Pursuant to a Data Practices challenge made on February 3, 2010, this
document is amended to note that Gladiator Exteriors, Inc. is now under new
ownership
OAH 8-1902-20649-2
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE MINNESOTA DEPARTMENT OF LABOR AND
INDUSTRY
|
In the Matter of
Gladiator Exteriors, Inc. |
FINDINGS
OF FACT, CONCLUSIONS AND RECOMMENDATION
|
This
matter came on for an evidentiary hearing before Administrative Law Judge Eric
L. Lipman on November 6, 2009, at the
Michael
J. Tostengard, Assistant Attorney General, appeared on behalf of the Minnesota
Department of Labor and Industry (Department).
Stuart D. Luhm, in his capacity as sole owner of the corporation,[1]
made an appearance on behalf of Gladiator Exteriors, Incorporated (Respondent
or Gladiator Exteriors). The hearing
record closed following the adjournment of the evidentiary hearing.
STATEMENT OF THE ISSUES
1.
Did Mr.
Luhm, working on behalf of Gladiator Exteriors, submit false and misleading
information to the Department in connection with an application for licensure?
2.
Has Mr.
Luhm engaged in acts that demonstrate that he is unqualified to act as the
qualifying person for a residential building contractor?
The Administrative Law Judge
concludes that while Mr. Luhm should not be sanctioned for submitting a false
application to the Department, the Commissioner of Labor and Industry should
deny the Respondent’s application for a residential contractor’s license.
FINDINGS OF FACT
1.
On
March 17, 2009, Stuart D. Luhm submitted an application for a residential
building contractor’s license on behalf of his corporation, Gladiator
Exteriors.[2]
2.
Mr. Luhm had earlier passed the residential
building contractor test and paid the required application fee.[3]
3.
As part
of the application for a Residential Building Contractor License, applicants
are required to provide background information on any “qualifying persons” of
the licensed entity. The form inquires
whether the applicant or the applicant’s qualifying person has “[b]een charged,
indicted, pleaded to, or convicted of any criminal offense in any State or
Federal Court in the last 10 years,” instructs the applicant to include
“felonies, gross misdemeanors or misdemeanors” other than traffic violations,
and directs applicants responding “yes” to this question to attach “a written
statement, signed and dated by the applicant, explaining the circumstances of
each incident.” Mr. Luhm signified that he had been the subject of such a
conviction; noting that “[o]n July 16th, 2006, I was arrested with
some drugs and charged with a felony.”[4]
4.
The
sentence on Mr. Luhm’s conviction for sale of a controlled substance in the
second degree expires in June of 2010.[5]
5.
Further,
as part of the application, Mr. Luhm pointed to his work history while he was
incarcerated in a Minnesota Department of Corrections’ facility during the
period between January 2007 and January 2008.[6]
1.
In the
application for licensure, Mr. Luhm did not detail his 2005 misdemeanor
conviction for Tampering with a Motor Vehicle.[7]
2.
Thomas
Sendecky, a senior investigator for the Department, reviewed the application
submitted by Respondent. As with all
such applications, Mr. Sendecky undertook a criminal background check on the
qualifying person.[8]
3.
The
Department evaluated the criminal complaint and accompanying materials
underlying Mr. Luhm’s 2006 conviction to determine if the allegations would
affect the application for a residential contractor’s license. The Department considered the misconduct by
Mr. Luhm, found that the underlying conduct directly related to the occupation
of residential contractor, and determined that the criminal convictions brought
into question Mr. Luhm’s fitness to serve as a qualifying person for a
residential contractor. The Department
ultimately concluded that it would not be in the public’s interest to issue a
license to Mr. Luhm’s company, Gladiator Exteriors.[9]
4.
On June 1, 2009, the Department served Mr. Luhm
with a Licensing Order denying Gladiator Exteriors’ application for a
residential building contractor’s license.[10]
5.
The Order
notified Mr. Luhm that, unless he requested a hearing within 30 days, the Order
would become a final order of the Commissioner.[11]
6.
On June
19, 2009, the Department received Mr. Luhm’s request for a hearing to contest
the denial of his application for a residential building contractor’s license.
Based upon the foregoing Findings of Fact, the Administrative Law Judge makes the following:
1.
The
Administrative Law Judge and the Commissioner of Labor and Industry are
authorized to consider the charges against Respondent under Minn. Stat.
§§ 14.50, 45.027, 326.91 and 364.06.
2.
Respondent
received due, proper and timely notice of the charges against it, and of the
time and place of the hearing. This matter is, therefore, properly before
the Commissioner and the Administrative Law Judge.
3.
The
Department has complied with all relevant procedural legal requirements.[12]
4.
The
burden of proof in this proceeding is upon the Respondent to show by a
preponderance of the evidence that it should be granted a residential
contractor license.
5.
The
Commissioner of Labor and Industry may deny a license application if the
Commissioner finds that it is in the public interest to do so and the applicant
either has “violated any law, rule, or order related to the duties and
responsibilities entrusted to the commissioner,”[13] or the applicant has “engaged in an act
or practice, whether or not the act or practice directly involves the business
for which the person is licensed or authorized, which demonstrates that the
applicant or licensee is untrustworthy, financially irresponsible, or otherwise
incompetent or unqualified to act under the authority or license granted by the
Commissioner.”[14]
6.
A
controlled substance crime in the second degree, and a recent misdemeanor
property offense, are sufficiently related to the duties of a residential
building contractor so as to forestall licensure. This conduct is grounds
for denial of a license under the relevant statutes in that it constitutes deceptive
and dishonest practices and further demonstrates that Mr. Luhm is not
sufficiently responsible to hold a position of trust.
7.
Gladiator
Exteriors has failed to demonstrate that it is appropriate, and in the public’s
interest, to grant it a residential building contractor license.
Based upon the foregoing
Conclusions, the Administrative Law Judge makes the following:
IT IS HEREBY RECOMMENDED that
the Commissioner of the Minnesota Department of Labor and Industry deny
Respondent’s application for a residential contractor’s license.
Dated: November 30, 2009
s/Eric
L. Lipman
________________________
ERIC
L. LIPMAN
Administrative
Law Judge
Reported: Digital Recording
No transcript prepared
This report is a
recommendation, not a final decision.
The Commissioner of the Department of Labor and Industry will make the
final decision after a review of the record.
The Commissioner may adopt, reject or modify the Findings of Fact,
Conclusions and Recommendation. Under
Minn. Stat. § 14.61, the final decision of the Commissioner shall not be made
until this Report has been made available to the parties to the proceeding for
at least ten days. An opportunity must
be afforded to each party adversely affected by this Report to file exceptions
and present argument to the Commissioner.
Parties should contact Steve Sviggum, Commissioner, Attention: Wendy Willson Legge, Director of Legal
Services, Minnesota Department of Labor
& Industry,
If the Commissioner fails to issue a final decision within 90 days of the close of the record, this report will constitute the final agency decision under Minn. Stat. § 14.62, subd. 2a. In order to comply with this statute, the Commissioner must then return the record to the Administrative Law Judge within 10 working days to allow the Judge to determine the discipline to be imposed. The record closes upon the filing of exceptions to the report and the presentation of argument to the Commissioner, or upon the expiration of the deadline for doing so. The Commissioner must notify the parties and the Administrative Law Judge of the date on which the record closes.
Under Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final decision upon each party and the Administrative Law Judge by first class mail or as otherwise provided by law.
MEMORANDUM
The Department asserts that
Respondent is not entitled to a residential contractor’s license because Mr.
Luhm “submitted false and misleading information to the State in connection
with an application for licensure” and “has shown to be unfit to act under a
license granted by the Commissioner.”[15]
Mr. Luhm does not dispute that he
was charged and convicted of a serious controlled substance crime, but argues
that the passage of time since his guilty plea, his completion of the Challenge
Incarceration Program, and the fact that he has remained law-abiding since the
conviction, make it appropriate to now issue him a residential contractor’s
license. The Respondent also emphasizes that he truthfully disclosed the
conviction on his application and has taken full responsibility for the
mistakes he made.
Count I - Claim of a False and Misleading
Application:
The Department asserts that
because Mr. Luhm did not disclose his 2005 misdemeanor conviction on the
Department’s application form, the application submitted by Mr. Luhm is
“incomplete and false.”
While the Administrative Law
Judge agrees that the application form requires documentation of all
misdemeanor convictions, and the Department is fully entitled to receive these
items before it must pass upon a request for licensure, the record does not
provide a basis for concluding that Mr. Luhm’s submissions were deliberately
false or misleading. The better
understanding of the hearing record is that Mr. Luhm forgot to include this
detail in his submissions.
In this context, it is
significant that Mr. Luhm called the Department’s attention to both his felony
controlled substance conviction and his term of incarceration.[16] Likewise important, the Department’s
investigator, Mr. Sendecky, testified persuasively that as a matter of routine
he undertakes criminal background checks on license applicants. Thus, the lack of specific documentation from
Mr. Luhm would not have resulted in the misdemeanor conviction eluding
Investigator Sendecky or his team.[17]
Sanctions for violations of
Minn. Stat. § 326B.082, subd. 11(b)(2) and the false claim provisions of Minn.
Stat. § 326B.84(1) should be reserved for those instances where there is
evidence that the applicant affirmatively acted to mislead the Department.[18] On this point, the Commissioner of Labor of
Industry’s final decision In the Matter of the Residential
Building Contractor’s License of Daniel Ivan Petrie, OAH Docket No. 8-1902-17514-2
(2006) is both helpful and instructive.[19]
Count I of the Statement of Charges should be dismissed.
Count II – Claim of Lack of Qualification:
The facts are likewise
sufficient to support the conclusion that the property and drug crimes which
Mr. Luhm committed directly relates to the occupation of a residential
contractor. As detailed in the testimony of the Department’s
investigator, Mr. Sendecky, licensed residential building contractors have
unfettered access to the homes of consumer clients and occupy privileged
positions of trust for these consumers.
While it is true that nearly
three years has elapsed since Mr. Luhm was convicted of his controlled
substance crime, and that he wishes to move in a different and more productive
direction, the Administrative Law Judge agrees with the Department that
Mr. Luhm’s earlier misconduct relates to his fitness for a residential
building contractor license. The nature
and seriousness of the crimes for which he was convicted, the circumstances relating
to those crimes, and the fact that he continues to be under court supervision
for his earlier misconduct,[20]
all provide reasonable support for denial of the license
application. Respondent has not
provided sufficient evidence of Mr. Luhm’s present fitness for licensure.
E. L. L.
[1] Compare,
[2] See, Ex. 1; Testimony of Stuart D. Luhm.
[3]
[4] See, Exhibit 1 at 5 and 8.
[5] Testimony of Thomas Sendecky; Testimony of Stuart D. Luhm.
[6] Ex. 1 at 4.
[7] Exs. 1 and 2.
[8] Test. of T. Sendecky.
[9]
[10] See also, Minn. Stat. § 326B.082 (11) and (12).
[11] See also, Minn. Stat. § 326B.082 (8) and (12) (2008).
[12] See,
[13] See,
[14] See,
[15] Notice and Order for Pre-Hearing Conference, OAH Docket No. 8-1902-20649-2 at 2-3.
[16] See, Exhibit 1 at 4 and 5.
[17] Testimony of T. Sendecky.
[18] Compare,
Minn. R. 2891.040 (A) (2007) (It is a dishonest practice to make a “misrepresentation
of material fact by the applicant in obtaining a license”); In the Matter of the Residential Building
Contractor License of Great Lakes Builders and Remodelers, Inc., OAH Docket
No. 8-1005-11810-2 (1999) (http://www.oah.state.mn.us/aljBase/100511810.sd.htm)
(applicant affirmatively misled the Department as to his relationship to
another business entity); compare also,
In the Matter of the Unlicensed Residential Building Contractor Activity of
Joseph Penrose, OAH Docket No. 7-1005-14143-2 (2001) (http://www.oah.state.mn.us/aljBase/100514143.drft.htm)
(licensee affirmative misled the Department as to the ownership of the business
entity).
[19] See, In the Matter of the
[20] Compare Test. of S. Luhm with Minn. Stat. § 364.03 (3)(a)(3) (2008) (among the minimum elements for a showing of “sufficient rehabilitation” under the disqualification statute is a discharge from supervision).