ALJDEC decisions subject to certification as final

2016A-94-ROMC-ROC · Registrar of Contractors · 2017-03-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Registrar of Contractors,

COMPLAINANT,

-v-

B & T Pools LLC,

License No. KA-5.298036-D,

RESPONDENT.

No. 2016A-94-ROMC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 8, 2017, at 1:00 p.m.

APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by John R. Tellier, Esq., Assistant Attorney General; B & T Pools LLC (“Respondent”) appeared through Gary Martin Brooks, its qualifying party/member.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

According to the Registrar’s public website, on May 26, 2010, the Registrar issued License No. CR21.265235-D for dual landscaping and irrigation systems to Earth Stone Water LLC (“ESW”). Ana Contreras was listed on the license as a member. Bobbie Jean Kennamer was listed as qualifying party. Mr. Brooks was not listed on ESW’s License No. CR21.265235-D.

On June 8, 2012, an application was filed with the Registrar for a KA-5 for dual swimming pool contracting on behalf of ESW. Ana Contreras was listed on the application as member and Mr. Brooks was listed as qualifying party/employee. On July 5, 2012, the Registrar issued License No. K-5.279568-D to ESW.

On April 3, 2015, Mr. Brooks filed a Notice of Qualifying Disassociation from ESW’s License No. K-5.279568-D with the Registrar. The Notice of Disassociation form included the following acknowledgement above Mr. Brooks’ signature:

I acknowledge that I am a Person named on this license for the purposes and duties of all Registrar statutes and rules, including, but not limited to, A.R.S. §§ 32-1122, 32-1139(B) & 32-1154. These purposes and duties include violations arising out of or relating to agreements that were entered into, monies received, or work performed while I am named on this license. I understand that because A.R.S. § 32-1155(A) establishes a two-year period for the filing of complaints, these purposes and duties continue for up to two years after I disassociate from this license.

On April 3, 2015, Mr. Brooks on behalf of Respondent filed an application for a K-5 contractor’s license with the Registrar. Mr. Brooks was the qualifying party/member, 100% owner, and only person listed on Respondent’s license application. On April 27, 2015, the Registrar issued License No. K-5.298036-D to Respondent.

On June 4, 2015, Ashwin R. Patel filed a complaint against ESW and its principals, Gordon Berry and Ms. Contreras, with the Registrar regarding ESW’s December 8, 2014 contract to build a pool and retaining wall at Mr. Patel’s property at 14430 N. 15th Drive, Phoenix, Arizona 85023. According to Mr. Patel’s complaint, ESW had not performed any work on the contract, even though Mr. Patel had paid it $57,970.00 to begin the project.

On June 8, 2015, Kelly Ann Tyler filed a complaint against ESW and Mr. Berry with the Registrar regarding ESW’s January 30, 2015 contract to build a pool and perform landscaping at her property at 22110 N. 36th Terrace, Phoenix, Arizona 85050. According to Ms. Tyler’s complaint, ESW failed to complete, failed to comply with specifications, and performed poor work on the project, even though Ms. Tyler had paid it $70,178.44 of the $78,310.06 contract price.

Ms. Tyler attached to her complaint ESW’s February 19, 2015 invoice for $15,837.30 with Mr. Brooks’ business card showing his association with ESW.

On June 17, 2015, David A. Weatherwax filed a complaint against ESW and Mr. Berry with the Registrar regarding ESW’s December 13, 2014 contract to remodel the pool at Mr. Weatherwax’s property at 3013 E. Ocotillo Rd., Phoenix, Arizona 85016. According to Mr. Weatherwax’s complaint, although ESW had installed a pool pump and started demolition, it had not completed the project, even though Mr. Weatherwax had paid $93,200.00 of the $116,500.00 contract price.

The Registrar investigated Mr. Patel’s, Ms. Tyler’s, and Mr. Weatherwax’s complaints. On July 17, 2015, the Registrar on its own motion filed a Citation and Complaint in Case No. 2015-3033 against ESW’s License Nos. CR21.265235-D and KA-5.279568-D based on Mr. Patel’s, Ms. Tyler’s, and Mr. Weatherwax’s complaints, charging cause to suspend or revoke ESW’s licenses under A.R.S. § 32-1154(A)(1), A.R.S. § 32-1154(A)(2), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

On August 8, 2015, Ms. Contreras on behalf of ESW signed a consent order in Case No. 2015-3033, acknowledging that ESW had violated the charged statutes and agreeing that as a result, the Registrar would revoke ESW’s License Nos. CR21.265235-D and KA-5.279568-D.

On August 19, 2015, Mr. Patel and his wife filed a claim to the Residential Contractors’ Recovery Fund (“the Fund”) to recover a payout for the damages that ESW’s proven statutory violations had caused them to suffer. On December 3, 2015, the Registrar issued a default decision, order, and award in Mr. and Mrs. Patel’s claim to the Fund against ESW. As a result, on December 15, 2015, the Registrar issued a warrant made payable to Mr. and Mrs. Patel in the amount of $30,000.00, the maximum amount of the payout that the Registrar is authorized to make from the Fund.

On September 2, 2015, Anna C. Bronnekant filed a complaint against ESW and Mr. Berry, Ms. Kennamer, and Mr. Brooks with the Registrar regarding ESW’s March 15, 2013 contract to construct a pool at Ms. Bronnekant’s property at 23650 N. 84th Pl., Scottsdale, Arizona 85255. According to Ms. Bronnekant’s complaint, the negative edge that ESW had constructed was leaking.

On February 26, 2016, the Registrar filed a Final Administrative Decision and Order based on Ms. Bronnekant’s complaint, finding that under A.R.S. § 32-1155(B), ESW’s failure to file a written answer to the Citation was deemed an admission to the charged violations of A.R.S. §§ 32-1154(A)(3) and 32-1154(A)(22). As a result of the admitted violations, the Registrar revoked ESW’s License Nos. CR21.265235-D and KA-5.279568-D.

On April 1, 2016, Ms. Bronnekant filed a claim to the Fund to recover a payout for the damages that ESW’s proven statutory violations had caused her to suffer. On June 14, 2016, the Registrar issued a default decision, order, and award in Ms. Bronnekant’s claim to the Fund against ESW. As a result, on June 23, 2016, the Registrar issued a warrant made payable to Ms. Bronnekant in the amount of $30,000.00, the maximum amount of the payout that the Registrar is authorized to make from the Fund.

On March 11, 2016, Daniel D. Diethelm filed a complaint against ESW and Mr. Berry with the Registrar regarding ESW’s February 10, 2015 contract to build a pool and perform landscaping at his property at 6109 N. Palo Cristi, Paradise Valley, Arizona 85253. According to Mr. Diethelm’s complaint, ESW had performed poor work constructing the pool. On February 26, 2016, the Registrar filed a Final Administrative Decision and Order based on Mr. Diethelm’s complaint, finding that under A.R.S. § 32-1155(B), ESW’s failure to file a written answer to the Citation was deemed an admission to the charged violations of A.R.S. §§ 32-1154(A)(3). As a result of the admitted violations, the Registrar revoked ESW’s License Nos. CR21.265235-D and KA-5.279568-D.

On May 8, 2016, Mr. Diethelm filed a claim to the Fund to recover a payout for the damages that ESW’s proven statutory violations had caused him to suffer. On June 23, 2016, the Registrar issued a warrant made payable to Mr. Diethelm in the amount of $7,772.50.

The Registrar later issued a Debt Collection Referral to the Arizona Attorney General’s Office against ESW and Ms. Contreras in the total amount of $323,780.57. The referral noted that the Fund payouts were evenly split between ESW’s License Nos. CR21.265235-D and KA-5.279568-D to avoid a maximum payout.

On December 30, 2016, the Registrar issued a Citation and Complaint against Respondent, charging cause to revoke Respondent’s license under A.R.S. § 32-1154(A)(20) because Mr. Brooks had been named on ESW’s License No. KA-5.279568-D when the contracts were made that gave rise to Mr. Patel’s, Ms. Tyler’s, Ms. Bronnekant’s, and Mr. Diethelm’s complaints and was currently named on Respondent’s license.

On January 13, 2017, Mr. Brooks filed a written answer to the Citation and Complaint arguing that Respondent’s license should not be revoked because he did not own ESW, but was only an employee, whose “sole function was to provide oversight and expertise in specific areas to qualify for the license,” and that shortly after he qualified for ESW, he underwent foot surgery, which rendered him immobile for several weeks, and after his return to ESW “it because readily apparent that the company and its management were struggling to meet its obligations both financially and procedurally in terms of warranty and production,” which cause him to end his relationship with ESW on the advice of personnel at the AROC Licensing school.

The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on March 8, 2017. The Registrar submitted 21 exhibits and presented the testimony of Bonny Allan, a staff attorney, to establish the facts set forth above. Respondent submitted one exhibit and presented Mr. Brooks’ testimony, as well as the testimony of James Tembly and Dennis Tembly, both of whom have done work with ESW and Respondent.

Mr. Brooks testified consistently with Respondent’s written answer. He was just an employee and disassociated himself from ESW when he saw Ms. Contreras and Mr. Berry not completing projects or paying subcontractors. Mr. Brooks testified that, when he heard about the consumer complaints, he approached the consumers and offered to have Respondent complete or repair the projects at no additional cost, but that no consumers ever took him up on the offer. Mr. Brooks testified that if he had the money, he would pay the Registrar to satisfy all claims against ESW.

Mr. Brooks acknowledged that he was aware that Mr. Berry had operated another pool contracting company with a different qualifying party and that the company’s license had been revoked. Mr. Brooks acknowledged that he had foot surgery in September 2012, returned to work in December 2012, and remained as ESW’s qualifying party until April 2015.

James Temby testified that he performed warranty work for ESW and that, sometimes, when others at ESW were not responsive, Mr. Brooks paid him out of pocket to make sure customers were being taken care of. James Tembly testified that most of the customers that Mr. Brooks helped were satisfied.

Dennis Tembly testified that he has known Mr. Brooks for 20 years. Dennis Tembly performs sales for Respondent. Dennis Tembly testified that no one watches pool construction better than Mr. Brooks, visiting jobsites 8-10 times. Dennis Tembly testified that 95% of Respondent’s customers were satisfied.

Respondent submitted letters of reference from former customers attesting to its professionalism and their satisfaction with its construction of new pools and renovation of older pools, including Mike and Joci McDermott, Janet Kuhn and Chris Hopewell, and Gary Bilow on behalf of Casa Mirage Homeowners’ Association. Respondent also submitted letters of reference from subcontractors attesting to Respondent’s fair business practices and quick payments, including Jesus G. Millan and Synergy Pools LLC.

CONCLUSIONS OF LAW

The Registrar bears the burden of proof to establish grounds for suspension or revocation of Respondent’s contractor’s license by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses and factors in mitigation of the penalty by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

Mr. Brooks did not dispute that he had been listed as qualifying party on ESW’s License No. K-5.279568-D and that that the Registrar revoked that license numerous times as a result of consumers’ complaints and ESW’s proven violations of A.R.S. § 32-1154. Mr. Brooks did not dispute that the Registrar had made payouts from the Fund in the aggregate amount of at least $67,772.50 to at least three consumers. The Registrar therefore has established cause to suspend or revoke Respondent’s License No. KA-5.298036-D under A.R.S. § 32-1154(A)(20).

ESW could not have obtained contractor’s License No. K-5.279568-D without a qualifying party. As qualifying party for ESW, Mr. Brooks was required to be “regularly employed by the licensee and . . . actively engaged in the classification of work for which such responsible managing employee qualifies in behalf of the licensee.” Mr. Brooks was prohibited from taking any other employment that would conflict with these obligations to ESW and could be a qualifying party on only one other license, but only if there was a common ownership of at least 25% of each licensee.

Mr. Brooks testified that he quickly became aware of ESW’s poor business practices when he started working with Mr. Berry and Ms. Contreras. Nonetheless, Mr. Brooks did not disassociate from ESW until almost three years had passed. Because Mr. Brooks was qualifying party on ESW’s license until April 2015, ESW kept the license and was able to enter into contracts with Ms. Bronnekant on March 15, 2013, with Mr. Patel on December 8, 2014, with Mr. Weatherwax on December 13, 2014, with Ms. Tyler on January 30, 2015, and with Mr. Diethelm on February 10, 2015. Mr. Brooks’ delay in disassociating from ESW damaged these consumers.

RECOMMENDED ORDER

In light of the foregoing, it is ordered that License No. KA-5.298036-D of Respondent B & T Pools LLC shall be revoked on the effective date of the Registrar’s order.

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, March 13, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors