ALJDEC decisions subject to certification as final

2014A-821-ROC · Registrar of Contractors · 2014-08-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 24, 2014

APPEARANCES: The Arizona Registrar of Contractors was represented by Assistant Attorney General Seth Hargraves; Respondent was represented attorney Patric Durazzo, Esq., accompanied by Managing Member Carlos Canez.

WITNESSES: Eric Ulinger, Carlos Canez Kathy Long Ed Long Thomas Larriva

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Respondent appeals from a Notice and Order Imposing § 32-1139(B) Suspensions (“Order”) issued by the Registrar of Contractors (“ROC”). The Order requires Respondent to show cause why automatic suspensions of the two licenses named herein should not be imposed under A.R.S. § 32-1139(B). That statue provides for automatic suspension of a license when a person named on the license is also named on a license that has caused a payout from the Residential Contractors’ Recovery Fund (“the Fund”). Suspension is required until the Fund is repaid in full. Here, the ROC alleges that Carlos Canez is such a person. Respondent denies the allegations. This tribunal entered the ROC’s marked Exhibits 1 through 7 into the record. In addition, the Administrative Law Judge took administrative notice of ROC complaint files in 2010-[number redacted] and 2010-[number redacted]. Testimony was presented from the witnesses listed above. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding no grounds for the automatic suspension of the licenses. FINDINGS OF FACT 1. Respondent is the holder of License No. KB-1.232937-D and License No. K-39.239556-D. Respondent’s Managing Member is Carlos Canez. 2. A & E Flood Services, LLC (“A & E”) obtained ROC License No. C- 61.222633-R (hereinafter “the C-61 license”) in August 2006. At that time, the entity was owned by Edward Montano and Terrence Wilkey. Documentation filed with the Arizona Corporation Commission shows that on February 1, 2010, Canez was brought in to replace Wilkey as an owner of A & E.[1] 3. ROC records show that Canez was the Qualifying Party and part- owner of A & E, when that entity applied for a license with the ROC on February 4, 2010.[2] Based on that application, ROC License No. KB- 1.263052-D (hereinafter (“the KB-1 license”) was issued on February 19, 2010. On that same date, the C-61 license held by A & E was cancelled.[3] 4. Canez filed with the ROC a Notice of Disassociation from the KB-1 license on May 10, 2010.[4] Documentation filed with the Arizona Corporation Commission shows that Canez was removed as a member of A & E on June 9, 2010. 5. On July 16, 2010, Gerry and Edwina Kerry filed an ROC complaint against A & E.[5] The complaint primarily alleged abandonment of a project that A & E was doing at their home. According to the complaint form filled in by the Kerrys and signed by both of them, the last date that work was performed by A & E on their project was June 19, 2010. Both Gerry and Edwina signed the form and verified “under penalty of law” that the information was true to the best of their knowledge.[6] 6. A Citation and Complaint was issued against each license held by A & E, charging abandonment and poor workmanship.[7] A & E defaulted by failing to answer either citation and both licenses were suspended and eventually revoked.[8] 7. In January 2012, the Fund made payouts of $15,000.00 to the Kerrys against both the KB-1 and the C-61 A & E licenses, for a total of $30,000.00.[9] 8. The evidence shows that the date of the violation by A & E, that led to the payments from the Fund, is June 19, 2010, the date that the project was abandoned, as sworn to by both of the Kerrys in their complaint. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[10] Further, the standard of proof at hearing is by preponderance of the evidence.[11] Here, the ROC bears the burden of showing, by a preponderance of the evidence,[12] that Canez is a person who is or was, at the time of the act or omission that leads to a Fund payout, named on the license that caused the payout to be made. The ROC has failed to do so. 2. A.R.S. § 32-1139(B) provides: If any amount is paid from the fund in settlement of a claim arising from the act, representation, transaction or conduct of a residential contractor, the license of the contractor shall be automatically suspended by operation of law until the amount paid from the fund is repaid in full, plus interest at the rate of ten per cent a year. Any person who is or was, at the time of the act or omission, named on a license that has been suspended because of a payment from the recovery fund is not eligible to receive a new license or retain another existing license that also shall be suspended by operation of law, nor shall any suspended license be reactivated, until the amount paid from the fund is repaid as provided in this subsection.

The statute is clear and self-explanatory. 3. Here, the violation that led to the Fund payments occurred on June 19, 2010, according to the sworn statement filed by the homeowners. The Kerrys were not called as witnesses to rebut that sworn statement, and nothing in the record provides grounds for rebuttal of that statement. The ROC’s assertion that the violation occurred on April 10, 2010, the date the Kerrys made a payment prior to the abandonment is not supported by logic or the record. 4. The evidence fails to show that Respondent’s licenses should be suspended by operation of law under A.R.S. § 32-1139(B). RECOMMENDED ORDER IT IS RECOMMENDED that the Registrar of Contractors rescind the Notice and Order Imposing § 32-1139(B) Suspensions issued to CA Development & Construction, LLC on March 31, 2014.

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 40 days from the date of that certification.

Done this day, August 15, 2014.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Exhibit 5. [2] Exhibit 4. [3] Exhibit 5. [4] Exhibit 4. [5] Exhibit 6. [6] Id. [7] Id. [8] Id. [9] Exhibit 7. [10] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [11] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [12] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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