ALJDEC

99F-M1521-ROC · Registrar of Contractors · 1999-12-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 26, 1999 APPEARANCES: Richard Chambliss, Esq. for the Complainants; Val Tsoukanov for Respondent ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________ FINDINGS OF FACT On March 2, 1999, Christian and Leonard Soto (“Complainants”) entered into a contract (“Contract”) with John Fontana of Fountain Valley Builders (“Fountain”) for remodeling of their home ( the “Home”). The Contract provided that Fountain would remodel the Home for the sum of $23,362.30. Complainants were referred to Fountain by Broad Street Mortgage Company, their mortgage company. Complainants closed on the Home at the end of March, 1999. At closing, the sum of $16, 951.65 was held in escrow, of which $13,362.30 was to be paid to a licensed contract for remodeling of the Home, and the remaining amount was to be applied to the inspection fee, a contingency reserve, the plan review and supplemental origination fee. The sum of $16,951.65 still remains in the escrow account. The evidence of record established that on December 15, 1998, Respondent and Fountain entered into an agreement (the “Agreement”) that provided for Respondent to do business as Fountain under License Number 129605, Respondent’s contractor’s license. Val Tsoukanov (“Mr. Tsoukanov”), Respondent’s owner, was introduced to Joseph Fontana (“Mr. Fontana”) of Fountain, by Mike Psaro (“Mr. Psaro”), a former employee of a mortgage company. According to Mr. Tsoukanov, Messrs. Psaro and Fontana were looking for a general contractor to whom they could refer homes that required construction in return for compensation. Mr. Tsoukanov provided Mr. Psaro with his letterhead stationary so that Mr. Psaro could draft a letter (Exhibit 4) to be provided to the mortgage company that was going to refer work to Respondent. The letter, (Exhibit 4), dated December 15, 1998, was drafted by Mr. Tsoukanov and signed by Mr. Tsoukanov. It states that: “This letter is provided as evidence of TAM CONSTRUCTIION LLC will be doing business as Foutain (sic)Vally(sic) Builders a Delaware Corporation and inclusive of General Contractors License AZ No. 129605 as to its rights and privileges. It is undisputed that a copy of the above-mentioned letter was provided to Complainants by Broad Street Mortgage. Mr. Tsoukanov testified that subsequent to his signing and delivering the above-mentioned letter (Exhibit 4) to Mr. Psaro, he never drafted or sent a letter to anyone disassociating himself or T A M Construction L LC from its business relationship with Mr. Fontana or Fountain. No work has been done to the Home with respect to remodeling despite Complainants’ repeated requests to Fountain and the Respondent for such work to be accomplished. As a result of such inaction, Complainants filed a complaint against Respondent’s license in the name of TAM Construction and Fountain with the Registrar of Contractors on June 22, 1999. After filing of the above-mentioned complaint, Complainants learned from the Registrar of Contractors that Fountain was an unlicensed contractor and that it was using the license of the Respondent. Mr. Tsoukanov testified that, in his opinion, the work set forth in the Contract, would cost more than the contract amount of $13,362.30. Since close of escrow on the Home, Complainants have been making monthly mortgage payments on the Home’s mortgage and have not and cannot move into the Home until it is remodeled. Mrs. Soto credibly testified that the Home is not livable in its current condition and requires remodeling inclusive of electrical and plumbing work in order for the Home to be habitable. It is undisputed that Complainants and Mr. Tsoukanov never personally dealt with each other until after Complainants filed the complaint with the Registrar of Contractors. 14. During the hearing, Mr. Tsoukanov testified that he had no knowledge of the Contract until Complainants filed with the Registrar of Contractors a complaint against his license. 15. Mr. Tsoukanov testimony, as set forth above, is determined to be credible. 16. Mr. Tsoukanov contends that he is not responsible for the Contract because he was not a party to the Contract, he never performed an inspection of the home to bid on the remodeling, and that Mr. Fontana used his license without permission. Mr. Tsoukanov also contends that the agreement Respondent had with Fountain is illegal and therefore unenforceable. 17. The evidence of record establishes that Mr. Tsoukanov, on behalf of Respondent, set the force in motion whereby Fountain could represent to the public that Respondent was doing business as Fountain. By such action, Respondent placed the public in the position of being harmed by Fountain. Thus, unless Respondent took appropriate action to notify the public, including those individuals who may been approached by Fountain concerning construction projects, Respondent is obligated to honor the work contracted for by Fountain while Fountain was using Respondent’s license. It is irrelevant that Mr. Tsoukanov never received any monies from Joseph Fontana or Fountain concerning any construction project, including the remodeling of Complainant’s home. 18. It is determined that the above-mentioned activities of Respondent amounts to the aiding and abetting of an unlicensed contractor, Fountain. 19. Administrative/Judicial Notice is taken of the licensing records of the Registrar Of Contractors revealing that Respondent’s license was canceled on November 24, 1997. Thus, Respondent’s license was canceled prior to execution of the Agreement and prior to execution of the Contract. CONCLUSIONS OF LAW The evidence of record establishes that Respondent violated the provisions of A.R.S. §32-1154(A)(1),(7)(10), and (15). RECOMMENDED ORDER Based on the above, it is recommended that on the effective date of the Order entered in this matter, Respondent’s Class B license be revoked unless on or before the effective date of the Order, the Respondent causes a currently properly licensed contractor to perform the work set forth in the Contract. It is further recommended that if Respondent complies with the above on or before the effective date of the Order entered in this matter then no license revocation shall be imposed but that the Class B license of Respondent be placed on disciplinary probation for a period of sixty days, such alternative penalty to commence on the effective date of the Order entered in this matter. Done this day, December 10,1999

______________________________________ Lewis D. Kowal Administrative Law Judge

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

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

ATTN: Joyce Armijo

By ___________________________

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