ALJDEC decisions subject to certification as final

2013A-5275-ROC · Registrar of Contractors · 2014-02-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 10, 2014. The record was kept open until January 13, 2014, to permit the Registrar of Contractors to submit additional documentation. APPEARANCES: Keep Cool AZ, Inc. was represented by its attorney, Michael Thal, Esq. The Registrar of Contractors was represented by Assistant Attorney General Michael Raine. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ FINDINGS OF FACT 1. The Arizona Registrar of Contractors (“Registrar”) is the authority for licensing and regulating contractors in the State of Arizona.[1] 2. On April 29, 2013, Keep Cool AZ, Inc. (“Applicant”) filed an Application for Contractor’s License (“Application”) with the Registrar seeking a C-39 Air Conditioning and Refrigeration Including Solar contracting license. In its Application, Applicant listed John Patrick Michel (“Mr. Michel”) as its president and 100% owner. 3. By letter dated November 6, 2013, the Registrar notified Applicant that its Application had been denied for the following reasons: 1. John Patrick Michel misrepresented a material fact in his application in contravention of A.R.S. § 32-1154.A.6.

2. Keep Cool AZ Inc. aided and abetted M D Mechanical Air Conditioning Heating and Plumbing LLC Revoked License # 260443, an unlicensed contractor by advertising that it would be the contractor installing air conditioning and refrigeration systems for Keep Cool AZ in contravention of A.R.S. § 32-1154.A.10.

3. Keep Cool AZ Inc. has performed contractor services in contravention of A.R.S. § 32-1151.

4. Keep Cool AZ Inc. did not disclose its unlicensed status in its internet advertisement in violation of A.R.S. § 32- 1121.A.14(C).

5. John Patrick Michel, has a history of contracting without proper licensure. As the owner of M D Mechanical Air Conditioning Heating and Plumbing, LLC and M D Mechanical, Inc. Michel has been admonished by the Registrar about contracting while his company’s license was suspended or inactive. In spite of these admonishments, MD Mechanical Air Conditioning Heating and Plumbing, LLC and M D Mechanical, Inc. performed contractor services in contravention of A.R.S. [§] 32-1151 and A.R.S. § 32- 1154A.18. This history makes the current unlicensed and improper advertising allegations a violation of A.R.S. § 32- 1122.D. as it is evidence of a failure to establish good character and reputation.

6. The evidence provided substantiating the allegations as referenced above also provide proof that the applicant, John Patrick Michel, on behalf of Keep Cool AZ Inc. has failed to establish good character and reputation in contravention of A.R.S. § 32-1122.D.

(See Exhibit R1).

4. Applicant timely appealed the denial of its Application. The Registrar then referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 5. Applicant was incorporated on May 11, 2012. 6. At the end of the Application, Mr. Michel, on behalf of Applicant, certified the following statement: I certify that I have reviewed the entire contents of this application and all statements, answers, and representations made in this application, including all supplementary statements attached hereto, are true and accurate. I understand that falsification of any information on this application is a violation of the Arizona Criminal Code in Arizona Revised Statutes, Title 13, Chapter 27. I understand that pursuant to A.R.S. §§ 32-1154(A)(6)(20) & 32-1122(D) providing false information is cause for denial of this application and cause for discipline of ROC licenses.

(See Exhibit R2).

7. Mr. Michel has been named on the following contracting licenses issued by the Registrar: (i) John P. Michel Enterprises, ROC License No. 197618 (voluntarily cancelled January 6, 2008); (ii) Michel Enterprises Air Conditioning and Heating, Inc., ROC License No. 223403 (voluntarily cancelled January 6, 2008); (iii) Michel Enterprises Air Conditioning and Heating, ROC License No. 223404 (voluntarily cancelled January 6, 2008); (iv) MD Mechanical, Inc., ROC License No. 241004 (suspended lack of qualifying party October 3, 2013); (v) MD Mechanical, Inc., ROC License No. 241005 (suspended non-renewal February 7, 2012; suspended lack of bond February 23, 2012; expired February 1, 2013); (vi) MD Mechanical Air Conditioning Heating and Plumbing, LLC, ROC License No. 259030 (suspended lack of qualifying party October 31, 2010; voluntarily cancelled October 31, 2011); and (vii) MD Mechanical Air Conditioning Heating and Plumbing, LLC, ROC License No. 260443 (suspended lack of qualifying party January 16, 2011; revoked October 21, 2011; suspended lack of bond November 30, 2011). Application Misrepresentation 8. Part 3: Personnel Information (Qualifying Party) of the Application asks the following question: “Have you ever been on a contractor’s license issued by Arizona or any other state?” Mr. Michel answered “Yes” and listed revoked ROC License No. 260443. Mr. Michel failed to list ROC License Nos. 197618, 259030, 223403, 223404, 241005, and 241004. Aiding and Abetting an Unlicensed Contractor 9. On October 17, 2011, the Registrar received a facsimile from MD Mechanical, L.L.C.[2] that utilized the slogan “Keep Cool” and contained the website address of www.keepcoolaz.com.[3] 10. Mr. Michel owns the website www.keepcoolaz.com and intends to use it for Applicant. 11. On November 1, 2013, the Registrar did a web search of www.keepcoolaz.com that contained the following language: “MD Mechanical would like to be your contractor.” The advertisement also contained the following language: “When you install a new high efficiency air conditioning in Phoenix from Keep Cool AZ, you will use less energy and save money.” The website stated “not a licensed contractor.” However, it is not clear from the advisement whether that disclosure applies to MD Mechanical, Inc. and/or Applicant. The words “Not a Licensed contractor” were found when the Registrar visited the website advertisement on November 13, 2013, December 23, 2013, and January 3, 2014. 12. MD Mechanical, Inc.’s License No. 241004 was active until it was suspended for lack of a qualifying party on or about October 2, 2013. Mr. Michel resigned as qualifying party on or about June 4, 2012. However, in Applicant’s Application, Mr. Michel requested that License No. 241004 be cancelled, although he had no position with the licensee according to the Registrar’s records. 13. Applicant contends that MD Mechanical, Inc. became a non-entity when it filed for bankruptcy on June 19, 2012. Therefore, according to Applicant, Applicant could not aid and abet a non-entity. 14. At the time Applicant submitted its Application, MD Mechanical, Inc.’s License No. 241004 was active. However, Applicant continued to advertise for MD Mechanical, Inc. after its license was suspended and it was prohibited from contracting. Applicant Performed Contracting Prior to Licensing 15. On or about August 26, 2010, Pedro Hernandez, Sr. had complained to the Registrar of poor work performed by MD Mechanical Air Conditioning Heating and Plumbing, LLC, under ROC License No. 259030. On or about April 15, 2013, the Registrar received a letter from Mr. Hernandez stating that because Applicant had repaired work previously performed by MD Mechanical Air Conditioning Heating and Plumbing, LLC to his satisfaction, his prior complaint should be closed. 16. The evidence of record established that the value of the work performed by Applicant for Mr. Hernandez exceeded $1,000.00. 17. Mr. Michel testified that Applicant did not charge Mr. Hernandez for the remedial work and, therefore, that Applicant did not perform contracting in excess of the $1,000.00 that requires licensure. Failure of Applicant to Disclose Unlicensed Contractor Status on Website 18. In its denial letter, the Registrar alleges that Applicant failed to disclose its unlicensed status in the “About Us” section of Applicant’s website. However, at the hearing the Registrar submitted into evidence four exhibits of Applicant’s website advertisements.[4] In the Registrar’s Exhibit R4 search of Applicant’s website on November 1, 2013, Applicant’s advertisement does not contain the statement “not a licensed contractor.” In each of the three other exhibits, the website advertisements begin with “Not a Licensed contractor.” The exhibits do not contain the “About Us” section. Prior Admonishments 19. By letter dated February 11, 2011, the Registrar admonished MD Mechanical Inc. for continuing to engage in contracting activities while its license was suspended or on inactive status. 20. By letter dated March 3, 2011, the Registrar admonished MD Mechanical Air Conditioning Heating and Plumbing, LLC for continuing to engage in contracting activities while its license was suspended or on inactive status. 21. By letter dated June 21, 2012, the Registrar admonished MD Mechanical, Inc. for continuing to engage in contracting activities while its license was suspended or on inactive status. 22. Mr. Michel has a history of being associated with contractors performing contracting work while not being actively licensed. Poor Character 23. Mr. Michel was listed on MD Mechanical Air Conditioning Heating and Plumbing, LLC’s ROC License No. 260443 that was revoked by the Registrar on October 21, 2011. 24. Applicant performed unlicensed contracting in excess of $1,000.00 by performing remedial work for Mr. Hernandez. 25. Applicant aided and abetted MD Mechanical, Inc. by advertising for the latter to provide contracting activities after its contracting license had been suspended. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over the subject matter of this appeal. 2. Pursuant to A.R.S. § 41-1092.07(G)(1), Applicant has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. See A.A.C. R2-19-109(A). 3. Mr. Michel misrepresented a material fact in Applicant’s Application for licensure in contravention of A.R.S. § 32-1154(A)(6). Mr. Michel failed to disclose all the contracting licenses on which he had been named. 4. Applicant aided and abetted MD Mechanical, Inc. as the holder of suspended ROC License No. 241004, by advertising that the latter would be the contractor for installing air conditioning and refrigeration systems for Applicant after the license had been suspended in violation of A.R.S. § 32-1154(A)(10). 5. Applicant performed contracting services in contravention of A.R.S. § 32-1151. As to the remedial work performed by Applicant for Mr. Hernandez, Applicant was not entitled to the “handyman” exemption to licensing requirements because the aggregate value of the work exceeded $1,000.00.[5] Therefore, the remedial work performed for Mr. Hernandez was required to be performed by a properly licensed contractor. 6. The evidence of record established that Applicant’s internet advertisement on November 1, 2013, did not list the phrase “not a licensed contractor.” Therefore, Applicant violated the provisions of A.R.S. § 32-1121(A)(14)(C). 7. The evidence of record established that Mr. Michel has a history of contracting without proper licensure. This history makes the current unlicensed contracting allegation a violation of A.R.S. § 32-1122(D), as it is evidence of a failure to establish good character and conduct. Therefore, Applicant failed to establish good character and reputation. RECOMMENDED ORDER Based on the foregoing, it is recommended that Applicant’s appeal in this matter be denied, and that the Registrar’s denial of Applicant’s Application for licensure be upheld and affirmed.

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 shall be forty (40) days from the date of the certification.

Done this day, February 3, 2014.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] A.R.S. § 32-1101(3) defines “Contractor” as follows:

"Contractor" is synonymous with the term "builder" and means any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that, for compensation, undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid or responds to a request for qualification or a request for proposals for construction services to, does himself or by or through others, or directly or indirectly supervises others to: (a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or any other structure or work in connection with the construction. (b) Connect such structure or improvements to utility service lines and metering devices and the sewer line. (c) Provide mechanical or structural service for any such structure or improvements.

[2] There is no evidence that the Registrar had issued a contracting license to MD Mechanical, L.L.C. The facsimile lists ROC License Nos. 241004 and 241005 that were issued to MD Mechanical, Inc. See Exhibits A1 and A18. [3] Applicant submitted evidence that the website has been shut down. See Exhibit A10. [4] See Exhibits R4, R5, R6, and R7. [5] See A.R.S. §§ 32-1121(A)(14) and 32-1123.

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826