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Buckle Up, Contractors: CSLB Disciplinary Procedures Must Be Completed Before Seeking The Court’s Assistance

By Aaron J. Flores

Contractors are often surprised to learn that they are the subject of a Contractors State License Board (“CSLB”) disciplinary action.  A frequent response from the contractor is, “The CSLB is misinterpreting the law! Stop them!”  A recent court of appeal decision, however, makes it clear that a contractor is obligated to complete the CSLB’s disciplinary procedure – through a final, effective decision – before they can seek relief from the courts.  In Contractors State License Board v. Superior Court (Black Diamond Electric, Inc.), the court of appeal held that even when a contractor seeks the court’s independent interpretation of statutes at issue in a disciplinary action (an action ultimately for the court, not administrative procedures), it cannot leapfrog the CSLB’s disciplinary procedures.  The contractor must complete the disciplinary procedures, then seek judicial review to interpret the statutes through a writ of administrative mandamus.

In this case, Black Diamond Electric, Inc. (“BDE”) was the subject of a CSLB disciplinary action, in the form of an “accusation” pursuant to the Administrative Procedure Act, due to its alleged violation of Labor Code § 108.2(a) and related statues which require individuals who perform certain electrical work to be certified (“Accusation Action”).  Uncertified persons seeking on-the-job experience necessary for certification may perform limited types of electrical work if they are “under the direct supervision” of a certified electrician.  Willful violations of the statutes may result in the suspension or revocation of a C-10 electrical contractor license.

The Accusation Action against BDE was filed by the CSLB in March 2017.  After a hearing on the accusation, the administrative law judge’s tentative decision was that BDE violated the Labor Code and should therefore have its license revoked.  The CSLB Registrar later adopted this tentative decision as its final decision, but, at BDE’s request, stayed the effective date so BDE could seek reconsideration of the decision.

While the Accusation Action was pending, and before the hearing on the CSLB’s accusation, BDE filed its own complaint against the CSLB in superior court seeking an independent declaration interpreting the statutes and prohibiting what BDE claimed was an illegal application of the Labor Code (“Court Action”).  The CSLB challenged BDE’s complaint on the basis that it had not yet exhausted its administrative remedies within the Accusation Action.  The trial court ruled in favor of BDE, and the CSLB immediately appealed.

The court of appeal found that the Administrative Procedure Act provides BDE with an administrative remedy that must be completed – through a final, effective decision – before it could request the court’s independent interpretation of the statutes and seek to enjoin the CSLB’s alleged illegal application.  This was true even though BDE’s action sought a legal interpretation of a statute – something generally not available through the CSLB disciplinary procedures and ultimately a court function.

The Black Diamond Electric, Inc. decision highlights the importance of understanding and completing the CSLB disciplinary procedures before seeking relief through the courts.  While this may be bad news for contractors who believe the CSLB is incorrectly interpreting and applying the law, rest assured, contractors will get their day in court (albeit later than they’d like).

Aaron J. Flores has been involved in the construction industry for over two decades. He represents businesses and public agencies in all sectors of the construction industry, including heavy industrial, transportation, infrastructure, architectural and engineering, commercial, retail, and residential. If you would like additional information about the subject matter of this bulletin, please contact Aaron J. Flores at flores@huntortmann.com.

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