ALJDEC decisions subject to certification as final

2014A-941-ROC · Registrar of Contractors · 2014-04-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 4, 2014, at 8:00 a.m. APPEARANCES: The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General, John Tellier. M Drive Enterprises Inc. (hereinafter “M Drive”) failed to appear. M Drive’s previous owner and qualifying party, Mark David Rivera (hereinafter “Mr. Rivera”), was present and represented by his attorney, Craighton T. Boates, Esq., Boates Law Firm. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT Background On December 7, 2009, the Registrar issued License No. C39R.261176-R to M Drive. Mr. Rivera was listed as M Drive’s director, president, sole owner, and qualifying party.[1]

On December 7, 2009, the Registrar issued License No. L-39.261175-C to M Drive. Mr. Rivera was listed as M Drive’s director, president, sole owner, and qualifying party for License No. L-39.261175-C.[2] On or about June 20, 2012, Mr. Rivera transferred 100% ownership of M Drive to ACME Home Services LLC (hereinafter “ACME”). On or about August 17, 2012, William Edward Dew (hereinafter “W. Dew”) took office as a director and as president of M Drive.[3] M Drive did not advise the Registrar of the changes in M Drive’s corporate officers, directors, and ownership. ACME is an Arizona limited liability company. W. Dew is ACME’s manager and sole member.[4] On December 5, 2011, the Registrar denied ACME’s license application based on Ronald Colen Dew (hereinafter “R.C. Dew”) acting ACME’s manager through a Limited Power of Attorney executed by his father, W. Dew.[5] R.C. Dew is a person named on License No. C39R.212859-R of Abode Air LLC (hereinafter “Abode”) as Abode’s managing member.[6] The Registrar first revoked License No. C39R.212859-R of Abode on September 7, 2011, and, as of March 18, 2014, has subsequently revoked License No. C39R.212859-R of Abode forty-five (45) additional times.[7] As of March 18, 2014, the Residential Contractor’s Recovery Fund (hereinafter “the Fund”) has paid $13,558.40 to persons injured by the actions of Abode. As of March 18, 2014, this amount had not been repaid to the Recovery Fund with interest.[8] On or about February 19, 2013, Dietrich and Violet Pankow (hereinafter the “Pankows”) filed a complaint with the Registrar seeking a refund of money they paid to M Drive for the purchase of a preventative maintenance agreement. The Pankows alleged that they contacted M Drive for a HVAC check-up and were pressured into paying M Drive $1,762.77 for a ten (10) year maintenance agreement. The Pankows stated that they canceled the maintenance contract and M Drive agreed to return their money. The Pankows stated that they repeatedly contacted M Drive and that M Drive failed to return their money, despite their repeated demands.[9] The Pankows also filed a complaint with the Better Business Bureau (hereinafter “BBB”) against M Drive doing business as “AC Men.” Mr. Rivera responded to the BBB complaint stating, in relevant part, as follows: I Mark D. Rivera am not the president just an employee I am just the qualifying party, for ACME my company was purchased in July 2012 please address all issues with the owner Ron Drew. . . .[10]

Numerous civil court judgments have been made against Abode totaling more than $150,000.00.[11] On or about November 30, 2013, Abode entered into a Stipulated Consent Judgment wherein Abode stipulated that it had violated the Arizona Consumer Fraud Act and agreed to pay a $15,000.00 civil penalty. The $15,000.00 civil penalty was personally guaranteed by R.C. Dew.[12] There was no Written Answer filed in this matter by M Drive. Mr. Rivera’s attorney filed an Answer on behalf of Mr. Rivera, not M Drive. Mr. Rivera’s attorney acknowledged that he was not representing M Drive at the hearing in this matter. Mr. Rivera’s attorney asserted that Mr. Rivera was simply an employee of M Drive and that M Drive was the licensee. On March 18, 2014, the Registrar issued an Order of Summary Suspension suspending M Drive’s License Nos. C39R.261176-R and No. L-39.261175-C.[13] Testimony of Registrar Investigator Jim Dimond Investigator Jim Dimond (hereinafter “Investigator Dimond”) testified that he is a Compliance Investigator for the Registrar. Investigator Dimond stated that he performed an investigation of M Drive for the Registrar. Investigator Dimond testified that he interviewed Mr. Rivera and four other M Drive employees as a part of his investigation. Investigator Dimond testified that he interviewed Mr. Rivera on January 10, 2014. Investigator Dimond stated that the purpose of the interview was to determine the relationship between R.C. Dew and M Drive. Investigator Dimond testified that the Registrar had received a complaint against ACME Air aka AbodeAir dba M Drive. Investigator Dimond testified that R.C. Dew attempted to obtain a contractor’s license for ACME under his father’s name, W. Dew. Investigator Dimond stated that the ACME license application was denied and R.C. Dew then “leased” M Drive’s contractor’s license from Mr. Rivera. Investigator Dimond testified that R.C. Dew had a power of attorney for his father W. Dew. Investigator Dimond stated that R.C. Dew had opened a telemarketing company called Miracle Mile Marketing (hereinafter “Miracle Mile”) to “telemarket” air conditioning jobs for ACME and M Drive. Investigator Dimond testified that M Drive and ACME are both located at 1867 E. Baseline Road, Tempe, Arizona 85283. Investigator Dimond testified that he believed that ACME, Miracle Mile and M Drive were all functioning as the same entity. Investigator Dimond stated that the ACME, Miracle Mile, and M Drive combined entity utilized Abode’s customer list. Investigator Dimond testified that Mr. Rivera stated that he had only spoken to W. Dew on a couple of occasions and that R.C. Dew ran M Drive. Investigator Dimond testified that, initially, Mr. Rivera maintained that R.C. Dew was not a part of M Drive. Investigator Dimond stated that by the end of the January 10, 2014 interview, Mr. Rivera acknowledged that R.C. Dew was in complete control of M Drive. Investigator Dimond testified that Mr. Rivera said that R.C. Dew had warned him not to say anything about R.C. Dew’s involvement with M Drive. Investigator Dimond testified that there was a standing order for all M Drive employees to deny that R.C. Dew had anything to do with M Drive. Investigator Dimond stated that he also spoke with four other employees at M Drive and all of the employees acknowledged that R.C. Dew was in complete control of M Drive. Investigator Dimond testified that the four employees of M Drive indicated that they did not know who Mr. Rivera was. Investigator Dimond testified that the four M Drive employees stated that they had only seen W. Dew on a couple of non-business related occasions. Investigator Dimond testified that Mr. Rivera disclosed that his involvement with M Drive as M Drive’s qualifying party was to pick up his check each Friday and have a chat with R.C. Dew. Investigator Dimond stated that Mr. Rivera acknowledged that R.C. Dew was in complete charge of M Drive. Investigator Dimond testified that M Drive was employing individuals who had previously been employees of Abode. Investigator Dimond testified that Mr. Rivera and the other four M Drive employees stated that R.C. Dew utilized a stamp with W. Dew’s name on it for their paychecks. Investigator Dimond testified that Mr. Rivera acknowledged that he filed the response to the BBB complaint and that the information contained in Mr. Rivera’s response to the BBB complaint was true and correct. Investigator Dimond testified that Mr. Rivera stated that he did not believe that W. Dew had the mental or physical capacity to run a business. Investigator Dimond stated that the other four M Drive employees that he interviewed agreed that W. Dew did not have the capacity to run a business. Investigator Dimond testified that Mr. Rivera stated that he was an “empty shell” and that Mr. Rivera had allowed R.C. Dew to use Mr. Rivera’s contractor’s license in exchange for a weekly paycheck.[14] Investigator Dimond’s testimony is found to be credible. Administrative notice is taken of M Drive’s prior license record for License No. C39R.261176-R as reflected on the Registrar’s public website on April 15, 2014. Such prior license record reflects that License No. C39R.261176-R was summarily suspended on March 18, 2014. License No. C39R.261176-R was suspended for lack of bond on March 25, 2014. License No. C39R.261176-R had previously been suspended for non-renewal from January 1, 2012, through February 15, 2012. Administrative notice is taken of M Drive’s prior license record for License No. L-39.261175-C as reflected on the Registrar’s public website on April 15, 2014. Such prior license record reflects that was License No. L- 39.261175-C was summarily suspended on March 18, 2014. License No. L- 39.261175-C was placed on inactive status on November 29, 2012. License No. L-39.261175-C was suspended for non-renewal from January 3, 2012, through November 29, 2012. CONCLUSIONS OF LAW The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119.[15] 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). Mr. Rivera initially falsely informed the Registrar that R.C. Dew was not involved with M Drive. By the end of his January 10, 2014 interview with Investigator Dimond, Mr. Rivera acknowledged that R.C. Dew was in complete control of M Drive. Mr. Rivera said that R.C. Dew had warned him not to say anything about R.C. Dew’s involvement with M Drive. Mr. Rivera acknowledged that he was an “empty shell” and that he had allowed R.C. Dew to use Mr. Rivera’s contractor’s license in exchange for a weekly paycheck. Mr. Rivera knowingly conspired with R.C. Dew, an unlicensed person, to evade the State’s contracting laws. This Tribunal concludes that M Drive violated the charged provision of A.R.S. § 32-1154(A)(10).[16] M Drive and ACME are both located at 1867 E. Baseline Road, Tempe, Arizona 85283. ACME is not a licensed contractor. ACME, Miracle Mile, and M Drive all functioned as though they were the same contracting entity. ACME, Miracle Mile, M Drive combined contracting entity utilized Abode’s customer list. Mr. Rivera knowingly allowed ACME, an unlicensed person, to utilize M Drive’s contractor’s license. This Tribunal concludes that M Drive violated the charged provision of A.R.S. § 32-1154(A)(10). Mr. Rivera is listed as M Drive’s director, president, sole owner, and qualifying party for License No. L-39.261175-C.[17] On or about June 20, 2012, Mr. Rivera transferred 100% ownership of M Drive to ACME. On or about August 17, 2012, W. Dew took office as a director and as president of M Drive.[18] M Drive did not advise the Registrar of the changes in M Drive’s corporate officers, directors, and ownership. This Tribunal concludes that M Drive violated the charged provision of A.R.S. § 32- 1154(A)(13), namely, A.R.S. § 32-1122(B)(1).[19] A.R.S. § 32-1154(A)(21) provides as follows: The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: . . . .

Having a person named on the license who is or was named on any other license in this state or in another state that is under suspension or revocation for any act or omission that occurs while the person is or was named on the license unless the prior revocation was based solely on a violation of this paragraph.

License No. C39R.261176-R of M Drive and No. L-39.261175-C of M Drive are both under suspension. License No. C39R.261176-R of M Drive and License No. L-39.261175-C of M Drive have the same persons named on them. This Tribunal concludes that M Drive violated the charged provision of A.R.S. § 32-1154(A)(21).

RECOMMENDed order In view of the foregoing, it is recommended that License Nos. C39R.261176-R and L-39.261175-C of M Drive shall be revoked. In the event of certification of this 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 the certification. Done this day, April 23, 2014.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] See Exhibit No. 2 (Application for Contractor’s License with attachments). [2] See Exhibit No. 3 (Application for Contractor’s License with attachments). [3] See Exhibit No. 8 (Stock Purchase Agreement with attachments). [4] See Exhibit No. 5 (Arizona Corporation Commission webpage printout). [5] See Exhibit No. 7 (Denial Letter with attachments). [6] See Exhibit No. 10 (Application for Contractor’s License, name change request, and Arizona Corporation Commission webpage printout). [7] See Exhibit No. 11 (ROCIMS printout and ROC webpage printout). [8] See Exhibit No. 1 (Order of Summary Suspension, Citation and Notice of Hearing). [9] See Exhibit No. 13 (Complaint No. 2013-826). [10] See Exhibit No. 14 (Answer to BBB Complaint). [11] See Exhibit No.16 (Civil Court Case Information). [12] See Exhibit No. 12 (Stipulated Consent Judgment). [13] See Exhibit No. 1 (Order of Summary Suspension). [14] See Exhibit No. 17 (CD-R recording of January 10, 2014 Interview with Mr. Rivera and the four other M Drive employees). [15] A.A.C. R2-19-119 provides as follows: A. Standard of proof. Unless otherwise provided by law, the standard of proof is a preponderance of the evidence. B. Burden of proof. Unless otherwise provided by law: 1. The party asserting a claim, right, or entitlement has the burden of proof; 2. A party asserting an affirmative defense has the burden of establishing the affirmative defense; and 3. The proponent of a motion shall establish the grounds to support the motion.

[16] A.R.S. § 32-1154(A)(10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, aiding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter. [17] See Exhibit No. 3 (Application for Contractor’s License with attachments). [18] See Exhibit No. 8 (Stock Purchase Agreement with attachments). [19] A.R.S. § 32-1122(B)(1) provides, in relevant part, as follows:

Submit to the registrar of contractors a verified application on forms that are prescribed by the registrar of contractors and that contain the following information and shall advise the registrar of any change in the information within thirty days.

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