ALJDEC decisions subject to certification as final

2016A-52-ROC · Registrar of Contractors · 2016-04-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 31, 2016 APPEARANCES: The Arizona Registrar of Contractors was represented by Assistant Attorney General Thomas Raine. Respondent Victor Covarrubias appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ Respondent appealed three Civil Citations issued by the Registrar for contracting without a license. The Civil Citations imposed aggregate civil penalties in the amount of $4500.00. Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law, and Recommend Order are made, finding a violation and recommending imposition of a total of $4500.00 in civil penalties. FINDINGS OF FACT Background Respondent is not a licensed contractor in the State of Arizona. On or about March 9, 2015, the Registrar received a complaint from Scott Lawrence Lorent alleging that on or about October 17, 2014, he had entered into a verbal contract with Respondent for the repair/remodel of a swimming pool including demolition, pool deck, tile, pebble sheen, and pool motor. Mr. Lorent asserted that he had paid Respondent the full $7300.00 contract price and Respondent had performed part of the work, had failed to finish the pebble sheen, and eventually abandoned the job. The complaint was designated as case number 2016-52. On or about July 24, 2015, the Registrar received a complaint from Susan and Dave Eisner alleging that on or about April 25, 2015, they had entered into a contract with Respondent for the repair/remodel of a swimming pool including demolition, pool deck, tile, pebble sheen, and other work. The Eisners asserted that they paid Respondent $5500.00 of the $6500.00 contract amount and that Respondent had performed part of the work, had failed to install the kool deck and pebble sheen, and eventually abandoned the job. The complaint was designated as case number 2016-53. On or about August 17, 2015, the Registrar received a complaint from Lloyd Dale Shatto alleging that on or about April 17, 2015, he had entered into a contract with Respondent for the repair/remodel of a swimming pool including demolition, pool tile, pebble sheen, and other work. Mr. Shatto asserted that he paid Respondent $4800.00 of the $5300.00 contract amount and that Respondent had performed part of the work, had failed to complete the pebble sheen, and eventually abandoned the job. The complaint was designated as case number 2016-54. The complaints were assigned to Investigator Daniel Rhodes for further investigation. Investigator Rhodes spoke to each of the complaining parties during the course of his investigation. Each homeowner told a similar version of events—namely that Respondent was paid up front for the bulk of the work and then Respondent began working on the pool projects, but eventually delays occurred, excuses were made, and Respondent stopped responding to texts and phone calls. Investigator Rhodes also interviewed Respondent who acknowledged he was not a licensed contractor. Respondent stated that he had lost his job and was unable to repay the homeowners the money they had paid for the work he was unable to finish. Respondent stated that he did not have a fixed address because he was between jobs and was staying with friends. A review of the Registrar records indicated that Respondent had two prior complaints against him for contracting without a license. In one of the cases, Respondent was found guilty of contracting without a license, and in the other case criminal prosecution was declined. Investigator Rhodes testified that Arizona contracting law allows an exemption from licensure, with certain limitations, for a “handyman.”[1] Investigator Rhodes stated that Respondent’s work did not fit within the handyman exemption because the work exceeded $1000.00. Investigator Rhodes determined that Respondent had violated the provisions of A.R.S. § 32-1151 (Engaging in contracting without a license). On January 7, 2016, the Registrar issued three Cease & Desist Orders for violating the provisions of A.R.S. § 32-1151. A total of $4500.00 in civil penalties was assessed for contracting without a license for work that Respondent had performed in the State of Arizona. Respondent testified that the homeowners knew that he was unlicensed and were looking for a good deal. Respondent asserted that he had been caught in the situation because people he hired to perform some of the work took some of the money without completing their portion of the work. Therefore, he was behind on the projects and was unable to move forward. Respondent acknowledged he owed the homeowners money for work he was unable to complete. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq. The Registrar bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See A.R.S. § 41- 1092.07(G)(2); 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). “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). Arizona contracting law prohibits a person from acting as a contractor without a license.[2] The law allows an exemption from licensure, with certain limitations, for a “handyman.” An unlicensed handyman can perform construction work, with certain exclusions, such as that the work does not require a permit, as long as the aggregate price for the job, including labor and materials, does not exceed $1,000.00.[3] The Registrar can order a person who performs contracting without a license and who is not exempt from licensure to cease and desist such activity and may impose a civil penalty of between $200.00 and $2500.00 for each violation, but not more than $2500.00 per day.[4] A.R.S. § 32-1121(A)(14) provides 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, but excluding any electrical fixture or appliance that was designed by the manufacturer, that is unaltered, unchanged or unmodified by any person, that can be plugged into a common household electrical outlet utilizing a two pronged or three pronged electrical connector and that does not use any other form of energy, including natural gas, propane or other petroleum or gaseous fuel, to operate or is attached by a nail, screw or other fastening device to the frame or foundation of any residential structure, is less than one thousand dollars. The work or operations that are exempt under this paragraph shall be of a casual or minor nature.

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.

A.R.S. § 32-1166(A) authorizes the Registrar to assess “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.” With respect to the appropriate amount of the total civil penalties for Respondent’s violations of A.R.S. § 32-1151, A.R.S. § 32-1166(A) required the Registrar to “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.” Pursuant to this directive, the Registrar adopted A.A.C. R4-9-131.[5] As to the aggravating factors, Respondent failed to perform the work for which money was received, failed to perform work in a good and workmanlike manner, and had two or more prior violations. The evidence established a violation of Arizona contracting laws. Thus, a civil penalty in the total amount of $4500.00 is warranted. RECOMMENDED ORDER Based upon the foregoing, it is recommended that the Registrar affirm the findings that Respondent violated A.R.S. § 32-1151 and affirm the decision to assess civil penalties in the aggregate amount of $4500.00, 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 forty (40) days from the date of certification. Done this day, April 20, 2016.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1121(A)(14). [2] A.R.S. § 32-1164(A)(2). [3] A.R.S. § 32-1121(A)(14). [4] A.R.S. § 32-1166(A). [5] A.A.C. R4-9-131 sets forth permissible aggravating and mitigating factors to be considered, 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.

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