ALJDEC decisions subject to certification as final

2016A-2872-ROC · Registrar of Contractors · 2016-10-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Registrar of Contractors,

COMPLAINANT

-v-

Desert Heat Excavating LLC,

Pending Application No. 304713,

APPLICANT.

No. 2016A-2872-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 30, 2016

APPEARANCES: Applicant was represented by Matthew Hum, Esq. The Registrar of Contractors (Registrar) was represented by Assistant Attorney General Thomas Raine.

ADMINISTRATIVE LAW JUDGE: Suzanne Marwil

_____________________________________________________________________

FINDINGS OF FACT

On or about March 3, 2016, Shawn Robert Kirby submitted to the Registrar a License Application listing himself as the qualifying party of Desert Heat Excavating, LLC. Mr. Kirby’s mother, Marlene Lehman signed the application as a member of the LLC and Mr. Kirby signed it as a qualifying party.

Desert Heat Excavating, LLC (Applicant) had held a residential contracting license since approximately 2006, but inadvertently missed the deadline to automatically renew its license, thereby necessitating a new application.

Mr. Kirby answered “No” in response to Question 23, which asked: “[h]ave you ever been convicted of a felony, or currently have a felony charge pending? List all felony convictions. Use additional paper if needed.” The question specified that "[y]ou are still required to answer ‘Yes’ if a conviction has been vacated, pardoned, expunged, dismissed, appealed, listed as undesignated or otherwise reduced, or your civil rights have been restored.”

That answer was false as Mr. Kirby had been charged on April 11, 2015 in Maricopa County Superior Court case # CR2015-0025557-001 DT with committing fraudulent schemes and artifices, a class two felony, insurance fraud, a class two felony, and theft, a class 6 felony. See Exhibit 3.

Mr. Kirby testified at hearing that he did not intend to mislead anyone, but was simply trying to keep his pending felony charges quiet so he did not tell Desert Heat Excavating LLC’s employee who filled out the license application about the charges. Mr. Kirby admitted that he signed the application, which also failed to disclose in response to Question 21 that he was the qualifying party on a current commercial license for Desert Heat Excavating, LLC, without reading it.

Mr. Kirby indicated at hearing that he had “sold a backhoe to Jaime [Ruiz] and then turned in to insurance” as stolen.

Mr. Kirby ultimately pled guilty to a single count of theft, a class 6 undesignated felony, agreed to pay restitution and be on probation for three years. The term of probation could be shortened if restitution was made sooner and upon completion of payment, Mr. Kirby could petition to have the undesignated felony reduced to a misdemeanor. See Exhibit 3.

After receiving the application, the Registrar requested more information from Mr. Kirby regarding the felony charges and subsequent guilty plea, which Mr. Kirby provided. Mr. Kirby also attended an interview with the Registrar to discuss the matter.

Bonnie Allan, Staff Attorney for the Registrar, testified that the Registrar’s character and fitness committee met to discuss Applicant’s renewal application and ultimately decided that Mr. Kirby’s felony rose to the level of a lack of good character. Ms. Allan noted that the committee considered several factors before exercising its discretion to deny Applicant’s renewal application, including but not limited to: the recent timing of Mr. Kirby’s conviction, the fact that it was a crime of dishonesty, and the fact that the fraud involved a substantial amount of money (approximately $60,000.00).

Ms. Allan acknowledged that Mr. Kirby had shown some evidence of rehabilitation by paying restitution, but noted he had not completed restitution and was still on probation. She agreed that this mitigating evidence had led the Registrar not to pursue Applicant’s commercial contracting license, but said the Registrar applied more scrutiny on a renewal application that contemplated serving residential customers.

On or about July 5, 2016, Ms. Allan (then called Bonnie Borgdan) notified Applicant hat the Registrar had determined to deny its license application under A.R.S. § 32-1122(D) and A.R.S. § 32-1154(A)(5) and (A)(7). The Notice of Denial Stated in pertinent part that:

A.R.S. § 32- 1122(D) states that 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 committee any act that if committed or done by any licensed contractor, would be grounds for suspension or revocation or a contractor's license ...”

The grounds for suspension or revocation of a contactor license are found in A.R.S. § 32-1154(A). Relevant to this application is Paragraph 7, which states “”[c]onviction of a felony:”

In summary, the Registrar finds that due to the prior felony charges. Mr. Kirby has failed to establish good character and reputation. As a result of Mr. Kirby’s felony convictions. The Registrar has determined that Applicant does not qualify for a contractor license.

. . . .

Relevant to this application is Paragraph 5, which states “[m]isrepresentation of a material fact by the applicant in obtaining a license ...”

In summary, the Registrar finds that because Mr. Kirby failed to disclose certain felony charges and because he failed to disclose that he was a person named on a current license on the pending license application he has failed to establish good character and reputation. As a result of Mr. Kirby's misrepresentations of a material fact on the pending license application, the Registrar has determined that Applicant does not qualify for a contractor license.

Applicant requested a hearing on the Registrar’s denial of its license application.

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

An evidentiary hearing was held on September 30, 2016.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1122.

Applicant bears the burden of proof to establish that it meets statutory qualifications for a contractor’s license by a preponderance of the evidence. 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). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).

A.R.S. § 32-1122 provides, in relevant part, as follows:

D. 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.

A.R.S. § 32-1154(A) provides, in relevant part, as follows:

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:

. . . .

5. Misrepresentation of a material fact by the applicant in obtaining a license.

. . . .

7. Conviction of a felony.

The evidence of record supports the conclusion that Mr. Kirby, the qualifying party of Applicant, failed to establish his good character and reputation as required by A.R.S. § 32-1122(D) in that he was convicted of a felony, involving fraud, which he failed to disclose. This felony was both recent and of a substantial nature. This supports the Registrar’s determination that Mr. Kirby lacks the good character and reputation necessary for licensure as required by A.R.S. § 32-1122(D).

The evidence of record supports the Registrar’s denial of Applicant’s Pending Application License No. 304713.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the denial of Desert Heat Excavating, LLC’s pending license application be affirmed.

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, October 5, 2016.

/s/ Suzanne Marwil

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors