ALJDEC decisions subject to certification as final

2018A-2668-CPA-ROC · Registrar of Contractors · 2018-12-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 30, 2018, at 1:00 p.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) appeared through Thomas Raine, Esq., Assistant Attorney General; John McAreavy (“Respondent”) failed to appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure The Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent agency, for an evidentiary hearing on Respondent’s appeal of the Registrar’s Cease & Desist Order and imposition of civil penalties for unlicensed contracting and unlicensed advertising. On August 31, 2018, the Registrar issued a Notice of Hearing, setting a hearing on October 12, 2018, at 1:00 p.m. at OAH. The Registrar mailed a copy of the Notice of Hearing to Respondent at the same residential address where the Cease & Desist Order and Notice of Civil Penalty had been served on Respondent. On September 28, 2018, at the Registrar’s attorney’s request, the Administrative Law Judge issued an order setting a continued hearing on November 30, 2018, at 1:00 p.m.. OAH staff sent the order to Respondent at his residential address of record. A hearing on the merits was held on November 30, 2018. The Registrar’s attorney appeared, submitted five exhibits, and presented the telephonic testimony of its investigator, James Vildusea. Respondent did not request to appear telephonically, did not request that the hearing again be continued, and did not appear. The Registrar’s attorney indicated that Respondent had left a voicemail, stating that he did not intend to appear at the continued hearing. Respondent did not present any evidence to controvert the evidence that the Registrar presented. Evidence of Statutory Violations On or about June 12, 2018, Mary Anne Downer filed an unlicensed complaint with the Registrar against John McAreavy Carpentry for a contract that Respondent had made to perform work at her home in Green Valley in the amount of $4,330.00, of which she had paid Respondent $1,500.00. The complaint alleged that Respondent had performed poor work and then abandoned the job. Ms. Downer indicated on the complaint that she did not know that Respondent was unlicensed until she contacted the Registrar and that he had requested that she make checks payable to Residential Resolution Trust.[1] Ms. Downer attached certain documents to the unlicensed complaint, including an estimate from Respondent to perform carpentry and other work, three invoices, and her two checks to Residential Resolution Trust in the amounts of $500.00 and $1,000.00, both of which Respondent had personally endorsed.[2] The complaint was assigned to Investigator Vildusea for investigation. Investigator Vildusea contacted Ms. Downer and she said that she had found Respondent through a business card posted at the local Ace Hardware. Ms. Downer provided a Respondent’s business card.[3] The estimate, invoices, and business card did not provide a contractor’s license number or the disclaimer, “not a licensed contractor.”[4] Investigator Vildusea testified that the Registrar considered the invoices and business card to be advertising. Investigator Vildusea consulted the Registrar’s data base and did not find any license that had been issued to Respondent or on which he was listed.[5] On July 3, 2018, Investigator Vildusea issued a Cease & Desist Order and assessed Civil Penalties in the amounts of $1,500.00 for contracting without a license in violation of A.R.S. § 32-1151 and $1,000.00 for advertising without a license in violation of A.R.S. § 32-1165 against Respondent. The Registrar served the Cease & Desist Order and notice of assessment of civil penalties by certified mail. According the USPS tracking service, the document was delivered on July 19, 2018, at 10:30 a.m.[6] CONCLUSIONS OF LAW The Notice of Hearing that the Registrar mailed to Respondent and the order setting a continued hearing that OAH mailed to Respondent at his residential address of record, where Respondent was served with the Cease & Desist Order and Notices of Civil Penalties, were reasonable and Respondent is deemed to have received notice of the continued hearing.[7] This matter lies within the Registrar’s jurisdiction.[8] The Registrar bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[9] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[10] A.R.S. § 32-1101(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.

(Emphasis added.) The Registrar established that by performing the work at Ms. Downer’s home that she described on her complaint and by advertising his availability to perform such work on his invoices and business card, Respondent engaged in contracting as defined by A.R.S § 32-1101(3). A.R.S. § 32-1151 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.

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. Downer exceeded $999.99 and Respondent actually received $1,500.00 from Ms. Downer for his work, the handyman exemption does not prevent Respondent from being liable for unlicensed contracting in violation of A.R.S. § 32-1151. The Registrar established that Respondent’s entry into an agreement to perform carpentry and other construction work for Ms. Downer for $4,330.00 and performance of such work constituted unlicensed contracting in violation of A.R.S. § 32-1151. A.R.S. § 32-1165 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.

A.R.S. § 32-1121(A)(14)(c) provides that the handyman exemption does not apply “[t]o 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.” The Registrar established that Respondent advertised his carpentry and construction business on his business card and on his invoices without including the disclaimer, “not a licensed contractor.” Therefore, the Registrar established that Respondent violated A.R.S. § 32-1165 by advertising without a license. 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 or to have advertised that he is able to perform a service for which a contractor’s license is required in violation of A.R.S. § 32-1165, 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. . . .

Respondent did not appear at the hearing that he requested and did not offer any factors in mitigation of the penalty. Under the circumstances, the civil penalty in the amount of $1,500.00 for Respondent’s violation of A.R.S. § 32-1151 and the civil penalty in the amount of $1,000.00 for Respondent’s violation of A.R.S. § 32-1165 are not excessive. RECOMMENDED ORDER Based on the foregoing, it is ordered that the Registrar affirm the finding that Respondent John McAreavy violated A.R.S. § 32-1151 and affirm the assessment of a civil penalty in the amount of $1,500.00. 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. It is further ordered that the Registrar affirm the finding that Respondent John McAreavy violated A.R.S. § 32-1165 and affirm the assessment of a civil penalty in the amount of $1,000.00. The $1,000.00 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, December 18, 2018.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 3 at 1/ [2] See id. at 1-6. [3] See the Registrar’s Exhibit 4. [4] See the Registrar’s Exhibit 3. [5] See the Registrar’s Exhibit 2 (report) and 5. [6] See the Registrar’s Exhibit 1. Respondent apparently received the documents because on or about August 21, 2018, he filed an appeal and request for hearing with the Registrar. See the Registrar’s Exhibit 6. [7] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [8] See A.R.S. § 32-1101 et seq. [9] See A.R.S. § 41-1092.07(G)(3); A.A.C. R2-19-119(A) and A.A.C. R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [10] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826