ALJDEC decisions subject to certification as final

2016A-2309-ROC · Registrar of Contractors · 2016-09-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 31, 2016 APPEARANCES: Jack Simon, Attorney for Respondent; Bruce Goetz, Respondent; Tom Raine, Attorney for the Registrar of Contractors; Dan Rhodes, witness; Betsy Goetz, observer ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang _____________________________________________________________________ Based on the evidence in this matter, the undersigned Administrative Law Judge hereby recommends that the Registrar of Contractors affirm the Cease and Desist Order and civil penalty issued to Respondent on July 1, 2016. FINDINGS OF FACT 1. On or about May 16, 2016, the Registrar of Contractors (“Registrar”) received a complaint against Respondent regarding alleged unlicensed contracting activities. 2. After investigating the complaint, the Registrar’s assigned investigator, Dan Rhodes, issued Respondent a Cease and Desist Order and Civil Citation dated July 1, 2016,[1] for failing to comply with A.R.S. § 32-1151, which pertains to contracting without a license. The proposed civil penalty was $2,500.00. 3. Respondent requested an administrative hearing and the Registrar forwarded the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 4. At the hearing, Investigator Rhodes testified that he investigated the matter after the Registrar received a complaint from a homeowner.[2] The homeowner purchased his home using Respondent as his real estate agent. The complaint alleged that Respondent said he would remodel the home after the sale closed. The homeowner gave Respondent $15,000.00 for the project. He also gave Mario Rios another $18,500.00. The homeowner told Investigator Rhodes that he also gave Respondent a personal check for $5,000.00. The complaint alleged many delays and poor workmanship. 5. Respondent argued that his activities did not meet the definition of contracting without a license because he was not working for compensation. Respondent testified that he undertook without charge to oversee some renovations on a home that he sold as a real estate agent. He said he has helped clients hundreds of times and it is part of the real estate business to help them in various ways. 6. The Registrar argued that it is not relevant whether Respondent charged for his services or whether he received anything in return. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[3] 2. The Registrar bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence.[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] 3. A.R.S. § 32-1101(A)(3) defines “Contractor” as follows:

"Contractor" is synonymous with the term "builder" and means 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, does himself or by or through others, or directly or indirectly supervises others to: (a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or any other structure or work in connection with the construction. (b) Connect such structure or improvements to utility service lines and metering devices and the sewer line.

4. A.R.S. § 32-1151 provides as follows:

It 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, unless the person, firm, partnership, corporation, association or other organization is exempt as provided in this chapter. Evidence of securing a permit from a governmental agency or the employment of a person on a construction project shall be accepted in any court as prima facie evidence of existence of a contract.

5. A.R.S. § 32-1166 concerns the Registrar’s authority to impose civil penalties and to issue cease and desist orders. It provides as follows:

A. In addition to all other remedies, when it appears to the registrar, either upon complaint or otherwise, that any person, firm, partnership, corporation, association or other organization, or a combination of any of them, has engaged in or is engaging in any act of contracting, practice or transaction which constitutes a violation of this chapter, or any rule or order of the registrar, the registrar may serve upon such person, firm, partnership, corporation, association or other organization not currently licensed under this chapter, by certified mail or by personal service, a cease and desist order requiring the person, firm, partnership, corporation, association or other organization to cease and desist immediately, upon receipt of the notice, from engaging in such act, practice or transaction. In conjunction with the cease and desist order, the registrar may issue a citation for a violation. Each citation shall be in writing and shall clearly describe the violation for which the citation was issued. Each citation shall contain an order to cease and desist and an assessment of a civil penalty in an amount of at least two hundred dollars for each violation but not more than two thousand five hundred dollars for the multiple violations committed on the same day. If after the issuance of a citation by the registrar, the person or organization receiving the citation fails to cease and desist in the violation or violations described in the citation, the registrar may assess an additional civil penalty of up to two thousand five hundred dollars for each day the violation or violations continue. The registrar shall adopt rules covering the assessment of a civil penalty that give due consideration to the gravity of the violation and any history of previous violations. The penalties authorized under this section are separate from, and in addition to, all other remedies either civil or criminal. B. Each violation of this chapter or a rule or order of the registrar by a person who is required to be licensed by this chapter and who does not possess the required license shall constitute a separate offense, and the registrar may impose a civil penalty of not to exceed two thousand five hundred dollars for each violation except that for multiple violations committed on the same day the civil penalty shall not exceed two thousand five hundred dollars for all such violations. Monies collected from civil penalties shall be deposited in the state general fund. C. The registrar of contractors may issue citations containing orders to cease and desist and of civil penalties against persons who have never been licensed under this chapter who are acting in the capacity of or engaging in the business of a contractor in this state.

6. A.A.C. R4-9-131 sets forth permissible aggravating and mitigating factors to be considered when assessing a civil penalty, in relevant part, as follows:

In assessing a civil penalty as provided for under A.R.S. § 32- 1166(A), the Registrar shall give due consideration to whether the person cited or any individual acting on that person’s behalf has committed one or more of the following acts in determining the gravity of the cited violation: 1. Falsely represented to be a licensed contractor. 2. Failed to perform any work for which money was received. 3. Executed or used any false or misleading documents for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 4. Made false or misleading statements for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 5. Failed or neglected to apply funds which were received for the purpose of obtaining or paying for services, labor, materials, or equipment. 6. Performed work that was or had the potential to become hazardous to the health, safety, or general welfare of the public. 7. Performed work that deliberately was in violation of building codes, safety laws, labor laws, workers’ compensation laws, or unemployment insurance laws. 8. Performed work that failed to meet minimum acceptable trade or industry standards or practices or was not performed in a good and workmanlike manner. 9. Has committed any other act which would otherwise be cause for disciplinary action if the person cited had been properly licensed pursuant to A.R.S. Title 32, Chapter 10. 10. Has committed two or more prior violations. 11. Performed work that has caused loss or damage to the structure, its appurtenances, or property being worked upon or has caused loss or injury to any person.

7. In this case, the Registrar has established that Respondent was contracting without a license. Regarding the question of whether was required to receive payment for his services in order to be considered acting as a contractor, it is not necessary to resolve the issue because it was established that Respondent expected a type of compensation for his labors. Even though Respondent may not have been paid in cash, he admitted that it is part of his business to do favors for clients and that this was a favor of that nature. Therefore, though he may not have been formally paid, he reasonably foresaw that he could obtain a business benefit from his actions. 8. In considering whether the civil penalty of $2,500.00 is appropriate, one must note that the project Respondent allowed himself to be involved in cost the homeowner more money that he expected, dragged on for 8 months, and resulted in workmanship issues. While no other aggravating factors were identified, this is sufficient to warrant a civil penalty of $2,500.00 because of the harm it caused to the homeowner.

RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent violated A.R.S. § 32-1151 and affirm the decision to assess a civil penalty under A.R.S. § 32-1166 in the amount of $2,500.00, to be paid in certified funds to the Registrar on or before the effective date of the Registrar’s final order in this matter.

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 shall be 40 days after the date of the certification.

Done this day, September 7, 2016.

/s/ Dorinda M. Lang Administrative Law Judge

Transmitted electronically to:

Jeff Fleetham, Director Registrar of Contractors

----------------------- [1] See Exhibit 1. [2] Exhibit 3. [3] See A.R.S. § 32-1101 et seq. [4] See A.R.S. § 41-1092.07(G)(3); A.A.C. R2-19-119(A) and A.A.C. R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

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