ALJDEC decisions subject to certification as final

2011A-6002-ROC · Registrar of Contractors · 2012-05-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 7, 2012, at 1:00 p.m. APPEARANCES: The Arizona Registrar of Contractors appeared through Anne Froedge, Esq., Assistant Attorney General; Respondent John Mason dba J. Mason and Associates appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT The Arizona Registrar of Contractors (“the Registrar”) received a complaint from Alice Gilman (“Mrs. Gilman”) against John Mason doing business as (“dba”) J. Mason and Associates ( “Respondent”) regarding his repair of a hot water line leak below the floor in her condominium at 65 Verde Valley School Road, Unit G-8, Sedona, Arizona. Mrs. Gilman complained that Respondent had filed a mechanic’s lien against her property and had charged her more money than she had agreed to pay for the repair. Mrs. Gilman stated that she had learned that Respondent was not licensed. Mrs. Gilman did not complain about Respondent’s workmanship. Mrs. Gilman attached to her complaint the following documents: 1. Copies of four invoices from Respondent for the job, as follows: (1) No. 289 dated July 24, 2011, in the amount of $65.00 for preparing the estimate for exploratory work to locate the leak; (2) No. 292 dated July 31, 2011, in the amount of $1,714.00 for performing demolition to locate the leak, repairing the leak, and repairing the floor, and noting $112.00 for materials for which Respondent did not charge Mrs. Gilman; (3) No. 292-B dated August 5, 2011, for the same work as described on No. 292 in the amount of $1,294.00 that showed a payment in the amount of $420.00; and (4) No. 294 dated August 5, 2011, in the amount of $112.00 for the materials for which No. 292 noted Mrs. Gilman would not be charged; 2. Copies of Mrs. Gilman’s personal checks to Respondent for the job dated July 26, 2011, in the amount of $420.00, and dated August 10, 2011, in the amount of $839.00; 3. A copy of Respondent’s e-mail to Suzanne Gilman (“Ms. Gilman”), Mrs. Gilman’s daughter, dated August 3, 2011, that stated that he was not willing to accept anything less than $1,294.00 for the job and that if Mrs. Gilman did not pay the full amount that Respondent alleged was owed, she would be charged an additional $112.00 for materials, $150.00 for “extensive and repetitive telephone calls,” and 5% interest, and that Respondent would file suit against Mrs. Gilman in small claims court; 4. A copy of Respondent’s 20-day lien notice for the project dated August 5, 2011, in the amount of $1,556.00 plus reasonable costs and interest; and 5. Respondent’s Invoice No. 300, dated September 1, 2011, that showed $845.38, including the costs of filing the lien, as due for the job. The Registrar’s investigator, Joseph Shikany, checked the Registrar’s records and determined that neither Mr. Mason nor J. Mason and Associates had been issued a contractor’s license. Investigator Shikany thereafter investigated the complaint against Respondent for unlicensed contracting. Investigator Shikany testified that it was illegal for Respondent to attempt to place a lien on Mrs. Gilman’s property because as an unlicensed contractor, he could not maintain a civil suit against a property owner for nonpayment on a job whose cost exceeded $1,000.00.[1] Investigator Shikany testified that because Mrs. Gilman was 85 years old and lived part-time in Virginia, most of his contacts were with Ms. Gilman. Ms. Gilman told Investigator Shikany that Mrs. Gilman had hired Respondent because he lived across the hall and had performed handyman work for the condominium association and other individual condominium owners. On October 28, 2011, Investigator Shikany sent letters warning Respondent that although the Registrar’s records did not reveal any license in his name, the Registrar had obtained information that Respondent had acted as a contractor on a construction project with an aggregate worth of more than $1,000.00. Investigator Shikany also sent a Cease and Desist Order to Respondent with respect to his contracting activities at Mrs. Gilman’s condominium. Investigator Shikany testified that in January 2012, he interviewed Respondent. Respondent acknowledged sending invoices in amounts that exceeded $1,000.00, and stated that he had hired a licensed plumber to repair the leak. Investigator Shikany testified that he explained to Respondent that he could not perform or hire a licensed contractor to perform construction projects with aggregate worth, including all labor and materials, greater than $1,000.00. Investigator Shikany testified that because Mrs. Gilman did not want to travel to Arizona from Virginia to testify at a criminal trial, he issued a Civil Citation for unlicensed contracting in violation of A.R.S. § 32-1151 and assessed a civil penalty in the amount of $1,500.00 under A.R.S. § 32- 1166 against Respondent. Investigator Shikany advised Respondent to obtain a C-61 license and advised Respondent that if he obtained the license within 90 days after the Civil Citation was issued, the civil penalty could be reduced to $200.00. Investigator Shikany testified that it was the Registrar’s policy to assess a civil penalty in the amount of $1,500.00 for an isolated event of unlicensed contracting activity when the subject did not subsequently obtain a license. Respondent testified that until Investigator Shikany explained the handyman’s exemption to him, he did not know that the $1,000.00 limit applied to the aggregate worth of the job, not just to the cost of his labor. Respondent testified that until he demolished the floor and located the leak in the floor of Mrs. Gilman’s condominium, he could not estimate the cost of the job. Respondent acknowledged that he had not applied to the Registrar for a contractor’s license. Respondent explained that at this time, licensure was cost prohibitive in light of the nature of the jobs that he usually undertook and his personal financial obligations, including a child overseas with a life threatening illness and extensive medical bills. Respondent testified that the aggregate worth of his jobs had never exceeded $1,000.00 before the job at issue. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[2] The Registrar bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[3] The Registrar also bears the burden to establish factors in aggravation of any penalty that it imposes as a result of proven statutory violations. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A.R.S. § 32-1101(A)(7)(a) defines the term “residential contractor” to include a person who undertakes a project to perform demolition to locate a plumbing leak in a floor and subsequently to repair the leak and the floor.[5] The so-called “handyman’s exemption” under A.R.S. § 32- 1121(A)(14) provides that if the aggregate contract price for a project is less than $1,000.00, including labor and materials, a person need not be licensed to perform the work.[6] A.R.S. § 32-1151 makes it unlawful for an unlicensed contractor to perform contracting projects if no exemption applies.[7] The canceled checks and invoices that the Registrar submitted established that Respondent’s price for discovery and repair of the leak in the floor of Mrs. Gilman’s condominium exceeded $1,000.00. Therefore, the Registrar established that Respondent committed the offense of unlicensed contracting, in violation of A.R.S. § 32-1151. A.R.S. § 32-1166(A) authorizes the Registrar to assess “a civil penalty in an amount of at least two hundred dollars for each violation but not more than two thousand five hundred dollars for the multiple violations committed on the same day.” With respect to the appropriate amount of the civil penalty for Respondent’s single violation of A.R.S. § 32-1151, A.R.S. § 32-1166(A) required the Registrar to “adopt rules covering the assessment of a civil penalty that give due consideration to the gravity of the violation and any history of previous violations.” Pursuant to this directive, the Registrar adopted A.A.C. R4-9-131.[8] With respect to factors in mitigation of the penalty, Respondent credibly testified that he could not know the full amount of the cost of the project until he completed demolition and located the leak. Investigator Shikany acknowledged that Respondent’s work was professional and workmanlike. Because Respondent did not attempt to obtain a license after the Cease and Desist Order and Civil Citation were issued, imposition of the minimum penalty under A.R.S. § 32-1166(A) is not appropriate. As additional factors in aggravation, it does not appear that Respondent disclosed his unlicensed status to Mrs. Gilman. In addition, Respondent’s heavy handed tactics in trying to collect additional money from Mrs. Gilman included amounts to which he was not legally entitled or that he had earlier promised that he would not charge. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent John Mason dba J. Mason and Associates violated A.R.S. § 32-1151 and affirm the decision to assess a civil penalty under A.R.S. § 32-1166(A) in the amount of $1,500.00, to be paid in certified funds to the Registrar on or before the effective date of the Registrar’s final order in this matter. 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, May 29, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1153 (requiring proof of license as a prerequisite to maintaining a civil action “for collection of compensation for the performance of any act for which a license is required by this chapter.” [2] See A.R.S. § 32-1101 et seq. [3] See A.R.S. § 41-1092.07(G)(3); A.A.C. R2-19-119(A) and A.A.C. R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] A.R.S. § 32-1101(A)(7)(a) defines “residential contractor” as follows: 7. “Residential contractor" is synonymous with the term "residential builder" and means any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid to, or does himself or by or through others, within residential property lines: (a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any residential structure, such as houses, townhouses, condominiums or cooperative units. Residential structures also include apartment complexes of four units or less and any appurtenances on or within residential property lines. [6] A.R.S. § 32-1121 concerns persons who are not required to be licensed. A.R.S. § 32-1121(A)(14) provides in relevant part as follows: A. This chapter shall not be construed to apply to: . . . . 14. 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. . . . [7] A.R.S. § 32-1151 prohibits engaging in contracting without a license and provides as follows: It is unlawful for any person, firm, partnership, corporation, association or other organization, or a combination of any of them, 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. . . . [8] A.A.C. R4-9-131 sets forth permissible aggravating and mitigating factors to be considered, in relevant part as follows: In assessing a civil penalty as provided for under A.R.S. § 32- 1166(A), the Registrar shall give due consideration to whether the person cited or any individual acting on that person’s behalf has committed one or more of the following acts in determining the gravity of the cited violation: 1. Falsely represented to be a licensed contractor. 2. Failed to perform any work for which money was received. 3. Executed or used any false or misleading documents for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 4. Made false or misleading statements for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 5. Failed or neglected to apply funds which were received for the purpose of obtaining or paying for services, labor, materials, or equipment. 6. Performed work that was or had the potential to become hazardous to the health, safety, or general welfare of the public. 7. Performed work that deliberately was in violation of building codes, safety laws, labor laws, workers’ compensation laws, or unemployment insurance laws. 8. Performed work that failed to meet minimum acceptable trade or industry standards or practices or was not performed in a good and workmanlike manner. 9. Has committed any other act which would otherwise be cause for disciplinary action if the person cited had been properly licensed pursuant to A.R.S. Title 32, Chapter 10. 10. Has committed two or more prior violations. 11. Performed work that has caused loss or damage to the structure, its appurtenances, or property being worked upon or has caused loss or injury to any person.

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