrar approves such proof of payment to Complainant, then the above-provided license revocation shall not take place, but instead Respondent’s License No. KB-1.173328-D shall be suspended for a period of 60 days, followed immediately by a period of disciplinary probation for one year. This alternative penalty shall commence, if at all, on the effective date of the Order entered in Case No. 2011-4036. 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 13, 2012.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors -----------------------

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