ALJDEC decisions subject to certification as final

2019A-03666-OMC-ROC · Registrar of Contractors · 2019-08-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 09, 2019 AT 9:00 AM. APPEARANCES: Assistant Attorney General Thomas Raine, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Marshall Chance Peterson and John Smith as witnesses. Brenda Lee, Esq. appeared on behalf of B A Associates (“Respondent”) with Bill Acker as a witness. Robert Stirling, Assistant Chief Counsel for the Registrar, observed. 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 Registrar. FINDINGS OF FACT Background and Procedure 1. On July 27, 2016, the Registrar issued License No. 316689 for specialty dual CR-69 asphalt paving contracting to Respondent.[1] Respondent’s address of record for the license is 223 Georgianna St., Sunset, LA 70584-5515.[2] Bill Roger Acker is the Qualifying Party listed on the license.[3] 2. Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior License record, for License No. 316689, as reflected on the Registrar’s public website on August 09, 2019. Such prior License record reflects that Respondent’s license is currently suspended.[4] The license has been previously disciplined by the Registrar on one prior occasion, and has had two previously resolved/settled cases.[5] The record also reflects that there is one complaint against Respondent’s license, which is presumed to be related to this matter.[6] Respondent has an active $6,750.00 surety bond issued through RLI Insurance Company effective November 02, 2017, of which all funds remain available.[7] 3. On June 29, 2019, the Registrar issued an Order of Summary Suspension, Order Consolidating Cases, and Notice of Promptly Instituted Proceeding (“Order”) setting the above-captioned matter for an expedited hearing at 9:00 a.m., on August 08, 2019, at the Office of Administrative Hearings.[8] In the Order, the Registrar presented its determination that the public welfare imperatively required emergency action and it summarily suspended Respondent’s license.[9] 4. On August 02, 2019, the Registrar also issued a Supplemental Notice to clarify and detail the specific charges against Respondent.[10] The Supplemental Notice provides a Statement of Facts and a Formal Statement of Alleged Violations in which Registrar alleges that Respondent committed violations of Ariz. Rev. Stat. §§ 32-1154(A)(5), 32-1154(A)(9), 32-1154(A)(19), and 32-1154(A)(20).[11] The Supplemental Notice also provides that the Registrar may present evidence at hearing to establish violations of Ariz. Rev. Stat. §§ 32- 1154(A)(3), 32-1154(A)(6), 32-1154(A)(12), and Ariz. Admin. Code R4-9- 108. 5. The Registrar is requesting that Respondent’s license be revoked. Hearing Evidence 6. Complainant called Marshall Chance Patterson and John Smith as witnesses and submitted twenty-nine exhibits into the record. Respondent called Bill Acker as a witness and submitted twelve exhibits into the record. The Registrar’s electronic hearing file and Notice of Hearing were also admitted into the record. 7. Between September 2018 and July 2019, the Registrar received seven complaints against Respondent believed to constitute statutory violations, which were consolidated into this single proceeding. During the course of the Registrar’s investigation into complaints against Respondent’s license, the Registrar discovered alleged acts or omissions believed to constitute additional statutory violations. Charge 1: Misrepresentation (Ariz. Rev. Stat. § 32-1154(A)(5)); Charge 2: Subsequent Discovery ((Ariz. Rev. Stat. § 32-1154(A)(19)); Charge 3: Prior Revocation ((Ariz. Rev. Stat. § 32-1154(A)(20)) 8. On June 11, 2007, Respondent submitted an application for contractor registration to the Idaho Contractors Board (“ICB”).[12] 9. On June 14, 2007, ICB License No RCT-22274 was issued to Respondent.[13] 10. On an unknown date approximately four months after licensure, Respondent left Idaho due to lack of work. 11. On May 13, 2008, the ICB received two complaints against Respondent’s license alleging poor workmanship.[14] As a result, ICB opened an investigation. 12. Respondent’s Idaho license expired on October 17, 2008.[15] 13. On May 29, 2009, a Default Order and Findings of Fact and Conclusions of Law and Recommended Order was issued against Respondent’s license.[16] No hearing was held. 14. On July 28, 2009, a Final Order was issued that found Respondent to be in violation of Idaho Code § 54-5215(h) and ordered a revocation of ICB License No RCT-22274.[17] The Final Order also required Respondent to pay a $1,000.00 fine within sixty days of its issuance.[18] 15. On October 31, 2017, Respondent submitted a Sole Proprietorship application for a CR-69 asphalt paving license to the Registrar.[19] The application was received on November 02, 2017.[20] 16. In the application, Respondent disclosed previously issued licenses from Pennsylvania, Utah, and Virginia. Respondent did not disclose a previously issued, and subsequently revoked, license from Idaho because he forgot to. 17. On November 28, 2017, the Registrar issued ROC License No 316689 to Respondent. Charge 4: Aiding and Abetting (Ariz. Rev. Stat. § 32-1154(A)(9)) 18. In Respondent’s October 31, 2017, Sole Proprietorship application to the Registrar, Respondent indicated that he possessed Worker’s Compensation Insurance.[21] Though not required, no proof of insurance was submitted with the application. 19. Respondent testified that he employs numerous individuals on his jobs. Specifically, Respondent often hires his sons, Ike Jeremy Acker and Johnny David Acker, to perform work and also picks up day laborers from homeless shelters and local home improvement stores. 20. Ike Acker’s services are most often utilized by Respondent. 21. These “employees”, Respondent’s sons included, are either paid in cash or via check, but do not include deductions of any kind. 22. None of the people Respondent employs hold a valid Arizona contracting license. 23. Respondent often deliberately orders more asphalt than is necessary to complete a job, in part, to ensure that there is enough asphalt available on a jobsite “just in case,” and also to perform other work. Specifically, Ike Acker will leave a jobsite and go to neighboring homes/businesses and ask owners if they would like to purchase “extra” or “leftover” asphalt for same-day projects. 24. Any unused or excess asphalt is money Respondent loses. Charge 5: Violation of Registrar’s Rule (Ariz. Rev. Stat. § 32-1154(A)(3) and Ariz. Admin. Code R4-19-108); Charge 6: Fraudulent Act Resulting in Substantial Injury to Another (Ariz. Rev. Stat. § 32-1154(A)(6)); Charge 7: Failure to Materially Comply (Ariz. Rev. Stat. § 32-1154(A)(12)) 25. The Registrar received the following five complaints against Respondent’s license alleging poor workmanship: 2019-00305[22] (Robert Edwards II complaint); 2019-01736[23] (Benjamin Galaz complaint); 2018- 04441[24] (Cynthia Bloise complaint); 2018-04272 (Carlton Buscemi complaint); and 2018-184 (Wess Silberman complaint). 26. Investigators assigned by the Registrar substantiated the poor workmanship allegations in each of the aforementioned cases. A Directive from the Registrar (“Directive”) was issued in each case which required Respondent to timely complete remediation(s) on all projects. Respondent successfully completed all remediations and all complaints were closed by the Registrar.[25] 27. The Registrar received the following two complaints against Respondent’s license alleging poor workmanship and/or deceptive sales practices: 2019-02196 (Mark Davis complaint) and 2019-03550 (Kenneth Eckle complaint). Davis complaint (2019-02196) 28. On April 18, 2019, Respondent approached Mr. Davis in the driveway of his residential property located at 4556 N. Camino Real, Tucson, Arizona 85718 and offered him a “good deal” to pour “leftover” asphalt within the hour. The parties entered into a contractual agreement for Respondent to lay asphalt for the sum total of $5,000.00.[26] Per the parties’ agreement, the project was to commence and be completed on April 18, 2019. Once the work was complete Respondent charged Mr. Davis $19,000.00 for the project. Mr. Davis gave Respondent a $10,000.00 check, and the parties agreed to final payment post inspection. 29. On April 18, 2019, upon review of Respondent’s work, Mr. Davis opined that the work was not to his satisfaction. Specifically, the grading was not as he had requested and there was damage to existing structures. 30. On April 26, 2019, the Registrar received a complaint from Mr. Davis alleging poor workmanship.[27] Mr. Davis included an illegible copy of his contract with Respondent, and an illegible Change Order form.[28] On June 10, 2019, Mr. Davis provided proof of payment to the Registrar.[29] 31. On May 17, 2019, the Registrar issued a Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by a Registrar investigator on June 07, 2019, at 9:00 a.m.[30] 32. On May 17, 2019, the Registrar issued a Warning Letter to Respondent to advise that his contract with Mr. Davis did not meet statutory minimum elements in violation of Ariz. Rev. Stat. § 32-1158(A).[31] Respondent was further advised that failure to comply with Ariz. Rev. Stat. § 32-1158(A) was a violation of Ariz. Rev. Stat. § 32- 1154(A)(12), which could result in discipline against Respondent’s license including suspension or revocation.[32] 33. On June 07, 2019, Registrar investigator John Smith (“Investigator Smith”) conducted a jobsite inspection of the project. Respondent was present with “a worker.” Investigator Smith reviewed the agreements executed between the parties and inspected the work that had been done on the project to date. Investigator Smith also took forty-four photographs of the project site.[33] When he was finished, Investigator Smith drafted Jobsite Inspection Notes.[34] 34. Mr. Davis also provided Investigator Smith with photographs of Respondent working on the project with the assistance of several laborers.[35] 35. On June 07, 2019, Investigator Smith issued a Directive to Respondent because he substantiated Mr. Davis’ allegation that Respondent failed to meet minimum workmanship standards.[36] Respondent was put on notice that it had until July 01, 2019, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32- 1154(E).[37] 36. On June 28, 2019, the Registrar closed the complaint because Mr. Davis agreed that Respondent fully complied with the Directive.[38] Eckle complaint (2019-03550) 37. On or about December 01, 2018, Respondent approached Mr. Eckle at his residential property located at 3451 W. Flying Diamond Drive, Tucson, Arizona 85742 and offered to pour “extra” asphalt on his driveway.[39] The parties entered into a contractual agreement for Respondent to lay asphalt for the sum total of $2,500.00.[40] Per the parties’ agreement, the project was to commence and be completed on December 01, 2018. Once the work was complete Respondent charged Mr. Eckle an additional $500.00 for the project because he had “measured incorrectly.” 38. On June 28, 2019, the Registrar received a complaint from Mr. Eckle alleging unscrupulous business practices.[41] Mr. Eckle included written permission for his friend and oldest daughter to represent him in the complaint, and illegible copies of a Change Order form.[42] 39. On July 16, 2019, the Registrar issued a Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by a Registrar investigator on August 05, 2019, at 9:00 a.m.[43] 40. On July 16, 2019, the Registrar issued a Warning Letter to Respondent to advise that his contract with Mr. Eckle did not meet statutory minimum elements in violation of Ariz. Rev. Stat. § 32-1158(A).[44] Respondent was further advised that failure to comply with Ariz. Rev. Stat. § 32-1158(A) was a violation of Ariz. Rev. Stat. § 32- 1154(A)(12), which could result in discipline against Respondent’s license including suspension or revocation.[45] 41. On July 22, 2019, the Registrar opened a complaint against Respondent on its own motion. 42. On August 05, 2019, Investigator Smith conducted a review of the agreements executed between the parties and inspected the work that had been done on the project to date. Investigator Smith was unable to substantiate any workmanship violations. 43. On August 07, 2019, the Registrar closed the complaint because Mr. Eckle agreed that Respondent had fully complied with the parties’ contract.[46] 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 purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.[47] 3. Respondent’s suspended license does not deprive the Registrar its right to prosecute the complaints or prevent the Registrar from determining the merits of the complaints.[48] 4. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.”[49] 5. The Registrar bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[50] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[51] 6. The standard of proof on all issues in this matter is that of a preponderance of the evidence.[52] 7. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[53] 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.”[54] 8. Ariz. Admin. Code R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” 9. Ariz. Rev. Stat. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” 10. Ariz. Rev. Stat. § 32-1154(A)(5) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[m]isrepresentation of a material act by the applicant in obtaining a license.” 11. Ariz. Rev. Stat. § 32-1154(A)(6) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[t]he doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” 12. Ariz. Rev. Stat. § 32-1154(A)(9) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]iding and abetting a licensed or unlicensed person to evade this chapter, knowingly or recklessly combining or conspiring with a licensed or unlicensed person, allowing one’s license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with intent to evade this chapter.” 13. Ariz. Rev. Stat. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” 14. Ariz. Rev. Stat. § 32-1154(A)(19) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[s]ubsequent discovery of facts that if known at the time of issuance of a license or the renewal of a license would have been grounds to deny the issuance or renewal of the license.” 15. Ariz. Rev. Stat. § 32-1154(A)(20) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[h]aving a person named on the license who is or was named on any other license in this state or in another state that is under suspension or revocation for any act or omission that occurs while the person is or was named on the license unless the prior revocation was based solely on a violation of this paragraph.” 16. Ariz. Rev. Stat. § 23-211 defines an employee as “any person, not an independent contractor, who provides services or labor for an employer in this state for wages or other remuneration.” 17. Ariz. Rev. Stat. § 23-361.01 requires, in pertinent part, employers who pay their employees in cash, when said employer has two or more employees, to adhere to income tax withholding laws prescribed in Title 43, Chapter 4 and worker’s compensation laws prescribed in Chapter 6 of this title.”[55] 18. The material facts in this matter are clear in the record. 19. There is insufficient evidence in the record to hold Respondent in violation of Ariz. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32- 1154(A)(3), 32-1154(A)(6), and 32-1154(A)(12). 20. There is, however, sufficient evidence in the record to hold Respondent in violation of Ariz. Rev. Stat. §§ 32-1154(A)(5), 32- 1154(A)(9), 32-1154(A)(19), and 32-1154(A)(20). 21. Respondent’s failure to disclose his Idaho license to the Registrar is not excused or justified by his forgetfulness. 22. Respondent is required by law to provide updated contact information to any and all state licensing agencies where he is licensed. There is a rebuttable presumption that Respondent’s notifications from ICB were mailed to the address(es) he provided and timely delivered. It is undisputed that Respondent did not provide the ICB with a response to the complaints filed against his license or appear for the hearing scheduled to address them. It is further undisputed that Respondent’s ICB License No RCT-22274 was revoked on July 28, 2009. It is unclear, however, whether Respondent paid his mandatory $1,000.00 fine on or before the due date, if at all. 23. It is apparent that the Registrar would have denied Respondent’s application for licensure had it known that Respondent’s Idaho license was revoked for grossly negligent or reckless conduct in the performance of his trade. 24. Although the record reflects that Respondent is a sole proprietorship, it is undisputed that Respondent uses several laborers to complete his jobs. Those laborers, however, are not “employees,” as defined by law.

25. While Respondent did receive multiple complaints regarding his workmanship, he was able to timely remediate and cure each complaint with the Registrar. No formal discipline was issued in the underlying cases because it was not necessary. 26. Respondent’s solicitation business practices are questionable and inadvisable. Respondent’s inability to approximate the amount of materials required for a job, or the approximate total that a job may cost, prior to undertaking it, results in substantial and tangible harm to his customers. The record, however, reflects that this conduct is more a result of ineptitude than insidiousness. 27. Therefore, because the Registrar established by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. §§ 32-1154(A)(5), 32-1154(A)(9), 32-1154(A)(19), and 32-1154(A)(20), the Registrar has also established cause discipline Respondent’s contractor’s license. 28. Ariz. Rev. Stat. § 32-1154 and its subsections do not require the Registrar to take disciplinary action against a contractor’s license. Instead, the section establishes grounds by which the Registrar may act. The undersigned concludes that disciplinary action is appropriate in light of the specific circumstances presented in this matter, but that revocation is not warranted. RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that that on the effective date of the Final Order in this matter, Respondent Bill Roger Acker, doing business as B A Associates, License No. 316689 shall be suspended until Respondent provides the Registrar with satisfactory evidence of a timely one thousand dollar ($1,000.00) payment to the ICB. 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 40 days from the date of that certification. Done this day, August 15, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACXZzEAP. [2] Id. [3] Id. [4] Id. The license was suspended on July 29, 2019. [5] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACXZzEAP. [6] Id. [7] Id. The bond was cancelled on July 11, 2018. [8] See Notice of Hearing. On August 05, 2019, a Correction of Clerical Error was issued to the parties to note the actual date of hearing as August 09, 2019. [9] Id. Citing Ariz. Rev. Stat. § 41-1092.11(B). [10] See Supplemental Notice. [11] Id. [12] See Registrar Exhibit 6. [13] See Registrar Exhibits 2 and 5; see also Respondent Exhibit A. [14] See Registrar Exhibit 6. [15] Id. [16] See Registrar Exhibit 2. [17] See Registrar Exhibits 2 and 6. See also Respondent Exhibit B. Idaho Code § 54-5215(h) provides, in pertinent part, “The board may investigate any person engaged in contracting within the state of Idaho. Upon receipt of a written complaint from a person who claims to have been injured or defrauded by such person, the board shall perform an investigation of the facts alleged against such person. If the board investigation reveals that the facts alleged or received are sufficient to proceed with a formal action, the board may authorize the filing of an administrative complaint against such person and may seek injunctive relief prohibiting such person from engaging in construction. The board shall have the authority to issue informal letters of reprimand, suspend or revoke a registration, impose a civil penalty in an amount not to exceed one thousand dollars ($1,000.00) or to issue a formal reprimand against any registered contractor if, after an opportunity for a hearing, the board determines that a contractor was grossly negligent or reckless in his conduct in the performance of construction. For purposes of this chapter, conduct is grossly negligent or reckless if, when taken as a whole, it is conduct which substantially fails to meet the generally accepted standard of care in the practice of construction in Idaho.” [18] See Registrar Exhibit 2. Sixty calendar days from July 28, 2009, is Saturday, September 26, 2009; which means Respondent’s fine was either due on Friday, September 25, 2009, or Monday, September 28, 2009. [19] See Registrar Exhibit 1. [20] Id. [21] Id. [22] See Registrar Exhibit 23 and 25-26. A Warning Letter regarding an alleged violation of Ariz. Rev. Stat. § 32-1158(A) was issued to Respondent on February 11, 2019. See Registrar Exhibit 24. [23] See Registrar Exhibits 27, 29, and 30. [24] See Registrar Exhibit 22. [25] See Respondent Exhibits H and I. The Galaz complaint (2019-01736) was closed due to the complainant’s denial of access. See Respondent Exhibits D- F. [26] See Registrar Exhibit 3. Initially, Respondent quoted Mr. Davis $2,500.00 for the project, but agreed to $5,000.00 based on the amount of asphalt that Mr. Davis wanted laid. [27] See Registrar Exhibit 3. [28] Id. [29] Id. [30] Id. [31] Id. Per Investigator Smith, the scope of work in the contract are very vague. The amount of asphalt to be used is not specified, nor is the location. The document just states “hot mix asphalt at $25.00 per yard.” [32] See Registrar Exhibit 3. [33] Id. [34] Id. [35] See Registrar Exhibit 11. [36] Id. [37] Id. [38] See Registrar Exhibit 3; see also Respondent Exhibit G. Ike Acker received final payment from Mr. Davis on behalf of Respondent. [39] See Registrar Exhibit 4. [40] See Registrar Exhibits 4, and 17-19. [41] See Registrar Exhibit 4. A supplemental complaint for 2019-03550 was received by the Registrar on July 15, 2019. [42] See Registrar Exhibit 4. [43] Id. [44] See Registrar Exhibits 4 and 20. Per Investigator Smith, the scope of work in the contract are very vague. The amount of asphalt to be used is not specified, nor is the location. The document just states “hot mix asphalt at $25.00 per yard.” [45] See Registrar Exhibits 4 and 20. [46] See Respondent Exhibit C. [47] See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). [48] See Ariz. Rev. Stat. § 32-1154(D). [49] See Ariz. Rev. Stat. § 41-1092.07(G)(2). [50] 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). [51] See Ariz. Admin. Code R2-19-119(B)(2). [52] See Ariz. Admin. Code R2-19-119. [53] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [54] Black’s Law Dictionary at page 1220 (8th ed. 1999). [55] Ariz. Rev. Stat. § 23-361.01(B) provides that the Attorney General may bring an action in Superior Court against an employer for alleged violations(s) of subsection A.

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