ALJDEC decisions subject to certification as final

2014A-3830-ROC · Registrar of Contractors · 2015-02-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 30, 2015, at 8:00 a.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by Seth T. Hargraves, Esq., Assistant Attorney General; Respondent Aaron Byrd (“Mr. Byrd”) appeared telephonically on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _________________________________________________________________ ____

FINDINGS OF FACT On or about August 11, 2014, the Registrar received a complaint from Maureen L. Mahoney that between June 1, 2013, and August 30, 2013, Mr. Byrd performed various handyman work on a rental property that Ms. Mahoney owned at 902 S. 3rd Ave. in Tucson, Arizona, and that she had paid him a total of $5,442.00.[1] The gravamen of Ms. Mahoney’s complaint was that Mr. Byrd had overcharged her and that Mr. Byrd had failed to install a used Master Cool evaporative cooler that she had acquired from a client and instead, had converted the newer unit to his own use and installed an older unit that was in poor condition. Ms. Mahoney acknowledged in the complaint that she had never seen the Master Cool evaporative cooler until after Mr. Byrd installed it on her rental property. Ms. Mahoney attached to her complaint copies of the following documents: (1) Invoice No. 361695 dated July 3, 2013, in the amount of $715.00 for various contracting work;[2] (2) Invoice 361697 dated July 3, 2013, in the amount of $45.00 for various construction materials;[3] (3) Two undated invoices that did not have numbers in the total amount of $1,761.00 for labor and materials on which “pd ck # 1091 8/4/13” had been written;[4] (4) Two undated invoices that did not have numbers in the total amount of $1,519.50 for labor and materials on which “Paid √ # 1101” had been written;[5] (5) Ms. Mahoney’s check number 125 dated June 15, 2013, in the amount of $760.00, made payable to Mr. Byrd;[6] (6) Ms. Mahoney’s check number 1091 dated August 4, 2013, in the amount of $1,882.00 made payable to Mr. Byrd;[7] and (7) Ms. Mahoney’s check number 1101 dated August 30, 2013, in the amount of $2,800.00 made payable to Mr. Byrd.[8] The Registrar assigned the complaint to its criminal investigator, Manuel Bermudez, to investigate. Investigator Bermudez consulted the Registrar’s records and determined that Mr. Byrd had never applied for or been issued a contractor’s license in Arizona. Investigator Bermudez prepared a report of his investigation.[9] On October 2, 2014, Investigator Bermudez contacted Mr. Byrd. Mr. Byrd acknowledged that he had performed work for Ms. Mahoney and that he was not a licensed contractor. Mr. Byrd stated that he brought one man to work on the job and that Ms. Mahoney paid money to him to pay the man. Mr. Byrd did not dispute that Ms. Mahoney had paid him a total of $5,442.00. Mr. Byrd explained that he gave Ms. Mahoney several invoices that had been broken down into increments, but that Ms. Mahoney requested that the work be summarized on one large invoice “to try to stick it to her previous tenants.”[10] On or about October 2, 2014, Investigator Bermudez on behalf of the Registrar issued a Cease & Desist Order, a Civil Citation, and imposed a civil penalty in the amount of $1,500.00 against Mr. Byrd for contracting without a license in violation of A.R.S. § 32-1151.[11] The Registrar served the document containing the Cease & Desist Order, Civil Citation, and notice of civil penalty on Mr. Byrd by registered mail at his address of record.[12] Mr. Byrd subsequently requested a hearing. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on January 30, 2015. The Registrar presented Investigator Bermudez’s testimony and submitted three exhibits. Mr. Byrd testified on his own behalf and presented the testimony of Justin Picard, his friend who had worked on Ms. Mahoney’s rental property with Mr. Byrd. Hearing Evidence Investigator Bermudez testified that if a job cost $1,000.00 or more for labor and materials, a contractor’s license was required for a person to perform the job. Investigator Bermudez testified that a person cannot break up a job to keep the cost under $1,000.00 and avoid a charge of unlicensed contracting. Mr. Byrd testified that he is well aware of the limitation on the cost of jobs that he can undertake as a handyman and that he frequently turns down jobs that are too large. Mr. Byrd explained that although originally, Ms. Mahoney hired him to perform a small job, after the small job was completed, she asked him to do additional work as she discovered that additional repairs would be necessary. Investigator Bermudez testified that if a person performed two jobs at the same property that where temporally separated by a year, the Registrar would consider the jobs to be separate for purposes of A.R.S. §§ 32- 1121(A)(14) and 32-1551. Investigator Bermudez opined that since Ms. Mahoney paid Mr. Byrd a total of $5,442.00 for repairs to her rental property that he performed steadily between June 1, 2013, and August 30, 2014, he engaged in unlicensed contracting by performing the cumulative repairs to the rental property. Mr. Picard testified that he worked on Ms. Mahoney’s rental property at the request of Mr. Byrd. Mr. Picard lost track of how many times that Ms. Mahoney asked for additional work. Mr. Picard testified that Mr. Byrd paid Mr. Picard $25.00 an hour for the work he performed on the project from the money that Mr. Byrd received from Ms. Mahoney. Mr. Picard acknowledged that he does not possess a contractor’s license. Mr. Byrd testified that he does honest work and that he paid more than half of the money he received from Ms. Mahoney to other workers at the project. Mr. Byrd acknowledged that during the time he performed repairs to Ms. Mahoney’s rental property, he did not work on any other jobs. Mr. Byrd pointed out that the total amount of his invoices was more than the total amount of Ms. Mahoney’s checks. Mr. Byrd questioned Ms. Mahoney’s motivation in filing the complaint. Mr. Byrd testified that as the project grew, Ms. Mahoney brought on other people and he brought additional workers as well. Mr. Byrd accused Ms. Mahoney of “cherry- picking” her complaints. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[13] The Registrar bears the burden of proof to establish Mr. Byrd’s statutory violation by a preponderance of the evidence.[14] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[15] A.R.S. § 32-1151 provides as follows: It is unlawful for any person, firm, partnership, corporation, association or other organization, or a combination of any of them, to engage in the business of, submit a bid or respond to a request for qualification or a request for proposals for construction services as, act or offer to act in the capacity of or purport to have the capacity of a contractor without having a contractor's license in good standing in the name of the person, firm, partnership, corporation, association or other organization as provided in this chapter, unless the person, firm, partnership, corporation, association or other organization is exempt as provided in this chapter. . . .

A.R.S. § 32-1121(A)(14)(b) provides in relevant part 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 . . . 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: . . . .

(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 . . . for the purpose of evasion of this chapter or otherwise.

(Emphasis added.) A.R.S. § 32-1101(A)(3) defines “contractor” in relevant part as follows: "Contractor" is synonymous with the term "builder" and means any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that, for compensation, undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid or responds to a request for qualification or a request for proposals for construction services to, does himself or by or through others, or directly or indirectly supervises others to:

(a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or any other structure or work in connection with the construction.

(Emphasis added.) Mr. Byrd credibly testified that when he initially contracted to repair Ms. Mahoney’s rental property, the scope of the job was within the limitations of the handyman’s exemption under A.R.S. § 32-1121(A)(14). However, the Registrar established that as Ms. Mahoney requested and Mr. Byrd agreed to perform additional repairs for additional compensation, without any meaningful temporal break between the different phases of the project, the scope of the job increased to the point that the exemption was lost under A.R.S. § 32-1121(A)(14)(b). If Mr. Byrd included work performed by others in his invoices and received money from Ms. Mahoney to pay these other workers, the cost of their work must be included in the project total for purposes of A.R.S. § 32-1121(A)(14). Once the scope of the job exceeded the amounts allowed by the handyman’s exemption, Mr. Byrd was required to stop working, to obtain a license to continue performing the job, or to refer it to a properly licensed contractor to complete the job. Because Mr. Byrd instead continued to work on Ms. Mahoney’s project as its scope increased, the Registrar established that Mr. Byrd committed unlicensed contracting in violation of A.R.S. § 32- 1151. 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.” In light of Mr. Byrd’s lack of prior violations and the lack of any established injury to Ms. Mahoney or her rental property,[16] the Registrar established that a civil penalty in the amount of $1,500.00 is appropriate for Mr. Byrd’s proven violation of A.R.S. § 32-1151. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Aaron Byrd violated A.R.S. § 32-1151 and affirm the decision to assess a civil penalty under A.R.S. § 32-1166(A) in the amount of $1,500.00, 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, February 11, 2015.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 1 at 1. [2] See id. at 11. [3] See id. at 12. [4] See id. at 13 and 14. [5] See id. at 15 and 16. [6] See id. at 17. [7] See id. at 18. [8] See id. at 19. [9] See the Registrar’s Exhibit 2 at 3. [10] Id. at 3. [11] See the Registrar’s Exhibit 3 at 3. [12] See the Registrar’s Exhibit 3 at 5. [13] See A.R.S. § 32-1101 et seq. [14] 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). [15] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [16] A.A.C. R4-9-131 provides 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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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826