ALJDEC decisions subject to certification as final

2017A-3360-CPA-ROC · Registrar of Contractors · 2017-10-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

IN THE MATTER OF THE CIVIL PENALTY CITATION ISSUED TO:

Richard Bjorn Reistad,

Respondent.

No. 2017A-3360-CPA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 4, 2017, at 8:30 a.m.

APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by Thomas Raine, Esq., Assistant Attorney General; Richard Bjorn Reistad (“Respondent”) appeared on his own behalf.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

On or about June 29, 2017, Angela LaMaide filed an unlicensed complaint with the Registrar alleging that Respondent had contracted to replace windows and sliding glass door at Ms. LaMaide’s house at 3435 Oakmont Dr. in Flagstaff, Arizona 85248, for $3,000.00 and that after Respondent was paid $1,500.00, he worked for one day, then left the project and never returned. The complaint stated that Dino Clark was present when the contract was made.

The complaint was assigned to the Registrar’s Investigator, Kirk Bryce, for investigation. On or about July 25, 2017, Investigator Bryce issued a Cease & Desist Order and a civil citation for violating of A.R.S. § 32-1151, based on Respondent’s activities on Ms. LaMaide’s project, and assessed a civil penalty in the amount of $1,500.00.

Respondent requested a hearing. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

A hearing was held on October 4, 2017. The Registrar submitted six exhibits and presented Investigator Bryce’s testimony. Respondent testified on his own behalf.

Additional Hearing Evidence

Investigator Bryce prepared a written report of his investigation. His testimony was consistent with his report.

Investigator Bryce testified that after the Registrar received Ms. LaMaide’s .complaint, it was assigned to him for investigation. Investigator Bryce testified that although he attempted to contact Ms. LaMaide several times, he was unable to speak with her. Investigator Bryce testified that he was able to contact and interview Dino Clark, Ms. LaMaide’s husband or partner, who co-owned the house on N. Oakmont Drive.

Investigator Rhodes testified that Arizona statute requires that a person possess a valid contractor’s license if the aggregate cost of the job, including labor and materials, is $1,000.00 or more. In addition, because Respondent contracted to remove a load-bearing wall, the job would have required a permit and an unlicensed contractor cannot undertake a job that requires a permit, regardless of its cost.

Ms. LaMaide attached to her complaint a check made payable to Respondent dated May 1, 2017, in the amount of $1,500.00, which had been negotiated. Investigator Bryce testified that Mr. Clark provided Respondent’s invoice dated May 1, 2017, in the total amount of $9,650.00, which showed a credit for $1,500.00 for a total amount due of $8,150.00. The work that Respondent described in the invoice included engineering to remove two load bearing walls and to replace the walls with beams for ceiling load, to perform framing on the walls, to replace 14 windows, and to perform demolition. Respondent proposed to perform the framing and demolition at a cost of $25.00 per hour.

The Registrar also submitted texts between Mr. Clark and Respondent that indicated that they had made an agreement for Respondent to perform the work, that Respondent failed to perform the work, and that Mr. Clark and Respondent subsequently had a falling out.

Investigator Bryce testified that he searched the Registrar’s records for Respondent and that Respondent had never been issued a contractor’s license and had never been cited for unlicensed contracting in the past.

Investigator Bryce testified that although this was Respondent’s first unlicensed contracting offense, Ms. LaMaide and Mr. Clark had been harmed because they paid Respondent to perform work that he did not perform. Investigator Bryce testified that he did not have any evidence that Respondent had refunded any monies to Ms. LaMaide or Mr. Clark.

Respondent testified that he never dealt with Ms. LaMaide and that his agreement with Mr. Clark was that he would be paid $25.00 an hour for all work. Respondent testified that the $1,500.00 check was only to ensure that he would work on Mr. Clark’s project first, rather than other projects that he had. Respondent testified that he created the May 1, 2017 invoice after the fact to secure a tactical advantage after Mr. Clark filed a suit against him in small claims court.

Although Respondent claimed to be Mr. Clark’s hourly employee who was paid $25.00/hour in cash, Respondent acknowledged that the only payment he received was the $1,500.00 lump-sum payment and that taxes were not withheld from his wages.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

The Registrar bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses 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.”

A.R.S. § 32-1151 prohibits contracting without a license, providing in relevant part 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.

The Registrar established that Respondent’s entry into an agreement to replace windows, remove load-bearing walls, and to perform other remodeling work at Ms. LaMaide’s and Mr. Clark’s house was contracting as defined by applicable statute.

Respondent did not establish that he was Mr. Clark’s hourly employee because he worked on other projects, Mr. Clark did not withhold taxes, and the only payment that Respondent received was the $1,500.00 lump sum.

A.R.S. § 32-1121(A)(14) sets forth the so-called “handyman’s exemption” to licensure requirements and provides in relevant part 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 . . . is less than one thousand dollars. The work or operations that are exempt under this paragraph shall be of a casual or minor nature. . . .

Because the amount of Respondent’s contract with Ms. LaMaide and Mr. Clark exceeded $999.99 and the work was not casual or minor in nature, the handyman exemption does not prevent Respondent from being liable for unlicensed contracting in violation of A.R.S. § 32-1151.

A.R.S. § 32-1166(A) authorizes the Registrar to assess a civil penalty against a person who has been found to have contracted without a license in violation of A.R.S. § 32-1151, in relevant part as follows:

In addition to all other remedies, when it appears to the registrar, either upon complaint or otherwise, that any person, firm, partnership, corporation, association or other organization, or a combination of any of them, has engaged in or is engaging in any act of contracting, practice or transaction which constitutes a violation of this chapter, or any rule or order of the registrar, the registrar may serve upon such person, firm, partnership, corporation, association or other organization not currently licensed under this chapter, by certified mail or by personal service, a cease and desist order requiring the person, firm, partnership, corporation, association or other organization to cease and desist immediately, upon receipt of the notice, from engaging in such act, practice or transaction. In conjunction with the cease and desist order, the registrar may issue a citation for a violation. Each citation shall be in writing and shall clearly describe the violation for which the citation was issued. Each citation shall contain an order to cease and desist and an assessment of 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. . . .

Because the Registrar established that Respondent performed contracting at Ms. LaMaide and Mr. Clark’s property and Respondent did not establish that any exemption applied, the Registrar established that Respondent engaged in unlicensed contracting in violation of A.R.S. § 32-1151.

A.A.C. R4-9131 provides 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.

The Registrar established that Respondent was paid for work that he did not perform, a factor in aggravation of the civil penalty to be assessed for Respondent’s unlicensed contracting activity in violation of A.R.S. § 32-1151.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent Richard Bjorn Reistad violated A.R.S. § 32-1151 and impose a civil penalty in the amount of $1,500.00 for the unlicensed contracting violation. The $1,500.00 civil penalty shall be paid in certified funds to the Registrar on or before the effective date of the 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 will be five days from the date of that certification.

Done this day, October 16, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors