ALJDEC decisions subject to certification as final

2014A-3667-ROC · Registrar of Contractors · 2014-12-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 18, 2014, at 8:00 a.m. APPEARANCES: CCC Builders LLC, Pending License No. B-291404-R and Mike James Capuzzo failed to appear. The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General, Seth T. Hargraves, Esq. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

Docket No. 2014A-3667-ROC CCC Builders LLC, Pending License No. B-291404-R (hereinafter “Applicant”) appealed the Registrar’s denial of its application for a contractor’s license. The Registrar based the denial upon a finding that Applicant’s sole officer and proposed Qualifying Party lacks statutory good character and reputation. The ROC found lack of good character and reputation based on a finding that Applicant has engaged in unlicensed contracting and other actions that show lack of good character. Applicant requested a hearing to challenge the denial. At the hearing, the Registrar presented twelve exhibits and the testimony of Lawrence Mathews, Esq. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order for docket No. 2014A-3667-ROC, finding that legal grounds support the Registrar’s denial of Applicant’s application and that Applicant has not established any grounds to support the Registrar’s grant of the application. FINDINGS OF FACT 1. On or about March 24, 2014, Applicant filed an application for a Class B general building contractor’s license with the Registrar.[1] On August 7, 2014, the ROC issued a letter (hereinafter “denial letter”) denying the application for the following reasons: 1. Michael James Capuzzo misrepresented a material fact on his application in contravention of A.R.S. § 32-1154(A)(5).

2. Michael James Capuzzo has failed to establish good character and reputation in contravention of A.R.S. § 32-1122(D) as he was and is a person named on Capuzzo Construction, License No. 150800, on the date of injury that resulted in the revocation of the license.

3. The registrar would violate the provisions of A.R.S. §§ 32- 1154(A)(20) and 32-1161(C), were it to allow Michael James Capuzzo to be named as a Member on CCC Builders, LLC’s License No. 291404, because Michael James Capuzzo is a person named on the license of Capuzzo Construction, Inc.’s, License No. 150800, on the date of injury that resulted in the revocation of the license.

4. Michael James Capuzzo has failed to establish good character and reputation in contravention of A.R.S. § 32-1122(D) a he was and is a person named on Capuzzo Construction, Inc., License No. 231763, on the date of injury that resulted in the revocation of the license.

5. The Registrar would violate the provisions of A.R.S. §§ 32- 1154(A)(20) and 32-1161(C), were it to allow Michael James Capuzzo to be named as a Member on CCC Builders, LLC’s, License No. 291404, because Michael James Capuzzo is a person named on the license of Capuzzo Construction, Inc.’s, License No. 231763, on the date of injury that resulted in the revocation of the license.[2]

2. The specific facts upon which the ROC relies for the denial were explained in the next pages of the application denial letter. Testimony of Lawrence Mathews 3. Lawrence Mathews (hereinafter “Mr. Mathews”) testified that he is the Chief of Licensing for the Registrar. Mr. Mathews stated that he was familiar with Applicant’s application for licensure. Mr. Mathews testified that Mr. Capuzzo is listed as the sole member of Applicant.

4. Mr. Mathews testified that Mr. Capuzzo misrepresented a material fact in Applicant’s license application by failing to list License No. 231763, issued to Capuzzo Construction, Inc. (hereinafter “Capuzzo Construction”) on Applicant’s license application. 5. Mr. Mathews testified that Mr. Capuzzo was the Qualifying Party and President of Capuzzo Construction, License Nos. 150800 and 231763, on the date of injury that resulted in the revocation of the licenses. Mr. Mathews stated that on or about May 1, 2014, the Registrar issued an Order of Summary Suspension in Case No. 2014-1587, summarily suspending License Nos. 150800 and 231763 for a substantiated violation of A.R.S. § 32-1154(A)(12). Mr. Mathews testified that the Registrar issued a Citation and Notice of Hearing in Case No. 2014- 1587, charging that Capuzzo Construction, Inc., License 150800 and 231763 violated A.R.S. §§ 32-1154(A)(12) and 32-1154(A)(21).[3] 6. Mr. Mathews testified that on June 16, 2014, the Registrar issued an Order revoking Capuzzo Construction’s License Nos. 150800 and 231763. Mr. Mathews stated that on July 29, 2014, the Registrar revoked Capuzzo Construction, Inc.’s License Nos. 150800 and 231763, according to the terms of the June 16, 2014 Order of the Registrar.[4] 7. Mr. Mathews testified that Mr. Capuzzo was a person named on Capuzzo Construction’s License Nos. 150800 and 231763 on the date of the injury that resulted in the revocation of the licenses. Mr. Mathews stated that Applicant’s license application contained the name of a person who violated the provisions of A.R.S. §§ 32-1154(A)(12) and 32- 1154(A)(21). Mr. Mathews testified that Applicant had not submitted proof of resolution of the complaint that led to the revocation of Capuzzo Construction, Inc.’s License Nos. 150800 and 231763. Mr. Mathews opined that if Applicant’s license application was granted, it would violate the provisions of A.R.S. §§ 32-1154(A)(20) and 32- 1161(C). 8. Mr. Mathews testified that he was also aware of the fact that Mr. Capuzzo was cited for advertising for contracting work without a contractor’s license after Applicant’s pending license application was denied by the Registrar. 9. Mr. Mathew’s testimony is found to be credible. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[5] 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.[6] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[7] 3. Mr. Capuzzo failed to disclose on Applicant’s License Application that he was listed on License No. 231763 that had been issued to Capuzzo Construction. This Tribunal concludes that Applicant’s failure is a misrepresentation of a material fact in violation of A.R.S. § 32- 1154(A)(5).[8] 4. Mr. Capuzzo was a person named on License Nos. 150800 and 231763 of Capuzzo Construction on the date of injury that resulted in the revocation of the licenses. There was no documentation presented to establish that the Complaint that led to the revocation of License Nos. 150800 and 231763 of Capuzzo Construction had been resolved. This Tribunal concludes that the applicable provisions of A.R.S. §§ 32- 1154(A)(20)[9] and 32-1161(C)[10] preclude the issuance of Pending License No. B-291404-R to Applicant. 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.”[11] 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 FOR No. 2014A-3667-ROC

IT IS RECOMMENDED that the Registrar of Contractors deny the license application of CCC Builders LLC Pending License No. B-291404-R.

Docket No. 2014A-3246-ROC

Respondent, Mike James Capuzzo (hereinafter “Mr. Capuzzo”) appealed five separate Civil Citations issued by the Registrar for advertising for without a license. The five separate Civil Citations imposed total civil penalties in the amount of $11,000.00. Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law, and Recommend Order are made, finding violations and recommending imposition of a total of $11,000.00 in civil penalties. FINDINGS OF FACT Background 1. Mr. Capuzzo has not been a licensed contractor in the State of Arizona since July 29, 2014, when the Registrar revoked License Nos. 150800 and 231763. 2. On or about August 13, 2014, the Registrar received a COMPSTAT complaint against Mr. Capuzzo, alleging that Mr. Capuzzo was advertising his services on the internet and not including the words “not a licensed contractor.” 3. Pursuant to the filing of the COMPSTAT complaint, an assigned Registrar Investigator, Manuel Bermudez (hereinafter “Investigator Bermudez”), initiated an investigation of the complaint. Investigator Bermudez checked the Registrar’s computer database and discovered that Mr. Capuzzo had previously been a licensed Arizona contractor under License Nos. 231763 and 150800, but that those licenses had both been revoked on July 29, 2014. The computer database check also revealed that Mr. Capuzzo had applied for another license under CCC Builders LLC, but that the application had been denied on August 7, 2014. 4. Investigator Bermudez concluded his initial investigation and determined that Mr. Capuzzo had violated the provisions of A.R.S. § 32- 1165 (advertising without a license). A Cease & Desist Order was issued to Mr. Capuzzo on August 13, 2014, for violating A.R.S. § 32- 1165. No civil penalty was assessed in the August 13, 2014 Cease & Desist Order.[12] 5. On August 14, 2014 a second Cease & Desist Order was issued to Mr. Capuzzo for violating A.R.S. § 32-1165 by again advertising without a license. A $1,000.00 civil penalty was assessed in the August 14, 2014 Cease & Desist Order.[13] 6. After numerous attempts, on or about August 27, 2014, Investigator Bermudez was finally able to contact Mr. Capuzzo on the phone. Investigator Bermudez informed Mr. Capuzzo that he needed to remove the revoked license numbers from the Capuzzo Construction website and to include the phrase “not a licensed contractor” on both the Capuzzo Construction website and the CCC Builders website. Investigator Bermudez advised Mr. Capuzzo that he would be checking the websites for compliance on August 29, 2014, and that if the websites for Capuzzo Construction and CCC Builders had not been updated, additional civil citations would be issued to Mr. Capuzzo on a daily basis until compliance with the Cease & Desist Orders had been achieved.[14] 7. On August 29, 2014, Investigator Bermudez checked the websites for Capuzzo Construction and CCC Builders. Investigator Bermudez found that the Mr. Capuzzo’s websites had been changed to include the words “not a licensed contractor.” However, upon further inspection, Investigator Bermudez determined that the website gave the impression that Mr. Capuzzo was a contractor rather than a handyman. Photographs that were submitted showed that CCC Builders’ advertisements did not solicit construction work that was minor in character and that Mr. Capuzzo’s home page referred to CCC Builders as a “framing contractor.”[15] 8. On August 29, 2014, a third Cease & Desist Order was issued to Mr. Capuzzo for violating A.R.S. § 32-1165 by advertising without a license. A $2,500.00 civil penalty was assessed in the August 29, 2014 Cease & Desist Order.[16] 9. On August 29, 2014, Investigator Bermudez conducted another telephone interview with Mr. Capuzzo and explained why the third Cease & Desist Order was being issued. Investigator Bermudez informed Mr. Capuzzo that he needed to update his website to reflect that Mr. Capuzzo was not a licensed contractor and that it could only perform construction work that was minor in nature.[17] 10. On September 2, 2014, Investigator Bermudez conducted a follow-up investigation for compliance with the terms of the Cease & Desist Orders that had been issued. Investigator Bermudez observed that Capuzzo’s advertisement had not been changed, that the phrase “Arizona Custom Home Contractor” was still on Mr. Capuzzo’s home page, and that the current projects tab stated that a Desert Mountain project for Platinum Homes had just begun.[18] 11. On September 2, 2014, a fourth Cease & Desist Order was issued to Mr. Capuzzo for violating A.R.S. § 32-1165 by advertising without a license. A $2,500.00 civil penalty was assessed in the September 2, 2014 Cease & Desist Order.[19] 12. On September 3, 2014, Investigator Bermudez conducted another follow- up investigation for compliance with the terms of the Cease & Desist Orders that had been issued by the Registrar. Investigator Bermudez found that Mr. Capuzzo had not changed his advertisement to reflect only construction jobs that were minor in nature or to include the words, “not a licensed contractor.”[20] 13. On September 3, 2014, a fifth Cease & Desist Order was issued to Mr. Capuzzo for violating A.R.S. § 32-1165 by advertising without a license. A $2,500.00 civil penalty was assessed in the September 3, 2014 Cease & Desist Order.[21] 14. On September 4, 2014, Investigator Bermudez conducted another follow- up investigation for compliance with the terms of the Cease & Desist Orders that had been issued by the Registrar. Investigator Bermudez found that Mr. Capuzzo had still not changed his advertisement to include the words, “not a licensed contractor.”[22] 15. On September 4, 2014, a sixth Cease & Desist Order was issued to Mr. Capuzzo for violating A.R.S. § 32-1165 by advertising without a license. A $2,500.00 civil penalty was assessed in the September 4, 2014 Cease & Desist Order.[23] 16. On September 10, 2014, Mr. Capuzzo filed a request for an administrative hearing.[24] Testimony of Registrar Investigator Alex Figueroa 4. The Registrar’s Investigator, Alex Figueroa (hereinafter “Investigator Figueroa”, testified that he is an Investigator with the Registrar of Contractors. Investigator Figueroa stated that he normally investigates complaints for unlicensed contracting and complaints for violations of A.R.S. § 32-1165 (advertising without a license). 5. Investigator Figueroa testified that he was not personally involved in the investigation of Mr. Capuzzo. Investigator Figueroa stated that he had reviewed the Official Departmental Report prepared by Investigator Bermudez. Investigator Figueroa testified that the Official Departmental Report was a standard report for this type of investigation. 6. Investigator Figueroa reviewed and summarized the Official Departmental Report. Investigator Figueroa testified that Mr. Capuzzo is not a licensed contractor. Investigator Figueroa stated that Mr. Capuzzo was not in compliance with Arizona contracting law. 7. Investigator Figueroa testified that Arizona contracting law allows an exemption from licensure, with certain limitations, for a “handyman.”[25] Investigator Figueroa stated that the words, “not a licensed contractor,” must be contained in any advertisement by an unlicensed contractor. Investigator Figueroa testified that the handyman exemption only applies to construction work that is casual or minor in nature. 8. Investigator Figueroa testified that custom framing a home was not casual or minor in nature and could not normally be performed for less than $1,000.00. Investigator Figueroa stated that framing normally requires a permit from the local building authority. 9. Investigator Figueroa’s testimony is found to be credible. CONCLUSIONS OF LAW The Registrar bears the burden of proof and to establish Mr. Capuzzo’s violation of A.R.S. § 32-1165 by a preponderance of the evidence. Arizona contracting law prohibits a person from acting as a contractor without a license.[26] The law allows an exemption from licensure, with certain limitations, for a “handyman.” An unlicensed handyman can perform construction work, with certain exclusions, such as that the work does not require a permit, as long as the aggregate price for the job does not exceed $1,000.00.[27] The Registrar can order a person who performs contracting without a license and who is not exempt from licensure to cease and desist such activity and may impose a civil penalty of at least $200.00 and up to $2,500.00 for each violation, but not more than $2,500.00 per day.[28] A.R.S. § 32-1121(A)(14) provides as follows: Any person other than a licensed contractor engaging in any work or operation on one undertaking or project by one or more contracts, for which the aggregate contract price, including labor, materials and all other items, but excluding any electrical fixture or appliance that was designed by the manufacturer, that is unaltered, unchanged or unmodified by any person, that can be plugged into a common household electrical outlet utilizing a two pronged or three pronged electrical connector and that does not use any other form of energy, including natural gas, propane or other petroleum or gaseous fuel, to operate or is attached by a nail, screw or other fastening device to the frame or foundation of any residential structure, 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:

(a) In any case in which the performance of the work requires a local building permit.

(b) In any case in which the work or construction is only a part of a larger or major operation, whether undertaken by the same or a different contractor, or in which a division of the operation is made in contracts of amounts less than one thousand dollars, excluding any electrical fixture or appliance that was designed by the manufacturer, that is unaltered, unchanged or unmodified by any person, that can be plugged into a common household electrical outlet utilizing a two pronged or three pronged electrical connector and that does not use any other form of energy, including natural gas, propane or other petroleum or gaseous fuel, to operate or is attached by a nail, screw or other fastening device to the frame or foundation of any residential structure, for the purpose of evasion of this chapter or otherwise.

(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

The Registrar established that Mr. Capuzzo violated A.R.S. § 32-1165 by advertising on the internet without including the disclaimer, “not a licensed contractor,” by advertising for construction work that was not minor or casual in nature, by advertising for construction work that would cost more than $1,000.00, and by advertising using contractor’s license numbers that had been revoked. A.R.S. § 32-1166(A) authorizes the Registrar to assess “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.” With respect to the appropriate amount of the civil penalty for Respondent’s continuing violation of A.R.S. § 32-1151, A.R.S. § 32-1166(A) required the Registrar to “adopt rules covering the assessment of a civil penalty that give due consideration to the gravity of the violation and any history of previous violations.” Pursuant to this directive, the Registrar adopted A.A.C. R4-9-131.[29] A factor in aggravation of the penalty is that the Mr. Capuzzo failed to correct his advertisements and continued to falsely represent himself as a licensed contractor despite repeated written Cease and Desist Orders and despite repeated telephone conversations with the assigned Registrar’s Investigator. The Registrar established violations of Arizona contracting law. Thus, a civil penalty is warranted. The evidence established that Mr. Capuzzo violated the charged provisions of A.R.S. § 32-1165 (advertising without a license) and that Mr. Capuzzo repeatedly failed to fully comply with Cease and Desist Orders issued by the Registrar. This Tribunal concludes that total civil penalties in the amount of $11,000.00 are warranted in this case. RECOMMENDED ORDER for Docket No. 2014A-3246-ROC

Based on the foregoing, it is recommended that the Registrar affirm the finding that Mr. Capuzzo violated A.R.S. § 32-1165 and affirm the decision to assess total civil penalties under A.R.S. § 32-1166(A) in the amount of $11,000.00, to be paid in certified funds to the Registrar on or before the effective date of the Registrar’s 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 5 days from the date of that certification. Done this day, December 2, 2014.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] See Exhibit 2 (CCC Builder LLC’s Application for B General Residential Contractor License). [2] See Exhibit 1 (8/7/14 Notice of Application Denial). [3] See Exhibit 4 (Citation and Notice of Hearing, attachments). [4] The Order issued in Case 2014-1487 provides, in part, as follows: 1. This matter is within the jurisdiction of the Registrar of Contractors pursuant to A.R.S. §§ 32-1104(A)(4), 32-1154(B) and 32- 1156. 2. The Citation and Notice of Hearing issued by the Registrar of Contractors in this matter alleged potential violations of A.R.S. § 32-1154(A)(12) and (21). 3. A.R.S. § 32-1154(A)(12) provides grounds for suspension or revocation of a contractor’s license for failure to comply with any safety or labor laws or codes. 4. A.R.S. § 32-1154(A)(21) provides grounds for suspension or revocation of a contractor’s license for having a person named on a license who is or was named on a suspended or revoked license for any act or omission done while named on the license, but not for a license revoked under this provision. 5. The Registrar of Contractors may consider the prior record of a contractor in any disciplinary proceeding. A.A.C. R4-9-117. Administrative notice is taken of the Respondent’s prior License record as reflected on the Registrar of Contractors public website on June 4, 2014. Such prior License record reflects that the status of Respondent’s licenses has not changed since the dates reflected in Exhibits 4 and 5. 6. In this case, the Registrar of Contractors has established that Respondent violated A.R.S. § 32-1154(A)(12) in that ADOSH has made a final determination of a safety violation and Respondent has not corrected it. Since there is an ongoing violation, it is appropriate to revoke both of Respondent’s licenses in order to avoid violation of A.R.S. § 32-1154(A)(21).

[5] See A.R.S. § 32-1122. [6] 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). [7] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [8] A.R.S. § 32-1154(A)(5) 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: Misrepresentation of a material fact by the applicant in obtaining a license

[9] A.R.S. § 32-1154(A)(20) provides as follows:

Having a person named on the license who is or was named on any other license in this state or in another state that is under suspension or revocation for any act or omission that occurs while the person is or was named on the license unless the prior revocation was based solely on a violation of this paragraph.

[10] A.R.S. § 32-1161(C) provides as follows:

After revocation of a license upon any of the grounds set forth in section 32-1154, the license shall not be renewed or reissued for one year after final determination of revocation and then only on proper showing that all loss caused by the act or omission for which the license was revoked has been fully satisfied.

[11] 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 . . . .”). [12] See Exhibit 6 (8/13/14 Violation and Cease & Desist Order). [13] See Exhibit 7 (8/14/14 Violation and Cease & Desist Order). [14] See Exhibit 5 (Official Departmental Report). [15] See Exhibit 5 (Official Departmental Report). [16] See Exhibit 8 (8/29/14 Violation and Cease and Desist Order). [17] See Exhibit 5 (Official Departmental Report). [18] See Exhibit 5 (Official Departmental Report). [19] See Exhibit 9 (9/2/14 Violation and Cease and Desist Order). [20] See Exhibit 5 (Official Departmental Report). [21] See Exhibit 10 (9/3/14 Violation and Cease and Desist Order). [22] See Exhibit 5 (Official Departmental Report). [23] See Exhibit 11 (9/4/14 Violation and Cease and Desist Order). [24] See Exhibit 12 ((9/10/14 Request for Administrative Hearing). [25] See A.R.S. § 32-1121(A)(14). [26] A.R.S. § 32-1164(A)(2). [27] A.R.S. § 32-1121(A)(14). [28] A.R.S. § 32-1166(A). [29] A.A.C. R4-9-131 sets forth permissible aggravating and mitigating factors to be considered, in relevant part as follows: In assessing a civil penalty as provided for under A.R.S. § 32- 1166(A), the Registrar shall give due consideration to whether the person cited or any individual acting on that person’s behalf has committed one or more of the following acts in determining the gravity of the cited violation: 1. Falsely represented to be a licensed contractor. 2. Failed to perform any work for which money was received. 3. Executed or used any false or misleading documents for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 4. Made false or misleading statements for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 5. Failed or neglected to apply funds which were received for the purpose of obtaining or paying for services, labor, materials, or equipment. 6. Performed work that was or had the potential to become hazardous to the health, safety, or general welfare of the public. 7. Performed work that deliberately was in violation of building codes, safety laws, labor laws, workers’ compensation laws, or unemployment insurance laws. 8. Performed work that failed to meet minimum acceptable trade or industry standards or practices or was not performed in a good and workmanlike manner. 9. Has committed any other act which would otherwise be cause for disciplinary action if the person cited had been properly licensed pursuant to A.R.S. Title 32, Chapter 10. 10. Has committed two or more prior violations. 11. Performed work that has caused loss or damage to the structure, its appurtenances, or property being worked upon or has caused loss or injury to any person.

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