ALJDEC decisions subject to certification as final

2014A-850-ROC · Registrar of Contractors · 2014-07-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 7, 2014, at 8:00 a.m. APPEARANCES: Michael A. Leigh (hereinafter “Mr. Leigh” or “Respondent”) appeared on his own behalf. The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General Seth Hargraves, Esq. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

Mr. Leigh appeals a Civil Citation and Cease & Desist Order issued by the Registrar for advertising unlawfully as an unlicensed contractor. The Citation imposed a civil penalty of $1,500.00. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommend Order finding a violation and recommending imposition of a $1,500.00 civil penalty. FINDINGS OF FACT Background 1. Mr. Leigh is not a licensed contractor. On or about January 17, 2014, the Registrar received an anonymous complaint against Mr. Leigh with an accompanying photograph of a motor vehicle with an advertisement on the back of the vehicle for Mr. Leigh to perform concrete work, including patios, driveways, and hot tub pads. The advertisement on the back of the vehicle did not disclose that Mr. Leigh is not a licensed contractor.[1] 2. The Registrar investigated the complaint and concluded that Mr. Leigh was not licensed at that time and had advertised soliciting contracting work without disclosing his unlicensed status.[2] 3. On or about April 10, 2014, the Registrar issued a Cease & Desist Order and a Civil Citation for the unlicensed advertising activity, imposing a civil penalty of $1,500.00.[3] Mr. Leigh requested an administrative hearing.[4] 4. An administrative hearing was held on July 7, 2014. The Registrar submitted five exhibits and presented the testimony of Registrar Investigator Barry Maerker. Mr. Leigh testified on his own behalf. Hearing Evidence Testimony of Investigator Barry Maerker 5. Investigator Barry Maerker (hereinafter “Investigator Maerker”) testified that he is an investigator with the Registrar. Investigator Maeker stated that he performed the investigation for the complaint against Mr. Leigh. 6. Investigator Maerker testified that he investigates complaints against unlicensed individuals performing and/or advertising to perform contracting work in the State of Arizona. Investigator Maerker stated that if an individual is not a licensed contractor, the maximum value of construction work that the individual can perform is $999.99 or less for labor and materials. Investigator Maeker testified that an advertisement by the unlicensed person must include the specific words, “not a licensed contractor,” in the advertisement. 7. Investigator Maerker testified that he investigated the unlicensed activity complaint against Mr. Leigh. Investigator Maerker stated that he discovered three Craigslist advertisements for Mr. Liegh’s concrete construction services.[5] Investigator Maerker testified that two of the Craigslist advertisements did not contain the words, “not a licensed contractor,” in the advertisement. 8. Investigator Maerker testified that he conducted a telephone interview with Mr. Leigh about the unlicensed activity complaint. Investigator Maerker stated that Mr. Leigh acknowledged that he was not a licensed contractor. Investigator Maeker testified that Mr. Leigh asserted that he had sold the truck with the advertisement in January 2014. 9. Investigator Maeker testified that when Mr. Leigh failed to attend an agreed-upon meeting, the Registrar issued a Citation and Complaint against Mr. Leigh for advertising without a license.[6] Investigator Maeker stated that a civil penalty of $1,500.00 was assessed against Mr. Leigh for the violation. Investigator Maeker testified that Mr. Leigh could not have fallen under the “handyman” exemption because a permit would have been required for the type of concrete work that Mr. Leigh was advertising to perform. Testimony of Michael A. Leigh 10. Mr. Leigh acknowledged that he was not a licensed contractor and that there was an advertisement for concrete work on the truck that he had once owned. Mr. Leigh testified that he had sold the truck with the advertisement in January 2014, and that the new owner had failed to remove the advertisement from the truck. Mr. Leigh stated that he had thirty years of concrete experience in another state and that he was now retired. Mr. Leigh testified that he currently performs small jobs to supplement his retirement income. 11. Mr. Leigh testified that he only performed jobs with a value of under $1,000.00. Mr. Leigh stated that if someone contacted him about a project over $1,000.00, he would refer the matter to a licensed contractor and that he would then work for wages from the licensed contractor on the construction project. Mr. Leigh testified that he did not know that he was required to disclose that he was not a licensed contractor on the advertisement on the truck. 12. Mr. Leigh testified that the Craigslist advertisements were for his construction services. Mr. Leigh stated that his wife may have placed the two advertisements that failed to disclose that he was not a licensed contractor. Mr. Leigh testified that his wife wanted to keep him working. CONCLUSIONS OF LAW Arizona contracting law prohibits persons from advertising to perform contracting work if the person does not possess a license.[7] The law allows an exemption from licensure, with certain limitations, for a “handyman.” One of the limitations is that no single project can be more than $999.99.[8] An unlicensed handyman may advertise to perform construction services as long as the advertisement includes the words, “not a licensed contractor.”[9] The ROC may order a person who violates the advertising provisions to cease and desist such activity and may impose a civil penalty of at least $200.00 for each violation but not more than $2,500.00 per day.[10] A.R.S. § 32-1121 provides as follows: A. This chapter shall not be construed to apply to:

1. An authorized representative of the United States government, this state or any county, incorporated city or town, reclamation district, irrigation district or other municipality or political subdivision of this state.

2. Trustees of an express trust that is not formed for the purpose of conducting business as a contractor or officers of a court, if they are acting within the terms of their trust or office.

3. Public utilities operating under regulation of the corporation commission or construction, repair or operation incidental to discovering or producing petroleum or gas, or the drilling, testing, abandoning or other operation of a petroleum or gas well, if performed by an owner or lessee.

4. Any materialman, manufacturer or retailer who furnishes finished products, materials or articles of merchandise and who does not install or attach such items or installs or attaches such items if the total value of the sales contract or transaction involving such items and the cost of the installation or attachment of such items to a structure does not exceed one thousand dollars, 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. The materialman, manufacturer or retailer shall inform the purchaser that the installation may also be performed by a licensed contractor whose name and address the purchaser may request.

5. Owners of property who improve such property or who build or improve structures or appurtenances on such property and who do the work themselves, with their own employees or with duly licensed contractors, if the structure, group of structures or appurtenances, including the improvements thereto, are intended for occupancy solely by the owner and are not intended for occupancy by members of the public as the owner's employees or business visitors and the structures or appurtenances are not intended for sale or for rent. In all actions brought under this chapter, except an action against an owner-occupant as defined in section 33-1002, proof of the sale or rent or the offering for sale or rent of any such structure by the owner-builder within one year after completion or issuance of a certificate of occupancy is prima facie evidence that such project was undertaken for the purpose of sale or rent. For the purposes of this paragraph, "sale" or "rent" includes any arrangement by which the owner receives compensation in money, provisions, chattels or labor from the occupancy or the transfer of the property or the structures on the property.

6. Owners of property who are acting as developers and who build structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor licensed pursuant to this chapter and owners of property who are acting as developers, who improve structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor or specialty contractors licensed pursuant to this chapter. To qualify for the exemption under this paragraph, the licensed contractors' names and license numbers shall be included in all sales documents.

7. Architects or engineers who are engaging in their professional practice as defined in chapter 1 of this title and who hire or offer to hire the services of a contractor for preconstruction activities relating to investigation and discovery, including:

(a) Subsurface utility location and designation services.

(b) Potholing.

(i) Soil samples.

(ii) Rock samples.

(iii) Pavement samples.

(d) Locating existing features of a building or structure, including existing electrical, mechanical, plumbing and structural members.

8. A person licensed, certified or registered pursuant to chapter of this title or a person working under the direct supervision of a person certified or qualified pursuant to chapter 22 of this title to the extent the person is engaged in pest management.

9. The sale or installation of finished products, materials or articles of merchandise that are not fabricated into and do not become a permanent fixed part of the structure. This exemption does not apply if a local building permit is required, if the total price of the finished product, material or article of merchandise, including labor 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 more than one thousand dollars or if the removal of the finished product, material or article of merchandise causes damage to the structure or renders the structure unfit for its intended use.

10. Employees of the owners of condominiums, townhouses, cooperative units or apartment complexes of four units or less or the owners' management agent or employees of the management agent repairing or maintaining structures owned by them.

11. Any person who engages in the activities regulated by this chapter, as an employee of an exempt property owner or as an employee with wages as the person's sole compensation.

12. A surety company or companies that are authorized to transact business in this state and that undertake to complete a contract on which they issued a performance or completion bond, provided all construction work is performed by duly licensed contractors.

13. Insurance companies that are authorized to transact business in this state and that undertake to perform repairs resulting from casualty losses pursuant to the provisions of a policy, provided all construction work is performed by duly licensed contractors.

14. 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.

15. A person who is licensed, certified or registered pursuant to title 41, chapter 16 and who is not otherwise required to be licensed under this chapter or an employee of such person.

16. A person who functions as a gardener by performing lawn, garden, shrub and tree maintenance.

17. Alarm agents as defined in section 32-101.

B. A person who is licensed to perform work in a particular trade pursuant to this chapter shall not be required to obtain and maintain a separate license for mechanical or structural service work performed within the scope of such trade by such person.

C. Any person who does not have an exemption from licensure pursuant to subsection A, paragraph 14, subdivision (c) of this section is subject to prosecution for a violation of section 44- 1522. The attorney general may investigate the act or practice and take appropriate action pursuant to title 44, chapter 10, article 7.

D. The exemptions from licensure pursuant to subsection A, paragraphs 4, 9 and 14 of this section do not apply to either of the following:

1. All fire safety and mechanical, electrical and plumbing work that is done in connection with fire safety installation and fire safety maintenance and repair. For the purposes of this paragraph, "fire safety installation" means hardwired or interconnected smoke alarms and fire sprinklers and does not include an individual device that is attached by a nail, screw or other fastening device to the frame or foundation of any residential unit. For the purposes of this paragraph, fire safety maintenance and repair does not include routine work that is conducted by an employee of an apartment or condominium complex that is incidental to the fire safety equipment.

2. All work that is done, including the installation, maintenance and repair of devices, appliances or equipment, that involves the connecting to any supply of natural gas, propane or other petroleum or gaseous fuel. Nothing in this paragraph impacts the effect of section 36-1624.01.

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. § 32-1166(A) provides 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. If after the issuance of a citation by the registrar, the person or organization receiving the citation fails to cease and desist in the violation or violations described in the citation, the registrar may assess an additional civil penalty of up to two thousand five hundred dollars for each day the violation or violations continue. The registrar shall 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. The penalties authorized under this section are separate from, and in addition to, all other remedies either civil or criminal.

In this case, Mr. Leigh’s advertisement that he caused to placed on the truck that he once owned and the two Craigslist advertisements did not comply with the law. In addition, the work that was described in the advertisement on the truck and the two Craigslist ads does not appear to be handyman-type work, but rather work that only a licensed contractor is allowed to perform. This Tribunal concludes that Mr. Leigh violated the charged provision of A.R.S. § 32-1165. . RECOMMENDED ORDER IT IS RECOMMENDED that the Registrar of Contractors affirm the Cease & Desist Order and Civil Citation and impose a civil penalty in the amount of $1,500.00 against Michael A. Leigh.

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, July 16, 2014.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] See Registrar’s Exhibit 1 (Telephone Complaint Form with attachment). [2] See Registrar’s Exhibit 2 (Registrar of Contractors Investigation Report). [3] See Registrar’s Exhibit 4 (Citation & Cease and Desist Order). [4] See Registrar’s Exhibit 5 (5/14/14 Response and Request for Hearing). [5] See Registrar’s Exhibit 3 (Craigslist Ads printed April 8, 2014). [6] See Registrar’s Exhibit 4. [7] A.R.S. § 32-1165. [8] A.R.S. § 32-1121(A)(14)(b). [9] A.R.S. § 32-1121(A)(14)(c). [10] A.R.S. § 32-1166(A).

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