ALJDEC decisions subject to certification as final

2015A-252-ROC · Registrar of Contractors · 2015-05-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 13, 2015, at 8:00 a.m. APPEARANCES: Francisco Javier Gallardo (hereinafter “Mr. Gallardo” or “Respondent”) failed to appear at the time scheduled for hearing and did not request to appear telephonically or via video conference. The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General Seth T. Hargraves. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

Mr. Gallardo appealed a Civil Citation issued by the Registrar for contracting without a license. The Civil Citation imposed a civil penalty in the amount of $1,000.00. 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 civil penalty in the amount of $1,000.00. FINDINGS OF FACT Background and Procedure Mr. Gallardo is not a licensed contractor in the State of Arizona.[1] On or about January 21, 2015, the Registrar’s Investigator Daniel Rhodes (hereinafter “Investigator Rhodes”) received information from the Registrar’s Construction Investigator Cort Bacon (hereinafter “Investigator Bacon”) that Investigator Bacon had been informed that an in-ground spa or concrete slab was being constructed at 7515 E. 26th Street, Yuma, Arizona by an alleged unlicensed contractor. Pursuant to the telephone call, Investigator Rhodes initiated an investigation of the complaint. Investigator Rhodes drove to the construction site at 7515 E. 26th Street, Yuma, Arizona and observed two individuals performing concrete work at the residence. Investigator Rhodes found that the construction work was being performed by Mr. Gallardo with the assistance of another man who was working as Mr. Gallardo’s employee. Investigator Rhodes asked Mr. Gallardo if he was a licensed contractor. Mr. Gallardo acknowledged that he was not a licensed contractor. Mr. Gallardo stated that he was “just working for a friend.” Mr. Gallardo said that the homeowner had paid for the concrete and that he was going to receive about $700.00 for his labor. Investigator Rhodes asked the value of the concrete and Mr. Gallardo stated that the cost of the concrete was about $700.00. Investigator Rhodes then informed Mr. Gallardo about statutes regarding the total dollar value of a construction project when considering whether the handyman exemption applied. Mr. Gallardo then alleged that he was working as an employee for a licensed contractor. Investigator Rhodes then asked the homeowner with whom he had contracted and the homeowner stated that he had only dealt with the Mr. Gallardo. The homeowner stated that he was paying Mr. Gallardo $2,000.00 for the construction project. Mr. Gallardo then acknowledged that he was performing the construction work at the residence and provided Investigator Rhodes with an invoice in the amount of $709.63 for the concrete that had been delivered to the construction site. Mr. Gallardo acknowledged that he was paying the other man whom Investigator Rhodes observed at the construction site the sum of $10.00 per hour for his work at the construction site. Investigator Rhodes determined that Mr. Gallardo had violated the provisions of A.R.S. § 32-1151 (Engaging in contracting without a license). A Cease & Desist Order was issued to Mr. Gallardo on January 21, 2015, for violating the provisions of A.R.S. § 32-1151. A civil penalty in the sum of $1,000.00 was assessed for one (1) count of contracting without a license for construction work that Mr. Gallardo had performed in the State of Arizona at 7515 E. 26th Street, Yuma, Arizona.[2] While Investigator Rhodes was issuing the Cease & Desist Order and civil citation to Mr. Gallardo, the other man who had been working as Mr. Gallardo’s employee at the construction site left the jobsite without notice. Investigator Rhodes then contacted the licensed contractor that Mr. Gallardo had alleged had employed him and the licensed contractor acknowledged that he knew Mr. Gallardo but denied any knowledge of the construction project at 7515 E. 26th Street, Yuma, Arizona. Investigator Rhodes testified that he is an Investigator with the Registrar of Contractors. Investigator Bacon stated that he investigates complaints of unlicensed contracting and complaints of violations of advertising without a license for the Registrar. Investigator Rhodes testified that he conducted the investigation of Mr. Gallardo and prepared the Official Departmental Report. Investigator Rhodes reviewed and summarized the Official Departmental Report. Investigator Rhodes testified that Mr. Gallardo is not a licensed contractor in the State of Arizona. Investigator Rhodes stated that Mr. Gallardo was not in compliance with Arizona contracting laws. Investigator Rhodes said that on or about January 21, 2015, Mr. Gallardo violated A.R.S. § 32-1151 by contacting without a license with a homeowner to perform concrete work in the State of Arizona for the sum of $2,000.00. Investigator Rhodes testified that Arizona contracting law allows an exemption from licensure, with certain limitations, for a “handyman.”[3] Investigator Rhodes stated that Mr. Gallardo’s construction work did not fit within the handyman exemption because the cost of the construction work was in excess of the dollar amount allowed in the handyman exemption and he utilized an employee at the construction site. Investigator Rhodes said that the Registrar issued a Cease & Desist Order and a Civil Citation for the unlicensed activity, imposing a civil penalty in the amount of $1,000.00. Investigator Rhodes’ testimony is found to be credible. CONCLUSIONS OF LAW The Registrar bears the burden of proof to establish Mr. Gallardo’s violation of A.R.S. § 32-1151 by a preponderance of the evidence. Arizona contracting law prohibits a person from acting as a contractor without a license.[4] 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.[5] 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.[6] 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 continuing 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.[7] The preponderance of the evidence established that Mr. Gallardo operated as a contractor without a license by contracting to perform at least $2,000.00 worth of unlicensed construction work in the State of Arizona. Thus, a civil penalty in the amount of $1,000.00 is warranted. This Tribunal concludes that a civil penalty in the sum of $1,000.00 is warranted in this case. RECOMMENDED ORDER Based upon the foregoing, it is recommended that the Registrar affirm the finding that Mr. Gallardo violated A.R.S. § 32-1151 and affirm the decision to assess a civil penalty in the amount of $1,000.00, 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, May 15, 2015.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See Exhibit 1 (Investigation Report with Attachments).

[2] See Exhibit 2 (Cease & Desist Order). [3] See A.R.S. § 32-1121(A)(14). [4] A.R.S. § 32-1164(A)(2). [5] A.R.S. § 32-1121(A)(14). [6] A.R.S. § 32-1166(A). [7] 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.

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