FINACT2018-329-CHC-ROC.pdf

2018A-329-CHC-ROC · Registrar of Contractors · 2019-01-03

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Monica Ann Del Re, Case No. 2018-329 COMPLAINANT, Docket No. 2018A-329-CHC-ROC v. FINAL ADMINISTRATIVE DECISION North Forty Enterprises Inc., AND ORDER DBA: A C Zone, License No. ROC 182531, 182530 RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the Registrar must provide written justification setting forth the reasons for the modification or rejection. REGISTRAR’S REJECTION In this case, a hearing was held, and the administrative law judge issued a written decision. See Administrative Law Judge Decision, attached. The Registrar reviewed the Decision and rejects it. BACKGROUND Herb Thompson is the qualifying party and officer on License Nos. 182531 and 182530, both of which are held by North Forty Enterprises Inc. DBA A C Zone (“Respondent”). See ALJ Dec. 1:18-23. The administrative law judge found that on or about June 20, 2017, Mr. Thompson “commenced site preparation and demo on [Complainant’s] residence for a re-model of [the] kitchen and living areas.” ALJ Dec. 1:24-27. There was no written contract between Complainant and Mr. Thompson. See ALJ Dec. 1:28-29. During the administrative hearing, Mr. Thompson admitted “that he was paid funds from [Complainant]” and that “all payments were made in cash only.” ALJ Dec. 2: 12-13. Mr. Thompson further testified that “any and all payments provided to him from [Complainant] were applied and paid to

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 workers on the project, not to him.” ALJ Dec. 2:17-19. Mr. Thompson also testified that he “provided all

materials and labor at cost to [Complainant].” ALJ Dec. 2:20-21.

The administrative law judge ultimately found that neither Respondent nor Mr. Thompson acted as

a “contractor” as defined under A.R.S. § 32-1101(3). See ALJ Dec. 7:10-12. The administrative law judge

reasoned that Respondent could not meet the definition of a “contractor” because there was “no written

contract, no oral contract, no documentary evidence of payment [since payments were always made in

case] and no bank accounting from any party or witness in this case that will support a finding that

Respondent was compensated.” ALJ Dec. 7:4-7.

WRITTEN JUSTIFICATION

Based on the administrative law judge’s own Findings of Fact, the conclusion that Respondent was

not acting as a contractor, is clearly erroneous and must be rejected. Additionally, the administrative law

judge erroneously determined that A.R.S. section 31-1121(A)(5)’s owner-builder exemption is negated

when a permit is required.

The administrative law judge’s Findings of Fact note that Respondent “admitted he was paid funds

from [Complainant],” and that all payments were made “in cash only.” ALJ Dec. 2:12-13. The

Administrative Law Judge Decision contains further factual findings that Complainant testified “that she

paid [Respondent] the sum of $56,400.00 over the period of many months.” ALJ Dec. 1:29 & 2:1.

Finally, the Decision’s Findings of Fact note that Respondent “provided all materials and labor at cost to

[Complainant].” ALJ Dec. 2:17-19. (emphasis added). Most importantly, the administrative law judge’s

Conclusions of Law note that “Mr. Thompson indicates and [Respondent’s] Answer in this cases states

that all funds received were either paid directly from [Complainant] to the workers on sight or to Mr.

Thompson who then paid the various trades for their work without taking any payment for himself or for

[Respondent].” ALJ Dec. 6:25-28 & 7:1.

Here, Complainant made payments directly to Mr. Thompson (Respondent’s qualifying party and

officer) in the form of cash. See ALJ Dec. 2:12-13; see also ALJ Dec. 1:29 & 2:1. Mr. Thompson then

made payments to various contractors to perform the work. Mr. Thompson also provided materials and

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 labor. See ALJ Dec. 2:17-19. Although Mr. Thompson claims he did not mark-up any materials or labor,

nor did he profit from the work, the statute does not require a person to realize a profit to qualify as a

contractor. See A.R.S. § 32-1101(3) (Requiring “compensation”, not “profit”). The administrative law

judge’s factual findings are clear; Respondent’s qualifying party and officer received funds from

Complainant and used those funds to pay other contractors to perform construction work. See ALJ Dec.

6:25-28 & 7:1. For this reason, the Registrar rejects the Administrative Law Judge Decision to the extent

that the administrative law judge determined the Registrar did not have jurisdiction in this case because

Respondent did not act as a contractor.

The Registrar further rejects the Administrative Law Judge Decision to the extent that the

administrative law judge determined that A.R.S. section 32-1121(A)(5)’s owner-builder exemption is

negated in instances where a building permit is required. The administrative law judge found that “[t]he

A.R.S. § 32-1121(A)(5) exemption ‘…does not apply in any case in which the performance of the work

requires a local building permit.’” ALJ Dec. 3:3-5. But A.R.S. section 32-1121(A)(5) contains no such

limitation.

CONCLUSION AND ORDER

The Registrar, therefore, rejects the Administrative Law Judge Decision to dismiss the citation.

The Registrar finds that Respondent, by and through its qualifying party and officer, accepted

compensation for the work on Complainant’s project and therefore meets the statutory definition of a

“Contractor” under A.R.S. § 32-1101(3).

IT IS ORDERED remanding the matter back to the Office of Administrative Hearings to

determine if Respondent violated the statutes as charged in the Citation.

A Notice of Hearing will be issued to the parties in due course.

Dated December 31, 2018. Registrar of Contractors /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Copy mailed via USPS First Class mail December 31, 2018 to: Respondent North Forty Enterprises Inc. DBA: A C Zone PO Box 7104 Cave Creek, AZ 85327 Respondent’s Attorney Fidelis V. Garcia, Esq. PO Box 2230 Chandler, AZ 85244 Complainant Monica Ann Del Re 5015 E Calle De Los Flores Cave Creek, AZ 85331 AND copy electronically mailed this same date to: Respondent at email address on record with the Registrar Respondent’s Attorney at email address of record with Registrar Complainant at email address on record with the Registrar Office of Administrative Hearings Randolph D. Wolfson, Administrative Law Judge

Case No. 2018-329 / AN

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762