ALJDEC decisions subject to certification as final

2015A-5189-ROC · Registrar of Contractors · 2016-05-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 16, 2016, at 8:00 a.m. APPEARANCES: John Caserio (“Complainant”) appeared on his own behalf; Magnum Construction Company LLC (“Respondent”) appeared through Robert Titus (“Mr. Titus”), its Qualifying Party/Manager. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website,[1] on October 29, 2015, the Registrar issued License No. B.301270-R for residential general contracting to Respondent. Mr. Titus is the qualifying party/manager on Respondent’s license. 2. Mr. Titus also was a member on License No. KB-1.207611-D, which the Registrar issued on May 25, 2005. License No. KB-1.207611-D was voluntarily canceled on February 13, 2007. 3. On December 18, 2015, the Arizona Office of the Attorney General, Civil Litigation Division, Consumer Protection & Advocacy Section forwarded to the Registrar a complaint that Complainant had filed with the Attorney General’s Office. Complainant alleged that on October 1, 2015, Respondent contracted to repair Complainant’s roof, that Complainant made a $6,100.00 down payment on the job, and that after Complainant learned that Respondent was not properly licensed and demanded the return of his down payment, Respondent refused. The Registrar sent a copy of the complaint to Respondent and requested that it respond to the complaint. 4. On February 9, 2016, after Respondent did not controvert or resolve the complaint, Complainant filed the same complaint with the Registrar. 5. The complaint was assigned to the Registrar’s Investigator Jack Grimm (“Investigator Grimm”) for investigation. Investigator Grimm performed a jobsite inspection. 6. On March 2, 2016, the Registrar issued a Citation against Respondent’s contractor’s license, charging cause to discipline the license under A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32-1154(A)(8), and A.R.S. § 32- 1154(A)(17). 7. Mr. Titus filed a timely written answer to the Citation on Respondent’s behalf, acknowledging that it had contracted to repair Complainant’s roof on October 1, 2015, before it was licensed, but affirmatively alleging that it had informed Complainant that the Registrar had not yet issued the license when it submitted the contract. Mr. Titus explained that he had informed Complainant that he had 30 years’ experience in construction, that his previous license had expired, and that Respondent had filed paperwork to renew the license in August 2015. Mr. Titus denied that Respondent had been deceitful or had violated any of the statutes charged in the Citation. 8. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 9. A hearing was held on May 16, 2016. Complainant testified on his own behalf. Mr. Titus testified on Respondent’s behalf. Investigator Grimm also testified. Hearing Evidence 10. Complainant paid Respondent a total of $7,000.00. Respondent performed or had another contractor perform certain work for $900.00 that was not related to the replacement of Complainant’s roof. That work was not at issue in Complainant’s complaint or at the hearing. 11. The remaining $6,100.00 that Complainant paid was a down payment for Respondent’s repair of the roof on his house. Before Respondent started work on that project, Complainant heard some derogatory information about the quality of Respondent’s work. 12. Before Respondent performed any work on the roof, Complainant elected to terminate his contract with Respondent. Complainant demanded that Respondent return the $6,100.00 down payment. 13. Respondent offered to refund part of the down payment and to make payments to Complainant over time. Respondent’s written answer alleged that it had incurred costs obtaining materials and hiring work crews to repair Complainant’s roof. Rather than accept payment over time of part of the down payment, Complainant requested that the Registrar refer his complaint for hearing. 14. Mr. Titus testified that he was first licensed in Arizona in 2002, and that because he worked for numerous companies under their licenses, he did not see the point in maintaining his own license. When he went to reinstate the former license, because the rules had changed, he had to reapply for a new license. Mr. Titus testified that he submitted the paperwork for a new license at the end of August 2015. Mr. Titus stated that personnel at the Registrar said that obtaining the new license would only take about 30 days. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[2] 2. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[3] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[4] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] 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.”[6] 4. Because Complainant terminated the October 1, 2015 contract before Respondent could perform it, Respondent did not abandon the job. Therefore, Complainant did not establish cause to suspend, revoke, or otherwise discipline Respondent’s license under A.R.S. § 32- 1154(A)(1).[7] 5. Because Respondent did not perform any work on its October 1, 2015 contract to repair Complainant’s roof, its work could not deviate from the Registrar’s or industry standards. Therefore, Complainant did not establish cause to suspend, revoke, or otherwise discipline Respondent’s license under A.R.S. § 32-1154(A)(3), namely, A.A.C. R4-9- 108.[8] 6. Mr. Titus credibly testified that if Complainant had not terminated the contract, Respondent would have repaired Complainant’s roof for the contract amount, but the Complainant did not allow Respondent to perform any work. Therefore, Complainant did not establish cause to suspend, revoke, or otherwise discipline Respondent’s license under A.R.S. § 32-1154(A)(8).[9] 7. Respondent’s former license had been canceled and its new license had not yet been issued when it entered the October 1, 2015 contract to repair the roof on Complainant’s house. Therefore, Complainant established cause to suspend, revoke, or otherwise discipline Respondent’s license under A.R.S. § 32-1154(A)(17).[10] 8. Whether or not Complainant knew that Respondent was unlicensed when he accepted Respondent’s October 1, 2015 proposal to repair the roof is irrelevant in a matter pending before the Registrar involving a contractor’s license.[11] Respondent committed unlicensed contracting by submitting the proposal,[12] which is an unlawful act[13] that potentially injured Complainant.[14] 9. Because Respondent should not have submitted the proposal before it was licensed, Respondent should not be allowed to profit from its unlicensed contracting and Complainant should not be required to allow Respondent to perform the contract under the circumstances. Therefore, the Registrar should require Respondent to return to Complainant the full $6,100.00 down payment as restitution.[15] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the final order in this matter, Respondent Magnum Construction Company LLC’s License No. B.301270-R shall be suspended until it submits written proof to the Registrar that it has paid Complainant John Caserio $6,100.00 by certified or registered check. 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, May 24, 2016.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See A.A.C. R4-9-117 (“In any disciplinary proceeding conducted by the registrar, the licensee’s entire license file including the record of prior citations and decisions may be considered by the registrar in making a decision and order in the case.”). [2] See A.R.S. § 32-1154(A). [3] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [4] See A.A.C. R2-19-119(B)(2). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Black’s Law Dictionary at page 1220 (8th ed. 1999). [7] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [8] A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [9] A.R.S. § 32-1154(A)(8) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” [10] A.R.S. § 32-1154(A)(17) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[c]ontracting or offering to contract or submitting a bid while the license is under suspension or while the license is on inactive status.” [11] See Laws 1985, Ch. 334, § 1 (“The goals and objectives of the registrar of contractors are to protect the public health, safety and welfare by licensing, bonding and regulating contractors engaged in residential construction . . . .”); Burrows v. Taylor, 129 Ariz. 212, 214, 630 P.2d 35, 37 (Ct. App. 1981) (“[T]he Registrar is charged with the overall responsibility of protecting the welfare of the public dealing with persons engaged in the building contracting vocations and afford the public protection against incompetent, inexperienced, unlawful and fraudulent acts of building contractors.”). [12] A.R.S. § 32-1101(3) defines “contractor” as “any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that, for compensation, undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid or responds to a request for qualification or a request for proposals for construction services to” perform construction. [13] A.R.S. § 32-1151 provides that “[i]t 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 . . . .” [14] A.R.S. § 32-1132(A) provides that “[a]n award from the [Residential Contractors’ Recovery Fund] shall not be available to persons injured by an act, representation, transaction or conduct of a residential contractor who was not licensed pursuant to this chapter or whose license was in an inactive status, expired, cancelled, revoked, suspended or not issued at the time of the contract.” [15] The legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages. See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (App. 1984). The Registrar may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation cannot be remedied by corrective work. See A.R.S. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990).

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