ALJDEC decisions subject to certification as final

2011A-6389-ROC · Registrar of Contractors · 2012-06-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 23, 2012

APPEARANCES: Complainant was represented by corporate President Chris Robert (“Bob”) Peralta; Respondent was represented by Members Matthew White and Chris Cole.

WITNESSES: Bob Peralta Doug Galle, employee of Complainant Matthew White Chris Cole

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant brings this action complaining about Respondent’s trade name “Phoenix Painting and Drywall.” Complainant alleges that it is too similar to its name and is confusing to the public. Complainant requests that the Registrar of Contractors (Registrar or ROC) prohibit Respondent from using the trade name. Respondent denies the allegations. This tribunal entered the complaint file received from the ROC into the record, along with Respondent’s Exhibits 1, 2, and 3. In addition, administrative notice is taken of Respondent’s prior license history and record as reflected on the ROC’s public website on June 11, 2012. Administrative notice is also taken of two prior ROC cases, specifically the Administrative Law Judge Decisions and ROC Orders adopting them: (1) Desert Winds Dev., Inc. v. Desert Winds Constr., LLC, ROC Case No. 04-2277 (Order issued September 13, 2004);[1] and (2) Ariz. Asphalt, Inc. v. Ariz. Asphalt Contracting Corp., ROC Cases M05-1373 and 05-1516 (Consolidated) (Order issued December 15, 2005).[2] Finally, notice is taken of the Maricopa County Superior Court decision in Ariz. Asphalt Contracting Corp. v. Ariz. State Registrar of Contractors, No. LC2006-000024-001 DT (Minute Entry decision issued April 17, 2007). Testimony was presented from the witnesses listed above. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding no violation. FINDINGS OF FACT 1. Complainant is the holder of three licenses issued by the ROC: (1) License No: L-34.129218-C, a commercial specialty contracting license that authorizes Complainant to perform painting work for commercial projects; (2) License No: B-1.231727-C, a commercial general contracting license that authorizes Complainant to operate as a general contractor for commercial projects; and (3) License No. B.270080-R, a residential general contracting license that authorizes Complainant to operate as a general contractor for residential projects. Complainant operates under the name “Phoenix Painting, Inc.” 2. Respondent is the holder of License No: K-34.273508-D, a dual specialty contracting license issued by the ROC. It authorizes Respondent to perform painting work for both residential and commercial properties. Respondent is authorized by the ROC to do business as “Phoenix Painting and Drywall.” 3. Complainant’s first license (License No: L-34.129218-C) was issued in 1997. Respondent’s license was issued in June 2011. Thus, Complainant had been using the name “Phoenix Painting, Inc.” for over ten years before Respondent began using the name “Phoenix Painting and Drywall.” 4. Doug Galle and Bob Peralta testified for Complainant that material suppliers have confused Respondent and Complainant because of the similarity of the names. They also testified that Complainant has received telephone calls from the public who thought that they were calling Respondent. This then requires Complainant to do some investigation to determine whether the person is Complainant’s client and also to make sure that there is not an unlicensed person using Complainant’s name or license. When asked about the frequency of these events, they testified that there were “seven or eight” of these telephone calls in the past two years, which is about one every three months. They admitted that not one of Complainant’s commercial client’s has been confused. They did not have specific names or dates of the calls, but Bob Peralta remembered some of the calls and generally described them. Complainant is primarily worried about future problems with confusion by the public between Complainant and Respondent. 5. Matthew White testified for Respondent that Respondent has never used the name “Phoenix Painting” in its advertising or documentation. He also testified, as supported by Exhibit 1, that Respondent obtained trade name certification and registration for the name “Phoenix Painting & Drywall” from the Arizona Secretary of State on April 11, 2011.[3] 6. There was no evidence that Respondent has used any name other than the authorized name of “Phoenix Painting and Drywall.” Nor did Complainant submit any advertising from Respondent. 7. In Exhibit 3, Respondent provides evidence from the ROC website showing many contractors with similar names. Respondent argued at hearing that the ROC cannot find a violation for Respondent’s use of its name that was approved by the ROC and the Arizona Secretary of State. Respondent also argued that its trade name is not so similar to Complainant’s that it would cause confusion. 8. Complainant has asked that the Registrar rescind its approval for Respondent’s use of the trade name “Phoenix Painting and Drywall.” CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[4] Further, the standard of proof at hearing is by preponderance of the evidence.[5] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[6] Complainant has not met that burden. 2. The Citation and Complaint alleges violations of A.R.S. § 32- 1154(A)(3) by way of A.A.C. R4-9-109(E) and A.R.S. § 32-1154(A)(16). A.R.S. § 32-1154(A)(16) prohibits “[f]alse, misleading or deceptive advertising whereby any member of the public may be misled and injured.” Because the evidence does not contain any advertisement from Respondent or show any instance wherein Respondent used a name other than the name it is authorized to use, the evidence does not make a prima facie showing of a violation of A.R.S. § 32-1154(A)(16). 3. With regard to the alleged violation of A.R.S. § 32-1154(A)(3) by way of A.A.C. R4-9-109(E), Respondent argues that the cited provision provides no standard to which Respondent must conform. A.A.C. R4-9-109 is entitled “Name of Licensee or Applicant.” Paragraph (E) of that rule provides: The Registrar may elect to reject an application, refuse to issue a license, or deny the name change of an existing license, based on a review of whether the proposed name is identical or so similar to that of an existing licensee or license applicant that it may cause confusion.

This provision gives the Registrar authority and discretion to review the names of licensees upon application for a license or request for name change and reject the name if it is “identical or so similar to that of an existing licensee or license applicant that it may cause confusion.” It does not, on its face, require or prohibit any particular action by a licensee. Yet the Citation and Complaint alleges that Respondent has violated that provision. 4. This issue has been adjudicated before the Registrar at least two times in the recent past. In Desert Winds Dev., Inc. v. Desert Winds Constr., LLC, the Administrative Law Judge found that a contractor did not commit a wrongful act in violation of the then-current ROC statutes by using the trade name approved for it by the ROC, even if the name was “much too similar” to another contractor’s name and caused confusion: Although this Tribunal finds that the two licensed names are much too similar and has caused, and probably will continue to cause, confusion in the minds of the public, as well as the construction industry, Respondent, who received its license after the many years during which Complainant established its name in the industry, has committed no acts which would serve to support a finding of wrongful acts or any other violation of the State’s Contracting laws. Respondent merely submitted its license application to the Registrar of Contractors and was issued a license by the Agency in the name “Desert Winds Construction, LLC” and, as such, Respondent has no alternative but to utilize its licensed name in the course of its construction business.

Notwithstanding the foregoing finding that Respondent has not violated the State’s Contracting laws, the Registrar may wish to reconsider its decision to have issued the current name to Respondent many years after Complainant had been using a similar name in the same license classification and in the same basic geographic area of the State.[7] In addition, the parties are hereby advised that nothing in this Order should serve to prevent the parties from seeking relief on this issue from a civil court of competent jurisdiction.[8]

The ROC adopted that Administrative Law Judge Decision by Order dated September 13, 2004. 5. In Arizona Asphalt, Inc. v. Arizona Asphalt Contracting Corporation, the Administrative Law Judge Decision addressed the issue of whether a licensed contractor can violate A.R.S. § 32-1154(A)(3) by way of A.A.C. R4-9-109(E). The ALJ Decision found that the names we so similar that they had, indeed, caused confusion.[9] The ALJ Decision also found that A.A.C. R4-9-109(E) granted implied authority for the Registrar to rescind a name already approved.[10] In addition, the ALJ Decision found that there was a violation of A.R.S. § 32-1154(A)(3) by way of A.A.C. R4-9- 109(E) and recommended that the Registrar rescind approval of the name.[11] By Order dated December 15, 2005, the Registrar adopted the majority of the ALJ Decision, rejecting and modifying only the recommended procedure for the respondent contractor to file for a new name. 6. The Arizona Asphalt case was appealed to Maricopa County Superior Court. On April 17, 2007, the Superior Court reversed the Registrar’s Order. After quoting the excerpt from the Desert Winds case above, the court concluded that A.A.C. R4-9-109(E) “had nothing to do with a licensee’s duties and obligations and creates no basis for disciplinary action against a licensee for utilizing a pre-approved name that, in fact, it is legally bound to use.”[12] 7. This tribunal agrees with the Superior Court. Although there may be implied authority for the Registrar to rescind a name already approved, there is no indication that such authority may be exercised through a disciplinary proceeding. 8. There being no violations, this matter should be dismissed. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that Citation and Complaint 2011-6389 against Respondent Arizona Carpet & Tile Cleaning, LLC dba Phoenix Painting and Drywall be dismissed.

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 13, 2012.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Desert Winds Dev., Inc. v. Desert Winds Constr., LLC, OAH Case No. 04F- 2277-ROC (August 13, 2004). [2] Ariz. Asphalt, Inc. v. Ariz. Asphalt Contracting Corp., OAH Case Nos. 05F-M1373-ROC/05F-1516-ROC (Consolidated; September 2, 2005). [3] The Arizona Secretary of State is prohibited by A.R.S. § 44-1460.01(B) and (C) from registering any trade name “if it is not distinguishable on the record from any other name previously filed and on record with the secretary of state” and “if it is not distinguishable on the record from an existing corporate name or a corporate name reserved pursuant to title 10, chapters 4, 19 and 24 through 40.” [4] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [5] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [6] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [7] A.R.S. § 32-1154A(3) prohibits a violation of any rule adopted by the Registrar. R4-9-109(E) provides that the Registrar may not accept an application, issue a license, or change the name of an existing license if the proposed name is identical with, or in the opinion of the Registrar, so similar it may cause confusion with a name on a pending application or existing license. [8] Desert Winds Dev., Inc. v. Desert Winds Constr., LLC, OAH Case No. 04F- 2277-ROC (August 13, 2004) at 4. [9] Ariz. Asphalt, Inc. v. Ariz. Asphalt Contracting Corp., OAH Case Nos. 05F-M1373-ROC/05F-1516-ROC (Consolidated; September 2, 2005) at 9. [10] Id. at 9-10. [11] Id. at 13. [12] Ariz. Asphalt Contracting Corp. v. Ariz. State Registrar of Contractors, No. LC2006-000024-001 DT (Maricopa Co. Super. Ct.; Minute Entry decision issued April 17, 2007) at 4.

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