ALJDEC decisions subject to certification as final

2014A-4628-ROC · Registrar of Contractors · 2015-03-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 6, 2014, at 8:00 a.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by Seth T. Hargraves, Esq., Assistant Attorney General; Respondent William Leroy Hickman (“Mr. Hickman” or “Sewer, Septic & Grease Solutions”[1]) appeared on his own behalf via videoconference from the Registrar’s Flagstaff office. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On or about August 29, 2014, an employee in the Mohave County Environmental Health Department’s Bullhead City office informed the Registrar’s Investigator Martha Watson that Mr. Hickman through one of his companies, Sewer, Septic & Grease Solutions, Sewer Septic Solutions, or Sewer Solutions (collectively “Sewer, Septic & Grease Solutions”), had pumped and repaired a sewer system at Correa’s Mexican Restaurant located at 4508 S. Highway 95, Fort Mohave, Arizona (“the Highway 95 project”).[2] The Mohave County employee stated that the work was performed illegally and that the existing system should have been abandoned and tied into a legal sewer system in the area. Investigator Watson on behalf of the Registrar opened an investigation into the Highway 95 project. On or about November 5, 2014, Investigator Watson received an anonymous complaint that Sewer, Septic & Grease Solutions had installed a new leach line at a residence located at 3327 Bouse Road, Golden Valley, Arizona (“the Bouse Road project”).[3] Investigator Watson on behalf of the Registrar opened an investigation into the Bouse Road project. On or about November 10, 2014, Investigator Watson interviewed Ginger Hinkle, the qualifying party/owner of J and J Plumbing, License No. ROC097823, at her place of business. Ms. Hinkle said that she was personally familiar with Mr. Hickman. Ms. Hinkle explained that after Mr. Hickman had called her to request advice on the Bouse Road project, she advised him that for the system to operate correctly, at least 12 yards of septic rock and a new leach line would have to be installed. Ms. Hinkle told Investigator Watson that she further advised Mr. Hickman that he could not perform the work to repair the system because a permit would be required but that he and his company could not obtain the permit or perform the work because they were not licensed contractors.[4] Ms. Hinkle also informed Investigator Watson that in the past, she had provided Mr. Hickman with proposals to correct problems with septic systems that Mr. Hinkle had described, but that J and J Plumbing never received the work. Ms. Hinkle stated that one homeowner, Linda Wakefield, had contacted J and J Plumbing to repair damage that Mr. Hickman had caused to the septic system at her residence at 3937 N. Bonita Road, Golden Valley, Arizona (“the Bonita Road project”). Ms. Hinkle told Investigator Watson the system at the Bonita Road project had to be abandoned and that J and J Plumbing had to install a new septic system.[5] Investigator Watson on behalf of the Registrar opened an investigation into the Bonita Road project. On or about November 13, 2014, Investigator Watson issued a Cease & Desist Order, three civil citations for violating of A.R.S. § 32-1151, and three civil citations for violating A.R.S. § 32-1165, based on Mr. Hickman’s activities at the Highway 95 project, the Bouse Road project, and the Bonita Road project, and assessing civil penalties in the amount of $2,500 for each project, for an aggregate amount of $7,500.00.[6] Mr. Hickman requested a formal hearing.[7] The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on March 6, 2015. The Registrar submitted nine exhibits and presented the testimony of three witnesses: (1) Mr. Hickman (cross- examination); (2) Investigator Watson; and (3) Cullin Pattillo, the Environmental Engineering Manager of the Mohave County Development Services Department’s Division of Environmental Quality. Mr. Hickman testified on his own behalf. Additional Hearing Evidence Mr. Hickman was the qualifying party/owner of Sewer and Septic Solutions, License No. ROC133770, Class CR41 for dual septic tanks and systems. On October 17, 2008, the Registrar revoked License No. ROC133770 after Mr. Hickman failed to pay a civil penalty that the Registrar had assessed as discipline in an unrelated case in which the Registrar had substantiated a consumer complaint.[8] Mr. Hickman and Sewer, Septic and Grease Solutions do not possess a valid Arizona contractor’s license. Mr. Hickman testified that he wants to obtain a contractor’s license; however, no application was pending at the time of the hearing in this matter. The Arizona Department of Environmental Quality (“ADEQ”) has delegated to the Mohave County Development Services Department and Mohave County Public Health Department enforcement of statutes and regulations relating to aquifer protection, including permitted construction and repair of septic systems in areas that are not served by a local sewer utility.[9] Mr. Pattillo testified that whenever someone installs or repairs a septic system, he needs a permit from the county so that that county inspectors can examine the plans and authorize the work. Mr. Pattillo explained that the work on a septic system needed to be uncovered so that the county could inspect it because installation or repair of a septic system must be performed under a sector-wide Aquifer Protection Permit issued by ADEQ. Mr. Hickman testified that if any of the projects required a permit, his son is a county inspector and performs an inspection to make sure that the project complies with all regulations. Mr. Hickman testified that his son has a different last name. The Registrar submitted an 8-page brochure published by Sewer, Septic & Grease Solutions on “[t]he care and feeding of your septic system.”[10] The brochure did not contain the disclaimer, “Not a licensed contractor.” The Highway 95 Project On or about August 14, 2014, Investigator Watson conducted an inspection of the Highway 95 project, spoke to employees of Correa’s Mexican Restaurant, photographed the jobsite, and obtained Mr. Hickman’s company’s invoices from the agent for the owner of the property. The Registrar submitted the following four invoices from Sewer, Septic & Grease Solutions for repairs to the septic system at the Highway 95 project: (1) No. 8714 dated July 18, 2014, in the amount of $775.00 to pump the tank, diagnose the problem, and clean the sewage and waste from the system and ground; (2) No. 8718 dated July 21, 2014, in the amount of $950.00 to excavate and pump the septic system; (3) No. 8719 dated July 22 and 23, 2014, in the amount of $950.00 to excavate the system to expose a baffle and leach line; and (4) No. 8724 dated July 24, 2014, in an amount not to exceed $950.00 per day for up to five days to restore the septic system. The invoices showed the disclaimer, “Not a licensed contractor.”[11] Investigator Watson testified that she contacted the owner’s agent and that he was not aware that Mr. Hickman’s company was not licensed. The owner’s agent also provided a business card for Mr. Hickman’s company that did not include the disclaimer, “Not a licensed contractor.” Investigator Watson’s photograph of Mr. Hickman’s company’s work on the Highway 95 job showed a white PVC pipe protruding from the leach field.[12] Investigator Watson testified that Mr. Hickman’s company’s work on the Highway 95 project should have been performed by a licensed contractor because the cumulative cost of the job exceeded $1,000.00. Mr. Hickman testified that he did not understand the so-called handyman’s exemption and that before the Registrar issued the Cease & Desist Order and Civil Citations, he thought that the limit was $1,000.00 per day. Mr. Hickman testified that he has started referring larger projects to licensed contractors such as Ms. Hinkle. Mr. Pattillo opined that the septic system at the Highway 95 project should have been abandoned and tied to the locally available sewer system for sanitary reasons related to the restaurant and the property itself. The Bouse Road Project On or about November 5, 2014, Investigator Watson contacted the tenant living at the Bouse Road address and confirmed that Sewer, Septic and Grease Solutions had performed work at the address. Investigator Watson photographed the area that Mr. Hickman’s company had dug up in the backyard. Investigator Watson later contacted the owner of the Bouse Road property. The owner provided Sewer, Septic & Grease Solutions’ business card, which did not include the disclaimer, “Not a licensed contractor.”[13] On or about November 6, 2014, Investigator Watson received a telephone call from the tenant’s wife stating that Sewer, Septic & Grease Solutions’ employee was performing work at the Bouse Road project. Investigator Watson traveled to the Bouse Road project and spoke to Sewer, Septic & Grease Solutions’ employee, who stated that he was repairing the septic system by adding 10 feet of pipe of a “Y” joint off of the existing stems and that he had poured some kind of liquid into the septic tanks. Investigator Watson contacted an employee of the Mohave County’s Division of Environmental Quality, who told her that a permit should have been obtained for the work that Mr. Hickman’s employee described at the Bouse Road project. On or about November 6, 2014, Investigator Watson photographed Mr. Hickman’s truck that was on site at the Bouse Road project. The truck showed the name, “Septic Solutions,” but did not include the disclaimer, “Not a licensed contractor.”[14] The owner of the Bouse Road property provided the following invoices from Sewer, Septic & Grease Solutions to Investigator Watson: (1) Invoice No. 8871 dated October 31, 2014, in the amount of $525.00 to expose the septic system and pump the overfill tank; (2) Invoice No. 8872 dated November 3, 2014, in the amount of $975.00 to repair damage to the septic system; (3) Invoice No. 8873 dated November 4, 2014, in the amount of $1,000.00 to repair additional damage at the septic system, and (4) Invoice No. 8824 dated November 13, 2014, that amended earlier invoices to state that the full cost of the project would be only $1,000.00.[15] The invoices showed the disclaimer, “Not a licensed contractor.” Mr. Hickman argued that because he had reduced the cost of the Bouse Road project to $1,000.00, his company’s work was covered by the handyman’s exemption. The Bonita Road Project On or about November 12, 2014, Investigator Watson met with Linda Wakefield, the owner of the property on Bonita Road where Sewer, Septic & Grease Solutions had performed work. Ms. Wakefield said that she hired Mr. Hickman after she discovered a blockage in her septic system and that his employees had damaged the system. Ms. Wakefield told Investigator Watson that Mr. Hickman’s employees showed up in a truck with the marking, “Septic Solutions.” Ms. Wakefield told Investigator Watson that after Mr. Hickman’s employees damaged her system, she ordered them off her property. Ms. Wakefield stated that Mr. Hickman later demanded that she pay Sewer, Septic & Grease Solutions $350.00 and threatened her. Ms. Wakefield paid the $350.00 to Mr. Hickman by credit card and filed a report to the Mohave County Sheriff’s Office about Mr. Hickman’s conduct.[16] Ms. Wakefield said that after Mr. Hickman’s employees damaged her septic system, she had to pay $4,581.00 to J & J Plumbing to replace the septic system because it could no longer be repaired.[17] Mr. Hickman testified that Ms. Wakefield was a drunk and an unstable person who was impossible to please and whose statements should not be credited. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[18] The Registrar bears the burden of proof to establish Mr. Hickman’s statutory violations 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] 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.”[21] A.R.S. § 32-1151 prohibits contracting without a license, providing in relevant part 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. Evidence of securing a permit from a governmental agency or the employment of a person on a construction project shall be accepted in any court as prima facie evidence of existence of a contract.

Mr. Hickman did not dispute that his employees performed contracting work at the Highway 95, Bouse Road, and Bonita Road projects. A.R.S. § 32- 1121(A)(14) sets forth the so-called “handyman’s exemption” to licensure requirements and 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:

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

The Registrar established that all three projects required a permit to properly perform. Therefore, the Registrar established that Mr. Hickman violated A.R.S. § 32-1151. Mr. Hickman argued that he understood that the limit set forth in A.R.S. § 32-1121(A)(14)(b) was $1,000.00 per day, not $1,000.00 for the entire project. Members of regulated professions are presumed to know the law and will be bound by statutes and regulations that regulate their profession: [T]here is no general due process requirement that the government give notice of the enactment of legislation, criminal or otherwise. . . . The promulgation of a law by a legislature in accordance with its constitutional obligations is deemed to constitute adequate notice to all. . . . As our supreme court has explained: "The administration of justice, the law itself as a practical system of the regulation of human conduct, requires that some fundamental assumptions should be made as postulates. The most important of all these is the assumption that all persons of sound and mature mind are presumed to know the law." Merrill v. Gordon, 15 Ariz. 521, 532, 140 P. 496, 500 (1914) (citation and internal quotation omitted); see also State v. Morse, 127 Ariz. 25, 31, 617 P.2d 1141, 1147 (1980) ("It is generally accepted that ignorance, or lack of knowledge, of the law which forbids the conduct with which one is charged is no defense.").

This concept of ignorance of the law being no excuse is codified in Arizona in A.R.S. § 13-204(B) (2001). See 1 Rudolph J. Gerber, Criminal Law of Arizona § 1-204(B) (2d ed. 1993) ("The underlying assumption of this section is that the content of the criminal law approximates the average person's actual assessment of tolerable behavior and that the citizenry knows everything needed to obey the law.").[22]

Under this well-established authority, Mr. Hickman is deemed to know the law; his claimed ignorance is no defense. Because the total cost of the Highway 95 and the Bouse Road projects was at least $1,000.00, even after Mr. Hickman’s rebate to the owner of the Bouse Road project, the Registrar established additional grounds to prove Mr. Hickman’s unlicensed contracting activities in violation of A.R.S. § 32-1151. The Registrar established that Mr. Hickman advertised the services of his company, Sewer, Septic & Grease Solutions, on business cards, brochures, and trucks without including the disclaimer, “Not a licensed contractor.” A.R.S. § 32-1165 provides as follows: Except as authorized by section 32-1121, subsection A, paragraph 14, subdivision (c), it is a class 1 misdemeanor for any person to advertise that he is able to perform any service or contract for compensation subject to regulation by the registrar under the terms of this chapter unless a license under the terms of this chapter is first obtained regardless of whether his operations as a contractor are otherwise exempt.

A.R.S. § 32-1121(A)(14)(c) provides that the handyman exemption does not apply “[t]o 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. Hickman violated A.R.S. § 32-1165 by advertising without a license. A.R.S. § 32-1166(A) authorizes the Registrar to assess a civil penalty against a person who has been found to have contracted without a license in violation of A.R.S. § 32-1151 or to have advertised that he is able to perform a service for which a contractor’s license is required in violation of A.R.S. § 32-1165, in relevant part as follows: In addition to all other remedies, when it appears to the registrar, either upon complaint or otherwise, that any person, firm, partnership, corporation, association or other organization, or a combination of any of them, has engaged in or is engaging in any act of contracting, practice or transaction which constitutes a violation of this chapter, or any rule or order of the registrar, the registrar may serve upon such person, firm, partnership, corporation, association or other organization not currently licensed under this chapter, by certified mail or by personal service, a cease and desist order requiring the person, firm, partnership, corporation, association or other organization to cease and desist immediately, upon receipt of the notice, from engaging in such act, practice or transaction. In conjunction with the cease and desist order, the registrar may issue a citation for a violation. Each citation shall be in writing and shall clearly describe the violation for which the citation was issued. Each citation shall contain an order to cease and desist and an assessment of 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. . . .

Although Mr. Hickman knew that his company’s license had been revoked, he continued to perform contracting work and to advertise his company’s ability to perform contracting work without informing potential customers that his company was not licensed. Therefore, civil penalties in the amount of $2,500.00 for each job is appropriate for Mr. Hickman’s violations of A.R.S. §§ 32-1151 and 32-1165, for total aggregate civil penalties in the amount of $7,500.00. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent William Leroy Hickman violated A.R.S. §§ 32- 1151 and 32-1165 and affirm the assessment of civil penalties in the total amount of $7,500.00. The aggregate total of $7,500.00 in civil penalties shall 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, March 30, 2015.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Mr. Hickman does business as “Sewer, Septic & Grease Solutions”; Mr. Hickman’s company is not a separate legal entity registered with the Arizona Corporation Commission or a trade name registered with the Arizona Secretary of State. [2] See the Registrar’s Exhibit 1 at 13. [3] See id. at 3. [4] See id. at 6. [5] See id. [6] See the Registrar’s Exhibit 7. [7] See the Registrar’s Exhibit 8. [8] See the Registrar’s Exhibit 2. [9] See the Registrar’s Exhibit 9. [10] See the Registrar’s Exhibit 6. [11] See the Registrar’s Exhibit 3 at 1, 2, 3, and 4. [12] See the Registrar’s Exhibit 3. [13] See the Registrar’s Exhibit 4 at 5. [14] See the Registrar’s Exhibit 4 at 11. [15] See the Registrar’s Exhibit 4 at 1 to 4. [16] See the Registrar’s Exhibit 5 at 6 to 14. [17] See the Registrar’s Exhibit 5 at 15. [18] See A.R.S. § 32-1101 et seq. [19] 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). [20] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [21] Black’s Law Dictionary at page 1220 (8th ed. 1999). [22] State v. Soltero, 205 Ariz. 378, 380 ¶¶ 7 and 8, 71 P.3d 370, 372 (App. 2003) (some citations omitted).

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