ALJDEC decisions subject to certification as final

2016A-4985-LDA-ROC · Registrar of Contractors · 2017-04-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Registrar of Contractors,

-v-

Witt Properties LLC,

APPLICANT,

Pending License Application Nos. 308804 and 308803.

Nos. 2016A-4985-LDA-ROC

and 2016A-4992-LDA-ROC

(Consolidated)

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 7, 2017, at 8:30 a.m.

APPEARANCES: Witt Properties LLC (“Applicant”) was represented by Thomas G. Luikens, Esq.; the Arizona Registrar of Contractors (“the Registrar”) was represented by Thomas Raine, Esq., Assistant Attorney General.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about September 23, 2016, Applicant filed two License Applications with the Registrar. Travis Witt was listed as Applicant’s qualifying party, 100% owner, and the only person on the application.

On the application, Travis Witt answered “no” to the question, “Have you been on a contractor’s license in any state as a qualifying party, owner, partner, manager, member, officer, director or shareholder?”

On or about November 10, 2016, the Registrar issued a Notice of License Denial to Applicant under A.R.S. § 32-1122(D) for the following reasons: (1) Travis Witt had failed to establish good character and reputation, under A.R.S. § 32-1154(A)(20) because Travis Witt had been named on Contractors Abatement Services, Inc.’s License Nos. 82552 and 110424, (2) License Nos. 82552 and 110424 had been revoked on July 31, 2012, and June 8, 2012, in Case Nos. 2012-220 and 2012-648 after Contractors Abatement Services, Inc. failed to pay, respectively, Arizona Environmental Specialists $40,878.00 and Soda Strippers International, LLC $4,800.00; and (3) Travis Witt had failed to provide proof that all loss caused by Contractors Abatement Services, Inc.’s statutory violations had been cured.

Travis Witt on Applicant’s behalf requested a hearing on the Registrar’s denial. The Registrar referred the matter to the Office of Administrative Hearings, an independent State agency, for an evidentiary hearing.

A hearing was held on April 7, 2017. The Registrar presented the testimony of Brian Kirby, Chief of Licensing, and submitted eight exhibits. Applicant presented the testimony of Travis Witt and submitted nine exhibits.

Undisputed Facts

Mr. Kirby testified that when he checked the Registrar’s records, he found that Travis Witt was named on two of Contractors Abatement Services, Inc.’s seven licenses. The qualifying party and 100% owner on all the licenses was John Witt, Travis Witt’s father.

The Registrar submitted Contractors Abatement Services, Inc.’s Officer Change Form dated March 13, 1997, and license renewals for 2002 and 2000 for License No. 082552, which all listed Travis Witt as Vice President. Either John Witt, Karen L. Hannah, or Karen L. Williams signed all the documents with Travis Witt’s name on them.

The Registrar submitted Contractors Abatement Services, Inc.’s License Application dated November 28, 1995, Officer Change Form dated November 17, 2005, and license renewals for 1999 and1997 for License No. 110424, which all listed Travis Witt as Vice President. Either John Witt, Karen L. Hannah, or Karen L. Williams signed the documents.

The Registrar submitted the Arizona Corporation Commission’s records showing that on April 17, 1997, an annual report for the fiscal year ending on December 31, 1996, was filed on which a name had been scratched out and Travis Witt’s name handwritten in the space for vice president. Travis Witt testified that the handwriting was his father’s, John Witt’s. Karen L. Hannah as secretary/treasurer and John Witt as president signed the 1996 annual report filed with the Arizona Corporation Commission. Travis Witt was later listed on annual reports filed with the Arizona Corporation Commission for the years 1998 and 2000. Travis Witt did not sign any of these documents.

Travis Witt submitted correspondence to the Registrar showing that although he recently was listed on the Arizona Corporation Commission’s records for Contractors Abatement Services, Inc. between 1996 and 2002, his name had been removed after 2002. Travis Witt stated that his father John Witt was always the 100% owner of Contractors Abatement Services, Inc., that he was employed as a Field Demo Supervisor by Contractors Abatement Service, Inc., and that he never occupied a decision-making role as an officer. Travis Witt testified that he did not know that he had ever been listed as an officer in his father’s company.

Travis Witt submitted Arizona Corporation Commission documents showing that John Witt resigned his position as president of Contractors Abatement Services, Inc. on May 7, 2012. Travis Witt explained that at that time, his father had been diagnosed with lung cancer. Travis Witt testified that his father died shortly thereafter and that his father’s illness and death caused turmoil at Contractors Abatement Services, Inc.

Mr. Kirby testified that John Witt filed a notice of disassociation from Contractors Abatement Services, Inc. on May 7, 2012, and that at some point, it went out of business.

On June 8, 2012, the Registrar issued a Decision and Order in Case No. 2012-648, deeming Contractors Abatement Services, Inc.’s failure to file a written answer to the Registrar’s Citation and Complaint to be an admission that it had violated A.R.S. § 32-1154(A) by failing to pay Soda Strippers International LLC $4,800.00. As a result of the admitted violation, the Registrar revoked License No. 110424. The date of Soda Strippers International LLC’s complaint was January 27, 2012.

On July 31, 2012, the Registrar issued a Decision and Order in Case No. 2012-220, deeming Contractors Abatement Services, Inc.’s failure to file a written answer to the Registrar’s Citation and Complaint to be an admission that it had violated A.R.S. § 32-1154(A) by failing to pay Arizona Environmental Specialists $40,878.00. As a result of the admitted violation, the Registrar revoked License No. 110424. The date of Arizona Environmental Specialists’ complaint was January 12, 2012.

Mr. Kirby testified that the Registrar did not have any evidence that Contractors Abatement Services, Inc. had satisfied Soda Strippers International, LLC’s or Arizona Environmental Specialists’ claims.

Travis Witt testified consistently with the correspondence he had sent to the Registrar. He did not know that his father, John Witt, had included his name as vice president on documents submitted to the Registrar and the Arizona Corporation Commission for Contractors Abatement Services, Inc. Travis Witt testified that it was a complete shock to him to learn that his father had listed him on corporate records. Travis Witt testified that he was never anything more than a field supervisor for Contractors Abatement Services, Inc. and that he never had an office or a role in making corporate decisions.

Applicant submitted Contractors Abatement Services, Inc.’s tax returns for the years between 2001 and 2009. All the documents showed John Witt as 100% owner.

Applicant submitted Travis Witt’s W2 forms issued by DHR Operations, LLC for the years 2012 and 2013. Travis Witt testified that he began working for DHR Operations, LLC in 2012, and did not play any role in the transactions that led to Arizona Environmental Specialists’ and Soda Strippers International, LLC’s claims to the Registrar.

Mr. Kirby acknowledged that there was no evidence that Travis Witt knew that he was listed on the Registrar’s or the Arizona Corporation Commission’s records for Contractors Abatement Services, Inc. Mr. Kirby testified that the Registrar now requires persons who are listed on a license application to sign a form to indicate that they agree to be named on the license, but that in the past, the Registrar did not require evidence of a person’s consent to be named on a license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Applicant bears the burden of proof to establish that it meets statutory qualifications for a contractor’s license by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

A.R.S. § 32-1154(A)(20) states that “[t]he holder of a license or any person listed on a license . . . shall not commit any of the following acts or omissions,” including “[h]aving a person named on the license who is named on any other license in this state or in another state which is under suspension or revocation unless the prior revocation was based solely on a violation of this paragraph.” Because Travis Witt was a person named on Contractors Abatement Services, Inc.’s License Nos. 082552 and 110424 and License No. 110424 license was revoked twice for violations of A.R.S. § 32-1154(A), cause would potentially exist to discipline Applicant’s licenses under A.R.S. § 32-1154(A)(20).

A.R.S. 32-1161(C) provides that, “[a]fter revocation of a license upon any of the grounds set forth in section 32-1154, the license shall not be renewed or reissued for one year after final determination of revocation and then only on proper showing that all loss caused by the act or omission for which the license was revoked has been fully satisfied.” Applicant did not present any evidence that Contractors Abatement Services, Inc.’s proven debts to Arizona Environmental Specialists’ claim in Case No. 2012-220 or Soda Strippers International LLC’s claim in Case No. 2012-648 have been satisfied.

A.R.S. § 32-1122(D) provides in relevant part as follows:

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 . . . committed any act that, if committed or done by any licensed contractor, would be grounds for suspension or revocation of a contractor's license . . . .

(Emphasis added.) Because Travis Witt may have committed an act described in A.R.S. § 32-1154(A)(20) that would be grounds for suspension of a contractor’s license by being listed on Contractors Abatement Services Inc.’s previously revoked License No. 110424, Applicant potentially failed to establish that Travis Witt is a person of good character and reputation who is eligible to be licensed as a contractor in the State of Arizona under A.R.S. § 32-1122(D).

The Registrar acknowledged that there is no evidence that Travis Witt knew that his father had listed him on two of Contractors Abatement Services, Inc.’s licenses, that Travis Witt played an officer’s role in Contractors Abatement Services, Inc.’s business operations, or that Travis Witt played any role in the jobs that lead to Arizona Environmental Specialists and Soda Strippers International LLC’s claims for non-payment. If the Registrar cannot grant Applicant’s license because his father listed Travis Witt on Contractors Abatement Services, Inc.’s licenses without his knowledge or consent, it would be unjust.

The Arizona Supreme Court has held that equity may be applied to avoid an injustice:

“Equity is reluctant to permit a wrong to be suffered without remedy. It seeks to do justice and is not bound by strict common law rules or the absence of precedents. It looks to the substance rather than the form. It will not sanction an unconscionable result merely because it may have been brought about by means which simulate legality. And once rightfully possessed of a case it will not relinquish it short of doing complete justice.”

An administrative agency’s failure to apply equity to prevent an injustice may be “arbitrary, capricious, and contrary to both equity and law.”

A.R.S. § 32-1154(A) states that the holder of a license “shall” not commit various acts, including having a person listed on its license who was also listed on a license that has been suspended or revoked. Although the legislature’s use of the word “shall” usually indicates a mandatory directive, under some circumstances, courts have construed the legislature’s use of the word “shall” to mean that the agency retains some degree of discretion in the decision:

The basic rule of statutory construction is that the courts must primarily attempt to ascertain and give effect to the intent of the legislature. . . . In arriving at the legislature’s intent, the effect and consequences of alternative constructions may be considered. . . . “Similarly, language that is mandatory in form may be deemed directory when the legislative purpose can best be carried out by such construction.” . . . .

The legislature did not intend for the Registrar to deny a license application based solely on a technicality and in the face of evidence that the applicant is otherwise qualified. Under the circumstances of this case, construing A.R.S. § 32-1154(A) to afford the Registrar some discretion avoids the injustice of deeming Travis Witt to have failed to have established his good character based solely on his father John Witt’s unilateral decision to name Travis Witt on Contractors Abatement Services, Inc.’s licenses. Since the Registrar acknowledged that all other evidence indicates that Travis Witt is a person of good character who is qualified to be granted a contractor’s license, the Administrative Law Judge recommends that the Registrar should uphold Applicant’s appeal and grant it the two pending license applications.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the final order, Applicant Witt Properties LLC’s appeal shall be affirmed, Pending License Applications Nos. 308804 and 308803 shall be granted, and those licenses shall be issued in due course.

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, April 13, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors