ALJDEC decisions subject to certification as final

2014A-4772-ROC · Registrar of Contractors · 2015-04-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 25, 2015 APPEARANCES: Respondent Jose Gaspar was represented by Alicia Z. Aguirre. The Registrar of Contractors was represented by Assistant Attorney General Seth T. Hargraves. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ Respondent appealed a Civil Citation issued by the Registrar for contracting without a license. The Civil Citation imposed aggregate civil penalties in the amount of $10,000.00. Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law, and Recommend Order are made, finding a violation and recommending imposition of a total of $10,000.00 in civil penalties. FINDINGS OF FACT Background Respondent is not a licensed contractor in the State of Arizona. On or about October 27, 2014, the Registrar received a telephone hotline tip alleging that an 83 year old homeowner had contacted Respondent to look at a plumbing leak around the washing machine and that Respondent had done other work for the homeowner, including a swimming pool repair for $6,000.00. The report alleged that Respondent was taking advantage of the failing memory of the homeowner and had been paid over $25,000.00 for unlicensed work in a period of five months. Pursuant to the filing of the telephone hotline tip, an assigned Registrar Investigator, Daniel Rhodes (hereinafter “Investigator Rhodes”), initiated an investigation of the complaint. Investigator Rhodes spoke to Karen King, the daughter of homeowner John Land. Ms. King stated that she had learned Mr. Land had paid Respondent over $25,000.00 since May 2014 and had recently contacted Respondent regarding a discovered leak. Ms. King reported that Mr. Land had found the leak and told her that the leak may lead to rusty pipes requiring replacement of those pipes inside his home. Ms. King was concerned that Respondent would take advantage of Mr. Land. Ms. King reported that her friend had to repair electrical work Respondent had performed earlier in the year because it was not safely constructed. On October 29, 2014, Investigator Rhodes visited Mr. Land’s home and observed Respondent replacing the faucets to address the water leak. Respondent reported it was a small job and that he would was not intending to charge Mr. Land for the repair. Mr. Land informed Investigator Rhodes that he planned to reimburse Respondent for the materials and would pay him something for his time. Mr. Land estimated the work would be worth approximately $500.00 and intended to pay him that amount. Mr. Land told Investigator Rhodes that he had known Respondent for several years and that he had paid Respondent for work on his home and a rental property as needed. Mr. Land did not believe he had paid Respondent $25,000.00 for work in recent months. Ms. King provided Investigator Rhodes with receipts and checks between Mr. Land and Respondent. Ms. King also related to Investigator Rhodes that Mr. Land’s wife had become ill in January 2014, was hospitalized in Yuma, Arizona, was later transported to Tucson, Arizona, moved to a nursing home in Tucson, Arizona, and passed away in July 2014. Mr. Land was away from Yuma, Arizona a great deal during this time and relied on Respondent to watch over his property. During a review of the documentation provided, Investigator Rhodes established the following incidents:[1] A. On May 1, 2014, Mr. Land paid Respondent $2,000.00 for landscaping work at 1919 West Camino Soledad, Yuma, Arizona. Respondent was not a licensed contractor at this time. B. On May 6, 2014, Mr. Land paid Respondent $2,798.00 for allegedly replacing the sewer and drainage pipes at 1919 West Camino Soledad, Yuma, Arizona. Respondent was not a licensed contractor at this time and the work performed required a permit. C. On June 30, 2014, Mr. Land paid Respondent $6,000.00 for pool work and repair at 1900 West 17th Street, Yuma, Arizona. Respondent was not a licensed contractor at this time and the work performed required a permit. D. On August 11, 2014, Mr. Land paid Respondent $3,800.00 for work performed on an electrical panel at 1900 West 17th Street, Yuma, Arizona. Respondent was not a licensed contractor at this time and the work performed required a permit. On or about November 6, 2014, Investigator Rhodes met with Respondent. Respondent acknowledged that he performed the work outlined in Finding of Fact 8 and that he was not a licensed contractor at the time that he performed the work and that he did not obtain permits for the any of the work performed. Respondent also indicated he was familiar with the Registrar of Contractor’s licensing requirements as he had previously been licensed in the late 1990s to perform fence/wall installations. On or about November 19, 2014, Investigator Rhodes met with Investigator Bacon at Mr. Land’s residence to examine the swimming pool. The investigators observed new pool decking had been installed and the drains at the bottom of the pool had been plastered over. The investigators then went to the rental property to examine the work performed by Respondent. Investigator Bacon accessed the crawl space under the mobile home and observed approximately ¼ inch of dust and dirt built up on the pipes and could see leakage in several areas from the drains and down over the pipes. Investigator Bacon also observed the original hangars and supports along the pipes as they went north towards the city connection. Investigator Bacon concluded the pipes had not been changed as Respondent claimed they had. Investigator Rhodes received detailed information including photographs from Ms. King’s friend, Mr. Marr, relating to the electrical work Respondent performed for Mr. Land. Mr. Marr documented those issues he corrected in Respondent’s work. Mr. Marr stated he had been a journeyman electrician for over 30 years and that he worked for an electrical contractor in Tucson. Investigator Rhodes testified that Arizona contracting law allows an exemption from licensure, with certain limitations, for a “handyman.”[2] Investigator Rhodes stated that Respondent’s work did not fit within the handyman exemption because the cost of each project was in excess of the dollar amount allowed in the handyman exemption and portions of the construction work required a building permit. Investigator Rhodes determined that Respondent had violated the provisions of A.R.S. § 32-1151 (Engaging in contracting without a license). A Cease & Desist Order was issued to Respondent on November 24, 2014, for violating the provisions of A.R.S. § 32-1151. A total of $10,000.00 in civil penalties was assessed for four counts of contracting without a license for work that Respondent had performed in the State of Arizona between May 1, 2014, and August 11, 2014. Respondent testified that he never advertised that he was a licensed contractor, never presented Mr. Land with a business card, and never solicited any work from Mr. Land. Respondent indicated the two were friends and that he performed the work to help Mr. Land maintain his home and rental property. Respondent attempted to argue he was an employee of Mr. Land and was not acting as an independent contractor. Respondent also asserted that he informed Mr. Land that some of the projects required a permit, but Mr. Land instructed him to just do the work. Respondent maintained that after Mr. Marr raised questions about the electrical work, Respondent returned a large portion of the payment to Mr. Land. Mr. Land testified that he did not consider Respondent an employee during any time, but was hired on a job by job basis. Mr. Land stated that he believed Respondent probably overcharged him for some of the jobs. Mr. Land also denied that Respondent ever indicated a work permit was required for any of the work performed. Mr. Land indicated he did not remember his specific conversation with Investigator Rhodes. When asked if he believed he benefited from the work done by Respondent, Mr. Land answered that he did not know. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq. The Registrar bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See A.R.S. § 41- 1092.07(G)(2); 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). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). Arizona contracting law prohibits a person from acting as a contractor without a license.[3] 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, including labor and materials, does not exceed $1,000.00.[4] 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 between $200.00 and $2,500.00 for each violation, but not more than $2,500.00 per day.[5] 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

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. 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.

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 total civil penalties for Respondent’s violations 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.[6] The evidence established repeated violation of Arizona contracting laws. Thus, civil penalties in the total amount of $10,000.00 are warranted. Credible evidence established that Respondent operated as a contractor without a license on at least four separate occasions by performing at least $14,598.00 worth of unlicensed construction work in the State of Arizona. Given the evidence of other payments received by Respondent from Mr. Land in the short timeframe being reviewed, Mr. Land’s personal loss of his wife, and Mr. Land’s impaired memory, it appears Respondent was taking advantage of Mr. Land’s situation and friendship. This Tribunal concludes that civil penalties of $10,000.00 are warranted in this case. RECOMMENDED ORDER Based upon the foregoing, it is recommended that the Registrar affirm the finding that Respondent violated A.R.S. § 32-1151 and affirm the decision to assess civil penalties in the amount of $10,000.00, 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 shall be forty (40) days from the date of certification. Done this day, April 14, 2015.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] The documentation included numerous other payments to Respondent during the timeframe in question totaling more than $25,000.00. [2] See A.R.S. § 32-1121(A)(14). [3] A.R.S. § 32-1164(A)(2). [4] A.R.S. § 32-1121(A)(14). [5] A.R.S. § 32-1166(A). [6] 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.

-----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826