ALJDEC decisions subject to certification as final

2015A-4303-ROC · Registrar of Contractors · 2016-01-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 4, 2015, at 1:00 p.m.; the record was held open until January 7, 2016, to allow Respondent to submit additional evidence and the Registrar of Contractors to submit a written closing argument. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by Thomas Raine, Esq., Assistant Attorney General; Jorge Luis Montaño (“Respondent” or “Mr. Montaño”) appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On or about June 26, 2015, Connie C. Martinez (“Ms. Martinez”) filed a complaint with the Registrar that Mr. Montaño had performed certain plumbing work at her residence that she believed to be deficient for the price of $7,355.00.[1] The complaint was assigned to the Registrar’s Investigator, Johnnie Rodney Hamilton (“Investigator Hamilton”), for investigation. Ms. Martinez attached to her complaint copies of Mr. Montaño’s business cards and invoices under the business name, Allegro Plumbing LLC. The business cards and invoices did not show the disclaimer, “Not a licensed contractor.”[2] On or about October 14, 2015, Investigator Hamilton issued a Cease & Desist Order, a civil citation for violating of A.R.S. § 32-1151, and a civil citation for violating A.R.S. § 32-1165, based on Mr. Montaño’s activities at Ms. Martinez’s project, and assessed civil penalties in the amount of $1,500.00 for the violation of A.R.S. § 32-1151 and $1,000.00 for the violation of A.R.S. § 32-1165.[3] Mr. Montaño 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 December 4, 2015. The Registrar submitted four exhibits and presented Investigator Hamilton’s testimony. Mr. Montaño testified on his own behalf. Additional Hearing Evidence Investigator Hamilton interviewed Ms. Martinez to verify the allegations in her complaint and prepared a report of his investigation.[4] Investigator Hamilton testified about the results of his investigation, including that Mr. Montaño had returned $1,000.00 to Ms. Martinez of the more than $7,000.00 that she had paid him. Investigator Hamilton did not render an opinion about Mr. Montaño’s workmanship on Ms. Martinez’s project. Mr. Montaño testified about the work that he performed at Ms. Martinez’s house, which showed an extensive knowledge of the plumbing trade. Investigator Hamilton testified that according to the Registrar’s records, on September 16, 2015, it issued License No. C-37.299791-C for commercial plumbing to Almighty Plumbing LLC, with Mr. Montaño as qualifying party and member. Mr. Montaño also has a pending application for a residential plumbing license. According to the records of the Arizona Corporation Commission, Mr. Montaño is the managing member of Almighty Plumbing LLC and on March 16, 2015, the name of the limited liability corporation was changed from Allegro Plumbing LLC to Almighty Plumbing LLC.[5] Mr. Montaño testified that a friend had referred him to Ms. Martinez and that she was unreasonable and demanding. Mr. Montaño that he did not understand the contracting laws when he undertook the job and by the end of the project, he just wanted out. Mr. Montaño testified that the value of the remaining repairs when he left the job were well under $1,000.00 and that he had Ms. Martinez sign a paper that she was satisfied with the payment. Mr. Montaño testified that Ms. Martinez did not want him back on the job to perform repairs. The Administrative Law Judge left the record open to allow Mr. Montaño to submit additional evidence that he had satisfied Ms. Martinez’s complaint and to allow the Registrar to submit a written closing argument. The Registrar’s written closing argument stated that, “[a]fter having reviewed the correspondence from [Ms. Martinez], the Registrar is satisfied that Respondent has resolved the issues with the homeowner. Therefore, the Registrar recommends that the Court enter judgement against Respondent in the amount of $200.00.” CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[6] The Registrar bears the burden of proof to establish Mr. Montaño’s statutory violations by a preponderance of the evidence.[7] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[8] 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.”[9] 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.

Mr. Montaño did not dispute that he contracted to perform and that he performed contracting work at Ms. Martinez’s residence for an aggregate cost of more than $1,000.00. Everyone is presumed to know the law.[10] “As a matter of public policy, all persons are charged with knowledge of law pertaining to their transactions . . . .”[11] Because everyone is presumed to know the law’s requirements, a mistake as to such requirements does not excuse failure to meet them.[12] Mr. Montaño’s ignorance of the law does not excuse his failure to comply with the law when he performed contracting at Ms. Martinez’s property. 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. . . .

Because the amount of Mr. Montaño’s contract with Ms. Martinez exceeded $999.99, the Registrar established that Mr. Montaño violated A.R.S. § 32- 1151. The Registrar established that Mr. Montaño advertised the services on his business card and invoices 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.” The Registrar established that Mr. Montaño 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. . . .

Mr. Montaño’s testimony at the hearing showed extensive knowledge about the plumbing trade. There is no evidence that Mr. Montaño committed any of the acts set forth in A.A.C. R4-9-131 as factors that might increase the amount of the civil penalty.[13] The fact that Mr. Montaño has obtained a commercial plumbing license and is in the process of obtaining a residential plumbing license should decrease the amount of the civil penalty for unlicensed contracting, even though the violation still occurred. / / / / RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Jorge Luis Montaño violated A.R.S. §§ 32-1151 and 32-1165 and reduce the civil penalty for unlicensed contracting to $200.00, but affirm the civil penalty of $1,000.00 for unlicensed advertising. The aggregate total of $1,200.00 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, January 22, 2016.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 2. [2] See id. at 8, 9, 10. [3] See the Registrar’s Exhibit 1. [4] See the Registrar’s Exhibit 3. [5] See the Registrar’s Exhibit 4. [6] See A.R.S. § 32-1101 et seq. [7] 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). [8] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [9] Black’s Law Dictionary at page 1220 (8th ed. 1999). [10] See Conway v. State Consolidated Publishing Co., 57 Ariz. 162, 171, 112 P.2d 218 (1941). [11] Turner v. State Employees Retirement System, 485 So. 2d 765 (Ala. App. 1986). [12] See Newman v. Fidelity Savings and Loan Ass’n, 14 Ariz. 354, 359, 128 P. 53 (1912). [13] A.A.C. R4-9-131 provides 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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