ALJDEC decisions subject to certification as final

2024A-02658-CPA-ROC · Registrar of Contractors · 2024-08-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Arizona Registrar of Contractors,

COMPLAINANT

Neville Clyde R, Clyde Russell Neville

License No.

RESPONDENT

No. 2024A-02658-CPA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 16, 2024

APPEARANCES: Assistant Attorney General Charles Hover III appeared on behalf of the Arizona Registrar of Contractors (Registrar). Clyde Russell Neville (Respondent) appeared on his own behalf.

ADMINISTRATIVE LAW JUDGE: Amy M. Haley

EXHIBITS ADMITTED INTO EVIDENCE: Administrative Notice was taken of the Notice of Hearing packet and all of its documents contained therein. Registrar’s exhibits 1 through 3 were admitted.

_____________________________________________________________________

Respondent appealed a Civil Citation issued by the Registrar for contracting without a license. The Civil Citation imposed aggregate civil penalties in the amount of $2,500.00. Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law, and Recommended Order are made.

FINDINGS OF FACT

Background

Respondent is not a licensed contractor in the State of Arizona.

On or about October 10, 2023, the Town of Prescott Valley Building Department advised Investigator Jim Dimond by email that it believed Respondent was engaging in contracting without a license at the address of 9670 E. Towago Drive, Prescott Valley, AZ. 86314 (Property).

The building officials provided additional documents pertaining to the Property. They further advised that a stop work order had been placed at the jobsite due to unpermitted work. The building officials further stated to Investigator Dimond that Respondent was “running the project” and failing to construct the home in accordance with plans and was creating costly errors for the owner.

The matter was assigned to Investigator Dave Thomas who gathered additional information and documents with regard to the allegation of contracting without a license.

According to Investigator Thomas’ notes, on January 10, 2024 Investigator Dimond received an email from Gary Fortune of Custom Quality Homes (CQH) stating that Respondent draws plans, submits for permits, and schedules inspections. The note further stated that there was no mention of the purchasing of construction materials by Respondent.

On September 18, 2021, Respondent and Charles Leon (Chuck) entered into an agreement that read as follows:

IT IS MUTUALLY AGREED UPON THAT CHARLES LEON & KAY LEON ALONG WITH CLYDE NEVILLE AND LINDA NEVILLE HAVE ENTERED INTO AN AGREEMENT ON THE PROPERTY AND A SIMI-CUSTOM HOME, TO BE BUILT AT 9670 E. TOWAGO DR. PRESCOTT VALLEY, AZ 86314, APN 402-21-509...THE FINANCES FOR THE PROPERTY & HOME WILL BE THE RESPONSIBILITY OF CHUCK LEON. THE CONSTRUCTION OF THE RESIDENCE WILL BE THE RESPONSIBILITY OF CLYDE NEVILLE. UPON THE SALE OF THE PROPERTY AND AFTER ALL EXPENSES HAVE BEEN PAID IN FULL, THE BALANCE WILL BE DIVIDED BY CHUCK LEON AND CLYDE NEVILLE AT 60% TO CHUCK LEON AND 40% TO CLYDE NEVILLE.

All errors contained in original.

Investigator Thomas’ notes also indicated that Respondent had been convicted of contracting without a license on August 17, 2022 in Yavapai County and that Respondent’s ROC license #091790 was revoked in 1995 and license #091797 was revoked in 1997.

On or about March 5, 2024, Investigator Thomas issued a Cease and Desist Order (Order) as well as a civil citation for violation of A.R.S. § 32-1151, contracting without a license, and assessed a civil penalty of $2,500.00.

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

The Registrar issued a Notice of Hearing, stating the issue to be decided involved A.R.S. § 32-1166 and 32-116.01.

A hearing was held on August 16, 2024. The Registrar presented the testimony of Investigator Thomas and submitted three exhibits.

Investigator Thomas testified that a review of the evidence gathered on his own accord, but also from the Town of Prescott demonstrated that the named owner of the Property on all of the documents was Chuck. Investigator Thomas further testified that when he asked Respondent for proof of ownership of the Property, Respondent provided him with a Partnership Agreement document that did not address ownership.

Respondent testified on his own behalf. Respondent testified that he was the owner of GC Construction Consultant and had been building “in the area” for many years. He testified that he had previously had a license on prior projects. Respondent testified that the Town of Prescott required an “agent letter,” signed by the owner, which was why he completed those documents. He further stated that the “partnership papers [were] a legal document.” Lastly, he stated that he did not spend any money on products for the project and never purchased any of the products required for the project. Respondent testified that the “owner or contractor” paid for those items.

Chuck testified on behalf of Respondent. Chuck testified that he was the homeowner and that he had not been harmed financially or personally in any way. He further testified that he signed the LOA and that he has personally paid for all of the items necessary to build and complete the project. He stated that, as a partnership, everything was done with both his approval and Respondent’s approval. Lastly, Chuck testified that the red-tags had been lifted as all violations had been complied with.

Randy Instine of CQH, the general contractor, testified on behalf of Respondent. He testified that Respondent had not directed any of the subcontractors in any way and that Respondent was helping with the design work and permitting process.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq.

The Registrar bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See A.R.S. § 41-1092.07(G)(2); 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). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).

Arizona contracting law prohibits a person from acting as a contractor without a license. The Registrar can order a person who performs contracting without a license and who is not exempt from licensure to cease and desist such activity.

A.R.S. § 32-1151 provides 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.

Emphasis added.

A.R.S. § 32-1101(A)(3) defines “contractor” as including “subcontractors, specialty contractors, floor covering contractors, hardscape contractors and consultants who represent that they are able to supervise or manage a construction project for the property owner's benefit, including hiring and firing specialty contractors, scheduling work on the project and selecting and purchasing construction material.” (Emphasis added.)

Here, the evidence established that Respondent was a consultant who ultimately managed the construction project. By Chuck’s testimony, everything was done with both his and Respondent’s approval. This would, then, necessarily include the selection of construction material.

The question then turns to whether this management of the construction project was done for the “property owner’s benefit.” Undoubtedly the property owner, Chuck, stood to gain a benefit upon the completion and sale of the project. However, Respondent did too. When drafting A.R.S. § 32-1151, the legislature anticipated scenarios in which the property owner paid the contractor for its work, similar to a customer-business relationship. Here, although Respondent was not technically the owner of the property, Respondent and the owner of the property had engaged in a partnership wherein Respondent stood to benefit from the completion and sale of the project, just as the property owner would. There was no evidence presented to suggest that Respondent was being compensated in any other way other than the ultimate sale of the Property. In this regard, although Respondent was not technically an owner of the property, both the property owner and Respondent stood to benefit from the project, in the same manner, at the same time.

By the letter of the law, the evidence established a violation of Arizona contracting laws, specifically of A.R.S. § 32-1151 in that Respondent was a consultant that managed the project for the property owner’s benefit. However, given the aforementioned circumstances, this Administrative Law Judge recommends that the minimum civil penalty allowable by law of $200.00 be imposed.

RECOMMENDED ORDER

Based upon the foregoing, it is recommended that the Registrar affirm the finding that Respondent violated A.R.S. § 32-1151 and assess a civil penalty of $200.00 to be paid 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 will be forty (40) days from the date of that certification.

-54864001

001

-137160-45720000Done this day, August 29, 2024.

/s/ Amy M. Haley

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

By: OAH Staff