View
8
Download
0
Category
Preview:
DESCRIPTION
Decision by Utah Construction Services Commission re: Universal Contracting LLC
Citation preview
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
Recommended