FINACT2013A-5695-ROC.pdf

2013A-5695-ROC · Registrar of Contractors · 2014-04-04

BEFORE THE REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA ) Registrar of Contractors ) CASE NO: 2013-5695 ) COMPLAINANT ) ) DOCKET NO. 2013A-5695-ROC -v- ) License No. B.285409-R of ) Lone Oak Properties LLC ) AMENDED FINAL ORDER REJECTING ) ALJ’S RECOMMENDED DECISION RESPONDENT ) ) ORDER SETTING REHEARING ) ) )

In light of Office of Administrative Hearings Director Vanell’s Minute Entry dated April 2, 2014, the Registrar hereby amends its Order dated April 1, 2014, as follows: The Registrar adopts the Administrative Law Judge's Findings of Fact numbers 1 through 9. The Registrar rejects the Administrative Law Judge's Finding of Fact number 10. The Registrar rejects the Administrative Law Judge's Conclusions of Law numbers 1 through 8 and instead substitutes the Conclusions of Law set forth

below. The Registrar rejects the Administrative Law Judge's Recommended Order and instead affirms its denial of the pending license application. Conclusions of Law: 1. The burden of proof to meet the qualifications for licensure is on the applicant. See § 41- 1092.07(G)(1); see also § 41-1065; see also Austin v. Arizona Registrar of Contractors, 2 CA-CV 2008- 0175, 2009 WL 638106 (Ariz. Ct. App. Mar. 12, 2009) (The burden of proof concerning character is on applicant, and the Registrar was not obligated to provide additional justification for denying application where applicant did not supply the Registrar with evidence of rehabilitation at the time of application). 2. A.R.S. § 32-1122(D)’s three examples are not the exclusive criteria for evaluating character and

reputation. “[The] use of the word ‘may’ generally indicates permissive intent ... while ‘shall’ generally indicates a mandatory provision.... If a statute employs both mandatory and discretionary terms, [a court] may infer that the legislature intended each term to carry its ordinary meaning.” Walter v. Wilkinson, 198 Ariz. 431, 432, ¶ 7, 10 P.3d 1218, 1219 (App.2000) (citations omitted); HCZ Constr., Inc., 199 Ariz. at 365, ¶ 15, 18 P.3d at 159 (citations omitted); City of Chandler v. Arizona Dept. of Transp., 216 Ariz. 435, 438-39, 167 P.3d 122, 125-26 (Ct. App. 2007).

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 A.R.S. § 32-1122(D) reads, “[t]o 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. . . .” (emphasis added). The statute uses both “may” and “shall,” thus it is proper to infer that Legislature intended “may” as used in § 32-1122(D) to be permissive. Indeed, at least one Arizona court has ruled this provision to be permissive. See Austin v. Arizona Registrar of Contractors, 2 CA-CV 2008-0175, 2009 WL 638106 (Ariz. Ct. App. Mar. 12, 2009) (“may” as used in § 32-1122(D) is permissive, and thus grants the Registrar discretion to deny a license based on a felony conviction). Other principles of statutory construction also mandate that the Registrar’s interpretation be

followed. “When statutory language is subject to differing interpretations . . . [the court] must consider the consequences of alternative statutory constructions to see what light they shed on the proper interpretation of the statute. In this analysis, [the court is] not bound by the literal meaning of the terms employed, but are guided by the spirit and intent of the law.” Walter v. Wilkinson, 198 Ariz. 431, 433, 10 P.3d 1218, 1220 (Ct. App. 2000) (citations omitted). Arizona case law has consistently held that the primary purpose of state regulation of construction contractors through licensing is to protect the public from unscrupulous and unqualified persons acting as contractors. Northen v. Elledge, 72 Ariz. 166, 232 P.2d 111 (1951); State v. Heritage Shutters, Inc., 23 Ariz.App. 544, 534 P.2d 758 (1975); Security Insurance Co. v. Day, 6 Ariz.App. 403, 433 P.2d 54 (1967). Kayetan v. License No. 37589, Class C-61,

116 Ariz. 99, 100, 567 P.2d 1228, 1229 (Ct. App. 1977); Westinghouse Elec. Corp. v. Rhodes, 97 Ariz. 81, 84, 397 P.2d 61, 64 (1964); Sobel v. Jones, 96 Ariz. 297, 300, 394 P.2d 415, 418 (1964). Any other interpretation of § 32-1122(D) would frustrate this purpose. 3. A.R.S. § 41-1065 limits hearings on license denials “to those matters originally presented to the agency for its determination on such application.” As such, the admission of new evidence not submitted prior to the issuance of the Registrar’s Denial was in error. 4. Based upon the evidence on record with the Registrar prior to the issuance of the Denial, the applicant failed to establish that the persons named on such application are of good character and reputation.

Therefore, IT IS ORDERED that the Registrar’s denial of the pending license application is affirmed. Justification: The ALJ made numerous mistakes of law. First, the ALJ incorrectly construed A.R.S. § 32-1122(D) to limit the Registrar’s ability to judge character and reputation to only the three categories of conduct enumerated in A.R.S. § 32-1122(D). Next, the ALJ improperly presumed the applicant’s qualifying party had good character and reputation and incorrectly placed the burden of proof

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 on the Registrar to demonstrate that the qualifying party lacked good character and reputation. Finally, the ALJ incorrectly allowed materials that were not provided to the Registrar in making its decision into evidence at the hearing. The ALJ’s interpretation of § 32-1122(D) would lead to preposterous consequences that frustrate the statute’s purpose, and cannot be what the Legislature intended. Under the ALJ’s interpretation, that only the items enumerated in A.R.S. § 32-1122(D) can be considered in judging character, if an applicant were to submit 100 affidavits from 100 separate individuals each attesting to the applicant’s poor character, and indeed even if the applicant himself admitted he was of poor character, a drug addict, and

compulsive thief of property or services costing less than $1,000, the Registrar would be barred from finding the applicant had poor character. The ALJ also failed to give deference to the Registrar’s interpretation of A.R.S. § 32-1122(D). When the language of a statute is subject to various interpretations, an agency's interpretation of its own statute is entitled to “considerable deference by the judiciary.” Coppock v. Mundell, 1 CA-CV 12-0667, 2013 WL 3155836 (Ariz. Ct. App. June 20, 2013) (quoting Ariz. Water Co. v. Ariz. Dep't of Water Res., 208 Ariz. 147, 154–55, ¶¶ 30–31, 91 P.3d 990, 997–98 (2004)). The Registrar’s representative testified that the Registrar interpreted A.R.S. § 32-1122(D) not to limit the Registrar’s ability to determine character. The Registrar’s interpretation is in harmony with both

the letter and purpose of the statute and should have been given great deference. Nonetheless, the ALJ disregarded the Registrar’s interpretation and declined to make findings based on Mr. Janowski’s misdemeanor convictions. Instead, the ALJ essentially read the word “only” into this statute thereby improperly and fundamentally disregarding both the legislative intent and long standing interpretation by the Registrar. The ALJ incorrectly placed the burden of proof on the Registrar to demonstrate that the applicant lacked good character and reputation. There is no legal justification for a presumption of good character; no less than Oliver Wendell Holmes has stated as much. See Greer v. United States, 245 U.S. 559, 561, 38 S. Ct. 209, 210, 62 L. Ed. 469 (1918) (No presumption of good character for an accused in a federal

case); Michelson v. United States, 335 U.S. 469, 475, 69 S. Ct. 213, 218, 93 L. Ed. 168 (1948). Decisions regarding bar applications confirm this rule of law carries through to the professional licensing context. See e.g. Application of Levine, 97 Ariz. 88, 91, 397 P.2d 205, 207 (1964) (“In Arizona, as a prerequisite to the admission to practice an applicant has the burden of establishing his good moral character.”); Application of Courtney, 83 Ariz. 231, 319 P.2d 991 (1957); In re Wilson, 76 Ariz. 49, 258 P.2d 433 (1953). Thus, the ALJ’s improper presumption of good character improperly shifted the burden to the Registrar without legal justification.

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Finally, it does not make sense for the law to allow an applicant to submit a threadbare application, only to supplement the record at a subsequent hearing. Here, the applicant supplied almost no information to demonstrate Mr. Janowski’s rehabilitation to the Registrar, and only provided this evidence at the hearing. The ALJ specifically referenced several letters of recommendation in his decision which were not provided to the Registrar and thus they should not have been considered by the ALJ at the hearing.

Order Setting Rehearing

In the interests of justice and pursuant to A.A.C. R4-9-120(E), the Registrar, on its own initiative, hereby FURTHER ORDERS that a Rehearing be scheduled in the expedited course of docketing in the Phoenix area. A Notice of Rehearing will be issued in due course. Respondent shall have twenty (20) days from the date of this order to file any objections with the Registrar concerning this ordered rehearing. IT IS FURTHER ORDERED that a pre-hearing conference is set at the Registrar’s office located at 1700 West Washington St. Suite 105, Phoenix, Arizona 85007, Second Floor Conference Room, on April 11, 2014 at 2:00 p.m. The parties are not precluded from discussing settlement or other resolution to this matter prior to the scheduled pre-hearing conference.

Justification: The ALJ’s numerous mistakes of law constitute grounds for the Registrar to order a rehearing on its own initiative pursuant to A.A.C. § R4-9-120(E). See A.A.C. § R4-9-120(C) and (E). The Registrar further concludes that a rehearing is necessary to allow the parties to supplement the record and allow the Registrar’s Licensing Department to reevaluate its determination on the merits of the application in light of the new evidence.

IT IS SO ORDERED this 3rd day of April, 2014. Registrar of Contractors /s/ Marc A. D’Amore Marc A. D’Amore Chief of the Legal Department Copy mailed via USPS First Class mail this 3rd day of April, 2014 to: Respondent Lone Oak Properties LLC 2636 N Doves Nest Ln Flagstaff, AZ 86001-0717

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Michael W Thal Lang Baker & Klain, PLC 8767 E Via De Commercio Ste 102 Scottsdale, AZ 85258-3374 AND copy electronically mailed this same date to: Registrar’s Counsel John Tellier, Assistant Attorney General\

Office of Administrative Hearings Cliff J. Vanell, Director Eric A. Bryant, Administrative Law Judge

Case No. 2013-5695 /mkc

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762