ALJDEC decisions subject to certification as final

2014A-5034-ROC · Registrar of Contractors · 2015-08-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 5, 2015 APPEARANCES: Adolfo Valdez Ramos was represented by Michael Smith. Abraham Perez Sevilla was represented by Richard Edgar. The Registrar of Contractors was represented by Assistant Attorney General Seth T. Hargraves. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ Respondents appealed Civil Citations issued by the Registrar of Contractors (Registrar) for contracting without a license. The Civil Citation to Adolfo Valdez Ramos imposed a civil penalty of $2500.00. The Civil Citation to Abraham Perez Sevilla imposed a civil penalty of $2500.00. Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law, and Recommend Order are made. FINDINGS OF FACT Respondents are not licensed contractors in the State of Arizona. The Registrar received a complaint filed by Carmella C. McCall against Respondent Sevilla alleging that she had hired him to remodel her kitchen and that, although she had paid him in full, the work was not done and he was no longer responding to her attempts to contact him. The job estimate provided by Respondent Sevilla indicated a total price of $17,700.00. Ms. McCall provided copies of cancelled checks payable to Respondent Sevilla totaling $20,050.00. Ms. McCall also provided a cancelled check payable to Respondent Ramos for $800.00 with the memo “partial payment for stucco” and a cancelled check payable to Respondent Ramos’ son, Marcos for $245.00 with the memo “paid in full stucco and brick for gate put up.” Exhibits 1 and 2. During its investigation, the Registrar determined that Respondent Sevilla, a previously licensed contractor, had volunteered to serve as the general contractor on Ms. McCall’s project, a total demolition and remodel of her kitchen, and asked that she pay the subcontractors directly. Respondent Sevilla’s written job estimate for $17,700.00 was dated April 27, 2014. Respondent Sevilla coordinated several trades and subjects to complete the work and Ms. McCall paid each of the subcontractors directly. Respondent Sevilla had a previous history of complaints and disciplinary actions for abandonment, poor workmanship, and unlicensed contracting. The Registrar issued Respondent Sevilla a Cease and Desist order and imposed a civil penalty of $2500.00. Investigator Rhodes determined that Respondent Sevilla 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 or about January 2, 2015, for violating the provisions of A.R.S. § 32-1151. A civil penalty of $2500.00 was assessed for contracting without a license on September 1, 2014. On December 17, 2014, Respondent Ramos was interviewed by the Registrar Investigator Daniel Rhodes. Respondent Ramos acknowledged he was involved in the project and accepted a check on May 21, 2014, for $800.00 and that his son accepted a check on May 23, 2015, for $245.00. Respondent Ramos asserted the payment to his son was for providing clean-up of the rubble and insulation resulting from the demolition and stucco work. Respondent Ramos admitted he had provided stucco application to an exterior wall and indicated he had hired an unidentified transient from the Mission to assist him in mixing the mortar. Respondent Ramos had a previous history of disciplinary actions for contracting without a license and at least two previous criminal convictions for unlicensed contracting. Investigator Rhodes determined that Respondent Ramos 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 or about December 17, 2014, for violating the provisions of A.R.S. § 32-1151. A civil penalty of $2500.00 was assessed for contracting without a license on May 1, 2014. The Registrar issued Respondent Ramos a Cease and Desist order and imposed a civil penalty of $2500.00. Investigator Rhodes provided testimony regarding the Arizona contracting law that allows an exemption from licensure, with certain limitations, for a “handyman.”[1] Investigator Rhodes testified that Respondent Sevilla’s bid of $17,700.00 did not fit within the handyman exemption because the bid was in excess of the dollar amount allowed in the handyman exemption. Investigator Rhodes also testified that Respondent Ramos’ work did not fit within the handyman exemption because the stucco portion of the project was in excess of the dollar amount allowed in the handyman exemption, the stucco was a portion of a larger project that was also in excess of the dollar amount allowed in the handyman exemption, Respondent Ramos hired someone to help with the work, and the stucco required a permit from the City of Yuma. Respondent Ramos testified that Respondent Sevilla had told him about this project and referred him to the job. Respondent Ramos acknowledged that he was criminally convicted for contracting without a license as a result of this project and was fined $2000.00 and that this was his third conviction for contracting without a license. Respondent Sevilla has been criminally charged for contracting without a license, but that matter has been continued until after this matter is resolved. 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 Respondents’ 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.[2] 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 $1000.00.[3] 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 $2500.00 for each violation, but not more than $2500.00 per day.[4] 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 civil penalties for 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.[5] Respondent Sevilla’s only argument at hearing was that he had not been convicted in criminal court of contracting without a license in this matter. Such a conviction is not a requirement to finding that Respondent Sevilla violated the Arizona contracting laws regarding contracting without a license. The evidence established Respondent Sevilla violated Arizona contracting laws. As aggravating factors to be considered under A.A.C. R4-9-131, Respondent Sevilla had been previously cited multiple times for contracting without a license. Further Respondent Sevilla had been paid at least $20,050.00, the amount of the job estimate he had submitted, and had failed to complete the work for which he was paid. Thus, the civil penalty of $2500.00 for Respondent Sevilla was appropriate. Respondent Ramos argued at hearing that he was only paid $800.00 for the stucco work and that he was not a part of Respondent Sevilla’s larger project. Respondent Ramos’ argument is undermined by the memos on the checks Ms. McCall issued to him and to his son that indicated the first check was a “partial payment for stucco” and the second check was “paid in full for stucco.” Further, it is apparent that Respondent Ramos’ work was a part of Respondent Sevilla’s larger project that was well in excess of the $1000.00 handyman exemption. In addition, Respondent Ramos was criminally convicted of contracting without a license as a result of this complaint. The evidence established Respondent Ramos violated Arizona contracting laws. As aggravating factors to be considered under A.A.C. R4-9-131, Respondent Ramos had been previously cited multiple times for contracting without a license. Thus, the civil penalty of $2500.00 for Respondent Ramos was appropriate. RECOMMENDED ORDER Based upon the foregoing, it is recommended that the Registrar affirm the finding that Respondent Sevilla violated A.R.S. § 32-1151 and affirm the decisions to assess a civil penalty in the amount of $2500.00. The civil penalty is to be paid in certified funds to the Registrar on or before the effective date of the Registrar’s final Order in this matter. It is further recommended that the Registrar affirm the finding that Respondent Ramos violated A.R.S. § 32-1151 and affirm the decisions to assess a civil penalty in the amount of $2500.00. The civil penalty is 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, August 25, 2015.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1121(A)(14). [2] A.R.S. § 32-1164(A)(2). [3] A.R.S. § 32-1121(A)(14). [4] A.R.S. § 32-1166(A). [5] A.A.C. R4-9-131 sets forth permissible aggravating 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.

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