ALJDEC

98F-R0026-ROC · Registrar of Contractors · 1998-05-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 1, 1998 APPEARANCES: Complainant was represented by Assistant Attorney General, Montgomery Lee and Respondent appeared through its owner and qualifying party, Patrick Sullivan. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record in this matter, the following Findings of Fact, Conclusions of Law, and Recommended Order are made:

FINDINGS OF FACT

1. Respondent is the holder of a Class B license issued by Complainant. Complainant alleges that Respondent violated the State’s Contracting laws by utilizing an unlicensed contractor and the facts surrounding said claim are discussed in the findings below. 2. The following salient facts were adduced at the hearing and are important to note: a. Respondent was the general contractor hired to accomplish significant remodeling on a residential structure. The contract price for the project was approximately $75,000.

b. It was undisputed that Respondent retained the services of an individual, Zero Love (hereinafter “Love”), to perform specified tile installation on the project in question. c. It was further undisputed that Love was not, and never has been, a licensed contractor. Respondent averred that he knew Love was not a licensed contractor. d. The contract arrangement between Love and Respondent provided that Love would furnish the labor, as an independent contractor, to install the tile and would be paid by Respondent on a daily rate of $100.00 per day. It was contemplated that the tile job would last 7 days and thus, Love would be paid a total of $700.00. e. Sometime into the project, Love made an arrangement with the owner of the project for additional tile work. Respondent agreed to act as the general contractor on said additional aspect of the project and thus, would receive all extra monies from the owner and pay Love the additional sums. This modification of the contract was contemplated to bring Love’s total payment for his work on the project up to approximately $1,000.00. f. Respondent paid Love $700.00 for the initial work on the project. However, when the contract price between Love and Respondent rose above $700.00, Respondent refused to pay the additional $300.00 unless and until Love signed an “employee packet” with Respondent’s business office. Love refused to sign any portion of this so-called “employee packet” and thus, Respondent refused to pay Love the additional $300.00. g. Love filed a complaint against Respondent with the Registrar of Contractors, alleging non-payment for services rendered. It was at this point that the Registrar became aware that Respondent had utilized an unlicensed contractor (Love) on the remodel project. 3. Respondent contends that applicable Arizona law allows him to utilize an unlicensed subcontractor if the amount of the contract is less than $700.00. He made reference to a law which he referred to as “casual- labor law” which allows him to utilize such an unlicensed individual. Respondent was unable to provide a specific citation for any such section of the State law. 4. Subsequent to concluding the instant hearing, Respondent’s prior record with the Registrar of Contractors was reviewed for purposes of determining any mitigation or aggravation to be applied to possible disciplinary penalties to be imposed as a direct result of the instant case. Respondent was shown to have only been licensed for less than three years and to have had several complaints, in addition to the instant complaint, already filed against him. Therefore, Respondent’s prior record is deemed to be poor and thus, is viewed as a matter in aggravation for any disciplinary penalties to be imposed as a direct result of this case.

CONCLUSIONS OF LAW

1. A.R.S. §32-1121 lists persons not required to be licensed under the State’s Contracting laws. Although there is a specific provision, commonly known as the “handyman exemption” providing that an individual may perform construction related work if the amount of the contract is less than $750.00, under A.R.S. §32-1121 (14) (b) said statutory exemption does not apply to those situations wherein the work in question is part of a larger project. Thus, Love was not eligible to perform the work in question under the handyman exemption due to the fact that the work in question was part of a larger project (i.e. $75,000.00 remodel job). 2. Contrary to Respondent’s belief that there is some “casual-labor” law in Arizona which allowed him to utilize unlicensed subcontractors if his contract with them is less than $700.00, Respondent, as the licensed general contractor on the project is never allowed, under the law, to hire unlicensed subcontractors to perform portions of the work that he has contracted to perform. 3. Notwithstanding the fact that Respondent believed that the law allowed him to utilize an unlicensed subcontractor, the applicable law against aiding and abetting an unlicensed contractor states, in pertinent part, “knowingly combining or conspiring with an unlicensed person…” (emphasis added). A.R.S. §1-215 (12) defines the word “knowingly” as “importing only a knowledge that the facts exist which bring the act or omission within the provisions of the stature using such word. It does not require any knowledge of the unlawfulness of the act….” Thus, under all of the salient facts presented herein, it is determined that Respondent violated the provisions of A.R.S. §32-1154A (10). 4. Although the instant citation and complaint included a charge that Respondent violated the provisions of A.R.S. §32-1154A (13), the citation is silent regarding what separate provision of the chapter Respondent was alleged to have violated. Without such a reference to a separate provision of the chapter, it is not possible to find any violation of A.R.S. §32-1154A (13). This section of the State’s Contracting laws cannot stand alone as a mere general allegation that a contractor has violated some unspecified section of the State’s Contracting laws. 5. Respondent was not shown to have violated A.R.S. §32-1154A (14) in light of the determination that said section of the State’s Contracting laws applies to using licensed contractors to perform work in areas of construction that are beyond the scope of their license, not merely a statutory provision that duplicates the same intent as the provisions of A.R.S. §32-1154A (10).

RECOMMENDED ORDER

In view of the foregoing, it is recommended, commencing on the effective date of the Order entered in this matter, that the Class B license of Respondent shall be placed on a period of disciplinary probation for 180 days. It is further recommended, in addition to the above provided penalty, that Respondent’s right to continue contracting, whether or not probationary, shall be subject to a condition that Respondent first post an additional surety bond, cash deposit or alternative deposit for a period of twenty-four (24) months, including future renewal periods, in the amount of $1,500.00, such bond or deposit to be for the sole benefit of persons injured as defined in A.R.S. § 32-1131 (3) and to be in addition to the required surety bond, cash deposit or recovery fund participation set forth in A.R.S. § 32-1152 (D). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two year period following the above-provided twenty-four (24) month period and only if no claims are then pending.

Done this day, May 4, 1998.

_______________________________ MARK A. SILVER Administrative Law Judge

Original transmitted by mail this ____ day of May, 1998, to:

Mr. Michael P. Goldwater, Director Registrar of Contractors ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By _______________________________

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Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826