ALJDEC decisions subject to certification as final

2015A-647-ROC · Registrar of Contractors · 2016-02-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 6 and February 9, 2016 APPEARANCES: Karlene Wamhoff on her own behalf; William Howell and David Smith for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ FINDINGS OF FACT 1. On November 18, 2015, the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for hearing on January 6, 2016, at the Office of Administrative Hearings in Phoenix, Arizona. 2. Respondent By David LLC holds license number CR61.233680-D issued by ROC.[1] David R. Smith is By David LLC’s qualifying party and a member of the LLC. 3. The Notice of Hearing shows that the hearing was set to consider the charges made in the Citation and Complaint.[2] 4. Through the Citation, ROC alleges that By David LLC may have violated Ariz. Rev. Stat. sections 32-1154(A)(1), (A)(2), (A)(3), (A)(16), and (A)(22). The Citation shows that if the Administrative Law Judge finds that any of the alleged charges are valid, ROC may suspend or revoke By David LLC’s license.[3] 5. Complainant Karlene Wamhoff entered a contract with By David LLC in which By David LLC was to build a new garage and remodel an existing garage at Ms. Wamhoff’s property. 6. The contract was signed by Mr. Smith on February 5, 2014, and bears the name “Marco” at the top. Marco is Marco Holquin.[4] 7. Mr. Holquin was an employee of By David LLC who initially negotiated the terms of the contract with Ms. Wamhoff. Ms. Wamhoff testified as to her belief that Mr. Holquin was a partner in By David LLC. Mr. Smith testified that Mr. Holquin was the job foreman. 8. Throughout 2014, there were delays in completion of the project, during which time Ms. Wamhoff communicated with Mr. Holquin and a “Tamarah,” who represented to Ms. Wamhoff that she was Mr. Holquin’s partner.[5] Based on Ms. Wamhoff’s exhibits, it appears that she did not contact Mr. Smith about these delays until August 21, 2015. See Exhibit A (email). 9. On January 29, 2015, Ms. Wamhoff sent Mr. Smith, Mr. Holquin, and Tamarah a text message in which she informed them that she had spoken to ROC and that ROC would be scheduling an inspection at her property. 10. Mr. Smith responded to Ms. Wamhoff’s January 29th text on that date, writing that he would come “to see the job and what it will take to fix it.” 11. On February 13, 2015, Ms. Wamhoff filed a complaint with ROC alleging workmanship and other deficiencies on By David LLC’s part. In her complaint, Ms. Wamhoff named both Mr. Smith and Mr. Holquin as the persons representing the license. 12. In response to that complaint, ROC Investigator Cliff Corlett conducted a job-site inspection on March 27, 2015, and he issued to By David LLC, a Directive dated April 17, 2015. Through a clerical error the Directive was not mailed until April 23, 2015. 13. Mr. Corlett determined that: there were workmanship deficiencies related to the concrete foundation; that By David LLC had abandoned the project; and that there was electrical wiring that was not up to plan, contract, or code, which included an illegal connection to Ms. Wamhoff’s air conditioning resulting in damage to its operation.[6] The preponderance of the evidence shows that these alleged violations did occur. 14. As a result of By David LLC’s failure to complete work on Ms. Wamhoff’s new garage in a timely manner, Ms. Wamhoff incurred additional expense installing stucco and roofing required to prevent damage to the structure. 15. The Directive shows that By David LLC’s C/R-61 Remodel, Repairs & Carpentry license did not authorize it to work on detached buildings such as the garage at issue. Consequently, By David LLC could not perform the required repair work and could not hire contractors to do the work on its behalf. 16. Ms. Wamhoff had also alleged that Mr. Smith was “renting” By David LLC’s license to Mr. Holquin. Mr. Corlett did not substantiate that allegation, but he recommended that there be further investigation of the allegation. 17. During Mr. Corlett’s March 27th inspection, Mr. Smith accepted responsibility for all the deficient work at issue in this matter. At the hearing however, Mr. Smith raised as a defense an argument that By David LLC was responsible for only the concrete and foundation work and that Ms. Wamhoff had entered a contract or contracts directly with Mr. Holquin for the other work.[7] 18. In support of his argument, Mr. Smith presented or referred to evidence showing that: a. Ms. Wamhoff initially paid By David LLC $8000.00 by check, which was intended to cover the costs of permits, plans, and the foundation of the new garage. Ms. Wamhoff made no other payments directly to By David LLC, but rather as work progressed, Ms. Wamhoff began making checks out to Mr. Holquin directly or to others at Mr. Holquin’s direction. b. Ms. Wamhoff had prepared what she testified were spreadsheets that show only what work had been completed. Mr. Smith, at the hearing, took the position that these were new contracts between Ms. Wamhoff and Mr. Holquin. Mr. Holquin and Ms. Wamhoff had signed one of these documents, which shows the date of preparation as May 9, 2014. Unsigned versions dated August 31, 2014 and February 1, 2015, show “This contract replaces all other contracts.” c. Ms. Wamhoff had failed to contract Mr. Smith during the months that she was experiencing problems. 19. Additional evidence in the record supports a conclusion that Ms. Wamhoff may have entered a separate agreement directly with Mr. Holquin.[8] But there is also evidence to show that Mr. Smith had “rented” his license to Mr. Holquin and that Ms. Wamhoff was aware of that arrangement when she entered the initial contract.[9] 20. In an email to Mr. Smith dated February 2, 2015, Ms. Wamhoff wrote that “ROC was very interested in hearing more about how you lend your license to people for $3000.00 a pop. You would think that if you let someone use your license you would pick someone that knows quality work. You let someone use your license that has no idea how to manage a job let alone do quality up to code work.” Exhibit A (emails). It is clear from the email that she is referring to Mr. Holquin and the work at her house. 21. Mr. Smith offered no evidence to rebut the allegation that he had “rented” his license to Mr. Holquin.[10] CONCLUSIONS OF LAW 1. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 2. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3). 4. A preponderance of the evidence is: The 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.

Black’s Law Dictionary 1373 (10th ed. 2014). 5. The term “knowingly” requires “[o]nly a knowledge that the facts exist that bring the act or omission within the provisions of the statute using such a word” and “[d]oes not require any knowledge of the unlawfulness of the act or omission.” Ariz. Rev. Stat. § 1-215(17). 6. Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 7. “Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B). 8. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 9. Ariz. Rev. Stat. section 32-1154(A) provides that The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: 1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal. 2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect that is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code. 3. Violation of any rule adopted by the registrar. ***** 16. Knowingly contracting beyond the scope of the license or licenses of the licensee. ***** 22. Failure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held.

10. Ariz. Admin. Code section R4-9-108(A) provides that “A contractor shall perform all work in a professional manner.” 11. Mr. Smith’s assertion that By David LLC is not responsible for the work other than the foundation is an affirmative defense. Considering that at the job site inspection Mr. Smith accepted that By David LLC was responsible for the work at issue, and the uncertainty related to the “rental” of the license, By David LLC has not proven that defense by a preponderance of the evidence. 12. The preponderance of the evidence shows that By David LLC violated Ariz. Rev. Stat. section 32-1154(A)(1) by failing to complete the work it contracted for. 13. The preponderance of the evidence shows that By David LLC violated Ariz. Rev. Stat. section 32-1154(A)(2) by its improper electrical wiring. 14. The preponderance of the evidence shows that By David LLC violated Ariz. Rev. Stat. section 32-1154(A)(3) by failing to perform its work in a professional manner. 15. The preponderance of the evidence shows that By David LLC violated Ariz. Rev. Stat. section 32-1154(A)(16) by contracting beyond the scope of its license. 16. The preponderance of the evidence shows that By David LLC violated Ariz. Rev. Stat. section 32-1154(A)(22) by failing to comply with the Directive. 17. Considering the nature of the violations, By David LLC’s license should be revoked. RECOMMENDED ORDER IT IS RECOMMENDED that on the effective date of the final Order in this matter By David LLC’s license number CR61.233680-D is revoked. 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 is forty days after the date of that certification. Done this day, February 26, 2016. /s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] ROC’s website shows By David LLC’s license number as 233680. Consistent with existing policy, in this Decision the number set out in the caption is used. [2] The Notice of Hearing does not provide the date the Citation was issued or when the Complaint was issued or filed. There appears to be no dispute that the Citation was issued on August 5, 2015 or that the Complaint was filed on February 13, 2015. [3] The Citation shows that ROC could not determine whether any violations had actually occurred, which is why the matter was set for hearing. [4] In some documents, Mr. Holquin is referred to as “Marcos,” and in others his last name is spelled “Holguin.” [5] In some documents it is spelled “Tamara.” [6] Mr. Corlett also noted that there deficiencies related to the construction of sheds on the property. At the hearing, Ms. Wamhoff acknowledged that these sheds were not part of her contract or agreement with By David, LLC, but were part of an agreement she had with Mr. Holquin directly. [7] According to Mr. Smith, Mr. Holquin had informed him that Ms. Wamhoff had financial problems and he was under the impression that no work was being done after the foundation for the new garage was completed. [8] In particular, there are text messages between Mr. Holquin, Tamarah, and Ms. Wamhoff dated May 6 and May 7, 2015 in which they are discussing requests that Ms. Wamhoff provide more money to keep the project going. In one message, Mr. Holquin explains that he is poor and needs additional money. In another text, Tamarah provides a breakdown of expenses to date. (Although Ms. Wamhoff testified that Tamarah represented that she was Mr. Holquin’s partner, there was no evidence adduced to suggest that she was affiliated with By David LLC.) In a third text, Ms. Wamhoff wrote “I understand that Marco is not established and is having a rough time….” Exhibit A (text messages at pp. 10 - 11). There is also an email from Mr. Smith to Ms. Wamhoff dated February 2, 2015, in which Mr. Smith asks her for a copy of the contract that Ms. Wamhoff and Mr. Holquin signed. Exhibit A (emails). [9] With her complaint, Ms. Wamhoff included a narrative in which she wrote that when they entered the initial contract, Mr. Holquin informed her that the work could be completed with a license and insurance or without, but it would cost an additional $3000.00 to use the license. [10] That he had entered such an arrangement could explain why Mr. Smith accepted responsibility for the poor workmanship prior to the hearing, despite his assertion at the hearing that By David LLC was not responsible for that work.

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