ALJDEC - Licensing

2023A-03632-LDA-ROC · Registrar of Contractors · 2023-09-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Arizona Registrar of Contractors,

COMPLAINANT

Circuit Tron Corporation

License No. ROC 093244,

RESPONDENT

No. 2023A-03632-LDA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 25, 2023

APPEARANCES: Assistant Attorney General Mona Baskin represented the Arizona Registrar of Contractors. James Hanson, Esq. represented Respondent Circuit Tron Corporation.

ADMINISTRATIVE LAW JUDGE: Brian Del Vecchio

FINDINGS OF FACT

Circuit Tron Corporation (Respondent or Applicant) holds CR-67 license number 093244 issued by the Arizona Registrar of Contractors (Registrar).

Samuel Troy Laughlin owns and controls Respondent. Mr. Laughlin is a person named on the CR-67 license for Respondent.

On January 28, 2020, Liberty Mutual sent a Notice of Cancellation and/or Termination regarding Respondent’s bond, license number 093244, to the Registrar.

The bond for license number 093244 expired on March 11, 2020.

On March 23, 2020, the Registrar issued a Notice of License Suspension for lack of bond or insufficient bond.

On March 26, 2020, the Registrar received evidence of a new bond for License No. 093244, which was effective date of March 25, 2020.

On January 10, 2023, Respondent submitted a Qualifying Party Exemption Application to the Registrar that is the subject of this Notice of Qualifying Party Exemption Denial.

On April 17, 2023, the Registrar issued a Notice of Hearing setting the matter regarding Respondent’s Application for hearing on May 23, 2023. The NOH provided that the issue set for determination was the Notice of Qualifying Party Exemption Denial, the Registrar denied Respondent’s Application for Exemption from Qualifying Party Requirements based on Respondent’s failure to meet the requirements of Ariz. Rev. Stat. § 32-1125(C). After two continuances a hearing was held on August 25, 2023.

At hearing, the Registrar presented the testimony of its General Counsel, Chance Peterson, and its Chief of Licensing, Julie Pickerill. The Registrar’s Exhibits 1 through 7 were admitted along with its administrative record. Respondent presented the testimony of Mr. Laughlin and submitted Exhibit 4, Bates CIRCUIT000027.

Respondent’s former bond provider notified Ms. Pickerill in writing that Respondent’s bond for CR-67 license number 0932344 was pending cancellation. There was a 12 day delay between the cancellation and the effect of the cancelled bond on Respondent’s license. The reason for the delay was due to increased process times. Respondent was contacted via phone, email, and regular mail regarding the suspension of their license. The Notice of License Suspension letter informed Respondent they are “prohibited from contracting while your license is suspended.” The Respondent’s qualifying party exemption application was denied because the suspension meant Respondent was unable to contract for two days in the 5 years prior to the application.

Respondent’s Qualifying Party Exemption Application was sent to Mr. Peterson for review. Mr. Peterson was responsible for validating the data associated with the Registrar’s Notice of Qualifying Party Exemption Application. Mr. Peterson determined the administrative suspension precluded the Registrar from granting Respondent’s application because during the days in which Respondent’s license was suspended it was unable to contract. Mr. Peterson interpreted Ariz. Rev. Stat. § 32-1125(C)(1) is to take section (C) subsection (1) as a phrase in its entirety as opposed to parsing out each individual word within the subsection. Mr. Peterson testified if he had to parse each word within the interpreted Ariz. Rev. Stat. § 32-1125(C)(1), “valid” means license was issued, “active” means not placed on inactive status or suspended or revoked, “legally able contract” is self-evident, and “entire five-year period” means continuous throughout five years. Finally, Mr. Peterson testified the qualifying party exemption is a unique and extraordinary status within the Registrar; less than 4% of active licenses hold a qualified party exemption.

Respondent’s counsel argued when the Registrar analyzed Ariz. Rev. Stat. § 32-1125(C)(1), the statute ought to be analyzed with each individual phrase independent of one another. Specifically, the phrases “valid,” “active,” “legally able to contract,” and “past five years.”

Samuel Troy Laughlin is the owner and operator of Respondent. Larry William Studley, was the former owner and qualifying party of Respondent, however, Mr. Laughlin purchased Respondent from Mr. Studley in 2016. There have been no complaints submitted to the Registrar in the history of the company. Mr. Laughlin testified he sought the qualifying party exemption because having the qualifying party exemption makes succession of his business is easier. When Mr. Laughlin submitted the Qualifying Party Exemption Application, he would have certified Respondent complied with Ariz. Rev. Stat. § 32-1125(C). Mr. Laughlin was aware Respondent’s license was administratively suspended in March of 2020 for lack of a bond, but he did not believe due to the short period of time in which it was suspended that it would affect Respondent’s ability to obtain the qualifying party exemption. The reason the bond lapsed was due to the fact that the original bond company required full financial disclosures before it would issue a continuing bond. The original bond company had an onerous process to issue the new bond and as a result Mr. Laughlin sought a new bond company which issued Respondent’s bond the day he requested said bond. The day Mr. Laughlin requested the new bond was March 25, 2023. Mr. Laughlin was aware that, during the two days between the Notice of License Suspension and the acquisition of a new bond, Respondent was unable to contract.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Respondent bears the burden of proof to establish statutory violations by a preponderance of the evidence.

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

The law at issue is Ariz. Rev. Stat. § 32-1125(C), which requires that a “licensee must show to the satisfaction of the registrar that during the past five years the licensee: (1) [h]eld a valid and active license and could legally contract under this chapter for the entire five-year period.”

The Registrar established by a preponderance of the evidence that Respondent failed to maintain a valid and active license which prevented it from contracting during the five-year period prior to its Qualifying Party Exemption Application. Respondent admitted its bond expired and, for a period of at least two days, its license was administratively suspended.

Mr. Peterson contended that the interpretation of Ariz. Rev. Stat. § 32-1125(C)(1) was taken a whole; however, Respondent argued each word within Ariz. Rev. Stat. § 32-1125(C)(1) must be interpreted separately. Under either interpretation, Respondent is unable to overcome the fact that it was unable to contract continuously during the five-year period prior to the Qualifying Party Exemption Application.

While it may be true Respondent was granted license number 093224 nearly 20 years prior to its Qualifying Party Exemption Application, this is the only element Respondent meets. Respondent’s license was not active by force of law due to the administrative suspension for lack of bond. Because Respondent’s license was not active due to the suspension for lack of bond, Respondent could not legally contract for at least two days in the five years prior to the Qualifying Party Exemption Application. Therefore, the Registrar rightfully denied Respondent’s Qualifying Party Exemption Application.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the Registrar’s Registrar’s Notice of Qualifying Party Exemption Denial be affirmed.

Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.

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 forty (40) days from the date of that certification.

Done this day, September 14, 2023.

/s/ Brian Del Vecchio

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Cindy Casaus

Interim Director

Registrar of Contractors

c/o Legal Department

1700 W. Washington Street, Suite 105

Phoenix, AZ 85007

[email redacted]

Circuit Tron Corporation

[email redacted]

Mona Baskin

Office of the Attorney General

Licensing & Enforcement Section

[email redacted]

James Hanson

Lang & Klain, P.C.

[email redacted]

By: OAH Staff