ALJDEC decisions subject to certification as final

2016A-901-ROC · Registrar of Contractors · 2016-09-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 2, 2016, at 1:00 p.m. APPEARANCES: Joseph Peter Altieri (“Complainant”) appeared on his own behalf; Davis Construction LLC (“Respondent”) failed to appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On or about December 12, 2014, the Arizona Registrar of Contractors (“the Registrar”) issued License No. CR69-295230-D for dual asphalt paving to Respondent. Respondent’s address of record is 2001 E. Lohman Ave., Ste. 110, Las Cruces, New Mexico 88001- 3197. 2. On or about March 17, 2016, Complainant filed a complaint with the Registrar stating that Respondent had orally contracted to partially chip-seal 100’ of the road in front of Complainant’s home at 150 E. Siesta Ridge Cove, Cottonwood, Arizona 86326 for $1,900.00. Complainant stated that Respondent’s representative knocked on his door to provide an unsolicited bid that it represented to be heavily discounted because “we have leftover material from another project but this offer is only good right now” and that Respondent had demanded an immediate commitment from Complainant. 3. Complainant provided with his complaint a detailed narrative of his dealings with Respondent. After Respondent chip-sealed the 100’ to which Complainant had agreed, Complainant learned Respondent had contracted with his neighbors and had been paid to chip-seal 60’ of the additional 140’ that it had orally proposed to chip-seal for him. 4. Complainant’s complaint noted that he had not paid Respondent anything for its work on the project. 5. The Registrar assigned the complaint to its investigator, Jim Dimond (“Investigator Dimond”), for investigation. Investigator Dimond performed a jobsite inspection and on May 10, 2016, issued a Directive to Respondent to provide a written contract to Complainant that complied with A.R.S. §§ 32-1158(B) and 32-1124(B) and submit evidence that it had brought its business practices into the compliance with the Registrar’s statutes on or before 5:00 p.m. on May 26, 2016. Investigator Dimond noted that Respondent’s attempt to double-bill chip-sealing the 60’ road to Complainant and his neighbors appeared to violation A.R.S. § 32-1154(A)(6). 6. On June 8, 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)(6), A.R.S. § 32-1154(A)(12), namely A.R.S. §§ 32-1124(B) and 32-1158(B), and 32-1154(A)(22). 7. Respondent filed a timely written answer to the Citation, alleging that it was not paid for the job and that it was working with Complainant to resolve issues. The Registrar referred the matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing. 8. On June 30, 2016, the Registrar issued a Notice of Hearing, setting an evidentiary hearing on August 16, 2016. The Registrar sent the Notice of Hearing to Respondent at its address of record. 9. On July 8, 2016, Respondent’s representative requested that the hearing be continued. On July 20, 2016, the Administrative Law Judge issued an order continuing the hearing to September 2, 2016. Staff at OAH sent the July 8, 2016 order to Respondent at its address of record. 10. A video conference hearing was held on September 2, 2016, from the Registrar’s Flagstaff office. Complainant testified and presented the testimony of his neighbor Michael Bartell to establish the facts set forth above. 11. Respondent did not request to appear telephonically at the continued hearing and did not request that the hearing again be continued. Although the hearing did not start until 15 minutes after the scheduled time and did not conclude for approximately 30 minutes, Respondent did not appear through an authorized member, employee, or attorney. Consequently, Respondent did not present any evidence to defend its license. 12. Complainant submitted Respondent’s business card that did not show its license number preceded by the acronym “ROC.” 13. Complainant testified that Respondent had provided an oral proposal to chip-seal an additional 140’ of the road, for a total of 240’, for a cost of $7,200.00. Complainant did not accept this oral proposal. Respondent did not prepare a written contract for Complainant to sign for the 100’ feet of chip-sealing that Complainant had accepted. 14. Complainant testified that after Respondent performed the work, it refused to accept the $1,900.00 from Complainant that he had agreed to pay, but instead demanded $7,200.00 and threatened to file a lien against Complainant’s property or to file suit against Complainant in civil court for non-payment. 15. Investigator Dimond testified that since he started working in northern Arizona, he has observed three or four contractors, including Respondent, who engage in business practices that allow them to scam homeowners, who are frequently elderly, by approaching them to have allegedly steeply discounted work performed if the homeowner agrees to immediate work. Investigator Dimond testified that the quality of the work that was performed was typically poor and that the contractor “travelers” typically demanded more than the homeowner had agreed to pay and threatened legal action if the homeowner refused to pay the inflated price. 16. Administrative notice is taken of Respondent’s license history on the Registrar’s public website on August 31, 2016, pursuant to A.A.C. R4-9-117. Between August 22, 2016, and August 24, 2016, the Registrar imposed a finite suspension on Respondent’s license as discipline in another case. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] The Registrar’s Notice of Hearing and OAH’s order continuing the hearing at Respondent’s request that was mailed to Respondent at its address of record were reasonable and Respondent is deemed to have received notice of the September 2, 2016 continued hearing.[2] Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] Complainant established that Respondent did not provide a written contract, failed to show its license number on its business cards, and failed to comply with the Registrar’s May 10, 2016 Directive. Complainant therefore established cause to discipline Respondent’s contractor’s license under A.R.S. 32-1154(A)(12),[5] namely A.R.S. §§ 32-1124(B)[6] and 32-1158(B),[7] and A.R.S. § 32-1154(A)(22).[8] Complainant did not present evidence that Respondent’s workmanship did not meet the Registrar’s or industry standards. Therefore, Complainant did not establish additional cause to discipline Respondent’s license under A.R.S. § 32-1154(A)(3),[9] namely A.A.C. R4-9-108.[10] The lack of a written contract allowed Respondent to later attempt to extort money from Complainant that he had not agreed to pay. Because Complainant did not pay Respondent for its work, Complainant did not suffer any injury or damages as a result of Respondent’s unethical business practices. Because injury is a prima facie element of common-law fraud, Complainant did not establish additional cause to discipline Respondent’s license under A.R.S. § 32-1154(A)(6).[11] The absence of any injury to Complainant is fortuitous, however, and no credit to Respondent. Respondent’s prior discipline, failure to attend the September 2, 2016 hearing, and Inspector Dimond’s and Complainant’s testimony about Respondent’s unethical business practices establish that Respondent’s proven violations of Arizona contracting law are serious and that its business model could result in substantial injury to the public. The lack of a written contract in this case allowed Respondent to attempt to extort money from Complainant that he had not agreed to pay and that Respondent had not earned. RECOMMENDED ORDER Based on the foregoing, it is recommended on the effective date of the order in this matter, License No. CR69-295230-D of Respondent Davis Construction LLC shall be suspended until it provides written proof that is satisfactory to the Registrar that it has provided written contracts that comply with A.R.S. §§ 32-1124(B) and 32-1158(B) to all the property owners with whom it has contracted in Arizona in the thirty days preceding the effective date of the order. It is further recommended that if Respondent provides satisfactory proof that it has changed its business forms to comply with the Registrar’s statutes, allowing its license is reinstated, Respondent’s license shall be placed on probation for one year subject to the condition that the Registrar may at any time audit its business practices to ensure that its business practice remain compliant with A.R.S. §§ 32-1124(B) and 32-1158(B) and the Registrar’s other statutes. 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 6, 2016.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1154(A). [2] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [3] 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). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] A.R.S. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” [6] A.R.S. § 32-1124(B) requires that licensed contractors include their license number “preceded by the acronym ‘ROC’“ on “all written bids submitted by the licensee and . . . on all advertising, loan forms, lending institution forms, letterheads and other documents used by the licensee in the conduct of business regulated by this chapter.” [7] A.R.S. § 32-1158(B) provides that any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved after December 31, 2007 must be in writing and must include the following minimum terms: 1. The name of the contractor and the contractor’s business address and the license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar’s telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in ten point bold type. . . .

[8] 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.” [9] 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.” [10] 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.” [11] A.R.S. § 32-1154(A)(6) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[t]he doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826