ALJDEC decisions subject to certification as final

2015A-3935-ROC · Registrar of Contractors · 2015-12-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 27, 2015, at 3:00 p.m. APPEARANCES: The Arizona Registrar of Contractors (“Registrar”) was represented by Thomas Raine, Esq., Assistant Attorney General; Juan Manuel Aldana (“Respondent”) appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On or about March 6, 2015, Brigitte Gallinger (“Ms. Gallinger”) filed a complaint with the Registrar that Respondent doing business as AZ Aircond had entered into a contract to run a gas line to a dryer and range at her residence for the price of $1,350.00, which amount Ms. Gallinger had paid in full.[1] Ms. Gallinger stated that the gas line leaked. Ms. Gallinger attached to her complaint Respondent’s business card and work order, neither of which showed a license number or the disclaimer, “not a licensed contractor.” The complaint was assigned to the Registrar’s Investigator James Vildusea (“Investigator Vildusea”) for investigation. Ms. Gallinger later informed Investigator Vildusea that she had paid Respondent $350.00 in cash to begin the project and provided a copy of a check made payable to Respondent in the amount of $1,000.00 that she issued to him upon completion of the job, which he had endorsed.[2] Investigator Vildusea prepared an investigative report that summarized his investigation.[3] On or about September 16, 2015, Investigator Vildusea issued a Cease & Desist Order, a civil citation for unlicensed contracting in violation of A.R.S. § 32-1151, and a civil citation for unlicensed advertising in violation of A.R.S. § 32-1165 based on Respondent’s activities at Ms. Gallinger’s project. Investigator Vildusea assessed a civil penalty in the amount of $1,500.00 for the violation of A.R.S. § 32-1151 and a civil penalty in the amount of $1,000.00 for the violation of A.R.S. § 32- 1165.[4] The Registrar served the Cease & Desist Order, civil citations, and assessment of civil penalties on Respondent by certified mail. Respondent requested a formal hearing. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on November 27, 2015. The Registrar submitted eight exhibits and presented Investigator Vildusea’s testimony. Respondent submitted one exhibit and testified on his own behalf. Additional Hearing Evidence On or about September 14, 2015, Investigator Vildusea interviewed Ms. Gallinger by telephone. Ms. Gallinger stated that for two months after Respondent installed the gas line, she periodically smelled gas at her residence in the laundry area where Respondent had installed the gas line. Finally, she notified Southwest Gas, which performed an inspection, found a gas leak, and shut the gas off to her residence until a permit was obtained for the new line and a corrective work order for repairs complied with. Ms. Gallinger said that she hired a licensed contractor to perform repairs and that she and her husband were able to return to the residence after spending thirteen days on a hotel. On or about September 15, 2015, Investigator Vildusea interviewed Respondent. Respondent stated that the Gallingers’ real estate agent, Bill Gavis, referred them to Respondent and that Respondent had informed Ms. Gallinger that he was unlicensed, but that he was working as a “handyman.” Respondent acknowledged that he had received a total of $1,350.00 from Ms. Gallinger for the job. Investigator Vildusea explained the handyman exemption to Respondent and informed him that because the Gallinger job cost more than $1,000.00 for labor and materials and required a permit, the exemption did not apply. Investigator Vildusea checked the Arizona Corporation Commission’s website for Respondent’s business, AZ Aircond LLC. Respondent is AZ Aircond LLC’s agent and one of its members. Bretha Aldana, who lives at the same address as Respondent, is its other member.[5] Investigator Vildusea also checked the Registrar’s Information Management System (“IMS”) database for Respondent’s license history. Respondent had been the qualifying party on License No. CR37.248907-D, which had been revoked on September 30, 2010.[6] Respondent is currently unlicensed and there is no record of Respondent having filed a pending application. The IMS database also showed that on March 12, 2013, Respondent had been issued a Cease & Desist Order and cited for advertising without license in Case No. 2013-970.[7] The Registrar’s Investigator Alfred Lindberg’s investigative report in Case No. 2013-970 stated that “[t]he contracting rules were explained to [Respondent] and he said he is interested in pursuing a license. In the meantime, [Respondent] said he would add the phrase not a licensed contractor to his advertisements.”[8] Investigator Vildusea later visited AZ Aircond LLC’s website. The website states that AZ Aircond is licensed, bonded, and insured, which is untrue, and does not contain a license number or the disclaimer, “not a licensed contractor.”[9] The website was not included in the Registrar’s civil citation for unlicensed advertising in violation of A.R.S. § 32-1165, but was offered into evidence to establish a factor in aggravation. Respondent submitted invoices that showed that Mr. Gadis had paid $399.16 for Mr. and Ms. Gallinger to stay at a hotel, a total of $2,885.00 to Alexander’s Plumbing to obtain a permit and to repair the gas line at the Gallingers’ residence, and a total of $1,150.00 to Custom Property Renovations to repair, texture, and paint the drywall at the Gallingers’ residence after Alexander’s Plumbing had obtained a permit and repaired the gas line, for a total expenditure of $4,434.16. [10] Respondent testified that he had given Mr. Gadis a total of $1,400.00 in two checks to begin repaying the amounts spent on the hotel, to permit and repair the gas line, and to repair the drywall and that he had agreed to make payments for the remainder. Respondent argued that a total civil penalty in the amount of $2,500.00 was excessive. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[11] The Registrar bears the burden of proof to establish Respondent’s statutory violations and factors in aggravation of the penalty by a preponderance of the evidence.[12] Respondent bears the burden to establish affirmative defenses and factors in mitigation of the penalty by the same evidentiary standard.[13] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[14] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[15] A.R.S. § 32-1151 prohibits contracting without a license, providing in relevant part 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.

Respondent did not dispute that he contracted to perform and did perform contracting work at Ms. Gallinger’s residence. A.R.S. § 32-1121(A)(14) sets forth the so-called “handyman’s exemption” to licensure requirements and provides in relevant part 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 . . . 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.

Because the amount of Respondent’s contract with Ms. Gallinger exceeded $1,000.00 and performance of the work required a permit, Respondent did not establish that the handyman’s exemption applied. Therefore, the Registrar established that Respondent violated A.R.S. § 32-1151. The Registrar established that Respondent advertised the services of his company, AZ Aircond LLC, on his business card without including the disclaimer, “not a licensed contractor.” 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. § 32-1121(A)(14)(c) provides that the handyman exemption does not apply “[t]o 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.” Therefore, the Registrar established that Respondent violated A.R.S. § 32-1165 by advertising without a license. A.R.S. § 32-1166(A) authorizes the Registrar to assess a civil penalty against a person who has been found to have contracted without a license in violation of A.R.S. § 32-1151 or to have advertised that he is able to perform a service for which a contractor’s license is required in violation of A.R.S. § 32-1165, in relevant part 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. . . .

A.A.C. R4-9-131 provide some factors that the Registrar may consider as factors in aggravation to increase the amount of a civil penalty, including the following: 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: . . . .

6. Performed work that was or had the potential to become hazardous to the health, safety, or general welfare of the public. . . . .

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. . . . .

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.

A gas leak may cause death if the gas is inhaled and if the gas builds up, may result in an explosion that may cause widespread death, bodily injury, and property devastation. The Registrar established at least four factors in aggravation of the penalty under A.A.C. R4-9-131. Respondent credibly testified that he has paid Mr. Gadis $1,400.00 of the $4,434.16 that his deficient and potentially dangerous unlicensed contracting cost Mr. Gadis, perhaps in an attempt to secure future work referrals. Under the circumstances, however, a civil penalty in the amount of $1,500.00 for Respondent’s violation of A.R.S. § 32-1151 is not excessive. In Case No. 2013-970, Respondent was specifically advised about how he could avoid future prosecutions for unlicensed advertising and informed the investigator that he would add the phrase, “not a licensed contractor,” to his future advertisements. Nonetheless, Respondent did not add the disclaimer, “not a licensed contractor,” to his business card. On AZ Aircond LLC’s website, Respondent not only did not include the disclaimer, but falsely represented that Respondent was licensed. Under the circumstances, a civil penalty in the amount of $1,000.00 for Respondent’s violation of A.R.S. § 32-1165 is not excessive. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Juan Manuel Aldana violated A.R.S. §§ 32-1151 and 32-1165 and affirm the assessment of civil penalties in the total amount of $2,500.00. The aggregate total of $2,500.00 in civil penalties shall be paid in certified funds to the Registrar on or before the effective date of the 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 will be five days from the date of that certification. Done this day, December 2, 2015.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 1. [2] See the Registrar’s Exhibit 2. [3] See the Registrar’s Exhibit 4. [4] See the Registrar’s Exhibit 3. [5] See the Registrar’s Exhibit 5. [6] See the Registrar’s Exhibit 6 at 1. [7] See the Registrar’s Exhibit 6 at 2. [8] The Registrar’s Exhibit 7 at 2. [9] See the Registrar’s Exhibit 7. [10] See Respondent’s Exhibit A. [11] See A.R.S. § 32-1101 et seq. [12] See A.R.S. § 41-1092.07(G)(3); 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). [13] See A.A.C. R2-19-119(B)(2). [14] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [15] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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