ALJDEC decisions subject to certification as final

2011A-6714-ROC · Registrar of Contractors · 2012-06-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 31, 2012, at 1:00 p.m. APPEARANCES: Complainant David S. Flores appeared on his own behalf; Respondent Foresight Roofing LLC dba Countrywide Shingle appeared through Clinton Hyman, its qualifying party and member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure The Arizona Registrar of Contractors (“the Registrar”) issued License No. K- 42.265407-D for dual roofing to Foresight Roofing LLC doing business as (“dba”) Countrywide Shingle (“Respondent”). The Registrar received a complaint from David S. Flores (“Complainant”) against Respondent regarding its failure to perform its contract to install a new roof and rain gutters and to repair the water damage at his house at 3301 West Kristal Way, Phoenix, Arizona. According to the complaint, Complainant had paid Respondent $15,676.42. Complainant requested that the Registrar issue a citation against Respondent after it failed to resolve his complaint. The Registrar issued a Citation and Complaint charging Respondent with violating A.R.S. §§ 32- 1154(A)(1) and 32-1154(A)(13), namely A.R.S. §§ 32-1124(B) and 32-1158. Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violations. The Registrar referred the matter to the Office of Administrative Hearings, an independent State agency, for an evidentiary hearing. A hearing was held on May 31, 2012. Complainant submitted seven exhibits and testified on his own behalf. Respondent submitted one exhibit and presented the testimony of Clinton Hyman, its qualifying party and member. 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 Such prior License record reflects that as of June 20, 2012, Respondent’s license has been revoked since February 6, 2012, three complaints had been closed as resolved/settled/withdrawn, five complaints had resulted in discipline against Respondent’s license, and twenty-one complaints were pending against the license. Hearing Evidence In October 2010, a severe hail storm hit the Phoenix area, damaging many roofs. After a work slow down due to the economic recession, the aftermath of the storm offered contractors an opportunity for substantial work, especially since most of the damaged residences were insured against storm damage. The storm damaged the roof on Complainant’s house. On or about January 1, 2011, Mr. Hyman, on behalf of Respondent, and Jack Jones, on behalf of Countrywide Shingle and Siding, L.L.C., a roofing materials supplier based in Lakewood, Colorado who is not licensed by the Registrar (“Countrywide”), entered into a contract (“the Fee Agreement”). The Fee Agreement included the following relevant terms: 1. Countrywide agreed to provide customer referrals and roofing materials to Respondent to perform roofing jobs; 2. Respondent agreed to do business as Countrywide Shingle and Siding;[1] 3. Respondent agreed to enter into and to perform contracts to repair or to replace roofs of customers referred by Countrywide; 4. Respondent agreed to deposit monies received from property owners and their insurers into Countrywide’s bank account; and 5. Countrywide agreed to pay Respondent a flat fee for its work, based on the sizes and slopes of the roofs it replaced or repaired. On or about April 23, 2011, Complainant signed a printed agreement to allow Countrywide to negotiate directly with Complainant’s homeowner’s insurer. The name, “Countrywide Shingle & Siding, L.L.C.,” and Respondent’s license number were printed at the top of the April 23, 2011 agreement. On or about June 9, 2011, Complainant signed a contract with Countrywide for it to remove and replace the roof and gutters and to repair interior water damage at his house at a total cost of $17,081.02, with $15,676.42 due for Countrywide to start the project. The name, “Countrywide Shingle & Siding, L.L.C.,” and Respondent’s license number were printed at the top of the June 9, 2011 contract. The June 9, 2011 contract did not include a completion date, apprise Complainant of his right to make a complaint to the Registrar, or provide the Registrar’s telephone number and public website address. Complainant’s homeowner’s insurer issued a check to Complainant and Countrywide in the amount of $15,676.42. Countrywide deposited the check into its bank account. Neither Respondent nor Countrywide did any work on the roof, gutters, or interior water damage on Complainant’s house. Countrywide sent several letters to Complainant from its office in Lakeside, Colorado, apologizing for the delay and assuring Complainant that Countrywide would perform the contract. Countrywide eventually sent an unsigned letter to Complainant dated January 17, 2012, in relevant part as follows: This letter is to regretfully inform you that [Countrywide] is out of business. . . .

[Countrywide] interred [sic] into an agreement with [Respondent] to use there [sic] license to install roofs in the Arizona market. Due to several reasons, [Countrywide] has been forced to close its doors.

As the owner of [Countrywide], I am deeply sorry for any ones [sic] losses as well as the damage I have caused [Respondent]. [Respondent] has never taken a dollar of your money and is now going under because of the issues my company has created. I hope you will all know I am the one at fault, not them.

I am diligently working on a plan with other roofing company’s [sic] to take over the balance of the agreements Countrywide has, to hopefully complete the work owed. . . .

As of the date of the hearing, no work had been performed to repair the storm damage at Complainant’s house and no money had been reimbursed to Complainant. Countrywide’s letterhead on the various letters that it sent to Complainant did not show Respondent’s license number, preceded by the acronym “ROC.” Mr. Hyman testified that Respondent only obtained a few roofing jobs as a result of its Fee Agreement with Countrywide. Mr. Hyman testified that a few months after the Fee Agreement was signed, Countrywide started entering into contracts with property owners for repairs without Mr. Hyman’s knowledge. Mr. Hyman testified he did not learn of the contracts until he started receiving the homeowners’ complaints to the Registrar. Mr. Hyman testified that he never met Complainant and that Respondent did not receive any money from his contract with Countrywide. CONCLUSIONS OF LAW The revoked status of Respondent’s license does not deprive Complainant of his right to prosecute his complaint against Respondent or prevent the Registrar from determining the merits of Complainant’s complaint.[2] This matter lies within the Registrar’s jurisdiction.[3] Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] A.R.S. § 32-1101(A)(3) defines a “contractor” in relevant part 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, [or] repair . . . any building . . . or to do any part thereof . . . .

(Emphasis added.) By signing the Fee Agreement, Mr. Hyman agreed to adopt Countrywide’s name and authorized Countrywide to solicit customers on Respondent’s behalf. Mr. Hyman agreed that Countrywide would receive the proceeds from the roofing contracts that Respondent performed pursuant to the Fee Agreement. By making these agreements, Mr. Hyman agreed to combine Respondent and Countrywide for the purpose of performing contracting as defined by A.R.S. § 32-1101(A)(3). Therefore, for purposes of the Registrar’s contracting statutes, any distinction between Countrywide and Respondent was dissolved, at least with respect to innocent third parties like Complainant. Respondent failed to supervise Countrywide when it contracted to perform work for Complainant using Respondent’s license number and name, cashed Complainant’s insurance check, and failed to perform any work that was undertaken under the authority of Respondent’s license.[6] Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(1) by abandoning the contract that Countrywide made using Respondent’s license.[7] The June 9, 2012 contract Countrywide made under the authority of Respondent’s license did not include Respondent’s full name or the estimated date of completion and did not advise Complainant of his right to file a complaint to the Registrar or provide the Registrar’s telephone number and website address. Therefore, Respondent violated A.R.S. § 32- 1154(A)(13), namely A.R.S. § 32-1158(B).[8] Respondent’s license number preceded by the acronym “ROC” was not on the letterhead of the letters that Countrywide sent Complainant from its Colorado office regarding a contract that it had made under the authority of Respondent’s license. Therefore, Respondent violated A.R.S. § 32- 1154(A)(13), namely A.R.S. § 32-1124(B).[9] 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 revoke Respondent Foresight Roofing LLC dba Countrywide Shingle’s License No. K- 42.265407-D. 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 forty days from the date of that certification. Done this day, June 25, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Apparently, Respondent only added the name, “Countrywide Shingle,” to the name on its license. [2] See A.R.S. § 32-1154(C). That statute provides that “[t]he expiration, cancellation, suspension or revocation of a license . . . shall not deprive the registrar of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such license, or to render a decision suspending or revoking such a license . . . .” [3] See A.R.S. § 32-1101 et seq. [4] See A.R.S. § 41-1092.07(G)(2); 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). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] A.R.S. § 32-1127 requires the qualifying party to be actively involved in any contracting business undertaken by or on behalf of a licensed contractor, in relevant part as follows: The terms "responsible managing employee" and "qualifying party" shall, for the purpose of administering this chapter, be synonymous, and shall mean an employee who is regularly employed by the licensee and is actively engaged in the classification of work for which such responsible managing employee qualifies in behalf of the licensee. While engaged as a qualifying party for a licensee, the qualifying party shall not take other employment that would conflict with his duties as qualifying party or conflict with his ability to adequately supervise the work performed by the licensee. [7] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [8] 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 the following minimum terms: 1. The name of the contractor and the contractor’s business address and the license number. . . . . 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 ten point bold type. . . . [9] A.R.S. § 32-1124(B) requires that licensed contractors include their license number “preceded by the acronym ‘ROC’“ on “all written bids submitted by the licensee and . . . on all advertising, loan forms, lending institution forms, letterheads and other documents used by the licensee in the conduct of business regulated by this chapter.”

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