ALJDEC

99F-R0019-ROC · Registrar of Contractors · 1999-02-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 27, 1999. APPEARANCES: Ron Blake appeared representing Sun Valley Plumbing Rooter, Inc., Respondent. Montgomery Lee, Assistant Attorney General, appeared representing the Registrar of Contractors (“Registrar”).

ADMINISTRATIVE LAW JUDGE: Kip M. Micuda _____________________________________________________________________ The hearing in this matter was held for the purpose of determining whether the Registrar is justified in taking disciplinary action against Respondent. Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Decision are made:

FINDINGS OF FACT 1. On or about May 28, 1996, Sun Valley Plumbing Rooter, Inc. (“Sun Valley”), Respondent, filed an application for licensure with the Registrar. The application identifies Ralph Anthony La Morte as the Qualifying Party and president of the company. The application fails to identify any other person as being a corporate officer. The preponderance of the evidence demonstrates that Mr. La Morte shouldered the responsibility for preparing the application. The preponderance of the evidence demonstrates also that Kim Senatore was, at the time, the vice- president of Sun Valley. 2. On July 10, 1996, the Registrar issued a L-37 commercial license, No. 114764, to Sun Valley with Mr. La Morte as the Qualifying Party. 3. On or about July 16, 1996, Mr. La Morte pled guilty to a charge of Aggravated DUI, a class 4 felony, in Maricopy County Superior Court. Mr. La Morte was sentenced to probation for a period of 5 years, which included 4 months incarceration and the revocation of his driving privileges. 4. On or about June 20, 1997, Sun Valley filed a second application for licensure with the Registrar. This application also identifies Mr. La Morte as the Qualifying Party and president of the company, and fails to identify any other person as being a corporate officer. In addition, in answer to Question 15 of the application, “has any person in question 9 or 11 been convicted of a felony,” the application states “No.” Similar with respect to the first application, the preponderance of the evidence demonstrates, once again, that Mr. La Morte shouldered the responsibility for preparing this application. 5. On or about July 2, 1997, the Registrar issued a C-37R residential license, No. 125354, to Respondent with Mr. La Morte as the Qualifying party. 6. On or about July 2, 1998, The Registrar received from Respondent a renewal application for its class L-37 license. Accompanying the renewal application was a letter from Mariellen Blidy, Dispatch Manager for Sun Valley. The letter states that Mr. La Morte was convicted of a felony and was, at that time, incarcerated. Ms. Blidy requested a felony disclosure packet, which the Registrar sent her. 7. In light of the renewal application and Ms. Blidy’s accompanying letter, the Registrar conducted a background investigation with respect to Mr. La Morte. In response to the Registrar’s request for information, Mr. La Morte disclosed only a felony conviction entered on or about June 22, 1998. 8. In September 1998, the Registrar received documents from the Maricopa County Superior Court confirming that Mr. La Morte pled guilty to a charge of Aggravated DUI, his second felony conviction, on or about June 22, 1998. The record’s also confirm Mr. La Morte’s 1996 DUI conviction, which he failed to disclose. 9. During the hearing in this matter, Ms. Blidy testified that she and several other employees of Sun Valley have maintained and managed the operations of the company since Mr. La Morte was incarcerated in mid-1998. She testified further that Mr. La Morte has had a very small role in the operations of the company since his incarceration and that the financial benefit he once received from the company has been restricted. Ms. Blidy added that Sun Valley has more than 25 employees, more than 875 customers, and received more than $700,000. in gross receipts in 1997. She added also that Sun Valley has a reputation for outstanding workmanship and customer service, and that the operations of the company have not been affected by Mr. La Morte’s incarceration. Finally, Ms. Blidy emphasized that the employees and customers of Sun Valley depend on the company, regardless of whether Mr. La Morte is a part of the company. Ms. Blidy’s testimony is uncontroverted and found to be credible. Moreover, the preponderance of the evidence demonstrates that, but for Mr. La Morte’s involvement in the company, Sun Valley is a model contractor for its workmanship, its customer service, and its employee and customer loyalty. 10. Also during the hearing, Billy Joe Paulk testified. He related that he supervises the plumbers working for Sun Valley. Mr. Paulk has been involved in plumbing for 15 years. He related also that he has taken appropriate steps to become the Qualifying Party on Respondent’s contractor’s licenses. Nothing in this record indicates that he is unqualified to serve in that role. Mr. Paulk’s testimony is uncontroverted and found to be credible.

APPLICABLE LAW Arizona Revised Statutes (“A.R.S.”) §32-1122(B)(1)(d) states: B. To obtain or renew a license under this chapter, the applicant shall: 1. Submit to the registrar of contractors a verified application on forms prescribed by the registrar of contractors and containing the following information: xxx d. If the applicant is a corporation, an association or any other organization, the names and addresses of the president, vice-president, if any, secretary and treasurer or the names and addresses of the functional equivalent of such officers, the directors and the owners of twenty-five per cent of more of the stock or beneficial interest.

Section 32-1122(D) states: D. To obtain or renew a license under this chapter, each person shall be of good character and reputation. Lack of good character and reputation may be established by showing that a person has committed any act which, if committed or done by any licensed contractor, would be grounds for suspension or revocation of a contractor’s license or by showing that the person was named on a contractor’s license in another state that was suspended or revoked.

Section 32-1154(A) adds, in part, that a holder of a license or a person listed on a license shall not commit the following: 6. Misrepresentation of a material fact by the applicant in obtaining a license. xxx 8. Conviction of a felony. xxx 13. Failure in any material respect to comply with the provisions of this chapter. xxx 20. Subsequent discovery of facts which if known at the time of issuance of a license or the renewal of a license would have been grounds to deny the issuance or renewal of a license.

CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over this matter, pursuant to §32- 1104(A). 2. The Registrar has the burden of demonstrating by a preponderance of the evidence that it may take disciplinary action against Respondent. Cf. Culpepper v. State of Arizona, 187 Ariz. 431, 437-38, 930 P.2d 508 (Ariz. App. 1996). Proof by “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). 3. With respect to Mr. La Morte’s alleged misrepresentation of material facts in obtaining its class C-37R license and renewal of its class L-37 license, the Registrar sustains its burden of demonstrating that Mr. La Morte failed to disclose his 1996 DUI felony convictions; the Registrar demonstrates sufficient evidence that these omissions constitute violations of A.R.S. §32-1154(A)(6). 4. With respect to Mr. La Morte’s felony convictions, the Registrar sustains its burden of demonstrating that Mr. La Morte pled guilty to felony charges in 1996 and 1998; the Registrar demonstrates sufficient evidence of violations of A.R.S. §32-1154(A)(8). 5. With respect to Mr. La Morte’s failure to disclose and identify Ms. Senatore as the vice-president of Sun Valley in any of the three applications to the Registrar, the Registrar sustains its burden of demonstrating violations; the Registrar demonstrates sufficient evidence that these omissions constitute violations of A.R.S. §§32-11254(A)(13) and 32-1122(B)(1)(d). 6. In light of the foregoing, the Registrar also demonstrates Mr. La Morte’s lack of good character and reputation, as required by A.R.S. §32- 1122(D); that Mr. La Morte failed in material respects to comply with the provisions of Title 32, Chapter 10, in violation of A.R.S. §32-1154(A)(13); and, finally, that subsequent discovery of the above facts, which if known at the time of issuance of the two licenses to Respondent, would have been grounds to deny the two licenses, under A.R.S. §32-1154(A)(20). 7. The facts outlined in paragraphs 9 and 10 of the Findings of Fact above are mitigating circumstances that should be considered in assessing discipline.

RECOMMENDED DECISION No doubt, the foregoing provides several grounds for revoking Respondent’s two licenses in this matter. However, the mitigating circumstances are compelling. Sun Valley has more than 25 employees and more than 875 customers. It has a reputation for outstanding workmanship and customer service, and the operations of the company have not been affected by Mr. La Morte’s incarceration. Indeed, Sun Valley is a model contractor for its workmanship, its customer service, and its employee and customer loyalty. In view of these mitigating circumstances, it is recommended that if, within 60 days of the final order entered in this matter, Respondent obtains a Qualifying Party other than Mr. La Morte and Mr. La Morte divests himself of more than 75% ownership of Sun Valley or any successor to that company, then the Director should invoke his discretion and refrain from revoking Respondent’s two licenses in issue. If Respondent fails to fully comply with the preceding two conditions, then the Director should revoke Respondent’s contractor’s licenses. Done this day, February 26, 1999.

_________________________________ Kip M. Micuda Administrative Law Judge

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

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 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826