ALJDEC decisions subject to certification as final

2012A-3643-ROC · Registrar of Contractors · 2013-01-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 28, 2012, at 1:00 p.m. APPEARANCES: The Arizona Registrar of Contractors appeared through Elizabeth A. Campbell, Esq., Assistant Attorney General; Respondent Richard Edward Serafin/Arizona Air Conditioning Service Co. did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT The Arizona Registrar of Contractors (“the Registrar”) received a complaint from Michael Patrick Frazier against Richard Edward Serafin doing business as Arizona Air Conditioning Service Co. ( “Respondent”) regarding his unlicensed contracting activities. Mr. Frazier is the qualifying party and a member of Fraz Air LLC, License No. K-39.214431-D for air conditioning, refrigeration, and heating. Between November 2011, and January 2012, when License No. K-39.214431-D was administratively suspended for lack of bond, Mr. Frazier consulted Craigslist, an electronic bulletin board, to find work. Mr. Frazier testified that he met Respondent through Craigslist and that Respondent said that he had hurt his shoulder and needed someone to install an air conditioner for a customer. Mr. Frazier testified that Respondent hired him to install a 16 seer split system heat pump at a customer’s home for $500.00. Mr. Frazier testified that he did not want to work as a handyman and that Respondent presented himself as a licensed contractor. Mr. Frazier testified that Respondent’s contract with the customer was in the amount of $7,098.00 and that the customer did not receive the $350.00 rebate after Salt River Project determined that Respondent was not licensed. Mr. Frazier testified that he later performed warranty work for the customer because Respondent refused to do so. Mr. Frazier testified that when he realized that Respondent was not licensed, he provided to the Registrar printouts of Respondent’s advertisements on Craigslist because he did not want to be undercut by an unlicensed contractor who was not required to pay for licensing fees, a bond, and insurance. The Registrar’s investigator, Lindbergh Alfred, checked the Registrar’s records and determined that neither Mr. Serafin nor Arizona Air Conditioning Service Co. had been issued a contractor’s license. Investigator Alfred thereafter opened a formal complaint against Respondent. Inspector Alfred testified that he found two prior complaints against Respondent for unlicensed contracting activity. Investigator Alfred determined that the records of the Arizona Corporation Commission (“ACC”) showed that Mr. Serafin had reserved the name, “Arizona Air Conditioning Service Co.” The address for Mr. Serafin on the ACC’s database was 4962 West Michelle Drive, Glendale, AZ 85308. The Registrar submitted Respondent’s Craigslist advertisement that Mr. Frazier had supplied. The advertisement offered to install Trane air conditioning units, but did not contain the disclaimer, “not a licensed contractor.” The Craigslist advertisement provided a telephone number for Respondent. The Registrar also submitted a printout of Respondent’s website, www.arizonaairconditioning.com. Respondent’s website offered to repair, tune-up, and replace air conditioning units. The website indentified Mr. Serafin as Arizona Air Conditioning Co.’s “owner and lead service technician.” The website did not contain the disclaimer, “not a licensed contractor.” Investigator Alfred testified that the Registrar requires that contractors’ advertisements display the contractor’s license number[1] or the disclaimer, “not a licensed contractor.” The Registrar submitted a warning letter to Mr. Serafin dated July 1, 2010, stating that A.R.S. § 32-1165 made it a Class 1 misdemeanor for an unlicensed person to advertise that he is able to perform any service for which a license was required, unless the advertisement contained the disclaimer, “not a licensed contractor,” and a Cease & Desist Order dated July 1, 2010. Investigator Alfred testified that on July 30, 2012, he sent a generic letter to Respondent at the address on West Michelle Drive, informing him that he might be violating state contracting law by offering to provide contracting services when he was not licensed and suggesting that Respondent should contact Investigator Alfred. Inspector Alfred testified that in September 2012, he called Respondent’s number and got a voicemail message that identified Respondent Mr. Serafin by name. Inspector Alfred testified that he left his name, telephone number, and the reason for the call, but that Respondent never contacted him. On September 28, 2012, Investigator Alfred issued a Civil Citation in the amount of $1,000.00, and mailed the Civil Citation. Inspector Alfred also issued a Cease & Desist Order to Respondent, notifying him that his advertisements on his website and on Craigslist violated A.R.S. § 32-1165. Investigator Alfred mailed the Civil Citation and Cease & Desist Order by certified mail to Respondent at the address on West Michelle Drive. Respondent submitted a request for hearing that provided the address on West Michelle Drive. The Registrar referred the matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing. On November 14, 2012, the Registrar issued a Notice of Hearing on Citation and Civil Penalty. The Registrar sent the Notice of Hearing on Citation and Civil Penalty to Respondent at his address on West Michelle Drive. Respondent did not request to appear telephonically at the hearing and did not request that the hearing be continued. Although the start of the duly noticed hearing was delayed sixteen minutes to allow Respondent additional travel time, Respondent did not appear, personally or through attorney, and did not contact the OAH to request that the start of the hearing be further delayed. Consequently, Respondent did not present any evidence. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[2] The Notice of Hearing on Citation and Civil Penalty that the Registrar mailed to Complainant at the address on the ACC’s records and that Respondent provided on the request for hearing was reasonable and Respondent is deemed to have received notice of the hearing.[3] The Registrar 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. § 32-1165 provides as follows: Except as authorized by section 32-1121, subsection A, paragraph 14, subdivision (c), it is a class 1 misdemeanor for any person to advertise that he is able to perform any service or contract for compensation subject to regulation by the registrar under the terms of this chapter unless a license under the terms of this chapter is first obtained regardless of whether his operations as a contractor are otherwise exempt.

A.R.S. § 32-1121(A)(14) sets forth the so-called “handyman’s exception” to licensure requirements for contractors who perform work whose aggregate contract price, including labor and materials, is less than $1,000.00 if other requirements are met. A.R.S. § 32-1121(A)(14)(c) provides that “[t]his exemption does not apply . . . [t]o a person who utilizes any form of advertising to the public in which the person's unlicensed status is not disclosed by including the words "not a licensed contractor" in the advertisement.” The Registrar established that Respondent violated A.R.S. § 32-1165 by advertising on Craigslist and on its website without including the disclaimer, “not a licensed contractor.” A.R.S. § 32-1166(A) authorizes the Registrar to assess “a civil penalty in an amount of at least two hundred dollars for each violation but not more than two thousand five hundred dollars for the multiple violations committed on the same day.” With respect to the appropriate amount of the civil penalty for Respondent’s continuing violation of A.R.S. § 32-1151, A.R.S. § 32-1166(A) required the Registrar to “adopt rules covering the assessment of a civil penalty that give due consideration to the gravity of the violation and any history of previous violations.” Pursuant to this directive, the Registrar adopted A.A.C. R4-9-131.[6] As factors in aggravation of the penalty, Respondent failed to disclose his unlicensed status to Mr. Frazier or to actual and prospective customers on Craigslist and Respondent’s website. In addition, although the Registrar has warned Respondent for past violations of A.R.S. § 32-1165, he has continued to advertise in violation of the statute. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Richard Edward Serafin/Arizona Air Conditioning Service Co. violated A.R.S. § 32-1165 and affirm the decision to assess a civil penalty under A.R.S. § 32-1166(A) in the amount of $1,000.00, to be paid in certified funds to the Registrar on or before the effective date of the Registrar’s final order in this matter. 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 40 days from the date of that certification. Done this day, January 16, 2013.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1124(B). [2] See A.R.S. § 32-1101 et seq. [3] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [4] See A.R.S. § 41-1092.07(G)(3); 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.A.C. R4-9-131 sets forth permissible aggravating and mitigating factors to be considered, in relevant part as follows: In assessing a civil penalty as provided for under A.R.S. § 32- 1166(A), the Registrar shall give due consideration to whether the person cited or any individual acting on that person’s behalf has committed one or more of the following acts in determining the gravity of the cited violation: 1. Falsely represented to be a licensed contractor. 2. Failed to perform any work for which money was received. 3. Executed or used any false or misleading documents for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 4. Made false or misleading statements for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 5. Failed or neglected to apply funds which were received for the purpose of obtaining or paying for services, labor, materials, or equipment. 6. Performed work that was or had the potential to become hazardous to the health, safety, or general welfare of the public. 7. Performed work that deliberately was in violation of building codes, safety laws, labor laws, workers’ compensation laws, or unemployment insurance laws. 8. Performed work that failed to meet minimum acceptable trade or industry standards or practices or was not performed in a good and workmanlike manner. 9. Has committed any other act which would otherwise be cause for disciplinary action if the person cited had been properly licensed pursuant to A.R.S. Title 32, Chapter 10. 10. Has committed two or more prior violations. 11. Performed work that has caused loss or damage to the structure, its appurtenances, or property being worked upon or has caused loss or injury to any person.

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