Judge Mitchell L. Beckloff, Case Number: 21STCP03359, Date: 2024-01-24 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 21STCP03359, Date: 2024-01-24 Tentative Ruling

Through his petition, Paul Allan Oravecz (Petitioner), seeks a writ of administrative mandate directing Respondent, Contractors State License Board (Board), to set aside its administrative decision (Decision) affirming Citation number 2 2019 2234 (the Citation) issued to ADR Design Inc. (ADR). The Citation, as affirmed by the Board, requires ADR to pay a civil penalty of $2,000 within 30 days of the effective date of the Decision, and to pay the cost of correction in the amount of $50,000 to Real Party in Interest, Mariya Wrightsman, also within 30 days of the effective date of the Decision. The Board opposes the petition.

[Petitioner shall address service of the petition or briefs on Wrightsman. It appears there is no service. Given Wrightsman’s interest in the proceedings, how can the court proceed without notice to her?]

Petitioner’s request for judicial notice of the Board’s website listing for ADR is denied. (See Opening Brief 17.) “[A] hearing on a writ of administrative mandamus is conducted solely on the record of the proceedings before the administrative agency.” (Toyota of Visalia, Inc. v. New Motor Vehicle Bd. (1987) 188 Cal.App.3d 872, 881.) Extra-record evidence may be admitted if, in the exercise of reasonable diligence, the relevant evidence could not have been produced or was improperly excluded at the hearing. (Code Civ. Proc., § 1094.5, subd. (e).) A request for judicial notice cannot be used to circumvent the rules about extra-record evidence. (Ballona Wetlands Land Trust v. City of Los Angeles (2011) 201 Cal.App.4th 455, 475, fn. 10.) As Petitioner has not addressed the requirements of Code of Civil Procedure section 1094.5, subdivision (e) and augmentation in his request for judicial notice, the request is denied.

Wrightsman Hires Amos Gawi to Build an Accessory Dwelling Unit (ADU) and Petitioner Obtains the Building Permits

On May 14, 2008, the Board issued a general building contractor license to ADR. (AR 674-676.) Petitioner is ADR’s responsible managing officer. (AR 675.)

In 2018, Wrightsman decided to convert the garage of her home to an ADU. (AR 121-122.) Wrightsman’s handyman, Erick Franco, referred her to Amos Gawi as someone who could do the work. (AR 34, 122-123, 718.) In a declaration dated in February 2021, Franco attested “[o]ver the years working for Mr. Gawi, I remember several occasions where [Gawi] referred to his ‘business partner,’ whose name he said was ‘Paul.’ ” (AR 718.)

“Gawi is not licensed by the Board. Gawi instructed Wrightsman to write checks to TO2 Group Corporation, which is not licensed by the Board.” (AR 34, ¶ 6 [administrative findings of fact].)[1]

“Wrightsman met Gawi in April 2019 to discuss plans. Gawi told her he had a partner who could help resolve issues and guide him. After the plans needed to be corrected, Gawi told Wrightsman the city approved the plans.” (AR 34, ¶ 7; see also AR 124-125 [testimony of Wrightsman].)

In a declaration, Petitioner attests, in April 2019, “I received a call from Amos Gawi asking for help on [an ADU] that he and his friend where [sic] preparing for her residence as she was the owner. I agreed and I met with him as he bought [sic] the plans to explain the problem.” (AR 828.) Petitioner further attests: “[Gawi’s] problem was that of an engineering issue of which I realized there was an engineer of record and he should take the plans back to him and have it resolved . . . . After some small talk we departed, after a week or so he called again and asked me if I wanted to build the project I said yes but I need to bid it out so he dropped the plans off to me.” (AR 828; see also AR 59-60 [summary of Petitioner’s interview with a Board investigator].)

“Gawi and Wrightsman signed the contract on May 2, 2019. (Exhibit 3). The contract listed the contractor as TO2 Group dba ADR Design. The work was described as adding a second story to the existing garage ADU. The contract price was $92,000. Wrightsman made a down payment of $16,000 on May 2, 2019 payable to TO2 Group Corporation.” (AR 35, ¶ 8; see also 678-680.) The contract also specifies an approximate completion date of August 22, 2019. (AR 678.)

“Gawi told Wrightsman he and his partner would do the project together and his partner had insurance. Gawi showed insurance certificates to Wrightsman that listed [ADR] as the insured. (Exhibit 6.).” (AR 35, ¶ 9; see also AR 126-127, 695-96.) “The insurance certificates Gawi showed to Wrightsman were obtained by [ADR] for other jobs, in some instances in other states. [Petitioner] did not know how Gawi obtained those certificates.” (AR 38, ¶ 24.)

“Gawi contacted [Petitioner] and asked him to get building permits, for the owner to use to get a building loan. [Petitioner] asked to meet the owner, and a meeting was arranged at city hall on May 13, 2019.” (AR 36, ¶ 11; see also AR 130-132.)

“Building permits were issued on May 13, 2019, for plumbing, electrical, mechanical, and general building. (Exhibit 7.) The permits list [ADR] as the contractor. [Petitioner] signed each of the permits in three places, indicating [ADR] was licensed, had worker's compensation insurance, and agreed to comply with ordinances and statutes relating to building construction.” (AR 36, ¶ 12; see also 703-706.)

At the administrative hearing, Petitioner testified neither Wrightsman nor Gawi could have obtained the permits because neither is a licensed contractor. (AR 358-59.) Petitioner testified he “was officially the owner of the building permits.” (AR 828, 362.)

Significantly, however, Petitioner also testified Gawi asked him to obtain the building permits “for a bank loan as the owner was going to borrow the money to fund the project.” (AR 828, ¶ 14.) Petitioner testified he agreed to obtain the permits for that purpose. (AR 828.) According to Petitioner, after the city issued the permits, Gawi told Petitioner “ok we will call you when we get the financing.” (AR 829, ¶ 19.) Petitioner attested: “That was the last time I spoke to Miss Wrightsman until on or about July 13th. I spoke with [Gawi] a few times after that but he would shift the conversation to his vacations and as I was in the same state of mind it was summer and time to travel.” (AR 829, ¶ 21.) In its Decision, the Board did make any finding regarding the credibility of these details in Petitioner’s testimony. (See AR 38, ¶ 23.)

Gawi Abandons the Project; Wrightsman Files a Police Report and Complaint to the Board; and Petitioner Makes Statements Concerning the Contract Terms

“Work commenced with demolition later in May 2019. Some work was done on the foundation. Wrightsman paid a total of $77,200 to Gawi. The last payment, in the amount of $40,000, was on June 12, 2019. No work was performed on the project after that date.” (AR 36, ¶ 16; see also AR 144-145.)

“According to city inspection cards dated May 31 and June 11, 2019, corrections were needed to the work that had been performed by Gawi on the project. (Exhibit 16.)” (AR 37, ¶ 17; see AR 741-742 [Exhibit 16]; see also AR 55 [Board investigation report].)

While Gawi initially responded to Wrightsman’s inquiries, and gave excuses about material supplier delays, by July 2019 he completely ceased communicating with her. (AR 144-45.) In July 2019, Wrightsman filed a police report and a complaint with the Board. (AR 145-146; see also AR 50-68 [Board investigation report].)

On August 21, 2019, Petitioner met with Wrightsman at her home. Also in attendance were handyman Franco and Randall Martinez, a building inspector Wrightsman had hired to assist with the ADU project. (AR 149-152; see also AR 713, 718.) Among other things, the ADU project, Wrightsman’s contract with Gawi, and Wrightman’s complaint to the Board were discussed. (AR 149-152, 713-14, 718-719.) In its Decision, the Board did not make any specific findings or conclusions based on Petitioner’s alleged statements at the August 21, 2019 meeting. (See AR 37, ¶ 19.)[2]

Two days later, on August 23, 2019, Petitioner and Wrightsman exchanged text messages. (AR 154-155, 722-723). Petitioner advised he was meeting with a city inspector about the ADU project, and “the quickest way for both of us is for me to finish the project as per the contract.” (AR 722.) Petitioner also texted: “I’m sorry if I upset u. . . . This is very unexpected. . . . Never had to deal with anything like this before.” (AR 722) When Wrightsman texted Petitioner and explained “the project was supposed to be done by August 22, 2109 [sic],” she was planning to move into the new ADU in September 2019; and “this has to be addressed,” Petitioner responded: “that’s not in the contract.” (AR 723.)

Petitioner and Wrightsman exchanged more text messages on August 28, 2019. (AR 158, 727-728). This exchange addressed payments, invoices, and work done pursuant to the contract between Wrightsman and Gawi. (AR 727-728.) In particular, Petitioner advised Wrightsman she would owe $23,950 under the contract, which is the exact amount Wrightsman had yet to pay TO2 Group pursuant to the contract she and Gawi had signed. (AR 728.)[3]

At the administrative hearing, Petitioner testified he was referring to a “hypothetical contract” in his text messages about “the contract” and, in such text messages, he was “investigating [Wrightsman] and trying to get her to give [him] information that [he] could use against her.” (AR 373-75, 379-81.) The Board found Petitioner’s testimony he was referring to a “hypothetical contract” lacked credibility.[4] (AR 37.)

On August 28, 2019, although Petitioner texted Wrightsman to advise her that he would bring a project foreman to the property the following week (AR 728), Petitioner never returned to the property. After August 28, 2019, ADR did not work on the ADU project. (AR 154, 160.) In September 2019, Wrightsman collected $15,000 on ADR’s contractor’s bond. (AR 730-31, 753.)

On June 25, 2020, after an investigation, the Board issued the Citation against ADR. (AR 47-48.) The Citation alleged ADR had aided and abetted an unlicensed person with the intent to evade the Contractor’s License Law in violation of Business and Professions Code section 7114, subdivision (a).[5] (AR 47-48.) The Citation assessed a civil penalty of $2,000 as well as an order of correction payable to Wrightsman in the amount of $62,200. (AR 47-48.)

Petitioner appealed the Citation. An administrative law judge (ALJ) conducted the appeal hearing. In April 2021, the ALJ issued a proposed decision to affirm the Citation as to the violation of section 7114, subdivision (a) and the $2,000 civil penalty. The proposed decision also affirmed an order of correction due to Wrightsman but reduced the amount to $50,000. (AR 33-44.) In the proposed decision, the ALJ applied a preponderance of the evidence standard because “the issues relate to imposition of fines and not license discipline such as revocation or suspension.” (AR 40, ¶ 2.)

By an order dated June 7, 2021, the Board adopted the ALJ’s proposed decision as its Decision. The Board set an effective date of August 6, 2021 for the Decision. (AR 32.)

Petitioner seeks relief from the court pursuant to Code of Civil Procedure section 1094.5.

Under Code of Civil Procedure section 1094.5, subdivision (b), the issues for review of an administrative decision are: whether the respondent has proceeded without jurisdiction, whether there was a fair trial, and whether there was a prejudicial abuse of discretion. An abuse of discretion is established if the respondent has not proceeded in the manner required by law, the decision is not supported by the findings, or the findings are not supported by the evidence. (Code Civ. Proc., § 1094.5, subd. (b).)

Petitioner argues his failure to pay the civil penalty ($2,000) and correction to Wrightsman ($50,000) within 30 days of the Decision’s effective date resulted in his license being suspended by operation of law pursuant to section 7090.1, subdivision (a). (Opening Brief 6:15-19.)[7] Petitioner suggests “because of that suspension, this Court may independently review the evidence.” (Opening Brief 6:20-21.)

“The courts must decide on a case-by-case basis whether an administrative decision or class of decisions substantially affects fundamental vested rights and thus requires independent judgment review.” (Bixby v. Pierno (1971) 4 Cal.3d 130, 144.) “ ‘In determining whether the right is fundamental the courts do not alone weigh the economic aspect of it, but the effect of it in human terms and the importance of it to the individual in the life situation.’ ” (Benetatos v. City of Los Angeles (2015) 235 Cal.App.4th 1270, 1281.) Generally, “[a]dministrative decisions which result in restricting a property owner’s return on his property, increasing the cost of doing business, or reducing profits are considered impacts on economic interests, rather than on fundamental vested rights.” (E.W.A.P., Inc. v. City of Los Angeles (1997) 56 Cal.App.4th 310, 325.) “In contrast, the independent judgment test is applied to review administrative decisions that will drive an owner out of business or significantly injure the business's ability to function.” (Benetatos v. City of Los Angeles, supra, 235 Cal.App.4th at 1281.)

Petitioner’s argument the Decision substantially affects a fundamental vested right is unpersuasive. “In a case such as this one, where the only sanction imposed is a fine—not revocation, suspension, or restriction of the petitioner's license—no fundamental vested right is implicated and the trial court is not authorized to exercise independent judgment on the evidence.” (Handyman Connection of Sacramento, Inc. v. Sands (2004) 123 Cal.App.4th 867, 880.)[8]

Further, the Decision itself imposed only financial penalties; the Board’s action did not result in revocation, suspension or restriction of ADR’s license. Even if the court were to judicially notice ADR’s suspended license status under section 7090.1, Petitioner has not cited any evidence demonstrating ADR’s license was suspended because of the amount of the Citation or the limited time permitted to pay the Citation. Stated another way, Petitioner does not sufficiently demonstrate “the fines and penalties imposed were so burdensome as to be tantamount to a suspension or revocation of his license.” (Owen v. Sands (2009) 176 Cal.App.4th 985, 992.)

Based on the foregoing, the court applies the substantial evidence test to review the Board’s factual findings. Substantial evidence is relevant evidence that a reasonable mind might accept as adequate to support a conclusion (California Youth Authority v. State Personnel Board (2002) 104 Cal. App. 4th 575, 584-585), or evidence of ponderable legal significance which is reasonable in nature, credible and of solid value. (Mohilef v. Janovici (1996) 51 Cal.App.4th 267, 305 n. 28.) Under the substantial evidence test, “Courts may reverse an [administrative] decision only if, based on the evidence . . ., a reasonable person could not reach the conclusion reached by the agency.” (Sierra Club v. California Coastal Com. (1993) 12 Cal.App.4th 602, 610.)

“[A] trial court must afford a strong presumption of correctness concerning the administrative findings.” (Fukuda v. City of Angels (1999) 20 Cal. 4th 805, 817.) Petitioner bears the burden of proof to demonstrate, by citation to the administrative record, that substantial evidence does not support the administrative findings. (Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 32; Steele v. Los Angeles County Civil Service Commission (1958) 166 Cal.App.2d 129, 137.)

“On questions of law arising in mandate proceedings, [the court] exercise[s] independent judgment.” (Christensen v. Lightbourne (2017) 15 Cal.App.5th 1239, 1251.) The interpretation of statute or regulation is a question of law. (See State Farm Mutual Automobile Ins. Co. v. Quackenbush (1999) 77 Cal.App.4th 65, 77.)

Petitioner contends the Board (through the ALJ) should have applied a clear and convincing standard because “the citation involved a suspension when Petitioner did not pay the $52,000 in the brief time permitted.” (Opening Brief 6:15-19.) The argument is unpersuasive.

To the extent Petitioner relies on his unsuccessful request for judicial notice to prove his point, the argument is unsupported.

Further, at the agency level, “the standard of proof to revoke a professional license is clear and convincing evidence. . . .” (Lone Star Security & Video, Inc. v. Bureau of Security and Investigative Services (2012) 209 Cal.App.4th 445, 454.) The Citation here merely imposed financial penalties and did not suspend or revoke ADR’s license. “[B]ecause the citation hearing on review could only result in civil penalties or correction orders, and could not have resulted in orders suspending, limiting, or revoking [ADR’s] license, the preponderance of the evidence rather than the clear and convincing evidence standard of proof applied.” (Owen v. Sands, supra, 176 Cal.App.4th at 992.)

Petitioner concedes “the facts of the Owens [sic] case are very close on many points.” (Reply 3:10-11.) Petitioner cites the following statement in Owen v. Sands to suggest an “important distinction” (Reply 3:11): “Critically, Owen does not argue that the fines and penalties imposed were so burdensome as to be tantamount to a suspension or revocation of his license.” (Owen v. Sands, supra, 176 Cal.App.4th at 992.) Petitioner argues: “In the instant case, the [Board] and ALJ imposed a very large payment obligation that was due in a very short period of time. That lethal combination was so burdensome that a license suspension was nearly guaranteed.” (Reply 3:15-17.)

Petitioner’s argument is unsupported by evidence. As discussed earlier, Petitioner has not cited any evidence suggesting ADR’s license was suspended because of the amount of the Citation or the time permitted to pay the Citation. Although the total dollar amount of the Citation ($52,000) was not insignificant, the court cannot conclude, without evidence of ADR’s financial circumstances, that paying the Citation within the time permitted by the Citation and section 7090.1 would necessarily result in suspension or revocation of its license. Petitioner has provided no factual context for his claim $52,000 is so burdensome it is tantamount to a suspension.

The licensee in Owen v. Sands was required to pay a $2,000 penalty and a correction to the homeowner in the amount of $7,880.79. (See Owen v. Sands, supra, 176 Cal.App.4th at 988-989.) While the amount of correction there was less than here, the amount of the penalty was the same. The Court of Appeal decided Owen v. Sands in 2009, suggesting the amount of correction and penalty could be considered in context and adjusted (raised) to present-day dollars. Owen v. Sands did not specify the size of a financial penalty necessary to justify application of a clear and convincing standard. Given that Petitioner does not submit evidence “the fines and penalties imposed were so burdensome as to be tantamount to a suspension or revocation of his license,” Owen v. Sands does not support Petitioner’s position that a clear and convincing standard should have been applied by the ALJ.[9]

Based on the foregoing, Petitioner does not demonstrate the Board improperly applied a preponderance of the evidence standard of proof in the administrative proceedings.

Aiding or abetting an unlicensed person to evade the provisions of this chapter or combining or conspiring with an unlicensed person, or allowing one's license to be used by an unlicensed person, or acting as agent or partner or associate, or otherwise, of an unlicensed person with the intent to evade the provisions of this chapter constitutes a cause for disciplinary action.

The Contractors’ State License Law (§ 7000 et seq.) “is a regulatory statute. It seeks to protect the public from incompetence and dishonesty in those who provide building and construction services . . . .” (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 436) “[W]hen the Legislature’s intent is to protect the health, safety, and welfare of the public rather than to serve punitive interests, that body additionally intends, in order to protect the public, that the law be interpreted broadly so that particular licensees not be able easily to evade the statute’s protective purposes.” (Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763, 786.)

Petitioner argues the court should interpret section 7114, subdivision (a) here consistently with the law of aiding and abetting in civil and criminal cases. Notably, the Board develops no argument to the contrary. Because section 7114, subdivision (a) uses the specific legal term “aiding and abetting,” the court agrees with Petitioner that case law discussing elements of aiding and abetting, both in criminal and civil contexts, is instructive here.

“In the civil arena, an aider and abettor is called a cotortfeasor. . . . A defendant can be held liable as a cotortfeasor on the basis of acting in concert only if he or she knew that a tort had been, or was to be, committed, and acted with the intent of facilitating the commission of that tort. ” (Gerard v. Ross (1988) 204 Cal.App.3d 968, 983 [emphasis added].) Stated more fully, “ ‘[l]iability may . . . be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.’ ” (Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1144.)

Similarly, under criminal law, “[a] person aids and abets the commission of a crime when he or she: [¶] (1) With knowledge of the unlawful purpose of the perpetrator, and [¶] (2) With the intent or purpose of committing or encouraging or facilitating the commission of the crime, and [¶] (3) By act or advice aids, promotes, encourages or instigates the commission of the crime. . . . Mere knowledge that a crime is being committed and the failure to prevent it does not amount to aiding and abetting.” (Casella v. SouthWest Dealer Services, Inc. (2007) 157 Cal.App.4th 1127, 1140-41 [emphasis added].)

“While aiding and abetting may not require a defendant to agree to join the wrongful conduct, it necessarily requires a defendant to reach a conscious decision to participate in tortious activity for the purpose of assisting another in performing a wrongful act.” (American Master Lease LLC v. Idanta Partners, Ltd (2014) 225 Cal.App.4th 1451, 1476 [emphasis added].)

Petitioner contends “[t]he ALJ never expressly states what Mr. Oravecz did to purportedly satisfy [the substantial assistance] element [of aiding and abetting], which may in and of itself be a basis to remand, at a minimum.” (Opening Brief 8:11-23.)

Petitioner raises an issue of whether the Board’s findings in the Decision’s comply with Topanga Assn. for a Scenic Community v. County of Los Angeles (1974) 11 Cal. 3d 506, 515 [Topanga]. In Topanga, the Supreme Court held that “implicit in [Code of Civil Procedure] section 1094.5 is a requirement that the agency which renders the challenged decision must set forth findings to bridge the analytic gap between the raw evidence and ultimate decision or order.” “Administrative agency findings are generally permitted considerable latitude with regard to their precision, formality, and matters reasonably implied therein.” (Southern Pacific Transportation Co. v. State Bd. of Equalization (1987) 191 Cal.App.3d 938, 954.)

As Petitioner acknowledges, the Decision discusses Petitioner’s relevant acts and omissions, including reviewing the plans with Gawi, obtaining the permits, and failing to take action once work on the Project began. The Decision is reasonably interpreted to find, at the least, that obtaining the ADU project permits and then failing to take action once Gawi commenced unlicensed work substantially assisted Gawi in evading the Contractor’s License Law. (See AR 40-42.) The Decision also includes findings regarding Petitioner’s knowledge and intent. (AR 40-42.) The findings are sufficient for judicial review and therefore satisfy Topanga.

Does Substantial Evidence Support the Board’s Findings that ADR Substantially Assisted an Unlicensed Person Evade the Provisions of the Contractor’s License Law?

Gawi informed Petitioner of the ADU project in April 2019, and Petitioner met with Gawi at that time to discuss the plans. (AR 828.) On May 2, 2019, not long after Petitioner met with Gawi, Gawi and Wrightsman executed a contract that lists the contractor as TO2 Group dba ADR Design. (AR 35, ¶ 8; AR 595.) Gawi represented to Wrightsman in the contract and related documents that the ADU project would be built “according to code” and would pass a “final inspection” before the final payment was due. (AR 595-604.)

On May 13, 2019, shortly after Gawi and Wrightsman executed the contract, Petitioner met Gawi and Wrightsman at city hall and obtained the building permits. (AR 36, ¶ 12; see also 703-706.) Petitioner “signed each of the permits in three places, indicating [ADR] was licensed, had worker's compensation insurance, and agreed to comply with ordinances and statutes relating to building construction.” (AR 36, ¶ 12; see also 703-706.)

Wrightsman testified that demolition worked commenced a “couple days” after the permits were issued. (AR 134-136.) City inspection cards dated May 31 and June 11, 2019 showed some of Gawi’s work on the project required corrections. (AR 741-742, 55; see also AR 37, ¶ 17.)

Wrightsman made a payment of $40,000 to Gawi on June 12, 2019, after the city issued the permits and after Gawi commenced construction. (See AR 36, ¶ 16 and 693.)

A reasonable person could conclude from this evidence that obtaining the building permits enabled Gawi, who was unlicensed, to commence construction and obtain further payments from Wrightsman under the contract.

Petitioner argues “there is no basis to impose a duty on [him] to check on a construction project he had not been engaged to perform.” (Opening Brief 8:18-20.) Thus, Petitioner ignores his representations on the permits that ADR was the licensed contractor responsible for the project. (AR 703-706.) As ADR’s responsible managing officer, Petitioner was “responsible for exercising supervision and control of [ADR’s] construction operations to secure compliance with [the law] and the rules and regulations of the board.” (§ 7068.1, subd. (a).)

Petitioner next contends ADR “could not be found to have aided or abetted an unlicensed contractor because the unlicensed contractor had a fully executed construction contract prior to any action on [Petitioner’s] part.” (Opening Brief 8:26-28.) Although Wrightsman had signed the construction contract before Petitioner obtained the permits, the construction work did not begin until the city issued the permits. Wrightsman made a payment of $40,000 to Gawi on June 12, 2019, after the permits were issued and after Gawi commenced construction. (See AR 36, ¶ 16 and 693.) Therefore, substantial evidence supports the Board’s finding that ADR’s participation substantially assisted Gawi’s evasion of the Contractor’s License Law after the contract was executed. Petitioner cites no legal authority to support his assertion that aiding and abetting can only occur before a contract is signed but not during the course of its performance.[10]

Petitioner also contends substantial evidence does not support the Board’s finding of causation because it is “speculative” whether the project would have proceeded without Petitioner having obtained the permits. (Opening Brief 11:7.) Gawi represented to Wrightsman the project would be built “according to code” and would pass a “final inspection” before the final payment was due. (AR 595-604.) Within a “couple days” of permitting, construction work on the permits started. (AR 134-136, 741-742, 55.) A reasonable person could conclude from the evidence, including the timing of events, that obtaining the permits “was a substantial factor in causing the harm suffered.” (American Master Lease LLC v. Idanta Partners, Ltd, supra, 225 Cal.App.4th at 1476.) Petitioner’s arguments about what Gawi would have done had the permits not been obtained are speculative.

Based on the foregoing, substantial evidence supports the Board’s findings that ADR’s actions in obtaining the permits and not monitoring the construction of the project after the permits were issued substantially assisted Gawi, an unlicensed person, to evade the provisions of the Contractor’s License Law.

Section 7114 sets forth required standard of intent: “ . . . the intent to evade the provisions of this chapter . . . .” That is, to violate section 7114, Petitioner must have acted “with the intent to evade the provisions of” the law.

Petitioner contends the Board improperly applied a general intent standard, rather than a specific intent standard, when concluding that ADR acted with intent to evade the Contractor’s License Law. (Opening Brief 12:25-26.) The Board does not squarely address the argument in its opposition brief.[11] The court finds Petitioner’s argument persuasive—that is, when it imposed liability on Petitioner, the Board misapplied the standard of intent required to prove a violation of section 7114 and aiding and abetting.

The Board concluded “Had [Petitioner] checked with the city, he could have learned as early as May 31, 2019, that work was performed and that the work did not pass inspection. [Petitioner’s] actions were sufficient evidence to establish [ADR’]s knowledge that Gawi was using its license, and therefore establish [ADR’s] intent to evade the provisions of the Contractor's License Law.” (AR 41, ¶ 4.) Relatedly, the Board found that “[a]lthough Gawi and [Petitioner] spoke during the period when work was being performed on the project, they did not speak about the work, as Gawi redirected the discussions to the subject of vacation travel. After Wrightsman complained, [Petitioner] claimed he first became aware of the project and the problems.” (AR 41, ¶ 4; see also AR 38, ¶ 23.) The Board did not find Petitioner actually learned Gawi performed work on the project after the permits were issued or anytime before Wrightsman complained to him. Thus, it appears the Board concluded Petitioner acted with the intent to evade the Contractor’s License Law because he should have learned construction work was performed, which implies a negligence (or perhaps recklessness) standard.

Other findings also show the Board misapplied the standard of intent. Thus, when addressing ADR’s contention it did not intend to violate the law, the Board concluded as follows: “Under totality of the circumstances, the evidence summarized above indicates that such a belief was not reasonable and could not have been held in good faith. . . . The intent necessary to establish a violation is the intent to take the acts. (Brown v. State Department of Health {1978) 86 Cal.App.3d 548, 554.) Here, [ADR] was aware Gawi had plans for the project, and [ADR] intentionally obtained permits. [ADR] then took no action to determine whether any construction activity was undertaken using those permits.” (AR 41, ¶ 5 [emphasis added].)

The emphasized sentence above indicates the Board believed ADR should have taken action to determine whether construction activity was undertaken pursuant to the permits, and ADR was negligent in failing to do so. However, the Board did not find Petitioner specifically knew, before Wrightsman complained, that Gawi had commenced construction or that Petitioner specifically intended to assist Gawi in evading the Contractor’s License Law when Petitioner failed to learn that construction activity had commenced.

In Brown v. State Department of Health (1978) 86 Cal.App.3d 548, 554, relied upon by the Board, the Court of Appeal considered a statute that states “it is unprofessional conduct to ‘knowingly‘ make or sign a certificate which ‘falsely represents‘ a state of facts.” (Id. at 554.) The Court held the statute did not require specific intent to deceive, noting “California case law has long held that the requirement of ‘knowingly’ is satisfied where the person involved has knowledge of the facts, though not of the law.” (Ibid.)

As discussed earlier, the Board has not disputed that the elements of aiding and abetting from civil and criminal law inform on the proper application of section 7114, subdivision (a), a statute expressly using the phrase “aiding and abetting.” As summarized earlier, those civil authorities require that the aider and abettor act “with the intent of facilitating the commission of that tort.” (Gerard v. Ross (1988) 204 Cal.App.3d 968, 983 [emphasis added].) The aider and abettor must “reach a conscious decision to participate in tortious activity for the purpose of assisting another in performing a wrongful act.” (American Master Lease LLC v. Idanta Partners, Ltd, supra, 225 Cal.App.4th at 1476.) Brown v. State Department of Health involved a statute for which specific intent was not required; it does not inform on the interpretation of section 7114, subdivision (a).

In distinguishing a case cited by Petitioner during the administrative proceeding, the Board stated: “In the present matter, [ADR’s] acts were unlike the facts in Swickheimer, because [Petitioner’s] and [ADR’s] acts indicated their knowledge of the project. [ADR] cannot rely upon [Petitioner’s] failure to take the action a reasonable contractor would have taken after obtaining permits that give permission for construction of the project to begin, even if he believed the permits were obtained for a different purpose.” (AR 42, ¶ 6 [bold added].)

While the meaning of the emphasized statement is somewhat unclear, it appears the Board was referring to Petitioner’s testimony that “Gawi contacted Oravecz and asked him to get building permits, for the owner to use to get a building loan” and that Petitioner obtained the permits for that purpose (i.e., to obtain a loan). (See AR 36, ¶ 11; see also AR 828, ¶ 14.) The Board did not find Petitioner’s testimony regarding his purpose of obtaining the permits was false or lacked credibility as it did with other testimony from him. Nor did the Board reject Petitioner’s testimony that “Gawi said he would call [Petitioner] when the financing was obtained” and that Petitioner believed Gawi statement the permits would be used to obtain financing for the project. (See AR 36, ¶ 13 and AR 829-830, ¶¶ 19-28.) Thus, in context, the Board’s findings and legal conclusions show the Board applied a negligence or general intent standard, not a specific intent standard, in assessing Petitioner’s liability under section 7114, subdivision (a). That is, the Board did not find Petitioner acted with the specific intent to facilitate Gawi’s wrongful conduct when he obtained the permits, failed to monitor the project, or took other actions related to the project.

The Board’s argues Gawi and Petitioner referred to each other as “partners” and Gawi’s use of ADR’s insurance certificates “supports the inference that Gawi and [Petitioner] worked together as partners.” (Opposition 9:22-27.) The Board’s contends at city hall “Wrightsman handed Gawi a check in front of [Petitioner].” (Opposition 10:12-13.) The Board asserts Petitioner’s “statements that Gawi had paid him, and his multiple text messages affirming the Wrightsman-Gawi contract terms support the inference that Oravecz and Gawi had been working together.” (Opposition 11:2-4.) The Board also argues, without citation to the record, that “two different witnesses (Wrightsman and Franco) testified that Oravecz admitted that he was paid by Gawi.” (Opposition 14:8-9.) The Board also reports Petitioner “represented to the City of Torrance that construction on the ADU project would proceed without a construction loan.” (Opening Brief 13:1-2.)

The Decision undermines the Board’s argument before the court—it never made such findings. The Decision does not include any findings that Petitioner and Gawi worked as partners (with respect to the project or otherwise); that Petitioner authorized Gawi to use ADR’s name on the contract or ADR’s insurance certificates; that Petitioner’s statements about the contract supported any inference of a partnership with Gawi or intent to assist Gawi in evading the Contractor’s License Law; that Petitioner witnessed Wrightsman hand Gawi a check or admitted he was paid by Gawi; or that Petitioner’s testimony about the purpose of obtaining the permits (for the owner to obtain a loan) was false. Under Code of Civil Procedure section 1094.5, the court reviews the factual findings made by the Board, not post hoc legal arguments made by the Board on judicial review. The court’s role here is not to parse the record to find some theory to uphold the Board’s decision. (See American Funeral Concepts v. Board of Funeral Directors & Embalmers (1982) 136 Cal.App.3d 303, 311.)

Based on the foregoing, the court finds the Board did not apply the correct standard of intent when it determined Petitioner aided and abetted Gawi in evading the Contractor’s License Law in violation of section 7114, subdivision (a). Accordingly, the matter must be remanded to the Board to reconsider the Decision and apply the correct standard of intent required by section 7114, subdivision (a).

The court will issue a writ directing the Board to aside the Decision and reconsider the case in light of the court’s opinion and judgment. (Code Civ. Proc., § 1094.5, subd. (b).) On remand, the Board shall determine whether ADR acted with the specific intent of assisting Gawi to evade the provisions of the Contractor’s License Law. (See Gerard v. Ross, supra, 204 Cal.App.3d at 983; American Master Lease LLC v. Idanta Partners, Ltd, supra, 225 Cal.App.4th at 1476.)

[Petitioner must address how this court adopts and issues this order given his failure to provide notice to Wrightsman.]

[1] At times, where facts are not disputed, the court quotes findings made in the administrative decision. (See AR 33-44 [administrative decision].)

[2] Accordingly, the court need not consider Petitioner’s contention his statements at the meeting were a “settlement offer (that should have been ruled inadmissible).” (Reply 1:23.)

[3] Specifically, $90,950, the total contract price as modified by Wrightsman and Gawi in June 2019 (AR 686-687), minus the $67,000 already paid by Wrightsman pursuant to the contract. (See AR 689-693 [checks payable to TO2 Group totaling $77,200]; AR 38-39, ¶ 25 [$8,100 permit fee reimbursement and $2,100 survey fee reimbursement were not part of the contract].)

[4] The Decision does not specify the facts the Board relied upon to reach its credibility conclusion.

[5] All undesignated statutory references are to this code.

[6] In this proceeding, the court has considered Petitioner’s revised opening brief filed November 21, 2023, Respondent’s opposition brief filed October 2, 2023, the reply brief filed October 13, 2023. The court has also considered the Bates-stamped administrative record lodged with the court after the November 1, 2023 hearing. Although the court has considered the claims made in Petitioner’s first amended petition (FAP), the court has not considered the exhibits to the FAP or the original petition to be part of the administrative record. As with his request for judicial notice, Petitioner has not moved to augment the administrative record with any documents from the FAP or petition. (See Code Civ. Proc., § 1094.5, subd. (e).)

[7] Section 7090.1, subdivision (a) states: “Notwithstanding any other provisions of law, the failure to pay a civil penalty, or to comply with an order of correction or an order to pay a specified sum to an injured party in lieu of correction once the order has become final, shall result in the automatic suspension of a license by operation of law 30 days after noncompliance with the terms of the order.”

[8] As discussed earlier, the court did not receive the evidence proffered by Petitioner through his request for judicial notice.

[9] While not briefed by the parties, the court also questions whether Petitioner raised any argument about the standard of proof in the administrative proceedings (i.e., exhausted the issue) or submitted any evidence before the ALJ suggesting the amount of the fines and penalties “were so burdensome as to be tantamount to a suspension or revocation of his license.”

[10] Based on this same reasoning, the court rejects Petitioner’s contention the Board was required to find Petitioner’s conduct “caused Ms. Wrightsman to contract with Mr. Gawi.” (Opening Brief 10:10-17.)

[11] While not dispositive, the Board’s failure to address the point suggests Petitioner’s argument is meritorious. (Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc. (2003) 111 Cal.App.4th 1328, 1345, fn. 16 [failure to address point is “equivalent to a concession”].)