FINACT2014A-1014-ROC.pdf

2014A-1014-ROC · Registrar of Contractors · 2014-06-25

BEFORE THE REGISTRAR OF CONTRACTORS

OF THE STATE OF ARIZONA

IN THE MATTER OF THE RENEWAL ) CASE NO: 2014-1014 ) APPLICATION OF: ) DOCKET NO. 2014A-1014-ROC Star All Scape Designs LLC ) Pending License No. K-21.274481-D ) ORDER ) RESPONDENT ) The Registrar adopts the Administrative Law Judge's (“ALJ”) attached Findings of Fact and Conclusions of Law with the following exceptions: The Registrar rejects the ALJ’s Conclusion of Law No. 1, including Footnotes Nos. six (6) through nine (9). The Registrar adopts the ALJ’s Recommended Order. The Registrar hereby replaces Conclusion of Law No. 1 as follows: “1. The burden of proof to meet the qualifications for licensure is on an applicant, thus an applicant for renewal of a license must make a prima facie showing of continued eligibility to renew a license. If that showing is made, the Registrar can rebut an applicant’s showing with any admissible evidence that demonstrates the applicant is no longer qualified for licensure. See A.R.S. § 32-1125(A); see also § 32-1122. Applicant has failed to demonstrate rehabilitation sufficient to withstand the Registrar’s showing of poor character. Appellant is therefore ineligible to renew its license.” Justification: Conclusion of Law No. 1 makes two mistakes of law. First, it incorrectly concludes, that the Registrar bears the burden of proof when denying an application for renewal of a license. Second, it incorrectly implies that the Registrar may only deny a renewal application for a violation of A.R.S. § 32-1154. I. The ALJ’s proposition that the “burden of proving that Appellant engaged in conduct that would be grounds to deny renewal” is on the Registrar, because the “refusal to renew a license is essentially disciplinary in nature” is not supported by statutes or the Registrar’s own interpretation. The ALJ does not cite authority for the proposition that there is some presumption or entitlement to renewal of the property interest at issue, nor is the Registrar aware of any such authority. A denial of an application for renewal of a license— a property interest at its natural end—is simply not the same as a revocation of a license. An application for a renewal of a license is filed at the end of the term of the license and absent affirmative action by the applicant to renew, the license expires. See § 32-1125(B). A revocation on the other hand involves affirmative action by an agency to impair an existent property interest. This difference is acknowledged by the Administrative Procedures Act. A.R.S. § 41-1092.07(H) specifically exempts renewal denials from the coverage of A.R.S. § 41-1092.07(G), which places the burden on the agency in a revocation action taken “on its own initiative. . . .” See § 41-1092.07(H). Thus the cases cited by the ALJ,

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 dealing with revocation of existent property interests are simply inapposite. In addition to the requirements of § 32-1125, § 32-1122(B) and (D) explicitly require an applicant to provide proof of specific qualifications in order to “obtain or renew a license.” It is without question the applicant’s burden of proof to satisfy these requirements when applying for a new license and it would be inconsistent and illogical to reverse that burden of proof for an applicant for a renewal of a license. 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 statutes at issue are clear, but to the extent that they are subject to various interpretations, the ROC’s interpretation should be accorded considerable deference. As such, the ROC’s interpretation should be accorded considerable deference. The ROC’s interpretation of the relevant statutes places the burden of proof in license renewal actions on the applicant, whether the applicant apply for a new license or for a renewal of an existing license. Such is the only consistent interpretation and application of the relevant statutes; therefore, the ALJ should have placed the burden of making a prima facie showing of continued eligibility to renew on the Applicant. II. Conclusion of Law No. 1 also purports to limit the bases for which an application for renewal can be denied to only those acts listed in § 32-1154. This is incorrect and in direct contravention of statute. It is absurd to state that the Registrar cannot deny a renewal application if the applicant fails to show that it has a qualifying party, is in good standing with the Corporation Commission, has maintained its bonding, has complied with the statues or rules governing workers’ compensation insurance, and has good character and reputation. A.R.S. § 32-1122(B) and (D) explicitly require an applicant to provide proof of all of these things before it may obtain or renew a license. The primary aim of statutory construction is to find and give effect to legislative intent. Mail Boxes etc., U.S.A. v. Indus. Comm'n, 181 Ariz. 119, 121, 888 P.2d 777, 779 (1995). If reasonably practical, a statute should be explained in conjunction with other statutes to the end that they may be harmonious and consistent. State ex rel. Larson v. Farley, 106 Ariz. 119, 122, 471 P.2d 731, 734 (1970). The ALJ’s interpretation conflicts with A.R.S. § 32-1122(B) and (D), and thus cannot be what the Legislature intended. Other well-settled rules of statutory construction also support the Registrar’s interpretation. The language in § 32-1125 is permissive and not an exhaustive list of reasons an application for renewal of a license may be denied. To interpret the statute in the restrictive manner as the ALJ has in the instant case impermissibly reads “may” as “may only,” or “shall.” “[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). Here, A.R.S. § 32-1125(A) reads, “[t]he registrar may refuse to renew a license if a licensee or person has committed or been found guilty of any act listed in § 32-1154.” Thus it is proper to infer that the legislature intended “may” as used in § 32-1125(A) to mean “may” as opposed to “shall” or “may only.” This is especially the case in light of the burdens placed on an applicant explicitly stated in § 32-1122(B) and (D). Finally, it would be an absurd interpretation of the Registrar’s scheme to require the Registrar to renew a license where the applicant’s license was suspended at the time the applicant sought to renew (for lack of a qualifying party, a lapsed bond or any other administrative reason referenced in § 32-1122(B) or (D)). Therefore, the ALJ’s Conclusion of Law, that only violations of § 32-1154 allow the Registrar to deny a renewal application, cannot withstand logical analysis. Based on this Decision, the Order, as modified, shall become effective on August 2, 2014. IT IS SO ORDERED this 23rd day of June, 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 23rd day of June, 2014 to: Respondent Star All Scape Designs LLC PO Box 1161 Litchfield Park, AZ 85340-1161

Mark A Hanson Schern Richardson Finter Decker PLC 1640 S. Stapley Dr., Ste. 132 Mesa, AZ 85204-6673

AND copy electronically mailed this same date to:

Registrar’s Counsel Elizabeth Campbell, Esq., Assistant Attorney General John Tellier, Esq., Assistant Attorney General

/// Office of Administrative Hearings Eric A. Bryant, Administrative Law Judge

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Registrar’s License Department Lawrence Mathews, Chief of Licensing

Case No. 2014-1014 /mkc