ALJDEC decisions subject to certification as final

2014A-433-ROC · Registrar of Contractors · 2015-05-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 20, 2015 APPEARANCES: The Arizona Registrar of Contractors was represented by Assistant Attorney General Seth T. Hargraves. Jose Alfredo Ruelas III, Qualifying Party, appeared on behalf of Respondent High Energy Contracting LLC. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT Background and Procedure 1. On May 6, 2012, the Arizona Registrar of Contractors (“the Registrar”) issued License No. B.278670-R to Respondent High Energy Contracting LLC (“Respondent”). Jose Alfredo Ruelas III is listed as Respondent’s Qualifying Party and Member. 2. The Registrar on its own motion issued a Citation and Complaint against Respondent’s License No. B.278670-R, charging a violation of A.R.S. § 32-1154(A)(20) because Mr. Ruelas had been listed as an employee and Qualifying Party on License No. B.279301-R previously issued to Eco-1 Exteriors, LLC dba Eco-1 Construction (“Eco-1”) and the Registrar had revoked Eco-1’s license after it found that Eco-1 had abandoned a project in violation of A.R.S. § 32-1154(A)(1). 3. An evidentiary hearing was held on April 20, 2015. The Registrar submitted four exhibits and presented the testimony of Jose Gill, Staff Attorney. Respondent submitted two exhibits and presented the testimony of six witnesses: 1) Mr. Ruelas; 2) Dr. Greg Pafford; 3) Michael Babicky; 4) Clyde Pope; 5) Patrick Heavey; and 6) James L. Penny. Hearing Evidence 4. Eco-1’s application for a license was filed with the Registrar on May 29, 2012, and indicated that it was owned by three different entities, Deveron Group LLC (“Deveron”) as a 58 percent owner; “EC” Energy Concept, LLC as a 25 percent owner; and Imperium Holdings, LLC as a 17 percent owner. Mr. Ruelas was identified as the Qualifying Party. 5. On or about July 5, 2012, a homeowner entered into a contract with Deveron for the purchase of a solar attic fan and radiant barrier. The total contract price was $2,980.00, and the homeowner paid a $2,000.00 deposit by check. That same day, the homeowner entered into a contract with Eco-1 for the installation of the solar attic fan and radiant barrier. The total contract price was $1,020.00. Both contracts were signed by Kerry Carter as the representative for Deveron and Eco-1. 6. Eco-1 did not install the solar attic fan or radiant barrier for the homeowner. 7. Eco-1 filed an Ownership/Personnel Change Form with the Registrar on October 19, 2012, indicating Deveron was no longer an owner of Eco-1. 8. Following a hearing, the Administrative Law Judge found that Eco-1 had abandoned its contract with the homeowner and concluded that its license should be revoked. The Administrative Law Judge’s decision became final on November 4, 2014. 9. Mr. Ruelas testified that the homeowner received a payout of $2,000.00 from the Residential Contractors’ Recovery Fund (“the Fund”) based on the abandonment and that Mr. Ruelas had reimbursed the Fund the $2,000.00. 10. Mr. Ruelas testified that the Deveron Group took money from many people without his knowledge and that when he became aware of the activity, he worked to make things right with all the homeowners that were affected. Mr. Ruelas stated that he had gone through great personal loss and expense to perform the contracts Deveron had entered into on behalf of Eco-1 even though deposits had been collected by Deveron and had not been forwarded to Mr. Ruelas and/or Eco-1. Mr. Ruelas asserted that it had cost him approximately $300,000.00 and that his home had gone into foreclosure, but he had avoided bankruptcy. Mr. Ruelas testified that if he had known about the contract with the homeowner referenced previously, he would have made that right as well, but he had no knowledge the contract existed. However, Mr. Ruelas had repaid the Fund the payout that was made to the homeowner. 11. Respondent presented the testimony of three customers who had worked with Mr. Ruelas personally. Dr. Pafford testified that Mr. Ruelas was very trustworthy and of the highest character. Mr. Heavey and Mr. Penny both testified they initially contracted with Deveron and paid deposits to Deveron, but that Mr. Ruelas completed the projects on budget. 12. Mr. Babicky of Advantage Plastering, ROC License No. CR36-266603-D, testified regarding his working relationship with Respondent. Mr. Babicky indicated he was always paid on time and had no issues with Respondent. Mr. Babicky testified that Mr. Ruelas was an honest and trustworthy individual who would go out of his way to make homeowners happy even if the issue was not his fault. 13. Mr. Pope, formerly of Avanti Kitchen and Bath, testified that Eco-1 owed him $10,000.00 for deposits and that he received two checks, neither of which were good. Mr. Pope had already began making the product for the contract and was hoping to recover some of the funds. Mr. Pope stated that when Mr. Ruelas discovered what had happened, he paid off the $20,000.00 balance in approximately six months. 14. Mr. Ruelas testified that he felt Respondent was at risk of losing its license over a $2,000.00 oversight after he had gone through so much time and expense to make things right with the injured parties. 15. The Registrar presented testimony that the proposed revocation of Respondent’s license was necessary to protect the public. The statutes in place are intended to prevent individuals from jumping for license to license. However, rectifying the harm to a homeowner is considered a mitigating factor. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[1] 2. The Registrar bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[2] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[3] 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.”[4] 3. A.R.S. § 32-1154(A)(20) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[h]aving a person named on the license who is or was named on any other license in this state or in any other 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.” 4. A.R.S. § 32-1122(E) provides that “[t]o 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.” 5. A.R.S. § 32-1161(C) provides that “[a]fter 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.” 6. The Registrar argued that Respondent’s license in this matter must be revoked for at least one year based on the provisions of A.R.S. § 32- 1154(A)(20), A.R.S. § 32-1122(E), and A.R.S. § 32-1161(C) read together. 7. A.R.S. § 32-1122(E) specifically addresses the qualifications to obtain a license from the Registrar. While it may be instructive as to those whom the Registrar considers appropriate for licensure, the statute does not directly address disciplinary actions that may be taken against an entity that has already been issued a license. 8. It is uncontested that Eco-1’s license was revoked for a violation of A.R.S. § 32-1154(A)(1) and may not be renewed or reissued for one year after the final determination pursuant to A.R.S. § 32-1161(C). 9. However, nothing in A.R.S. § 32-1154(A)(20) requires that Respondent’s license must be revoked as a result of Eco-1’s license being revoked. Rather, A.R.S. § 32-1154 is entitled “Grounds for suspension or revocation of license; continuing jurisdiction; civil penalty; recovery fund award; summary suspension.” Thus, suspension or revocation are possible disciplinary actions that may be taken as a result of Mr. Ruelas being named on Eco-1’s license when it was revoked and presently being named on Respondent’s license. 10. The Registrar did not argue that Respondent and/or Mr. Ruelas had failed to repay the Fund the $2,000.00 payout that was made to the homeowner in the underlying issue that lead to the revocation of Eco- 1’s license. The evidence established that the harm to the homeowner had been rectified. 11. Based on the specific circumstances present in this matter, the Administrative Law Judge concludes that it is not appropriate to revoke the license previously issued to Respondent. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the order in this matter, License No. B.278670-R of Respondent High Energy Contracting, LLC shall be suspended for a period of one day. 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, May 11, 2015.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1154(A). [2] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [3] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [4] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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