utah construction services commission decision on universal contracting llc

25
DIVISION OF OCCUPATIONAL AND PROFESSIONAL LICENSING MARK STEINAGEL, DIRECTOR DEPARTMENT OF COMMERCE P.O. BOX 146741 160 EAST 300 SOUTH SALT LAKE CITY, UTAH 84114-6711 Telephone: (801) 530-6628 BEFORE THE DIVISION OF OCCUPATIONAL AND PROFESSIONAL LICENSING OF THE DEPARTMENT OF COMMERCE OF THE STATE OF UTAH IN THE MATTER OF THE LICENSE OF FINDINGS OF FACT, CONCLUSIONS OF UNIVERSAL CONTRACTING, LLC, LAW, AND ORDER LICENSE #8146797-5501, TO PRACTICE AS A CONTRACTOR IN THE STATE OF CASE NO. DOPL-2012-417 UTAH COMMISSION MEMBERS: Jerry Preston Ed Gongaware Scott Sessions Kevin Clubb Robert Campbell BY THE ACTING DIRECTOR OF THE UTAH DIVISION OF OCCUPATIONAL AND PROFESSIONAL LICENSING AND THE UTAH CONSTRUCTION SERVICES COMMISSION: This adjudicative proceeding was initiated through a notice of agency action issued by the Utah Division of Occupational and Professional Licensing (Division) on October 11, 2012. The notice established the matter as an informal proceeding for which a hearing is not required. On November 9, 2012, Universal Contracting, LLC (Respondent) filed a response to the Division's notice. On November 26,2012, Respondent filed a supplement to its response.

Upload: the-salt-lake-tribune

Post on 13-Apr-2015

2.008 views

Category:

Documents


0 download

DESCRIPTION

Utah Construction Services Commission decision on Universal Contracting LLC

TRANSCRIPT

Page 1: Utah Construction Services Commission decision on Universal Contracting LLC

DIVISION OF OCCUPATIONAL AND PROFESSIONAL LICENSING MARK STEINAGEL DIRECTOR DEPARTMENT OF COMMERCE PO BOX 146741 160 EAST 300 SOUTH SALT LAKE CITY UTAH 84114-6711 Telephone (801) 530-6628

BEFORE THE DIVISION OF OCCUPATIONAL AND PROFESSIONAL LICENSING

OF THE DEPARTMENT OF COMMERCE

OF THE STATE OF UTAH

IN THE MATTER OF THE LICENSE OF FINDINGS OF FACT CONCLUSIONS OF UNIVERSAL CONTRACTING LLC LAW AND ORDER LICENSE 8146797-5501 TO PRACTICE AS A CONTRACTOR IN THE STATE OF CASE NO DOPL-2012-417 UTAH

COMMISSION MEMBERS

Jerry Preston Ed Gongaware Scott Sessions Kevin Clubb Robert Campbell

BY THE ACTING DIRECTOR OF THE UTAH DIVISION OF OCCUPATIONAL AND PROFESSIONAL LICENSING AND THE UTAH CONSTRUCTION SERVICES COMMISSION

This adjudicative proceeding was initiated through a notice of agency action issued by

the Utah Division of Occupational and Professional Licensing (Division) on October 11 2012

The notice established the matter as an informal proceeding for which a hearing is not required

On November 9 2012 Universal Contracting LLC (Respondent) filed a response to the

Divisions notice On November 262012 Respondent filed a supplement to its response

On November 28 2012 the matter was presented to the Utah Construction Services

Commission (Commission) as an agenda item during its monthly meeting The Commission

members discussed the issues but made no rulings because there was no quorum present

The Commission held meetings on December 9 2012 and January 30 2013 The matter

was not discussed during these meeting because there was no quorum present However during

the January 30 2013 meeting the parties presented to the Commission a stipulation under which

adjudication of two of the four counts set forth in the notice-both of which deal with the issue

of whether the company has owners or employees who are not legally present in the United

States-would be stayed pending the conclusion of the 2013 Utah Legislative Session The

chairman of the Commission accepted approved and entered the stipulation the same day

On February 27 2013 the Commission held a meeting with a quorum present

Respondent attended with counsel The Division was represented by several staff members

Counsel for the Commission was present as was the Acting Director of the Division Both

parties were provided an opportunity to present documentary records and to make arguments

regarding the proper interpretation and application of statutes relevant to this matter Having

reviewed all evidence before it the Commission with the concurrence of the Acting Director

(hereafter referred to jointly as the Commission) now enters the following findings of fact

conclusions of law and order

FINDINGS OF FACT

1 Respondent is an unincorporated business entity

2 On January 132012 Respondent obtained a license from the Division to operate in Utah

as a contractor

Page 2

3 Every applicant for a contractor license is required to demonstrate financial

responsibility Utah Code Ann sect 58-55-306(1) and (3)

4 As an unincorporated business entity Respondent was required to disclose information

about its owners in order to demonstrate that each owner satisfied the financial

responsibility requirement Respondent was required to list each owners name address

and Social Security number Utah Code Ann sect 58-55-302(1)(e)(iv)(A) The Divisions

records show and the Commission accepts as fact that Respondent complied with these

requirements and listed one owner Alma Faerber

5 In reviewing the financial responsibility of the owners in an unincorporated business

entity the Division may require each owner to submit a credit report Utah Code Ann sect

58-55-306(4) The Divisions records show and the Commission accepts as fact that Mr

Faerber did submit a credit report which was reviewed by the Division as part of the

license application process

6 After obtaining its license on January 132012 and during the first 90 days of licensure

Applicant brought 725 new owners into the company

7 Respondents making this change resulted in a business structure under which more than

five individual owners held each individually a direct or indirect ownership interest of

less than 8 Unincorporated business entities if structured in this manner and licensed

as a contractor are subject to certain reporting requirements under the Construction

Trades Licensing Statute Utah Code Ann sect 58-55 et seq Specifically any such

company must submit to the Division an ownership status report every 90 days following

the date of licensure Utah Code Ann sect 58-55-302(10)(a)(i)

Page 3

8 The 90th day following the date of Respondents initial licensure and therefore the

deadline for the companys first ownership status report was Friday April 132012

9 At all times relevant to Respondents first ownership status report any such report was

required by statute to list each addition or deletion of an owner be in a format prescribed

by the Division include at a minimum the owners name address and Social Security

number and be accompanied by a fee as established by the Division Utah Code Ann sectsect

58-55-302(10)(b) and 58-55-302(1)(e)(iv)

10 Utah Code sect 58-55-302(1)(e)(iv) was amended during the 2012 Utah Legislative Session

(SB 92) to require ownership status reports to include each new owners birthdate in

addition to the other data listed in Paragraph 9 The new requirement went into effect on

May 8 2012 after the deadline for Respondents first report

11 The Division charges a fee of $20 for each new owner listed on an ownership status

report

12 Respondent submitted its first ownership status report on Monday April 16 2012 the

93rd day following the date of initial licensure In its first report Respondent listed 725

new owners by name and included addresses but used the company address for six of the

new owners Respondent did not provide any birthdates or credit reports for the new

owners nor did Respondent have any of the new owners complete financial

questionnaires as provided by the Division On April 24 2012 Respondent paid to the

Division a fee of $8760 an amount $5740 short of the total required to register 725 new

owners at a fee of $20 per owner

13 On May 16 2012 the Division sent Respondent written notice that an audit of its first

ownership status report would be conducted pursuant to Utah Code Ann sect 58-55shy

Page 4

302(1O)(c) The notice indicates that the audit would be conducted to determine whether

Respondents April 16 2012 ownership status report was timely filed whether

Respondent paid the required fee for each new owner disclosed in its report and whether

Respondent had submitted a complete report in light of the issue regarding the use of the

company address for six of the new owners and the fact that Respondent had not

provided a birthdate financial questionnaire or credit report for any of the new ownersl

The notice also directs Respondent to cure the identified deficiencies within 30 days

14 On June 18 2012 Respondent submitted to the Division a letter raising the following

points

a) Respondent argues that the Divisions investigation should be terminated on a

finding that pursuant to Utah Code Ann sect 55-58-402(3) the circumstances

indicate no apparent material jeopardy to the public health safety and welfare

As support for this argument Respondent claims that each owner is covered by

both unemployment and workers compensation insurance that the company

complies with all applicable tax reporting requirements that no complaint has

been filed with the Division against the company that the company has not been

named as a party in any type of lawsuit that the company has no financial

problems emphasizing that it has never been involved with a mechanics lien and

that the company pays its bills in a timely fashion and has a healthy balance sheet

I The Divisions notice also raises issues regarding whether some of the new owners identified in the status report could be considered legally present in the United States Respondent made arguments on these issues when it submitted a letter to the Division on June] 8 20] 2 Thereafter the Division issued six citations against individuals alleged to be unlawfully present and various procedures followed Pursuant to the parties January 30 2013 stipulation bifurcating the matter so as to deal with issues related to legal presence separately no further discussion on those issues is included in this order

Page 5

b) Respondent agrees that its April 16 2012 ownership status report was not filed by

the 90th

day following the date of licensure but points out that its tardiness was

minimal (a couple ofdays) and due to a miscalculation of the due date

c) Respondent acknowledges that the Division charges a $20 fee for each new owner

listed on an ownership status report but contends that it paid the required fee in

full

d) Respondent argues that Utah Code Ann sect 58-55-302(l)(e)(iv) does not require an

ownership status report to disclose each new owners birthdate Respondent

further argues that although the statute authorizes the Division to mandate the

form of the ownership status report that grant of authority does not include the

ability to require whatever information or data the Division might wish to see

therefore precluding the Division from requiring birthdates

e) Respondent argues that its use of the company address for new owners who are

in transition is appropriate and should be considered sufficient to comply with

the statute Respondent also provides updated address information for four of the

new owners for whom the company address was used on the ownership status

report and explains that the other two individuals whose addresses were being

audited by the Division had moved from the state and terminated their ownership

interests in the company

f) Respondent argues that after granting a license application the Division does not

have statutory authority to require the company to demonstrate an owners

financial responsibility by providing a credit report Respondent appears to argue

that in an audit the Division has the burden to prove unprofessional or unlawful

Page 6

conduct and that it may not use an audit to shift onto a licensee the burden to

demonstrate financial responsibility including the associated costs Respondent

notes that a credit report costs $23 Further Respondent argues that the Division

is specifically authorized by statute to require that owners submit credit reports

only in conjunction with the processing of an application for licensure and

therefore is prohibited from requiring a credit report in processing an ownership

status update or conducting an audit of financial responsibility

15 Respondent has provided no documentary evidence to prove the claims made in its June

18 2012 letter that the company is financially healthy and responsible In its presentation

before the Commission Respondent claimed that the company is structured so as to make

it impossible for the financial liabilities of any individual owner to affect or impair the

overall financial health or responsibility of the company

16 The Division has not investigated Respondents overall company finances Nor has the

Division investigated whether the terms of ownership outlined in Respondents contracts

with its owners would suffice to protect the company from an individual owners

financial liabilities beyond those protections that are afforded legally through its business

organization as a limited liability company (LLC) Respondent has not provided its

financial records to the Division but represents that it is willing do to do

17 On August 14 2012 the Division replied to Respondents June 18 2012 letter reiterating

its request that Respondent cure the deficiencies previously identified in regard to its

April 162012 ownership status report and giving Respondent 15 days to do so

18 Respondent did not cure the alleged deficiencies and on October 11 2012 the Division

issued the notice of agency action in this matter

Page 7

19 On November 272012 Respondent supplemented its June 182012 response reiterating

its arguments and alleging that the Division has misinterpreted and misapplied the

statutes on which it relies for this action

20 The Divisions research of Utah court records using the names and Social Security

numbers of the owners Respondent identified on its first status report reveals the

following

a) There are 132 owners who appear to have judgments entered against them several

with multiple judgments In sum it appears that individuals with ownership

interests in Respondent are liable under 443 judgments totaling $145115763

b) There are 232 owners who appear to have criminal history several with multiple

cases In sum it appears that individuals with ownership interests in Respondent

have been prosecuted in Utah for 1274 misdemeanor or felony charges including

the following theft attempted theft retail theft theft by deception theft of

services criminal trespass forgery attempted forgery possession of forgery

equipment attempted possession of forgery writing device attempt to receive

stolen property robbery attempted robbery burglary burglary of a vehicle

attempted fraudulent obtainment of unemployment compensation use or

distribution of a controlled substance possession with intent to distribute of a

controlled substance identity fraud false information with intent to be another

actual person false information to a police officer assault with substantial bodily

injury aggravated assault with a deadly weapon criminal mischief driving under

the influence of alcohol driving without a license no valid driver license ever

obtained driving or operating a vehicle without insurance no proof of insurance

Page 8

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 2: Utah Construction Services Commission decision on Universal Contracting LLC

On November 28 2012 the matter was presented to the Utah Construction Services

Commission (Commission) as an agenda item during its monthly meeting The Commission

members discussed the issues but made no rulings because there was no quorum present

The Commission held meetings on December 9 2012 and January 30 2013 The matter

was not discussed during these meeting because there was no quorum present However during

the January 30 2013 meeting the parties presented to the Commission a stipulation under which

adjudication of two of the four counts set forth in the notice-both of which deal with the issue

of whether the company has owners or employees who are not legally present in the United

States-would be stayed pending the conclusion of the 2013 Utah Legislative Session The

chairman of the Commission accepted approved and entered the stipulation the same day

On February 27 2013 the Commission held a meeting with a quorum present

Respondent attended with counsel The Division was represented by several staff members

Counsel for the Commission was present as was the Acting Director of the Division Both

parties were provided an opportunity to present documentary records and to make arguments

regarding the proper interpretation and application of statutes relevant to this matter Having

reviewed all evidence before it the Commission with the concurrence of the Acting Director

(hereafter referred to jointly as the Commission) now enters the following findings of fact

conclusions of law and order

FINDINGS OF FACT

1 Respondent is an unincorporated business entity

2 On January 132012 Respondent obtained a license from the Division to operate in Utah

as a contractor

Page 2

3 Every applicant for a contractor license is required to demonstrate financial

responsibility Utah Code Ann sect 58-55-306(1) and (3)

4 As an unincorporated business entity Respondent was required to disclose information

about its owners in order to demonstrate that each owner satisfied the financial

responsibility requirement Respondent was required to list each owners name address

and Social Security number Utah Code Ann sect 58-55-302(1)(e)(iv)(A) The Divisions

records show and the Commission accepts as fact that Respondent complied with these

requirements and listed one owner Alma Faerber

5 In reviewing the financial responsibility of the owners in an unincorporated business

entity the Division may require each owner to submit a credit report Utah Code Ann sect

58-55-306(4) The Divisions records show and the Commission accepts as fact that Mr

Faerber did submit a credit report which was reviewed by the Division as part of the

license application process

6 After obtaining its license on January 132012 and during the first 90 days of licensure

Applicant brought 725 new owners into the company

7 Respondents making this change resulted in a business structure under which more than

five individual owners held each individually a direct or indirect ownership interest of

less than 8 Unincorporated business entities if structured in this manner and licensed

as a contractor are subject to certain reporting requirements under the Construction

Trades Licensing Statute Utah Code Ann sect 58-55 et seq Specifically any such

company must submit to the Division an ownership status report every 90 days following

the date of licensure Utah Code Ann sect 58-55-302(10)(a)(i)

Page 3

8 The 90th day following the date of Respondents initial licensure and therefore the

deadline for the companys first ownership status report was Friday April 132012

9 At all times relevant to Respondents first ownership status report any such report was

required by statute to list each addition or deletion of an owner be in a format prescribed

by the Division include at a minimum the owners name address and Social Security

number and be accompanied by a fee as established by the Division Utah Code Ann sectsect

58-55-302(10)(b) and 58-55-302(1)(e)(iv)

10 Utah Code sect 58-55-302(1)(e)(iv) was amended during the 2012 Utah Legislative Session

(SB 92) to require ownership status reports to include each new owners birthdate in

addition to the other data listed in Paragraph 9 The new requirement went into effect on

May 8 2012 after the deadline for Respondents first report

11 The Division charges a fee of $20 for each new owner listed on an ownership status

report

12 Respondent submitted its first ownership status report on Monday April 16 2012 the

93rd day following the date of initial licensure In its first report Respondent listed 725

new owners by name and included addresses but used the company address for six of the

new owners Respondent did not provide any birthdates or credit reports for the new

owners nor did Respondent have any of the new owners complete financial

questionnaires as provided by the Division On April 24 2012 Respondent paid to the

Division a fee of $8760 an amount $5740 short of the total required to register 725 new

owners at a fee of $20 per owner

13 On May 16 2012 the Division sent Respondent written notice that an audit of its first

ownership status report would be conducted pursuant to Utah Code Ann sect 58-55shy

Page 4

302(1O)(c) The notice indicates that the audit would be conducted to determine whether

Respondents April 16 2012 ownership status report was timely filed whether

Respondent paid the required fee for each new owner disclosed in its report and whether

Respondent had submitted a complete report in light of the issue regarding the use of the

company address for six of the new owners and the fact that Respondent had not

provided a birthdate financial questionnaire or credit report for any of the new ownersl

The notice also directs Respondent to cure the identified deficiencies within 30 days

14 On June 18 2012 Respondent submitted to the Division a letter raising the following

points

a) Respondent argues that the Divisions investigation should be terminated on a

finding that pursuant to Utah Code Ann sect 55-58-402(3) the circumstances

indicate no apparent material jeopardy to the public health safety and welfare

As support for this argument Respondent claims that each owner is covered by

both unemployment and workers compensation insurance that the company

complies with all applicable tax reporting requirements that no complaint has

been filed with the Division against the company that the company has not been

named as a party in any type of lawsuit that the company has no financial

problems emphasizing that it has never been involved with a mechanics lien and

that the company pays its bills in a timely fashion and has a healthy balance sheet

I The Divisions notice also raises issues regarding whether some of the new owners identified in the status report could be considered legally present in the United States Respondent made arguments on these issues when it submitted a letter to the Division on June] 8 20] 2 Thereafter the Division issued six citations against individuals alleged to be unlawfully present and various procedures followed Pursuant to the parties January 30 2013 stipulation bifurcating the matter so as to deal with issues related to legal presence separately no further discussion on those issues is included in this order

Page 5

b) Respondent agrees that its April 16 2012 ownership status report was not filed by

the 90th

day following the date of licensure but points out that its tardiness was

minimal (a couple ofdays) and due to a miscalculation of the due date

c) Respondent acknowledges that the Division charges a $20 fee for each new owner

listed on an ownership status report but contends that it paid the required fee in

full

d) Respondent argues that Utah Code Ann sect 58-55-302(l)(e)(iv) does not require an

ownership status report to disclose each new owners birthdate Respondent

further argues that although the statute authorizes the Division to mandate the

form of the ownership status report that grant of authority does not include the

ability to require whatever information or data the Division might wish to see

therefore precluding the Division from requiring birthdates

e) Respondent argues that its use of the company address for new owners who are

in transition is appropriate and should be considered sufficient to comply with

the statute Respondent also provides updated address information for four of the

new owners for whom the company address was used on the ownership status

report and explains that the other two individuals whose addresses were being

audited by the Division had moved from the state and terminated their ownership

interests in the company

f) Respondent argues that after granting a license application the Division does not

have statutory authority to require the company to demonstrate an owners

financial responsibility by providing a credit report Respondent appears to argue

that in an audit the Division has the burden to prove unprofessional or unlawful

Page 6

conduct and that it may not use an audit to shift onto a licensee the burden to

demonstrate financial responsibility including the associated costs Respondent

notes that a credit report costs $23 Further Respondent argues that the Division

is specifically authorized by statute to require that owners submit credit reports

only in conjunction with the processing of an application for licensure and

therefore is prohibited from requiring a credit report in processing an ownership

status update or conducting an audit of financial responsibility

15 Respondent has provided no documentary evidence to prove the claims made in its June

18 2012 letter that the company is financially healthy and responsible In its presentation

before the Commission Respondent claimed that the company is structured so as to make

it impossible for the financial liabilities of any individual owner to affect or impair the

overall financial health or responsibility of the company

16 The Division has not investigated Respondents overall company finances Nor has the

Division investigated whether the terms of ownership outlined in Respondents contracts

with its owners would suffice to protect the company from an individual owners

financial liabilities beyond those protections that are afforded legally through its business

organization as a limited liability company (LLC) Respondent has not provided its

financial records to the Division but represents that it is willing do to do

17 On August 14 2012 the Division replied to Respondents June 18 2012 letter reiterating

its request that Respondent cure the deficiencies previously identified in regard to its

April 162012 ownership status report and giving Respondent 15 days to do so

18 Respondent did not cure the alleged deficiencies and on October 11 2012 the Division

issued the notice of agency action in this matter

Page 7

19 On November 272012 Respondent supplemented its June 182012 response reiterating

its arguments and alleging that the Division has misinterpreted and misapplied the

statutes on which it relies for this action

20 The Divisions research of Utah court records using the names and Social Security

numbers of the owners Respondent identified on its first status report reveals the

following

a) There are 132 owners who appear to have judgments entered against them several

with multiple judgments In sum it appears that individuals with ownership

interests in Respondent are liable under 443 judgments totaling $145115763

b) There are 232 owners who appear to have criminal history several with multiple

cases In sum it appears that individuals with ownership interests in Respondent

have been prosecuted in Utah for 1274 misdemeanor or felony charges including

the following theft attempted theft retail theft theft by deception theft of

services criminal trespass forgery attempted forgery possession of forgery

equipment attempted possession of forgery writing device attempt to receive

stolen property robbery attempted robbery burglary burglary of a vehicle

attempted fraudulent obtainment of unemployment compensation use or

distribution of a controlled substance possession with intent to distribute of a

controlled substance identity fraud false information with intent to be another

actual person false information to a police officer assault with substantial bodily

injury aggravated assault with a deadly weapon criminal mischief driving under

the influence of alcohol driving without a license no valid driver license ever

obtained driving or operating a vehicle without insurance no proof of insurance

Page 8

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 3: Utah Construction Services Commission decision on Universal Contracting LLC

3 Every applicant for a contractor license is required to demonstrate financial

responsibility Utah Code Ann sect 58-55-306(1) and (3)

4 As an unincorporated business entity Respondent was required to disclose information

about its owners in order to demonstrate that each owner satisfied the financial

responsibility requirement Respondent was required to list each owners name address

and Social Security number Utah Code Ann sect 58-55-302(1)(e)(iv)(A) The Divisions

records show and the Commission accepts as fact that Respondent complied with these

requirements and listed one owner Alma Faerber

5 In reviewing the financial responsibility of the owners in an unincorporated business

entity the Division may require each owner to submit a credit report Utah Code Ann sect

58-55-306(4) The Divisions records show and the Commission accepts as fact that Mr

Faerber did submit a credit report which was reviewed by the Division as part of the

license application process

6 After obtaining its license on January 132012 and during the first 90 days of licensure

Applicant brought 725 new owners into the company

7 Respondents making this change resulted in a business structure under which more than

five individual owners held each individually a direct or indirect ownership interest of

less than 8 Unincorporated business entities if structured in this manner and licensed

as a contractor are subject to certain reporting requirements under the Construction

Trades Licensing Statute Utah Code Ann sect 58-55 et seq Specifically any such

company must submit to the Division an ownership status report every 90 days following

the date of licensure Utah Code Ann sect 58-55-302(10)(a)(i)

Page 3

8 The 90th day following the date of Respondents initial licensure and therefore the

deadline for the companys first ownership status report was Friday April 132012

9 At all times relevant to Respondents first ownership status report any such report was

required by statute to list each addition or deletion of an owner be in a format prescribed

by the Division include at a minimum the owners name address and Social Security

number and be accompanied by a fee as established by the Division Utah Code Ann sectsect

58-55-302(10)(b) and 58-55-302(1)(e)(iv)

10 Utah Code sect 58-55-302(1)(e)(iv) was amended during the 2012 Utah Legislative Session

(SB 92) to require ownership status reports to include each new owners birthdate in

addition to the other data listed in Paragraph 9 The new requirement went into effect on

May 8 2012 after the deadline for Respondents first report

11 The Division charges a fee of $20 for each new owner listed on an ownership status

report

12 Respondent submitted its first ownership status report on Monday April 16 2012 the

93rd day following the date of initial licensure In its first report Respondent listed 725

new owners by name and included addresses but used the company address for six of the

new owners Respondent did not provide any birthdates or credit reports for the new

owners nor did Respondent have any of the new owners complete financial

questionnaires as provided by the Division On April 24 2012 Respondent paid to the

Division a fee of $8760 an amount $5740 short of the total required to register 725 new

owners at a fee of $20 per owner

13 On May 16 2012 the Division sent Respondent written notice that an audit of its first

ownership status report would be conducted pursuant to Utah Code Ann sect 58-55shy

Page 4

302(1O)(c) The notice indicates that the audit would be conducted to determine whether

Respondents April 16 2012 ownership status report was timely filed whether

Respondent paid the required fee for each new owner disclosed in its report and whether

Respondent had submitted a complete report in light of the issue regarding the use of the

company address for six of the new owners and the fact that Respondent had not

provided a birthdate financial questionnaire or credit report for any of the new ownersl

The notice also directs Respondent to cure the identified deficiencies within 30 days

14 On June 18 2012 Respondent submitted to the Division a letter raising the following

points

a) Respondent argues that the Divisions investigation should be terminated on a

finding that pursuant to Utah Code Ann sect 55-58-402(3) the circumstances

indicate no apparent material jeopardy to the public health safety and welfare

As support for this argument Respondent claims that each owner is covered by

both unemployment and workers compensation insurance that the company

complies with all applicable tax reporting requirements that no complaint has

been filed with the Division against the company that the company has not been

named as a party in any type of lawsuit that the company has no financial

problems emphasizing that it has never been involved with a mechanics lien and

that the company pays its bills in a timely fashion and has a healthy balance sheet

I The Divisions notice also raises issues regarding whether some of the new owners identified in the status report could be considered legally present in the United States Respondent made arguments on these issues when it submitted a letter to the Division on June] 8 20] 2 Thereafter the Division issued six citations against individuals alleged to be unlawfully present and various procedures followed Pursuant to the parties January 30 2013 stipulation bifurcating the matter so as to deal with issues related to legal presence separately no further discussion on those issues is included in this order

Page 5

b) Respondent agrees that its April 16 2012 ownership status report was not filed by

the 90th

day following the date of licensure but points out that its tardiness was

minimal (a couple ofdays) and due to a miscalculation of the due date

c) Respondent acknowledges that the Division charges a $20 fee for each new owner

listed on an ownership status report but contends that it paid the required fee in

full

d) Respondent argues that Utah Code Ann sect 58-55-302(l)(e)(iv) does not require an

ownership status report to disclose each new owners birthdate Respondent

further argues that although the statute authorizes the Division to mandate the

form of the ownership status report that grant of authority does not include the

ability to require whatever information or data the Division might wish to see

therefore precluding the Division from requiring birthdates

e) Respondent argues that its use of the company address for new owners who are

in transition is appropriate and should be considered sufficient to comply with

the statute Respondent also provides updated address information for four of the

new owners for whom the company address was used on the ownership status

report and explains that the other two individuals whose addresses were being

audited by the Division had moved from the state and terminated their ownership

interests in the company

f) Respondent argues that after granting a license application the Division does not

have statutory authority to require the company to demonstrate an owners

financial responsibility by providing a credit report Respondent appears to argue

that in an audit the Division has the burden to prove unprofessional or unlawful

Page 6

conduct and that it may not use an audit to shift onto a licensee the burden to

demonstrate financial responsibility including the associated costs Respondent

notes that a credit report costs $23 Further Respondent argues that the Division

is specifically authorized by statute to require that owners submit credit reports

only in conjunction with the processing of an application for licensure and

therefore is prohibited from requiring a credit report in processing an ownership

status update or conducting an audit of financial responsibility

15 Respondent has provided no documentary evidence to prove the claims made in its June

18 2012 letter that the company is financially healthy and responsible In its presentation

before the Commission Respondent claimed that the company is structured so as to make

it impossible for the financial liabilities of any individual owner to affect or impair the

overall financial health or responsibility of the company

16 The Division has not investigated Respondents overall company finances Nor has the

Division investigated whether the terms of ownership outlined in Respondents contracts

with its owners would suffice to protect the company from an individual owners

financial liabilities beyond those protections that are afforded legally through its business

organization as a limited liability company (LLC) Respondent has not provided its

financial records to the Division but represents that it is willing do to do

17 On August 14 2012 the Division replied to Respondents June 18 2012 letter reiterating

its request that Respondent cure the deficiencies previously identified in regard to its

April 162012 ownership status report and giving Respondent 15 days to do so

18 Respondent did not cure the alleged deficiencies and on October 11 2012 the Division

issued the notice of agency action in this matter

Page 7

19 On November 272012 Respondent supplemented its June 182012 response reiterating

its arguments and alleging that the Division has misinterpreted and misapplied the

statutes on which it relies for this action

20 The Divisions research of Utah court records using the names and Social Security

numbers of the owners Respondent identified on its first status report reveals the

following

a) There are 132 owners who appear to have judgments entered against them several

with multiple judgments In sum it appears that individuals with ownership

interests in Respondent are liable under 443 judgments totaling $145115763

b) There are 232 owners who appear to have criminal history several with multiple

cases In sum it appears that individuals with ownership interests in Respondent

have been prosecuted in Utah for 1274 misdemeanor or felony charges including

the following theft attempted theft retail theft theft by deception theft of

services criminal trespass forgery attempted forgery possession of forgery

equipment attempted possession of forgery writing device attempt to receive

stolen property robbery attempted robbery burglary burglary of a vehicle

attempted fraudulent obtainment of unemployment compensation use or

distribution of a controlled substance possession with intent to distribute of a

controlled substance identity fraud false information with intent to be another

actual person false information to a police officer assault with substantial bodily

injury aggravated assault with a deadly weapon criminal mischief driving under

the influence of alcohol driving without a license no valid driver license ever

obtained driving or operating a vehicle without insurance no proof of insurance

Page 8

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 4: Utah Construction Services Commission decision on Universal Contracting LLC

8 The 90th day following the date of Respondents initial licensure and therefore the

deadline for the companys first ownership status report was Friday April 132012

9 At all times relevant to Respondents first ownership status report any such report was

required by statute to list each addition or deletion of an owner be in a format prescribed

by the Division include at a minimum the owners name address and Social Security

number and be accompanied by a fee as established by the Division Utah Code Ann sectsect

58-55-302(10)(b) and 58-55-302(1)(e)(iv)

10 Utah Code sect 58-55-302(1)(e)(iv) was amended during the 2012 Utah Legislative Session

(SB 92) to require ownership status reports to include each new owners birthdate in

addition to the other data listed in Paragraph 9 The new requirement went into effect on

May 8 2012 after the deadline for Respondents first report

11 The Division charges a fee of $20 for each new owner listed on an ownership status

report

12 Respondent submitted its first ownership status report on Monday April 16 2012 the

93rd day following the date of initial licensure In its first report Respondent listed 725

new owners by name and included addresses but used the company address for six of the

new owners Respondent did not provide any birthdates or credit reports for the new

owners nor did Respondent have any of the new owners complete financial

questionnaires as provided by the Division On April 24 2012 Respondent paid to the

Division a fee of $8760 an amount $5740 short of the total required to register 725 new

owners at a fee of $20 per owner

13 On May 16 2012 the Division sent Respondent written notice that an audit of its first

ownership status report would be conducted pursuant to Utah Code Ann sect 58-55shy

Page 4

302(1O)(c) The notice indicates that the audit would be conducted to determine whether

Respondents April 16 2012 ownership status report was timely filed whether

Respondent paid the required fee for each new owner disclosed in its report and whether

Respondent had submitted a complete report in light of the issue regarding the use of the

company address for six of the new owners and the fact that Respondent had not

provided a birthdate financial questionnaire or credit report for any of the new ownersl

The notice also directs Respondent to cure the identified deficiencies within 30 days

14 On June 18 2012 Respondent submitted to the Division a letter raising the following

points

a) Respondent argues that the Divisions investigation should be terminated on a

finding that pursuant to Utah Code Ann sect 55-58-402(3) the circumstances

indicate no apparent material jeopardy to the public health safety and welfare

As support for this argument Respondent claims that each owner is covered by

both unemployment and workers compensation insurance that the company

complies with all applicable tax reporting requirements that no complaint has

been filed with the Division against the company that the company has not been

named as a party in any type of lawsuit that the company has no financial

problems emphasizing that it has never been involved with a mechanics lien and

that the company pays its bills in a timely fashion and has a healthy balance sheet

I The Divisions notice also raises issues regarding whether some of the new owners identified in the status report could be considered legally present in the United States Respondent made arguments on these issues when it submitted a letter to the Division on June] 8 20] 2 Thereafter the Division issued six citations against individuals alleged to be unlawfully present and various procedures followed Pursuant to the parties January 30 2013 stipulation bifurcating the matter so as to deal with issues related to legal presence separately no further discussion on those issues is included in this order

Page 5

b) Respondent agrees that its April 16 2012 ownership status report was not filed by

the 90th

day following the date of licensure but points out that its tardiness was

minimal (a couple ofdays) and due to a miscalculation of the due date

c) Respondent acknowledges that the Division charges a $20 fee for each new owner

listed on an ownership status report but contends that it paid the required fee in

full

d) Respondent argues that Utah Code Ann sect 58-55-302(l)(e)(iv) does not require an

ownership status report to disclose each new owners birthdate Respondent

further argues that although the statute authorizes the Division to mandate the

form of the ownership status report that grant of authority does not include the

ability to require whatever information or data the Division might wish to see

therefore precluding the Division from requiring birthdates

e) Respondent argues that its use of the company address for new owners who are

in transition is appropriate and should be considered sufficient to comply with

the statute Respondent also provides updated address information for four of the

new owners for whom the company address was used on the ownership status

report and explains that the other two individuals whose addresses were being

audited by the Division had moved from the state and terminated their ownership

interests in the company

f) Respondent argues that after granting a license application the Division does not

have statutory authority to require the company to demonstrate an owners

financial responsibility by providing a credit report Respondent appears to argue

that in an audit the Division has the burden to prove unprofessional or unlawful

Page 6

conduct and that it may not use an audit to shift onto a licensee the burden to

demonstrate financial responsibility including the associated costs Respondent

notes that a credit report costs $23 Further Respondent argues that the Division

is specifically authorized by statute to require that owners submit credit reports

only in conjunction with the processing of an application for licensure and

therefore is prohibited from requiring a credit report in processing an ownership

status update or conducting an audit of financial responsibility

15 Respondent has provided no documentary evidence to prove the claims made in its June

18 2012 letter that the company is financially healthy and responsible In its presentation

before the Commission Respondent claimed that the company is structured so as to make

it impossible for the financial liabilities of any individual owner to affect or impair the

overall financial health or responsibility of the company

16 The Division has not investigated Respondents overall company finances Nor has the

Division investigated whether the terms of ownership outlined in Respondents contracts

with its owners would suffice to protect the company from an individual owners

financial liabilities beyond those protections that are afforded legally through its business

organization as a limited liability company (LLC) Respondent has not provided its

financial records to the Division but represents that it is willing do to do

17 On August 14 2012 the Division replied to Respondents June 18 2012 letter reiterating

its request that Respondent cure the deficiencies previously identified in regard to its

April 162012 ownership status report and giving Respondent 15 days to do so

18 Respondent did not cure the alleged deficiencies and on October 11 2012 the Division

issued the notice of agency action in this matter

Page 7

19 On November 272012 Respondent supplemented its June 182012 response reiterating

its arguments and alleging that the Division has misinterpreted and misapplied the

statutes on which it relies for this action

20 The Divisions research of Utah court records using the names and Social Security

numbers of the owners Respondent identified on its first status report reveals the

following

a) There are 132 owners who appear to have judgments entered against them several

with multiple judgments In sum it appears that individuals with ownership

interests in Respondent are liable under 443 judgments totaling $145115763

b) There are 232 owners who appear to have criminal history several with multiple

cases In sum it appears that individuals with ownership interests in Respondent

have been prosecuted in Utah for 1274 misdemeanor or felony charges including

the following theft attempted theft retail theft theft by deception theft of

services criminal trespass forgery attempted forgery possession of forgery

equipment attempted possession of forgery writing device attempt to receive

stolen property robbery attempted robbery burglary burglary of a vehicle

attempted fraudulent obtainment of unemployment compensation use or

distribution of a controlled substance possession with intent to distribute of a

controlled substance identity fraud false information with intent to be another

actual person false information to a police officer assault with substantial bodily

injury aggravated assault with a deadly weapon criminal mischief driving under

the influence of alcohol driving without a license no valid driver license ever

obtained driving or operating a vehicle without insurance no proof of insurance

Page 8

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 5: Utah Construction Services Commission decision on Universal Contracting LLC

302(1O)(c) The notice indicates that the audit would be conducted to determine whether

Respondents April 16 2012 ownership status report was timely filed whether

Respondent paid the required fee for each new owner disclosed in its report and whether

Respondent had submitted a complete report in light of the issue regarding the use of the

company address for six of the new owners and the fact that Respondent had not

provided a birthdate financial questionnaire or credit report for any of the new ownersl

The notice also directs Respondent to cure the identified deficiencies within 30 days

14 On June 18 2012 Respondent submitted to the Division a letter raising the following

points

a) Respondent argues that the Divisions investigation should be terminated on a

finding that pursuant to Utah Code Ann sect 55-58-402(3) the circumstances

indicate no apparent material jeopardy to the public health safety and welfare

As support for this argument Respondent claims that each owner is covered by

both unemployment and workers compensation insurance that the company

complies with all applicable tax reporting requirements that no complaint has

been filed with the Division against the company that the company has not been

named as a party in any type of lawsuit that the company has no financial

problems emphasizing that it has never been involved with a mechanics lien and

that the company pays its bills in a timely fashion and has a healthy balance sheet

I The Divisions notice also raises issues regarding whether some of the new owners identified in the status report could be considered legally present in the United States Respondent made arguments on these issues when it submitted a letter to the Division on June] 8 20] 2 Thereafter the Division issued six citations against individuals alleged to be unlawfully present and various procedures followed Pursuant to the parties January 30 2013 stipulation bifurcating the matter so as to deal with issues related to legal presence separately no further discussion on those issues is included in this order

Page 5

b) Respondent agrees that its April 16 2012 ownership status report was not filed by

the 90th

day following the date of licensure but points out that its tardiness was

minimal (a couple ofdays) and due to a miscalculation of the due date

c) Respondent acknowledges that the Division charges a $20 fee for each new owner

listed on an ownership status report but contends that it paid the required fee in

full

d) Respondent argues that Utah Code Ann sect 58-55-302(l)(e)(iv) does not require an

ownership status report to disclose each new owners birthdate Respondent

further argues that although the statute authorizes the Division to mandate the

form of the ownership status report that grant of authority does not include the

ability to require whatever information or data the Division might wish to see

therefore precluding the Division from requiring birthdates

e) Respondent argues that its use of the company address for new owners who are

in transition is appropriate and should be considered sufficient to comply with

the statute Respondent also provides updated address information for four of the

new owners for whom the company address was used on the ownership status

report and explains that the other two individuals whose addresses were being

audited by the Division had moved from the state and terminated their ownership

interests in the company

f) Respondent argues that after granting a license application the Division does not

have statutory authority to require the company to demonstrate an owners

financial responsibility by providing a credit report Respondent appears to argue

that in an audit the Division has the burden to prove unprofessional or unlawful

Page 6

conduct and that it may not use an audit to shift onto a licensee the burden to

demonstrate financial responsibility including the associated costs Respondent

notes that a credit report costs $23 Further Respondent argues that the Division

is specifically authorized by statute to require that owners submit credit reports

only in conjunction with the processing of an application for licensure and

therefore is prohibited from requiring a credit report in processing an ownership

status update or conducting an audit of financial responsibility

15 Respondent has provided no documentary evidence to prove the claims made in its June

18 2012 letter that the company is financially healthy and responsible In its presentation

before the Commission Respondent claimed that the company is structured so as to make

it impossible for the financial liabilities of any individual owner to affect or impair the

overall financial health or responsibility of the company

16 The Division has not investigated Respondents overall company finances Nor has the

Division investigated whether the terms of ownership outlined in Respondents contracts

with its owners would suffice to protect the company from an individual owners

financial liabilities beyond those protections that are afforded legally through its business

organization as a limited liability company (LLC) Respondent has not provided its

financial records to the Division but represents that it is willing do to do

17 On August 14 2012 the Division replied to Respondents June 18 2012 letter reiterating

its request that Respondent cure the deficiencies previously identified in regard to its

April 162012 ownership status report and giving Respondent 15 days to do so

18 Respondent did not cure the alleged deficiencies and on October 11 2012 the Division

issued the notice of agency action in this matter

Page 7

19 On November 272012 Respondent supplemented its June 182012 response reiterating

its arguments and alleging that the Division has misinterpreted and misapplied the

statutes on which it relies for this action

20 The Divisions research of Utah court records using the names and Social Security

numbers of the owners Respondent identified on its first status report reveals the

following

a) There are 132 owners who appear to have judgments entered against them several

with multiple judgments In sum it appears that individuals with ownership

interests in Respondent are liable under 443 judgments totaling $145115763

b) There are 232 owners who appear to have criminal history several with multiple

cases In sum it appears that individuals with ownership interests in Respondent

have been prosecuted in Utah for 1274 misdemeanor or felony charges including

the following theft attempted theft retail theft theft by deception theft of

services criminal trespass forgery attempted forgery possession of forgery

equipment attempted possession of forgery writing device attempt to receive

stolen property robbery attempted robbery burglary burglary of a vehicle

attempted fraudulent obtainment of unemployment compensation use or

distribution of a controlled substance possession with intent to distribute of a

controlled substance identity fraud false information with intent to be another

actual person false information to a police officer assault with substantial bodily

injury aggravated assault with a deadly weapon criminal mischief driving under

the influence of alcohol driving without a license no valid driver license ever

obtained driving or operating a vehicle without insurance no proof of insurance

Page 8

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 6: Utah Construction Services Commission decision on Universal Contracting LLC

b) Respondent agrees that its April 16 2012 ownership status report was not filed by

the 90th

day following the date of licensure but points out that its tardiness was

minimal (a couple ofdays) and due to a miscalculation of the due date

c) Respondent acknowledges that the Division charges a $20 fee for each new owner

listed on an ownership status report but contends that it paid the required fee in

full

d) Respondent argues that Utah Code Ann sect 58-55-302(l)(e)(iv) does not require an

ownership status report to disclose each new owners birthdate Respondent

further argues that although the statute authorizes the Division to mandate the

form of the ownership status report that grant of authority does not include the

ability to require whatever information or data the Division might wish to see

therefore precluding the Division from requiring birthdates

e) Respondent argues that its use of the company address for new owners who are

in transition is appropriate and should be considered sufficient to comply with

the statute Respondent also provides updated address information for four of the

new owners for whom the company address was used on the ownership status

report and explains that the other two individuals whose addresses were being

audited by the Division had moved from the state and terminated their ownership

interests in the company

f) Respondent argues that after granting a license application the Division does not

have statutory authority to require the company to demonstrate an owners

financial responsibility by providing a credit report Respondent appears to argue

that in an audit the Division has the burden to prove unprofessional or unlawful

Page 6

conduct and that it may not use an audit to shift onto a licensee the burden to

demonstrate financial responsibility including the associated costs Respondent

notes that a credit report costs $23 Further Respondent argues that the Division

is specifically authorized by statute to require that owners submit credit reports

only in conjunction with the processing of an application for licensure and

therefore is prohibited from requiring a credit report in processing an ownership

status update or conducting an audit of financial responsibility

15 Respondent has provided no documentary evidence to prove the claims made in its June

18 2012 letter that the company is financially healthy and responsible In its presentation

before the Commission Respondent claimed that the company is structured so as to make

it impossible for the financial liabilities of any individual owner to affect or impair the

overall financial health or responsibility of the company

16 The Division has not investigated Respondents overall company finances Nor has the

Division investigated whether the terms of ownership outlined in Respondents contracts

with its owners would suffice to protect the company from an individual owners

financial liabilities beyond those protections that are afforded legally through its business

organization as a limited liability company (LLC) Respondent has not provided its

financial records to the Division but represents that it is willing do to do

17 On August 14 2012 the Division replied to Respondents June 18 2012 letter reiterating

its request that Respondent cure the deficiencies previously identified in regard to its

April 162012 ownership status report and giving Respondent 15 days to do so

18 Respondent did not cure the alleged deficiencies and on October 11 2012 the Division

issued the notice of agency action in this matter

Page 7

19 On November 272012 Respondent supplemented its June 182012 response reiterating

its arguments and alleging that the Division has misinterpreted and misapplied the

statutes on which it relies for this action

20 The Divisions research of Utah court records using the names and Social Security

numbers of the owners Respondent identified on its first status report reveals the

following

a) There are 132 owners who appear to have judgments entered against them several

with multiple judgments In sum it appears that individuals with ownership

interests in Respondent are liable under 443 judgments totaling $145115763

b) There are 232 owners who appear to have criminal history several with multiple

cases In sum it appears that individuals with ownership interests in Respondent

have been prosecuted in Utah for 1274 misdemeanor or felony charges including

the following theft attempted theft retail theft theft by deception theft of

services criminal trespass forgery attempted forgery possession of forgery

equipment attempted possession of forgery writing device attempt to receive

stolen property robbery attempted robbery burglary burglary of a vehicle

attempted fraudulent obtainment of unemployment compensation use or

distribution of a controlled substance possession with intent to distribute of a

controlled substance identity fraud false information with intent to be another

actual person false information to a police officer assault with substantial bodily

injury aggravated assault with a deadly weapon criminal mischief driving under

the influence of alcohol driving without a license no valid driver license ever

obtained driving or operating a vehicle without insurance no proof of insurance

Page 8

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 7: Utah Construction Services Commission decision on Universal Contracting LLC

conduct and that it may not use an audit to shift onto a licensee the burden to

demonstrate financial responsibility including the associated costs Respondent

notes that a credit report costs $23 Further Respondent argues that the Division

is specifically authorized by statute to require that owners submit credit reports

only in conjunction with the processing of an application for licensure and

therefore is prohibited from requiring a credit report in processing an ownership

status update or conducting an audit of financial responsibility

15 Respondent has provided no documentary evidence to prove the claims made in its June

18 2012 letter that the company is financially healthy and responsible In its presentation

before the Commission Respondent claimed that the company is structured so as to make

it impossible for the financial liabilities of any individual owner to affect or impair the

overall financial health or responsibility of the company

16 The Division has not investigated Respondents overall company finances Nor has the

Division investigated whether the terms of ownership outlined in Respondents contracts

with its owners would suffice to protect the company from an individual owners

financial liabilities beyond those protections that are afforded legally through its business

organization as a limited liability company (LLC) Respondent has not provided its

financial records to the Division but represents that it is willing do to do

17 On August 14 2012 the Division replied to Respondents June 18 2012 letter reiterating

its request that Respondent cure the deficiencies previously identified in regard to its

April 162012 ownership status report and giving Respondent 15 days to do so

18 Respondent did not cure the alleged deficiencies and on October 11 2012 the Division

issued the notice of agency action in this matter

Page 7

19 On November 272012 Respondent supplemented its June 182012 response reiterating

its arguments and alleging that the Division has misinterpreted and misapplied the

statutes on which it relies for this action

20 The Divisions research of Utah court records using the names and Social Security

numbers of the owners Respondent identified on its first status report reveals the

following

a) There are 132 owners who appear to have judgments entered against them several

with multiple judgments In sum it appears that individuals with ownership

interests in Respondent are liable under 443 judgments totaling $145115763

b) There are 232 owners who appear to have criminal history several with multiple

cases In sum it appears that individuals with ownership interests in Respondent

have been prosecuted in Utah for 1274 misdemeanor or felony charges including

the following theft attempted theft retail theft theft by deception theft of

services criminal trespass forgery attempted forgery possession of forgery

equipment attempted possession of forgery writing device attempt to receive

stolen property robbery attempted robbery burglary burglary of a vehicle

attempted fraudulent obtainment of unemployment compensation use or

distribution of a controlled substance possession with intent to distribute of a

controlled substance identity fraud false information with intent to be another

actual person false information to a police officer assault with substantial bodily

injury aggravated assault with a deadly weapon criminal mischief driving under

the influence of alcohol driving without a license no valid driver license ever

obtained driving or operating a vehicle without insurance no proof of insurance

Page 8

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 8: Utah Construction Services Commission decision on Universal Contracting LLC

19 On November 272012 Respondent supplemented its June 182012 response reiterating

its arguments and alleging that the Division has misinterpreted and misapplied the

statutes on which it relies for this action

20 The Divisions research of Utah court records using the names and Social Security

numbers of the owners Respondent identified on its first status report reveals the

following

a) There are 132 owners who appear to have judgments entered against them several

with multiple judgments In sum it appears that individuals with ownership

interests in Respondent are liable under 443 judgments totaling $145115763

b) There are 232 owners who appear to have criminal history several with multiple

cases In sum it appears that individuals with ownership interests in Respondent

have been prosecuted in Utah for 1274 misdemeanor or felony charges including

the following theft attempted theft retail theft theft by deception theft of

services criminal trespass forgery attempted forgery possession of forgery

equipment attempted possession of forgery writing device attempt to receive

stolen property robbery attempted robbery burglary burglary of a vehicle

attempted fraudulent obtainment of unemployment compensation use or

distribution of a controlled substance possession with intent to distribute of a

controlled substance identity fraud false information with intent to be another

actual person false information to a police officer assault with substantial bodily

injury aggravated assault with a deadly weapon criminal mischief driving under

the influence of alcohol driving without a license no valid driver license ever

obtained driving or operating a vehicle without insurance no proof of insurance

Page 8

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 9: Utah Construction Services Commission decision on Universal Contracting LLC

use of license plates registered to another vehicle failure to remain at the scene of

an accident purchase transportation possession or use of a firearm by a restricted

person and bail jumping

c) There are 35 owners whose Social Security numbers appear to be associated with

prior bankruptcies although the names on the bankruptcy records are different

from the owners names in certain cases

Without credit reports and more specific information to verify the identity and financial

circumstances of Respondents owners the Division is unable to determine the extent to

which the above data applies to individuals holding ownership interests in Respondent

21 Respondent filed additional ownership status reports as follows

22 The Divisions records show and the Commission accepts as fact that Respondent filed

its second ownership status report on July 30 2012-108 days following the previous

report deadline of April 13 2012 (The 90th day following the previous deadline was July

12 2012) Respondent identified 364 new owners and paid a fee of $6240 an amount

$1050 short of the total required to register 364 new owners at a fee of $20 per owner 2

23 As of the date on which the notice of agency action was filed in this matter Respondent

had registered 1089 new owners and paid registration fees of$15000 an amount $6780

short of the total required to register 1089 new owners at a fee of $20 per owner 3

2 The Divisions records show that Respondent submitted additional ownership status reports on October 172012 and January 142013 It appears that the Division is prepared to demonstrate that each of these reports was filed late and with deficiencies However since these reports were filed after the date on which the notice of agency action was issued in this matter the Commission does not consider them in this order The Division may bring a subsequent action if after the issuance of this order the parties are not able to determine how any deficiencies identified by the Division should be corrected

3 It appears that Respondent made additional payments to the Division following the date on which the notice of agency action was issued in this matter and that the total amount owed as of the date of this order is less than $6780

Page 9

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 10: Utah Construction Services Commission decision on Universal Contracting LLC

CONCLUSIONS OF LAW

24 The following statutory and rule provisions are relevant and controlling in this matter

a) Utah Code Ann sect 58-1-501(2)(a) which establishes that a licensed contractor

commits unprofessional conduct if it violates any statute rule or order regulating the

profession

b) Utah Code Ann sect 58-55-502(1) which establishes that a licensed contractor commits

unprofessional conduct if it fails to establish maintain or demonstrate financial

responsibility while licensed

c) Utah Code Ann sect 58-55-102(19) which defines the term financial responsibility as

follows

Financial responsibility means a demonstration of a current and expected future condition of financial solvency evidencing a reasonable expectation to the division and the board that an applicant or licensee can successfully engage in business as a contractor without jeopardy to the public health safety and welfare

Utah Code Ann sect 58-55-102(19) also specifies the following Financial

responsibility may be determined by an evaluation of the total history concerning the

licensee or applicant including past present and expected condition and record of

financial solvency and business conduct

d) Utah Code Ann sect 58-55-502(2)(t) which establishes that a licensed contractor

commits unprofessional conduct if it disregards or violates either through gross

negligence or through a pattern of negligence any reporting notification and filing

laws of the state

Page 10

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 11: Utah Construction Services Commission decision on Universal Contracting LLC

e) Utah Code Ann sect 58-55-501 (16)(f) which establishes that a licensed contractor

commits unlawful conduct if it fails to comply with applicable reporting notification

and filing laws of the state

f) Utah Code Ann sect 58-55-302(10)(a) which requires a licensed contractor organized

according to Respondents business model to file an ownership status report every 90

days following the date of licensure

g) Utah Code Ann sect 58-55-302(1 O)(b) which requires a licensed contractor organized

according to Respondents business model to list on each ownership status report any

new owners according to a format prescribed by the Division including each new

owners name birthdate (as of May 8 2012) address and Social Security number

and to pay a fee as established by the Division

h) Utah Code Ann sect 58-55-302(lO)(c) which allows the Division to audit at any time

an ownership status report to determine if the licensees financial responsibility has

been demonstrated or maintained as required under Utah Code Ann sect 58-55-306

i) Utah Code Ann sect 58-55-306(4)(a) which allows the Division to require each owner

of a contractor business that is organized according to Respondents business model

to demonstrate financial responsibility in conjunction with an application for

licensure

j) Utah Code Ann sect 58-55-306(2) which allows the Division to audit an applicants or

licensees demonstration of financial responsibility on a random basis or upon finding

of a reasonable need

k) Utah Code Ann sect 58-55-306(3) which places the burden of demonstrating financial

responsibility on the applicant or licensee

Page II

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 12: Utah Construction Services Commission decision on Universal Contracting LLC

I) Utah Code Ann sect 58-55-306(4)(b) which allows the Division to audit the financial

responsibility of an owners demonstration of financial responsibility under

Subsection 58-55-306(4)(a) at any time by among other methods requiring a current

list of owners and requiring a credit report for each owner

m) Utah Administrative Code sect RI56-55a-306(l) which lists the records including

judgments tax liens and collection actions the Division may consider in conducting

a financial responsibility audit of a licensed contractor and specifying that the

Division may examine individuals credit reports

25 The Divisions petition in this matter sets forth the following two counts

a) Count I Respondent has failed to submit timely and complete owner reports

b) Count II Respondent has failed to demonstrate financial responsibility

The Commission will address each count individually

COUNT I FAILURE TO SUBMIT TIMELY AND COMPLETE OWNER REPORTS

26 The Commission finds pursuant to Paragraphs 12 and 22 above that Respondent filed its

first ownership status reports three days late and its second report 18 days late The

Commission concludes that by missing these statutory deadlines Respondent failed to

comply with the reporting requirement set forth in Utah Code Ann sect 58-55-302(lO)(a)

Therefore Respondent has engaged in unlawful conduct pursuant to Utah Code Ann sect

58-55-501 16)t)

27 Respondent admits that it missed the first ownership status report deadline due to a

miscalculation of the due date The Commission concludes that these circumstances

constitute negligence and that similar negligence can more likely than not be attributed

Page 12

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 13: Utah Construction Services Commission decision on Universal Contracting LLC

to Respondents missing the second report deadline Therefore the Commission finds that

Respondent has engaged in a pattern of negligence regarding a statutory reporting

requirement which constitutes unprofessional conduct under Utah Code Ann 58-1shy

501(2)(a) and Utah Code Ann sect 58-55-502(2)(f)

28 Pursuant to Paragraph 12 above the Commission has found that Respondents first

ownership status report failed to include a birthdate financial questionnaire and credit

report for each of the new owners listed and failed to provide a residential address for six

of the individuals The issue to be decided by the Commission is whether these omissions

also render the report incomplete

29 As to the issue regarding addresses the Commission disagrees with Respondents

contention that it is appropriate to use a company address for any owner who is in

transition It is unclear what this term means how long a transition period might last

and when if ever Respondent would update the information if it were not challenged by

the Division Where the Division may require each owner individually to demonstrate

financial responsibility the Commission concludes that it is reasonable for the Division

to require each individual owner to disclose his or her residential address to aid in

verifying the identity of a debtor who has a common name and in order to facilitate direct

communication with an owner rather than having to filter all communication through

Respondent Therefore Respondents failure to provide unique residential addresses for

each new owner rendered its first status report incomplete However where Respondent

has since remedied this failing the Commission finds the issue to be moot for the purpose

of assessing violations and penalties

Page 13

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 14: Utah Construction Services Commission decision on Universal Contracting LLC

30 As to the issue regarding birthdates Respondent argues that the Division did not at the

time the first ownership status report was submitted have statutory authority to require

new owners to disclose their birthdates The Commission disagrees

31 In drawing this conclusion the Commission notes the inclusive language of the statute

outlining the data that must be disclosed for each new owner Specifically Section 58-55shy

302(1)(e)(iv) states that a licensee must provide Ita list that includes for each

individual the individuals name address and Social Security number II (emphasis

added) According to standard rules of statutory interpretation such inclusive language

indicates that other items may be added to the list4 Arguably a reasonableness standard

would apply to any added item

32 In this case the Divisions request for birthdates was reasonable A birthdate is necessary

in order to verify the identity of a debtor named in a judgment tax lien or collection

action Home addresses are helpful for this purpose though not entirely reliable and

Social Security numbers are generally not included in the information contained in court

records Where pursuant to Utah Administrative Code sect RI56-55a-306(1) judgments

tax liens and collection actions are records that can be examined by the Division in a

financial responsibility audit it is reasonable for the Division to require data including a

birthdate from which it might be verified whether an owner and a debtor are the same

person The conclusion that it is reasonable for the Division to require owners birthdates

is further supported by fact that the Utah Legislature in its 2012 session amended

4 See eg State v Pecht 48 P3d 931 937 stating that a list of factors outlined in the statute under consideration in the case was not exclusive but should be interpreted as intended to prompt a comprehensive inquiry It is notable that the statute under consideration by the Pecht court did not use any form of the word include Even so the court held that the list of items to be considered was not exclusory

Page 14

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 15: Utah Construction Services Commission decision on Universal Contracting LLC

Section 58-55-302(1)(e)(iv) to state specifically that a licensee must provide new owners

birthdates on each ownership status report

33 Having reached a conclusion on the specific issue as to whether the Division was at all

relevant times authorized by statute to require Respondent to disclose its new owners

birthdates and having found that the Division may reasonably require a company to

provide data other than that specified in statute the Commission does not find it

necessary to entertain Respondents more general arguments that the authority to dictate a

form of a disclosure does not also authorize an administrative agency to dictate the

content of a disclosure

34 The Commission finds that Respondents failure to disclose its new owners birthdates in

response to a proper and reasonable request by the Division constitutes a failure to

comply with a state reporting notification and filing law Therefore Respondents

actions constitute unlawful conduct under Utah Code Ann sect 58-55-501(l6)(f)

35 The Division also argues under Count I of its petition that Respondents failure to provide

credit reports and financial questionnaires for its new owners constitutes a failure to

submit a complete ownership status report The Commission agrees but finds that this

issue is better analyzed under Count II of the Divisions petition

COUNT II FAILURE TO DEMONSTRATE FINANCIAL RESPONSIBILITY

36 The parties do not dispute the following points

a) That a licensed contractor organized according to Respondents business model is

required to provide the Division with a list of owners each time it applies for

licensure and every 90 days following the date on which a license is issued

Page 15

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 16: Utah Construction Services Commission decision on Universal Contracting LLC

b) That the Division is explicitly authorized by statute to require credit reports from

all owners identified in conjunction with an application submitted by a contractor

that is organized according to Respondents business model

c) That a licensed contractor organized according to Respondents business model is

required to maintain financial responsibility throughout the term of licensure

d) That the Division is explicitly authorized by statute to audit a licensed contractor

that is organized according to Respondents business model with regard to the

demonstration of financial responsibility made during the most recent application

and

e) That the Division is explicitly authorized by statute to audit an ownership status

report submitted by a licensed contractor that is organized according to

Respondents business model at any time during the period of licensure to

determine whether the company maintains financial responsibility

37 The dispute between the parties involves what the Divisions audit power means III

practice particularly as it relates to an audit of an ownership status report Specifically

the issue before the Commission is whether the Division may require Respondent to

provide credit reports and financial questionnaires5 for its new owners as part of an audit

of a status report

38 Respondents central argument is that the Division once a license has been granted has

no authority to inquire into or audit the financial status of new owners until such time as

5 The parties focus during the Commissions February 272013 meeting was on credit reports There was little if any discussion of financial questionnaires However to date Respondent has declined to provide financial questionnaires in response to the Divisions audit Therefore it appears that Respondents position regarding financial questionnaires is the same as its position regarding credit reports Rather than reconvening the parties to clarity Respondents position the Commission assumes that Respondent considers the Division to be without authority to require each new owner to complete and submit a financial questionnaire

Page 16

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 17: Utah Construction Services Commission decision on Universal Contracting LLC

the company next makes application for license renewal Therefore Respondent contends

that a Division audit of an ownership status report is restricted to inquiry regarding the

companys finances and that if the company itself appears to be financially healthy the

Division should be precluded from considering the financial condition of any individual

owner 6 The Commission disagrees

39 Utah Code Ann sect 58-55-306 allows the Division to require individual owners of an

unincorporated contractor company to demonstrate financial responsibility in order to

determine whether the company itself is financially responsible No language in this

section-or in any other section brought to the Commissions attention by Respondent-

specifies that there are times or circumstances when the relationship between the

financial health of an unincorporated entity and the financial circumstances of its owners

terminates or becomes irrelevant As such the statute contemplates that the financial

circumstances of Respondents owners are relevant at all times to the companys ability to

demonstrate financial responsibility

40 Respondent in its argument before the Commission repeatedly claimed that the

company is structured so as to make it impossible for an owners financial liabilities to

impair or affect the companys overall financial standing Respondent appears to argue

that if the Legislature sees the relationship between the financial health of an

unincorporated company and its owners to be relevant then the Legislature is-at least in

some cases-wrong If this is Respondents position it must take its argument to the

Legislature The Commission declines to rule on whether the mechanism outlined in

statute for demonstrating financial responsibility of an unincorporated entity is overbroad

6 Respondents argument before the Commission appears to acknowledge that if the companys finances were to appear questionable the Division might then have the authority to look further at the financial condition of the companys owners

Page 17

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 18: Utah Construction Services Commission decision on Universal Contracting LLC

or otherwise flawed Therefore the Commission concludes that while an examination of

a companys books might be useful in determining whether a company is financially

responsible the Division is not required to make such an examination before it may

inquire into the financial condition of a companys owners Nor is the Division precluded

from inquiring into the financial condition of a companys owners if it appears on some

level that the company is financially healthy and responsible

41 This conclusion is supported by the statutory definition of financial responsibility

which specifies that the term refers to the total history of an applicant or licensee This

language is extremely broad and allows consideration of all factors particularly those

considered relevant under the statute In the instant case as stated above the statute

indicates that an owners financial circumstances are relevant

42 Having determined that the relationship between the finances of a company and its

owners is relevant at all times to the companys ability to demonstrate financial

responsibility it remains for the Commission to consider whether the statute nevertheless

restricts the Division from requiring owners to submit financial questionnaires and credit

reports in conjunction with an ownership status report The Commission concludes that

there is no such restriction

43 To conclude otherwise would require the Commission to engage in an extremely narrow

reading of Section 58-55-306 Essentially Respondent requests the Commission to read

the section as allowing the Division to audit nothing more than the demonstration of

financial responsibility that a company has made in conjunction with its most recent

application for licensure In the instant case such an approach would allow the Division

to audit Alma Faerbers financial responsibility during Respondents initial term of

Page 18

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 19: Utah Construction Services Commission decision on Universal Contracting LLC

licensure but it would preclude the Division from evaluating any new owners who are

brought into the company during that term

44 If the Legislature intended for the statute to be read in such a narrow and restrictive

manner there would be little if any practical application of the statutory requirement

that each owner of an unincorporated business demonstrate financial responsibility in

conjunction with an application Any company that wished to preclude the Divisions

review of an individual whose financial circumstances might undermine the companys

ability to demonstrate overall financial responsibility could simply apply at a time when

the individual were not considered an owner then bring the person into the company

shortly thereafter

45 Similarly there would be no reason to require a company to submit an ownership status

report every 90 days other than to document the new names This is not the purpose of

Section 58-55-302(10)(c)(i) which authorizes the Division to audit an ownership status

report for the specific purpose of determining whether financial responsibility has been

demonstrated or maintained as required under Section 58-55-306 II (emphasis added)

The Commission notes that this language does not restrict an audit as applying only to a

companys demonstration of financial responsibility as established at some past point in

time specifically as of an application date Rather it authorizes the Division to audit an

ownership status report submitted outside of an application for licensure As such the

statute contemplates that the financial status of new owners might impair a companys

overall financial stability as well as its ability or willingness to maintain responsible

financial policies and practices

Page 19

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 20: Utah Construction Services Commission decision on Universal Contracting LLC

46 Utah Code Ann sect 58-55-306(4)(b)-which is referenced by Section 58-55-306 in regard

to the requirement that a company maintain financial responsibility-states that an audit

of the financial responsibility demonstrated by a company in conjunction with a license

application may include the requirement that the company provide a current list of

owners The use of the word current reveals that the purpose of the audit is to scrutinize

the financial responsibility of any new owners to determine whether a new owners

circumstances impair the companys ability to demonstrate that it maintains financial

responsibility In addition the statute specifies that a recommended way to conduct the

audit is by examining a credit report for each owner as named in the current list

47 The Commission notes that the statute does not specify that the Division may require a

company to submit financial questionnaires for its new owners Having already found

that the Division has the ability to require information and data beyond the items

specified in Utah Code Ann sect 58-55-302(1)(e)(iv) the Commission now considers

whether it is reasonable for the Division to require financial questionnaires

48 If the Division were not allowed to require new owners to submit financial disclosures in

an audit it would be very difficult for the Division to comply with the statutory mandate

that it evaluate the financial responsibility of the owners in an unincorporated entity This

difficulty is illustrated by the actions taken by the Division in this case

49 When Respondent declined to provide credit reports and financial disclosures the

Division searched the Utah court records individually for each of the 725 new owners

named in Respondents first status report There is no information in the record regarding

the number of hours required to conduct these searches or the associated administrative

cost but it is reasonable to conclude that the administrative burden was meaningful

Page 20

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 21: Utah Construction Services Commission decision on Universal Contracting LLC

50 The Divisions research indicated that Respondents new owners might include petitioners

for bankruptcy debtors and defendants named in as many as 1752 cases in Utah alone

with crimes involving theft forgery violence and fraud The Division has no ability to

search other jurisdictions for similar information

51 It would be impossibly burdensome to require the Division to further research those

1752 cases to verify the identity of the individuals named and thereafter to determine

the current status of each case involving an individual affiliated with Respondents

company so as to establish whether each such individual demonstrates financial

responsibility in spite of his or her history Even were the Division to undertake such a

task the information generated would be incomplete because it would not reflect issues

adjudicated in other states Nor would it reveal collections delinquent accounts and

similar matters that had not been made part of a court case However a financial

questionnaire allows the Division to focus on relevant inquiries Therefore the

Commission concludes that it is reasonable for the Division to require Respondents new

owners to submit completed financial questionnaires

52 Moreover under Utah law the Division does not have the burden of proving that an

applicant or licensee lacks financial responsibility To the contrary Utah Code Ann sect 58shy

55-306(3) explicitly places the burden of demonstrating financial responsibility on the

applicant or licensee and this burden is not restricted to circumstances involving an

application for licensure For this very purpose Respondent is required to submit a status

report every 90 days Further Utah Code Ann sect 58-55-302(10)( c )(i) incorporates Section

58-55-306(3) in outlining a licensees obligation to maintain financial responsibility

Therefore the Commission concludes that any costs associated with demonstrating that

Page 21

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 22: Utah Construction Services Commission decision on Universal Contracting LLC

financial responsibility is maintained must be borne by the licensee at all times

regardless of whether it is an application or an audit through which a licensee is requested

to make the required showing Therefore the Commission concludes that Respondent

must bear all costs associated with providing financial questionnaires and credit reports

as requested by the Division If Respondents business model makes these costs

excessively burdensome that factor is within Respondents control and irrelevant under

the statute

53 Given the foregoing findings that Respondent was required at all relevant times to

provide financial questionnaires and credit reports for new owners listed on its status

reports and to bear the associated costs the Commission now concludes that

Respondents failure to do so constitutes a failure to demonstrate and maintain financial

responsibility Therefore Respondent has committed unprofessional conduct under Utah

Code Ann sect 58-55-502(1)

54 Where Respondent has failed to demonstrate and maintain financial responsibility the

Commission concludes that there is an open question as to whether its circumstances

indicate that it operates or that it might operate in a manner as to place in jeopardy the

health safety and welfare of the public Therefore the Commission concludes that it is

not appropriate under Utah Code Ann sect 55-58-402(3) to resolve this administrative

matter without taking an immediate action

55 Utah Code Ann sect 58-1-401(1)-(2) states that the Commission may revoke suspend

restrict place on probation or otherwise act on the license of a licensee who has engaged

in unprofessional conduct as defined by statute or rule or who has engaged in unlawful

conduct as defined by statute Utah Code Ann sect 58-55-306(4)(c) provides that in

Page 22

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 23: Utah Construction Services Commission decision on Universal Contracting LLC

circumstances where an owner fails to demonstrate financial responsibility either the

owner or the licensee may be prohibited from engaging in a construction trade

ORDER

On the basis of the findings of fact and conclusions of law outlined herein the license of

Universal Contracting LLC is placed on probation for a period of one year from the date of this

order contingent on its complying with the remainder of this order and submitting financial

questionnaires and credit reports from which it may be determined that each of the companys

owners demonstrates financial responsibility Within 45 calendar days of the date of this order

Universal Contracting LLC shall pay to the Division either the $6780 due in outstanding fees as

of October 112012 or alternatively the total amount due according to the Divisions records in

order to register all new owners named in the companys status reports between April 16 2012

and January 14 2013 By the same deadline Respondent shall also provide to the Division

birthdates financial questionnaires and credit reports for any owner who as of October 11

2012 had not provided these records If Universal Contracting LLC fails to comply with these

requirements by the deadline stated the Division shall immediately revoke the companys

contractor license without further notice or proceeding If Universal Contracting LLC complies

with these requirements by the deadline stated the Division shall review the records and bring to

the Commission for further consideration and action any concerns or issues regarding the

companys financial responsibility

This order shall be effective on the signature date below

Page 23

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 24: Utah Construction Services Commission decision on Universal Contracting LLC

Acting Director Division of Occupation

DATED this Ill-h day of 1-0-lt 2013

Signed by the Acting Director pursuant to a grant of authority from the Utah Construction Services Commission and on its behalf

UTAH DEPARTMENT OF COMMERCE

Thomas A Brady

Professional Licensing

Notice of Right to Administrative Review

Review of this order may be sought by filing a written request for administrative review with the Executive Director of the Department ofCommerce within thirty (30) days after the issuance of this order Any such request must comply with the requirements of Utah Code Ann sect 630-4shy301 and Utah Admin Code R151-4-902

Page 24

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing

Page 25: Utah Construction Services Commission decision on Universal Contracting LLC

CERTIFICATE OF SERVICE

I hereby certify that on the ~ day of March 2013 a true and correct copy of the foregoing FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER has been served on the parties of record in this proceeding by mailing a copy thereof properly addressed by first class mail with postage prepaid to the following

Universal Contracting LLC 598 West 2760 North Pleasant Grove UT 84062

Daniel Watkins Peck Hadfield Baxter amp Moore 399 North Main Street Ste 300 Logan UT 84321

Carol Inglesby Administrative Asst Division of Occupational

and Professional Licensing