ALJDEC decisions subject to certification as final

2014A-2589-ROC · Registrar of Contractors · 2015-12-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 27, 2015 APPEARANCES: Jon Dessaultes, Attorney for Complainant; Dane McCauley, Complainant; Michael Drews and Dan Starwalt, Respondent’s representatives; Steve Klein, Registrar of Contractors Inspector ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang _____________________________________________________________________

Complainant has failed to establish a legal basis for his complaint because he did not establish that the guarantee at issue was not fulfilled. Therefore, this matter should be dismissed in its entirety. FINDINGS OF FACT 1. On September 10, 2006, the Registrar of Contractors (“Registrar”) issued License No. B.224034-R for General Residential Contracting to Respondent. Since August 31, 2015, License No. B.224034-R has been suspended for lack of bond. 2. On February 26, 2012, the Registrar issued License No. CR11.277334- D for dual electrical contracting to Respondent. Since August 31, 2015, License No. CR11.277334-D has been suspended for lack of bond. 3. Respondent’s current address of record for both licenses is P.O. Box 552, Phoenix, Arizona 85010-5552. 4. On or about June 25, 2014, Complainant filed a Complaint with the Registrar against Respondent doing business as Stealth Solar, alleging that the savings on his electric bill that Stealth Solar promised when it installed a roof-top solar system on his residence had not materialized. 5. Complainant attached to his complaint Stealth Solar’s Limited Energy Savings Guarantee (“the Guarantee”), which provided in relevant part as follows: The Stealth Solar (the “company”) Energy Management System (the “system”) has been designed to significantly reduce homeowner’s present total actual energy usage. This is accomplished through the installation of specific energy savings products. The total energy reduction you will realize (“Guaranteed Reductions”) is dependent on specific circumstances, lifestyle and particular products installed as components of the system, Stealth Solar will guarantee, subject to the terms herein, that the total kilowatt hours you use to heat and cool your home will be reduced by the amount listed below. This reduction plan will result in a total reduction of the stated percentage listed below and will be calculated for you and the guarantee will be authorized by an agent of the company. As a part of this guarantee, the company may inspect your system, perform maintenance as we deem necessary, or make repairs to lower overall energy requirements for heating cooling your home through out the period of this guarantee. If any major appliances warrant repairs you will have said appliances repaired or replaced to maintain the same energy environment or better than when the system was installed.

Activation:

For the company to be able to complete the calculations and issue this guarantee and to establish the actual total energy usage of your home, we will require that you furnish the company with a copy of the monthly utility bills for the preceding twelve months ending with the bill for the month in which the installation of the System is completed. Theses [sic] bills need to be submitted to the company within 30 days of the completion of the systems installation. For us to be able to monitor your actual energy usage and to properly track the guarantee, you will be required to furnish the Company with a copy of your monthly utility bill for each of the following 12 months no later than 30 days after the end of each month. If our review identifies any unexplained increase in your total energy consumption, we reserve the right to contact you and determine if there is some outside factor that is affecting your recorded energy consumption. For example: your monthly bill may not have decreased as much as expected as a result of any increase in the rates you pay per kilowatt hour. The Company is making the guarantee on the total energy consumption which is a condition that we can assist you in controlling. As the company has no ability to control rate increases by the utility company which are generally covered by the Arizona Corporation Commission unless the utility is exempt for the regulation. Our guarantee is for the percentage stated below in decrease in net kilowatts usage. Similarly if you were to install a pool after the start of the guarantee period, we would not be able to guarantee the stated percentage in net reduction. Unusual circumstances such as this would have to be addressed separately and specifically and we will work with you to ensure that the net reduction of the core energy usage of your home decreases by the percentage guaranteed in this agreement. . . . .

Your Responsibilities:

Since your actions can greatly affect energy use, this guarantee is void unless you use prudent energy management of your home, in order to maintain this guarantee, you agree to:

1. Furnish the company with copies of the required energy bills within the time frame listed above.

2. Use windows and doors prudently when operating your heating, ventilating and cooling (HVAC) systems.

3. Follow manufacture[r’]s instructions regarding HVAC system including annual inspections and filer [sic] replacement every 30 days.

4. Notify Stealth Solar of any changes to your home that may increase the energy use, its equipment or occupancy after the date of this guarantee so that appropriate adjustments can be made to the Guaranteed Reductions.

5. Submit any copies of utility bills, claims and notices in writing to: Stealth Solar 2600 North 44th Street Ste B-103 Phoenix, Arizona 85008. Submit claims for reimbursement relating to the guarantee within 30 days of the first anniversary of the date of the completion of installation of the system. Include proof that the HVAC system has been maintained and working in accordance with #3 above.[1] [Emphasis added.]

The amount of the guaranteed reduction was 38%. Complainant and Stealth Solar’s salesperson signed the guarantee on May 31, 2012. 6. At one time, Respondent had added Stealth Solar as a dba to the name on the Registrar’s records. By the time of the hearing, the dba had been removed. 7. After Respondent did not resolve Complainant’s complaint, the Registrar issued a Citation that charged cause to discipline Respondent’s license under A.R.S. § 32-1154(A)(15), which includes among the grounds for suspension, revocation, and other disciplinary action against a contractor’s license, “[f]alse, misleading or deceptive advertising whereby any member of the public may be misled and injured.” The Registrar sent the Citation to 3 Star Homes and Remodeling, Inc. DBA: Stealth Solar, 3104 E. Camelback Rd. Ste. 353, Phoenix, AZ 85016-4502. 8. Stealth Solar at 3104 East Camelback Road, Suite 353, Phoenix, Arizona 85016-4502, an unlicensed contractor, filed a written answer to the Citation. Stealth Solar’s written answer alleged that Complainant had not complied with the requirements of the Guarantee. Nevertheless, it argued that Complainant has realized the 38% savings and more. 9. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 10. Mr. Drews and Mr. Starwalt testified that they did not know why they were responsible for Stealth Solar’s advertising. According to their testimony, four or five years ago, Arizona required solar companies to have a qualified individual on staff to protect the public because the installation of solar panels on the rooftop implicated other trades, that Stealth Solar asked Mr. Starwalt to be the qualified individual and that otherwise, Respondent had nothing to do with Stealth Solar’s sales of solar systems to homeowners. They testified that if Stealth Solar’s installation of electrical panels had been deficient, Respondent would have corrected the deficiencies. 11. Respondent’s representatives further testified that the Registrar changed Respondent’s mailing address to Stealth Solar’s mailing address without Respondent’s knowledge or permission and it was not until Respondent changed its address of record back to the P.O. Box, Respondent received the Registrar’s Notice of Hearing and became aware of this Complaint. 12. They testified that the Attorney General’s Office (“AGO”) had investigated Stealth Solar, which was a different entity than Respondent. Mr. Starwalt explained that the owners of Stealth Solar had settled the AGO’s investigation. 13. Complainant testified that he moved into his residence on or about March 1, 2012 but he did not know how long the home was empty prior to his moving in. He testified that his energy bills were higher than he expected them to be. 14. It should be noted that Stealth Solar’s Guarantee only promised a reduction in the kilowatts used and that the dollar amount of a monthly APS bill depended on many things, including rate increases, the condition and number of appliances and other improvements, including spas and pools, and the amount of insulation in the residence. The record contains a letter to the Inspector dated October 15, 2014 from Stealth Solar which states actual reduction in kilowatt usage was 41.40%. Complainant did not establish that this was incorrect. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[2] 2. Complainant bears the burden of proof to establish cause to discipline Respondent’s licenses by a preponderance of the evidence.[3] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[4] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] 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.”[6] 4. The Citation in this matter identified a potential violation of A.R.S. § 1154(A)(15). Complainant did not establish by a preponderance of the evidence that Stealth Solar violated A.R.S. § 32-1154(A)(15) by engaging in false, misleading, or deceptive advertising, however, because he did not establish that his annual kilowatt usage was not 38% lower than the year before Steal Solar installed the solar system or that, if his usage failed to decrease by the guaranteed amount, the failure is not attributable to other causes, such as the fact that the home was most likely not occupied for many months prior to the contract. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the order in this matter, the complaint in Case No. 2014A-2589 against 3 Star Homes and Remodeling, Inc.’s License Nos. CR11.277334-D and B.224034-R shall be dismissed in its entirety.

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 the date of certification.

Done this day, December 14, 2015.

/s/ Dorinda M. Lang Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] The Registrar’s electronic file, Intake Complaint Submittal1.pdf at 34. [2] See A.R.S. § 32-1154(A). [3] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [4] See A.A.C. R2-19-119(B)(2). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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