ALJDEC decisions subject to certification as final

2015A-4822-ROC · Registrar of Contractors · 2016-03-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

OF ADMINISTRATIVE HEARINGS

HEARING: February 17, 2016 APPEARANCES: The Registrar of Contractors was represented by Assistant Attorney General Thomas Raine. Respondent was represented by its Chief Executive Officer and Qualifying Party Scott Allan Baker. ADMINISTRATIVE LAW JUDGE: Suzanne Marwil _____________________________________________________________________ FINDINGS OF FACT 1. On March 26, 2011, Above All Heating & Cooling LLC (Above All) applied to the Registrar of Contractors (Registrar) for a K39 Contractors License. On the application, Scott Allan Baker (Baker) was listed as “Qualifying Party” and noted to have a 0% ownership interest in the LLC. Exhibit 4. That application was approved and Above All was issued License Number 272317. 2. On May 18, 2011, Baker filed a license application with the Registrar to obtain a Contractor’s license for Respondent and obtained license number 273308. 3. On August 13, 2011, Baker filed a Notice of Disassociation with the Registrar indicating that he was resigning as the Qualifying Party of Above All. 4. Baker testified that he resigned as Above All’s Qualifying Party because he had opened his own business, in the form of Respondent. Baker indicated that Daniel Parker, sole owner of Above All, telephoned him in early 2014 requesting that he again agree to be Above All’s Qualifying Party so Above All could remain in business. 5. Baker agreed to act as Above All’s Qualifying Party and to be its superintendent. On February 14, 2012, Baker signed an Application to Replace Qualifying Party that listed his position with Above All as superintendent. Exhibit 11. 6. In 2012, Baker did very little work for Above All as he was devoting his time to running Respondent. 7. On February 5, 2014, the Registrar received a complaint against Above All alleging that on July 1, 2013, Above All poorly installed two air conditioning units in the Verdugos home. Exhibit 9. A copy of the complaint was sent to Above All’s address of record. 8. On January 15, 2015, the Registrar issued a Citation and Complaint to Above All in Case No. 2014-505. The Citation and Complaint charged violations of seven statutory subsections of A.R.S. § 23-1154. Above All did not file an Answer to the Citation and Complaint, leading the Registrar to issue a Default Decision, Order and Award against Above All dated February 17, 2015. Exhibit 9. A copy of the Citation was sent to Above All’s address of record. 9. On August 27, 2015, the Verdugos filed a claim with the Residential Contractors’ Recovery Fund (Fund). On September 21, 2015, the Fund issued a Notice of Administrative Payout in the amount of $19,470.00 based on the damages sustained as a result of Above All’s acts or omissions. Exhibit 10. 10. Above All did not respond, leading the Registrar to issue a Default Decision, Order and Award that authorized the $19,470.00 payout from the Fund. 11. The Verdugos received payment from the Fund on November 18, 2015. 12. The Fund has not been reimbursed for the amount it paid to the Verdugos. 13. During this timeframe, Baker inactivated Respondent’s license because he felt the company was running him instead. 14. On November 20, 2015, the Registrar issued a Notice and Order Imposing § 32-1139(B) Suspension(s) to Air America, Inc. indicating that the date of the act or omission that led to the Fund award against Above All was on July 1, 2013 and that Baker appeared on the license of Above All on the date of the acts or omissions that led to the Fund payout. As a result, the Registrar indicated it was required to suspend Air America’s license pursuant to A.R.S. § 32-1139(B) until the amount paid from the Fund in Case No. 2014-505 was repaid to the Registrar. Exhibit 1. 15. Baker testified that in late 2013 or early 2014, he discovered that Daniel Parker, the President of Above All, had fraudulently listed him as an owner of Above All. He noted that he “freaked out” and called Parker to yell at him and demand that Baker be removed as an owner of Above All. According to Baker, Parker begged him to remain Above All’s Qualifying Party so Above All did not have to shut down. Baker agreed. 16. Baker did not file a Notice of Disassociation as Above All’s Qualifying Party’s until March 12, 2015. Exhibit 7. Baker indicated he learned after the filing of these suspension proceedings that in March 2012, Parker filed an application for Change of Ownership of Above All adding him as a 25 percent member so he could legally serve as the Qualifying Party of both Air America and Above All. Baker maintained he never agreed to be an owner of Above All and believed that he should not be held responsible for Above All’s deficient work, especially because he did not know of the Verdugo complaint. He said that had he been notified he would have corrected Parker’s poor work. 17. The Registrar took the position that any alleged fraudulent activity related only to Baker’s ownership of Above All, not Baker’s willingness to serve as a Qualifying Party of Above All and hence was irrelevant to this suspension proceeding based on Baker’s status as the Qualifying Party for Above All. It noted that Baker continued to serve as a Qualifying Party even after learning of Parker’s alleged fraud and had not filed any charges against Parker. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32- 1122. 2. The Registrar bears the burden of proof by a preponderance of the evidence to establish that cause exists to discipline Respondent’s licenses. See A.R.S. § 41-1092.07(G)(1); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “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). 3. A.R.S. § 32-1139(B) provides as follows: If any amount is paid from the fund in settlement of a claim arising from the act, representation, transaction or conduct of a residential contractor, the license of the contractor shall be automatically suspended by operation of law until the amount paid from the fund is repaid in full, plus interest at the rate of ten per cent a year. Any person who is or was, at the time of the act or omission, named on a license that has been suspended because of a payment from the recovery fund is not eligible to receive a new license or retain another existing license that also shall be suspended by operation of law, nor shall any suspended license be reactivated, until the amount paid from the fund is repaid as provided in this subsection.

4. The undisputed evidence established that Baker was named on Above All’s license as Qualifying Party when the acts or omissions relative to the Verdugo complaint occurred. Baker agreed to serve as Above All’s Qualifying Party, even though it appears he did not really work for the LLC or provide any oversight thereof in contravention of what the term “Qualifying Party” implies. Baker cannot now blame the Registrar for being so uninvolved with Above All that he did not know of the Verdugo complaint. If Baker did not intend to truly be a Qualifying Party for Above All, he should have filed a Notice of Disassociation as he did in both 2011 and 2015. Because Baker remained Above All’s Qualifying Party on and after July 1, 2013, the Registrar established that Air America Inc.’s inactive license should be suspended until the Fund has been repaid. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar of Contractors’ Order in this matter, the Registrar of Contractors’ Notice and Order Imposing § 32-1139(B) Suspension(s) be affirmed. 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, March 3, 2016.

/s/ Suzanne Marwil Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors -----------------------

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