ALJDEC decisions subject to certification as final

2014A-3276-ROC · Registrar of Contractors · 2015-12-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 23, 2015, at 3:00 p.m. APPEARANCES: Amber Petranella Nyhuis (hereinafter “Complainant” or “Ms. Nyhuis”) appeared on her own behalf; 3 Star Homes and Remodeling, Inc. (“Respondent”) appeared through Michael Patrick Drews (“Mr. Drews”), the former qualifying party on License No. CR11.277334-D,[1] and Dan Clifford Starwalt (“Mr. Starwalt”), the qualifying party on License No. B.224034-R. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

The hearing was convened to determine whether Respondent violated the charged provisions of A.R.S. § 32-1154(A)(1) and A.R.S. § 32-1154(A)(15) as alleged by Complainant and as cited by the Registrar of Contractors (hereinafter “Registrar”). Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT Background and Procedure 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. 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. 5. On or about August 14, 2014, Complainant filed a Complaint with the Registrar against Respondent doing business as Stealth Solar, alleging that Respondent had abandoned her construction project without completing all of the agreed-upon solar panel installation and insulation work on her residence and that the savings on her electric bill “were nowhere close to the savings promised by two of Stealth Solar’s representatives.” 6. Complainant attached to her complaint voluminous email correspondence with Stealth Solar in which she had expressed her dissatisfaction with the initial number of solar panels installed on her residence, a Work Order signed by Respondent’s representative stating that Respondent would install four additional solar panels on Complainant’s residence, along with additional insulation, the solar panel design for the additional solar panels, her HOA’s approval of the installation of four additional solar panels, email correspondence in which Respondent had contacted her HOA, and email confirmation from her HOA that Respondent had not contacted it. 7. On November 13, 2014, as Registrar’s Investigator conducted an onsite inspection at Complainant’s residence. 8. On November 14, 2014, a written Directive was issued by the Registrar. 9. The written Directive provided, in relevant part, as follows: After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). You are hereby directed to remedy the following violations by the appropriate means:

1. Respondent shall install additional solar panels and attic insulation and complete project per contractual agreement, properly executed change orders, and/or verbal agreements.

10. When the Respondent failed to respond to the written Directive the Registrar issued a Citation that charged cause to discipline Respondent’s license under A.R.S. § 32-1154(A)(1)[2] and A.R.S. § 32-1154(A)(15).[3]. Hearing Evidence 11. Matt Gunstra (hereinafter “Investigator Gunstra”) testified that he is an Investigator for the Registrar. Investigator Gunstra stated that he performed an onsite inspection at Complainant’s residence on November 6, 2014. He said that he prepared the written Directive that was issued by the Registrar on November 14, 2014. 12. Investigator Gunstra testified that Respondent agreed to install additional solar panels and additional insulation in Complainant’s residence. Investigator Gunstra said that he called the Respondent before performing his onsite inspection and that Respondent’s representative, “Bob Beck,” acknowledged that Respondent had agreed to install additional solar panels and insulation in Complainant’s residence. Respondent acknowledged that it had not performed the agreed-upon extra work but that it intended to do so. 13. Investigator Gunstra testified Respondent admitted that the estimated utility savings promised to Complainant were not going to be met because the additional solar panels and insulation had not been installed. Investigator Gunstra stated that Respondent failed to comply with the written Directive. 14. Investigator Gunstra’s testimony is found to be credible. 15. Ms. Nyhuis testified that Respondent’s salesperson, “Nick DeFernando,” inspected her home and promised her that the installation of a solar panel system on her residence would reduce her net energy utility bill to $18 per month. She said that she applied for and was approved for a loan for the cost of the solar panel system at that time. She contacted Respondent to proceed with the solar panel installation and Respondent sent out a different sales person, “Mike Kelly.” 16. Ms. Nyhuis testified that she then signed a contract with Stealth Solar and paid Respondent the sum of $13,760.00 for the installation of the agreed-upon solar system. Ms. Nyhuis stated that within a few months, she noticed that she was paying more for her utility bills and her payments on the loan then she would have paid for her energy bills to begin with. She then contacted SRP and SRP conducted an energy audit of her residence. 17. Ms. Nyhuis testified that SRP provided her with an energy audit that indicated that her savings would be far less than the amount promised by Respondent. She then contacted Respondent and asked why Respondent had never informed her about the lack on insulation in her residence when it conducted an energy audit of her residence before it installed the solar panel system on her residence. 18. Ms. Nyhuis testified that Respondent’s representative agreed to perform additional work on her residence and presented her with a signed a Work Order for the installation of additional solar panels and insulation in her residence. Ms. Nyhuis stated that Respondent failed to comply with the terms of its agreement. 19. Ms. Nyhuis’ testimony is found to be credible. 20. Mr. Drews testified that he did not know why he was responsible for Stealth Solar’s actions. Mr. Drews explained that he was a subcontractor for Stealth Solar. Mr. Drews said that he had nothing to do with the installation of Complainant’s solar system. Mr. Drews said that it was “mind boggling” to him that Respondent was involved in this matter. 21. Mr. Drews testified that Respondent had nothing to do with Stealth Solar’s sales of solar systems to homeowners. Mr. Drews testified that if Stealth Solar’s installation of electrical panels had been deficient, Respondent would have corrected the deficiencies. 22. Mr. Drews testified that the Registrar changed Respondent’s mailing address to Stealth Solar’s mailing address without Respondent’s knowledge or permission. Mr. Drews testified that Respondent therefore did not receive the Complaint at issue. Mr. Drews testified that after Respondent changed its address of record back to the P.O. Box, Respondent received the Registrar’s Notice of Hearing. Mr. Drews said that he worked for the leasing company and that the leasing company actively supports the solar installations.

23. Mr. Starwalt testified that he would have known about the complaint earlier if the Registrar of Contractors had not changed his address without authorization. He stated that changed the address back in July. Mr. Starwalt said that he knew nothing about the problems Stealth Solar was experiencing with his license for about two years. Mr. Starwalt said before the Registrar changed Respondent’s address, the Registrar would always notify him of a problem and he would make sure the Complaint was taken care of. 24. Mr. Starwalt testified that Complainant had a claim in with the Attorney General’s Office (“AGO”) against Stealth Solar. Mr. Starwalt explained that Fred Richie and his wife were the owners of Stealth Solar. Mr. Starwalt said that until the claim against Stealth Solar gets settled, he did not see why this complaint should even be brought up. Mr. Starwalt said that he did not know why the Complainant had not been contacted regarding the settlement of the complaint to the AGO. 25. Mr. Starwalt testified that he does not own Stealth Solar and that he should not be held liable for agreements made by Stealth Solar. Mr. Starwalt said that he did not understand why he would be liable. Mr. Starwalt acknowledged that Stealth Solar did business under Respondent’s licenses and that he knew that Stealth Solar was operating under Respondent’s contractor’s licenses. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[4] 2. Complainant bears the burden of proof to establish cause to discipline Respondent’s licenses by a preponderance of the evidence.[5] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[6] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[7] 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.”[8] 4. The Registrar’s statutes provide comprehensive qualifications and regulation of solar contractors in Arizona.[9] A.R.S. § 32-1170 provides that “‘[s]olar contractor’ means a contractor, as defined in section 32-1101, who installs, alters or repairs solar devices.” A.R.S. § 32-1170.01 unequivocally provides that “[a]fter June 30, 1980, it is unlawful for a contractor to install, alter or repair a solar device without qualifying as a solar contractor pursuant to this article.” A.R.S. § 32-1170.02(A) provides as follows: To qualify as a solar contractor under this article, the applicant shall:

1. Submit to the registrar an application on forms prescribed by the registrar, identifying the applicant and the classification of license held or sought by the applicant, and pay the prescribed fee.

2. Pass an examination approved and conducted by the registrar that is specific to the solar requirements of the classification of license held or sought by the applicant.

3. Meet all other provisions of this chapter relating to obtaining and retaining an appropriate license.

These statutes require Stealth Solar to have had its own license to install, alter, or repair solar devices in Arizona. 5. Stealth Solar could not have obtained a contractor’s license without a qualifying party.[10] The qualifying party would have been obliged to be “regularly employed by the licensee and . . . actively engaged in the classification of work for which such responsible managing employee qualifies in behalf of the licensee.”[11] The qualifying party would have been prohibited from taking any other employment that would conflict with these obligations and could have been a qualifying party on only one other license, but only if there was a common ownership of at least 25% of each licensee.[12] Although Mr. Starwalt was the qualified individual whose association allowed Stealth Solar to engage in solar contracting in Arizona, he did not perform the oversight over Stealth Solar that is required for qualifying parties in Arizona. 6. A.R.S. § 32-1154(A)(9) includes among the grounds for suspension, revocation, and other disciplinary action against a contractor’s license, “[a]iding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one’s license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.” Under A.R.S. § 32- 1154(A)(9), because Respondent allowed Stealth Solar to use its license, Respondent is responsible for Stealth Solar’s violation of Arizona contracting statutes.[13] 7. Investigator Gunstra credibly testified that Respondent agreed to install additional solar panels and additional insulation in Complainant’s residence. Investigator Gunstra said that he called Respondent before performing his onsite inspection and that Respondent’s representative, “Bob Beck,” acknowledged that Respondent had agreed to install the additional solar panels and insulation in Complainant’s residence. Investigative Gunstra testified that Respondent acknowledged that it had not performed the agreed-upon extra work but that it intended to do so. 8. Ms. Nyhuis credibly testified that Respondent’s representative agreed to perform additional work on her residence and presented her with a signed a Work Order for the installation of additional solar panels and insulation in her residence. Ms. Nyhuis stated that Respondent failed to comply with the terms of its agreement. 9. This Tribunal concludes that Complainant established by a preponderance of the evidence that Stealth Solar violated the charged provisions of A.R.S. § 32-1154(A)(1). 10. Ms. Nyhuis credibly testified that Respondent’s salesperson, “Nick DeFernando,” inspected her home and promised her that the installation of a solar panel system on her residence would reduce her net energy utility bill to $18 per month. Ms. Nyhuis stated that within a few months she noticed that she was paying more for her utility bills and the loan for the solar system then she would have paid for her energy bills to begin with. She then contacted SRP and that SRP conducted an energy audit of her residence. 11. Ms. Nyhuis testified that SRP provided her with an energy audit that indicated that her savings would be far less than the amount promised by Respondent. She then contacted the Respondent and asked why the Respondent had never informed her about the lack on insulation in her residence when it conducted an energy audit of her residence before it installed the solar panel system on her residence. Respondent’s representative agreed to perform additional work on her residence and presented her with a signed a Work Order for the installation of additional solar panels and insulation in her residence. 12. This Tribunal concludes that Complainant established by a preponderance of the evidence that Stealth Solar violated the charged provisions of A.R.S. § 32-1154(A)(15). RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the order in this matter, that 3 Star Homes and Remodeling, Inc.’s License Nos. CR11.277334-D and B.224034-R shall be revoked. 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 9, 2015.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] According to the Registrar of Contractors’ public website, Mr. Drews resigned as qualifying party on the license on December 2, 2015. [2] A.R.S. § 32-1154(A)(1) provides as follows: A. The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: 1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

[3] A.R.S. § 32-1154(A)(15) provides as follows: A. The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: . . . . 15. False, misleading or deceptive advertising whereby any member of the public may be misled and injured.

[4] See A.R.S. § 32-1154(A). [5] 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). [6] See A.A.C. R2-19-119(B)(2). [7] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [8] Black’s Law Dictionary at page 1220 (8th ed. 1999). [9] See A.R.S. §§ 32-1170 through 32-1170.01, 44-1762. [10] See A.R.S. § 32-1122(B)(1)(e); see also A.R.S. § 32-1167(B) (If the qualifying party disassociates from the licensee, after 60 days license shall be suspended by operation of law until the licensee does qualify through another person). [11] A.R.S. § 32-1127. [12] See id. [13] Complainant did not allege, however, and the Registrar in the Citation did not charge a violation of A.R.S. § 32-1154(A)(9).

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