ALJDEC decisions subject to certification as final

2018A-3593-CPA-ROC · Registrar of Contractors · 2018-11-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Based on the evidence in this matter, the undersigned Administrative Law Judge hereby recommends that the Registrar of Contractors reverse the Cease and Desist Order and civil penalty issued to Respondent on August 6, 2018. FINDINGS OF FACT Background and Procedure 1. Respondent is not a licensed contractor in the State of Arizona. 2. On or about August 6, 2018, the Registrar of Contractors (“Registrar”) issued Respondent a Cease and Desist Order and Civil Citation against Respondent for failing to comply with A.R.S. § 32-1151 (contracting without a license) with a proposed civil penalty of $1,000.00 for a violation thereof. (Register’s Exhibit 1). 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 setting a hearing, after continuances, for October 23, 2018, at 2:00 P.M. At the hearing, the Register presented the testimony of Investigator Robert McQueen (Investigator). Respondent testified on his own behalf and presented the testimony of Linda Phanthongphay. The Tribunal received and admitted the Registrar’s exhibit numbers 1 - 4.[1] 5. The Investigator testified that the Registrar was informed by a building official from the city of Bullhead City that Respondent had been replacing a house roof without a building permit and the official believed that Respondent was an unlicensed contractor. He stated that he visited the site and that Respondent admitted that he was replacing the roof. He further testified that the city had given Respondent a stop notice due to the lack of a building permit. (Respondent’s Exhibit 3). He stated that when he visited the site, Respondent told him that he was replacing the room for a friend in Long Beach and that it was going to “cost about $1,800” and that he had done several roofs and understood how to work on roofs. He further stated that Respondent admitted that he did not have a permit for the work but that he checked a few weeks later and discovered that Respondent had obtained the necessary building permit on September 4, 2018. (Register’s Exhibit 4). 6. Respondent testified that his nephew, who lived in California, could not afford to hire a contractor for the repair and had asked him to do the work. He stated that his nephew had not agreed to pay him for the work and that he had not received nor did he expect to receive any compensation for the work. He further testified that he was retired from warehouse work and had never been a contractor or a handyman nor had he fixed other roofs in Bullhead City. He stated his nephew paid for all of the materials directly and that the permit was obtained in his nephew’s name. 7. Linda Phanthongphay, wife of Respondent, testified on behalf of Respondent that she was present when their nephew came to town. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[2] 2. The Registrar bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 3. A.R.S. § 32-1151 regarding engaging in contracting without a required license provides in pertinent part 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.

(emphasis added). 4. 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.

(emphasis added). 5. 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….

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.

6. In this case, the Registrar has established that Respondent has engaged in work for which the aggregate contract price would have exceeded $1,000.00 and for which a building permit was required, and was ultimately obtained. However, at issue is whether Respondent performed the subject work “for compensation” such that Respondent met the definition of contractor under A.R.S. § 32-1101(A)(3). 7. The Registrar has not met its burden to show that Respondent received compensation for the subject roof repair. Respondent testified that he did not receive compensation for the subject work nor did he expect to receive compensation from his nephew who owned the residence. The Registrar did not directly contradict such testimony. The only relevant testimony offered by the Registrar in that regard was that Respondent at the site said that replacing the roof “cost about $1,800,” which Respondent indicated at the hearing was the cost of materials that his nephew purchased. The Register offered no evidence that Respondent received or expected to receive compensation for the work from his nephew or any other source. Further, there was no evidence presented that Respondent had done any other work for which a contractor’s license was required which might have reflected upon Respondent’s credibility. While Respondent admitted that he had done other roof work before, he testified that he had never been a contractor or handyman and that he had never before performed roof work in Bullhead City. 8. Accordingly, the evidence does not 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. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar reverse the finding that Respondent violated A.R.S. § 32-1151 and reverse the decision to assess a civil penalty under A.R.S. § 32-1166 of $1,000.00 for the violation of A.R.S. § 32-1151. 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, November 12, 2018.

/s/ Roger Geddes Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] The Tribunal also took administrative notice of the Registrar’s file. [2] See A.R.S. § 32-1101 et seq. [3] 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). [4] 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