ALJDEC

99F-UA0117-ROC · Registrar of Contractors · 1999-06-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 2 and 4, 1999 APPEARANCES: Victoria Mangiapane, Assistant Attorney General, on behalf of the State Eric Vanni, Defendant, in his own behalf ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________

Preliminary Matters This matter was initially heard on June 2, 1999, at which time the record closed. At the time of the hearing, the State had copies of tape recordings of the record of a civil case in East Phoenix Justice Court, relevant to issues in the instant hearing. The parties stipulated that notes of the tape recordings made by Inspector Garner of the Registrar of Contractors could be admitted into evidence (State’s Exhibit 1), rather than the tapes. Upon close of the record and review of the notes, the Administrative Law Judge concluded that there was a potential for significant conflict between the notes and the testimony of the Defendant. In light of this, an Order Reopening the Record was issued on the motion of the Administrative Law Judge. A telephone conference was held with the parties on June 4, 1999. At that time the tapes of the Justice Court proceedings were admitted into evidence over objection of the Defendant. The tape of a telephone conversation between Inspector Garner and the Defendant was not admitted into evidence and therefore was not considered for the purpose of this Recommended Decision.

Findings of Fact Eric Vanni (Vanni), dba TNT Restoration (TNT), generally does contracting work under the “handyman” exemption of A.R.S. §32-1121(A)(4). Mike Moser (Moser), a friend of Vanni’s, was building a personal residence in Chino Valley, Arizona and contacted Vanni about the installation of the electrical system. Vanni reviewed Moser’s floor plan, diagrammed the electrical system for the home and prepared a list of the materials that would be required. Vanni reviewed this list with a salesman for Brown Wholesale Electric Company (Brown). Moser obtained the materials from Brown and in the spring of 1998, Vanni went to Chino Valley to begin the electrical work. Vanni made at least one and possibly two additional trips to do work at the Moser residence. Subsequently, after failure to satisfactorily resolve billing issues after a mistake by Brown in properly crediting the TNT account, Brown filed suit against Moser and Vanni as co-defendants for supplies provided. The case was heard in East Phoenix Justice Court. After the case in Justice Court, the attorney for Brown contacted the Registrar of Contractors (Registrar) and asserted that based on the testimony in the civil case, Vanni was contracting without a license. Information provided by counsel for a party opponent in a civil proceeding is suspect and absent corroboration would not be considered reliable evidence. The case was assigned to Inspector John Garner (Garner) of the Registrar’s office for investigation. Based on his investigation, Garner concluded that Vanni had done the electrical work for $750.00 for services and that materials for the work cost approximately $1,500.00. The parties to the instant hearing stipulate that this cost estimate for electrical materials is appropriate. Garner issued Vanni a citation for contracting without a license. A fine of $1,500.00 was assessed as a part of the violation which was alleged. As a consequence, Vanni requested the instant hearing. The record of the Justice Court proceedings shows that Vanni submitted the list of materials and reviewed them with a salesman for Brown. It also showed that Moser and Vanni had an agreement for Vanni to do the electrical work for $750.00 (for Vanni’s services). Although this amount was not paid, Moser paid Vanni for materials from Brown and other suppliers. In the instant hearing, Vanni testified that he and Moser had no agreement for payment for work and that he, (Vanni), provided the services without any initial charge because Moser was a friend. This testimony is in direct contradiction of Moser’s answers to Vanni in the Justice Court proceeding where Moser testified he was to pay Vanni $750.00 to do the wiring . In that same proceeding, Vanni testified he had even brought another person to Chino Valley to help him with the electrical work. In the instant hearing, Vanni testified, it was only after Brown filed suit that Moser offered to reimburse Vanni for expenses involved in defending the suit. The purported reason the reimbursement was set at $750.00 was to keep within the statutory exemption. Again, this is contrary to the testimony given in the Justice Court proceeding. Additionally, Vanni testified any payment was to be made to him as an employee. There is no competent evidence that Vanni was ever Moser’s employee. Conclusions of Law A.R.S. §32-1151 makes it unlawful to engage in the business of contracting without a license or qualifying under an exemption. A.R.S. §32-1164 classifies acting in the capacity of a contractor without a license as a class 1 misdemeanor. A.R.S. §32-1166 provides that the Registrar may issue orders to cease and desist, a citation, and impose a civil penalty of no less than $200.00 but not more than $2,500.00, to persons engaging in acts of contracting in violation of the applicable statutes. A.R.S. §32-1121(A)(14) allows an exemption from the licensing requirement if the aggregate cost of materials and installation is less than $750.00. The exemption does not apply to work which requires a local building permit. A.R.S. §32-101(A)(3) provides in pertinent part that a ”contractor” is a person who for compensation undertakes to, purports to have the capacity to undertake to or does himself, construct, add to, improve any building. The Citation issued by Garner alleges violation of A.R.S. §§32-1151 and 32-1164. The State argued that by virtue of the stipulation that the materials alone exceeded $750.00, the violation is proven. This is not accepted. There must be a showing that a person was acting as a “contractor” as defined in A.R.S. §32-1101(A)(3). In this case, the pertinent question in view of the statutory definition would be whether Vanni undertook the electrical work for compensation from Moser. The amount of compensation is not of major import since once compensation is established, the material cost of $1,500.00 is well beyond the amount allowed under the statutory exemption. The evidence on this issue is conflicting with Vanni claiming the $750.00 was not to be payment for work but reimbursement for costs entailed in the civil case after the electrical work was completed. If this testimony is accepted, then Vanni was simply helping Moser without any compensation and would not be a contractor or acting in the capacity of a contractor under the statute. However, this testimony is rather suspect on its face because of the amount involved. If it was truly reimbursement for actual costs related to a legal defense, then there is no need to keep the cost at $750.00 (it should be noted that the statute provides the amount is to be less than $750.00 to qualify for the exemption). In addition, there is no reason that the Defendant should be reimbursed money as an employee if it is for reimbursement for legitimate costs as opposed to payment for traditional labor-work related services. After review of the taped record of the Justice Court proceedings, it is clear that Vanni did not testify truthfully at the instant hearing. In fact, in his closing argument in Justice Court, he asks the court to award him the $750.00 that Moser was to have paid him “…for the work that was done”. Based on all the evidence, it is concluded that the State has presented a clear preponderance of the evidence that Vanni violated the statutory provisions with which he is charged. . . . . . . In view of the nature of the violation, the fact that the work was hazardous and therefore meets the provision of A.A.C. R4-9-131(6), the penalty assessed by Garner on behalf of the Registrar would seem appropriate. The fact that Vanni’s testimony at the instant hearing was less than truthful is considered aggravating but was not considered for the purpose of enhancing the penalty. Recommended Order In view of the foregoing, it is recommended that a civil penalty of $1,500.00 be assessed pursuant to the authority of A.R.S. §32-1166(A) which penalty shall be payable by the effective date of the Order entered in this matter. Done this day, June 8, 1999.

______________________________________ ALLEN REED Administrative Law Judge

Original transmitted by mail this ____ day of June, 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