ALJDEC decisions subject to certification as final

2014A-1737-ROC · Registrar of Contractors · 2014-11-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 27, 2014

APPEARANCES: Seth Hargraves, Assistant Attorney General representing the Registrar of Contractors; Eric Andrew Ulrich, Respondent; Karen Ulrich, Respondent’s wife; Martha Watson, Investigator for the Registrar of Contractors

ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang _____________________________________________________________________ Respondent Eric Andrew Ulrich requested a hearing after receiving a civil penalty from the Registrar of Contractors for his Craigslist ads in circulation on May 3, 2014. At the hearing, Respondent did not dispute that the exact language required by law was not in the ads; however, he established three relevant factors in mitigation of the violation. Therefore, it is recommended that Respondent’s civil penalty be modified to the minimum of $200.00. FINDINGS OF FACT 1. On or about August 12, 2014, Investigator Martha Watson on behalf of the Registrar of Contractors (“Registrar”) issued a Cease and Desist Order and Civil Citation against Respondent for advertising without a license in violation of A.R.S. § 32-1165, and assessed a $1,000.00 civil penalty as a consequence.[1] 2. In response to Respondent’s request for a hearing in the matter, the Registrar issued a Notice of Hearing setting an evidentiary hearing before the Office of Administrative Hearings (“OAH”), an independent state agency. 3. At the hearing, Investigator Watson testified that she did a Craigslist search and found Respondent had advertised there circa May 3, 2014, without using the required language for notifying the public that Respondent was an unlicensed contractor. Investigator Watson testified that she had told Respondent and his wife in April 2013[2] that Respondent could not work or advertise as a licensed contractor. 4. Respondent appeared at the hearing and testified that there is a box to check for Craigslist advertisements that asks whether the contractor is licensed and he always checks that box because if you don’t,[3] they want more information. He said if anyone asks he always tells them he’s not licensed. Respondent testified that he and his wife did not know they were required to do more, but when they were informed, they began to add more language. He said he thought they had been doing it right. He acknowledged that the exact phrase “not a licensed contractor” was not in his Craigslist ads. 5. Respondent’s wife testified that she placed the ads and they said that Respondent was not licensed. She said she may not have used the Registrar’s lingo, but the information was there. She argued that Respondent’s business has a business license; so they are not advertising without a license. However, she did not dispute that Respondent does not have a contractor’s license though he is trying to obtain one. She said they cannot afford a $1,000.00 civil penalty because they are struggling financially already and living on their IRAs. She testified that Respondent has turned down plenty of work because the proposed project was over the limit for an unlicensed contractor. 6. In rebuttal, Investigator Watson clarified her April 2013 contacts with Respondent. She said she issued a Cease and Desist Order to Respondent, though it did not include a civil penalty. She said the ads she had seen at that time had indicated that Respondent was doing projects for over $1,000.00, a conclusion that was based on the type of work proposed and the pictures in Respondent’s ads. The Registrar offered no evidence that Respondent actually took any jobs over $1,000.00 and did not argue that Respondent had ever done so. Investigator Watson testified that she talked to Respondent at the time of the 2013 Cease and Desist Order and warned Respondent and his wife about contracting and advertising without a license. 7. The Craigslist ads that were the subject of this matter state, “License info: Unlicensed” next to the pictures in a box that has print about the same size as all other print on the page.[4] The new Craigslist ad submitted by Respondent posted on or about October 11, 2014, contains that same box as well as stating near the bottom, “WE ARE NOT LICENSED CONTRACTORS.”[5] 8. The Administrative Law Judge asked Investigator Watson if this was a violation. She stated that it was questionable whether the new ad complies with the statute because does not contain the exact phrase that is in the statute. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[6] 2. The Registrar bears the burden of proof to establish that Respondent engaged in advertising without a license by a preponderance of the evidence.[7] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[8] 3. The Registrar established that on May 3, 2014, Respondent did not have a contractor’s license and that his ads on Craigslist at that time did not include the phrase “not a licensed contractor.” 4. 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 in relevant part as follows:

This chapter shall not be construed to apply to: . . . . 14. Any person other than a licensed contractor engaging in any work or operation . . . for which the aggregate contract price, including labor, materials and all other items . . . is less than one thousand dollars. The work or operations that are exempt under this paragraph shall be of a casual or minor nature. This exemption does not apply: . . . . (c) To 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.

5. A.R.S. § 32-1166 provides in relevant part as follows: A. In addition to all other remedies, when it appears to the registrar, either upon complaint or otherwise, that any person . . . has engaged in or is engaging in any act of contracting, practice or transaction which constitutes a violation of this chapter, . . . the registrar may serve upon such person. . . not currently licensed under this chapter, by certified mail or by personal service, a cease and desist order requiring the person . . . 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 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. . . .

B. Each violation of this chapter or a rule or order of the registrar by a person who is required to be licensed by this chapter and who does not possess the required license shall constitute a separate offense, and the registrar may impose a civil penalty of not to exceed two thousand five hundred dollars for each violation except that for multiple violations committed on the same day the civil penalty shall not exceed two thousand five hundred dollars for all such violations. Monies collected from civil penalties shall be deposited in the state general fund.

C. The registrar of contractors may issue citations containing orders to cease and desist and of civil penalties against persons who have never been licensed under this chapter who are acting in the capacity of or engaging in the business of a contractor in this state.

6. In this case, Respondent clearly violated A.R.S. § 32- 1121(A)(14)(c) because he did not use the phrase “not a licensed contractor” in his ads. Because the statute places quotes around the phrase, the exact phrase itself must be used and nothing may be substituted in its place. Respondent clearly did not understand this, as shown by the ad placed after the civil penalty was proposed. That ad clearly got the information across, but it did not use the required language. The Registrar has proposed a $1,000.00 penalty; however, there were three mitigating factors in this matter that should be taken into consideration.

7. First, Respondent offered undisputed testimony that his family is having financial difficulties and they are living on their IRAs. The poor should not have to pay a grossly disproportionate penalty for doing the same activities as those for whom the penalty represents a much smaller percentage of their wealth. This is implicitly recognized by case law.[9] 8. Second, the proper information was contained in the ads, though not using the required language. Therefore, there was most likely no harm to the public, which is another relevant consideration in setting civil penalties.[10] 9. Third, the fact that Respondent used the wrong phrase again in his more recent ads indicates that he and his wife truly did not understand the legal requirement involved. Again, when the statute placed the phrase in quotes, it imposed on him a legal requirement that the exact phrase be used. The Registrar properly takes the extent of the contractor’s culpability into account when setting civil penalties. This was demonstrated by Investigator Watson’s testimony that Respondent’s new language is questionably a violation.[11] 10. Considering the factors in mitigation as well as the fact that there was, indeed, a violation of the statute’s specific requirement that the phrase “not a licensed contractor” be used in Respondent’s ads, the Registrar established that a $200.00 civil penalty is appropriate for Respondent’s Craigslist ads circa May 3, 2014. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the final Order in this matter, the Registrar modify its initial decision and assess Respondent a $200.00 civil penalty against Respondent. This is the minimum allowed by A.R.S. § 32-1166 for each citation issued for a violation of A.R.S. § 32-1165.

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 40 days from the date of that certification. Done this day, November 13, 2014.

/s/ Dorinda M. Lang Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See Exhibit 2. [2] Investigator Watson initially reported this date as April 2014, but she corrected it to 2013 later in the hearing.

[3] While many legal authorities say that contractions don't belong in legal writing, Bryan Garner, a leading authority on legal writing, advocates their use as a way to make legal writing, including opinions and rules, less stuffy and more natural. Contractions make your writing more accessible to the user. Research shows that that they also enhance readability (Danielson and Larosa, 1989).

"Write as you talk" is a common rule of writing readably, and the best way to do that is to use contractions. People are accustomed to hearing contractions in spoken English, and using them in your writing helps people relate to your document.

Use contractions with discretion. Just as you shouldn't bullet everything on a page, you shouldn't make a contraction out of every possible word. Don't use them wherever possible, but wherever they sound natural. . . .

See http://www.plainlanguage.gov/howto/guidelines/FederalPLGuidelines/writeContr act.cfm(emphasis added).

The Administrative Law Judge argues that readability is especially important in administrative law where parties usually represent themselves and come from a variety of backgrounds. [4] See Exhibit 1, pages 5 and 6. [5] See Exhibit A, page 5/6 in the electronic record. [6] See A.R.S. § 32-1154(A). [7] See A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, Ariz. 369, 372, 249 P.2d 837 (1952). [8] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [9] U.S. v. Global Distribs., 498 F.3d 613 (7th Cir. 2007); Federal Election Comm’n. v. Furgatch, 869 F.2d 1256 (9th Cir. Cal. 1989). [10] Ibid. [11] Ibid.

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