ALJDEC decisions subject to certification as final

2022A-04038-CPA-ROC · Registrar of Contractors · 2023-02-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Arizona Registrar of Contractors,

COMPLAINANT,

Yul Ryan Nelson,

RESPONDENT.

No. 2022A-04038-CPA-ROC (ROOT)

No. 2022A-04041-CPA-ROC

No. 2022A-04042-CPA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 8, 2023

APPEARANCES: Assistant Attorney General Seth Hargraves represented the Arizona Registrar of Contractors. Yul Ryan Nelson, doing business as Nelson Contracting, represented himself. Registrar’s Assistant Chief of Investigations Wes Ellington appeared as a witness.

ADMINISTRATIVE LAW JUDGE: Kay Abramsohn

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Registrar at the Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

Background and Procedure

The Registrar received a contractor complaint (“Complaint”) from Lindsay Milazzo (“Homeowner 1”), wherein Homeowner 1 alleged that on May 2, 2021, she contracted with Oasis Construction Inc., regarding new home construction on N. Michelle Lane in Queen Creek, Arizona. Homeowner 1 named Yul Nelson as the person representing the licensed contractor and also named Nelson Contracting LLC as the construction site owner. The contract amount was stated to be $678,780.00. Construction work started on July 31, 2021 and was completed on February 3, 2022.

The Registrar received a Complaint from Brittany Damiano (“Homeowner 2”), wherein Homeowner 2 alleged that on March 19, 2021, she contracted with Oasis Construction Inc., regarding new home construction on N. Michelle Lane in Queen Creek, Arizona. Homeowner 2 named Yul Nelson as the person representing the licensed contractor and also named Nelson Contracting LLC as the construction site owner. The contract amount was stated to be $581,995.00. Construction work started on March 1, 2021 and was completed on October 31, 2021.

The Registrar received a Complaint from Kevin Mellor (“Homeowner 3”), wherein Homeowner 3 alleged that on April 9, 2021, he contracted with Oasis Construction Inc., regarding new home construction on N. Michelle Lane in Queen Creek, Arizona. Homeowner 3 named Yul Nelson as the person representing the licensed contractor. The contract amount was stated to be $668,000.00. Construction work started on April 11, 2022 but stopped on December 28, 2021.

When Mr. Ellington investigated the three Complaints and conducted the three jobsite inspections, he found that “Oasis” was not performing general contracting but rather, was performing as a sub-contractor performing construction work on the projects under the coordination and direction of Mr. Nelson. At the jobsite inspections on April 28, 2022, on May 4, 2022, and on May 19, 2022, the Homeowners showed their workmanship issues to Mr. Wellington; at the first of the three jobsite inspections, Mr. Nelson admitted that he was the general contractor. As each jobsite proceeded, Mr. Nelson rather than Mr. Teran had the answers to construction and workmanship questions from Mr. Wellington.

On review of the circumstances, Mr. Ellington created his three reports, finding that Mr. Nelson was contracting without a Registrar’s license in the instance of each Complaint that had been filed. Mr. Wellington wrote his narrative including the circumstances of all three projects and concluded that, “at the very least,” Mr. Nelson had needed to have a “B General Contracting” license from the Registrar for constructing the three homes he had contracted to build with Homeowners 1, 2 and 3.

On May 19, 2022, at the last of the three jobsite inspections, Mr. Wellington served Mr. Nelson with three Cease and Desist Orders (C/D Order), one for each of the three projects. Mr. Nelson refused to sign for service of the three C/D Orders; however, Mr. Wellington noted his personal delivery of the three C/D Orders on May 19, 2022.

Each of the Registrar’s issued C/D Orders stated that the Registrar had reason to believe that Mr. Nelson was acting as an unlicensed contractor in violation of Ariz. Rev. Stat. § 32-1151 and/or Ariz. Rev. Stat. § 32-1165 and, further, imposed a civil penalty in the amount of $2,500.00 for the violations. Civil penalties are authorized by statute, Ariz. Rev. Stat. § 32-1151.

Respondent requested a hearing on the charged violations.

The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

Nelson Contracting LLC is registered with the Arizona Corporation Commission as active, as of December 13, 2019, as a “construction” business with Member “Yul Ryan Nelson and Meagan Jean Nelson, Trustees of the Yul and Meagan Nelson Family Trust dated May 20, 2021.” Additionally, both Yul Ryan Nelson and Meagan Nelson are listed as the Managers.

At hearing, the Registrar’s position was that the evidence clearly demonstrates the actions of Mr. Nelson to be the actions of a coordinating general contractor, as defined in statute, and as documented by the inspections and contracts. The Registrar indicated that Mr. Nelson was continuing to develop a large land area in Pinal County according the Pinal County records.

At hearing, Mr. Nelson testified that they had purchased one lot in December of 2019 and had moved to Arizona in May of 2020. Mr. Nelson indicated that once they were here, they purchased a lot and subdivided that lot into 5 lots, pre-selling the homes for those lots. Mr. Nelson argued that he was the developer and seller of the various properties and noted that these Homeowners would not have been there every day when the construction was ongoing. Mr. Nelson noted that they had discovered that Oasis was experienced in construction in the area and hired Oasis, further noting that Oasis personnel speak Spanish and are able to communication with the various subcontractors. Mr. Nelson testified that when Mr. Teran did not know the answers to Mr. Ellington’s questions, he would answer the questions. Mr. Nelson requested consideration regarding the amount of the civil penalty, that it should be more amenable so that he can move forward.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

The Registrar bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses and factors in mitigation of the penalty by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

Ariz. Rev. Stat. § 32-1151 prohibits contracting without a license, providing in relevant part:

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.

Ariz. Rev. Stat. § 32-1121(A)(14) sets forth a “handyman’s exemption” to licensure requirements and provides in relevant part:

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 $1,000.

Ariz. Rev. Stat. § 32-1166.01(B)(4) authorizes the Registrar to assess a civil penalty against a person who has been found to have contracted without a license in violation of Ariz. Rev. Stat. § 32-1151 of “at least $200 for each violation but not more than $2,500 for the multiple violations committed on the same day.”

The credible, substantial, probative evidence established that Respondent violated Ariz. Rev. Stat. § 32-1151.

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that the Registrar affirm the finding that Respondent Yul Ryan Nelson, doing business as Nelson Contracting LLC, violated Ariz. Rev. Stat. § 32-1151.

IT IS FURTHER RECOMMENDED that the Registrar affirm its decision to assess against Respondent Yul Ryan Nelson, doing business as Nelson Contracting LLC, the combined civil penalty of $7,500.00 for the documented activities of contracting without a license.

it is FURTHER recommended that the $7,500.00 combined civil penalty be paid by Respondent in certified funds to the Registrar on or before the effective date of the Registrar’s 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 is forty (40) days after the date of that certification.

-54864001

001

-137160-45720000RECOMMENDED this day, February 28, 2023.

/s/ Kay A. Abramsohn

Administrative Law Judge

Transmitted electronically to:

Martín Quezada, Registrar

Registrar of Contractors

By OAH Staff