ALJDEC decisions subject to certification as final

2016A-1713-ROC · Registrar of Contractors · 2016-07-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 24, 2016, June 28, 2016, June 29, 2016, June 30, 2016 and July 1, 2016 with the record held open until July 5, 2016, in view of the voluminous record and the July 4, 2016 holiday. APPEARANCES: The Arizona Registrar of Contractors (hereinafter “Registrar”) was represented by Assistant Attorney General Thomas Raine, Esq. Home Lift Now LLC (hereinafter “Respondent”) was represented by its attorney, Thomas Horne, Esq. ADMINISTRATIVE LAW JUDGE: Suzanne Marwil _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. The Registrar issued its Notice of Hearing in this matter on June 13, 2016. The parties agreed that the issues for hearing included the propriety of the summary suspension the Registrar imposed upon Respondent’s license on June 6, 2016, whether Respondent committed the violations charged in the June 6, 2016 Citation and Complaint, and the appropriate penalty for any violations that might be established. 2. On October 27, 2015, Respondent applied for a CR-61 Carpentry Remodeling and Repairs license.[1] See Exhibit 1. Brandon Howard Lederer (“Lederer”) signed the application. The application was also signed by John Thomas Lawson (“Lawson”) who agreed to serve as the qualifying party for Respondent and to take responsibility for agreements Respondent entered into, monies received, or work performed while named on the license. Lawson did not appear at hearing, but Lederer testified that Lawson acted solely as a salesman for Respondent and did not supervise work performed by Respondent. 3. In response to question no. 11, Lederer indicated that Respondent was exempt from the statutes governing workers’ compensation because he was self-employed and Respondent did not employ workers. Exhibit 1 at 1. This answer was true at the time, but ceased to be true once Respondent grew. At one point, Respondent employed thirty people. Respondent never updated its application with the requisite workers’ compensation insurance policy. Respondent did not obtain a workers’ compensation policy for its workers, but did begin the process of obtaining such a policy during the hearing process in this matter. See Exhibit Z. Lederer indicated he had instructed Respondent’s office manager to obtain a workers’ compensation policy, but she failed to do so. 4. In response to question 21, which inquired whether Lederer had been on a contractor’s license as a member or in other capacities, Lederer answered, “No.” See Exhibit 1 at 2 .This answer was false as Lederer was in fact named on the license of Express Home Services, LLC dba Express Flooring (“Express”), License No. 200037. Lederer indicated at hearing that he was unaware that his father had named him as a member but later stated that he viewed himself as one of the founders of Express, such that he could count jobs done by Express as evidence of his own experience. The Registrar submitted Exhibit 14, showing that in January 2012, Lederer had sent documents and letters to the Registrar identifying himself as a member of Express. Lederer characterized the documents in Exhibit 14 as his attempt to be removed from Express after a disagreement with his father. 5. Lederer signed the application as well and certified that all statements made therein were “true and accurate.” Exhibit 1. at 3. 6. In reliance on the veracity of the above answers and, representations, the Registrar issued License No. 302446 to Respondent on December 26, 2015. Exhibit 3. 7. Just five days after the issuance of that license, the Registrar received a complaint for unlicensed contracting and sent Respondent a warning letter. See Exhibit 4. Lederer stated that doing so was an honest mistake given that he thought Respondent could beginning contracting after receiving a congratulatory letter from the Registrar in October 2015, which acknowledged Respondent’s application and provided a license number associated with the application. 8. In addition, shortly after issuing the license, the Registrar received a number of complaints against Respondent, many of which contained contracts entered into before December 26, 2015 and constituted unlicensed contracting. See Exhibit 5 (Anderson complaint, specifying a contract date of September 24, 2015); Exhibit 6 (Whitetree complaint, contract date November 17, 2015); Exhibit 10 (Joeng complaint, contract date December 5, 2015). 9. Many of the contracts submitted with the complaints lacked required elements pursuant to A.R.S. §32-1158 such as an ROC number or notice to the homeowner of the right to file a complaint. See Exhibit 5 (Anderson complaint); Exhibit 6 (Whitetree complaint); Exhibit 9 (Johnson complaint); Exhibit 10 (Joeng complaint). 10. Some of the complaints contained advertisements from Respondent that ran before Respondent was licensed. See Exhibit 5 (Anderson complaint, advertisement notes an expiration date of October 15, 2016, before Respondent even applied for a license); Exhibit 9 (Johnson complaint, attaching Respondent’s advertisement on houzz.com). Various homeowners provided competent testimony that they hired Respondent based on a money mailer advertisement they received in their mailboxes. 11. For two of the complaints, the Registrar’s investigator determined that building permits were not obtained as required. See Exhibit 6 (Whitetree complaint, February 8, 2016 letter from Beau Cruz to Mesa Building Official); Exhibit 10 (Joeng complaint, Directive referenced the need for a permit). Respondent maintained that no permits were needed because the jobs did not involve relocating any plumbing, but Robert Whitetree produced a letter showing that the City of Mesa fined Respondent for performing unpermitted work. In addition, the cities involved ultimately issued permits in both matters once Respondent applied for them. 12. In some of the complaints, the Registrar issued warning letters for performing work that appeared to require a plumbing license that was outside the scope of Respondent’s license. Exhibit 10 (Joeng May 24, 2016 letter from Jack Grimm to Respondent suggesting the work on the shower required an R-37R Plumbing license). 13. Additional complaints were filed against Respondent for nonpayment of suppliers and or subcontractors. See Exhibit 8. Chase Vercelli agreed that after the filing of his company’s, Chance Glass’, no-pay complaint Respondent paid the company in full for the glass it provided Respondent, but said that Respondent had made no effort to do so before the filing of the complaint for nonpayment, despite him making several attempts to obtain payment. 14. Other complaints also alleged nonpayment of subcontractors. See Exhibit (Johnson complaint, attaching a lien waiver obtained from Respondent’s subcontractor received after paying them directly). 15. After receiving the above complaints, the Registrar searched its own investigative records for items that may be in process regarding Respondent. It uncovered a hotline call from Mitch VanDeVeer on August 12, 2015, alleging that Respondent was using the license of MVAN Enterprises without authorization and that VanDeVeer had sent Respondent a cease and desist letter, but Respondent continued to display MVAN’s license number on its website. See Exhibit 11. Lederer indicated that Respondent had partnered with Mitch VanDeVeer’s father Arthur and that Arthur gave Respondent permission to work under MVAN’s license. Neither of VanDeVeers testified at hearing, but even with permission, using another’s license to perform contracting violates the Registrar’s statutes concerning unlicensed contracting. 16. The Registrar also found allegations of unlicensed contracting made by Nicole Holt, who had been given MVAN’s license number by Lederer. Holt provided a copy of a contract she entered into with Respondent on July 18, 2015, as well as a contract addendum executed in August 2015. Exhibit 10. Holt also alleged that one of Respondent’s subcontractors had removed a popcorn ceiling in her home without providing for asbestos remediation, causing asbestos dust to spread throughout her home. She indicated that she was seeking recourse against Respondent in civil court. Holt attached an email from Lederer dated August 21, 2015 that appeared to minimize the danger and damage from asbestos. See Exhibit 12 (“You would have to breathe [asbestos] in everywhere for it to cause you harm to great harm”). 17. Periodically, the Registrar runs reports to identify contractors who have received in excess of five complaints over the last six months. In early June 2016, Respondent met that threshold and a group of individuals employed by the Registrar determined that reasonable cause existed to summarily suspend Respondent’s license. On June 6, 2016, the Registrar issued the summary suspension, which provided as follows: Pursuant to A.R.S. § 41-1092.11(B), and with good cause appearing, IT IS ORDERED that Respondent's License No. CR61.302446-D shall be summarily suspended on the date of this Order. The Registrar finds that the public health, safety, and welfare imperatively require emergency action on the part of the Registrar. Respondent knowingly perpetrated acts in violations of A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(2), and A.R.S. § 32- 1154(A)(6) which violations include, without limitation, abandoning homeowner contracts after payment, failing to obtain permits and inspections, failure to pay subcontractors and materialmen which damaged the homeowners and other acts that demonstrate that the licensee is an ongoing danger to the public health, safety, and welfare. At the time of this Order, the Respondent has eleven complaints which have been filed against it or its Qualifying Party with the most recent complaint filed on May 27, 2016.

18. On the same date, the Registrar on its own motion issued a Citation and Complaint against Respondent’s license, charging thirty two (32) violations of various statutes as cause to discipline Respondent’s license. Hearing Testimony 19. Steven Nelson, Compliance Supervisor for the Registrar, testified he was part of the decision to summarily suspend Respondent’s license. He noted that at the time Respondent was tied for having the most complaints of any contractor among the 35,000 contractors in the state of Arizona and that Respondent had racked up these complaints in a short time. Nelson added that the nature of these complaints and the fact that the narratives within them were consistent, combined with the fact that consumers were being left without a remedy from the Registrar’s Recovery Fund and had not been made whole, justified the imposition of the summary suspension. Nelson believed the Registrar had a duty to act to protect the public. He acknowledged that Respondent was not contacted before the imposition of the summary suspension. 20. Bonnie Brogdan, a staff attorney with the Registrar, drafted the Citation and Complaint against Respondent. When doing so, she was careful not to duplicate citations that were already part of the homeowner-driven complaints except in the case of citations involving permitting, a matter over which the Registrar had significant regulatory concerns. She did not participate in the summary suspension decision, but indicated that the “cascade” of complaints received by the Registrar telling similar stories made it clear that Respondent was a bad actor in the contracting community and needed to be stopped to protect consumers and subcontractors. 21. When drafting the Citation and Complaint, Brogdan had access to the homeowner and no-pay complaint files above as well as the investigations for unlicensed contracting, many of which included the inspectors’ notes and Respondent’s answers to or arguments against those complaints. 22. Brogdan explained the bases for each of the alleged violations including: Lederer’s misrepresentation of material fact on Respondent’s license application, namely Lederer’s failure to disclose he was a member of Express (Count 1) [2]; the Registrar’s subsequent discovery that Respondent lacked the good moral character to obtain a license as demonstrated by its contracting without a license[3] (Counts 2, 11, 15, 23, 29 and 32); the Registrar’s subsequent discovery that Respondent had failed to display its license number (Counts 3, 10, 12, 21, 28 and 31); Respondent’s entry into contracts that did not contain all required elements (Counts 4, 9, 13, 22, 27 and 30); Respondent’s aiding and abetting unlicensed contracting by its subcontractors (Counts 5, 8, 16, 19); Respondent’s failure to pay subcontractors for their work (Count 18); Respondent’s acts of constructive abandonment by failing to complete or even start jobs by the date provided for completion and/or delaying completion of projects beyond a reasonable time (Counts 6, 17 and 24); failure to obtain permits (Counts 7, 25),;advertising without a license (Counts 14, 20); and contracting outside the scope of the license for which Respondent applied (Count 26). 23. Respondent acknowledged the commission of many of the above violations relating to contracting and advertising without a license as well as deficiencies in Respondent’s contracts and display of its license number. Respondent characterized these violations as “technical” and believed they merited only a short suspension, which Respondent had already served at the time of the hearing in light of the summary suspension. During the course of the hearing, Respondent acknowledged that at least some of its subcontractors, including Luke Kaminski, to whom it subcontracted the Whitetree job, were not licensed. Respondent denied failing to pay subcontractors unless it was withholding monies for poor work that required repair. This claim appears not credible in view of the filing of Chance Glass’ claim for nonpayment and Respondent’s subsequent payment of the invoices contained in Exhibit 7. 24. Respondent further denied that it had failed to pull any required permits or had abandoned any of the jobs detailed above. Instead, Respondent claimed that it remained ready, willing and able to complete the projects at issue, but had not been able to do so due to delays caused by the homeowners and/or lack of access. 25. Robert Whitetree testified that he contracted with Respondent to install a bathroom by Thanksgiving, 2015. He and Respondent both agreed that the first subcontracted tile installer did poor work, leading Respondent to bring in another tile installer to completely redo the shower. Both parties agree that the second installer stopped working before completing the project. Whitetree indicated the installer told him he could not work without being paid; Lederer and Mark Belkhe, Respondent’s project manager, said that the installer went to work on another job and Whitetree elected to wait the two or three weeks it would take the installer to return. In light of the delay, Whitetree filed a complaint with the Registrar. 26. Whitetree also said that based on his background in construction, a permit was needed for the shower work, and was only obtained after he filed a complaint. Thereafter, Respondent hired the unlicensed Kaminski to redo the shower once again. Kaminski in turn subcontracted the job to Joseph Hoffee. 27. Joseph Hoffee testified that it took him over month to build a shower that should have taken a week and a half due to Lederer’s failure to order tile and other misdeeds. Lederer acknowledged he ordered the incorrect tile and injected further delay into this already drawn out process. 28. Hoffee testified that after his tile work was complete, Respondent only wanted to pay Kaminski $500.00 because of damage it claimed Kaminski had done to the tub and tile. Hoffee thought the amount of the damages was overstated and just an attempt by Respondent not to pay for work that was completed by Hoffee. 29. As of the time of the hearing, the Whitetree project was still unfinished as Respondent was still waiting for a faucet to arrive. Respondent argued that because the project was 98% complete, some seven months after the contract was entered into, a charge of abandonment was not warranted. 30. Chook Gyun Joeng testified that he contracted with Respondent to install a shower and redo a kitchen. The parties agreed that work began on the shower, but that a problem arose with the order for the kitchen cabinetry, leading Respondent to push the whole job out six weeks and utilize another cabinetry company. While waiting on the cabinetry and seeking a schedule, Joeng repeatedly asked for a refund of the monies he had paid to Respondent. In late February 2016, Lederer signed an agreement to refund Joeng $19,000 for the cabinets if the order was not placed by the following Friday. Respondent submitted an invoice suggesting that it had paid a deposit for the cabinets along with an entry from Lederer’s debit card purporting to show the deposit (Exhibits H, I and AA), but during the hearing the Registrar obtained an email from Kong Lee, owner of J&K Cabinets, stating that the cabinets had never been ordered, but had merely been invoiced. 31. Lederer testified that after the Registrar issued a Directive in the Joeng matter, he attempted to contact Joeng to complete the work or come to a financial settlement, but Joeng refused to contact him. Lederer never offered a credible explanation for how Respondent could possibly complete the work without having the requisite cabinets. Lederer claimed the cabinets were at one time ready for installation, but were returned to the cabinetry company after Joeng refused Respondent access. Lederer did not produce any evidence that Respondent ever paid the full amount for the cabinets. 32. Joeng testified that his experience with Respondent had “ruined his dreams.” He explained that he owned a small sandwich shop and had saved his money to buy an old house. He saw a mailer that Respondent advertised on and contacted Respondent. He recalled Lederer telling him the job would be done by Christmas 2015, but that was not the case. 33. Lederer testified Respondent was a qualified and responsible contractor who had done over 300 jobs with only six complaints. He said that Respondent aimed to please its customers and viewed the six complaints in the Citation and Complaint as stemming from situations involving difficult customers. 34. With regard to the Johnson complaint, Lederer admitted Respondent entered into the contract in November 2015, after Respondent submitted its license application but before the license was officially issued. Lederer also acknowledged that the amount of the contract was $70,000, which is beyond the scope of a CR 61 license. He also agreed that the work done by Respondent needed to be fixed and that a window installed in the Johnson home was both installed improperly and had warranty issues. Lederer said that the Johnsons knew the replacement window was back- ordered but refused to allow other work to be done before the window was completed. 35. Lederer indicated that other delays were caused by contractors refusing to work for Ms. Johnson as well as by Mr. Johnson’s cancer diagnosis and subsequent request to have a break from construction. 36. Tom Johnson testified that when the contract was signed, he was told the project would be finished by December 18, 2015. He noted that his cancer diagnosis did not occur until January 2016. Johnson indicated that after several weeks, subcontractors began walking off the job claiming that Respondent had failed to pay them for their work. He stated that he had no choice but to pay the subcontractors himself. Johnson said he learned that many subcontractors used on the job were not licensed. 37. The Johnson complaint contains documentary evidence that the Johnsons paid subcontractors directly and received lien waivers. See Exhibit 8. 38. Johnson detailed a variety of problems with Respondent’s work including chips in tile and the need to redo the shower and tub. Johnson indicated he was “astonished” by the claim that Respondent had completed 300 jobs, as his experience was that he could not get Respondent to complete anything. He explained that this inability to complete work was the reason he told Lederer that Respondent had to replace the window and install it correctly before moving on to other parts of the parts of the project. 39. Lederer maintained that at the time of the filing of the Johnson complaint, he believed the project was on hold due to concerns over Mr. Johnson’s health. He said the window is still not available, but he is available to perform corrective work and finish the project if he were permitted access to the Johnson residence. 40. Lederer noted that he was attempting to do Alexandra Anderson a favor when he agreed to remodel her kitchen for $5,000.00 after she did not qualify for a loan in excess of $14,000.00 for the kitchen she originally sought. He indicated that Respondent rushed through the remodel so the kitchen would be ready for her son’s going away party. Lederer said that although the kitchen was “finished and fully functional” for the party, Anderson knew Respondent intended to return and clean up some issues. Lederer said that after the party, Anderson claimed her kitchen was not what she had contracted for, refused to allow Respondent back in and filed a complaint with the Registrar. 41. Lederer denied any abandonment of the project and noted the Anderson received a new kitchen for free after the finance company relieved her of her loan obligation. 42. Ms. Anderson did not testify in these proceedings, but did appear before Administrative Law Judge Diane Mihalsky to pursue her homeowner complaint, which contained separate charges from those alleged in the Citation and Complaint. 43. Mark Belkhe, Respondent’s 36 year old project manager, claimed to have years of experience in construction, a claim deemed inherently not credible. He nevertheless admitted that he did not know the scope of Respondent’s license and was not involved in the decision to enter contracts or to place advertisements for Respondent. 44. The record reflects that Belkhe was responsible for obtaining subcontractors for jobs and did not verify that these subcontractors were licensed. Belkhe continued to offer Hoffee, who was the unlicensed subcontractor of Respondent’s subcontractor, work on other jobs as recently as June 23, 2016.[4] 45. Christina Ramos, a witness from MSI Tile, called by Respondent for the purpose of impeaching Hoffee, testified that her system revealed that Respondent last ordered tile from MSI on June 16, 2016, when the summary suspension in this matter was in place and before the hearing began. The tile was for a customer not involved in these proceedings and the work done was not corrective work. 46. Throughout the proceedings, Respondent charged that the Registrar was to blame for its inability to complete the projects at issue in the Citation and Complaint at the present time. Respondent also suggested that any complaints subsequently filed with the Registrar were due to the summary suspension rather than any action by Respondent. 47. With the consent of all parties, the Tribunal issued an oral recommendation to uphold the summary suspension of Respondent’s license until the issuance of a written decision on the merits of this matter. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[5] 2. The Registrar bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[6] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[7] 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.”[8] 3. The Registrar has established that the license application of Respondent contained material misrepresentations pursuant to A.R.S. § 32-1154(A)(5) given that Lederer was named on the license of Express and failed to disclose this fact. The Tribunal finds the notion that Lederer did not know he was named on this license not credible given Lederer’s testimony that he was one of the founders of Express and counted those jobs as part of his work experience. Moreover, when applying for Respondent’s license, Lederer had an affirmative obligation to check whether he was named on another license before he answered the question on the application. 4. The Registrar has established that Respondent engaged in unlicensed contracting on numerous occasions and hence lacks the moral character to hold a contractors’ license pursuant to A.R.S. § 32-1154(A)(19) and A.R.S .§ 32-1122(D). Respondent does not dispute engaging in these instances of unlicensed contracting, but indicates it is the Registrar’s practice to cure these sort of deficiencies by permitting the unlicensed contractor to become licensed. The Registrar took the position that allowing an unlicensed contractor to become licensed may be an option in certain limited circumstances where a contractor has a single instance of unlicensed contracting and can prove the contractor has made his victim whole. The record showed far more than one instance of unlicensed contracting and also clearly shows that Respondent has not made whole the homeowners it unlawfully contracted with between August and December 2015. Holt has a civil suit pending, Whitetree awaits completion of his project, and Joeng and Johnson have unfinished projects and their money has not been refunded. Each homeowner has been damaged by Respondent’s unlawful acts of unlicensed contracting, which precludes access to the Residential Contractors Recovery Fund. 5. The Registrar has established that Respondent entered into several contracts that did not display its ROC license number in violation of A.R.S. § 32-1154(A)(12) and that did not contain the required elements of a contract pursuant to A.R.S. § 32-1158.[9] 6. The Registrar has established that the Respondent aided and abetted numerous acts of unlicensed contracting by subcontractors on its projects in violation of A.R.S. § 32-1154(A)(9), including but not limited to the hiring of Kaminski and the use of Hoffee for the Whitetree project. 7. The Registrar has established that Respondent abandoned the Whitetree, Joeng and Johnson projects without legal excuse within the meaning of A.R.S. § 32-1154(A)(1). The record reflects that Respondent was responsible for significant delays in these projects that amount to a constructive abandonment. Joeng, and Johnson did not have an obligation to wait for an unlimited period for their products to be ordered and arrive. Similarly, Whitetree was entitled to a finished shower without waiting seven months and counting. Respondent cannot cure the abandonment inherent in the significant and material delays by professing the intent to come back at some point in the future. The Registrar did not establish a violation of A.R.S. § 32-1154(A)(1) in the Anderson matter. 8. The Registrar has established that Respondent failed to obtain a permit on both the Whitetree and Joeng jobs. The city of Mesa cited Respondent for unpermitted work regarding the Whitetree job, suggesting that it believed a permit was necessary for this shower work. Similarly, the city of Phoenix issued a permit for the Joeng job, demonstrating that such a permit was also required. 9. The Registrar has established that Respondent advertised without a license in multiple places without a license from July 2015 to at least November 2015 in violation of A.R.S. § 32-1154(A)(15). Respondent admits to placing such advertisements before obtaining its license. 10. The Registrar has established that Respondent committed a fraudulent act that injured another person in violation of A.R.S. § 32-1154(A)(6) when it failed to pay subcontractors for materials or services provided. The record contains evidence that Chance Glass had to file a complaint in order to receive payment and that the Johnsons paid Respondent’s subcontractors directly after being told that they would walk off the job if not paid. 11. The Registrar established that Respondent worked outside the scope of its license in violation of A.R.S. § 32-1154(A)(16) both by contracting for the Johnson job, which was in excess of $50,000.00, and by undertaking work at the Joeng home that required a plumbing license. 12. The Tribunal previously orally articulated why many of the above acts constituted a reasonable basis to summarily suspend Respondent’s license and substantial evidence to support the continued imposition of the summary suspension. See Audio Record on July 1, 2016, following counsel’s closing arguments. Aside from the multitude of different violations that plainly injured homeowners, material suppliers and subcontractors, the evidence reflected a failure by Respondent to utilize its qualifying party in a manner that allowed him to act in his representative capacity and supervise jobsites and to ensure that work was done correctly in the first instance, to ensure that Respondent abided by the applicable statutes and laws, and to ensure that Respondent completed its work in a timely manner and met its obligations. By relegating its qualifying party to the role of a mere salesman, Respondent left the heart of its contracting work in the hands of inexperienced individuals who did not know the scope of Respondent’s license and felt the only option available to them was to repair poor work or offer monetary sums to fix poor work. 13. These same factors support revoking Respondent’s license. Throughout these proceedings, Respondent has protested that it is being damaged by the Registrar’s actions due to what are only “technical” violations. At the same time, Respondent professes ignorance of basic contracting principles even as it boasts to homeowners that it has the resources to hire experience legal counsel to represent it in civil disputes. The right to a contractor’s license is one qualified by an acceptance of the Registrar’s right to regulate licensed contractors. The actions detailed above show that Respondent cannot be regulated and fails to take responsibility for its own wrongdoing, preferring instead to blame others for its errors and delays. RECOMMENDED ORDER Based on the foregoing and the totality of the evidence presented, it is recommended that Respondent’s License No. 302446 shall be 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 will be five days from the date of that certification. Done this day, July 12, 2016.

/s/ Suzanne Marwil Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] Pursuant to Arizona Administrative Code (A.A.C.) R4-9-104, the scope of a CR61 CARPENTRY, REMODELING AND REPAIRS license is limited as follows to “projects of $50,000 or less.” . [2] A.R.S. 32-1154(A) includes among it grounds for suspension or revocation the following 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. 4. Failure to comply with the statutes or rules governing social security, workers' compensation or unemployment insurance. 5. Misrepresentation of a material fact by the applicant in obtaining a license. 6. The doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured. 7. Conviction of a felony. 8. Failure 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. 9. Aiding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter. 10. Failure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee's operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. 11. Failure of a contractor to comply with any safety or labor laws or codes of the federal government, state or political subdivisions of the state. 12. Failure in any material respect to comply with this chapter. 13. Knowingly entering into a contract with a contractor for work to be performed for which a license is required with a person not duly licensed in the required classification. 14. Acting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth on the license. 15. False, misleading or deceptive advertising whereby any member of the public may be misled and injured. 16. Knowingly contracting beyond the scope of the license or licenses of the licensee. 17. Contracting or offering to contract or submitting a bid while the license is under suspension or while the license is on inactive status. 18. Failure to notify the registrar in writing within a period of fifteen days of any disassociation of the person who qualified for the license. Such licensee shall have sixty days from the date of such disassociation to qualify through another person. 19. Subsequent discovery of facts that if known at the time of issuance of a license or the renewal of a license would have been grounds to deny the issuance or renewal of a license. 20. Having 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. 21. Continuing a new single family residential construction project with actual knowledge that a pretreatment wood-destroying pests or organisms application was either: (a) Not performed at the required location. (b) Performed in a manner inconsistent with label requirements, state law or rules. 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. 23. Prohibit, threaten to prohibit, retaliate, threaten to retaliate or otherwise intimidate any contractor or materialman from serving a preliminary notice pursuant to section 33-992.01. [3] A.R.S. §32-1122(D) provides: To obtain or renew 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 or by showing that the person was named on a contractor's license that was suspended or revoked in another state. [4] At the time of the offer of work, Respondent was under the misimpression that it could perform work on jobs without pay. Brogdan acknowledged she may have said this but clarified that A.R.S. §32-1151 only permits a suspended licensee to perform corrective work without pay. [5] See A.R.S. § 32-1154(A). [6] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [7] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [8] Black’s Law Dictionary at page 1220 (8th ed. 1999). [9] That section provides: From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32- 1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365.

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