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RBW Consultants, Inc. v. Sooman

Court of Appeals of Arizona, First Division, Department A

August 6, 2013

RBW CONSULTANTS, INC., an Arizona corporation; AMERICAN MODULAR SERVICES, INC., an Arizona corporation, Plaintiffs/Appellees,
ROY SOOMAN, a married man, Defendant/Appellant.

Not for Publication – Rule 28, Arizona Rules of Civil Appellate Procedure

Appeal from the Superior Court in Maricopa County Cause No. LC2010-000878-001 The Honorable Crane McClennen, Judge.

Weinberger Law, Brian A. Weinberger Attorneys for Plaintiffs/Appellees.

Jennings, Strouss & Salmon, P.L.C., David Brnilovich Attorneys for Defendant/Appellant.

C. Thomas Horne, Arizona Attorney General, Michele L. Forney, Assistant Attorney General Registrar of Contractors


JON W. THOMPSON, Presiding Judge.

¶1 Roy Sooman appeals the superior court's judgment reversing the decision of the Arizona Registrar of Contractors (ROC) to revoke the contractors' licenses held by RBW Consultants, Inc. (RBW) and American Modular Services, Inc. (AMS). For the reasons that follow, we affirm.


¶2 By written contract dated November 25, 2006, Sooman agreed to purchase from TM Development Group, LLC, (TM Development) an undeveloped lot (Property) in a residential subdivision. The purchase price of $345, 850.00 included costs for constructing a home on the lot (the Project) . Neither TM Development nor its principal, Thomas Brown, were licensed contractors.

¶3 On July 27, 2007, TM Development and American Modular Services Corporation (AMS Corp.) executed a written agreement (Contractor Agreement) whereby AMS Corp. agreed to serve as the general contractor on the Project under the ROC license number 143165, which was held by AMS.[1] In the Contractor Agreement, TM Development held itself out to be the owner of the Property. The Project was completed on June 19, 2008.

¶4 On August 10, 2009, Sooman filed a complaint with the ROC alleging AMS (1) aided and abetted an unlicensed contractor, (2) acted as a contractor under an ROC license issued in a name other than as set forth on the license, and (3) engaged in contracting without a license.[2] In support of the ROC complaint, Sooman alleged the Contractor Agreement evidenced an "attempt to circumvent Arizona's contractor license laws." Specifically, Sooman asserted that Thomas Frederick, the president of AMS, sold all of AMS's assets before executing the Contractor Agreement, and AMS Corp. – an entity that did not exist – was not the lawful license holder of #143165. Thus, according to Sooman's complaint, AMS engaged in illegal unlicensed construction activity on the Project from July 27, 2007 until January 18, 2008, the date Frederick obtained a new ROC license (#241609) for RBW.[3] Moreover, between January 18, 2008 and June 2008, when a certificate of occupancy was issued upon the Project's conclusion, Sooman alleged Frederick illegally allowed TM Development to "use . . . license #241609 for the construction of the house." Sooman requested AMS's and RBW's licenses be revoked, and he sought "restitution of the purchase price of the home."[4]

¶5 In response to Sooman's complaint, the ROC informed Sooman and AMS on May 19, 2010 that an administrative hearing would be held. AMS and RBW moved to dismiss the complaint arguing Sooman did not have "standing" to make the complaint because Sooman did not have a contract with AMS or RBW, and he did not allege any material loss or injury resulting from construction of the Project. Further, AMS and RBW argued the ROC did not have authority to conduct a hearing and resolve Sooman's complaint because the ROC did not join in the complaint and had not issued any orders requiring AMS and RBW to take corrective action. The Administrative Law Judge (ALJ) summarily denied the motion to dismiss and held a hearing on July 7, 2010.[5] The ROC did not appear at the hearing.

¶6 The ALJ found that the evidence produced at the hearing supported Sooman's allegations that AMS and RBW violated Arizona contractor licensing statutes, and the ALJ recommended the ROC revoke the licenses held by AMS and RBW.[6] The ROC adopted the ALJ's recommendations and revoked the licenses on October 14, 2010.

¶7 AMS and RBW (collectively, plaintiffs) sought judicial review in superior court, and the ROC filed its notice of appearance as a nominal party. The superior court determined Sooman did not have the right to file the complaint against AMS and RBW, and the court concluded the ROC acted outside its statutory authority by revoking Plaintiffs' licenses. Accordingly, the court vacated the ROC s revocation order and remanded the matter. ...

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