ALJDEC decisions subject to certification as final
2017A-4245-CPA-ROC · Registrar of Contractors · 2018-04-09
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
IN THE MATTER OF THE CIVIL PENALTY CITATION ISSUED TO:
Jose A Flores
No. 2017A-4245-CPA-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: March 20, 2018, 1:00 P.M.
APPEARANCES: The Arizona Registrar of Contractors was represented by Assistant Attorney General Thomas Raine; no appearance was made on behalf of Respondent
ADMINISTRATIVE LAW JUDGE: Roger A. Geddes
_____________________________________________________________________
Based on the evidence in this matter, the undersigned Administrative Law Judge hereby recommends that the Registrar of Contractors (“Registrar”) affirm the Cease and Desist Order and civil penalty issued to Jose A. Flores (“Respondent”) on August 21, 2017, as amended at the hearing.
FINDINGS OF FACT
Respondent is not a licensed contractor in the State of Arizona.
2. The Registrar’s assigned investigator, Mike Nation (Investigator), issued Respondent a Cease and Desist Order and Civil Citation dated August 21, 2017, for failing to comply with A.R.S. § 32-1151 (contracting without a license) and failing to comply with A.R.S. § 32-1165 (advertising contracting services without a license). The proposed civil penalty was $10,000.00 for violations of A.R.S. § 32-1165.
3. Respondent requested an administrative hearing and the Registrar forwarded the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing.
4. The Registrar issued a Notice of Hearing that set a hearing for November 9, 2017, at 8:30 A.M. The Registrar mailed a copy of the Notice of Hearing to Respondent on or about September 25, 2017, at his address of record. The matter was continued to December 18, 2017, and again to February 13, 2018, at the request of Respondent in order to allow Respondent time to take the examination for a contractor’s license.
5. On February 12, 2018, the matter was again continued to March 20, 2018, at 1:00 P.M. at the request of Complainant. A Minute Entry - Granting Continuance was emailed to Respondent on February 12, 2018, at his email address of record.
6. Although the commencement of the hearing was delayed approximately 20 minutes, Respondent did not appear at any time during the hearing through an authorized officer, employee, attorney, or any other person. Respondent further did not request to appear telephonically and did not in advance request that the March 20, 2018, hearing be continued.
7. At the hearing, the Investigator testified on behalf of the Registrar that on August 18, 2017, he observed a truck with Arizona license plate “IRONHSE” that displayed signage advertising for Iron Horse Welding Work, LLC, a company that he recognized as having previous complaints against the owner. He stated the signage reflected a telephone number of (602) 821-7167 and a web site address of www.ironhorseweldingwork.com, but did not include the phrase, “Not a licensed contractor.” He further stated his investigation revealed the truck was registered to Jose A. Flores Espinosa.
8. He stated that that day he searched Arizona Corporation Commission records for Iron Horse Welding Work, LLC, which revealed that Respondent was a member of and statutory agent for the company.
9. He further testified that he conducted an internet search that day for that company name on August 18 2017, and found a web site, that displayed an email address of [email redacted]. The web site did not include a disclaimer that Respondent was “Not a licensed contractor.”
10. The Investigator further testified that upon a review of the web site, he determined that the work that was advertised was work that would require a contractor’s license.
11. Thereafter, on August 20, 2017, he stated he conducted another internet search and uncovered a Craigslist advertisement for Iron Horse Welding Work, LLC, which again did not include the disclaimer “Not a licensed contractor.”
12. The Investigator further testified that on August 21, 2017, he conducted a social media search for Iron Horse Welding Work, LLC, and found a Facebook listing for the company. The Facebook listing failed to include the disclaimer “Not a licensed contractor.”
13. On August 21, 2017, he stated he conducted a search in the Go Daddy Who Is database and that it indicated that the registrant of the www.ironhorseweldingwork.com web site was Respondent.
14. The Investigator also testified as to five prior unlicensed complaints against Respondent and presented two other Cease and Desist Orders directed to Respondent, Case No. 2017-2400, dated June 12, 2017, and Case No. 2017-1811, dated June 12, 2017, alleging violations of A.R.S. § 32-1151.
15. The Investigator acknowledged that he observed the advertising on the truck and the www.ironhorseweldingwork.com web site on the same day, August 18. 2017, and that there should have been only one $2,500.00 civil citation assessed for the multiple violations committed on the same day rather than two citations for $5,000.00 as originally specified in the August 21, 2017, Cease and Desist Order and Civil Citation.
CONCLUSIONS OF LAW
1. This matter lies within the Registrar’s jurisdiction.
2. The Registrar bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”
3. A.R.S. § 32-1101(A)(3) defines “Contractor” in relevant part as follows:
"Contractor" is synonymous with the term "builder" and means any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that, for compensation, undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid or responds to a request for qualification or a request for proposals for construction services to, does himself or by or through others, or directly or indirectly supervises others to:
(a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or any other structure or work in connection with the construction.
4. A.R.S. § 32-1151 regarding engaging in contracting without a required license 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.
5. A.R.S. § 32-1165 regarding advertising contracting services without a required license provides as follows:
Except as authorized by section 32-1121, subsection A, paragraph 14, subdivision (c), it is a class 1 misdemeanor for any person to advertise that he is able to perform any service or contract for compensation subject to regulation by the registrar under the terms of this chapter unless a license under the terms of this chapter is first obtained regardless of whether his operations as a contractor are otherwise exempt.
6. A.R.S. § 32-1166 regarding the Registrar’s authority to impose civil penalties and to issue cease and desist orders provides in relevant part as follows:
A. 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. If after the issuance of a citation by the registrar, the person or organization receiving the citation fails to cease and desist in the violation or violations described in the citation, the registrar may assess an additional civil penalty of up to two thousand five hundred dollars for each day the violation or violations continue....
B. Each violation of this chapter or a rule or order of the registrar by a person who is required to be licensed by this chapter and who does not possess the required license shall constitute a separate offense, and the registrar may impose a civil penalty of not to exceed two thousand five hundred dollars for each violation except that for multiple violations committed on the same day the civil penalty shall not exceed two thousand five hundred dollars for all such violations. Monies collected from civil penalties shall be deposited in the state general fund.
C. The registrar of contractors may issue citations containing orders to cease and desist and of civil penalties against persons who have never been licensed under this chapter who are acting in the capacity of or engaging in the business of a contractor in this state.
7. Arizona Administrative Code Rule 4-9-131 regarding permissible aggravating and mitigating factors to be considered when assessing a civil penalty 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.
8. In this case, the Registrar has established that Respondent was contracting without a required license and advertising for construction services for which a contractor’s license was required. These activities support a finding that Respondent is a “contractor” as defined under A.R.S. § 32-1101(A)(3) and acting in the capacity of a contractor without a license in violation of A.R.S. § 32-1151 and advertising for services for which a contractor’s license is required in violation of A.R.S. § 32-1165.
9. The exemption provided under A.R.S § 32-1121(A)(14) (persons not required to be licensed) does not apply because Respondent advertised for contracting services without disclosing that he was not a licensed contractor. Section 32-1121(A)(14) provides:
A. This chapter shall not be construed to apply to:
...
14. 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. This exemption does not apply:
(a) In any case in which the performance of the work requires a local building permit.
...
(c) To a person who utilizes any form of advertising to the public in which the person's unlicensed status is not disclosed by including the words "not a licensed contractor" in the advertisement.
10. In assessing the civil penalty and the gravity of Respondent’s violation, aggravating factors that were present include previous violations committed by Respondent. These previous violations are sufficient to warrant a civil penalty in this current matter in the aggregate amount of $7,500.00.
RECOMMENDED ORDER
Based on the foregoing, it is recommended that the Registrar affirm the finding that Respondent violated A.R.S. § 32-1151 and A.R.S. § 32-1165 and affirm the amended decision to assess a civil penalty under A.R.S. § 32-1166 of $7,500.00 for the violations of A.R.S. § 32-1165, 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 will be five days from the date of that certification.
Done this day, April 9, 2018.
/s/ Roger Geddes
Administrative Law Judge
Transmitted electronically to:
Jeffrey Fleetham, Director
Registrar of Contractors