ALJDEC

99F-1961-ROC · Registrar of Contractors · 1999-07-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 24, 1999. APPEARANCES: COMPLAINANTS: Jim and Carol Howard, on their own behalf. RESPONDENT: by Rolf Micola von Furstenrecht, president and qualifying party, with representation by Baltazar Iniguez, Esq.

ADMINISTRATIVE LAW JUDGE: Anthony Halas _____________________________________________________________________ This matter proceeded to hearing on June 24, 1999, to determine whether Respondent violated state law as alleged by Complainant and as cited by the Registrar of Contractors (Registrar). Based on the testimony and evidence of record, and administrative notice of certain events and documents relative to the history of the case, the following Findings of Fact, Conclusions of Law, and Recommended Decision are made and submitted to the Registrar of Contractors:

FINDINGS OF FACT

1. Complainants Jim and Carol Howard (the Howards) reside at 9915 West Tarrytown, in Sun City, Arizona. They contend that Respondent Rockwell Building Corp., should be responsible for the poor workmanship and abandonment, and their out-of-pocket cost for a fence-building project at that address for which they had contracted with Paul Gialamas (Gialamas) In September, 1998. 2. Rolf Micola von Furstenrecht (Micola) is president and qualifying party for Respondent Rockwell Building Corp. (Rockwell), a corporation holding License No. 138617, Class KB-02, issued September 8, 1998, by the Registrar of Contractors. Micola denies that Rockwell had any business relationship with Gialamas at any time relevant to this complaint sufficient to hold the company responsible for the actions of Gialamas in contracting with Complainants. 3. On or about September 16, 1998, the Howards met with Gialamas for a period of several hours at their home to have him provide an estimate and to discuss his qualifications to build a masonry-block fence on a portion of their property line. After Gialamas and his assistant measured the site on that date, a week later he met again with the Howards and provided them a proposal in the amount of $3200.00, a figure they considered consistent with information they had received from others. 4. The proposal (Exhibit A), dated September 23, 1998, was on the pre-printed letterhead of “APOLLO CONTRACTING CO.”, upon which Gialamas (according to the credible testimony of Mr. Howard) had hand-written “D.B.A. Rockwell Building Corp. 138617”. 5. It was also on September 23, 1998 that Gialamas showed the Howards the actual license, no. 138617, held by Respondent Rockwell, with the assurance that the company could now legally do both commercial and residential contracting. 6. On the basis of Gialamas’ representations, the Howards provided him their check (of which Exhibit B is a photocopy), no. 1009, dated September 22, 1998, in the amount of $2500.00, as a deposit of “two-thirds of fence”. At the request of Gialamas, the check was made out to “Rockwell or Paul Gialamas”, and as Exhibit B confirms, was endorsed and cashed by Gialamas. 7. On the basis of the uncontroverted evidence of record, including the testimony of both Mr. and Mrs. Howard, the four photographs marked and admitted as their Exhibit C, and the testimonial concession by Micola that he had never viewed the jobsite and had no knowledge of any work done, or the extent of the work, or the quality of its workmanship, it is found that work on the fence by Gialamas did not begin until November 12, 1998 (and only after many repeated efforts by Mr. Howard to have Gialamas begin, despite Gialamas’ promises to begin within a week of receiving the Howards’ deposit); that the work completed was to dig and pour the footings only; that the work done was contrary to specification in that it crossed property lines; that the work done was of poor quality and not to minimal workmanship standards; and that the work was then wrongfully abandoned as substantially incomplete, despite the Howards’ more than reasonable efforts to provide Gialamas and Respondent Rockwell the opportunity to complete. 8. The efforts by the Howards to involve Rockwell came about when Gialamas would not respond to complete the fence, and eventually could not be found, such that Complainants telephoned Rockwell Building Corp. (and spoke to Micola), as the company whose license Gialamas had shown them and for whom he assured them he was working. 9. The Howards’ testimony was that in their telephone conversations with Micola he confirmed that Gialamas had done this sort of thing before [i.e. taken money for work to be done, and then not done the work], and that while Rockwell wasn’t involved in the contract to build their fence, Micola would help to find Gialamas, and if Gialamas couldn’t be found, would help to finish the fence. 10. Then, when Gialamas could no longer be found, and Micola would not finish the fence, the Howards filed their complaint with the Registrar on January 4, 1999, while at the same time contracting with another licensed contractor to correct the work already done, and complete the remaining work. 11. The Howards calculated that even if the footings work done by Gialamas was optimistically valued at $700.00, his abandonment of the work had deprived them of greater than the remaining $1800.00 benefit of the contract amount already paid, for which amount they sought restitution. 12. Micola conceded a prior working relationship with Gialamas under Respondent’s name, but under the company’s former license no. 119077. To establish when he ceased working with Gialamas, Micola had marked and admitted as Respondent’s Exhibit 1 correspondence to the Registrar over his signature and on the letterhead of Rockwell Building Corp., stating that “…we have eliminated Paul Gialamas as an officer of Rockwell Builders.” 13. That letter is dated “7-15-98” although Micola conceded that it was his understanding that the Registrar’s office apparently had not received that letter and had no record of the information it contained until some later, unspecified date. 14. Administrative notice of the Registrar’s official records confirms that Respondent’s prior license no. 119077 was issued on November 27, 1996, canceled September 8, 1998, and revoked November 5, 1998. Micola was listed on that license as president and qualifying party; Gialamas was listed as vice-president. 15. Administrative notice is further taken to confirm that Respondent’s license no. 138617 was issued September 8, 1998, with Micola as president and qualifying party, and Peter Overkamp as vice-president. Gialamas is not listed as an officer or principal in the company on that license. 16. Micola testified to describe the apparently acrimonious falling- out he and Gialamas had had sometime about mid-July, 1998, and stated that from that time he had no further business dealings with Gialamas, and had received no money or benefit from jobs Gialamas had apparently contracted for since then, and specifically so on the contract Gialamas had made with the Howards. 17. Micola did not dispute being telephoned by the Howards in their efforts to have their fence built, or that he would - and did - attempt to find Gialamas for them. However, he did dispute ever telling them that he or Rockwell would finish their fence if Gialamas did not. 18. That disputed fact may be reconciled as the result of the differing perceptions and recollections of the two parties over the course of more than one phone call, and it is so found. 19. What cannot so readily be reconciled is why Gialamas had license no. 138617 available for display to the Howards on September 16, 1998, just a week and a day after it was issued. At least based on Micola’s testimony, that was two months and a day after Micola and Gialamas had less than amicably parted and Micola had written the Registrar - but the Registrar had not received - information that Gialamas had been eliminated as an officer of Rockwell. 20. Micola did not dispute that Gialamas did in fact have the license in his possession at the time the Howards stated Gialamas had displayed it to them, but said only that Gialamas would not give him the license when he had demanded it; that Gialamas did not have permission, and was not an agent, of Rockwell in his dealings with the Howards; and that neither he nor the company received any money or benefit from the $2500.00 they had paid Gialamas. 21. Notwithstanding Micola’s disclaimer that Rockwell should not be responsible for the contract between the Howards and Gialamas, it is found that the Howards reasonably contracted with Gialamas on basis of the apparent authority he had to act on the company’s behalf, particularly through his display of the brand-new license. 22. His possession of that license at that time has not been satisfactorily explained on the evidence presented, but is found to be a risk and responsibility to be borne by the business to which the license was issued, and not to members of the general public such as the Complainants reasonably seeking the services of a licensed contractor. 23. For that reason, it is found and determined that Respondent Rockwell, by allowing Gialamas to utilize its license, through inadvertence or otherwise, effectively set in force and effect the actions of Gialamas by which the Howards became victims of his failure to comply with and abide by Arizona’s Contracting laws. As such, Gialamas’ actions in this matter are found properly attributable to Respondent Rockwell Building Corp. 24. As set forth in the Citation and Complaint issued by the Registrar of Contractors, Respondent was advised that in the event of a finding of a violation, Respondent’s prior disciplinary record of final Registrar of Contractor’s orders may be considered in mitigation or aggravation. Accordingly, subsequent to conclusion of the instant hearing, notice was taken of official records of the Registrar of Contractors regarding any prior final disciplinary orders against Respondent and said notice revealed no prior disciplinary actions on the Registrar of Contractor’s current record regarding Respondent’s license at issue, albeit of recent issuance. Therefore, Respondent’s prior record is properly viewed as a matter in mitigation for any disciplinary penalties to be imposed as a direct result of this case.

APPLICABLE LAW

Arizona Revised Statutes (“A.R.S.”) §32-1154.A provides, in relevant part, that a holder of a license or a person listed on a license shall not commit the following:

1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal. … 2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code. … 3. Violation of any rule adopted by the Registrar. … 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. …

The Citation and Complaint names A.A.C. R4-9-108 as the rule charged pursuant to A.R.S. § 32-1154.A.3. That rule provides that all work shall be done in a professional and workmanlike manner, and in accordance with any applicable building codes and professional industry standards.

CONCLUSIONS OF LAW 1. To warrant action by the Registrar pursuant to the statutes above, Complainant must demonstrate by a preponderance of the evidence that Respondent violated any one of the statutory sections cited. Culpepper v. State of Arizona, 187 Ariz. 431, 437-38, 930 P.2d 508 (Ariz. App. 1996). A “preponderance of the evidence” means that the evidence is sufficient to persuade the finder of fact that the proposition is “more likely true than not.” In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). It “is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (rev. 6th ed. 1990). 2. On the basis of the findings above, the undersigned determines that Respondent, through the actions of its agent Gialamas, at least as apparent to Complainants, violated the provisions of A.R.S. §§ 32-1154.A.1, .2, .3; namely A.A.C. R4-9-108, and .7. 3. In matters such as this, the Registrar of Contractors’ authority includes the ability to impose restitution, in whole or part, as a reasonable condition to reduce otherwise-appropriate disciplinary action against contractors. In this instance, the undersigned deems that the Registrar’s exercise of such authority to condition the nature and extent of disciplinary action on restitution would be reasonable. 4. Therefore, based on all the evidence, a reasonable condition in this case would be that Respondent pay Complainants the sum of $1800.00, the amount wrongfully taken by Gialamas, Respondent’s agent for purposes of this matter, as a result of the partially-constructed fence of poor workmanship he abandoned. Such a condition is deemed preferable to simply imposing suspension of Respondent’s license without the conditioned opportunity to reduce or eliminate such suspension.

5. Such an administrative award of damages is not an unconstitutional exercise of administrative authority where due process procedural rights are protected, where the authority to prohibit conduct has been well defined as in A.R.S. § 32-1154, and where judicial review is available as provided in A.R.S. § 12-901, et seq. Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (App. 1990).

RECOMMENDED DECISION

In light of the findings and conclusions above, IT IS RECOMMENDED that the Class KB-02 license of Respondent Rockwell Building Corp. shall be suspended on the effective date of the Registrar’s Order entered in this matter. IT IS FURTHER RECOMMENDED THAT IF Respondent pays or tenders the sum of $1800.00 on or before the effective date of the Order, then the foregoing license suspension shall not be instituted, but instead the license shall be placed on a period of disciplinary probation for one year, commencing, if at all, on the effective date of the Order entered in this matter. Done this day, July 6, 1999.

______________________________________ Anthony Halas Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 1999, to:

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

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826