FINACT2019A-03286-NPC-ROC-FinalAgencyAction-6589.pdf

2019A-03286-NPC-ROC · Registrar of Contractors · 2019-11-05

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

R E Michel Company LLC, Case No. 2019-03286

COMPLAINANT, Docket No. 2019A-03286-NPC-ROC v.

A Team Air Conditioning and Heating Inc., FINAL ADMINISTRATIVE DECISION AND License No. ROC 209745, ORDER 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 of each finding of fact or conclusion of law. MODIFICATION AND WRITTEN JUSTIFICATION 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 modifies it. The Administrative Law Judge found that Respondent violated A.R.S. §32-1154(A)(10). ALJ Dec. 6: 26-28. The Administrative Law Judge decision concluded that Respondent failed to pay Complainant $1,650.21. ALJ Dec. 6: 12-14. Therefore, the Administrative Law Judge recommended Respondent’s License No. 209745 be suspended for 3 days. ALJ Dec. 7: 1-3. The Administrative Law Judge further recommended, that five days after the effective date of the Registrar’s FINAL ORDER in this matter, Respondent provide proof of a $1,650.21 payment, in certified funds to Complainant, to the Registrar. ALJ Dec. 7: 4-7. If Respondent failed to pay the entire amount of the ordered restitution by the time specified, the administrative law judge recommended assessing a $500.00 civil penalty. Finally, the Administrative Law Judge recommended that if a civil penalty was assessed and the Respondent failed to pay the civil penalty within 30 days, the Registrar shall revoke Respondent’s license. ALJ

Dec. 7: 8-17.

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 Arizona courts have held that the Registrar may not award money damages, but may order restitution as a condition of licensure. J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 600 P. 2d 119 at 125, 142 Ariz. 400 at 406 (App. 1984). However, Arizona Revised Statutes Title 32 Chapter 10 only permits the Registrar to impose civil penalties for specific violations. See e.g. A.R.S. § 32-1154(e) (permitting civil penalties up to $500 for each violation of A.R.S. § 32-1154(A)(22)). There is no statute that permits a civil penalty for a violation of A.R.S. § 32-1154(A)(10) or failure to pay restitution as a condition of licensure. Therefore, the Registrar cannot impose a civil penalty in this case. Additionally, the purpose of filing a complaint for a violation of A.R.S. §32-1154(A)(10) is to facilitate the payment of outstanding debts owed by a licensed contractor. In a case such as this, revocation may frustrate that purpose. For these reason, the Registrar modifies the Administrative Law Judge Decision to suspend Respondent’s license until it provides proof to the Registrar that it paid Complainant. For these reasons, the Registrar modifies the order as described below. CONCLUSION AND ORDER The Registrar herby modifies the Recommended Order of the Administrative Law Judge Decision by: • Replace page 7, lines 4 through 18, with: • IT IS ORDERED that thirty days after the effective date of the Final Order in this matter, Respondent’s License No. 209745 be suspended until the Registrar receives and accepts written verification that A Team Air Conditioning and Heating Inc., has paid to R E Michel Company LLC the amount of $1,650.21 in certified funds. • IT IS FURTHER ORDERED that if, on or before thirty days after the effective date of the Final Order, the Registrar receives written proof from Respondent that it has paid to Complainant $1,650.21, then the Registrar will not suspend Respondent’s license, but will instead close the complaint.” The Registrar accepts the remainder of the Administrative Law Judge Decision, which becomes effective on December 8, 2019.

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 FINAL NOTE On page 3, line 14, 27 and 29 replace “Galvaz” with “Galvez.” On page 4, line 2, 6, 9, 10, 13, and 15 replace “Galvaz” with “Galvez.” On Page 6, line 14 replace “$1,650.18” with $1,650.21.” Dated October 29, 2019. By: /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund Arizona Registrar of Contractors Copy mailed via USPS First Class mail October 29, 2019 to: Respondent A Team Air Conditioning and Heating Inc 2916 N 35th Ave Ste 7 Phoenix, AZ 85017

Respondent’s Attorney Richard D. Elley Esq. 3323 E. Baseline Rd. Gilbert, AZ 85234 Complainant R E Michel Company LLC 6749 Bay Meadow Dr Glen Burnie, MD 21060

Complainant’s Attorney Edward J. Marko, Esq. 14820 N Cave Creek Rd Ste 6 Phoenix, AZ 85032 Copy sent electronically this same date to: Office of Administrative Hearings Jenna Clark, Administrative Law Judge 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 Complainant’s Attorney at email address of record with Registrar

Case No. 2019-03286 / VE

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 RECEIVED 10.9.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

R E Michel Company LLC, No. 2019A-03286-NPC-ROC COMPLAINANT, ADMINISTRATIVE LAW JUDGE v. DECISION A Team Air Conditioning and Heating Inc., ROC License: ROC 209745, RESPONDENT.

HEARING: September 23, 2019 at 9:00 AM. APPEARANCES: Edward Marko, Esq. appeared on behalf of R E Michel Company LLC (“Complainant”) with Guillermo Valdez as a witness. Richard Elley, Esq. appeared on behalf of A Team Air Conditioning and Heating Inc. (“Respondent”) with Orlando Galvez as a witness. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following RECOMMENDED ORDER to the Director of the Arizona Registrar of Contractors (“Registrar”). FINDINGS OF FACT BACKGROUND AND PROCEDURE 1. On August 09, 2005, the Registrar issued License No. 209745 for specialty dual CR-39 air conditioning and refrigeration contracting to Respondent.1 Respondent’s address of record for the license is 2916 N. 35th Ave. Ste. 7. Phoenix, Arizona 85017-5264. Orlando Galvez-Borbon is listed on the license as the Qualifying Party.2 2. Pursuant to ARIZ. ADMIN. CODE R4-9-117, Administrative Notice is taken of Respondent’s prior License record for License No. 209745, as reflected on the

1 See https://roc.az.gov/contractor-search?Id=a0Yt000000ACZG5EAP. Id. Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 10.9.2019 ROC LEGAL

Registrar’s public website on September 23, 2019. Such prior license record reflects that Respondent’s license is active.3 There is one prior discipline listed for the license.4 The record shows that there is one open complaint against Respondent’s license,

which is presumed to be related to this matter. Respondent has a $6,750.00 surety

bond issued through RLI Insurance Company effective April 29, 2015.5 Per the

Registrar’s website, there have been no payments issued from the bond.

3. Complainant operates a commercial hardware and supply store. Patrons

of Complainant’s store must be members in order to make a purchase. Member

accounts are setup by Complainant, and include a list of all employees permitted to

make a purchase on a member’s account.

4. Respondent has a member account with Complainant’s store.

5. On June 24, 2019, the Registrar received a complaint from Complainant

alleging non-payment of services and/or materials against Respondent for twenty-one

outstanding purchase invoices totaling $4,304.46.6

6. On July 02, 2019, the Registrar issued a NON-PAYMENT COMPLAINT

NOTIFICATION LETTER to the parties, advising that Respondent could supply any

affirmative defenses or raise other issues to the Registrar by July 09, 2019.7 7. On August 02, 2019, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on September 23, 2019. Per the NOTICE OF HEARING8 issued on August 06, 2019, the issue to be determined is whether the Registrar has cause to discipline Respondent’s license based on the following charges: Charge 1: A violation of A.R.S. § 32-1154(A)(10) (“Failure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to

Id. Id. Id. See Hearing File, pages 15-42. See Hearing File, page 28. 8 See NOTICE OF HEARING. RECEIVED 10.9.2019 ROC LEGAL

pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.”).9 HEARING EVIDENCE 8. Complainant called branch manager Guillermo Valdez as a witness and submitted four exhibits into the record. Respondent called Orlando Galvez as a witness. The Registrar’s electronic hearing file and NOTICE OF HEARING were also admitted into the record as their own exhibits. 9. Mr. Valdez testified that he does not have firsthand knowledge regarding Respondent’s account with Complainant’s store, but was advised by his company’s corporate headquarters that Respondent’s account was past due in the amount of $4,304.46 plus late fees. 10. Per Mr. Valdez, store associates are tasked with familiarizing themselves with customer accounts and only permitting authorized users to make purchases. Mr. Valdez was unable to provide any information regarding who, besides Mr. Galvaz, was authorized to use Respondent’s account. Mr. Valdez alleged that several individuals bearing Respondent’s uniform and insignia made multiple purchases on Respondent’s account. Mr. Valdez could not, however, affirmatively state whether any of these unnamed individuals had written or otherwise express permission from Respondent to make any of the purchases that were allowed by Complainant’s store associates, or that any of these individuals were named on Respondent’s account as authorized users at the time the purchases at issue were made. 11. Mr. Valez testified that, per corporate policy, after Respondent’s account was in arrears charges were still permitted to be made up to the credit limit. 12. The only employee permitted to make a purchase on Respondent’s account is Mr. Galvez. 13. Mr. Galvaz admitted that he owed $1,650.18 for three of Complainant’s invoices, but denied purchasing or authorizing the purchases in all other invoices at issue. Specifically, Mr. Galvaz admitted to owing Complainant $1,405.18 for Invoice

9 Id. RECEIVED 10.9.2019 ROC LEGAL

No. 278955 dated February 22, 2018, $62.91 for Invoice No. 693997 dated March 23, 2018, and $182.12 for Invoice No. 997504 dated April 13, 2018. Mr. Galvaz denied receiving or benefitting from any of the materials identified on Complainant’s remaining

invoices, and further denied knowledge of the unauthorized purchases that had

occurred on Respondent’s account.

14. Mr. Galvaz testified that Respondent’s address of record on file with

Complainant is incorrect, as he moved the business approximately one and a half years

ago and did not update his address with the United States Postal Services until months

later. Mr. Galvaz never updated Respondent’s mailing address with Complainant.

15. Mr. Galvaz admitted that he knew payment on his account was due thirty

days after a charge was made, and further admitted that he did not make timely

payments for his purchases because he lacked the funds at the time they were due.

After the underlying complaint was filed, Mr. Galvaz attempted to pay what he thought

he owed to Complainant, but was not able to do so because Complainant would not

delete the remaining eighteen invoices Mr. Galvaz disagreed with from Respondent’s

account.

16. Overall, Respondent argued that Complainant erred in permitting unauthorized persons to make charges to his account, and that Respondent should not be held liable for Complainant’s error. Complainant argued that it reasonably and detrimentally relied on subcontractor misrepresentations and should be compensated for its loss. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over this matter pursuant to ARIZ. REV. STAT. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before the Office of Administrative Hearings pursuant to ARIZ. REV. STAT. §§ 41-1092 et seq. 2. The Registrar may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering

RECEIVED 10.9.2019 ROC LEGAL

payment of restitution if a proven statutory violation was not remedied by corrective action.10 3. The purpose of the Registrar’s licensing statutes is to protect the public

from unscrupulous, unqualified, and financially irresponsible contractors.11

4. Complainant bears the burden of proof to establish cause to discipline

Respondent’s license by a preponderance of the evidence.12 Respondent bears the

burden to establish factors in mitigation of the penalty and affirmative defenses by the

same evidentiary standard.13

5. “A preponderance of the evidence is such proof as convinces the trier of

fact that the contention is more probably true than not.”14 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.”15

6. ARIZ. REV. STAT. § 32-1154(A)(10) includes among the grounds for

suspension, revocation, or other disciplinary action against a contractor’s license, “[F]ailure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.”

10 See ARIZ. REV. STAT. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990). See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). ARIZ. REV. STAT. § 41-1092.07(G)(2); ARIZ. ADMIN. CODE R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). See ARIZ. ADMIN. CODE R2-19-119(B)(2). MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 15 BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999). RECEIVED 10.9.2019 ROC LEGAL

7. ARIZ. REV. STAT. § 32-1156.01 states, in pertinent part, that after a hearing an Administrative Law Judge may provide restitution to any person who is injured by an action of a licensee.

8. ARIZ. REV. STAT. § 32-1154(E) holds, in pertinent parts, that the Registrar

may “[i]mpose a civil penalty not to exceed five hundred dollars on a contractor for each

violation. The failure by the licensee to pay any civil penalty imposed results in the

automatic revocation of the license thirty days after the effective date of the order

providing for the civil penalty. It also holds that no future license may be issued to an

entity consisting of a person who is associated with the contractor, unless payment of

any outstanding civil penalty is tendered.”

9. Here, the material facts are not in dispute.

10. The credible evidence of record reflects that of the twenty-one invoices

Complainant alleged Respondent owed, only three were valid as each transaction had

been performed by an authorized user on Respondent’s account, totaling $1,650.18.

These are charges Respondent knew were due to be paid to Complainant within thirty-

days of each transaction, but failed to timely pay.

11. Respondent is not liable for any remaining charge at issue on his account, as the charges were made by unauthorized users who Complainant failed to prevent from accessing Respondent’s account. 12. Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to pay Complainant on invoices 278955, 693997, and 997504. This is an affirmative defense that Respondent bears the burden to establish. This burden has not been sustained. The record shows that Respondent failed to promptly and completely pay Complainant for three invoices, and had no affirmative defense(s) for doing so. 13. Because Complainant established by a preponderance of the evidence that Respondent violated ARIZ. REV. STAT. § 32-1154(A)(10), Complainant has also established cause for the Registrar to discipline Respondent’s contractor’s license. RECOMMENDED ORDER Based on the foregoing findings of fact and conclusions of law, RECEIVED 10.9.2019 ROC LEGAL

IT IS RECOMMENDED that that on the effective date of the FINAL ORDER in this

matter Respondent, A Team Air Conditioning and Heating Inc. ROC License No.

209745, shall be suspended for three (3) days.

IT IS FURTHER RECOMMENDED that that five days after the effective date of

the Registrar’s FINAL ORDER in this matter, Respondent provide proof of a $1,650.18

payment, in certified funds to Complainant, to the Registrar pursuant ARIZ. REV. STAT. §

32-1156.01.

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the ordered restitution five days after the effective date of the Registrar’s FINAL ORDER in this matter, a civil penalty of $500.00 shall be assessed against Respondent. IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s FINAL ORDER, the Registrar revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in ARIZ. REV. STAT. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty. 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 days from the date of that certification. Done this day, October 04, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors