ALJDEC

99F-2920-ROC · Registrar of Contractors · 1999-10-12

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Pursuant to notice, a formal hearing was held in this case on October 8, 1999, in Phoenix, Arizona, before Neal H. Jordan, Administrative Law Judge of the Office of Administrative Hearings. APPEARANCES For Complainant: Douglas Flynn, President For Respondent: Mark Rumsey, Vice President

FINDINGS OF FACT Based upon all the evidence of record, the following findings of fact are determined: Complainant is an Arizona corporation and was issued a Class B-05 license as a general swimming pool contractor on January 20, 1988. Complainant’s business operations are primarily conducted in Maricopa County. Respondent, also an Arizona corporation under the name of Carelle, Inc., dba, Sonoran Springs and Spa, was issued a Class B-05 license on March 5, 1999. Likewise, the business operations of Respondent are primarily conducted in Maricopa County. The complaint in this matter is dated April 19, 1999 and was filed with the Registrar of Contractors of the same date. The basis for the complaint is that the Respondent’s name is so similar that confusion will result among trade contractors and suppliers, as well as with the general public when attempting to identify one from the other. Both entities have selected and emphasize the first word of the name. “Sonoran” is identical in both names, and the only differentiation between the two names is the insertion of the word “Springs” and the addition of the tag word “Spa” in the trade name of Respondent. The issue raised by the name selected by Respondent is whether such name is so similar that it may or will likely cause confusion with the name of Complainant. Complainant has presented persuasive evidence that misdirected telephone calls and billing invoices have already been received due to a confusion in the names of both parties.

CONCLUSIONS OF LAW The Office of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to A.R.S. §41-1092 - 1092.12 (1998). The Complainant has brought this complaint and accordingly bears the burden of proving by a preponderance of the evidence that the allegations contained therein are true. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (Ct. App. 1996); Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985), (the standard of proof is that of the “preponderance of evidence.”) A.A.C. R4-9-109(E) provides that “The registrar may not accept an application, issue a license, or change the name of an existing license if the proposed name is identical with, or in the opinion of the registrar, so similar it may cause confusion with a name on a pending application or existing license.” (Emphasis added). The definition of “confuse” includes mistaking one thing for another. See The American Heritage Dictionary (3d ed. 1996). Thus, if the use of the name “Sonoran” causes or creates a circumstance that leads to mistaking one use of the name for another who is using the same name, then a priori confusion results. The issue is not whether the word “sonoran” is a generic term and is, therefore, available for use by any future licensee. The issue is whether future license applications seeking to use identical generic or descriptive works already in use ought or must be rejected based on the question of fact test that there is a danger of confusion with an existing name on another license. While competitors may by allowed to use generic, descriptive or geographic words in their promotional literature or advertising about products and services, the use of such words should be restricted for use in business names when the result may lead to public confusion as to who they are doing business with at any given time. It is not necessary to establish that actual confusion exists. It is sufficient if the proposed and existing names are so similar that there is a likelihood or probability of confusion in the minds of the contracting or homeowner public. In this case, the primary areas of operation of both entities are covered by the same telephone directories, the same territory, and the license classifications are identical. Moreover, Complainant has established that a degree of confusion already exists by misdirected telephone calls and billing invoices. Despite Respondent’s protestations to the contrary, more and continuing instances of such confusion will likely result simply because of the similarity of the names. Certainly Respondent has cause to express concern about the inconvenience and difficulty in changing a name, especially after a period of time has passed in which a certain amount of good will has already been established. However, it was established that Respondent did not conduct a due diligence investigation as to the same or similar names when selecting the one on its license. Such an effort would have been minimal by requesting from the Registrar of Contractors an information printout listing all similar names then being used. Further, any prior permission or authorization, express or implied, on the part of the Registrar of Contractors arising from the issuance of the license to Respondent is not such action as to estop or preclude the agency from taking subsequent appropriate action to cure a name confusion situation when it is subsequently found to exist. To the extent that the Registrar of Contractors has, in the past, permitted or approved the use of business names with equal of greater similarities, such practices cannot be countenanced in light of the overriding statutory obligation placed upon the agency to avoid granting the use of confusingly similar names on contracting licenses. No vested rights in and to the use of any improperly approved name may be acquired, but rather, a correction of any inappropriate approval, albeit belatedly, should be mandated. It has not been demonstrated that Respondent intended to unfairly trade upon Complainant’s name and good will built up over the past eleven years, or to have acted in bad faith when selecting the name to be used. Had Respondent conducted a due diligence investigation as to name similarities, then by its own admission another name would have been selected. Respondent’s corporate name is clearly not confusing, and may be retained during all periods of licensure provided that the trade name under which Respondent is conducting business is properly changed on the license and on the license bond. A reasonable period of time should be afforded to Respondent to effectuate a name change. Such period of time should not be allowed to extended beyond the next renewal date of Respondent’s license in March, 2001. The evidence of record supports a conclusion that the name on the license issued to Respondent is confusingly similar to the name previously issued to and in continuous use by Complainant. Under A.A.C. R4-9-109(E), the Registrar of Contractors may not allow the business names of Complainant and Respondent to be used similtaneously so as to comply with the meaning and intent of the this rule. The facts and conclusions of this case do not warrant the imposition of any disciplinary penalties against Respondent, the requirement to change its name being penalty enough. So long as the likelihood of confusion is removed by the adoption of another acceptable and available business name, Respondent’s contracting activities should be allowed to continue unabated and without bemish.

RECOMMENDED ORDER In view of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Registrar of Contractors not renew the Class B-05 license of Respondent under its present trade name beyond the renewal date of March, 2001, unless on or prior to said date, Respondent completes the necessary steps to change the trade name by which it presently is conducting its business to another available name. In this regard, Respondent shall not be required to change its corporate name and any fees to accomplish such a name change that would otherwise be charged by the Registrar of Contractors should be waived.

DONE AND ENTERED this day, October 12, 1999

______________________________________ Neal H. Jordan 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 ___________________________ -----------------------

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