ALJDEC decisions subject to certification as final

2014A-1157-ROC · Registrar of Contractors · 2014-12-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 17, 2014, at 8:00 a.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by Seth T. Hargraves, Esq., Assistant Attorney General; Respondent Jaime Daniel Fraley appeared via videoconference on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On or about March 26, 2014, Audree Juhlin, the Interim Director of the Community & Economic Development Department of the City of Sedona, Arizona, sent an email to the Registrar’s Investigator, Joseph L. Shikany.[1] Ms. Juhlin alleged that Jaime Daniel Fraley and his partner, Wendy Weidman,[2] on behalf of their business, Florange Signs (“Florange”), had applied to the City of Sedona for a permit to install a sign. Ms. Juhlin stated that she did not believe that Mr. Fraley, Ms. Weidman, or Florange possessed a contractor’s license and that they had used the license number of John DiBattista[3] on the application. Ms. Juhlin stated in her email to Investigator Shikany that Mr. DiBattista had informed City of Sedona’s staff that Mr. Fraley and Ms. Weidman had submitted the application without his knowledge. Ms. Juhlin described her communication with Mr. DiBattista in relevant part as follows: I have contacted John DiBa[tt]ista . . . and left him a message that his current set-up with [Florange] is not allowed – essentially John cannot be a sub-contractor to Florange. I told him that John has to be the applicant, general contractor and can hire [Florange] to do the design and manufacturing of the signs and then John is responsible for their installation. . . . For your information, John is very cooperative and does not want to do anything to jeopardize his license and told me he will once again contact [Florange]. I have informed my staff that [Florange] does not have a license and cannot use John DiBa[tt]ista[’]s.[4]

Ms. Juhlin attached two documents to her email: (1) A City of Sedona Sign Permit Application dated February 21, 2014, for the business, MVP Service, LLC, that identified the sign contractor as Florange, and left the license number blank;[5] (2) A City of Sedona Department of Community and Economic Development Sign Permit dated March 14, 2014, for the business MVP Service, LLC, with Florange as the contractor and “DiBattista Const. 162612” as the license number.[6] Investigator Shikany consulted the Registrar’s records and found that Mr. Fraley did not have a current or pending contractor’s license in Arizona. Investigator Shikany also determined that no prior complaints had been made against Mr. Fraley for advertising or contracting without a license.[7] The Registrar submitted a printout from Florange’s website with the print date of July 2, 2014, stating that it could perform “Sign Repair & Installation.”[8] The website did not include the disclaimer, “not a licensed contractor.” On July 21, 2014, Investigator Shikany contacted Mr. DiBattista. Mr. DiBattista stated that he was aware that Mr. Fraley had been using Mr. DiBattista’s license number, but stated that Mr. DiBattista had “put a stop to it.” Mr. DiBattista was not willing to aid in the criminal prosecution of Mr. Fraley for identity theft for putting Mr. DiBattista’s license number on the permit application.[9] On or about August 21, 2014, Investigator Shikany on behalf of the Registrar issued a Cease & Desist Order, a Civil Citation, imposed a civil penalty in the amount of $1,500.00 against Mr. Fraley for contracting without a license in violation of A.R.S. § 32-1151, and imposed a civil penalty in the amount of $1,000.00 against Mr. Fraley for advertising without a license in violation of A.R.S. § 32-1165.[10] Mr. Fraley signed the registered mail receipt for the Cease & Desist Order, Civil Citation, and notice of civil penalties.[11] On or about September 24, 2014, Mr. Fraley requested a formal hearing.[12] The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on December 17, 2014. The Registrar presented the testimony of Investigator Shikany and submitted four exhibits. Mr. Fraley presented Ms. Weidman’s testimony, testified on his own behalf, and submitted one exhibit. Additional Hearing Evidence Investigator Shikany testified that a contractor must be licensed to install signs if the cost of the job is more than $1,000.00 or if a permit is required. Inspector Shikany testified that if the cost of the job is less than $1,000.00 and a permit is not required, the contractor could perform the job under the so-called “handyman exemption.” The Registrar submitted a printout from Florange’s Facebook page that included a post dated September 30, 2013, that stated, “[W]e put up Wayne B. Light & Denise L. Bowers Dimensional lettering and sign this morning” under a photograph of Mr. Fraley in front of the sign.[13] Florange’s Facebook page did not include the disclaimer, “not a licensed contractor.” Ms. Weidman testified that she signed the permit application and permit that Ms. Juhlin had attached to her email to Investigator Shikany. Ms. Weidman testified that MVP Service, LLC had its own general contractor who performed the sign installation. Ms. Weidman testified that Florange’s business is as a “sign broker” because it primarily assembles into signs components purchased elsewhere, although it has equipment to print banners. Ms. Weidman testified that Florange’s primary business is assembling signs, not installing them. Ms. Weidman testified that when Florange started its business in 2006, Cary Meyers, a former employee of the City of Sedona, told Ms. Weidman and Mr. Fraley that they needed to work with a licensed contractor when they applied for permits. Ms. Weidman testified that Florange had been working with Mr. DiBattista since 2011, and that sometimes Mr. DiBattista’s company was involved in the installation of the signs. Mr. Fraley submitted an email that Ms. Juhlin had sent to Florange on March 26, 2014, the same date as her email to Investigator Shikany, informing Florange that according to the Registrar’s investigator, its use of Mr. DiBattista’s license violated state law and that until Florange had a contractor’s license, the City of Sedona would no longer process Florange’s sign applications.[14] Ms. Weidman testified that neither she, Mr. Fraley, nor Florange had applied for a permit or installed any signs since they received Ms. Juhlin’s March 26, 2014 email. Mr. Fraley testified that he has been making signs since 2006. The first sign that he installed was torn out of the ground because he did not obtain a permit. Mr. Fraley testified that since that time, he has listened to and heeded the advice of the City of Sedona’s code enforcers, but that he was misled because until Ms. Juhlin’s complaint, no one ever told him that he needed to possess a contractor’s license to install signs. Mr. Fraley testified that now he wants to obtain a license. Mr. Fraley testified that he will be the only licensed sign installer in Sedona and that signs “go up all the time.” Ms. Weidman testified that she had taken all references to sign installation off of Florange’s website. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[15] The Registrar bears the burden of proof to establish Mr. Fraley’s statutory violations by a preponderance of the evidence.[16] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[17] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[18] Members of regulated professions are presumed to know the law and will be bound by statutes and regulations that regulate their profession: [T]here is no general due process requirement that the government give notice of the enactment of legislation, criminal or otherwise. . . . The promulgation of a law by a legislature in accordance with its constitutional obligations is deemed to constitute adequate notice to all. . . . As our supreme court has explained: "The administration of justice, the law itself as a practical system of the regulation of human conduct, requires that some fundamental assumptions should be made as postulates. The most important of all these is the assumption that all persons of sound and mature mind are presumed to know the law." Merrill v. Gordon, 15 Ariz. 521, 532, 140 P. 496, 500 (1914) (citation and internal quotation omitted); see also State v. Morse, 127 Ariz. 25, 31, 617 P.2d 1141, 1147 (1980) ("It is generally accepted that ignorance, or lack of knowledge, of the law which forbids the conduct with which one is charged is no defense.").

This concept of ignorance of the law being no excuse is codified in Arizona in A.R.S. § 13-204(B) (2001). See 1 Rudolph J. Gerber, Criminal Law of Arizona § 1-204(B) (2d ed. 1993) ("The underlying assumption of this section is that the content of the criminal law approximates the average person's actual assessment of tolerable behavior and that the citizenry knows everything needed to obey the law.").[19]

Under this well-established authority, the Registrar had no duty to inform Mr. Fraley of applicable law. A.R.S. § 32-1151 prohibits contracting without a license, providing in relevant part as follows: It is unlawful for any person, firm, partnership, corporation, association or other organization, or a combination of any of them, to engage in the business of, submit a bid or respond to a request for qualification or a request for proposals for construction services as, act or offer to act in the capacity of or purport to have the capacity of a contractor without having a contractor's license in good standing in the name of the person, firm, partnership, corporation, association or other organization as provided in this chapter, unless the person, firm, partnership, corporation, association or other organization is exempt as provided in this chapter. Evidence of securing a permit from a governmental agency or the employment of a person on a construction project shall be accepted in any court as prima facie evidence of existence of a contract.

The Registrar established that Mr. Fraley’s company, Florange, applied for a permit to install a sign for MVP Service, LLC. Although Ms. Weidman signed the permit application, in Arizona partners are jointly and severally liable for acts in furtherance of the partnership’s business.[20] Therefore, the Registrar established that Mr. Fraley engaged in unlicensed contracting in violation of A.R.S. § 32-1151. A.R.S. § 32-1121(A)(14)(a) sets forth the so-called “handyman’s exemption” to licensure requirements for contractors who perform work whose aggregate contract price, including labor and materials, is less than $1,000.00 if other requirements are met, including that the work does not require a building permit. A.R.S. § 32-1165 provides as follows: Except as authorized by section 32-1121, subsection A, paragraph 14, subdivision (c), it is a class 1 misdemeanor for any person to advertise that he is able to perform any service or contract for compensation subject to regulation by the registrar under the terms of this chapter unless a license under the terms of this chapter is first obtained regardless of whether his operations as a contractor are otherwise exempt.

A.R.S. § 32-1121(A)(14)(c) provides that “[t]his exemption does not apply . . . [t]o a person who utilizes any form of advertising to the public in which the person's unlicensed status is not disclosed by including the words ‘not a licensed contractor’ in the advertisement.” The Registrar established that the website of Mr. Fraley’s business, Florange, advertised its ability to install signs. Although such installation might have been within the so-called “handyman exemption” established by A.R.S. § 32- 1122(A)(14) if it did not require a permit, the advertisement did not contain the disclaimer, “not a licensed contractor,” as required by A.R.S. § 32-1122(A)(14)(c). Therefore, the Registrar established that Mr. Fraley violated A.R.S. § 32-1165 by advertising without a license. A.R.S. § 32-1166(A) authorizes the Registrar to assess a civil penalty against a person who has been found to have contracted without a license in violation of A.R.S. § 32-1151 or to have advertised that he is able to perform a service for which a contractor’s license is required, in relevant part as follows: In addition to all other remedies, when it appears to the registrar, either upon complaint or otherwise, that any person, firm, partnership, corporation, association or other organization, or a combination of any of them, has engaged in or is engaging in any act of contracting, practice or transaction which constitutes a violation of this chapter, or any rule or order of the registrar, the registrar may serve upon such person, firm, partnership, corporation, association or other organization not currently licensed under this chapter, by certified mail or by personal service, a cease and desist order requiring the person, firm, partnership, corporation, association or other organization to cease and desist immediately, upon receipt of the notice, from engaging in such act, practice or transaction. In conjunction with the cease and desist order, the registrar may issue a citation for a violation. Each citation shall be in writing and shall clearly describe the violation for which the citation was issued. Each citation shall contain an order to cease and desist and an assessment of a civil penalty in an amount of at least two hundred dollars for each violation but not more than two thousand five hundred dollars for the multiple violations committed on the same day. . . . The registrar shall adopt rules covering the assessment of a civil penalty that give due consideration to the gravity of the violation and any history of previous violations.

Pursuant to the directive in A.R.S. § 32-1166(A), the Registrar has promulgated A.A.C. R4-9-131, which provides in relevant part as follows: In assessing a civil penalty . . ., the Registrar shall give due consideration to whether the person cited or any individual acting on that person’s behalf has committed one or more of the following acts in determining the gravity of the cited violation:

1. Falsely represented to be a licensed contractor.

2. Failed to perform any work for which money was received.

3. Executed or used any false or misleading documents for the purpose of inducing a person to enter into a contract or to pay money for work to be performed.

4. Made false or misleading statements for the purpose of inducing a person to enter into a contract or to pay money for work to be performed.

5. Failed or neglected to apply funds which were received for the purpose of obtaining or paying for services, labor, materials, or equipment.

6. Performed work that was or had the potential to become hazardous to the health, safety, or general welfare of the public.

7. Performed work that deliberately was in violation of building codes, safety laws, labor laws, workers’ compensation laws, or unemployment insurance laws.

8. Performed work that failed to meet minimum acceptable trade or industry standards or practices or was not performed in a good and workmanlike manner.

9. Has committed any other act which would otherwise be cause for disciplinary action if the person cited had been properly licensed pursuant to A.R.S. Title 32, Chapter 10.

10. Has committed two or more prior violations.

11. Performed work that has caused loss or damage to the structure, its appurtenances, or property being worked upon or has caused loss or injury to any person.

Mr. Fraley has never before violated statutory prohibitions for contracting or advertising without a license. Nor have any of the other aggravating factors set forth in A.A.C. R4-9-131 been established. Although Mr. Fraley’s ignorance of the statutory prohibitions is not a defense to a finding that he violated charged statutes, it is a factor in mitigation of the penalty. Mr. Fraley associated with Mr. DiBattista to comply with the City of Sedona’s requirements for sign permits. Mr. DiBattista, like Mr. Fraley, was unaware of the Registrar’s requirements for Florange’s use of his license to obtain permits until Ms. Juhlin informed him that his association with Mr. Fraley and Florange violated the Registrar’s statutes. Moreover, Mr. Fraley and Ms. Weidman credibly testified that installation of signs was always an incidental part of Florange’s business and that Florange no longer installs signs. In light of the lack of any factors in aggravation and the existence of some factors in mitigation, a civil penalty in the amount of $500.00 is appropriate for Mr. Fraley’s unlicensed contracting activities in violation of A.R.S. § 32-1151. As of July 2, 2014, Mr. Fraley had not modified Florange’s website to include the disclaimer, “not a licensed contractor,” even though the website still stated that Florange could install signs. Therefore, imposition of a civil penalty in the amount of $1,000.00 is still appropriate for Mr. Fraley’s advertising without a license in violation of A.R.S. § 32-1165. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Jaime Daniel Fraley violated A.R.S. §§ 32-1151 and 32-1165, affirm the assessment of a civil penalty in the amount of $1,000.00 for advertising without a license in violation of A.R.S. § 32- 1165, but modify the civil penalty to assess a $500.00 civil penalty for Mr. Fraley’s unlicensed contracting in violation of A.R.S. § 32-1151. The combined total of $1,500.00 in civil penalties shall be paid in certified funds to the Registrar on or before thirty days after the effective date of the final order in this matter. 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 five days from the date of that certification. Done this day, December 29, 2014.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 1 at 5. [2] Mr. Fraley and Ms. Weidman sometimes used the surname, “Phenom,” in their business. This decision uses their legal names. [3] According to the Registrar’s public website, John DiBattista is an officer and qualifying party for DiBattista Construction Inc.’s License Nos. 136427 (residential general contractor) and 162612 (small commercial general contractor). [4] The Registrar’s Exhibit 1 at 5. [5] See id. at 7. [6] See id. at 6. [7] See id. at 2. [8] See id. at 8. [9] See id. at 3. [10] See the Registrar’s Exhibit 2 at 3. [11] See the Registrar’s Exhibit 2 at 5. [12] See the Registrar’s Exhibit 3. [13] See the Registrar’s Exhibit 4 at 4. [14] See Mr. Fraley’s Exhibit A. [15] See A.R.S. § 32-1101 et seq. [16] See A.R.S. § 41-1092.07(G)(3); A.A.C. R2-19-119(A) and A.A.C. R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [17] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [18] Black’s Law Dictionary at page 1220 (8th ed. 1999). [19] State v. Soltero, 205 Ariz. 378, 380 ¶¶ 7 and 8, 71 P.3d 370, 372 (App. 2003) (some citations omitted). [20] See, e.g., Catalina Mortgage Co., Inc. v. Monier, 166 Ariz. 71, 73-74, 800 P.2d 574, 576-77 (1990).

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