ALJDEC decisions subject to certification as final

2014A-1576-ROC · Registrar of Contractors · 2014-07-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 18, 2014

APPEARANCES: BD Construction Unlimited AZ, Inc. appeared through corporate President and proposed Qualifying Party Charles Straub; the State of Arizona, Registrar of Contractors, was represented by Assistant Attorney General Seth Hargraves and ROC Chief of Licensing Lawrence Matthews.

WITNESSES: For Applicant: Thomas Lawrence Straub

For the ROC: Lawrence Mathews, Chief of ROC Licensing

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

BD Construction Unlimited AZ, Inc. (“Applicant”) appeals the Arizona Registrar of Contractors’ (“ROC” or “Registrar”) denial of its application for a contracting license. The ROC based the denial upon finding that Applicant’s sole officer and proposed Qualifying Party lacks statutory good character and reputation. The ROC found lack of good character and reputation based on finding that Applicant has engaged in unlicensed contracting and other actions that show lack of good character. Applicant requested a hearing to challenge the denial. At hearing, this tribunal entered marked Exhibits 1 through 5 from the ROC. 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 the ROC has legal grounds to deny Applicant’s application and Applicant has shown no reason why the ROC should not deny the application. FINDINGS OF FACT 1. On November 14, 2013, Applicant applied for a Class K-61 carpentry contracting license with the ROC. On April 8, 2014, the ROC issued a letter (hereinafter “denial letter”) denying the application for the following reasons: 1. BD Construction Unlimited AZ, Inc. has performed contractor services in contravention of A.R.S. §§ 32-1151.

2. BD Construction Unlimited AZ, Inc. did not disclose its unlicensed status in its internet advertisement in violation of A.R.S. §§ 32- 1121.A.14(C).

3. Thomas Lawrence Straub, on behalf of BD Construction Unlimited AZ, Inc. has failed to establish good character and reputation in contravention of A.R.S. §§ 32-1122.D.

4. BD Construction Unlimited AZ, Inc. lists its Pending Application number on its internet advertisement leading the public to believe that it is a properly licensed contractor in contravention of A.R.S. §§ 32-1154.A.16.

The specific facts upon which the ROC relies for the denial are explained in the next pages of the application denial letter. 2. As of April 3, 2014, the ROC discovered a website promoting Applicant as a fully licensed contractor, showing kitchen and bathroom remodeling that Applicant has completed and also displaying the pending license number as if it was a regular, current license number. The website was accessible by the public and contained no restrictions or limitations—no language indicating that Applicant was not a licensed contractor. 3. Pursuant to A.R.S. § 32-1151, holding oneself out to the public as a contractor is considered engaging in contracting without a license. A.R.S. § 32-1121(A)(14) provides an exemption from licensure for a “handyman.” A handyman is someone who performs small contracting jobs (under an aggregate amount of $1,000.00) that do not require a building permit and who advertises with the words “not a licensed contractor.” The evidence shows that the construction attributed to Applicant and displayed by the website was not small jobs and the website did not state that Applicant was not a licensed contractor or that a license was pending. 4. Tom Straub testified about the website in an attempt to claim that he was not responsible for what appeared in it, but that it was the web designer. However, it is clear from his testimony that the web designer only took the actions that it took based on actions started by Straub. It is also clear that Straub knew or should have known of the contents of the website as soon as it went up, sometime before April 3, 2014. CONCLUSIONS OF LAW 1. Applicant must show that it meets the qualifications for licensure.[1] One of those qualifications is that persons named on a license be persons of good character and reputation.[2] 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.[3] For the reasons stated below, Applicant has not shown good character and reputation for Straub by showing that the ROC’s finding of Straub’s lack of good character and reputation is not founded in fact or law. 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 showing that a person has acted within one of the three categories of prohibited actions, as stated above. Because there is no party other than an 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 allege lack of good character and reputation by alleging 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,[4] the ROC must allege and go forward with any evidence concerning lack of good character and reputation.[5] And then, if there are grounds and since character can change over time, it is incumbent upon an 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 alleges lack of good character based on an internet advertisement for Applicant that provides multiple grounds for finding lack of good character. First, the advertisement constitutes unlicensed contracting under A.R.S. § 32-1151 by advertising on the internet for full contracting services without limitation or restriction. That is one ground for finding lack of good character and the evidence supports that ground. 4. In addition, the internet advertisement displays the pending license number for Applicant as if it is a valid, current license number. This is misleading advertising and would be grounds for discipline of a licensed contractor under A.R.S. § 32-1154(A)(16). This is a second ground for finding lack of good character and reputation. 5. Applicant did not provide evidence sufficient to rebut the evidence showing lack of good character and reputation. Nor did Applicant show rehabilitation of the actions that support the finding of lack of good character. 6. The application should be denied. RECOMMENDED ORDER IT IS RECOMMENDED that the Registrar of Contractors deny the license application of BD Construction Unlimited AZ, Inc. for Pending License No. K- 61.289029-D.

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, July 8, 2014.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Arizona Revised Statutes (A.R.S.) § 41-1092.07(G)(1). [2] A.R.S. § 32-1122(D). [3] 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.

[4] A.R.S. § 41-1092.07(G)(1). [5] 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.

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