PDF copy: ALJDEC decisions subject to certification as final

2017A-5203-LDA-ROC · Registrar of Contractors · 2018-02-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

IN THE MATTER OF THE APPLICATION No. 2017A-5203-LDA-ROC OF:

KBH Construction LLC, ADMINISTRATIVE LAW JUDGE PENDING LICENSE NO: 246688 DECISION

HEARING: January 31, 2018, at 8:30 a.m.

APPEARANCES: Kris Daubs (“Mr. Daubs” representative for KBH Construction,

LLC, “Respondent”); Fidelis V. Garcia (“Mr. Garcia” attorney for Appellant); Thomas

Raine (“Mr. Raine” attorney for the Registrar of Contractors “ROC” or “Registrar”);

Bonny Allen (“Ms. Allen” witness for the Registrar); and Brian Kirby (“Mr. Kirby” witness

for the Registrar).

ADMINISTRATIVE LAW JUDGE: Linda Marie Brown

_____________________________________________________________________

FINDINGS OF FACT

1. Kristopher Brett Haynes Daubs (“Mr. Daubs”) is named as Qualifying Party

and Member on License No. 246688.1 2. On or about August 30, 2017, Kristopher Brett Haynes Daubs submitted a Reinstatement Form, License No. 246688 for KBH Construction LLC (“Respondent”) for a Class B license.2 3. Upon review of Respondent’s Reinstatement Form, Bonny Allan, Staff Attorney for the Registrar’s Legal Department issued a Notice of License Reinstatement Denial on October 4, 2017, citing grounds for denial as “Failure to establish good character and reputation by being named to revoked Contractor’s Licenses in violation of A.R.S. §§ 32-1122(C).”3

State’s Exhibit 3. State’s Exhibit 2. State’s Exhibit 1.

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826 4. The Notice of Denial specifically set forth under its Factual Allegations that Mr. Daubs was named as an officer on Thermo Expert, Inc. for License Nos. 199202, and 258810. 5. Under Factual Allegations, No. 8, the Notice of Denial explained that Mr. Daubs was an officer on Thermo Expert, Inc., License No. 199202, from August 29, 2004 through November 3, 2010, and is a responsible party for the following nine (9) complaints that resulted in assessments of various discipline charges, civil penalties, recovery fund payouts and eventual revocation.4 6. Under Factual Allegations, No. 9, the Notice of Denial explained that Mr. Daubs was an officer for Thermo Expert, Inc., License No. 258810 from September 8, 2009, through November 3, 2010, and is a responsible party for a complaint filed and resulting in additional assessments of discipline, civil penalties, and recovery fund payout.5 7. On or about November 3, 2010, the Registrar received a Notice of Disassociation/Resignation from Kris Haynes Daubs for Thermo Expert, License No. 258810, stating he is resigning as corporate officer/member/partner ONLY.6 8. The Registrar included in its exhibits a copy of Thermo Expert, Inc., License No. 258810 application received by the Registrar on August 26, 2009, wherein Kristopher Brett Haynes-Daubs was listed as the Vice President/Qualifying Party.7 9. Respondent filed its written answer to the Notice of Denial and requested a hearing, on or about October 13, 2017, citing, among other things, that Respondent is without sufficient information to form a belief to truth or falsity of the allegations, and therefore denies them and demands strict proof thereof.8 10. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. HEARING EVIDENCE 11. At hearing, the parties stipulated to admitting of the State’s Exhibits 1 through 16.

4 State’s Exhibits 4-12. State’s Exhibit 13. State’s Exhibit 14. State’s Exhibit 15. See ProLaw: (10/31/2017 REQHRG: Lg Dups2 pdf). 12. Respondent’s attorney argued that Respondent never received notice of any of the complaints and for this reason never had an opportunity to defend against the complaints. 13. Brian Kirby (“Mr. Kirby”), Chief of Licensing at the Registrar’s office credibly testified as to his involvement in the licensing reinstatement process. 14. Mr. Kirby explained the underlying discipline hearings leading up to revocation of license nos. B3-258810-R and CR5-199202-D issued to Thermo Expert, Inc. wherein Kristopher Brett Haynes-Daubs was named as the qualifying party and/or an officer.9 15. Mr. Kirby was questioned by Mr. Garcia regarding signatures as they may or may not have appeared on the various State’s exhibits. 16. Mr. Kirby further testified that when performing the review process, the Registrar looks to several factors as it pertains to the complaints such as the contract dates, when work started and whether the applicant was still named on the license when determining whether to issue or deny an applicant or license reinstatement. 17. Mr. Kirby testified that the notice of denial is based on the lack of showing by Respondent that any of the complaining parties have been made whole or issues satisfactorily resolved, that the recovery fund has been paid back with interest, and civil penalties satisfied. 18. Mr. Daubs testified that he never received notice and had no knowledge of being named as the Qualifying Party on the entities as cited in the Registrar’s Notice of Denial for Reinstatement of License, and that had he received notice of the complaints, he would have appeared in response to the complaints. 19. Entered as Exhibit 15, the Registrar provided copies of the Arizona Corporation Commission website entity detail dated 08/17/2009 that reflects Kristopher Brett Daubs at the Vice-President for Thermo Expert, Inc. and an updated website entity detail dated 01/25/2018 for Thermo Expert, Inc. that continued to list Kristopher Brett Daubs as the Vice-President up to the date of 03/12/2012 in which the document reflects the entity was administrative dissolved for failure to file its annual report.10 State’s Exhibits 4-13. State’s Exhibit 16. 20. Mr. Garcia continued to argue that the Respondent never received notice of the complaints or Citation stemming from any of the complainants and was not provided an opportunity to defend the claims. 21. Ms. Allan explained that under the Arizona statutory scheme11, the Registrar is only required to mail the Citation by certified mail to the address of record that is associated with the license, and this was the process the Registrar followed to provide notice to the licensee to defend the complaints asserted against its licenses. 22. Mr. Kirby reaffirmed that the Licensing Division has little to no discretion in matters of unresolved claims and no discretion in matters of payments made from the Registrar’s Recovery Fund as the Registrar has a fiduciary duty to protect those funds and seek recovery on funds payout to claimants. 23. In sum, the Registrar has no flexibility as the Respondent was listed as the qualifying party and/or member of License Nos. 199202 and 258810 at the time the complaints were made, and in order to be reconsidered, Respondent is required to show that any and all complainants have been resolved, complainants made whole, civil penalties paid, as well as the Recovery Fund repaid with interest. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1122. 2. Applicant bears the burden of proof to establish that it meets statutory qualifications for a contractor’s license by a preponderance of the evidence. See A.R.S. § 41-1092.07(G)(1); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 3. A.R.S. § 32-1122 provides, in relevant part, as follows: C. To obtain or renew a license under this chapter, each person shall be of good character and reputation. Lack of good character and reputation may be established by showing that a person has engaged in contracting without a license or committed any act that, A.R.S. § 32-1155(A) . . . “Service of citation on the licensee shall be fully effected by personal service or by mailing a true copy thereof, together with a true copy of the complaint, by registered mail in a sealed envelope with postage prepaid and addressed to the licensee at the licensee's latest address of record in the registrar's office.” (emphasis added). if committed or done by any licensed contractor, would be grounds for suspension or revocation of a contractor's license or by showing that the person was named on a contractor's license that was suspended or revoked in another state.

4. A.R.S. § 32-1154(A) provides, in relevant part, as follows: The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: .... 20. Having a person named on the license who is or was named on any other license in this state or in another state that is under suspension or revocation for any act or omission that occurs while the person is or was named on the license unless the prior revocation was based solely on a violation of this paragraph.

5. A.R.S. § 32-1139 provides, in relevant part, as follows: B. If any amount is paid from the fund in settlement of a claim arising from the act, representation, transaction or conduct of a residential contractor, the license of the contractor shall be automatically suspended by operation of law until the amount paid from the fund is repaid in full, plus interest at the rate of ten per cent a year. Any person who is or was, at the time of the act or omission, named on a license that has been suspended because of a payment from the recovery fund is not eligible to receive a new license or retain another existing license that also shall be suspended by operation of law, nor shall any suspended license be reactivated, until the amount paid from the fund is repaid as provided in this subsection. 6. The evidence of record supports the conclusion that Applicant failed to establish good character and reputation as required by A.R.S. §§ 32-1122(C) and 32- 1154 (A)(20) in that Respondent/Applicants is a person named on a contractor's license that was suspended or revoked. 7. This Tribunal also finds it disingenuous that Respondent testified that he had no knowledge or was not aware that he was named as a qualifying party and/or a responsible party to License Nos. 199202 and 258810. 8. Additionally, Respondent/Applicant failed to properly show that all loss caused by the act or omission for which the licenses were revoked has been fully satisfied by all unresolved complainants as well as repayment of all civil penalties and the

aggregate of payments made from the Registrar’s Recovery Fund to claimants with interest. 9. The outstanding issues supports the Registrar’s determination that Mr. Daubs, lacks good character and reputation necessary for reinstatement of licensure as required by A.R.S. § 32-1122(C). 10. The evidence of record supports the Registrar’s denial of Applicant’s Reinstatement of License No. 246688. RECOMMENDED ORDER Based on the foregoing, it is recommended that the denial of reinstatement of KBH Construction LLC, License No. 246688 be affirmed. 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 forty days from the date of that certification.

Done this day, February 15, 2018.

/s/ Linda Marie Brown Administrative Law Judge

Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors