ALJDEC decisions subject to certification as final

2016A-2201-ROC · Registrar of Contractors · 2016-08-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 6, 2016 held open until July 27, 2016 APPEARANCES: Tom Raine, Attorney for the Registrar of Contractors; Dan Zrihen, Respondent’s representative and owner; Joe Citelli, Donna Grannis, Jeff Wills, Bob Bailey, Debbie Pope, Jeanie Candaso, Gina Sivas, witnesses ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang _____________________________________________________________________ After summarily suspending Respondent’s license, the Registrar of Contractors promptly set the matter for hearing and established by the evidence presented and by Respondent’s admission that Respondent is in violation of A.R.S. § 32-1154(A)(1), (10), (12), and (22) in the 7 complaints that were the subject of the summary suspension. Additionally, the Registrar of Contractors website shows that Respondent’s license had 20 open complaints, 4 disciplinary actions in response to complaints, and 3 complaints that were resolved, settled, or withdrawn. Based on the current state of Respondent’s business and the applicable law, it is recommended that Respondent’s license be revoked. FINDINGS OF FACT 1. On June 24, 2016, the Registrar of Contractors issued Respondent an Order of Summary Suspension & Notice of Promptly Instituted Proceeding (“Summary Suspension”). The Summary Suspension informed Respondent that due to the numerous complaints received regarding Respondent’s license, the Registrar of Contractors found that the public welfare required emergency action and suspended Respondent’s License No. KB-2.284930-D. 2. On June 28, 2016, the Registrar of Contractors issued a Supplemental Notice, informing Respondent of the charges alleged against Respondent and setting forth the Registrar of Contractors’ legal position in this matter. 3. The matter was promptly set for hearing at the Arizona Office of Administrative Hearings, an independent hearings agency. 4. At the hearing, the Registrar of Contractors presented the testimony of 5 of the 7 complainants listed in the Summary Suspension as well as two witnesses from the Registrar of Contractors. The complainants testified as to the subject of their complaints.[1] The Registrar of Contractors witnesses testified about the internal review of the matter prior to the issuance of the Summary Suspension.[2] 5. Respondent’s representative did not dispute the allegations in the complaints. He testified that he had had some business setbacks that caused delays in his performance, but he intends to complete every job. He said he hired someone in October 2015 who claimed that he could expand Respondent’s business. The new employee hired some sales people and, according to Respondent’s representative, they underbid jobs without his knowledge. He also stated that he experienced a $25,000 loss that has impinged his ability to catch up with the work and he has had to use the deposits from new projects to complete older projects and to pay his office expenses, such as payroll. He said he has currently shut down production but will have an accountant figure out how much he owes in refunds. 6. Tom Raine argued in closing on behalf of the Registrar of Contractors that Respondent has shown a pattern of abandoning projects, which is a business practice that the Registrar of Contractors should not allow to continue, regardless of Respondent’s intent to complete the work or pay the money owed the complainants. He argued that Respondent’s $25,000 loss does not excuse the violations and does not explain them because the money taken from the complainants was more than $25,000, and Respondent has done no work at all on most of those projects. Additionally, he argued, 5 of the 7 complaints concerned contracts that Respondent entered in March, April, and May, which is after the time that Respondent fired the troublesome employee that he testified about. He argued that if Respondent could not complete the projects he had, he should not have taken on more. Therefore, Respondent’s license should be revoked. 7. Respondent’s representative closed by stating that only a contractor knows if he can complete a project and he does have the ability to do so, he has just experienced substantial delays. He said he has been working with people to improve his business practices, and he just wants to take care of his customers. He also stated that he does not understand why the Registrar of Contractors did not help him resolve the issues and suspended him right away. He said he is trying to pool his resources and complete the jobs as needed, that it is his intention to run a clean business, and that he wants the opportunity to complete the projects and refund the money that is owed.

CONCLUSIONS OF LAW 1. This matter is within the jurisdiction of the Registrar of Contractors pursuant to A.R.S. §§ 32-1104(A)(4), 32-1154(B) and 32- 1156. The Registrar of Contractors has the burden of proof in this matter and the standard of proof, as established by A.A.C. R2-19- 119(B) is a preponderance, or the greater weight, of the evidence. 2. The Supplemental Notice identified potential violations of A.R.S. § 32-1154(A)(1), (10), (12), and (22). 3. A.R.S. § 32-1154(A)(1) provides grounds for suspension or revocation of a contractor’s license for abandoning a contract or refusal to perform without a legal excuse. 4. A.R.S. § 32-1154(A)(10) provides grounds for suspension or revocation of a contractor’s license for failure to failure to pay in excess of $750.00 when due for materials or services given on a contract when the contractor has the ability to pay or, if not, when he has received sufficient pay on the contract at issue. 5. A.R.S. § 32-1154(A)(12) provides grounds for suspension or revocation of a contractor’s license for failure to comply with provisions of that chapter. A.R.S. § 32-1124(B) requires contractors to use contracts that contain the minimum elements set forth in that subsection. 6. A.R.S. § 32-1154(A)(22) provides grounds for suspension or revocation of a contractor’s license for failure to take appropriate corrective action on a Corrective Work Order without valid justification and within a reasonable period of time. 7. Respondent did not dispute the validity of the alleged violations against him and offered, instead, his testimony about several factors that could be considered as mitigating. However, the purpose of the action taken by the Registrar of Contractors in this matter was clearly for the purpose of intervening in a situation that threatened to cause harm to more of Respondent’s customers should Respondent’s practices continue. While Respondent’s plan to complete all projects may be sincere, it has clearly not worked out as Respondent intended and has unfortunately resulted in several violations. 8. The Registrar of Contractors may consider the prior record of a contractor in any disciplinary proceeding. A.A.C. R4-9-117. As of the writing of this recommendation, Respondent’s license is suspended due to the Summary Suspension. However, it also has 20 open complaints against it, 4 past complaints in which disciplinary action has been taken against it, and 3 complaints that were resolved, settled, or withdrawn. 9. A.R.S. § 32-1154(B) provides, in relevant part, as follows:

B. The registrar may on the registrar's own motion . . . investigate the acts of any contractor within this state and may temporarily suspend . . . or permanently revoke any or all licenses issued under this chapter if the holder of the license . . . is guilty of or commits any of the acts or omissions set forth in subsection A of this section. . . .

10. In this case, Respondent’s representative did not dispute that he is currently in violation of A.R.S. § 32-1154(A)(1), (10), (12), and (22). Moreover, his testimony regarding the course of his business practices indicates that what he had hoped to be a temporary course of business designed to bring him current on his obligations did not have the desired effect and, instead, has led him into further trouble in the form of mounting violations and mounting complaints against him. 11. Having established numerous violations of A.R.S. § 32-1154(A), the Registrar of Contractors has shown that it had the authority under A.R.S. § 32-1154(B) to impose the Summary Suspension in this matter. The greater weight of the evidence adduced at hearing established further that it is appropriate at this time to revoke Respondent’s license.

RECOMMENDED DECISION Based on the foregoing considerations, the undersigned Administrative Law Judge hereby recommends that Respondent’s License No. KB-2.284930-D be revoked.

If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be forty (40) days from the date of certification.

Done this day, August 11, 2016.

/s/ Dorinda M. Lang Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Donna Grannis testified that Respondent took a deposit of $7,602.07 on June 7, 2016 and performed no work on her home. Debbie Pope testified that she paid Respondent $12,240.00 in 2015. After a long delay in starting the project, she said Respondent did some work but installed the wrong bathroom vanity and left the work incomplete. She said Respondent’s last day of work on her home was March 24, 2016. Bob Bailey testified that Respondent owes him about $23,325.00 for materials. He said Respondent made a payment of $7,905.00 about 2 weeks before the hearing date. He said he had previously had a good relationship with Respondent for about 2 or 3 years. Jeanie Candaso testified that she made a deposit of $2,960.00 and Respondent took over $11,000 within 2 days of signing the contract without obtaining permission from the lender. She said on June 14, 2016, Respondent emailed her stating that if she cancelled her contract he would take 30% of it as a cancellation fee. Gina Silvas testified that she gave Respondent $4,015.00 for home improvements and no work was done. [2] Joe Citelli summarized the 7 complaints that were the basis of the Summary Suspension including the 2 complaints in which the complainants were unable to testify. Both of those cases concerned deposits that were paid where no work was completed.

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