ALJDEC decisions subject to certification as final

2012A-2182-ROC · Registrar of Contractors · 2012-07-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 21, 2012, at 1:00 p.m. APPEARANCES: Applicant appeared through its attorney, Roger R. Foote, Esq., Jackson White Attorneys at Law. The Registrar of Contractors was represented by Assistant Attorney General, Elizabeth A. Campbell, Esq. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________ Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. D & K Enterprises LLC (hereafter “Applicant”) has filed an application for a Class A-12 License. 2. Robert Joseph Divis (hereinafter “Mr. Divis”) is the sole owner of the Applicant.[1] 3. Mr. Divis is also listed on several other existing contractor’s licenses issued by the Registrar of Contractors. Mr. Divis is listed as the qualifying party for the K-57 License, the KB-1 License and the K-5 License of the Applicant. Mr. Divis is also listed as the qualifying party for the K-39 License of Desert Mechanical Inc. Mr. Divis is listed as a member for the A-12 License of Cactus Pipeline Contractors LLC and is listed as a corporate officer for the K-39 License, K-37 License and K- License of Desert Mechanical Inc.[2] 4. On April 2, 2012, the Registrar of Contractors denied the Applicant’s license application based upon the following: 1. Robert Joseph Divis as the sole owner of D & K Enterprises LLC has failed to establish good character and reputation as required by A.R.S. § 32-1122.D. 2. Robert Joseph Divis as the Vice-President of K N K Diversified Inc has not fully satisfied the cause of the revocation of its previous license in violation of A.R.S. § 32-1161.C. 3. Robert Joseph Divis as the Vice-President of K N K Diversified Inc has failed to pay civil penalties in violation of A.R.S. § 32- 1154.D. 4. As Robert Joseph Divis has personally had a license revoked, K N K Diversified Inc, less than [a] year before applying for a subsequent license, as such D & K Enterprises LLC, D & K are [sic] not eligible to receive a license pursuant to A.R.S. § 32-1122.E within one year from the date of revocation.[3]

5. The Applicant disagreed with the Registrar of Contractors’ determination to deny its license application and requested an administrative hearing.[4] 6. The Registrar of Contractors then forwarded the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 7. John F. Kealy (hereinafter “Mr. Kealy”) testified that he was the president of K N K Diversified, Inc. (hereinafter, “K N K”), and that Mr. Divis held no ownership interest in K N K. Mr. Kealy stated that Mr. Divis served as qualifying party and a corporate officer for K N K from January 27, 2009, through June 23, 2009. Mr. Kealy stated that Mr. Divis resigned from any involvement with K N K on June 23, 2009. Mr. Kealy testified that Mr. Divis had no involvement with the matters that led to the revocation of K N K’s contractor’s license by the Registrar of Contractors.[5] 8. There was no dispute that on or about July 23, 2009, a Complaint was filed by the City of Mesa Tax Audit and Collections Department against License No. 200251, Class K-05 of K N K and that, pursuant to the Registrar of Contractors’ Decision and Order, License No. 200251, Class K- of K N K was suspended based upon the July 23, 2009 Complaint by the City of Mesa Tax Audit and Collections Department.[6] 9. There was no dispute that on or about September 22, 2009, a Complaint was filed against License No. 195506, Class B-01, of K N K by Kelly Brothers of Arizona Inc. The Complaint alleged that K N K had ordered materials which were delivered on March 12, 2008, but that K N K failed to pay Kelly Brothers of Arizona Inc., for the delivered materials. On or about January 21, 2011, License No. 195506, Class B-01, of K N K was revoked by the Registrar of Contractors based upon the September 22, 2009 Complaint filed by Kelly Brothers of Arizona Inc.[7] 10. Mr. Divis testified that he personally filled out Applicant’s license application.[8] 11. There was no dispute that question 12b of the Application Form is as follows: 12b. Has any person listed in question 12a ever been on a contractor’s license that has been suspended, revoked or otherwise disciplined? Yes No.[9]

12. Mr. Divis acknowledged that in answering question 12b he checked the box marked “No.” Mr. Divis denied ever being on a contractor’s license that had been suspended or revoked.[10] 13. Mr. Divis stated that he resigned as qualifying party, and that he intended to resign as a corporate officer/member/partner, for the license of K N K on June 23, 2009. Mr. Divis stated that his failure to check the box indicating that he was resigning as a qualifying party and as a corporate officer/member/partner was simply a mistake.[11] 14. Mr. Divis filed a Notice of Disassociation on June 23, 2009. The Notice has three x marks in the box showing: “I am resigning as qualifying party only.”[12] 15. Mr. Divis filed a second Notice of Disassociation with the Registrar of Contractors on December 20, 2010, wherein Mr. Divis resigned as a corporate officer/member/ partner from K N K. 16. The Notice of Disassociation filed by Mr. Divis on December 20, 2010, has one x mark in the box showing: “I am resigning as corporate officer/member/partner ONLY.”[13] 17. Mr. Divis testified that he thought that question 12b in the Application Form referred to the contractor’s license of Desert Mechanical Inc., which was identified in Mr. Divis’s response to question 12a. Mr. Divis stated that it was a correct statement because the contractor’s license of Desert Mechanical Inc., had never been suspended or revoked.[14] 18. Mr. Divis stated that in January, 2012, he had been allowed by the Registrar of Contractors to renew two of the contractor’s licenses of Desert Mechanical Inc., and the existing contractors licenses of D & K.[15] 19. Lawrence Mathews (hereinafter, “Mr. Mathews”) stated that he is the Chief of the Licensing Department for the Registrar of Contractors. Mr. Mathews stated that he supervised the investigation of the license application at issue. 20. Mr. Mathews testified that Applicant’s license application was denied pursuant to A.R.S. § 32-1122.D because the application contained a false statement regarding whether Mr. Divis had been on a previous contractor’s license that had been suspended or revoked.[16] 21. Mr. Mathews stated that the City of Mesa Complaint resulted in the suspension of License No. 200251, Class K-05 of K N K in ROC Case No. 10- 0328. Mr. Mathews testified that Mr. Divis did not stop being a corporate officer of K N K until December 2010, and that Mr. Divis was listed as a corporate officer of K N K when the City of Mesa Complaint was filed on or about July 23, 2009, and that Mr. Divis was a corporate officer of K N K when its Class K-05 License was suspended by the Registrar of Contractors. Mr. Mathews stated that Mr. Divis’s answer to question 12b of the license application for the Applicant was false.[17] 22. Mr. Mathews stated that the second basis for denial of Applicant’s license application was that Mr. Divis, as the vice-president, corporate officer, and twenty five percent (25%) owner of K N K, had not fully satisfied the cause of the revocation of its previous license in violation of A.R.S. § 32-1161.C. Mr. Mathews testified that the Registrar of Contractors has not received any information that Kelly Brothers of Arizona, Inc.’s Complaint[18]had been resolved.[19] 23. Mr. Mathews stated that the Registrar would like to strike the third basis for denial set forth in the April 2, 2012, Denial Letter. Mr. Mathews acknowledged that no civil penalty had been imposed on K N K.[20] 24. Mr. Mathews testified that the fourth basis for the denial of the license application was that Mr. Divis is listed on a contractor’s license revoked less than a year before applying for a subsequent contractor’s license and that Applicant was not eligible to receive a contractor’s license within one year from the date of the revocation of License No. 195506, B-01 of K N K, pursuant to A.R.S. § 32-1122.E.[21] 25. Mr. Mathews did not dispute that the Registrar of Contractors had renewed several contractor’s licenses for Desert Mechanical Inc., in June 2011. Mr. Mathews stated that the Registrar of Contractors tries to do a good investigation of all license applications and renewals. Mr. Mathews acknowledged that the Registrar of Contractors sometimes made mistakes in its investigations.[22] 26. Mr. Kealy reviewed Exhibit No. 9, and testified that the corporate minutes contained in Exhibit No. 9 were a contemporaneously recorded corporate document created on June 23, 2009. Mr. Kealy stated that the 2002 date shown on the corporate seal on the minutes may have been made by a stamp from a different corporation that he owned.[23] 27. Lekan Raji (hereinafter “Mr. Raji”) testified that he was the finance manager for Kelly Brothers of Arizona Inc. and that he had prepared the Complaint against K N K, contained in Exhibit No. 11. Mr. Raji stated there had been no attempt by K N K to pay Kelly Brothers of Arizona Inc. the $17,325.00 owed by K N K to Kelly Brothers of Arizona Inc.[24] This tribunal finds the testimony of Mr. Raji to be credible. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A.R.S. § 41-1092.07.G.1. provides as follows: 1. At a hearing on an agency's denial of a license or permit or a denial of an application or request for modification of a license or permit, the applicant has the burden of persuasion. 3. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 4. A.R.S. § 32-1122.D provides, as follows: D. To obtain or renew a license under this chapter, each person shall be of good character and reputation. Lack of good character and reputation may be established by showing that a person has engaged in contracting without a license or committed any act that, if committed or done by any licensed contractor, would be grounds for suspension or revocation of a contractor's license or by showing that the person was named on a contractor's license that was suspended or revoked in another state. 5. Mr. Divis did not resign as a corporate officer/member/partner of K N K until December 20, 2010.[25] License No. 200251, Class K-05 of K N K was suspended in ROC Case No. 10-0328 as a result of the Complaint by the City of Mesa Tax Audit and Collections Department filed with the Registrar of Contractors on or about July 23, 2009. License No. 195506, Class B-01 of K N K was revoked in ROC Case No. 10-1186 as a result of a Complaint filed by Kelly Brothers of Arizona Inc., on or about September 22, 2009. Both complaints were filed while Mr. Divis was listed as a corporate officer of K N K. This tribunal concludes that Mr. Divis provided a false answer to question 12b in the Application for Contractor’s License Form and that Mr. Divis failed to establish good character and reputation pursuant to A.R.S. § 32-1122.D. 6. A.R.S. § 32-1161.C provides as follows: C. After revocation of a license upon any of the grounds set forth in section 32-1154, the license shall not be renewed or reissued for one year after final determination of revocation and then only on proper showing that all loss caused by the act or omission for which the license was revoked has been fully satisfied. 7. Kelly Brothers of Arizona Inc. has not been paid for the materials that it delivered to K N K. This tribunal concludes that Mr. Divis, as the vice-president of K N K has not fully satisfied the cause of the revocation for License No. 195506, Class B-01 of K N K pursuant to A.R.S. § 32-1161.C. 8. A.R.S. § 32-1122.E provides as follows: E. To obtain a license under this chapter, a person shall not have had a license refused or revoked, within one year before the person's application, or shall not have engaged in the contracting business, nor shall the person have submitted a bid without first having been licensed within one year before the person's application, nor shall a person act as a contractor between the filing of the application and actual issuance of the license. The registrar may find any of those actions or circumstances to be excusable if there was reasonable doubt as to the need for licensure or the actions of the applicant did not result in an unremedied hardship or danger or loss to the public. A person who has been convicted of contracting without a license is not eligible to obtain a license under this chapter for one year after the date of the last conviction. 9. License No. 195506, Class B-01 of K N K was revoked on January 21, 2011, as a result of the complaint filed on or about September 22, 2009, by Kelly Brothers of Arizona Inc. while Mr. Divis was still listed as a corporate officer of K N K. Mr. Divis has had a contractor’s license revoked less than a year before applying for a subsequent contractor’s license. This tribunal concludes that Mr. Divis is not eligible to receive a contractor’s license within one year of the date of the revocation per A.R.S. § 32-1122.E. RECOMMENDed order In view of the foregoing, it is recommended that the Registrar’s denial of Applicant’s license application be upheld and affirmed. In the event of certification of this 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 the certification. Done this day, July 10, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Exhibit No. 1 (Application for Contractor’s License). [2] Registrar of Contractors’ public website, July 2, 2012. [3] Exhibit No. 12 (4/2/12 Denial of Application letter). [4] April 26, 2012, request for administrative hearing. [5] 6/21/2012 Hearing Record (hereinafter “H.R.”) at 9:00-11:24. [6] Exhibit No. 10 (Decision and Order Case No. 10-0328). [7] Exhibit No. 11 (Decision and Order Case No. 10-1186). [8] H.R. at 20:44-21:06. [9] Exhibit No. 1 (Application for Contractor’s License). [10] H.R. at 21:50-22:06. [11] H.R. at 21:17-24:13. [12] Exhibit No. 6 (June 23, 2009 Notice of Disassociation). [13] Exhibit No. 8 (December 20, 2010 Notice of Disassociation). [14] H.R. at 27:15-28:28. [15] H.R. at 28:30-28:58. [16] H.R. at 58:00-58:34. [17] H.R. at 57:53-101:56. [18] Exhibit No. 11. (Complaint by Kelly Brothers of Arizona Inc.) [19] H.R. at 1:11:29-1:12:47. [20] H.R. at 1:12:47-1:13:03. [21] H.R. at 1:13:22-1:13:44. [22] H.R. at 1:36:45-1:37:55. [23] H.R. at 1:41:46-1:42:07. [24] H.R. at 1:48:34-1:51:53. [25] Exhibit No. 8 (December 20, 2010 Notice of Disassociation).

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