ALJDEC decisions subject to certification as final

2012A-547-ROC · Registrar of Contractors · 2012-09-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 21, 2012, at 8:00 a.m. APPEARANCES: Complainants 1501 Horses LLC, KCB Properties LLC, Chris E. Boyles, and Karen J. Boyles were represented by Guy W. Bluff, Esq., Bluff and Associates, P.C.; Respondent Bellagio Builders LLC did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On or about August 10, 2007, the Arizona Registrar of Contractors (“the Registrar”) issued License No. B.236607-R to Bellagio Builders LLC (“Respondent”). Respondent’s address of record is 8535 East Hartford Drive #104, Scottsdale, Arizona 85255-5438. On or about January 30, 2012, the Registrar received a complaint from Chris E. Boyles, Karen J. Boyles, 1501 Horses LLC, and KCB Properties LLC (“Complainants”) against Respondent regarding its contract to construct a house at 1501 East Calle de Caballos in Tempe, Arizona.[2] According to the Complaint, the contract amount was $1,596.498.00, Complainants had paid Respondent $566,773.00, and Complainants felt that they were owed $50,000.00. On February 1, 2012, the Registrar sent a copy of Complainants’ Complaint to Respondent at its address of record with a letter informing it that “[i]f you do not resolve this complaint within ten (10) calendar days from the date of this letter, a formal citation may be issued against your license.” Complainants requested that the Registrar issue a citation against Respondent. On February 17, 2012, the Registrar set a letter to Respondent informing it that “[t]his is your final opportunity to resolve this complaint before it is sent to the ROC Legal Department to consider whether a formal Citation should be issued.” On March 22, 2012, the Registrar issued a Citation and Complaint charging Respondent with possible violations of A.R.S. § 32-1154(A)(1), A.R.S. § 32- 1154(A)(2), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32- 1154(A)(9), A.R.S. § 32-1154(A)(11), and A.R.S. § 32-1154(A)(20). Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violations. The address on Respondent’s written answer was its address of record. The Registrar referred the matter to the Office of Administrative Hearings (“the OAH”), an independent state agency, for an evidentiary hearing. On May 7, 2012, the Registrar issued a Notice of Hearing, setting a hearing on June 27, 2012, at 8:00 a.m. at the OAH. The Registrar mailed a copy of the Notice of Hearing to Respondent at its address of record. The Notice of Hearing informed the parties that “[f]ailure to attend the scheduled hearing is likely to result in an adverse ruling against you.” On June 4, 2012, Respondent moved to continue the hearing. After Complainants opposed the motion, on June 11, 2012, the Administrative Law Judge (“ALJ”) denied Respondent’s motion. The OAH mailed a copy of the June 11, 2012 order to Respondent at its address of record. Subsequently, Complainants moved to continue the hearing. After Respondent did not oppose the motion in the time allowed, on June 19, 2012, the ALJ issued an order continuing the hearing to August 21, 2012, and August 22, 2012. The OAH mailed a copy of the June 19, 2012 order to Respondent at its address of record. A hearing was held on August 21, 2012. Complainants appeared through their attorney, submitted 47 exhibits, and presented the testimony of three witnesses: (1) Brian Edward Dwyer, Respondent’s former qualifying party and member; (2) Shawn Codina, the construction coordinator who was hired to oversee completion of construction on the house; and (3) Complainant Mr. Boyles. Respondent did not request to appear telephonically. Although the start of the hearing was delayed fifteen minutes, Respondent did not appear, through an authorized member, employee, or attorney. Consequently, Respondent did not present any evidence to defend its license. Administrative notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website on September 4, 2012. Such prior License record reflects that on May 16, 2012, Respondent’s license was suspended for lack of bond and on May 22, 2012, Respondent’s license was suspended for lack of a qualifying party. Hearing Evidence Mr. Boyles testified that he and his wife have formed ten or twelve trusts or limited liability companies on the advice of their attorney for estate planning purposes. Mr. Boyles testified that KCB Properties LLC is the parent company that paid all the bills for the construction of the house at issue. Mr. Boyles testified that 1501 Horses LLC was formed to take legal title to the property where the house was built.[3] Mr. Boyles testified that he and his wife presently occupy and always intended to occupy the house.[4] He considers the house to be his, even though 1501 Horses LLC owns the land. Mr. Boyles testified that he and his wife are contractors.[5] Mr. Boyles testified that his contracting companies perform environmental cleanups and do not build houses. Complainants submitted a printout from the Registrar’s public website for Respondent.[6] Only three people have ever been listed on Respondent’s license: (1) Ashley Elizabeth Dittmer as member; (2) Salvatore John Paluscio as former qualifying party and member; and (3) Brian Edward Dwyer as former qualifying party and member. Mr. Paluscio’s inactivation date was March 1, 2011, and Mr. Dwyer’s inactivation date was March 22, 2012. Mr. Boyles testified that when he and his wife decided to build the house, their architect referred them to Phillip Tennyson.[7] Mr. Boyles testified that he thought that Mr. Tennyson and Suzanne Dittmer (“Mrs. Dittmer”), with whom Mr. Tennyson lived, were Respondent’s principals. Mr. Boyles testified that he never met Ashley Dittmer and did not know whether she actually existed. Mr. Boyles testified that he and his wife solicited three bids from appropriately licensed contractors. One of the bids was really high and that the other two bids, including Respondent’s, were close. Even so, the two bids exceeded Complainants’ budget by about $200,000.00. Mr. Boyles testified that he requested that the contractors agree to an “open-book arrangement,” or value pricing, under which they agreed to construct the house on a time-and-material basis. Mr. Boyles testified that the other contractor was not willing to modify its bid to accommodate his wishes, but Mr. Tennyson agreed that Respondent would construct the house on a time-and- material basis with a flat rate for profit, supervision, and overhead. On or about April 26, 2011, Mr. Boyles and Mrs. Dittmer on behalf of Respondent entered into a “Fixed Contract Amount” for Respondent to build a house for Mr. Boyles. The contract provided that “[t]he contract price of the project shall be set at the sum of $1,596,497.62 subject to additions and deductions pursuant to authorized change orders and allowances.”[8] The contract amount was based on Respondent’s list of scheduled values for all items of construction that totaled the contract price.[9] Mr. Boyles did not explain why the contract was denominated a fixed-price contract if Respondent had agreed that the contract would be based on time and materials, value-pricing, or open-book accounting. However, Complainants submitted an e-mail from Mr. Tennyson that accompanied Respondent’s second draw request and stated that he understood that Mr. Boyles preferred to include the same unspecified amount on each draw for supervision and overhead and 15% of the amount of the draw for Respondent’s profit.[10] Complainants also submitted Respondent’s cover letter for its third draw request that confirmed the understanding.[11] Respondent started construction of the house. Mr. Boyles testified that from the beginning, it was clear to him that Respondent was not a competent or an honest contractor. Mr. Boyles testified that Respondent approved every change order that its subcontractors submitted without going over the change order with him. Mr. Boyles testified that the only times when Mr. Tennyson communicated with him was after Respondent had submitted a draw request. On or about December 29, 2011, Complainants’ attorney terminated Respondent’s performance of the contract due to its superintendent’s failure to supervise subcontractors, approval of subcontractors’ change orders without consulting Mr. Boyles, subcontractors’ liens against the property, the unsafe, unclean, and dangerous condition of the jobsite, poor workmanship, and Mr. Tennyson’s drunken state after 2:00 p.m. on most days.[12] On or about March 2, 2012, Complainants 1501 Horses LLC and Mr. and Mrs. Boyles filed suit against Respondent, its bond company, and Mr. Dwyer and his wife in Maricopa County Superior Court Case No. CV2012-004625 for breach of contract, offsets under A.R.S. § 33-994 for subcontractors’ liens, indemnity and recoupment under A.R.S. § 33-995, recovery of Respondent’s license bond, and constructive trust/fraud/ defalcification under A.R.S. § 33-1005.[13] Respondent filed an answer in Case No. CV2012-004625. However, Respondent’s answer was not signed by an attorney or any individual.[14] Mr. Dwyer filed an answer to the complaint in Case No. CV2012-004625, generally denying any wrongdoing or involvement in the project. Mr. Dwyer filed a cross-claim against Respondent for the same claims that had been asserted against him. Mr. Dwyer also filed a third-party complaint against Mr. Tennyson and Mrs. Dittmer for breach of contract, breach of the duty of good faith and fair dealing, and indemnity.[15] Mr. and Mrs. Boyles and 1501 Horses LLC moved to strike Respondent’s answer in Case No. CV2012-004625. On June 12, 2012, the Court granted the motion to strike and allowed Respondent until June 22, 2012, “to file a proper Answer or other responsive pleading executed by an attorney licensed to practice law in the State of Arizona.”[16] Respondent failed to file a timely answer that complied with the Court’s June 12, 2012 order and 1501 Horses LLC and Mr. and Mrs. Boyles filed an application for entry of default in Case No. CV2012-004625.[17] On or about August 8, 2012, the Court in Case No. CV2012-004625 entered a judgment against Respondent, awarding 1501 Horses LLC and Mr. and Mrs. Boyles $120,000.00 in damages, $22,500.00 for attorney’s fees, and $478.80 in costs.[18] Evidence of Respondent’s Violation of A.R.S. § 32-1154(A)(20) Mr. Dwyer testified that he met and became friends with Mr. Tennyson in 2005 or 2006, when Mr. Dwyer was working for another builder. At the time, Mr. Tennyson was working for Blackhawk Custom Home Builders. Mr. Dwyer testified that after he lost his job in 2011, “out of the blue” Mr. Tennyson asked him to be Respondent’s qualifying party and job superintendent. Mr. Dwyer testified that Mr. Tennyson said that he owned Respondent. Mr. Dwyer testified that Mr. Tennyson said that Respondent’s former qualifying party, Mr. Paluscio, was moving on and wanted to run his own business. Mr. Dwyer testified that after he became Respondent’s qualifying party in March 2011, Respondent paid him $1,000.00/month. Mr. Dwyer testified that he was not informed that in April 2011, Mrs. Dittmer on behalf of Respondent signed the contract with Mr. Boyles to construct the house. Mr. Dwyer testified that he did not learn of Complainants’ project until he was served with the lawsuit in Case No. CV2012-004625 against Respondent and himself. Mr. Dwyer testified that he recently learned that Ashley Dittmer was the only other person who was listed on Respondent’s license and that Mr. Paluscio had acted as superintendent on Complainants’ project. Mr. Dwyer testified that he resigned as qualifying party because he had been “duped,” and that even when he submitted his resignation to the Arizona Corporation Commission, he did not meet Ashley Dittmer, whom he believed to be Mrs. Dittmer’s daughter.[19] Mr. Dwyer testified that although he was supposed to receive 25% of Respondent’s profits, he did not receive any monies from Complainants’ project. Mr. Dwyer testified that Mr. Tennyson and Mrs. Dittmer defrauded many people, including Mr. and Mrs. Boyles. Mr. Dwyer testified that after he learned of Mr. Tennyson and Mrs. Dittmer’s fraud, he notified the Registrar. Evidence of Respondent’s Violation of A.R.S. § 32-1154(A)(9) By the time that Mr. Boyles terminated Respondent, it had submitted six draw requests in the total amount of $647,533.88. Respondent was paid the full amount of its first five draw requests in the amount of $566,772.64.[20] Complainants submitted spreadsheets and other documents that showed that by the time of Respondent’s sixth draw request, Complainants believed that they had overpaid Respondent $128,986.16, based on the stage of construction at the time they terminated Respondent, Respondent’s list of scheduled values, and Complainants’ payments for supervision, overhead, and profit.[21] Complainants had subpoenas duces tecum issued that required Respondent to produce the documents that supported its draw requests. Respondent’s responses to the subpoenas included numerous blank documents and did not substantiate the amounts in its draw requests.[22] Evidence of Respondent’s Violations of A.R.S. § 32-1154(A)(11) Foxworth Galbraith On December 6, 2011, Foxworth Galbraith Lumber Company (“Foxworth Galbraith”) recorded a mechanic’s lien against Complainant 1501 Horses LLC for $14,036.94, plus interest, for the lumber and other materials that it furnished for construction of the house.[23] Complainants submitted evidence that by the time of Respondent’s sixth draw request, Respondent had been paid all but approximately $11,000.00 of the amounts that it had billed for material and labor for framing and related work.[24] On or about April 3, 2012, Foxworth Galbraith recorded a release of its lien due to the actions of Mr. Boyles and his attorney.[25] Austin Electric At some point, Toby Thomas, the president of Austin Electric Services LLC (“Austin Electric”), contacted Mr. Boyles because Respondent had not paid Austin Electric $30,900.00 for its electrical work.[26] In January 2012, Respondent’s attorney stated that Austin Electric had not been paid because when Mr. Boyles terminated Respondent, Austin Electric’s work was not complete.[27] Complainants’ attorney pointed out that Complainant’s fifth draw included $31,500.00 for Austin Electric’s work.[28] On or about April 7, 2012, Complainants Mr. Boyles and 1501 Horses LLC paid Austin Electric $30,900.00 and it assigned its claims against Respondent to them.[29] Craftsmen Respondent’s fourth draw request included the sum of $17,783.00 for millwork, which Complainants’ attorney indicated was a deposit for interior doors furnished by Craftsmen in Wood, Mfg. (“Craftsmen”).[30] On or about December 19, 2011, Craftsmen submitted a document to Mr. Boyle and Respondent, requesting them to indemnify Craftsmen against any liability for the deposit amount of $17,783.00.[31] The Town Electrician On or about July 25, 2012, Gangsei Enterprises, Inc. dba The Town Electrician (“The Town Electrician”) sent an invoice to Mr. Boyles and 1501 Horses LLC regarding Respondent’s failure to pay The Town Electrician’s October 12, 2011 invoice in the amount of $4,992.25.[32] Someone on behalf of Respondent had scrawled across the bottom on the invoice a statement that The Town Electrician’s invoice was to be in the next draw. Complainants’ attorney pointed out that Respondent should have received the invoice before it submitted the sixth draw request in November 2011, but noted that it was not included in the documents that Respondent produced in response to Complainants’ subpoena duces tecum.[33] Evidence of Respondent’s Violation of A.R.S. § 32-1154(A)(1) The parties’ contract provided that “[u]pon satisfactory payment being made for any portion of the work performed, Contractor shall furnish a full and unconditional release from any claim or mechanics’ lien for that portion of the work for which payment has been made.”[34] After Mr. Boyles started receiving liens and requests for payment from various subcontractors whose work was or should have been included in Respondent’s draw requests that were paid, Mr. Boyles requested that Respondent provide unconditional lien releases from the subcontractors. Respondent never provided such lien releases. Evidence of Respondent’s Violation of A.R.S. § 32-1154(A)(2) Although Mr. Codina is not listed on any contractor’s license, he has sixteen years’ experience building homes. Mr. Codina has worked as a construction manager and superintendent in the construction of high-end custom homes for approximately ten years. Mr. Codina was paid $1,000.00/week to supervise completion of the house. Mr. Codina testified that when he became involved in the construction project in January 2012, the framing and rough-in trades were almost complete. Mr. Codina testified that Respondent’s construction of the house violated applicable building codes in several respects, as follows: (1) The house lacked any fire-blocking that would prevent fire from entering a cavity in the attic or a soffit; (2) The attic and garage access doors were missing; (3) Lag nuts were loose on the perimeter of the house; (4) The gas line was not properly installed; (5) The vent for the pipes in the master laundry was not properly strapped down; and (6) The foam used by the plumbing subcontractor was not approved fire caulking and had to be cut out and replaced. Mr. Codina testified that Respondent had departed from plans and specifications in several respects, as follows: (1) The size and location of numerous door and window openings were not constructed as shown on the plans and specifications; (2) The plans and specifications required that the large beams used throughout the house were to be cut from wood located away from the center of the tree, but the beams that Respondent used were cut from the center of the tree, which made them more prone to twist and split; and (3) The ground rods for the electrical service were not installed and improper breakers were installed. Mr. Codina testified that Fiacco Custom Framing, LLC, License No. C- 7.203970-R (“Fiacco”), was hired to correct the framing. Complainants submitted Fiacco’s invoices dated between January 13, 2012, and January 25, 2012, in the total amount of $6,807.20.[35] Evidence of Respondent’s Violation of A.R.S. § 32-1154(A)(3), Namely A.A.C. R4-9-108 Complainants submitted numerous photographs that Mr. Codina had taken of Respondent’s workmanship deficiencies. Mr. Codina testified that Respondent’s workmanship did not meet applicable standards in the following respects: (1) The stain on the wood beams was streaked, resulting in a darker stain than was requested to even the color of the wood; (3) Many of the wood beams were twisted and had been improperly seated in the inside cavity; (4) There were numerous cracks in the concrete slab, some of which extended into the stem wall and required saw-cutting and rebar to correct; (5) There was an excessive gap where two beams met at a ridgeline; (6) The walls were not plumb and had to been straightened with furring strips; (7) There was a dip in the exterior roofline. CONCLUSIONS OF LAW The administratively suspended 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.[36] This matter lies within the Registrar’s jurisdiction.[37] The Notice of Hearing that the Registrar mailed to Respondent at its address of record was reasonable and it appears that Respondent actually received notice of the hearing.[38] The notice of the continued hearing in the ALJ’s June 19, 2012 order that the OAH sent to Respondent’s address of record also was reasonable and Respondent is deemed to have received notice of the continued hearing. Complainants bear the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[39] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[40] Complainants established that unlicensed individuals Mr. Tennyson and Mrs. Dittmer, rather than the persons listed on Respondent’s license, ran Respondent’s contracting operations. Because Mr. Tennyson’s and Mrs. Dittmer’s undisclosed status violated A.R.S. § 32-1154(A)(6)[41] and A.R.S. § 32-1154(A)(10),[42] Respondent did not possess good character as defined by A.R.S. § 32-1122(D)[43] when it applied for and renewed License No. B.236607-R. Therefore, Complainants established facts that if known at the times that the license was issued or renewed, would have been grounds to deny issuance or renewal of the license under A.R.S. § 32-1154(A)(20).[44] Although Complainants established that Respondent’s first five draw requests contained substantial overbillings, after Respondent was terminated, it could not have completed the project for any amount. Therefore, Complainants did not establish that Respondent violated A.R.S. § 32-1154(A)(9).[45] Complainants established that Respondent failed to pay Foxworth Galbraith and Austin Electric more than $750.00 for materials or services furnished to Respondent for the project. Therefore, Complainants established that Respondent violated A.R.S. § 32-1154(A)(11).[46] Although Complainants terminated Respondent before it completed the project, Complainants established that Respondent failed to obtain and provide lien releases from subcontractors and suppliers who furnished labor and/or materials for the work that Respondent completed and for which it was paid, in violation of the contract. Therefore, Complainant established that Respondent abandoned the contract in violation of A.R.S. § 32- 1154(A)(1).[47] Fiacco repaired Respondent’s framing deficiencies before Complainants filed their Complaint with the Registrar. Under A.R.S. § 32-1155(C),[48] the timing of the Complaint precludes a finding that Respondent violated any statute with respect to framing deficiencies. However, the record does not show that after Complainants filed the Complaint with the Registrar, Respondent was not afforded an opportunity to inspect and repair the other departures from specifications, code violations, and workmanship deficiencies that were established at the hearing. Complainants established that Respondent’s construction of the house without fire blocking, with an improperly installed gas line, with an improperly strapped vent for the master laundry, with plumbing foam that was not approved, and without ground rods and with improper breakers for the electrical service violated applicable code and/or was contrary to specifications.[49] Therefore, Complainants established that Respondent violated A.R.S. § 32-1154(A)(2).[50] Complainants also established that Respondent’s stain on the wood beams and construction of the concrete slab and stem walls violated the Registrar’s and industry workmanship standards. Therefore, Complainants established that Respondent violated A.R.S. § 32-1154(A)(3), namely, A.A.C. R4-9-108.[51] Respondent’s administratively suspended license status prevents it from performing or from hiring others to perform any corrective work.[52] Moreover, Respondent’s proven violation of A.R.S. § 32-1154(A)(20) is an aggravating factor that precludes the imposition of any conditional discipline that would allow Respondent to keep its license. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final Order in Case No. 2012-547, the Registrar revoke Respondent Bellagio Builders LLC’s License No. B.236607-R. 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, September 4, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The Administrative Law Judge granted Complainants’ request to amend the caption to add as party Complainants Mr. and Mrs. Boyles, who live in the house and are principals in 1501 Horses LLC. Additional information on the named parties Complainant is set forth at Finding of Fact No. 15. [2] See Complainants’ Exhibit 1. [3] Complainants submitted the warranty deed for the property showing that KCB Properties LLC conveyed the property to 1501 Horses LLC on August 16, 2010. See Complainants’ Exhibit 7. [4] As stated on the record at the hearing, Complainants’ eligibility to recover a payout from the Residential Contractors’ Recovery Fund was not at issue in this matter. The Administrative Law Judge makes no implicit or explicit findings regarding their eligibility or if they are eligible, the amount of the damages that they are entitled to recover from the Fund. [5] According to the Registrar’s public website, Mr. and Mrs. Boyles are listed on numerous contractors’ licenses. See License Nos. B-1.089302-C (cancelled), BE.099303-C (cancelled), B-3.099349-R (cancelled), C-5.099483- R (cancelled), AE.101060-C, C-5.101110-R, B-1.130187-C, KB-1.244330-D, and K-5.244331-D. [6] See Complainants’ Exhibit 2. [7] On various exhibits, Mr. Tennyson’s name is spelled “Tennyson” or “Tenneyson.” The Administrative Law Judge has adopted Complainants’ attorney’s spelling, see Complainants’ Exhibit 8 at 7 (subpoena duces tecum) rather than Mr. Dwyer’s attorney’s spelling, see Complainants’ Exhibit 44 (Mr. Dwyer’s third-party complaint). [8] See Complainants’ Exhibit 3 at 1. [9] See Complainants’ Exhibit 4. [10] See Complainants’ Exhibit 38. [11] See Complainants’ Exhibit 39. [12] See Complainants’ Exhibit 22 (termination letter). [13] See Complainants’ Exhibit 42. [14] See Complainants’ Exhibit 43. [15] See Complainants’ Exhibit 44. The record does not show the outcomes of 1501 Horses LLC and Mr. and Mrs. Boyles’ complaint against Mr. Dwyer, Mr. Dwyer’s cross-claim against Respondent, or Mr. Dwyer’s third-party complaint against Mr. Tennyson and Mrs. Dittmer in Case No. CV2012-004625 [16] See Complainants’ Exhibit 45. [17] See Complainants’ Exhibit 46. [18] See Complainants’ Exhibit 17 at 2. [19] Complainants submitted the Articles of Amendment obtained from the Arizona Corporation Commission that showed that Mrs. Dittmer had signed Mr. Dwyer’s withdrawal on Ashley Dittmer’s behalf using a power of attorney. See Complainants’ Exhibit 10 at 5. [20] See Complainants’ Exhibit 6. [21] See Complainants’ Exhibit 6. [22] See Complainants’ Exhibits 11, 12, 13, 14, 15, and 16. [23] See Complainants’ Exhibit 18. [24] See Complainants’ Exhibits 19 and 20. [25] See Complainants’ Exhibit 21. [26] See Complainants’ Exhibit 23. [27] See Complainants’ Exhibit 24. None of the correspondence and other documents that Respondent submitted in this matter was signed or identified the individual who submitted the document. [28] See Complainants’ Exhibits 24 and 15. [29] See Complainants’ Exhibit 27. [30] See Complainants’ Exhibit 14. [31] See Complainants’ Exhibit 28. Although Craftsmen’s representative signed the agreement, no one signed the agreement on Complainants’ behalf. [32] See Complainants’ Exhibit 29. [33] See Complainants’ Exhibit 16. [34] Complainants’ Exhibit 3 at 2. [35] See Complainants’ Exhibit 31. [36] See A.R.S. § 32-1154(C) (“The 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 . . . .”). [37] See A.R.S. § 32-1151 to A.R.S. § 32-1169. [38] See A.R.S. § 41-1092.04 and A.R.S. § 41-1092.05(D). [39] 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). [40] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [41] A.R.S. § 32-1154(A)(6) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[m]isrepresentation of a material fact by the applicant in obtaining a license.” [42] A.R.S. § 32-1154(A)(10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]iding or abetting a licensed or unlicensed person to evade this chapter, knowingly combining or conspiring with a licensed or unlicensed person, allowing one’s license to be used by a licensed or unlicensed person with intent to evade this chapter.” [43] A.R.S. § 32-1122 sets forth qualifications for a contractor’s license. A.R.S. § 32-1122(D) provides in relevant part: 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 . . . committed any act that, if committed or done by any licensed contractor, would be grounds for suspension or revocation of a contractor's license . . . . [44] A.R.S. § 32-1154(A)(20) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[s]ubsequent discovery of facts which if known at the time of issuance of a license or the renewal of the license would have been grounds to deny the issuance or renewal of the license.” [45] A.R.S. § 32-1154(A)(9) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” [46] A.R.S. § 32-1154(A)(11) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.” [47] 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.” [48] See A.R.S. § 32-1155(C) provides as follows: The registrar shall not issue a citation for failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards if either: 1. The contractor is not provided an opportunity to inspect the work within fifteen days after receiving a written notice from the registrar. 2. The contractor's work has been subject to neglect, modification or abnormal use. [49] Although Fiacco may have corrected some of these deficiencies, they are found to be violations because Fiacco’s invoices did not specifically describe them. See Complainants’ Exhibit 31. [50] A.R.S. § 32-1154(A)(2) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of plans or specifications or any building codes of any state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.” [51] A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [52] It is unlawful for anyone without a contractor’s license in good standing to engage in contracting. See A.R.S. § 32-1151. “Contractor” is defined as anyone who “does himself or by or through others” performs construction. A.R.S. § 32-1101(A)(3) (emphasis added).

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