ALJDEC decisions subject to certification as final

2011A-6990-ROC · Registrar of Contractors · 2012-05-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 2, 2012, at 8:00 a.m. APPEARANCES: Complainant Eva Vasquez appeared on her own behalf; Respondent Foresight Roofing, L.L.C. 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, L.L.C. doing business as (“dba”) Countrywide Shingle (“Respondent”). The Registrar received a complaint from Eva Vasquez (“Complainant”) against Respondent regarding its failure to perform its contract to replace the roof on Complainant’s house at 9501 West Taylor, Tolleson, Arizona, after Complainant paid it $2,811.00. Complainant requested that the Registrar issue a citation against Respondent after it failed to resolve the complaint. The Registrar issued a Citation and Complaint, charging Respondent with violating A.R.S. § 32- 1154(A)(1), A.R.S. § 32-1154(A)(13), namely A.R.S. §§ 32-1124(B) and 32- 1158, and A.R.S. § 32-1154(A)(15). 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 2, 2012. Complainant submitted five exhibits and presented the testimony of two witnesses: (1) herself; and (2) her daughter, Irma Vasquez (“Ms. Vasquez”). 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 Such prior License record reflects that as of May 21, 2012, Respondent’s license had been revoked since February 6, 2012, three complaints had been closed as resolved/settled/withdrawn, five complaints had resulted in discipline against Respondent’s license, and twenty complaints were pending against the license. Hearing Evidence In October 2010, a severe hail storm hit the Phoenix area, damaging many roofs. After a general 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. After the storm, Jack Jones of Countrywide Shingle (“Countrywide”), a roofing materials supplier based in Lakewood, Colorado, approached Mr. Hyman about entering into a contract to have Respondent perform contracting work that Countrywide obtained through fliers, telemarketers, and its connections in the roofing industry. On or about January 1, 2011, Mr. Hyman on behalf of Respondent, and Mr. Jones on behalf of Countrywide, entered into a Fee Agreement. Countrywide agreed to provide customer referrals and roofing materials. Respondent agreed to do business as Countrywide Shingle and Siding and to enter and to perform contracts to repair or replace roofs of customers referred by Countrywide. The Fee Agreement required Respondent to deposit monies received from property owners and their insurers into a bank account that Countrywide would open. Respondent agreed that Countrywide would pay it a fee of $70.00 per square to remove and replace asphalt roofs, plus $10.00 per square for each additional layer of asphalt roofing and an additional $5.00 per square if the pitch of the roof was greater than 7/12. Countrywide’s representative approached Complainant and called Complainant’s homeowner’s insurer to send an adjuster to confirm the damage to her roof. On or about April 9, 2011, Complainant and her husband signed a printed agreement in Spanish to allow Countrywide Shingle to work with Complainant’s homeowner’s insurer to replace her roof. The printed name, “Countrywide Shingle & Siding, L.L.C.,” was printed at the top of the agreement. The license number that was printed beneath the name was crossed out and Respondent’s license number was handwritten underneath. Complainant’s homeowner’s insurer paid the full amount of her claim for the damaged roof directly to Complainant. On or about May 24, 2011, Complainant signed a contract with Countrywide for it to remove and replace her roof for a total cost of $9,602.25, with $2,811.00 to start the project. The name, “Countrywide Shingle & Siding, L.L.C.,” was printed at the top of the contract, as well Respondent’s license number preceded by the acronym “ROC.” The May 24, 2011 contract did not include a projected completion date, advise Complainant of her right to make a complaint to the Registrar, or provide the Registrar’s telephone number and website address. On or about May 24, 2011, Complainant issued a personal check to “Countrywide Shingles Roofing” in the amount of $2,811.00 for the first draw to remove and replace the roof on her house. The check was cashed. Neither Respondent nor Countrywide did any work on Complainant’s roof. Ms. Vasquez began making telephone calls and writing letters to Countrywide in Colorado on her mother’s behalf. Countrywide responded in a letter dated July 21, 2011, apologizing for the delay and promising to perform the work within 60 days. The letter from Countrywide’s Colorado office did not show Respondent’s license number preceded by the acronym “ROC.” Countrywide did not perform any work for Complainant and eventually stopped returning Ms. Vasquez’s telephone calls and letters. Complainant testified that during the summer monsoon storms in 2011, as a result of the unrepaired damage that had occurred in October 2010, the roof leaked and caused damage to the interior of the house. Complainant testified that her homeowner’s insurer would not cover the damage to the interior of her house. On or about October 9, 2011, Complainant paid another roofing contractor to remove and replace the roof on her house. Complainant testified that after she paid the monies that remained from her homeowner’s insurer’s payout, she had to pay $1,061.65 out of her own pocket to replace the roof. Mr. Hyman testified that Respondent did not obtain any roofing jobs as a result of its Fee Agreement with Countryside. Mr. Hyman testified that Mr. Jones instead instructed Countrywide’s representatives to enter into contracts without Mr. Hyman’s knowledge and that he did not learn of the contracts until he started receiving copies of homeowners’ complaints to the Registrar against Respondent. Mr. Hyman testified that he never met Complainant and that Respondent did not receive any work or monies from the contracts that Countrywide entered into using Respondent’s license. CONCLUSIONS OF LAW The revoked status of Respondent’s license does not deprive Complainant of her right to prosecute her complaint against Respondent or prevent the Registrar from determining the merits of Complainant’s complaint.[1] This matter lies within the Registrar’s jurisdiction.[2] Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[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] Respondent may have a breach-of-contract claim against Countrywide. However, with respect to innocent third parties like Complainant, after Mr. Hyman signed the Fee Agreement on Respondent’s behalf to authorize Countrywide to solicit customers and receive contract proceeds, any distinction between Countrywide and Respondent was dissolved for purposes of the charged contracting statutes. Thereafter, Mr. Hyman failed to comply with applicable statute that required him to be actively involved in supervising the performance of any contracting activities that Countrywide undertook after Respondent authorized Countrywide to use Respondent’s license.[5] Respondent failed to supervise Countrywide’s employees when they contracted to perform work for Complainant, cashed Complainant’s check, and failed to perform any work that was undertaken under the authority of Respondent’s license. Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(1) by abandoning the contract that Countrywide’s employees made using Respondent’s license.[6] The printed contracts included the name, “Countrywide Shingle & Siding, L.L.C.,” instead of the name on Respondent’s license, “Foresight Roofing, L.L.C. dba Countrywide Shingle.” Therefore, Respondent violated A.R.S. § 32-1154(A)(15).[7] The two contracts did not include Respondent’s full name or the estimated date of completion and did not advise Complainant of her 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 letter that Countrywide sent Complainant from its Colorado office. 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, L.L.C. 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 five days from the date of that certification. Done this day, May 21, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1154(C). A.R.S. § 32-1154(C) 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 . . . .” [2] See 32-1101 et seq. [3] 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). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] See A.R.S. § 32-1127. A.R.S. § 32-1127 defines “responsible managing employee” and “qualifying party” 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. [6] 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.” [7] 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.” [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