FINACT2018A-3601-CPA-ROC.pdf

2018A-3601-CPA-ROC · Registrar of Contractors · 2019-02-21

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

IN THE MATTER OF THE CIVIL PENALTY Case No. 2018-3601 CITATION ISSUED TO: Docket No. 2018A-3601-CPA-ROC Jason P. Orozco, RESPONDENT. FINAL ADMINISTRATIVE DECISION AND ORDER

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 ACCEPTANCE 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 that decision and hereby accepts it. CONCLUSION Because the Registrar has accepted the administrative law judge’s decision, that decision is the final administrative decision in this case and becomes effective on April 1, 2019. IT IS FURTHER ORDERED that Respondent pay a civil penalty in the amount of $1,000.00 payable to the Registrar on or before the effective date of this Order. Payment may be hand-delivered to the Registrar’s physical address or mailed to: Registrar of Contractors P.O. Box 6748 Phoenix, Arizona 85505-6748

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Dated February 20, 2019.

Registrar of Contractors /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund Copy mailed via USPS First Class mail February 20, 2019 to: Respondent Jason P. Orozco 2103 Del Rey Dr Bullhead City, AZ 86442 AND copy electronically mailed this same date to: Respondent at email address on record with the Registrar Registrar’s Counsel Thomas Raine, Assistant Attorney General

Office of Administrative Hearings Diane Mihalsky, Administrative Law Judge Case No. 2018-3601 / AN

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 1.30.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

IN THE MATTER OF THE CIVIL PENALTY No. 2018A-3601-CPA-ROC CITATION ISSUED TO: ADMINISTRATIVE LAW JUDGE JASON P OROZCO, DECISION Respondent.

HEARING: January 15, 2019, at 1:00 p.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) appeared through Thomas Raine, Esq., Assistant Attorney General; Jason P. Orozco (“Respondent”) appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________ FINDINGS OF FACT BACKGROUND AND PROCEDURE 1. On August 13, 2018, the Registrar issued a Cease & Desist Order, a civil citation for violating of A.R.S. § 32-1151, with a civil penalty in the amount of $1,500.00 for the violation, and a civil citation for violating A.R.S. § 32-1165, with a civil penalty of $1,000.00 for the violation.1 Respondent requested a hearing on the charged violations.2 2. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on January 15, 2019. The Registrar presented the testimony of Bob McQueen, the Investigator who had been assigned to investigate the matter, and submitted six exhibits. Respondent testified on his own behalf. HEARING EVIDENCE 3. On or about August 6, 2018, the Bullhead City Building Department notified Investigator McQueen that an electrical permit had been issued for a service upgrade

1 See Exhibit 1. See Exhibit 6. Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 1.30.2019 ROC LEGAL

to an electrical panel due to an air conditioner installation, but that no required permit application had been received to install an air conditioner. 4. Investigator McQueen went to the residence listed on the electrical permit,

1840 Coral Isle Dr., Bullhead City, Arizona 86442, and spoke to the homeowner. The

homeowner showed Investigator McQueen an electronic receipt in the amount of

$3,378.54 for the air conditioner.3

5. The homeowner also provided Respondent’s business card with his name

under the business name, Phoenix Services LLC, and advertised an ability to perform

heating, cooling, refrigeration services, ice machine cleaning and Maintenance, and

residential and commercial changeouts. The electronic invoice and card did not

include the disclaimer, “not a licensed contractor.”4

6. Investigator McQueen testified that air conditioner changeouts involve

removing an old unit and replacing it with a new unit. Because a changeout requires a

permit, it cannot be performed by an unlicensed contractor.

7. Investigator McQueen testified that he consulted the Registrar’s database

and did not find any license on which Respondent was listed. He also did not find any

previous contact with or enforcement action against Respondent. 8. Investigator McQueen testified that he contacted the supply house referenced on Respondent’s electronic receipt and the corresponding invoice from the supply house was for $2,947.14,5 a difference of $431.40. The employee at the supply house stated that the difference was credited to Respondent’s account. Investigator McQueen testified that with some businesses, it was standard practice to charge more for materials and apply the difference to labor. 9. The homeowner told Investigator McQueen that Respondent had asked for cash, $400.00 up front and another $400.00 when he completed the job. The homeowner stated that Respondent had asked for another $200.00 for extras and to pay his helper.

See Exhibit 3 at 1. See Exhibit 4. 5 See Exhibit 3 at 2. RECEIVED 1.30.2019 ROC LEGAL

10. Investigator McQueen testified that Respondent received $4,300.00 for the job. Because the cost of the job for labor and materials exceeded $1,000.00, the job required a license. This was not a case in which the homeowner already had the

materials on site and did not have to purchase the new air conditioner and materials to

install it.

11. Investigator McQueen testified that he contacted Respondent. Respondent

acknowledged that he did not have a contractor’s license. Investigator McQueen

testified that he inspected the air conditioner that Respondent had installed and

photographed the unit and its serial number.6

12. Respondent testified that he thought having the customer purchase that air

conditioning unit directly would allow him to perform the job. Respondent testified that

the homeowner was a friend of his who knew that he did not have a contractor’s license

and that he did not know that a permit was required to install an air conditioner.

Respondent testified that he has taken a job working for Mohave County because he is

supporting his wife and two babies and cannot afford to obtain a contractor’s license at

this time.

13. Respondent testified that he had no ill intent. He believes that the air conditioner installation has passed the county’s inspection. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.7 2. The Registrar bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.8 Respondent bears the burden to establish affirmative defenses and factors in mitigation of the penalty by the same evidentiary standard.9

See Exhibit 5. See A.R.S. § 32-1101 et seq. 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). 9 See A.A.C. R2-19-119(B)(2). RECEIVED 1.30.2019 ROC LEGAL

3. “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 preponderance of the evidence is “[t]he 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.”11

4. A.R.S. § 32-1151 prohibits contracting without a license, providing in relevant

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. 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. 5. 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. . . . This exemption does not apply:

MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 11 BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999). RECEIVED 1.30.2019 ROC LEGAL

(a) In any case in which the performance of the work requires a local building permit. Because the aggregate cost of the job that Respondent undertook to install a new air conditioner, including labor and materials, was more than $1,000.00 and required a

permit, the Registrar established that Respondent violated A.R.S. § 32-1151.

6. The Registrar established that Respondent’s business card solicited work

that required a contractor’s license without including the disclaimer, “Not a licensed

contractor.” 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.” (Emphasis added.) The Registrar established that Respondent

violated A.R.S. § 32-1165 by advertising without a license.

7. 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 in violation of A.R.S. § 32-1151 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, RECEIVED 1.30.2019 ROC LEGAL

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. . . . (Emphasis added.) 8. Respondent credibly testified that the homeowner was a friend who knew that he was not a licensed contractor and that, as far as he knew, the installation of the air conditioner passed Bullhead City’s inspection. The Registrar did not contest or controvert this credible testimony. Respondent credibly testified that he did not know that a license was required to install an air conditioner if the homeowner purchased the unit and he charged less than $1,000.00 for labor. Investigator McQueen testified that this was Respondent’s first offense. These are all factors in mitigation of the penalty under A.A.C. R4-9-131.12 A.A.C. R4-9-131 provides as follows: In assessing a civil penalty as provided for under A.R.S. § 32-1166(A), the Registrar shall give due consideration to whether the person cited or any individual acting on that person’s behalf has committed one or more of the following acts in determining the gravity of the cited violation: 1. Falsely represented to be a licensed contractor. 2. Failed to perform any work for which money was received. 3. Executed or used any false or misleading documents for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 4. Made false or misleading statements for the purpose of inducing a person to enter into a contract or to pay money for work to be performed. 5. Failed or neglected to apply funds which were received for the purpose of obtaining or paying for services, labor, materials, or equipment. 6. Performed work that was or had the potential to become hazardous to the health, safety, or general welfare of the public. RECEIVED 1.30.2019 ROC LEGAL

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the Registrar affirm the finding

that Respondent Jason P. Orozco violated A.R.S. §§ 32-1151 and 32-1165, but reduce

the civil penalties imposed for the violations to $750.00 for the unlicensed contracting

and $250.00 for the unlicensed advertising. The aggregate total of $1,000.00 in civil

penalties 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, January 30, 2019.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors

7. Performed work that deliberately was in violation of building codes, safety laws, labor laws, workers’ compensation laws, or unemployment insurance laws. 8. Performed work that failed to meet minimum acceptable trade or industry standards or practices or was not performed in a good and workmanlike manner. 9. Has committed any other act which would otherwise be cause for disciplinary action if the person cited had been properly licensed pursuant to A.R.S. Title 32, Chapter 10. 10. Has committed two or more prior violations. 11. Performed work that has caused loss or damage to the structure, its appurtenances, or property being worked upon or has caused loss or injury to any person.