ALJDEC decisions subject to certification as final

2012A-5481-ROC · Registrar of Contractors · 2013-04-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 28, 2013, at 1:00 p.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) appeared through Elizabeth A. Campbell, Esq., Assistant Attorney General; Respondent John Joseph Pacifico III/Pacifico Communications appeared through Gary L. Lassen, Esq., Law Office of Gary L. Lassen, PLC. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On or about December 18, 2012, the Arizona Registrar of Contractors (“the Registrar”) served a Cease & Desist Order on John Joseph Pacifico doing business as Pacifico Communications (“Mr. Pacifico” or “Respondent”), ordering him to cease and desist all unlicensed contracting advertising under A.R.S. § 32-1165.[1] 2. On or about December 18, 2012, the Registrar issued a Civil Citation against Mr. Pacifico that assessed a civil penalty in the amount of $1,500.00 against him for advertising without a license in violation of A.R.S. § 32-1165.[2] 3. Mr. Pacifico requested a hearing on the Civil Citation and civil penalty. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 4. The hearing was continued once at Mr. Pacifico’s attorney’s request to allow him to meet with Mr. Pacifico and prepare the case for hearing or settlement. 5. A continued hearing was held on March 28, 2012. The Registrar presented the testimony of its assigned investigator, Joseph L. Shikany, and submitted seven exhibits. Although Mr. Pacifico’s attorney appeared on his behalf, Mr. Pacifico’s attorney stated that Mr. Pacifico could not attend the hearing or testify due to his wife’s high-risk pregnancy. Mr. Pacifico submitted a letter that he had written to Investigator Shikany dated January 14, 2013, in response to the charged violation of A.R.S. § 32-1165 and imposition of the civil penalty. Hearing Evidence 6. On or about November 5, 2012, the Registrar received a Complaint on its hotline from Stephen Kunisch against Mr. Pacifico regarding his advertisement to install low voltage communications systems without disclosing his unlicensed status.[3] 7. Mr. Kunisch is the qualifying party and a member of Havasu Audio Video LLC, License No. K-67.217355-D for dual low voltage communication systems (“Havasu Audio Video”). Mr. Pacifico was formerly employed by Havasu Audio Video. 8. Because the hotline does not accept supporting documentation, Investigator Shikany contacted Mr. Kunisch to obtain a copy of Mr. Pacifico’s advertisement in the November 2012 issue of AdsPay, a direct mail advertising magazine that is published in Mohave County.[4] 9. In the November 2012 AdsPay advertisement, Respondent offered to install surround-sound systems and security cameras and to perform custom installations of audio video systems. Investigator Shikany testified that the contracting work described in the advertisement required a low voltage communication systems license. 10. Mr. Pacifico’s November 2012 advertisement did not state, “not a licensed contractor.” Investigator Shikany checked the Registrar’s ROCIMS records system and ascertained that Respondent did not possess a contractor’s license. Investigator Shikany testified that the handyman exemption does not protect advertisements that offer to perform contracting services unless the advertisement includes the disclaimer, “not a licensed contractor.” Investigator Shikany testified that an unlicensed contractor cannot claim the handyman exemption to perform contracting jobs for amounts that are less than $1,000.00 if he does not disclose his unlicensed status. 11. Respondent’s November 2012 advertisement also stated that Respondent was “licensed & insured.” Investigator Shikany testified that the advertisement was misleading because the license to which it referred was a city tax license, not a contractor’s license. 12. Investigator Shikany also found that Mr. Pacifico and another company with which he was associated, Save On Electronics Satellite Services LLC (“Save On”), had been issued a Cease & Desist Order in Case No. 2010-[number redacted] based on two advertisements that he placed in the October 2010 AdsPay Havasu publication that did not contain the disclaimer, “not a licensed contractor.” The report of the Registrar’s investigator assigned to investigate Case No. 2010- [number redacted], Donald Herman, stated that Investigator Herman informed Mr. Pacifico that the Registrar would close the case, but that “any future violation may be handled criminally or civilly.”[5] 13. Investigator Shikany testified that according to his report of his investigation in this matter, he repeatedly attempted to contact Mr. Pacifico without any response, but finally spoke to Mr. Pacifico on December 18, 2012.[6] Investigator Shikany reported that Mr. Pacifico acknowledged that Investigator Herman had contacted him in Case No. 2010-[number redacted], but stated that Mr. Pacifico did not own Save On, but was merely employed by the company. 14. Investigator Shikany testified that Mr. Pacifico said that he would change the advertisement in AdsPay to comply with statutory requirements. The Registrar submitted Mr. Pacifico’s advertisement in the January 2013 issue of AdsPay, which contained the disclaimer, “not a licensed contractor.”[7] 15. Investigator Shikany testified that the Registrar’s policy was to impose a civil penalty in the maximum amount or $1,500.00 for advertising that violated A.R.S. § 32-1165 if the respondent had committed prior violations. 16. Investigator Shikany testified that he advised Mr. Pacifico that if he obtained a contractor’s license within 30 days of the assessment of the civil penalty, the penalty would be reduced to $200.00. Investigator Shikany testified that according to the ROCIMS system, Mr. Pacifico did not obtain a contractor’s license. 17. Mr. Pacifico’s January 14, 2013 letter to Inspector Shikany stated that Mr. Kunisch made the complaint in Case No. 2010-[number redacted] because “he was not happy about my effort in trying to feed my family by working for [Save On] and went on a mission to defeat any of my progress.”[8] Mr. Pacifico’s letter also informed Investigator Shikany that “I personally, have never been warned in writing for any ROC violation with your letter being my first ever warning.”[9] 18. Investigator Shikany acknowledged that he did not perform the investigation in Case No. 2010-[number redacted] and that he had not seen the advertisements described in Investigator Herman’s report. Investigator Shikany acknowledged that the complaint in Case No. 2010- [number redacted] came from Mr. Kunisch, whose company formerly employed Mr. Pacifico and competes with him for low voltage audio video systems business. 19. The Registrar’s attorney pointed out that Investigator Herman’s report in Case No. 2010-[number redacted] described three advertisements. In addition to the advertisement for Save On, the report described the following advertisements: 2. A quarter page advertisement from Pacifico Communications, John J. Pacifico III as owner and soliciting the installation of satellite & surround sound systems. There is no unlicensed disclosure posted in the advertisement.

3. A business card from Pacifico Communications, John J. Pacifico owner, soliciting satellite & surround sound systems. There is no unlicensed disclosure posted on the business card. . . .[10]

20. Mr. Pacifico’s January 14, 2013 letter to Investigator Shikany also stated that “[a]ll my advertising is done by Doorknob Publishing LLC and for over 12 months I have complied with all requests from all governing bodies until December 2012 when my advertising representative left out ‘not a licensed contractor’ from that one single ad.”[11] Mr. Pacifico did not submit copies of any advertisements that were published before November 2012. 21. Investigator Shikany testified that he did not recall that Mr. Pacifico said that his advertising company had left out the disclaimer in the December 18, 2012 interview. Investigator Shikany testified that because he does not live in the Lake Havasu City community, he had not seen any of Respondent’s earlier advertisements in the AdsPay magazine. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[12] The Registrar bears the burden of proof to establish Respondent’s violation of A.R.S. § 32-1165, cause to assess a civil penalty against Respondent, and factors in aggravation of the penalty by a preponderance of the evidence.[13] Respondent bears the burden to establish affirmative defenses and factors in mitigation of the penalty by the same evidentiary standard.[14] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[15]

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 exemption” 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 in the AdsPay magazine published in November 2012, 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 violation of A.R.S. § 32-1165, 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.[16] As a factor in aggravation of the penalty, the Registrar established that in October 2010, Mr. Pacifico on behalf of his business Pacifico Communications placed an advertisement in the AdsPay Havasu magazine and used a business card that did not include the disclaimer, “not a licensed contractor.” The Registrar established that Respondent’s prior violations of A.R.S. § 32-1165 resulted in a Cease & Desist Order and a verbal warning in Case No. 2010-30847630. Mr. Pacifico did not establish that the subsequent November 2012 advertisement was an isolated event that resulted from his advertising company’s error, rather than his own continued violation of A.R.S. § 32-1165. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent John Joseph Pacifico III/Pacifico Communications 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 $1,500.00, 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, April 4, 2013.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 4. [2] See the Registrar’s Exhibit 5. [3] See the Registrar’s Exhibit 1. [4] See the Registrar’s Exhibit 2. [5] The Registrar’s Exhibit 6. [6] See the Registrar’s Exhibit 3. [7] See the Registrar’s Exhibit 7. [8] Respondent’s Exhibit A at 1. [9] Id. at 2. [10] The Registrar’s Exhibit 7 at 2. [11] Id. [12] See A.R.S. §§ 32-1151 to 32-1169. [13] 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). [14] See A.A.C. R2-19-119(B)(2). [15] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [16] 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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