ALJDEC decisions subject to certification as final

2016A-2585-ROC · Registrar of Contractors · 2017-03-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

IN THE MATTER OF THE CIVIL PENALTY

CITATION ISSUED TO:

Michael Hernandez,

RESPONDENT.

No. 2016A-2585-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 28, 2017, at 1:00 p.m.

APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by Thomas Raine, Esq., Assistant Attorney General; Michael Hernandez (“Respondent”) appeared on his own behalf.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about July 19, 2016, Manolo Nicdao (“Mr. Nicdao”) filed an unlicensed complaint with the Registrar alleging that Respondent had contracted to install tile at Mr. Nicdao’s house at 1225 North 36th Street, Unit 1139, Phoenix, Arizona 85008 for a price of $1,450.00, that Mr. Nicdao had paid Respondent $1,160.00 for the job, and that Respondent had performed poor work on and abandoned the job. Mr. Nicdao attached to his complaint Respondent’s business card and invoice, which both showed him doing business as HMH Commercial Services (“HMH”).

The complaint was assigned to the Registrar’s Investigator, Daniel Rhodes (“Investigator Rhodes”), for investigation. On or about August 4, 2016, Investigator Rhodes issued a Cease & Desist Order and a civil citation for violating of A.R.S. § 32-1151, based on Respondent’s activities on Mr. Nicdao’s project, and assessed a civil penalty in the amount of $1,500.00 for Respondent’s violation of A.R.S. § 32-1151. Investigator Rhodes personally served the Cease & Desist Order, civil citation, and notice of assessment of civil penalty on Respondent.

Respondent requested a formal hearing. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

The matter was twice continued to allow Respondent additional time to obtain a contractor’s license.

A hearing was held on February 28, 2017. The Registrar submitted five exhibits and presented Investigator Rhodes’ testimony. Respondent testified on his own behalf.

Additional Hearing Evidence

Investigator Rhodes prepared a written report of his investigation. His testimony was consistent with his report.

Investigator Rhodes testified that Mr. Nicdao purchased tile for Respondent to install on the job. Investigator Rhodes testified that Arizona statute requires that a person possess a valid contractor’s license if the aggregate cost of the job, including labor and materials, is $1,000.00 or more.

According to the records of the Arizona Corporation Commission, Respondent is HMH’s statutory agent and manager.

In the past, Respondent had been listed on several licenses that had expired or been cancelled or from which Respondent had resigned. Investigator Rhodes testified that neither Respondent nor HMH currently possess a valid contractor’s license issued by the Registrar. Investigator Rhodes testified that as of the date of the continued hearing, Respondent had not submitted an application for a contractor’s license to the Registrar.

The Registrar’s policy is to reduce a civil penalty for unlicensed contracting to $200.00 if the unlicensed contractor obtains a license and no loss to the public has occurred as a result of the unlicensed contracting activity.

Investigator Rhodes testified that that he did not investigate whether Respondent’s work complied with the Registrar’s or industry standards.

Investigator Rhodes testified that Respondent had entered into a settlement with Mr. Nicdao and had provided a letter to the Registrar from Mr. Nicdao stating that Respondent had settled the claim. Investigator Rhodes testified that he confirmed the settlement with Mr. Nicdao.

Respondent did not disagree with any of Mr. Rhodes’ testimony or the Registrar’s other evidence. Respondent testified that he paid Mr. Nicdao $960.00 to resolve his complaint and that he paid the Registrar $200.00 as a civil penalty. Respondent testified that, altogether, he was out-of-pocket $1,580.00, including the contracting class, test, bonding, and background check for the cost of preparing to submit a license application. Respondent testified that he has never borrowed money before and that he could not afford to submit the license application.

Respondent testified that he performed the tile job for Mr. Nicdao as a favor for a friend. Respondent testified that his business is fabricating and refinishing commercial furniture and that a contractor’s license is not necessary for this work. Nonetheless, he is still interested in obtaining a license because he feels it will be an asset to his business.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

The Registrar bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

A.R.S. § 32-1151 prohibits contracting without a license, providing in relevant part 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.

The Registrar established that Respondent’s performance of the contract to install tile at Mr. Nicdao’s residence was contracting as defined by applicable statute.

A.R.S. § 32-1121(A)(14) sets forth the so-called “handyman’s exemption” to licensure requirements and provides in relevant part as follows:

Any person other than a licensed contractor engaging in any work or operation on one undertaking or project by one or more contracts, for which the aggregate contract price, including labor, materials and all other items . . . is less than one thousand dollars. The work or operations that are exempt under this paragraph shall be of a casual or minor nature. . . .

Because the amount of Respondent’s contract with Mr. Nicdao exceeded $999.99 and the work was not casual or minor in nature, the handyman exemption does not prevent Respondent from being liable for unlicensed contracting in violation of A.R.S. § 32-1151.

A.R.S. § 32-1166(A) authorizes the Registrar to assess a civil penalty against a person who has been found to have contracted without a license in violation of A.R.S. § 32-1151, in relevant part as follows:

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. . . .

Because the Registrar established that Respondent performed contracting work at Mr. Nicdao’s property and Respondent did not establish that any exemption applied, the Registrar established that Respondent engaged in unlicensed contracting in violation of A.R.S. § 32-1151.

A.A.C. R4-9131 provides 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.

The Registrar did not establish any factors in aggravation of the civil penalty to be assessed for Respondent’s unlicensed contracting activity in violation of A.R.S. § 32-1151. Respondent’s settlement with Mr. Nicdao is a factor in mitigation of the penalty. Although the maximum civil penalty under A.R.S. § 32-1166(A) is $2,500.00, the absence of other aggravating factors requires further reduction.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Bryan Dean Clark violated A.R.S. § 32-1151 and impose a civil penalty in the amount of $1,000.00 for the unlicensed contracting violation. The $1,000.00 civil penalty shall be paid in certified funds to the Registrar on or before the effective date of the 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 will be five days from the date of that certification.

Done this day, March 17, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors