ALJDEC decisions subject to certification as final

2015A-908-ROC · Registrar of Contractors · 2015-05-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 18, 2015, at 8:00 a.m. APPEARANCES: ML Plastering LLC DBA: ML General Contractor Pending License No(s). KB-2.294263-D (hereinafter “Applicant” or “ML”) appeared through its owner and Qualifying Party, Mario Viscarra Lopez (hereinafter “Mr. Lopez” or “Lopez”). The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General Seth T. Hargraves. A Spanish/English speaking interpreter was present for the hearing. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. Mr. Lopez is listed as the Qualifying Party and Member for ML. The Applicant filed an application for a Class KB-2 Contractors License on or about August 3, 2014.[1] 2. On or about January 27, 2015, the Registrar’s former Chief of Licensing sent a Notice of License Denial (hereinafter “Notice”) to the Applicant indicating that the Registrar was denying Applicant’s license application.[2] The Notice provided, in relevant part, as follows: I. JURISDICTION

This License Denial is issued pursuant to A.R.S. § 32-1101 et seq.

II. FACTUAL ALLEGATIONS

1. Mario Viscarra Lopez (Lopez) is a person named on Pending Application No. 294263 of ML.

III. GROUNDS FOR DENIAL

A. Lopez failed to Establish Good Character and Reputation by Being Named on a Revoked Contractor License.

1. A.R.S. § 32-1122(D) states that to “obtain a license under this chapter, each person shall be of good character and reputation. Lack of good character and reputation may be established by showing that a person has engaged in contracting without a license or committed any act that, if committed or done by any licensed contractor, would be grounds for suspension or revocation of a contractor’s license…”

2. The grounds for suspension or revocation of a contractor license are found in A.R.S. § 32-1154(A). Relevant to this application is Paragraph 20, which states “[h]aving a person named on the license who is or was named on any other license in this state or in another state that is under suspension or revocation for any act or omission that occurs while the person is or was named on the license unless the prior revocation was based solely on a violation of this paragraph.”

3. A.R.S. § 32-112261(C) requires that “[a]fter revocation of a license upon any of the grounds set forth in section 32-1154, the license shall not be renewed or reissued for one year after final determination of revocation and then only on proper showing that all loss caused by the act or omission for which the license was revoked has been fully satisfied.” Clearly, as shown by these statutes, the legislature intends for licensed contractors to resolve harm caused. Although one could argue statues establish a different level of responsibility between a suspension and a revocation, the distinction is ameliorated by A.R.S. § 32- 1154(A)(20). Furthermore, it would seem contrary to this overall statutory scheme to issue a new license without any prior revocation being resolved.

4. Lopez was the Qualifying Party and owner of Mario [Viscarra] Lopez dba Mario’s Plastering, (“Mario’s”), License No. 180469, from November 7, 2002 to September 8, 2008.

5. …. On June 26, 2008, the Registrar issued a Rehearing Order providing that Mario’s license would be revoked on August 5, 2008, unless the Registrar received proof that Mario’s paid [Erika Martinez] to hire an alternate properly licensed contractor of her choice to comply with the written Corrective Work Order issued in this matter [Case No. 2007-10106239]. Mario’s was further ordered to pay the sum of $500.00 to the Registrar by way of a civil penalty pursuant to A.R.S. § 32-1154(D). The failure by Respondent [Mario’s] to pay the entire amount of the civil penalty, on or before September 4, 2008, shall result in the automatic revocation of Mario’s License No. 180469.

6. On September 8, 2008, the Registrar imposed the revocation of Mario’s License No. 180469, according to the terms set forth in the Registrar’s June 26, 2008 Rehearing Order. On or about May 22, 2014 Lopez paid the $500.00 civil penalty to the Registrar.

7. …. A.R.S. § 32-1154(A)(20) establishes the relevant timeframe for being responsible for the actions of a license at the time when the “act or omission that occurs.” Here, Lopez was on the license when the poor work was performed on or about October 2006. Failing to correct the deficient work was the act or omission that led to the revocation. Therefore, Lopez was on the license at the time of the act or omission and is accountable for Mario’s revocations.

8. In summary, the Registrar finds that because Lopez is named on a revoked license, he has failed to establish good character and reputation. As a result of Lopez’s being on a revoked license, the Registrar has determined that ML does not qualify for a new contractor license.

B. Lopez Failed to Establish Good Character and Reputation by Being Named on a Contractor License that led to a Recovery Fund Payout.

2. On or about November 18, 2008, Erika Martinez and Adnan Garcia filed a Residential Contractors’ Recovery Fund (“Recovery Fund”) claim against Mario’s to recover the damages incurred from the poor workmanship performed by Mario’s. The complaint was assigned Case No. 2008-7090391, formerly RF09-0391. On May 20, 2009, the Recovery Fund issued a check to Erika Martinez and Adnan Garcia in the amount of $21,242.70, as a payout from the Recovery Fund.

3. A.R.S. § 32-1139(B) states that 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 in full, plus interest at the rate of ten (10) percent a year.

4. In summary, the Registrar finds that because Lopez is named on a license that has been suspended due to a Recovery Fund payout, he has failed to establish good character and reputation. As a result of Lopez’s being on a license suspended due to a Recovery Fund payout, the Registrar has determined that ML [Applicant] does not qualify for a new contractor license.

C. Lopez Failed to Establish Good Character by Misrepresenting Numerous Material Facts in the Application.

2. The grounds for suspension or revocation of a contractor license are found in A.R.S. § 32-1154(A). Relevant to this application is Paragraph 5, which states “[m]isrepresentation of a material fact by the applicant in obtaining a license.”

3. The certification statement on the license application signed by Lopez states “I certify that I have reviewed the entire contents of this application and all statements, answers, and representations made in this application, including all supplementary statements attached hereto, are true and accurate….”

4. Lopez [misrepresented] material facts in his responses to two (2) questions on the application.

5. First, question 22 asks “have you ever been on a contractor’s license issued by Arizona or any other state? If necessary, use additional pages to indicate all previous licenses.” Lopez answered yes to this question and listed License Nos. 200893 and 210776. Lopez’s answer is a misrepresentation because he failed to disclose other licenses, such as License No. 180469 issued to Mario [Viscarra] Lopez dba Mario’s Plumbing and License No. 234025 issued to M and S Cruz Construction, LLC….

6. Second, question 23 asks “Have any of the licenses listed in question 22 ever been suspended, revoked or otherwise disciplined? If yes, which license(s), what is/are the current status(es) and what was the cause of the discipline.” Lopez answered not to this question. Lopez’s answer is a misrepresentation because it failed to disclose that License No. 180469 was revoked by the Registrar on September 8, 2008; that this license was still revoked at the time of this application was submitted; and that the revocation was imposed for performing poor work on Martinez’s project in violation of A.R.S. § 32- 1154(A)(7)(23) and (3; namely, Rule R4-9-108) [now Paragraph 6 and 22]….

7. In Summary, the Registrar finds that by failing to disclose (a) being named on prior contractor licenses and (b) discipline of a prior contractor license, the status of the discipline, and the cause of the discipline—Lopez failed to establish good character by misrepresenting numerous material facts on his license application. As a result of Lopez’s misrepresentations, the Registrar has determined that ML does not qualify for a new contractor license.

5. Mr. Lopez requested a hearing on the Registrar’s denial. 6. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 7. An evidentiary hearing was held on May 18, 2015, at 8:00 a.m. The Applicant presented the testimony of Mr. Lopez and eight exhibits (A-H). The Registrar presented the testimony of Assistant Chief of Licensing Paul Terek and five (5) exhibits. Hearing Evidence Testimony of Mr. Lopez 8. Mr. Lopez acknowledged that he was the Qualifying Party and owner of Mario Viscarra Lopez dba Mario’s Plastering (hereinafter “Mario’s”), License No. 180469, from November 7, 2002, to September 8, 2008. 9. Mr. Lopez acknowledged that Mario’s performed construction work at Erika Martinez’s residence. 10. Mr. Lopez acknowledged that Erika Martinez filed a consumer complaint against Mario’s with the Registrar and that there was a hearing and rehearing on the Complaint. 11. Mr. Lopez acknowledged that he was present and participated in the Rehearing that occurred on May 21, 2008. 12. Mr. Lopez acknowledged that on or about December 20, 2007, he filed a request with the Registrar to cancel Mario’s license and the license for Mario’s Drywall.[3] 13. On June 26, 2008, the Registrar issued a Rehearing Order providing that Mario’s license would be revoked on August 5, 2008, unless the Registrar received proof that Mario’s paid Complainant [Erika Martinez and Adnan Garcia] to hire an alternate properly licensed contractor of her choice to comply with the written Corrective Work Order issued in this matter [Case No. 2007-10106239].[4] 14. On September 8, 2008, the Registrar imposed a revocation of Mario’s License No. 180469, according to the terms set forth in the Registrar’s June 26, 2008 Rehearing Order.[5] 15. Erika Martinez and Adnan Garcia filed a Residential Contractors’ Recovery Fund (hereinafter “Recovery Fund”) claim against Mario’s to recover the damages that they incurred from the poor workmanship performed by Mario’s. On May 20, 2009, the Recovery Fund issued a check to Erika Martinez and Adnan Garcia in the amount of $21,242.70 as a payout from the Recovery Fund.[6] 16. Mr. Lopez acknowledged that he had not resolved the consumer complaint filed by Erika Martinez and that he had not repaid any money to the Recovery Fund. 17. Mr. Lopez testified that he corrected his construction work on the exterior of the residence of Erika Martinez and Adnan Garcia. Mr. Lopez said that he was not able to correct the interior of their residence because they would not allow him access to the interior of the residence. 18. Mr. Lopez stated that the bank released the money to the homeowners but they did not pay him for his work. Mr. Lopez asserted that the homeowners owe him $18,000.00. Mr. Lopez said that the acceptable quality of his construction work is demonstrated by the alleged fact that Erika Martinez and Adnan Garcia have not had any corrective work performed on their residence despite receiving a payout from the Recovery Fund for their damages. 19. Mr. Lopez testified that he had worked in construction since the 1990s. He said that has always obtained required permits and inspections. Mr. Lopez stated that he has a family and needs to be able to continue to work. Testimony of Paul Terek 20. Paul Terek (hereinafter “Mr. Terek”) testified that he is the Assistant Chief of the Licensing Department for the Registrar. Mr. Terek stated that the Licensing Department processes new license applications and license renewal applications for the Registrar. 21. Mr. Terek testified that the Applicant’s application for licensure was reviewed by the License Department. Mr. Terek stated that Mr. Lopez is listed as member, 100% owner, and qualifying party on the license application. 22. Mr. Terek testified that Mr. Lopez was the Qualifying Party and owner of Mario Viscarra Lopez dba Mario’s Plastering, (“Mario’s”), License No. 180469, from November 7, 2002, to September 8, 2008. Mr. Terek said that on September 8, 2008, the Registrar revoked Mario’s License No. 180469, according to the terms set forth in the Registrar’s June 26, 2008 Rehearing Order. 23. Mr. Terek testified that on or about November 18, 2008, Erika Martinez and Adnan Garcia filed a Recovery Fund claim against Mario’s to recover the damages incurred from the poor workmanship performed by Mario’s and that on May 20, 2009, the Recovery Fund issued a check to Erika Martinez and Adnan Garcia in the amount of $21,242.70, as a payout from the Recovery Fund for their damages. 24. Mr. Terek said that Mr. Lopez is not eligible to receive a new contractor license or retain another existing contractor’s license until the amount paid from the Fund is repaid in full, plus interest at the rate of ten (10) percent a year. Mr. Terek said that ML’s License application was denied because Mr. Lopez failed to establish good character and reputation because he is named on a revoked contractor license, because Mr. Lopez is named on a contractor license that led to a Recovery Fund Payout, and because Mr. Lopez made material misrepresentations in ML’s license application. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[7] 2. Mr. Lopez bears the burden of proof to establish that he meets statutory qualifications for a contractor’s license by a preponderance of the evidence.[8] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[9]

3. A.R.S. §32-1122(D) provides in pertinent part that to obtain a contractor’s license, a person shall be of good character and reputation. Lack of good character and reputation may be established by showing that the person has committed any act which is grounds for suspension or revocation of a license. 4. On June 26, 2008, the Registrar issued a Rehearing Order providing that Mario’s license would be revoked on August 5, 2008, unless the Registrar received proof that Mario’s paid Complainant (Erika Martinez) to hire an alternate properly licensed contractor of her choice to comply with the written Corrective Work Order issued in Case No. 2007-10106239. On September 8, 2008, the Registrar imposed the revocation of Mario’s License No. 180469, according to the terms set forth in the Registrar’s June 26, 2008 Rehearing Order. Mr. Lopez is named on a revoked contractor license. This Tribunal concludes that as a result of Mr. Lopez’s being named on a revoked license, ML does not qualify for a new contractor’s license. 5. On September 8, 2008, the Registrar imposed the revocation of Mario’s License No. 180469, according to the terms set forth in the Registrar’s June 26, 2008 Rehearing Order. The homeowners then filed a Recovery Fund claim against Mario’s to recover the damages that they incurred from the poor workmanship performed by Mario’s. On May 20, 2009, the Recovery Fund issued a check to the homeowners in the amount of $21,242.70, as a payout from the Recovery Fund. The Recovery Fund has not been repaid for the above payout.[10] 6. A.R.S. § 32-1139(B) states that 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 to retain another existing license, which also must be suspended by operation of law, nor shall any suspended license be reactivated until the amount paid from the Fund is repaid in full, plus interest at the rate of ten (10) percent a year. This Tribunal concludes that Mr. Lopez failed to establish good character and reputation because he is named on a license that has been suspended due to a Recovery Fund payout. 6. Mr. Lopez failed to disclose all of his contractor licenses, such as License No. 180469 issued to Mario Viscarra Lopez dba Mario’s Plumbing and License No. 234025 issued to M and S Cruz Construction, LLC. Mr. Lopez failed to disclose that License No. 180469 was revoked by the Registrar on September 8, 2008; that this license was still revoked at the time that the application was submitted; and that the revocation was imposed for performing poor work in violation of A.R.S. § 32- 1154(A)(7)(23) and (3), namely, Rule R4-9-108 (now Paragraph 6 and 22). This Tribunal concludes that Mr. Lopez failed to establish good character by knowingly misrepresenting material facts on ML’s license application. 7. A contractor’s license is a privilege, not a right. “[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 affording that public protection against incompetent, inexperienced, unlawful and fraudulent acts of building contractors.”[11] On this record, Mr. Lopez did not establish that he is eligible for the Registrar to grant him a contractor’s license without exposing the public to an unreasonable risk. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the decision to deny ML’s License Application for Pending License No. KB- 2.294263-D. 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 29, 2015.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See Exhibit No. 1 (8/3/14 License Application). [2] See Exhibit 2 (1/27/15 Notice of License Denial). [3] See Exhibit 3 (Mario’s 2002 License Application/2006 Renewal/Address Change/Notice of Cancellation and License Status). [4] See Exhibit 4 (Consumer Complaint/Citation and Complaint/Order/Rehearing Order). [5] See Exhibit 4 (Consumer Complaint/Citation and Complaint/Order/Rehearing Order). [6] See Exhibit 5 (Recovery Fund Claim Form/Notice/Order and Award/Notice of Payout). [7] See A.R.S. § 32-1122. [8] 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). [9] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [10] See Exhibit 5 (Recovery Fund Claim Form/Notice/Order and Award/Notice of Payout). [11] Burrows v. Taylor, 129 Ariz. 212, 214, 630 P.2d 35, 37 (Ct. App. 1981); see also 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 . . . .”).

-----------------------

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