ALJDEC

99F-UF0311-ROC · Registrar of Contractors · 1999-10-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 12, 1999 APPEARANCES: The Registrar of Contractors (“Plaintiff”) was represented by Assistant Attorney General Patti Shelton. Defendant Septic Southwest, Inc. failed to appear. ADMINISTRATIVE LAW JUDGE: Daniel G. Martin _____________________________________________________________________

This matter came on for a regularly scheduled hearing on October 12, 1999 at 1:30 p.m. The Administrative Law Judge notes for the record that the start of the scheduled hearing was delayed for approximately fifteen (15) minutes so as to allow added time for appearance by or on behalf of Defendant Septic Southwest, Inc. Defendant failed to appear, and further failed to inform the Office of Administrative Hearings of any reason which would establish good cause for failing to appear. Based on the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT Defendant is an Arizona corporation. Defendant does not hold a contractor’s license issued by Plaintiff. In May 1998, Harry and Bernie Sanchez-Bell answered a newspaper ad placed by Defendant for a land/home package. The Sanchez-Bells met with Rick Cromley, who represented himself as being a “part” of Defendant along with two other “parts,” Jerry Thomas and Tom Zatkalik. As of May 7, 1999, Jerry Thomas was listed in the records of the Arizona Corporation Commission as Defendant’s statutory agent. The land/home package offered to the Sanchez-Bell included a manufactured home and a choice of two lots owned by Defendant in the Flagstaff area. Mr. Cromley told the Sanchez-Bells that a $5,000 down payment would be needed for the manufactured home. The Sanchez-Bells agreed to this arrangement and began to save the needed $5,000. In October 1998 the Sanchez-Bells paid Defendant $4,000. At this same time Mr Sanchez-Bell selected the lot which is now 10580 Nighthawk Lane, Flagstaff, Arizona (the “Property”). The manufactured home was delivered to the Property at the end of October 1998. On or about November 23, 1998, the Coconino County Department of Public Health issued a permit to Defendant to construct a septic system at the Property. On or about November 24, 1998, the Coconino County Department of Community Development issued a building permit to Defendant to construct the manufactured home at the Property. In connection with construction of the Sanchez-Bell home, Defendant entered into a contract with Kocisko Construction, a licensed contractor, to perform grading and site preparation at the Property. The Sanchez-Bells were not a party to Defendant’s contract with Kocisko Construction. Defendant paid Kocisko Construction directly for its work. Also in connection with construction of the Sanchez-Bell home, Defendant entered into a contract with Highland Excavating, a licensed contractor, to install the septic system at the Property. The Sanchez-Bells were not a party to Defendant’s contract with Highland Excavating. Defendant paid Highland Excavating directly for its work. On March 4, 1999, Defendant conveyed title to the Property to the Sanchez- Bells by warranty deed. After moving into their new residence, the Sanchez-Bells experienced numerous problems which Defendant either failed or refused to remedy. On April 14, 1999, the Sanchez-Bells filed a complaint against Defendant with the Registrar of Contractors. Registrar of Contractors investigator Dan Fishel investigated the Sanchez- Bell complaint. After determining that Defendant did not hold a license issued by Plaintiff, Mr. Fishel contacted Defendant’s agent, Jerry Thomas. In an April 30, 1999 telephone conversation with investigator Fishel, Mr. Thomas acknowledged that Defendant had sold the land/home package to the Sanchez-Bells and that Defendant owned the property in question. When investigator Fishel inquired as to why Defendant had undertaken the project without first obtaining a license, Mr. Thomas responded it had been a “one time deal” and that in any event he believed Defendant, as owner of the property, was entitled to perform construction itself through the use of licensed subcontractors. Investigator Fishel explained to Mr. Thomas that property owners are not exempt from the license requirement when the structure being built is intended for sale within one year. On or about June 15, 1999, investigator Fishel issued a complaint against Defendant for contracting without a license and assessed a civil penalty against Defendant in the amount of $500. Defendant thereafter filed a request for hearing. CONCLUSIONS OF LAW A.R.S. § 32-1151 makes it unlawful to engage in the business of contracting without a license or qualification 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 authorizes the Registrar of Contractors to issue cease and desist orders and citations to, and to impose civil penalties of not less than $200 but not more than $2,500 upon, persons engaging in any act of contracting in violation of applicable statutes. The uncontroverted evidence of record established that Defendant engaged in contracting without a license and therefore violated A.R.S. § 32-1151 when it acted as developer of the property located at 10580 Nighthawk Lane, Flagstaff, Arizona for purposes of sale to Mr. and Mrs. Sanchez-Bell. Defendant does not qualify for an exemption under A.R.S. § 32-1121 to the license requirement. The violation as charged in the citation issued by the Registrar of Contractors is established. The Registrar of Contractors assessed a $500 civil penalty against Defendant pursuant to A.R.S. § 32-1166. A.A.C. Rule R4-9-131 sets forth certain factors to consider when assessing a civil penalty under A.R.S. § 32-1166. Because Defendant failed to appear at the hearing, there is no evidence for mitigation of the penalty. To the contrary, Defendant’s failure to appear at the hearing which it requested militates in favor of a more severe penalty. RECOMMENDED ORDER In view of the foregoing, it is recommended, based on the entire case record, that a civil penalty of $750 be assessed against Septic Southwest, Inc. pursuant to the authority of A.R.S. § 32-1166(A). This civil penalty shall be paid to the Registrar of Contractors on or before thirty (30) days subsequent to the effective date of the Order entered in this matter. Done this day, October 19, 1999.

______________________________________ Daniel G. Martin 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