Contractors' State License Bd. v. Superior Court of Contra Costa Cnty., A154476
| Decision Date | 11 October 2018 |
| Docket Number | A154476 |
| Citation | 239 Cal.Rptr.3d 501,28 Cal.App.5th 771 |
| Court | California Court of Appeals Court of Appeals |
| Parties | CONTRACTORS’ STATE LICENSE BOARD, Petitioner, v. The SUPERIOR COURT OF CONTRA COSTA COUNTY, Respondent; Black Diamond Electric, Inc., Real Party in Interest. |
Counsel for Petitioner: Xavier Becerra, Attorney General, Thomas S. Patterson, Senior Assistant Attorney General, Benjamin M. Glickman, Supervising Deputy Attorney General, Sharon L. O’Grady, Deputy Attorney General, John W. Kelleen, Deputy Attorney General.
Counsel for Real Party in Interest David M. Birka-White, Birka-White Law Offices, Danville, Steven T. Knuppel, Law Offices of Steven T. Knuppel.
The Contractors’ State License Board (the Board) seeks a writ of mandate to compel respondent superior court to sustain the Board’s demurrer to an action brought by real party in interest, Black Diamond Electric, Inc. (BDE) seeking a declaratory judgment.
The action seeks judicial construction of statutory terms at issue in disciplinary proceedings initiated against BDE by the Board. The Board filed a demurrer, arguing that BDE was required to exhaust its administrative remedies before filing suit. The superior court overruled the demurrer, concluding that BDE was not required to exhaust administrative remedies because the action sought a declaration on issues of statutory interpretation.
We hold that the superior court erred in overruling the Board’s demurrer. The general rule is that a party must exhaust an available administrative remedy before resorting to the courts. While this rule is subject to exceptions, none applies here. We therefore grant the Board’s petition and issue a peremptory writ in the first instance, as we previously informed the parties was possible. (See Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 177-180, 203 Cal.Rptr. 626, 681 P.2d 893 ( Palma ).)
We set forth some of the facts of this case in our opinion resolving an earlier writ of mandate filed by the Board. (See Contractors’ State License Bd. v. Superior Court (2018) 23 Cal.App.5th 125, 129-130, 232 Cal.Rptr.3d 558 ( BDE I ).) Below we discuss additional facts pertinent to the current controversy.
BDE is a California corporation licensed as a C-10 electrical contractor by the Board. ( Cal. Code Regs., tit. 16, § 832.10.) Labor Code section 108.2, subdivision (a) requires individuals who perform work as electricians to be certified, and it prohibits those lacking certification from performing "electrical work for which certification is required." Uncertified persons seeking the on-the-job experience necessary for certification may perform electrical work subject to certain requirements, including that they "be under the direct supervision of an electrician certified pursuant to Section 108." ( Lab. Code, § 108.4, subd. (a)(3).)
The Labor Code prescribes sanctions for employers that fail to comply with these provisions. "An employer who is found by the division to have failed to provide adequate supervision may be barred by the division from employing uncertified individuals pursuant to this section in the future." ( Lab. Code, § 108.4, subd. (a)(3).) Willful violations of the statutory certification requirements may result in the suspension or revocation of a C-10 electrical contractor license. ( Lab. Code, § 108.2, subd. (h).) Violations include willful employment of "one or more uncertified persons to perform work as electricians in violation of this section," willful "fail[ure] to provide the adequate supervision of uncertified workers," and willful "fail[ure] to provide adequate supervision of apprentices." ( Lab. Code, § 108.2, subd. (h)(1)-(3).)
When it has been determined that a violation of these provisions has likely occurred, the Labor Commissioner may refer violations to the Board. ( Lab. Code, § 108.2, subd. (i).) Upon receipt of a referral, the Registrar of Contractors, who functions as the executive officer of the Board, must open an investigation. ( Lab. Code, § 108.2, subd. (j) ; see Bus. & Prof. Code, § 7011, subd. (b).) The Registrar "may initiate disciplinary action against any licensee upon his or her own investigation, the filing of any complaint, or any finding that results from a referral from the Labor Commissioner alleging a violation under [ Labor Code section 108.2 ]." ( Lab. Code, § 108.2, subd. (j).)
Such disciplinary proceedings are governed by the Administrative Procedure Act, and are generally commenced with the filing of an accusation. ( Bus. & Prof. Code, § 7091, subd. (f) ; see Gov. Code, § 11503, subd. (a).) An adverse decision by the Board is subject to judicial review in an action for administrative mandamus. ( Code Civ. Proc., § 1094.5 ; Gov. Code, § 11523 ; see Owen v. Sands (2009) 176 Cal.App.4th 985, 989, 98 Cal.Rptr.3d 167 ; Sautter v. Contractors’ State License Bd. (1954) 124 Cal.App.2d 149, 154, 268 P.2d 139.)
In March 2017, the Board filed an accusation against BDE, alleging that uncertified BDE employees performed work that required certification. The accusation also alleged that certified BDE trainees performed work without the required supervision of a certified electrician. BDE filed a "Notice of Defense," in which it asserted "that the work its employees were performing required neither certification nor supervision." It argued that the Board’s interpretation of Labor Code sections 108, 108.2, and 108.4 was erroneous. In its requests for relief, BDE sought a "permanent injunction barring any disciplinary action for violation of Labor Code sections 108 et seq." (Italics omitted.)
In April 2018, an administrative law judge (ALJ) held a hearing on the accusation. In her proposed decision, the ALJ found that BDE had violated Labor Code sections 108.2, subdivisions (a) and (h)(1)-(3) and 108.4, subdivision (a)(3). The ALJ found unpersuasive BDE’s interpretation of Labor Code sections 108, 108.2, and 108.4. She specifically rejected BDE’s contention that "certified electricians are required only when a device is attached to the wires at the end of the electrical project." The ALJ found that under the circumstances of the case, "it would be contrary to the public interest to allow [BDE] to retain its license" and therefore recommended revocation.
On April 24, 2018, the Registrar adopted the proposed decision. Before the decision became effective, BDE asked the Board for a stay so that it could file a motion for reconsideration. The Registrar granted the request and stayed the decision’s effective date until June 16, 2018.
Meanwhile, on December 15, 2017, while the administrative proceeding was pending, BDE filed a complaint in Contra Costa County Superior Court. The complaint alleges that the Board "is knowingly enforcing Labor Code § 108, et seq. illegally." (Italics omitted.) It asks for a declaration defining the terms "electrician," "electrical work," and "direct supervision" as they are used in section 108, et seq. In the alternative, BDE asks the court to declare the foregoing terms unconstitutionally vague. Although the complaint alleges a cause of action for declaratory judgment only, BDE’s prayer for relief requests a "permanent injunction enjoining and restraining the [Board] from seeking to enforce the ‘direct supervision’ provision of Labor Code section 108.4(a)(3) until the legislation [sic ] provides the [Board] with further clarification."
On February 5, 2018, the Board filed a demurrer to the complaint. It argued that respondent court lacked jurisdiction to hear the complaint because BDE has not yet exhausted its administrative remedies in the parallel administrative proceeding. The Board further argued that the complaint failed to allege the existence of a ripe controversy.
BDE opposed the Board’s demurrer, arguing that it should not be required to exhaust its administrative remedies because the policies underlying administrative exhaustion would not be served in this case. BDE also contended that an exception to the exhaustion rule applied since the Board was incapable of affording an adequate remedy.
On May 15, respondent issued a tentative ruling overruling the demurrer.1 The Board requested oral argument, and respondent held a hearing on May 16. Respondent’s June 7, 2018 order overruling the demurrer adopted its tentative ruling. Respondent disagreed that BDE was required to exhaust its administrative remedies, reasoning that BDE’s "declaratory relief action is not limited to the pending administrative proceeding, but is based on the Board’s interpretation of [Labor Code] section 108 and how the Board will apply its interpretation to [BDE] going forward." Respondent found it significant that "the Board has offered no administrative procedure for [BDE] to follow if it wanted to challenge the Board’s interpretation of [Labor Code] section 108 and there was no disciplinary proceeding pending." It faulted the Board because it "ha[d] not shown how [BDE] can obtain the declaratory relief it seeks through the pending administrative proceeding."
On June 7, the Board filed the instant petition.2 On June 11, we issued a temporary stay of the action and requested an informal response from BDE. ( Cal. Rules of Court, rule 8.385(b)(1).) In our request, we gave Palma notice, informing the parties that we might proceed by issuing a peremptory writ in the first instance.
BDE filed its informal response on July 30, and the Board replied on August 6.
The Board argues that respondent erred in overruling its demurrer because BDE failed to exhaust its administrative remedy, and exhaustion of that remedy is a jurisdictional prerequisite to resort to the courts. BDE first responds by arguing that the policies underlying the exhaustion doctrine would not be served in this case. It also contends that it should be excused from exhausting its administrative remedy because it...
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