ALJDEC decisions subject to certification as final

2014A-1969-ROC · Registrar of Contractors · 2015-03-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 9, 2015, at 8:00 a.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by Michael D. Raine, Esq., Assistant Attorney General; Arthur Kerley (“Resopndent”) appeared on his own behalf via videoconferencing from the Registrar’s Flagstaff office. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On or about May 17, 2014, the Registrar’s Investigator Joseph L. Shikany saw Respondent’s business card on a community bulletin board in the Jimmy John’s Restaurant located at the intersection of Milton and Riordan Roads in downtown Flagstaff, Arizona. The business card included Respondent’s name, business name, AZ Native Handyman, and telephone number and advertised his ability to perform major and minor home repairs, fencing, and decks, but did not include the disclaimer, “Not a licensed contractor.”[1] Investigator Shikany filed the business card for future investigation because his case load prevented him from taking immediate action. On or about October 14, 2014, Investigator Shikany checked the Registrar’s data base and determined that neither Respondent nor his business possessed a current or pending contractor’s license in Arizona. Investigator Shikany also determined that Respondent had one prior civil citation in 2007 for advertising without a license in violation of A.R.S. § 32-1165 and that the complaint had been closed with a warning to Respondent.[2] On or about October 14, 2014, Investigator Shikany called the number on Respondent’s business card and left a message. A short time later, Respondent returned the call. Investigator Shikany identified himself and informed Respondent that his business card violated Arizona statute by failing to disclose his unlicensed status.[3] On or about October 14, 2014, Investigator Shikany on behalf of the Registrar issued a Cease & Desist Order and Civil Citation for a violation of A.R.S. § 32-1165 and as a result, assessed a civil penalty against Respondent in the amount of $1,500.00. The Registrar served the Cease & Desist Order and Civil Citation on Respondent by certified mail.[4] Respondent requested a hearing.[5] The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on March 9, 2015. Investigator Shikany and Respondent appeared and testified from the Registrar’s Flagstaff office. The Registrar submitted six exhibits. Additional Hearing Evidence The Registrar submitted Investigator Shikany’s report, which established the facts set forth above.[6] Respondent testified that he resides in Cameron, which is approximately 40 miles north of Flagstaff. Respondent testified that most of the work he performs is on the Navajo reservation. Respondent testified that after the Registrar issued the Civil Citation in 2007, he corrected his advertisement in the Flagstaff newspaper, the Arizona Daily Sun, to add the disclaimer, “Not a licensed contractor.” Respondent testified that after 2007, he hand-wrote the disclaimer on his business cards. Respondent denied placing his business card on the community bulletin board in the Jimmy John’s restaurant in Flagstaff and testified that one of his clients must have placed a card that he gave them before 2007 on the bulletin board. Investigator Shikany testified that the Jimmy John’s Restaurant had only been open less than two years. Investigator Shikany testified that since he started the investigation, he located another business card on the bulletin board of Mike & Rhonda’s Restaurant on the west side of Flagstaff that was identical to the card that he had found in Jimmy John’s Restaurant. Neither business card showed the disclaimer, “Not a licensed contractor,” on the front or back. Investigator Shikany also testified that on or about November 25, 2014, after he had started the investigation, he saw printouts of Respondent’s online advertisements on the Registrar’s data base.[7] The online advertisements did not include the disclaimer, “Not a licensed contractor.” Investigator Shikany testified that the Registrar’s policy is to issue a warning after a person’s first violation of A.R.S. § 32-1165, but after a second violation, to assess a civil penalty in the amount of between $1,000.00 and $1,500.00. Investigator Shikany pointed out that the Registrar did not charge additional violations based on Respondent’s second business card in Mike & Rhonda’s Restaurant or Respondent’s online advertisements. Respondent testified that he only earns approximately $1,000.00 per month doing small handyman jobs on the reservation. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[8] The Registrar bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence.[9] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[10] 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.”[11] 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)(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. A.R.S. § 32-1121(A)(14)(c) provides that the handyman 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.” 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 . . . 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 . . . 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. . . .

Respondent’s testimony that someone else must have placed a business card that he had given him or her eight years earlier on the community bulletin board in the Jimmy John’s Restaurant in Flagstaff was not plausible, especially in light of the second business card and online advertisement that Investigator Shikany subsequently discovered, which also did not include the disclaimer, “Not a licensed contractor.” Therefore, the Registrar established that Respondent violated A.R.S. § 32-1165 by failing to disclose his unlicensed status in his advertisement. With respect to the appropriate civil penalty, the Registrar established as a factor in aggravation that in 2007, Respondent had been guilty of the same misconduct and had received a warning. However, Respondent credibly testified that he only earns about $1,000.00 per month for his handyman work. Respondent’s ability to pay is a factor in mitigation of the penalty. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Arthur Kerley violated A.R.S. § 32-1165 and as a consequence, impose a civil penalty in the amount of $1,000.00 under A.R.S. § 32-1166, to 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, March 27, 2015.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 3. [2] See the Registrar’s Exhibit 2. [3] See the Registrar’s Exhibit 1 at 2. [4] See the Registrar’s Exhibit 5. [5] See the Registrar’s Exhibit 6. [6] See the Registrar’s Exhibit 1. [7] See the Registrar’s Exhibit 4. [8] See A.R.S. § 32-1101 et seq. [9] 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). [10] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [11] Black’s Law Dictionary at page 1220 (8th ed. 1999).

-----------------------

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