ALJDEC decisions subject to certification as final

2018A-2258-CHC-ROC · Registrar of Contractors · 2018-08-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Andrew Xuan Minh Nguyen, No. 2018A-2258-CHC-ROC

COMPLAINANT, ADMINISTRATIVE LAW JUDGE v. DECISION

Scapes and Stones LLC, License No: 290620

RESPONDENT.

HEARING: August 15, 2018

APPEARANCES: Andrew Xuan Minh Nguyen, Complainant, Mike Crow, Chief

Asst. Supervisor, ROC Investigations Division. ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson _____________________________________________________________________

FINDINGS OF FACT 1. The Registrar referred the Complaint and Citation in matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing regarding the Complaint against the Respondent for poor and below standard workmanship and abandonment. 2. On July 2, 2018, the Registrar issued a Notice of hearing setting a hearing at 8:30 am on August 15, 2018, 2018. The Registrar mailed copies of the Notice of hearing to the respondent at its address of record and to Respondent’s attorney of record. 3. The Notice of Hearing informed the parties that “[f]ailure to attend the scheduled hearing is likely to result in an adverse ruling against you.” 4. Respondent did not request to appear telephonically and did not request that the hearing be continued. Although the start of the hearing was delayed 20 minutes, respondent did not appear through an authorized member, employee or attorney.

Consequently, Respondent did not present any evidence to defend its license.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 5. A hearing was conducted on August 15, 2018. 6. Registrar Chief Asst. Supervisor, ROC Investigations Division Mike Crow testified that Investigator Steve Nelsen, the investigator in this case for the Registrar was no longer working for the Registrar. Mr. Crow advised that Mr. Nelsen was an employee under his direct supervision. Reviewing Mr. Nelsen’s Job Site Inspection Notes and the other documents contained in the Agency Record in this matter, Mr. Crow testified that the Complaint was filed on May 21, 2018 and was immediately referred to Mr. Nelsen for investigation. A Job Site Inspection [hereinafter, the “JSI”] was conducted, after proper notice to the parties, on Jun 1, 2018. Before the JSI, Mr. Nelson had been contacted by a person representing himself to be the Respondent’s attorney and was advised the Respondent would not be attending the JSI for the reason that it admit the items contained in the Complaint are true. The Respondent did not appear at the JSI. Notice of the inspection was provided to the Respondent at its address of record and the Respondent’s

attorney.1 Mr. Nelsen noted in his JSI notes:2

Met C at site. R atty contacted me to say they would not be attending the JSI -, claims there may be an identity theft issue, but stated that the respondent would take full responsibility. … Complaint form is a narrative of events leading up to the job, the allegation below is simplified. Complaint Item 1: Abandonment of the project. Investigator’s Observation: It appears the Respondent or his Rep, Carlo Papazian entered into a contract, but did not complete it…There was only some minor demolition completed, no new work from the contract appears to have been completed. Respondent should complete the project as per contract. Governing Rule: Workmanship Rule: ARS 32-1154A3. [emphasis added].

7. Following the JSI, Mr. Nelsen issued a Directive and Corrective Work Order [CWO] to the Respondent on June 5, 2018 as follows: You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on June 20, 2018. Complete project as per contract. The Registrar has determined that any workmanship Counsel subsequently filed a Motion to Withdraw as Respondent’s attorney. See, Agency Record”, “Rcc100 Job Site Inspection Notes1.rtf.” violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action. 8. In the CWO, the Respondent was given until June 20, 2018 to notify the Registrar of its compliance with the CWO. The Registrar having not received a notice of compliance from the Respondent, on June 21, 2018, Mr. Nelson contacted Mr. Nguyen by e-mail to inquire as to the status of Respondent’s compliance with the CWO. Mr. Nguyen responded to advise that no work had be done since the JSI. 9. On June 25, 2018, the Registrar issued a Citation against the Respondent charging six alleged violations:

A violation of A.R.S. § 32-1154(A)(1) (“Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”).

A violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3).

A violation of A.R.S. § 32-1154(A)(4)(“Failure to comply with the statutes or rules governing social security, workers' compensation or unemployment insurance.”). A violation of A.R.S. § 32-1154(A)(9)(“Aiding or abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.”). A violation of A.R.S. § 32-1154(A)(12)(“Failure in any material respect to comply with this chapter.”). to wit: A violation of A.R.S. § 32-1158(A)(“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 shall contain in writing at least certain specified language.3 1. The name of the contractor and the contractor's business address and 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. A violation of A.R.S. § 32-1154(A)(22) (“Failure 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. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive.”). 11. At the hearing in this matter, Chief Asst. Supervisor Crow testified that the Respondent’s record filed with the Registrar indicates that it has no employees. There is no Affidavit on file reflecting that the Respondent had current Worker’s Compensation Insurance or was making Social Security payments for any employee. Mr. Crow testified that on the Friday before the Wednesday hearing, he was present for a Settlement Conference with the Respondent where Respondent’s attorney posited the theory that an employee of the Respondent had been contracting with residents to perform contracting services using the name of the Respondent. This person, identified in this Settlement Conference as “Carlos Papazian,” then collected the payments for these jobs and absconded with the funds. There is no evidence submitted to substantiate that Carlos Papazian was using the Respondent’s company to perform unauthorized work or that Carlos Papazian absconded with payments made to him by Mr. Nguyen. Mr. Crow testified that Carlos Papazian is not a licensed contractor. Mr. Papazian is the person whose signature appears on the Contract with Mr. Nguyen4 Mr. Crow advised that since the Respondent has no employees, Mr. Papazian was determined to be an independent or a sub-contractor to the Respondent and must be a licensed

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 at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. See, Complainant’s Disclosure Statement Exhibit C-1. contractor to perform work for Respondent.5 The Respondent thus engaged in aiding or abetting Mr. Carlos Papazian to work the Nguyen job without being licensed contrary to A.R.S. § 32-1154(A)(9). Reviewing the Contract in this case, Mr. Crow was able to confirm that the contract did not conform to the requirements of A.R.S. § 32-1158(A) in that the contract indicates that although payment for this job exceeded $1,000.00, the contract did not indicate a start or stop date or any warning to the customer “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 and does not state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. Mr. Crow testified that the Respondent said it intended to file a stipulation with the Registrar admitting all of the allegations in this Complaint [along with several other pending complaints] and would be giving up its contractors license.6 12. Andrew Xuan Minh Nguyen, Complainant [hereinafter, “Nguyen”], introduced Exhibit C-1 through and including Exhibit C-6 which were admitted into evidence.7 Mr. Nguyen testified that his security cameras on site videotaped Carlos Papazian working on his residence. A freeze frame from the video was admitted into evidence8 depicting a van parked in the drive of Mr. Nguyen’s residence displaying in large lettering across the side of the van: “Scapes and Stones LLC.” He said he had paid the Respondent $6,000.00 of deposit on a contracted amount of $12,000.00 by his check written to Scapes and Stones LLC9 CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over Complaint No. 2017A- 4793-CHC-ROC under the authority of A.R.S. § 32-1101, et seq., a section that enables

A.R.S. § 32-1154(A)(13) – Knowingly entering into a contract with a contractor for work to be performed for which a license is required with a person not duly licensed in the required classification. As of the date of the hearing, no such stipulation or request to terminate Respondent’s license has been filed with either the Registrar or the Office of Administrative Hearings. Moreover, the attorney representing the Respondent at the Settlement Conference has not filed a Notice of Appearance in the instant case. See, Complainant’s Disclosure Statement and attached exhibits 1-6. The ALJ also took administrative judicial notice of the entirety of the Registrar’s file in the matter [hereinafter, “Agency Record.”. See, Complainant’s Disclosure Statement Exhibit C-6 See, Complainant’s Disclosure Statement, Exhibit 3. The check was stamped “For Deposit Only” the Registrar to impose disciplinary sanctions against licensees for the violations noted at A.R.S. § 32-1154(A). PVTS LLC dba Phoenix Valley Tree Service is a licensee. 2. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 3. A preponderance of the evidence is: The 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. Black’s Law Dictionary 1373 (10th ed. 2014).

4. The Respondent presented no evidence.

5. Statutes should be interpreted to provide a fair and sensible result.

Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095

(2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 6. “Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B). 7. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 8. The preponderance of the evidence does show that Respondent is unscrupulous, unqualified, or financially irresponsible. 9. Ariz. Rev. Stat. section 32-1154(A) provides that 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:…(3.) Violation of any rule adopted by the registrar….(22.) Failure 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. 10. Ariz. Admin. Code section R4-9-108(A) provides that “A contractor shall perform all work in a professional manner.” 11. The copies of the CWO and the Notice of Hearing that the registrar mailed to the Respondent at its address of record and to Respondent’s then acting attorney were reasonable. Inasmuch as the Respondent filed an Answer and participated in a Settlement Conference indicates that Respondent was clearing provided proper notice. Respondent is deemed to have received notice of the hearing. A.R.S. §41-1092.04 and §41-1092.05(D). 12. By its failure to appear, Respondent has presented virtually no evidence to defend its license. Thus, Respondent has failed to meet its burden of proof to prove any affirmative defense or to otherwise defend its license.

13. Respondent, by a preponderance of the evidence, did abandon the

Nguyen contract in violation of A.R.S. § 32-1154(A)(1) . 14. Respondent, by a preponderance of the evidence, did violate Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby did violate A.R.S. § 32-1154(A)(3). 15. Respondent, providing no evidence to the contrary did, by a preponderance of the evidence, violate A.R.S. § 32-1154(A)(4) by failure to comply with the statutes or rules governing social security, workers' compensation or unemployment insurance. 16. Respondent, by a preponderance of the evidence, did violate A.R.S. § 32- 1154(A)(4) in that its contract failed to contain language required by statute when the aggregate value of the contract [in this case $12.000.00], exceeds $1,000.00. 17. Respondent, by a preponderance of the evidence, did violate A.R.S. § 32- 1154(A)(9) by aiding or abetting Carlos Papazian, an unlicensed person, “…to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one's license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.” 18. Respondent, by a preponderance of the evidence, did violate A.R.S. § 32- 1154(A)(22) by its failure to take appropriate corrective action to comply with the CWO without valid justification within a reasonable period of time after receiving a written directive from the registrar. 19. That the Respondent did ignore each effort of the Registrar to address the concerns of the Complainant - in that the Respondent did not appear for the JSI and that the Respondent failed to appear at the hearing in this case - are aggravating circumstances. 20. The Respondent’s license should, under the facts presented in this case, be revoked. RECOMMENDED ORDER IT IS RECOMMENDED it be ordered that thirty days after the effective date of the final Order in this matter is revoked.

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 is forty days after the date of that certification.

Done this day, August 15, 2018. /s/ Randolph D. Wolfson Administrative Law Judge Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors