ALJDEC decisions subject to certification as final

2012A-119-ROC · Registrar of Contractors · 2012-06-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 30, 2012, at 8:00 a.m. APPEARANCES: Complainants Ryan and Linda Gertenbach appeared on their own behalf; Respondent Foresight Roofing, L.L.C. dba Countrywide Shingle appeared through Clinton Shawn Hyman, its member and qualifying party. 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 Ryan and Linda Gertenbach (“Complainants”) against Respondent regarding its failure to perform its contract to replace the damaged roof and fascia on Complainants’ house at 1620 West Nopal Drive, Chandler, Arizona, after Complainants paid $3,886.59. Complainants 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). 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 May 30, 2012. Complainants submitted thirteen exhibits and testified on their 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 Such prior License record reflects that as of June 14, 2012, Respondent’s license had been revoked since February 6, 2012, three complaints had been closed as resolved/settled/withdrawn, five complaints had resulted in discipline against Respondent’s license, and twenty-one complaints were pending against the license.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 Complainants’ 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. (“Countrywide”), a roofing materials supplier based in Lakewood, Colorado, entered into a 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 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. On or about March 31, 2011, Complainants signed a printed agreement that allowed Countrywide to negotiate directly with Complainants’ homeowner’s insurer. The name, “Countrywide Shingle & Siding, L.L.C.,” and Respondent’s license number were printed at the top of the March 31, 2011 contract. On or about April 19, 2011, Complainants signed a contract with Countrywide for it to remove and replace their roof and to repair damaged fascia for a total cost of $6,818.91, with $3,886.59 to start the project. The name, “Countrywide Shingle & Siding, L.L.C.,” and Respondent’s license number were printed at the top of the April 19, 2011 contract. Complainants’ homeowner’s insurer issued a check to Complainants in the amount of $3,886.59. Complainants endorsed the check over to Countrywide. Countrywide deposited the check into its bank account. Neither Respondent nor Countrywide did any work on the roof and fascia at Complainants’ house. Although Complainants at first were able to contact Countrywide at its office in Lakeside, Colorado, Countrywide eventually stopped responding to Complainants’ telephone calls and e-mails. 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 Complainants and that Respondent did not receive any money from their contract with Countrywide. CONCLUSIONS OF LAW The revoked status of Respondent’s license does not deprive Complainants of their right to prosecute their complaint against Respondent or prevent the Registrar from determining the merits of Complainants’ complaint.[2] This matter lies within the Registrar’s jurisdiction.[3] Complainants bear 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 to solicit customers on Respondent’s behalf and to receive the proceeds from the roofing contracts that Respondent performed. By doing so, Mr. Hyman agreed to combine Respondent and Countrywide for the purpose of performing contracting. Under A.R.S. § 32-1101(A)(3), any distinction between Countrywide and Respondent was dissolved, at least with respect to innocent third parties like Complainants. Respondent failed to supervise Countrywide when it contracted to perform work for Complainants using Respondent’s license number and name, cashed Complainants’ insurance check, and failed to perform any work that was undertaken under the authority of Respondent’s license.[6] Therefore, Complainants 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, 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, June 20, 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). 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 . . . .” [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.”

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