ALJDEC decisions subject to certification as final

2012A-1102-ROC · Registrar of Contractors · 2012-07-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 5, 2012, at 1:00 p.m. APPEARANCES: Complainant David J. Lewis was represented by John D. Lewis, Esq., John D. Lewis, P.C.; Respondent Foresight Roofing LLC dba Countrywide Shingle appeared through Clinton Shawn 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 J. Lewis (“Complainant”) against Respondent regarding its failure to replace the roof on his house at 25707 South Mandarin Drive, Queen Creek, Arizona after he paid Respondent $9,251.60. The Registrar issued a Citation and Complaint charging Respondent with violating A.R.S. § 32-1154(A)(1). Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violation. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on July 5, 2012. Complainant submitted eleven exhibits and testified on his own behalf. Respondent submitted one exhibit and presented the testimony of Clinton Shawn 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 Such prior License record reflects that as of July 19, 2012, Respondent’s license has been revoked since February 6, 2012, three complaints had been closed as resolved/settled/withdrawn, six complaints had resulted in discipline against Respondent’s license, and twenty complaints were pending against the license.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 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. Countrywide Shingle and Siding, LLC (“Countrywide”) is a roofing materials supplier based in Lakewood, Colorado that is not licensed by the Registrar. On or about January 1, 2011, Mr. Hyman, on behalf of Respondent, and Jack Jones, on behalf of 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 that it replaced or repaired. In early 2011, Countrywide’s salesmen handed out business cards in Complainant’s neighborhood with the name, “Countrywide,” and Respondent’s license number on them. On or about March 19, 2011, Complainant signed an agreement that authorized Countrywide to negotiate with his homeowner’s insurer to repair the storm damage to his roof. On or about March 31, 2011, Complainant and Countrywide’s representative signed a contract for Countrywide to remove and replace the roof on Complainant’s house for a total cost of $13,831.19. The name, “Countrywide Shingle,” and Respondent’s license number were printed at the top of the contract. Based on the information that Countrywide provided, Complainant’s insurer had made a payment to Complainant and his mortgage holder in the amount of $9,251.60. When Complainant signed the March 31, 2011 contract, he endorsed the check over to Countrywide. Countrywide negotiated the check. Neither Respondent nor Countrywide did any work to repair or replace the roof on Complainant’s house. Complainant called Countrywide’s employees in Arizona and Colorado. Although Countrywide’s employees provided various excuses for the delay and assured Complainant that his roof would be replaced, neither Respondent nor Countrywide did any work on the roof 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, that provided 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. 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 Complainant’s payment to 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 violation 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, an unlicensed entity, 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 insurer’s 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] 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, July 24, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] 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. §§ 32-1151 to 32-1169. [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.”

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