ALJDEC decisions subject to certification as final

2016A-608-ROC · Registrar of Contractors · 2016-09-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 7, 2016, at 10:00 a.m. APPEARANCES: Ramon Guzman Gomez (“Complainant”) appeared on his own behalf; Burro Enterprises Inc. dba, Burro Electric was represented by David J. Sandoval, Esq., Carmichael & Powell, P.C.; Ramses Briones of Language Connection provided English-Spanish translation. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On or about August 2, 1995, the Arizona Registrar of Contractors (“the Registrar”) issued License No. R-11.108616-R for residential electrical contracting to Respondent. 2. On or about February 22, 2016, Complainant filed a complaint with the Registrar against Respondent alleging that it failed to perform all the work that it contracted to perform at Complainant’s residence at 1054 Kennedy Lane, San Luis, Arizona 85344, and that Respondent “kept on [charging] ‘direct deposit’ for over 8 months without finishing work.” 3. The Registrar assigned the complaint to its Senior Investigator, Stephen Lawton (“Investigator Lawton”), for investigation. Senior Investigator Lawton performed a jobsite inspection, which Respondent did not attend. On May 3, 2016, Senior Investigator Lawton on behalf of the Registrar issued a Directive to Respondent to “[c]omplete installation of panels per agreement. Correct by Appropriate means.” 4. Respondent did not resolve Complainant’s complaint. On June 7, 2016, the Registrar issued a Citation against Respondent’s license, charging cause to revoke, suspend, or otherwise discipline Respondent’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4- 9-108, A.R.S. § 32-1154(A)(8), and A.R.S. § 32-1154(A)(22). 5. Respondent’s attorney filed a timely written answer to the Citation, denying that it violated any of the Registrar’s statutes and affirmative alleging in relevant part as follows: [T]he original contract was fully completed and operational prior to this dispute. After the solar system was installed and operational, Complainant complained about the performance and saving realized by the system he agreed to lease. [Respondent] agreed to double the system size, but before all of the required permits and authorizations could be obtained, Complainant terminated his underlying lease with the leasing company. The termination of the underlying lease precluded [Respondent] from obtaining necessary authorizations, equipment, and permits to perform any additional work at Complainant’s residence [i.e., Complainant created an impossibility of performance].

6. An evidentiary hearing was held on September 7, 2016. Complainant testified on his own behalf and presented the testimony of his daughter, Barbara Guzman. Respondent submitted four exhibits and presented the testimony of three witnesses: (1) Avital Naftali (“Mr. Naftali”), Respondent’s salesperson who first contacted Complainant; (2) Joanna Sanchez, Respondent’s customer service representative who spoke to Complainant several times and met Complainant at his home; and (3) C. Patrick Lewallen, Respondent’s sales manager. Senior Investigator Lawton also testified. Hearing Evidence 7. Respondent installs solar energy systems consisting of photovoltaic panels on homeowners’ roofs that are tied into the local electric utility’s grid. The local electric utility must approve the system and once the system is approved, agrees to credit excess electricity that the system may produce and to limit rate hikes for electricity that is supplied to the property. 8. Respondent does not sell the solar energy systems. Instead, customers agree to lease the systems for a 25-year term from a company called Sunnova, which provides financing to purchase and to install the systems. 9. Respondent’s salesperson, Mr. Naftali, was the first person to contact Complainant about the solar electric system. Complainant does not speak English. Mr. Naftali testified that, although he does not speak Spanish, he communicated with Complainant through Complainant’s daughters or grand-daughter, who acted as translators. 10. Mr. Naftali testified that Respondent’s proposal prominently featured Sunnova’s name and explained how the lease worked.[1] The proposal also provided an example of how the lease payments could be expected to offset the utility company’s electric charges over time. In the example, the first month’s net savings on electric would be $5.43 and the first year’s savings would be $65.21, but these amounts would increase over the term of the lease.[2] Mr. Naftali explained that part of the savings would be realized through the lower rate for solar customers based on the historical trend of rate hikes by Complainant’s electric utility, Arizona Public Service (“APS”). As APS increased its rates, the solar customer’s savings would be exponential. 11. In December 2014, Complainant accepted Respondent’s proposal for a 4.08 kW system at a price of $13,464.00.[3] According to the contract, the cost of the lease for the initial system should be $95.18 per month.[4] 12. Mr. Naftali testified that Sunnova has agents who speak Spanish. Mr. Naftali testified that he and Complainant went to the public library to get internet access to sign the contract electronically and to contact Sunnova so that it could get information for the lease. Mr. Naftali testified that before Complainant signed the initial contract, he spoke to a Sunnova agent in Mr. Naftali’s presence about the lease program. Complainant provided bank account information and an authorization for an automatic payment for the lease from his bank account. 13. Ms. Sanchez works for Respondent as a customer service representative and speaks Spanish fluently. Ms. Sanchez testified that she spoke to Complainant in Spanish two or three times before the solar system was installed. 14. Because both the local building authority and APS had to review substantial information that Respondent gathered before approving the project,[5] it takes five to eight months after a homeowner initially agrees to lease a system for Respondent to install the system and for the system to become operational. 15. Ms. Sanchez testified that on May 20, 2015, the initial system that Respondent installed on Complainant’s house become operational. Ms. Sanchez testified that Sunnova monitored the initial system and that it functions as intended. Respondent printed out a graph that showed the initial solar electric system’s production of electricity,[6] which Ms. Sanchez testified she gave to Complainant. 16. Ms. Sanchez testified that a homeowner cannot expect his next bill after the system is installed to be low, especially if the system became operational at the end of the month. In addition, because Respondent bases the size of the system on the homeowner’s average annual electric bill, savings do not generally accrue until the first winter after the system has become operational. 17. Ms. Sanchez testified that after the initial system became operational, Complainant complained that he could not afford both the lease payment to Sunnova and the electric bill payment to APS. Respondent agreed to help by installing a second system to double the solar electric system’s output at a substantially discounted rate. 18. Mr. Lewallen testified that he became involved when Complainant started complaining about his continued high electric bills. Mr. Lewallen testified that although the first system was producing electricity from the first day that it was operational, generally consumption was greater than production between June and September. Because the cycle that Respondent uses to calculate the size of the system runs from January to December, a system that becomes operational in May will not realize significant savings until the winter months, when production exceeds consumption, resulting in credits from APS. 19. Mr. Lewallen testified that consumers will always have at least a small electric bill because APS charges meter and other fees and does not pay cash for excess power generated by a solar electric system. Because a larger solar electric system is more expensive than a smaller system, Respondent generally recommends the size of the system based on the homeowner’s past annual electric consumption rather than consumption during the summer months. 20. Mr. Lewallen testified that he and Ms. Sanchez travelled to San Luis to meet Complainant about a second system because Complainant was persistently making complaints about the first system. Ms. Sanchez testified that she explained the second solar electric system to Complainant in Spanish with his granddaughter present. 21. On October 22, 2015, Complainant approved installation of the second 4.08 kW system at a price of $1,403.28 by signing a second contract that was written in Spanish.[7] Ms. Sanchez testified that the cost of the second system to Complainant would be about $9.00 per month. Mr. Lewallen testified that even though the size of the second system was the same as the initial system, the cost to Complainant was only about one-tenth the cost of the first system. Mr. Lewallen explained that Respondent absorbed the difference in price as a good-will gesture. 22. Mr. Lewallen testified that he began the process of getting approval from the local building authority and APS for the second system. The permitting process was more complicated because he needed to explain why Respondent was installing a second system. Although the first application was filed online, because there was an existing system, Respondent had to manually prepare and submit to 20 pages of forms to explain why it was adding another system to the existing system. 23. Ms. Sanchez testified that on February 9, 2016, before the local building authority and APS approved the second system, she received a message from Sunnova that Complainant had called to cancel the second system. Complainant also stopped payments on his agreed authorization to lease the first system. 24. As of the date of the hearing, Complainant had not made a lease payment for the first system for 210 days and owed $795.06 on the lease. During this time, the first system had been generating electricity to Complainant’s APS account.[8] Mr. Lewallen testified that the production of electricity by the first system exceeded 100% of the projected amount. 25. Mr. Lewallen testified that Complainant’s termination of the lease for the first system prevents Respondent from going forward in getting approval for the second system. Mr. Lewallen testified that in addition, even if Respondent could get the permits, Complainant will not allow Respondent access to install the second system. 26. Complainant acknowledged that he had terminated the lease on the first system. Complainant testified that he did not know how Sunnova obtained access to his bank account, although he recalls speaking to Sunnova’s representative at the library. Complainant testified that Respondent promised him that if he installed the first system, it would bring his electric bill to zero. Complainant testified that all the system gave him was more expenditures. 27. Senior Investigator Lawton testified that when he performed the April 12, 2016 jobsite inspection, he did not have any evidence that Complainant had cancelled the second contract to install the panels. Senior Investigator Lawton testified if he had known the Complainant’s contract to make lease payments was with Sunnova, not Respondent, and that Complainant had terminated the lease, he would not have issued the May 3, 2016 Directive. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[9] 2. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[10] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[11] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[12] 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.”[13] 4. Complainant did not establish cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3),[14] namely A.A.C. R4-9-108.[15] Complainant did not submit any evidence that Respondent’s installation of the first solar electric system or attempts to obtain permits to install the second system violated the Registrar’s or industry workmanship standards. 5. Complainant also did not establish cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(8).[16] Sunnova charged Complainant the amounts set forth on Respondent’s two contracts. Respondent established Complainant terminated his lease with Sunnova and is no longer paying anything for the solar electric system that Respondent installed, even though it is generating electricity. 6. Complainant also did not establish cause to discipline Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22).[17] Respondent established that Complainant terminated the lease and stopped paying for the first solar electric system, which prevented Respondent from obtaining permits for or installing the second system. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the final order in this matter, Complainant Ramon Guzman Gomez’s complaint in Case No. 2016-608 against Respondent Burro Enterprises Inc. dba, Burro Electric’s License No. R-11.108616-R shall be dismissed. 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, September 23, 2016.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See Respondent’s Exhibit 1 at 2. [2] See Respondent’s Exhibit 1 at 3. [3] See Respondent’s Exhibit 1 at 4. [4] See Respondent’s Exhibit 1 at 11. [5] See Respondent’s Exhibit 1 at 26 - 41. [6] See Respondent’s Exhibit 2 at 72. [7] See Respondent’s Exhibit 2 at 73. [8] See Respondent’s Exhibit 3 at 111. [9] See A.R.S. § 32-1154(A). [10] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [11] See A.A.C. R2-19-119(B)(2). [12] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [13] Black’s Law Dictionary at page 1220 (8th ed. 1999). [14] A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” [15] A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [16] A.R.S. § 32-1154(A)(8) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” [17] A.R.S. § 32-1154(A)(22) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.”

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