ALJDEC decisions subject to certification as final

2012A-3506-ROC · Registrar of Contractors · 2013-08-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 19, 2013, at 8:00 a.m. APPEARANCES: Irma Gonzales (hereinafter “Complainant”) was represented by her attorney, Brenda J. Lee, Esq., Lee & Travers, P.L.C. Chacho’s Remodeling and Repair LLC (hereinafter “Chacho”) failed to appear. 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 Chacho is the holder of License No. C-61.172518-R issued by the Registrar of Contractors. Chacho also holds License No. K-37.275359-D issued by the Registrar of Contractors.[1] Complainant wanted to remodel a residence located at 3243 E. Edison, Tucson, Arizona (hereinafter “the residence”) into an assisted living facility. Chacho provided Complainant with written proposals for the construction work required to turn the residence into an assisted living facility. Complainant specified that her license for the assisted living facility required that all work on the residence be performed by properly licensed contractors. Chacho assured Complainant that it was properly licensed to perform all construction work necessary to remodel the residence into an assisted living facility. On February 25, 2012, Complainant entered into a construction agreement with Chacho to install a fire protection system in the residence for a total cost of $7,250.00.[2] Pursuant to the terms of the construction agreement, Complainant paid Chacho $3,000.00 in cash on February 25, 2012. Complainant paid Chacho an additional $625.00 by check on February 28, 2012. On February 29, 2012, Complainant entered into a separate construction agreement with Chacho for an extensive remodeling of the residence for the total sum of $54,687.00.[3] Pursuant to the terms of the parties’ agreement, Complainant provided Chacho with a check for the sum of $8,000.00. Before any construction work was performed, Complainant discovered that Chacho was not properly licensed to install fire protection systems and was not properly licensed to perform $54,687.00 worth of remodeling work on the residence. Complainant then demanded that Chacho return the $11,625.00 that she had paid Chacho. When Chacho failed to comply with Complainant’s demand, Complainant filed a formal Complaint against Chacho with the Registrar of Contractors. After the parties were unable to resolve their differences, the Registrar of Contractors issued a formal Citation and Complaint against Chacho’s contractor’s license charging Chacho with possible violations of A.R.S. § 32-1154(A)(1),[4] A.R.S. § 32-1154(A)(7),[5] A.R.S. § 32-1154(A)(13),[6] namely, A.R.S. § 32-1158,[7] and A.R.S. § 32-1154(A)(17).[8] Testimony of Irma Gonzalez Complainant testified that she was going to transform the residence into an assisted living facility. Complainant testified that she accepted Chacho’s proposals and entered into two separate construction agreements with Chacho. Complainant testified that pursuant to the terms of the two construction agreements, she paid Chacho a total of $11,625.00. Complainant testified that Chacho knowingly and falsely represented that it could perform the agreed-upon construction work under Chacho’s License No. C-61.172518-R. Complainant stated that she relied on Chacho’s misrepresentation and entered into two construction agreements with Chacho.

Complainant testified that Chacho was unable to perform any of the agreed- upon construction work because the construction work was beyond the scope of Chacho’s contractor’s licenses. Complainant stated that Chacho has repeatedly refused to return her $11,625.00 to her and that she had been substantially damaged as a result of Chacho’s misrepresentations. Complainant stated that before construction work started, she checked with the local building authority and the Registrar of Contractors. Complainant stated that she discovered that Chacho was not licensed to install a fire protection system in the residence and that Chacho’s License No. C- 61.172518-R was a limited remodeling and repair contractor’s license that was restricted to construction contracts that did not exceed $25,000.00. Complainant testified that she explicitly specified that all of the construction work on the residence had to be performed by properly licensed contractors because it was a licensed care facility. Complainant stated that Chacho assured Complainant that it was properly licensed to install fire protection systems and to perform all of the construction work necessary to remodel the residence into an assisted living facility. Complainant testified that when she discovered that Chacho was not licensed to perform the agreed-upon construction work, she demanded that Chacho return the $11,625.00 that she had paid Chacho. Complainant stated that if Chacho did not have the money to repay her, she offered Chacho the opportunity to make payments on the $11,625.00. Complainant testified that Chacho refused to return the money and insisted that it be allowed to perform the out-of-scope construction work. Complainant testified that when Chacho refused to return her money, she contacted her attorney. Complainant stated that on July 11, 2012, her attorney issued a letter to Chacho demanding the return of Complainant’s money.[9] Complainant testified that Chacho did not respond to her attorney’s demand letter. Complainant testified that her attorney then filed a civil action in Superior Court against Chacho on Complainant’s behalf. Complainant testified that on July 3, 2013, the Superior Court issued a Default Judgment against Chacho for the $11,625.00, plus Complainant’s costs, attorney’s fees, and interest.[10] Complainant stated that Chacho had made no attempt to satisfy the civil court judgment. Complainant testified that a C-16 Fire Protection Systems License is required to install fire protection systems.[11] Complainant stated that the installation of fire protection systems is beyond the scope of Chacho’s License No. C-61.172518-R and Chacho’s License No. K-37.275359-D. Complainant testified that she could have been disciplined by the State of Arizona for allowing an improperly licensed contractor to perform construction work at an assisted care facility. Administrative notice is taken of Chacho’s prior license record as reflected on the Registrar of Contractors’ public website on August 28, 2013. Such prior license record reflects that Chacho’s License No. C- 61.172518-R is current. Chacho’s License No. C-61.172518-R was suspended for non-renewal from May 1, 2012, through May 4, 2012. Chacho’s License No. C-61.172518-R was suspended for non-renewal from May 1, 2010, through May 20, 2010. Chacho’s License No. C-61.172518-R was suspended for non- renewal from May 1, 2004, through May 25, 2004. 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 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). 3. Chacho knowingly entered into two separate construction agreements with Complainant for construction work that was beyond the scope of Chacho’s contractor’s licenses. Chacho accepted the total sum of $11,625.00 from Complainant as down payments for the out-of-scope construction projects. When Complainant discovered that Chacho was not properly licensed to perform the agreed-upon construction work and demanded the return of her $11,625.00, Chacho refused to return Complainant’s money and insisted that it be allowed to perform the out-of-scope construction work. This Tribunal concludes that Chaco violated the charged provisions of A.R.S. § 32-1154(A)(1). 4. Chacho falsely represented that it could perform the agreed-upon construction work under Chacho’s License No. C-61.172518-R. Complainant relied upon Chacho’s false representation and suffered substantial injury as a result of her reliance on Chacho’s misrepresentation. This Tribunal concludes that Chacho violated the charged provision of A.R.S. § 32- 1154(A)(7). 5. The two written Contracts and Proposals prepared by Chacho and utilized by the parties for their construction agreements did not inform the Complainant that she had the right to file a written complaint with the Registrar of Contractors for an alleged violation of A.R.S. § 32-1154(A), did not contain the Registrar of Contractors’ telephone number and website address, and did not state that complaints must be made within the applicable time period. This Tribunal concludes that Chacho violated the charge provision of A.R.S. § 32-1154(A)(13), namely, A.R.S. § 32- 1158(B). 6. Chacho knowingly contracted beyond the scope of Chacho’s License No. C- 61.172518-R. This Tribunal concludes that Chacho violated the charged provision of A.R.S. § 32-1154(A)(17).

RECOMMENDed order In view of the foregoing, it is recommended that commencing on the effective date of the final Order in this matter, License No. C-61.172518- R of Chacho shall be revoked unless the Registrar of Contractors receives and accepts written proof that Chacho has, as restitution, fully repaid Complainant the sum of $11,625.00 in certified funds. It is further recommended that if on or before the effective date of the final Order, Chacho provides acceptable written proof that it has fully accomplished the above-described restitutionary action, then the above-provided License revocation shall not take place and, instead, License No. C-61.172518-R of Chacho shall be suspended for a period of twenty (20) days followed by one hundred and eighty (180) days of disciplinary probation. 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, August 30, 2013.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1]Administrative notice is taken of Chacho’s prior license record as reflected on the Registrar of Contractors’ public website on August 28, 2013. Such prior license record reflects that Chacho’s License No. K- 37.275359-D is current. A.R.S. § 32-1154(A)(21) provides grounds for the suspension or revocation of a contractor’s license as follows:

Having a person named on the license who is named on any other license in this state or in another state which is under suspension or revocation unless the prior revocation was based solely on a violation of this paragraph.

[2] See Exhibit No. C-4 (2/25/12 Contract and Proposal for installation of fire protection system). [3] See Exhibit No. C-1 (2/29/12 Contract and Proposal for remodeling residence). [4] A.R.S. § 32-1154(A)(1) includes among the grounds for disciplinary action against a contractor’s license, abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal. [5] A.R.S. § 32-1154(A)(7) includes among the grounds for disciplinary action against a contractor’s license, the doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured. [6] 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.” [7] A.R.S. § 32-1158 provides as follows: A. From and after December 31, 1992 until December 31, 2007, any contract in an amount of more than one thousand dollars and less than one hundred fifty thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. B. From and after December 31, 2007, 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 shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction 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 at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365. C. At the time of signing a contract the owner shall be provided a legible copy of all documents signed and a written and signed receipt for and in the true amount of any cash paid to the contractor by the owner. D. The requirements of this section shall not constitute prerequisites to the formation or enforcement of a contract. Failure to comply with the requirements of this section shall not constitute a defense by either party to an action for compensation, damages, breach, enforcement or other cause of action based on the contract.

[8] A.R.S. § 32-1154(A)(17) includes among the grounds for disciplinary action against a contractor’s license, knowingly contracting beyond the scope of the license or licenses of the licensee. [9] See Exhibit C-8 (7/11/12 Demand Letter). [10] See Exhibit C-9 (Default Judgment). [11] See Exhibit No. C-7 (Scope of C-16 Fire Protection Systems license).

-----------------------

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