ALJDEC decisions subject to certification as final

2013A-3275-ROC · Registrar of Contractors · 2014-01-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 9, 2013 held open until January 16, 2014

APPEARANCES: John Tellier, Assistant Attorney General representing the Registrar of Contractors; Joe Heskett, Respondent’s Qualifying Party and sole owner; Matt Mansfield, Attorney for Respondent; T’shura-Ann Elias, Carolyn Blevins,Jose Gill, witnesses; and Lynn Gross, observer

ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang _____________________________________________________________________ Having heard the evidence and testimony in this matter and having considered the record, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following recommended decision in the above-entitled matter. FINDINGS OF FACT 1. Heskett Homes, LLC, (“Respondent”) holds License Nos B.209112-R, B-2.226435-C, and B-1.255715-C. On or about July 7, 2012, the qualifying party on those licenses, Joe Heskett (“Mr. Heskett”), orally contracted to perform contracting work for Carolyn Blevins (“Ms. Blevins”). 2. Respondent voluntarily canceled License No. B-12.226435-C on July 8, 2009. License Nos. B.209112-R and B-1.255715-C were suspended on August 1, 2011 for non-renewal. They expired on August 1, 2012. Therefore, at the time of the agreement with Ms. Blevins, Mr. Heskett was the qualifying party on License Nos. B.209112-R and B-1.255715-C, which were currently under suspension, and he had a history of being the qualifying party on License No. B-12.226435-C. 3. On October 8, 2013, the Registrar of Contractors issued a Citation and Notice of Hearing to Respondent alleging five violations of the applicable statutes governing licensed contractors in the State of Arizona. 4. On November 25, 2013, Mr. Heskett, through his attorney, moved for a dismissal or summary judgment on the grounds that the Registrar of Contractors lacks jurisdiction, that Respondent had no agreement or contract with Ms. Blevins (rather, Mr. Heskett was acting as an individual), and that the Registrar of Contractors license requirements do not apply to Mr. Heskett because he was working outside of his licenses. 5. Respondent’s motion was denied. 6. At the hearing, the Registrar of Contractors argued that Respondent’s licenses should be revoked and Respondent[1] should be charged a $1,000 civil penalty. The Registrar of Contractors asserted that Respondent was responsible for the following violations: COUNT ONE: Failure to complete a project for the price stated in the contract or its subsequent modifications, in violation of A.R.S. § 32-1154(A)(9). The allegation was based on payment by Ms. Blevins for more than the agreed-upon amount (though there was no written contract) and the project is still not finished. COUNT TWO: Failure to reduce the agreement between the parties to a written contract containing the elements required by A.R.S. § 32- 1158(B), in violation of A.R.S. § 32-1154(A)(13). This was based on the lack of a written contract. COUNT THREE: False, misleading or deceptive advertising whereby a member of the public may be misled and injured, in violation of A.R.S. § 32-1143(A)(16). The allegation is based on the argument that it was a violation of this section to misrepresent to Ms. Blevins that Respondent was a properly licensed contractor COUNT FOUR: Contracting while the license is suspended, in violation of A.R.S. § 32-1154(A)(18). COUNT FIVE: Having a person named on the license who is also named on a license that is suspended or revoked, in violation of A.R.S. § 32-1154(A)(21). The allegation serves to state that if a license held by Respondent is suspended or revoked as a result of this action, all of Respondent’s licenses will automatically undergo the same disciplinary action. 7. Respondent argued that Mr. Heskett did not contract with Ms. Blevins under any of the licenses, and therefore, the Registrar of Contractors has no jurisdiction over those activities. Mr. Heskett testified that he was hired as Ms. Blevins’ employee and she acted as an owner builder. 8. Mr. Heskett did not dispute that he drew the plans, hired the subcontractors (some of which were Ms. Blevins’ preferences), paid the subcontractors (through the bank account of another business that he owns), and that he charged a percentage for most of his work. Mr. Heskett also testified that Ms. Blevins made many changes to the plans, paid one subcontractor directly, decided who one or two of the subcontractors would be, and ultimately fired him. He said he had estimated the job at $150,000.00 at first and Ms. Blevins put $135,000.00 into his account to start it. (He did not dispute that he was to be paid a percentage of the cost.) He said that it was because of her many changes that the price had to go up. An invoice to Ms. Blevins documents that as of January 19, 2013, she had paid him $177,583.47[2] and that she still owed $39,783.47. The invoice contains no heading stating who it is from nor does it contain any signature. One has only the surrounding facts of the case to inform them that the invoice was from Respondent. Exhibit 12, p. BLEVINS 000172. 9. Mr. Heskett stated that he told Ms. Blevins that he could work as a contractor but he would need more money to re-activate his licenses. 10. Ms. Blevins testified that she hired Mr. Heskett after the contractor who was drawing plans for her left. She said Mr. Heskett did the plans/drawings, contracted independently with subcontractors, purchased materials, and paid, scheduled, and supervised the subcontractors’ work. She said Mr. Heskett never told her that he wasn’t a licensed contractor and she had thought he was an architect at first. She said she asked him for a written contract and accountings of the money being spent, that he said he would get to it, but that he never did. She said Tom Mesmer was Mr. Heskett’s foreman and was getting ½ of Mr. Heskett’s pay. 11. Ms. Blevins testified that she never approved any budget changes but she asked for a four car garage and an arched door for which no drawings were done. She said Mr. Heskett made changes that she didn’t ask for, saying that he thought she would like them.[3] She acknowledged that she had an electrical subcontractor before she hired Mr. Heskett and that subcontractor stayed on the job when Mr. Heskett came. 12. Ms. Blevins stated that in December 2012 she fired Mr. Heskett for all the extra construction he was doing, the high cost, and the lack of any receipts. 13. Ms. Blevins stated that Mr. Heskett had a beam constructed at a high price, which she later threw out because she did not like it. She later admitted that the engineer that did the beam was someone she herself had hired in the past before she hired Mr. Heskett. She also said that the engineer was a friend of Mr. Heskett and she did not remember whether she had told Mr. Heskett to hire that engineer for the beam. She said she hired no subcontractors for that project once Mr. Heskett was hired, though she hired some to do other things. She also testified about the disagreements that concerned the final payment amount to Respondent. 14. Jose Gill, a staff attorney for the Registrar of Contractors, testified that he drafted that Citation and Notice of Hearing. “Exhibit 1” of Exhibit 1. He testified that, according to the records of the Registrar of Contractors, Mr. Heskett is the only member on all three licenses in this matter. “Exhibit 2” of Exhibit 1. He stated that, while there are exceptions to the requirement that one have a proper contractor’s license, the Registrar of Contractors would not consider an arrangement where someone was paid a percentage of the project’s cost to be an “employee” under that particular exception. He said it is the Registrar of Contractors’ position that the term “wages” referenced in A.R.S. § 32- 1121(A)(11)[4] concerns hourly wages only, not percentage pay, or the term would have no meaning. He also testified that a person whose license is suspended cannot bid on a project. He said that Mr. Heskett’s drafting of the project was of no concern to the Registrar of Contractors and none of the counts against him relate to his drafting activities; however, Mr. Heskett’s actions in bidding, hiring, and scheduling were considered contracting. 15. Administrative notice is taken of the Respondent’s prior License record as reflected on the Registrar of Contractors public website on January 24, 2014. License No. B-12.226435-C was voluntarily canceled on July 8, 2009. It had undergone suspension for non-renewal from December 1, 2008 to February 5, 2009. The site reflects no complaint activity on this license. The site states that License No. B.209112-R expired on August 1, 2012, it was suspended for non-renewal from August 1, 2011 to July 31, 2012, and it has two open complaints and no closed cases. The site also states that License No. B-1.255715-C expired on August 1, 2012, it was suspended for non-renewal from August 1, 2011 to July 31, 2012, and it has two open complaints and no closed cases against it. All three of the licenses are in the name of Heskett Homes LLC with the sole member and qualifying party listed as Joe Lee Heskett. CONCLUSIONS OF LAW 1. This matter is within the jurisdiction of the Registrar of Contractors pursuant to A.R.S. §§ 32-1104(A)(4), 32-1154(B) and 32-1156. 2. The Citation and Notice of Hearing issued by the Registrar of Contractors in this matter alleged potential violations of A.R.S. § 32- 1154(A)(9), (13)(specifically A.R.S. § 32-1158(B)), (16), (18), and (21). It is noted that A.R.S. § 32-1154(A)’s introduction specifically prohibits anyone named on a license from committing any of the violations laid out therein. Therefore, even if Mr. Heskett had established that he was not working under his license, Respondent would still be responsible for his actions because he was named on all of the licenses. 3. A.R.S. § 32-1154(A)(9) provides grounds for suspension or revocation of a contractor’s license for failure by the licensee “to complete a construction project . . . for the price stated in the contract” or any modification thereof. The Registrar of Contractors did not establish a violation of this portion of the statute because Ms. Blevins fired Respondent before the project was finished. Although it is clear that Respondent would not have finished the project for the price he quoted her, his actions don’t fit strictly within the wording of the statute. Respondent’s failure to make a proper contract with Ms. Blevins does not prevent a violation of this section of the statute because the law may construct a contract out of the actions of the parties. However, this section of the statute primarily concerns the issue of abandonment, and Respondent did not abandon the project. Both parties agreed that he was fired. 4. A.R.S. § 32-1154(A)(13) provides grounds for suspension or revocation of a contractor’s license for failure to comply with provisions of that chapter. A.R.S. § 32-1158(B) requires contractors to reduce all contracts over $1,000.00 into writing and include several specific items of information. Respondent argued that his activities were exempt from the entire chapter because he was an employee of an owner-builder. The greater weight of the evidence did not support Respondent’s theory, though it appears he made some attempts to make it appear so. Respondent styled his bid as an estimate of the cost, but nothing about his dealings with Ms. Blevins indicates that she was aware of their relationship being that of employer/employee. She paid him up front for the project, less a small amount withheld, which is common with contractors. He used one or two subcontractors that she had previously hired, but he hired the rest. He scheduled the subcontractors’ work as well, which is a clear sign that he was supervising them and acting more like an employer than an employee.[5] It was undisputed that the project did not have a written contract. Therefore, the Registrar of Contractors has established a violation of A.R.S. § 32-1154(A)(13). 5. A.R.S. § 32-1154(A)(16) provides grounds for suspension or revocation of a contractor’s license for “[f]alse, misleading or deceptive advertising whereby any member of the public may be misled and injured.” By submitting a bid, followed by setting up an arrangement to do contracting for Ms. Blevins, Mr. Heskett solicited business from Ms. Blevins. This meets the definition of advertising set forth in A.R.S. § 32- 1101(A)(1). The bid was misleading because it lacked the information Ms. Blevins needed to enter into a proper contract, which was the true status of Mr. Heskett’s licenses. Mr. Heskett testified that he told Ms. Blevins that for a greater price he could re-active his licenses and act as the general contractor. Ms. Blevins denied that he said this. Mr. Heskett’s testimony would have carried more weight if there had been any activity he did in the course of the project that was different from what he could or would have done if his licenses were active. Mr. Heskett’s actions were consistent with acting as a contractor when he knew that he should not be contracting; therefore, it is not believable that he told Ms. Blevins that his licenses were suspended. Even if Mr. Heskett did reveal his licensing status to Ms. Blevins, his bid was still deceptive and, while bringing her in on the deception, it still injured her because, in case of a problem, she would not have access to the recovery fund. Therefore, the Registrar of Contractors established a violation of A.R.S. § 32-1154(A)(16). Nevertheless, Mr. Heskett’s activities are better described by A.R.S. § 32- 1154(A)(18). 6. A.R.S. § 32-1154(A)(18) provides grounds for suspension or revocation of a contractor’s license for “[c]ontracting or offering to contract or submitting a bid while the license is under suspension or while the license in on inactive status.” It was undisputed that License Nos. B.209112-R and B-1.255715-C were suspended when Mr. Heskett was hired by Ms. Blevins. Respondent argued that Mr. Heskett merely drafted some plans, estimated the cost, and was hired as an employee. However, the actions of the parties indicate that this was not the case. By estimating the cost, Mr. Heskett went beyond merely drafting. By accepting the job after doing so, without informing Ms. Blevins that he could only work in a limited capacity, he completed the action that follows from bidding, thus shedding the light of his intentions on his earlier activities. Taken as a whole, Mr. Heskett’s actions make it clear that he was bidding the project. Then, when he took a percentage of the cost, hired people, obtained materials, and supervised subcontractors, he also contracted while the licenses were under suspension. While Ms. Blevins may have done some of the same activities, this does not change what Mr. Heskett was doing. The Registrar of Contractors established a violation of A.R.S. § 32-1154(A)(18). 7. A.R.S. § 32-1154(A)(21) provides grounds for suspension or revocation of a contractor’s license for “[h]aving a person named on the license who is or was named on any other license in this state or in another state that is under suspension for any act or omission that occurs while the person is or was named on the license unless the prior revocation was based solely on a violation of this paragraph.” The Registrar of Contractors stated in the Complaint and Notice of Hearing, “Should the Registrar suspend or revoke any of Respondent’s licenses, such conduct and circumstances constitutes a violation of this section and all Respondent’s other licenses shall also be disciplined.” Therefore, if the Registrar of Contractors determines, as a result of this case, that a suspension or revocation of any of Respondent’s licenses, it must also suspend or revoke all other licenses on which Mr. Heskett is named in order to avoid placing the other licenses in a state of violation. There is no basis, however, for finding that Respondent is currently in violation of A.R.S. § 32- 1154(A)(21). RECOMMENDED DECISION In view of the foregoing, it is recommended that Respondent’s License Nos. B-12.226435-C, B.209112-R and B-1.255715-C shall be revoked on the effective date of the Order entered in this matter. It is further recommended that Respondent be required to pay the sum of $800.00 in certified funds for its violation of A.R.S. § 32-1154(A)(18) pursuant to A.R.S. § 32-1154(E). It is further recommended that if Respondent fails to pay the entire amount of the civil penalties on or before thirty days following the effective date of the final Order in this matter, the Registrar shall revoke License Nos. B-12.226435-C, B.209112-R and B-1.255715-C, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32- 1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty.

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 27, 2014.

/s/ Dorinda M. Lang Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Where context makes it appropriate, “Respondent” may be used to indicate both Respondent and Mr. Heskett. [2] The invoice is clear that it concerns only money paid to Mr. Heskett and/or Respondent and did not include any reference to the money Ms. Blevins paid directly to other parties on the project. [3] Mr. Heskett’s alleged unilateral changes included an arched fireplace (supposedly because it would match the arched door) and the raising of the garage roof to the level of the house and an addition of a balcony. Ms. Heskett did not like the change because, she said, it ruined the Tuscan look of the home. [4] “Any person who engages in the activities regulated by this chapter, as an employee of an exempt property owner or as an employee with wages as the person’s sole compensation” is not covered by the chapter. [5] A.R.S. § 32-1101(A)(3) lists bidding and supervision as part of the activities of a contractor as it is defined in that chapter.

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