ALJDEC decisions subject to certification as final

2013A-5695-ROC · Registrar of Contractors · 2014-02-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 7, 2014

APPEARANCES: Loan Oak Properties, LLC appeared through attorney Michael Thal, accompanied by proposed Qualifying Party Michael Jankowski; the State of Arizona, Registrar of Contractors, was represented by Assistant Attorney General Michael Raine and ROC Chief of Licensing Lawrence Matthews.

WITNESSES: For Applicant: Michael Smith, MS Square Construction, LLC Michael Jankowski, proposed Qualifying Party

For the ROC: Lawrence Matthews, Chief of ROC Licensing Paul Terek, Asst. Chief of ROC Licensing

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Lone Oak Properties LLC (“Applicant”) appeals the Arizona Registrar of Contractors’ (“ROC” or “Registrar”) denial of an application for a general residential contracting license. The ROC based the denial upon finding that Applicant’s proposed Qualifying Party lacks good character and reputation. The ROC found lack of good character and reputation based on the proposed Qualifying Party’s criminal history that includes criminal convictions. Applicant requested a hearing to show that its proposed Qualifying Party has good character and reputation. Applicant admits several felony convictions, but provided evidence of rehabilitation at the hearing.[1] At hearing, this tribunal entered marked Exhibits 1 through 5 from the ROC, and Applicant’s Exhibits A4, A5, A16 to A24, and A29. The parties presented evidence and testimony from the witnesses listed above. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommend Order finding that Applicant has established that its Qualifying Party has good character and reputation and, therefore, that Applicant meets the good character and reputation requirement for licensure as a contractor. FINDINGS OF FACT 1. On May 22, 2013, Applicant applied for a Class B general residential contracting license with the ROC.[2] On November 25, 2013, the ROC issued a letter denying the application (hereinafter “application denial letter”) for two listed reasons as follows: 1. Michael Gregg Jankowski has failed to establish good character and reputation in contravention of A.R.S. §§ 32-1154.A.6 and 32-1122.D.

2. Michael Gregg Jankowski was convicted of a felony in contravention of A.R.S. § 32-1154.A.8 and A.R.S. § 32-1122.D.

The specific facts upon which the ROC relies for the denial are explained in the next pages of the application denial letter, but do not address misrepresentation on the application as charged in point 1 above per A.R.S. § 32-1154(A)(6). At hearing, the ROC withdrew that basis for denial.[3] Therefore, only the criminal record of the proposed Qualifying Party was addressed at hearing. 2. Michael Jankowski submitted criminal court records to the ROC. In addition, the ROC requested records from several courts. Criminal court records that were received, and relied upon for denial, are found in Exhibit 4. Other records related to criminal history are found in Exhibits A10 – A15. The Administrative Law Judge has carefully reviewed those records, and finds the following facts:[4] a) In September 1999, Jankowski was convicted of two felony offenses, both for aggravated DUI (same occasion; one count for being intoxicated and one for having a blood alcohol content over the legal limit; aggravated because his driver’s license was suspended at the time).[5] He was sentenced to five years’ probation with four months incarceration in state prison.[6] b) In February 2004, Jankowski entered a plea agreement and pled guilty to endangerment, a class 6 undesignated felony.[7] Judgment of guilt and sentencing were deferred by the court, and Jankowski was ordered to enter “the Drug Court Program” under the supervision of the Adult Probation Department.[8] According to Jankowski’s testimony, he fled the state after that, then returned in a few years. c) In July 2006, Jankowski entered into another plea agreement that covered all outstanding charges against him, including those from the prior convictions in 2004.[9] In this document, he agreed to plead guilty to felonies of aggravated DUI, endangerment, and failure to appear.[10] d) On August 30, 2006, Jankowski, pursuant to the July 2006 plea agreement, entered guilty pleas.[11] The court found Jankowski guilty of the endangerment and failure to appear felonies and deferred judgment for the aggravated DUI felony.[12] For the aggravated DUI charge, the court ordered Jankowski to the Drug Court Program as before.[13] The court records do not show the sentencing for endangerment or failure to appear. e) On July 3, 2007, the court found that Jankowski had successfully graduated from the Drug Court Program.[14] The court terminated Jankowski’s probation and entered an Order of Dismissal with respect to the aggravated DUI charge.[15] That charge was dismissed with prejudice. f) In sum, Jankowski’s felony conviction record is as follows: – September 1999: aggravated DUI (5 yrs probation) – September 1999: aggravated DUI (5 yrs probation, concurrent) – August 2006: endangerment (from 2004; sentence unknown) – August 2006: failure to appear (sentence unknown)

g) The 2006 aggravated DUI charge was dismissed with prejudice and is therefore not a felony conviction. Judgment of guilt and sentencing were deferred to await successful completion of the Drug Court Program, which occurred and resulted in dismissal of the charge.

3. The record shows four felony convictions: two from 1999 and two from 2006. 4. Applicant called Michael Smith as a character witness for Jankowski. Smith is the sole principal and Qualifying Party for M S Square Construction, LLC, an Arizona licensed contractor with an excellent record.[16] Smith testified he recently hired Jankowski as a supervisor for a residential project in Flagstaff, after getting recommendations for Jankowski from others. Smith showed up at the jobsite periodically, unannounced and at random. Smith found Jankowski to be a good worker, reliable, and knowledgeable about construction. He saw no evidence of drug or alcohol use. He thinks highly of Jankowski’s character. Smith also wrote a letter of recommendation for Jankowski and testified that he will use Applicant as a subcontractor if the license is granted. 5. The Administrative Law Judge finds Smith’s testimony to be credible and gives it great weight. The fact that Smith admitted he knew nothing about Jankowski’s criminal record before the hearing does not effect the weight given his testimony, which was focused on Jankowski’s character within the last year as he worked for Smith. 6. Applicant also submitted character reference letters from three others.[17] These letters are hearsay and are not given as much weight as Smith’s testimony, but provide some evidence of Jankowski’s character. The first letter is from a friend, Robert Naughton, who has known Jankowski for years. They are both involved with off-road racing, a hobby that Jankowski spends a significant amount of time doing. Naughton states that, over the years, Jankowski has worked as a mechanic, crew chief, and spotter for his team during these events. Naughton is aware of Jankowski’s past problems, but has seen him mature in recent years, so much so that Naughton trusts Jankowski to work with and chaperone Naughton’s 12-year-old daughter for racing events. This is good evidence of rehabilitation. 7. The second letter is from a long-time licensed contract in Arizona who has known Jankowski for over 20 years. He has high praise for Jankowski’s knowledge and skills as a worker in the construction industry. The third letter is from a commercial real estate manager who has known Jankowski for over ten years and for whom Jankowski has worked construction as an employee of another licensed contractor. He too has high praise for Jankowski’s knowledge and skills in construction. These letters (second and third) are also evidence of rehabilitation, but are not as weighty as the other character evidence. 8. Jankowski testified on his own behalf at the hearing. He testified to what is obvious after looking at his history: he had a substance abuse problem. The common threads to his criminal history were alcohol and drugs. In 2006, he testified, he realized that he had a problem and needed help. He wanted to be in a program such as the Drug Court Program, which combines education and counseling and a strict regimen to promote recovery through “abstinence and accountability.”[18] Jankowski was in the program for ten months and was successful.[19] The program is operated by the court system and probation office. Jankowski did so well he has a letter of recommendation from one of the supervisor’s of the program.[20] That letter states that Jankowski completed the program in 2007 with no sanctions. 9. Jankowski’s demeanor as he testified at the hearing was honest and frank. He credibly testified that he has been sober since the day he entered the Drug Court Program in 2006. Jankowski revealed himself as a mature and sober person who is not likely to abuse drugs or alcohol again. 10. The Administrative Law Judge finds that Applicant has provided substantial evidence of the rehabilitation of Jankowski and finds that Jankowski has re-established good character and reputation after his felony convictions. CONCLUSIONS OF LAW 1. Applicant must show that it meets the qualifications for licensure.[21] One of those qualifications is that persons named on a license be persons of good character and reputation.[22] By statute, lack of good character and reputation may be established by showing (1) that a person has engaged in contracting without a license, or (2) that a person has committed any act that, if committed by a licensee, would be grounds for disciplinary action against a licensee, or (3) that a person has been named on a contractor’s license that was suspended or revoked in another state.[23] For the reasons stated below, Applicant has shown good character and reputation for Michael Jankowski. Thus, the ROC has not established lack of good character and reputation for Jankowski, despite the felony convictions, which occurred 8 and 15 years ago. 2. The ROC statute that controls this case, A.R.S. § 32-1122(D), requires each person on a license to be of “good character and reputation.” It then states that lack of such good character and reputation may be established by a showing that a person has acted within one of the three categories of prohibited actions stated above. Because there is no one other than the applicant and the ROC involved in an application for a contractor’s license, the plain meaning of the statute is that, if there is any lack of good character to be shown, the ROC must establish lack of good character and reputation by putting forth evidence that the person has committed at least one action within one of the three statutory categories. While the ultimate burden of showing qualification for licensure remains on an applicant,[24] the ROC must go forward with any evidence concerning lack of good character and reputation.[25] And then, since character can change over time, it is incumbent upon the applicant to show rehabilitation of the person’s character in order to show that an applicant meets the good character requirement for licensure. 3. Here, the ROC proceeded to show lack of good character under the second category of the three: Jankowski had committed an act that would be grounds for discipline if committed by a licensed contractor. A.R.S. § 32- 1154(A) lists the acts that are grounds for discipline. One of them is conviction of a felony.[26] There is no ground for discipline in A.R.S. § 32-1154(A) for misdemeanor convictions. 4. At hearing, the ROC presented evidence of misdemeanor convictions. The Administrative Law Judge finds such evidence to be irrelevant.[27] The ROC argues that such convictions are relevant to determining good character and reputation. But that argument is wrong in the context of the ROC statutes. The phrase “good character and reputation” is not separately or explicitly defined in the ROC statutes, as other terms such as “person” are defined in A.R.S. § 32-1101 or elsewhere. However, the phrase is defined implicitly by A.R.S. § 32-1122(D) when it states that lack of good character and reputation can be shown in three ways. By stating it in that fashion, the statute defines good character and reputation by what it is not rather than by what it is. It does not allow lack of good character and reputation to be shown by misdemeanor convictions because those convictions are not included within the domain of “lack of good character and reputation” in A.R.S. § 32-1122D). For that reason, misdemeanor convictions are not relevant to whether Jankowski has a lack of good character and reputation. And the Licensing Department’s use of misdemeanor convictions to show lack of good character, being contrary to the statute, is rejected. 5. Once felony convictions have been established, as they were here, the next question is whether, despite those felony convictions, the person has re-established good character and reputation.[28] Relevant to this inquiry is evidence of how recent the convictions were, what the sentencing was, and whether the person has successfully completed jail or probation, paid fines and assessments, and met all the orders of the criminal justice system.[29] In addition, if there are other factors that were in involved in the criminal activity, perhaps drug or alcohol abuse, the person seeking to show rehabilitated character and reputation must show that those other factors have also been addressed successfully. 6. In this case, Applicant has shown that Jankowski has re- established good character and reputation after his convictions.[30] The most recent felony convictions occurred eight years ago. Jankowski was on probation most recently in 2007, seven years ago. He has successfully completed probation and the more rigorous Drug Court Program. So he has successfully addressed the criminal penalties and his drug abuse problems. He has been sober for over seven years and in that time has established a reputation as a knowledgeable and valuable supervisor and manager in the construction industry. With Smith’s excellent record as a contractor, his endorsement of Jankowski carries a good deal of weight. 7. The evidence shows that Jankowski, who because of felony convictions had a lack of good character and reputation at one time, has shown that he currently has good character and reputation. 8. Applicant has shown that the persons on the pending license are persons of good character and reputation. RECOMMENDED ORDER IT IS RECOMMENDED that the Registrar of Contractors find that the persons on Pending License No. B.285409-R of Lone Oak Properties, LLC, have good character and reputation.

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 5 days from the date of that certification.

Done this day, February 27, 2014.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The ROC’s argument, at the hearing, that this proceeding is some sort of review, as if on appeal, of the Licensing Department’s initial denial of the application is without merit. The Licensing Department denied the application under the authority of the Registrar, who is the final decision maker. The Registrar can now make a final decision based on the evidence reviewed by the Licensing Department and the evidence produced at hearing, along with the Administrative Law Judge’s findings, conclusions, and recommendation. The Administrative Law Judge will not “remand” the matter to the Licensing Department as the Licensing Department suggested at the hearing. [2] Exhibit 3. [3] It is very likely that the citation to “A.6” was a typo and was intended to be “A.8”. [4] For the reasons stated below in Conclusion of Law 4, these findings do not include misdemeanor convictions. [5] Exhibit A10. [6] Id. at 2. [7] Exhibit 4,Coconino County Superior Court Minute Entry dated February 19, 2004. [8] Id. at 2-4. [9] Exhibit 4, Plea Agreement for Superior Court Nos. CR2003-1075 and CR2006-0600. [10] Id. [11] Exhibit 4,Coconino County Superior Court Minute Entry dated August 30, 2006 at 1-2. [12] Id. at 2-3. [13] Id. at 4. [14] Exhibit 4,Coconino County Superior Court Minute Entry dated July 3, 2007. [15] Id. [16] According to the ROC public website on February 25, 2014, M S Square Construction, LLC has been licensed since 1998 and has never been disciplined. [17] Exhibits A21, A22, and A23. [18] Exhibit A16. [19] Exhibit A18. [20] Exhibit A17. [21] Arizona Revised Statutes (A.R.S.) § 41-1092.07(G)(1). [22] A.R.S. § 32-1122(D). [23] Id. The entire paragraph states:

To 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 showing that a person has engaged in contracting without a license or committed any act that, if committed or done by any licensed contractor, would be grounds for suspension or revocation of a contractor's license or by showing that the person was named on a contractor's license that was suspended or revoked in another state.

[24] A.R.S. § 41-1092.07(G)(1). [25] In other words, the applicant bears the burden of persuasion for showing qualifications for licensure, but the ROC bears the burden of going forward with evidence for lack of good character and reputation. [26] A.R.S. § 32-1154(A)(8). [27] This is the reason that misdemeanor convictions are not included in the findings above. [28] See ROC Substantive Policy Statement 100, “Licensing Background Checks,” which states that the ROC considers evidence of rehabilitation. [29] Much of the hearing concerned a “matrix” that the Licensing Department uses as a guide when a person on a license application has criminal convictions. Exhibit 5. Although, the Administrative Law Judge still does not fully understand how it works and how it is applied, it seems reasonable if it is used as a tool for making an initial determination when felony convictions are involved. The Administrative Law Judge would not recommend its use in making a final decision. [30] In other words, that he has been rehabilitated.

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