ALJDEC decisions subject to certification as final

2014A-35-ROC · Registrar of Contractors · 2014-05-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 21, 2014, at 8:00 a.m. APPEARANCES: T and K Petersen Investments LLC (hereinafter “Applicant”) appeared through its qualifying party and member, Timothy Raymond Petersen. The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General, Seth Hargraves, Esq. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. Timothy Raymond Petersen (hereinafter “Mr. Petersen”) and Karen Michelle Petersen (hereinafter “Ms. Petersen”) are persons named on Pending Application No. P285821 of T and K Petersen LLC. Mr. Petersen and Ms. Petersen are listed as members of Applicant with the Arizona Corporation Commission. Applicant was incorporated on September 7, 2005. 2. On or about June 10, 2013, Mr. Petersen, on behalf of Applicant, submitted an Application for a Contractor’s License to the Registrar. Mr. Petersen was listed on the application as Applicant’s qualifying party and member. Ms. Petersen was listed as a member. 3. Mr. Petersen and Ms. Petersen are persons named on License No. 147642 of Timothy R. Petersen & Associates Inc., when it was revoked.[1] 4. On or about April 6, 2012, the Registrar’s then Interim Chief of Licensing, Lawrence R. Mathews, sent a letter to Mr. Petersen that provided, in relevant part, as follows:[2] This letter is being written as a follow-up to our telephone conversation earlier today around noon. In that conversation I followed up on a letter I mailed to you on March 27, 2012, portions of which, contained information not clear on its face and requiring supplementation.

In that previous letter I informed you that you needed to do the following things in order to have an application for a contractor’s license considered by the Registrar. Those things were/are:

• Complete a new application with all required documentation. Retest with the Business and Trade Exam. • Provide experience. • Resolve all complaints. • Pay Recovery fund outstanding amounts owing.

Items 1-3 remain the same and are accurate.

Item #4 is not clear on its face and needs to be clarified. This item actually refers to resolving “all civil penalties” associated with any previous complaints. As I mentioned to you in our conversation, the total amount of civil penalties outstanding from the numerous cases previously filed against your company amounts to $2,750 dollars. As I also mentioned to you in our conversation, this is an amount that cannot be discharged due to a bankruptcy. This amount should be submitted by cashier’s check or money order made out to the Registrar of Contractors.

Item #5 is inaccurate and needs to be supplemented. Your company, and consequently you, will not be precluded from applying for a new license even though there are still outstanding Recovery Fund payout amounts owed to the Registrar. The same is true for all amounts owed to subcontractor who filed “no pay” complaints against your company. This is because of your previous filing of bankruptcy.

Once revised item #4 is addressed, a new application that you may file will be addressed for licensure. The information in this letter is not intended to express a determination on whether or not an application will be approved if it is submitted. As previously expressed, all applicants have to meet all Licensing requirements, namely, passing both the Trade Exam and the Business Management Exam, the review and verification of experience commensurate with the License being applied for, the securing and posting of a bond or cash deposit in the amount set forth in statute for the type of License being applied for and the anticipated volume of work and any other Licensing Requirements provided for by Arizona law.

However, until Item #4 is addressed, any new application submittal will not be considered and if received by our office will be returned to you.

5. On or about December 10, 2013, the Registrar’s Chief of Licensing sent a letter to Applicant indicating that the Registrar was denying its license application under A.R.S. §§ 32-1154(A)(2); 32-1154(A)(3), namely A.A.C. R4-9-108; 32-1154(A)(7); 32-1154(A)(10); 32-1154(A)(11), and A.R.S. § 32-1154(A)(23).[3] 6. Applicant requested a hearing on the Registrar’s denial. 7. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 8. An evidentiary hearing was held on April 21, 2014. Mr. Petersen testified on Applicant’s behalf. The Registrar presented the testimony of Lawrence R. Mathews, Chief of Licensing. Hearing Evidence License History for License No. 147642 of Timothy R. Petersen & Associates Inc. 1. License No. 147642 of Timothy R. Petersen & Associates Inc., was suspended in Case No. 2007-6204988 (A07-0620) for failure to comply with an Order of the Registrar. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, 32-1154(A)(7), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matters had been resolved.[4] 2. License No. 147642 of Timothy R. Petersen & Associates Inc. was revoked in Case No. 2007-6211897 (A07-0621) for failure to comply with an Order of the Registrar. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, 32-1154(A)(7), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matter had been resolved.[5] 3. License No. 147642 of Timothy R. Petersen & Associates Inc. was suspended in Case No. 2007-6229750 (A07-0622) for failure to comply with an Order of the Registrar. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, 32-1154(A)(7), and 32-1154(A)(23). No documentation has been provided to the Registrar showing that the matter had been resolved.[6] 4. License No. 147642 of Timothy R. Petersen & Associates Inc. was revoked in Case No. 2007-6304207 (A07-0630) for failure to comply with an Order of the Registrar and for failure to pay a civil penalty. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, 32- 1154(A)(7), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matter had been resolved. The civil penalty has been paid.[7] 5. License No. 147642 of Timothy R. Petersen & Associates Inc., was revoked in Case No. 2008-282112 (A08-0028) for failure to comply with an Order of the Registrar and for failure to pay a civil penalty. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, 32- 1154(A)(7), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matter had been resolved. The civil penalty has been paid.[8] 6. License No. 147642 of Timothy R. Petersen & Associates Inc., was revoked in Case No. 2008-1575192 (A08-0157) for failure to comply with an Order of the Registrar and for failure to pay a civil penalty. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, 32- 1154(A)(7), 32-1154(A)(10), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matter had been resolved. The civil penalty has been paid.[9] 7. License No. 147642 of Timothy R. Petersen & Associates Inc. was revoked in Case No. 2008-1597314 (A08-0159) for failure to comply with an Order of the Registrar and for failure to pay a civil penalty. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(2), 32-1154(A)(3), namely, A.A.C. R4-9-108, 32-1154(A)(7), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matter had been resolved. The civil penalty has been paid.[10] 8. License No. 147642 of Timothy R. Petersen & Associates Inc. was revoked in Case No. 2008-1601059 (A08-0160) for failure to comply with an Order of the Registrar and for failure to pay a civil penalty. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, 32- 1154(A)(7), 32-1154(A)(10), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matter had been resolved. The civil penalty has been paid.[11] 9. License No. 147642 of Timothy R. Petersen & Associates Inc. was revoked in Case No. 2008-1758183 (A08-0175) for failure to comply with an Order of the Registrar and for failure to pay a civil penalty. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, and 32- 1154(A)(7). No documentation had been provided to the Registrar showing that the matter had been resolved.[12] 10. License No. 147642 of Timothy R. Petersen & Associates Inc. was revoked in Case No. 2008-4834809 (A08-0483) for failure to comply with an Order of the Registrar and for failure to pay a civil penalty. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(2), 32-1154(A)(3), namely, A.A.C. R4-9-108, 32-1154(A)(7), 32-1154(A)(10), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matter had been resolved. The civil penalty has been paid.[13] 11. License No. 147642 of Timothy R. Petersen & Associates Inc., was revoked in Case No. 2009-101710 (A09-0010) for failure to comply with an Order of the Registrar and for failure to pay a civil penalty. Timothy R. Petersen & Associates Inc. was found to have violated the provisions of A.R.S. §§ 32-1154(A)(3), namely, A.A.C. R4-9-108, 32- 1154(A)(7), and 32-1154(A)(23). No documentation had been provided to the Registrar showing that the matter had been resolved. The civil penalty has been paid.[14] 12. Twenty-four (24) separate complaints for alleged non-payment were filed with the Registrar against License No. 147642 of Timothy R. Petersen & Associates Inc. 13. License No. 147642 of Timothy R. Petersen & Associates Inc., has been revoked by the Registrar seventeen (17) times. 14. Several Residential Contractors’ Recovery Fund claims have been filed against License No. 147642 of Timothy R. Petersen & Associates Inc. $16,750.00 was paid out in Case No. 2008-7090472 (RF09-0472), $30,000.00 was paid out in Case No. 2009-7090948 (RF09-0948), $19,718.11 was paid out in Case No. 2009-7090965 (RF09-0965), $24,272.32 was paid out in Case No. 2009-7091048 (RF09-1048), $15,258.76 was paid out in Case No. 2009-7100208, and $8,623.31 was paid out in Case No. 2008-4834809 (A08-0483). Mr. Petersen and Ms. Petersen filed for Chapter 7 Bankruptcy Protection. Their bankruptcy was discharged on or about March 28, 2011.[15] TESTIMONY Testimony of Lawrence R. Mathews 15. Lawrence R. Mathews (hereinafter “Mr. Mathews”) testified that he is the Chief of Licensing Department for the Registrar. Mr. Mathews stated that he reviewed the Applicant’s license application. Mr. Mathews testified that the Licensing Department processes new license applications and license renewal applications for the Registrar. 16. Mr. Mathews testified that on or about June 10, 2013, Applicant filed an application for licensure with the Registrar.[16] Mr. Mathews stated that Applicant’s application for licensure was reviewed by the License Department. Mr. Mathews testified that Mr. Petersen was listed as member and qualifying party on the license application. 17. Mr. Mathews testified that Mr. Petersen had previously been listed on License No. 147642 of Timothy R. Petersen & Associates Inc. Mr. Mathews stated that numerous complaints had been filed License No. 147642 of Timothy R. Petersen & Associates Inc. Mr. Mathews testified that previous contracting history of an Applicant gives the Registrar and idea of what it can expect if it issues a new license to individuals that were previously listed on a different contractor’s license. Mr. Mathews stated that after review the ultimate decision by the Registrar was to deny the Applicant’s Licensee Application. 18. Mr. Mathews testified that a bankruptcy would not preclude an individual or an entity from applying for a new contractor’s license. Mr. Mathews acknowledged that Mr. Petersen had numerous conversations with the Licensing Department before the Application at issue was filed with the Registrar. Mr. Mathews stated that a determination of licensure can not be made until an application is actually filed with the Registrar. 19. Mr. Mathews testified that Mr. Petersen was given written notice of the Registrar’s decision to deny Applicant’s license application.[17] Mr. Mathews reviewed the denial letter. Mr. Mathews stated that the first issue was a pattern, practice, and history of performing poor work under the previous contractor’s license. Mr. Mathews testified that the numerous workmanship complaints that had been filed against License No. 147642 of Timothy R. Petersen & Associates Inc. were listed in the Denial Letter. Mr. Mathews stated that the numerous complaints with Corrective Work Orders were important because when a contractor is given a Corrective Work Order, the contractor is supposed to correct the work set forth in the Corrective Work Order. 20. Mr. Mathews testified that the workmanship complaints against License No. 147642 of Timothy R. Petersen & Associates Inc. had nothing to do with money. Mr. Mathews stated that the workmanship complaints were all based on poor workmanship by Timothy R. Petersen & Associates Inc. Mr. Mathews testified that Mr. Petersen had a history of performing poor work. 21. Mr. Mathews testified that the second issue was that Mr. Petersen had a history of not paying vendors. Mr. Mathews stated that many, if not all, of the non-pay complaints against Timothy R. Petersen & Associates Inc. were discharged in bankruptcy. Mr. Mathews testified that the Registrar’s issue was that Mr. Petersen had a history of not paying vendors, not that vendors were not paid. Mr. Mathews stated that the Registrar did not believe that the bankruptcy statutes prevent the Registrar from exercising its police authority. Mr. Mathews testified that the Registrar can still review an Applicant’s history of a pattern and practice of non-payment regardless of a bankruptcy. 22. Mr. Mathews testified that numerous non-payment complaints had been filed against License No. 147642 of Timothy R. Petersen & Associates Inc. with the Registrar. Mr. Mathews stated that numerous claims for damages had been filed against License No. 147642 of Timothy R. Petersen & Associates Inc. with the Residential Contractors’ Recovery Fund. 23. Mr. Mathews testified that a license applicant that has previously been licensed with the Registrar, such as the Applicant, must provide the Registrar with acceptable proof that all issues that have led to previous disciplinary actions against its contractor’s license have been fully resolved. Mr. Mathews stated that Applicant failed to provide any documentation that any of the issues that had led to disciplinary action against License No. 147642 of Timothy R. Petersen & Associates Inc. had been resolved. 24. Mr. Mathews testified that the Registrar reviewed the entire license history of License No. 147642 of Timothy R. Petersen & Associates Inc., not just the last two or three years of licensure. Mr. Mathews stated that Registrar exists to protect the health, safety, and welfare of the general public. Mr. Mathews testified that that twenty- five of the fifty-one complaints that had been filed against License No. 147642 of Timothy R. Petersen & Associates Inc. had been closed as resolved. 25. Mr. Mathews acknowledged that he had several telephone conversations with Mr. Petersen before the Applicant’s application for licensure was filed with the Registrar. Mr. Mathews acknowledged that Mr. Petersen had paid the sum of $2,750.00 to resolve the civil penalties that had been assessed by the Registrar against License No. 147642 of Timothy R. Petersen & Associates Inc. 26. Mr. Mathew’s testimony is found to be credible. Testimony of Timothy R. Petersen 27. Mr. Petersen testified that he had several issues with the denial of Applicant’s License Application. Mr. Petersen stated that for ten years, he had a spotless record with the Registrar of Contractors. Mr. Petersen testified that the problems experienced by License No. 147642 of Timothy R. Petersen & Associates Inc. were due to the collapse of the housing market. 28. Mr. Petersen testified that the collapse of the housing market was financially calamitous. Mr. Petersen stated that he had been forced to stop contracting and work in a grocery store for hourly wages to support his family. 29. Mr. Petersen testified that he had spent a great deal of time researching the possibility of re-obtaining a contractor’s license before Applicant’s license application was filed. Mr. Petersen stated that he thought he had an “excellent” chance of getting the new contractor’s license after he paid the civil penalties to the Registrar. Mr. Petersen testified that he did not understand how the Registrar could overlook twenty-five years of his life and base a denial of a contractor’s license on problems that occurred in a two- year period that were caused by a collapse in the real estate market. 30. Mr. Petersen testified that he lost his home, his vehicles, and that everything that he had worked twenty-five years for had been lost due to the housing market collapse. Mr. Petersen stated that the Registrar failed to take his entire history into account when Applicant’s license application was denied. 31. Mr. Petersen testified that the workmanship complaints were from the Sherman family. Mr. Petersen stated that Mr. Steve Sherman was an investor, not a homeowner. Mr. Petersen testified that Timothy R. Petersen & Associates Inc. constructed several “spec” houses for Mr. Sherman. 32. Mr. Petersen testified that he was unable to comply with Corrective Work Orders because he did not have the money. Mr. Petersen stated that he could not pay for the correction of poor work because he needed all of his money to support his family. Mr. Petersen testified that the Registrar failed to take the collapse of the housing market into consideration when Applicant’s license application was filed. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[18] 2. Applicant bears the burden of proof to establish that it meets statutory qualifications for a contractor’s license by a preponderance of the evidence.[19] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[20] 3. The history of workmanship complaints against License No. 147642 of Timothy R. Petersen & Associates Inc. provides evidence of lack of good character and reputation under A.R.S. § 32-1122(D). 4. Mr. Petersen testified that the problems that resulted in complaints being filed with the Registrar against License No. 147642 of Timothy R. Petersen & Associates Inc., were due solely to the financial problems caused by the collapse of the housing market and the personal animosity of one family. A review of the record establishes that the allegations of poor workmanship were reviewed and verified by an unbiased Registrar Investigator. Applicant failed to provide any documentation that any of the issues that had led to disciplinary action against License No. 147642 of Timothy R. Petersen & Associates Inc. had been resolved. 5. A contractor’s license is a privilege, not a right. “[T]he Registrar is charged with the overall responsibility of protecting the welfare of the public dealing with persons engaged in the building contracting vocations and afford the public protection against incompetent, inexperienced, unlawful and fraudulent acts of building contractors.”[21] On this record, Applicant did not establish that it is eligible for the Registrar to grant Applicant a contractor’s license without exposing the public to an unreasonable risk of loss. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s Order, the Registrar affirm the decision to deny T and K Petersen Investments LLC’s application for a contractor’s license. 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, May 2, 2014.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] Administrative Notice is taken of the official public records of the Registrar of Contractors, which reveal that Mr. Petersen and Ms. Petersen were listed on License No. 147642 of Timothy R. Petersen & Associates Inc., when it was revoked. [2] See Exhibit No. A (4/6/12 Letter).

[3] See Exhibit No. 2 (12/10/13 Denial Letter). [4] See Exhibit No. 4A (8/19/08 Order of the Registrar). [5] See Exhibit No. 4B (2/18/09 Order of the Registrar). [6] See Exhibit No. 4A (8/19/08 Order of the Registrar). [7] See Exhibit No. 4C (4/30/09 Order of the Registrar). [8] See Exhibit No. 4D (7/22/08 Order of the Registrar). [9] See Exhibit No. 4E (8/28/08 Order of the Registrar). [10] See Exhibit No. 4F (3/13/09 Order of the Registrar with attachments). [11] See Exhibit No. 4G (8/28/08 Order of the Registrar with attachments). [12] See Exhibit No. 4H (6/10/08 Order of the Registrar with attachments). [13] See Exhibit No. 4I (6/12/09 Order of the Registrar with attachments). [14] See Exhibit No. 4J (8/13/09 Order of the Registrar with attachments). [15] See Exhibit No. 2 (12/10/13 Denial Letter). [16] See Exhibit No. 1 (Applicant’s application for Class B- License). [17] See Exhibit No. 2 (12/10/13 Denial Letter). [18] See A.R.S. § 32-1122. [19] See A.R.S. § 41-1092.07(G)(1); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [20] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [21] Burrows v. Taylor, 129 Ariz. 212, 214, 630 P.2d 35, 37 (Ct. App. 1981); see also Laws 1985, Ch. 334, § 1 (“The goals and objectives of the registrar of contractors are to protect the public health, safety and welfare by licensing, bonding and regulating contractors engaged in residential construction . . . .”).

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