ALJDEC decisions subject to certification as final

2014A-3862-ROC · Registrar of Contractors · 2015-02-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 9, 2015. APPEARANCES: Coconut Contracting LLC, Pending License No. CR21.293769-D (hereinafter “Coconut” or “Applicant”) appeared through its Qualifying Party and Member, Robert Evan Gruber (hereinafter “Mr. Gruber”). The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General Seth T. Hargraves, Esq. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On or about July 2, 2014, Mr. Gruber on behalf of Coconut submitted an Application for Contractor’s License to the Registrar. Mr. Gruber was listed on the application as Coconut’s qualifying party, member, and 50% owner.[1] 2. Mr. Gruber answered “Yes” to the following two questions on the application: 1. Question 22 about whether Mr. Gruber had been listed on a contractor’s license in Arizona or any other State. Mr. Gruber disclosed that he had been on License No. 174847, a Class K-21 License issued to Habitats Design and Landscape Inc. (hereinafter “Habitats Design and Landscape”). 2. Question 23 about whether the licenses listed in question 22 have been suspended, revoked or otherwise disciplined. Mr. Gruber disclosed that License No. 174847 of Habitats and Design and Landscape had been revoked. 3. Mr. Gruber was listed as the president, Qualifying Party, and 100% owner of Habitats Design and Landscape.[2] 4. On or about September 17, 2014, the Registrar’s Chief of Licensing, Lawrence R. Mathews (hereinafter “Mr. Mathews”), sent a letter to Coconut to notify it that the Registrar had determined to deny its license application under A.R.S. §§ 32-1122(D), 32-1154(A)(20), and 32-1161(C), and summarizing the facts that supported the denial under each statute.[3] Mr. Mathews’ August 12, 2014 letter concluded as follows: R. Gruber has failed to resolve the previous complaint filed against Habitats Design and Landscape. . . License 174847, a license on which he was a person named, on the date of injury, resulting in the revocation of the license in one (1) matter. This is evidence that shows that Robert Evan Gruber does not possess the good character required pursuant to statute. Therefore, this application is DENIED.[4]

5. Mr. Gruber requested a hearing on the Registrar’s denial of Coconut’s license application. 6. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 7. An evidentiary hearing was held on February 9, 2015. Mr. Gruber submitted thirteen exhibits and testified on Coconut’s behalf. The Registrar submitted four exhibits and presented the testimony of Mr. Mathews. Hearing Evidence 8. Mr. Mathews testified that he is the Chief of the Licensing Department for the Registrar. Mr. Mathews stated that he was familiar with Coconut’s application for licensing. Mr. Mathews said that Coconut’s completed license application was received by the Registrar on July 14, 2014. 9. Mr. Mathews testified that Mr. Gruber had previously been listed on License No. 174847, a Class K-21 License issued to Habitats Design and Landscape. Mr. Mathews stated that License No. 174847 of Habitats Design and Landscape had been revoked while Mr. Gruber was listed on License No. 174847. Mr. Mathews said that Mr. Gruber had failed to resolve a previous complaint filed by Steve Andersen (hereinafter “Mr. Andersen”) against Habitats Design and Landscape for construction work that Mr. Gruber performed at Mr. Andersen’s residence located at 25943 N. 84th Drive, Peoria, Arizona 85383. Mr. Mathews said that the Registrar was concerned that Mr. Gruber’s failure to resolve Mr. Andersen’s complaint indicated that the same problem could arise again if Coconut was licensed. 10. Mr. Mathew testified that he wrote the September 17, 2014 Denial Letter. Mr. Mathews stated that the basis for the Denial Letter was that Mr. Gruber had failed to resolve the previous complaint filed by Mr. Andersen against Mr. Gruber’s prior license with the Registrar. Mr. Mathews said that the complaint filed by Mr. Andersen led to the revocation of License No. 174847 of Habitats Design and Landscape. 11. Mr. Mathews testified that the issues giving rise to revocation of License No. 174847 of Habitats Design and Landscape had not been resolved. Mr. Mathews stated that the Registrar was not able to grant a license when a previous contractor’s license had been revoked and the underlying issues that led to the revocation had not been resolved. Mr. Mathews said that the basis for the denial of Coconut’s license application was the previous revocation of License No. 174847 of Habitats Design and Landscape and Mr. Gruber’s failure to resolve the issues that led to the revocation of the license. Mr. Mathews said that Mr. Gruber failed to present any evidence that the issues that led to the revocation of License No. 174847 of Habitats Design and Landscape had been resolved. 12. Mr. Gruber testified that Mr. Andersen had been mailed a blank Recovery Fund claim form by the Registrar and that Mr. Andersen had failed to file a claim with the Residential Contractors’ Recovery Fund. Mr. Gruber stated that when he filed the license application for Coconut’s licensure in 2013, he found that he had three (3) unresolved complaints against Habitats Design and Landscape. Mr. Gruber said that he was able to promptly resolve two (2) of the unresolved complaints. 13. Mr. Gruber testified that he was unable to contact Mr. Andersen. Mr. Gruber stated that he could not find Mr. Andersen. Mr. Gruber said that his certified letter to Mr. Andersen was returned. Mr. Gruber stated that he was unable to reach Mr. Andersen at his previous telephone number and that Mr. Andersen failed to respond to numerous emails. 14. Mr. Gruber testified that Mr. Andersen had sold his house at 25943 N. 84th Drive, Peoria, Arizona 85383. Mr. Gruber said that Mr. Andersen had used the construction work performed by Mr. Gruber as a marketing point in the real estate listing for Mr. Andersen’s residence. Mr. Gruber said that Mr. Andersen had failed to make the final payment for the work performed by Habitats Design and Landscape and that the final payment was enough to satisfy any damages suffered by Mr. Andersen. 15. Mr. Gruber stated that Mr. Andersen left no forwarding address. Mr. Gruber asserted that he had made all reasonable efforts to contact Mr. Andersen and resolve the complaint against him. CONCLUSIONS OF LAW

1. This matter lies within the Registrar’s jurisdiction.[5] 2. Coconut 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. A.R.S. § 32-1122 provides, in relevant part, as follows: D. To obtain or renew a license under this chapter, each person shall be of good character and reputation. Lack of good character and reputation may be established by showing that a person has engaged in contracting without a license or committed any act that, if committed or done by any licensed contractor, would be grounds for suspension or revocation of a contractor's license or by showing that the person was named on a contractor's license that was suspended or revoked in another state.

E. To obtain a license under this chapter, a person shall not have had a license refused or revoked, within one year before the person's application, or shall not have engaged in the contracting business, nor shall the person have submitted a bid without first having been licensed within one year before the person's application, nor shall a person act as a contractor between the filing of the application and actual issuance of the license. The registrar may find any of those actions or circumstances to be excusable if there was reasonable doubt as to the need for licensure or the actions of the applicant did not result in an unremedied hardship or danger or loss to the public. A person who has been convicted of contracting without a license is not eligible to obtain a license under this chapter for one year after the date of the last conviction.

4. A contractor’s license is a privilege, not a right. Even though cause may exist to deny a license application, however, an applicant may establish that he is rehabilitated, has reestablished good character, and no longer poses a threat to the public. The issue of what constitutes good character or a lack thereof is nebulous at best. Former United States Supreme Court Justice Frankfurter noted: No doubt satisfaction of the requirement of moral character involves an exercise of delicate judgment on the part of those who reach a conclusion, having heard and seen the applicant . . . , a judgment of which it may be said as it was of "many honest and sensible judgments" in a different context that it expresses "an intuition of experience which outruns analysis and sums up many unnamed and tangled impressions; impressions which may lie beneath consciousness without losing their worth. . . .[8]

5. A.R.S. § 32-1122(E) provides that the Registrar may excuse a past contracting law violation if “the actions of the applicant did not result in an unremedied hardship or danger or loss to the public.” No statute or regulation sets forth the efforts that a contractor’s license applicant must make to remedy the damages that a property owner may have incurred as a result of the applicant’s past contracting law violations that the homeowner established in a previous complaint that he filed with the Registrar. However, the Arizona Rules of Civil Procedure does provide some guidance in situations like this. Rule 4(n) of the Arizona Rules of Civil Procedure provides as follows: Service by Publication

Return Where the person to be served is one whose present residence is unknown but whose last known residence was outside the state, or has avoided service of process, and service by publication is the best means practicable under the circumstances for providing notice of institution of the action, then service may be made by publication in accordance with the requirements of this subpart. Such service shall be made by publication of the summons, and of a statement as to the manner in which a copy of the pleading being served may be obtained, at least once a week for four successive weeks in a newspaper published in the county where the action is pending. If no newspaper is published in any such county, then the required publications shall be made in a newspaper published in an adjoining county. The service shall be complete thirty days after the first publication. When the residence of the person to be served is known, the party or officer making service shall also, on or before the date of the first publication, mail the summons and a copy of the pleading being served, postage prepaid, directed to that person at that person’s place of residence. Service by publication and the return thereof may be made by the party procuring service or that party’s attorney in the same manner as though made by an officer. The party or officer making service shall file an affidavit showing the manner and dates of publication and mailing, and the circumstances warranting utilization of the procedure authorized by this subpart which shall be prima facie evidence of compliance herewith. A printed copy of the publication shall accompany the affidavit. If the residence of the person to be served is unknown, and for that reason no mailing was made, the affidavit shall so state.

6. Coconut submitted credible evidence that it had attempted to contact Mr. Andersen by certified mail and that the certified mail was returned to Coconut. Coconut also sent emails to Mr. Andersen’s last known email address with no response. Coconut left messages at Mr. Andersen’s last known telephone number that were not responded to. There was no evidence of any method of publication or its equivalent. 7. Mr. Gruber has established that he is otherwise qualified for licensure, and that he has remedied two of Habitats Design and Landscape’s past contracting law violations. However, applicable statute provides that the Registrar may excuse a past contracting law violation if “the actions of the applicant did not result in an unremedied hardship or danger or loss to the public.” Coconut failed to resolve the previous complaint filed by Mr. Andersen against Mr. Gruber’s prior License No. 174847 with the Registrar. The complaint filed by Mr. Andersen led to the revocation of License No. 174847 of Habitats Design and Landscape. After full review, this Tribunal concludes that Coconut failed to meet its burden to establish by the preponderance of the evidence that Mr. Gruber has the good character to satisfy the statutory requirement for a license at this time. RECOMMENDED ORDER

Based on the foregoing, it is recommended that the denial of Coconut’s pending license application be affirmed. 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 18, 2015.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See the Registrar’s Exhibit 1. [2] See the Registrar’s Exhibit 3. [3] See the Registrar’s Exhibit 2. [4] See the Registrar’s Exhibit 2. [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] Schware v. Board of Bar Examiners of the State of New Mexico, 353 U.S. 232, 248, 77 S. Ct. 752, 761 (1957) (citation omitted; concurring opinion).

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