ALJDEC decisions subject to certification as final

2013A-3441-ROC-res · Registrar of Contractors · 2014-02-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 24, 2014, with the record held open until January 27, 2014 APPEARANCES: Michael D. Raine, Esq. for Complainant; Karen A. Palecek, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ FINDINGS OF FACT 1. On November 26, 2013, the Registrar of Contractors (“Registrar”) issued a Notice of Hearing setting the above-captioned matter for hearing on January 24, 2014, at the Office of Administrative Hearings, in Phoenix, Arizona. 2. Arizona Custom Stone LLC held License No. K-48.224945-D[1] issued by the Registrar. Michael Dehaven Aman was a member of Arizona Custom Stone LLC and was its qualifying party. 3. The Registrar’s website shows that Arizona Custom Stone LLC’s license was suspended for non-renewal on November 1, 2010, and that the license expired on November 1, 2011. At the hearing, the Registrar’s witness, staff attorney Jose Gill, acknowledged that the website was in error and that Arizona Custom Stone LLC’s license had not expired.[2] 4. Arizona Custom Stone LLC’s license was voluntarily canceled effective January 18, 2011, which is what the Registrar’s website should show. 5. On October 29, 2010, Mr. Aman filed an Application for Contractors License for Quality Stone and Tile Installation, LLC d.b.a. Arizona Custom Stone (“Quality Stone”). 6. The voluntary cancellation of Arizona Custom Stone LLC’s license was effective when Quality Stone was granted a license on January 18, 2011. Mr. Aman is a member of Quality Stone and Tile Installation, LLC and Quality Stone’s qualifying party. 7. On November 19, 2012, Craig Thompson and Gretchen Thompson filed with the Registrar Complaint No. 2012-5653 against Arizona Custom Stone LLC. The Thompsons’ complaint related to tile installed at their home by Arizona Custom Stone LLC. 8. The Thompsons’ complaint shows that the parties entered a contract on October 14, 2010. The evidence at hearing shows that the contract was based on a proposal dated September 17, 2010. 9. During the course of performance, the Thompsons and Arizona Custom Stone LLC added additional work to the project, the terms and scope of which are set out in an email dated November 8, 2010. 10. The Registrar investigated the Thompsons’ complaint, but did not issue a citation based on that complaint. 11. On October 3, 2013, the Registrar issued to Arizona Custom Stone LLC a Citation and Complaint (No. 2013-3441) in which the Registrar is the Complainant.[3] The Citation alleges that Arizona Custom Stone LLC may have violated Ariz. Rev. Stat. section 32-1154(A)(13), (A)(15), and (A)(18). 12. On October 23, 2013, Arizona Custom Stone LLC filed with the Registrar an Answer to Citation and Complaint. Ariz. Rev. Stat. § 32-1154(A)(13) 13. The Citation and Complaint alleges that Arizona Custom Stone LLC failed to comply with Ariz. Rev. Stat. section 32-1154(A)(13), in that the contract it entered with the Thompsons did not contain the minimum elements of a contract as required by Ariz. Rev. Stat. section 32- 1158(B). 14. Ariz. Rev. Stat. section 32-1158(B) sets out nine elements that must be included in each contract. 15. The Citation and Complaint does not specify which elements the Registrar alleges were not present in Arizona Custom Stone LLC’s contract with the Thompsons. 16. At the hearing, Mr. Gill, who drafted the Citation and Complaint, testified that Arizona Custom Stone LLC failed to include in the contract a statement regarding the Thompsons’ right to file a complaint with the Registrar. 17. Arizona Custom Stone LLC concedes that the contract did not contain the required statement, but offered unrebutted evidence showing that Quality Stone’s contracts now include the required statement. 18. Mr. Gill initially testified that Arizona Custom Stone LLC did not violate Ariz. Rev. Stat. section 32-1158(B)(7), which requires the amounts of any “draw” payments to be provided in the contract. Subsequently, Mr. Gill testified that Arizona Custom Stone LLC may have violated that provision because it did receive a draw payment that was not provided for in the contract. 19. Mr. Thompson’s testimony showed however, that there were to be no draw payments, but Ms. Thompson made such a payment after Mr. Aman requested additional funds. In light of this testimony and evidence showing that the draw payment was related to the Additional Work Order entered into by the parties, the evidence does not demonstrate that Arizona Custom Stone LLC violated Ariz. Rev. Stat. section 32- 1158(B)(7). 20. When the Registrar finds that a contractor has violated Ariz. Rev. Stat. section 32-1158(B)(9), but no other statutory provisions, the Registrar typically resolves the matter by sending the contractor a letter informing it of the violation and requiring the contractor to provide proof that the violation has been cured. Ariz. Rev. Stat. § 32-1154(A)(15) 21. The Citation and Complaint alleges that Arizona Custom Stone LLC violated Ariz. Rev. Stat. section 32-1154(A)(15) by contracting under a name other than that which appears on its license. 22. The contract at issue shows the name “Quality Stone and Tile LLC Dba: Arizona Custom Stone” and provides Arizona Custom Stone LLC’s license number (ROC 224945). Respondent’s Exhibit 2. 23. License No. ROC 224945 was issued to “Arizona Custom Stone LLC.” Complainant’s Exhibit 1. 24. Mr. Gill testified that a contractor’s name must be exactly as it appears on the license issued by the Registrar. Subsequently Mr. Gill amended his testimony to acknowledge that there might be some latitude in, for example, the case of a typographical error on the license. Ariz. Rev. Stat. § 32-1154(A)(18) 25. The Citation alleges that Arizona Custom Stone LLC violated Ariz. Rev. Stat. section 32-1154(A)(18) by contracting while its license was suspended. 26. The Registrar’s website shows that Arizona Custom Stone LLC’s license was suspended for non-renewal on November 1, 2010. 27. Mr. Aman testified that he renewed Arizona Custom Stone LLC’s license during the time that Quality Stone’s application was pending. In support of his testimony, Mr. Aman introduced a handwritten note, dated November 3, 2010, showing that he was requesting a one year K48 license, instead of a two year license. 28. Mr. Aman acknowledged that if he had renewed Arizona Custom Stone LLC’s license, he would have a canceled check showing payment. 29. Mr. Aman testified that during the time at issue, he was trying to stay in compliance with the applicable statutes and rules as he phased out Arizona Custom Stone LLC and began working as Quality Stone, and that he thought he had done so. Mr. Aman acknowledged however, that the events were “fuzzy” and he explained that because of personal issues, in 2010 his life was at its lowest point.[4] 30. In its Answer to Citation and Complaint, Arizona Custom Stone LLC stated that the contract had not been entered into pursuant to its license, but rather was a contract between the Thompsons and Quality Stone under one of Quality Stone’s licenses. 31. At hearing, Mr. Aman acknowledged however, that he did not apply for Quality Stone’s K48 license until October 29, 2010, which was after the date of the contract.[5] 32. The Registrar argues that Arizona Custom Stone LLC’s Answer shows that Mr. Aman has a “credibility” issue. The Registrar also noted that the Answer could be seen as an admission that Mr. Aman was contracting without a license. 33. The Answer includes printouts from the Registrar’s website for Quality Stone’s K48 and CR31 licenses, both of which were not issued until 2011, which means that if the Answer is accurate, Mr. Aman was contracting without a license. Consequently, the Administrative Law Judge concludes that the Answer was more likely a manifestation of Mr. Aman’s “fuzzy” memory about the details of 2010 than a deliberate attempt to deceive. 34. Quality Stone’s October 29, 2010 license-application documentation shows that Mr. Aman had Arizona Custom Stone LLC’s bond transferred to Quality Stone. 35. The Department is requesting a $1000 civil penalty for Arizona Custom Stone’s alleged violation of Ariz. Rev. Stat. section 32-1158(A)(18). This is the maximum civil penalty and Mr. Gill testified that it is the Registrar’s policy to assess the maximum. Statute of Limitations 36. Arizona Custom Stone LLC argues that the Thompsons’ complaint was based on acts that occurred more than two years before the date of that complaint, which in its view means that the Registrar has no jurisdiction. 37. The Registrar takes the position that the two year statute of limitations does not apply because the Registrar is the Complainant in this matter and no citation was issued based on the Thompsons’ complaint. The Registrar also takes the position that the Thompsons’ complaint was filed within the two year statute of limitations period.

38. At some point, the exact date of which was not provided by either party, the Thompsons began paying Doug Rush rather than Arizona Custom Stone LLC.[6] Mr. Rush was an employee of Arizona Custom Stone LLC working on the project. 39. According to Arizona Custom Stone LLC, the specific project at issue was completed on November 15, 2010, whereas the Registrar’s position is that work on the project was still ongoing as of December 12, 2010. Mr. Thompson testified that the project was complete on December 9, 2010, which he based on his records showing that the Thompsons made a payment to Mr. Rush on December 10, 2010. 40. Initially, Mr. Aman could not provide a firm date on which he believed the project ended. After being shown an email he wrote dated December 22, 2010, Mr. Aman testified that the project termination date was November 15, 2010. This was based on language in the email showing that as of November 15th, Mr. Aman told the Thompsons he would no longer be charging them and because by December 22nd he had learned that the Thompsons had been paying Mr. Rush directly. 41. For its position that work was ongoing on December 12, 2010, the Registrar relies on an email dated December 12, 2010, in which Mr. Aman wrote that Mr. Rush would be working at the Thompsons on that date. Mr. Aman testified that when he wrote the December 12th email, he did not know that the Thompsons were paying Mr. Rush directly. 42. Although Mr. Thompson acknowledged that the Thompsons were paying Mr. Rush, he asserted that Mr. Aman told Ms. Thompson that they would need to pay Mr. Rush. Mr. Aman disagreed and testified that he told the Thompsons to pay Mr. Rush only for supplies that Mr. Rush purchased based on instructions from the Thompsons. 43. The evidence of record shows that work on the project was being done in December 2010, which is less than two years before the Thompsons’ complaint was filed. Licensing History 44. If Arizona Custom Stone LLC is found to have committed any of the alleged statutory violations, its prior disciplinary record may be considered as a factor in mitigation or aggravation in determining the appropriate disposition of this matter. 45. As of February 13, 2014, the Registrar’s website shows that Arizona Custom Stone LLC’s license had not been disciplined, and that Arizona Custom Stone LLC had two open complaints and no closed complaints.[7] 46. Mr. Gill testified that there had been a total of two complaints against Arizona Custom Stone LLC: the current matter and one that was resolved or settled without a hearing. Mr. Aman confirmed that a previous complaint had been resolved, and Mr. Thompson testified that before entering the contract with Arizona Custom Stone LLC, the Thompsons checked the Registrar’s website, which showed one resolved complaint. 47. Although there is some ambiguity, the Administrative Law Judge concludes that Mr. Gill’s testimony accurately represents Arizona Custom Stone LLC’s license history and that the Registrar’s website is not accurate with regard to the number of open complaints.[8] 48. Quality Stone holds license number 276263 and formerly held license numbers 270708 and 269393. As of February 13, 2014, the Registrar’s website shows that none of these licenses had been disciplined, and that there were no open or closed complaints for any of these licenses. CONCLUSIONS OF LAW 1. The Registrar bears the burden on persuasion. Ariz. Rev. Stat. § 41- 1092.07(G)(2) and (G)(3). 2. A party asserting an affirmative defense bears the burden of proving that defense. Ariz. Admin. Code § 2-19-119. 3. The standard of proof is that of a preponderance of the evidence. Ariz. Admin. Code § 2-19-119. 4. A preponderance of the evidence is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990). 5. The Registrar may impose discipline on a licensee that has had its license voluntarily canceled. Ariz. Rev. Stat. § 32-1154(C). Ariz. Rev. Stat. § 32-1154(A)(13) 6. The preponderance of the evidence shows that Arizona Custom Stone LLC violated Ariz. Rev. Stat. section 32-1154(A)(13) because its contract with the Thompsons did not include a statement regarding the Thompsons’ right to file a complaint with the Registrar as required by Ariz. Rev. Stat. section 32-1158(B)(9). 7. The preponderance of the evidence shows that Mr. Aman now includes the required statement in Quality Stone’s contracts. Ariz. Rev. Stat. § 32-1154(A)(15) 8. The preponderance of the evidence shows that Arizona Custom Stone LLC violated Ariz. Rev. Stat. section 32-1154(A)(15) because its proposal to, and contract with, the Thompsons used a name other than that which is on its license. 9. Because Arizona Custom Stone LLC included its license number and the name “Arizona Custom Stone” on the contract, the risk to consumers was minimized. This is demonstrated by the fact that the Thompsons were able to access and review Arizona Custom Stone LLC’s license history before executing the contract. Ariz. Rev. Stat. § 32-1154(A)(18) 10. The Registrar’s website shows that Arizona Custom Stone LLC’s license was suspended during November and December of 2010, during which time Arizona Custom Stone LLC engaged in contracting. 11. Arizona Custom Stone LLC asserts that the Registrar’s website is in error because Mr. Aman had filed a renewal application. But the only evidence of renewal presented was Mr. Aman’s testimony and the hand written note signed by Mr. Aman. This evidence is not sufficient to outweigh the Registrar’s records.[9] 12. The preponderance of the evidence shows that Arizona Custom Stone LLC violated Ariz. Rev. Stat. section 32-1154(A)(18) because it was contracting while its license was suspended. Statute of Limitations 13. Arizona Custom Stone LLC argues that the Thompsons’ complaint was not filed within the two year statute of limitations found in Ariz. Rev. Stat. section 32-1155. As applicable to the facts of this matter, that two year statute of limitations does not apply to a citation and complaint issued on the Registrar’s own motion. See Ariz. Rev. Stat. §§ 32-1154 and 32-1155. 14. Work related to the contract was being done at the Thompsons’ home in December 2010, which is less than two years before the Thompsons’ complaint was filed within the meaning of Ariz. Rev. Stat. section 32- 1155(A). Conclusion 15. The Registrar requests a $1000 civil penalty for the violation of Ariz. Rev. Stat. section 32-1154(A)(18) and that Arizona Custom Stone LLC’s license be revoked. Arizona Custom Stone LLC argues that the requested discipline is too severe. 16. Considering all the facts and circumstances of this matter, including Arizona Custom Stone LLC’s and Quality Stone’s licensing histories, it is appropriate to assess a $1000 civil penalty and to suspend Arizona Custom Stone LLC’s license for 30 days. Recommended Order IT IS ORDERED License No. K-48.224945-D of Arizona Custom Stone LLC is suspended for 30 days beginning on the effective date of the Order entered in this matter; IT IS FURTHER ORDERED that within ten days of the effective date of the Order in this matter Arizona Custom Stone LLC must pay to the Registrar of Contractors $1000 in certified funds as a civil penalty for Arizona Custom Stone LLC’s violation of Ariz. Rev. Stat. section 32-1154(A)(18). 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 after the date of that certification. Done this day, February 14, 2014.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The Registrar’s Exhibit 1 shows Arizona Custom Stone LLC’s license number as ROC 224945 and the Registrar’s website shows the license number as 224945. Nevertheless, to be consistent with existing policies, License No. K-48.224945-D is used in this Decision. [2] As of February 13, 2014, the Registrar’s website was showing that Arizona Custom Stone LLC’s license had expired. [3] Mr. Gill testified that he relied on the Thompsons’ complaint for factual information, and the Registrar’s Citation and Complaint incorporates by reference the Thompsons’ complaint. [4] These issues were a bankruptcy, a divorce, and his son’s heroin addiction. According to Mr. Aman’s testimony, Quality Stone and Tile Installation LLC’s formation was related to that divorce and the need to have an LLC in which he was the sole member. [5] Mr. Aman also made reference to other license applications he had filed, but there was no substantial evidence showing the dates of these applications. [6] Mr. Rush was not a licensed contractor. The Registrar was of the belief that Mr. Rush has passed away. [7] On January 26, 2014, the Registrar’s website also showed two open and no closed complaints for Arizona Custom Stone LLC. [8] Another possibility is that the Registrar considers both its Complaint and the Thompsons’ complaint to be open, but this interpretation is not consistent with Mr. Gill’s testimony. [9] As Mr. Aman acknowledged, if he had renewed the license he would have a canceled check showing payment, and it is reasonable to conclude that he would have additional documentation as well.

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