Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. No. BS119024 James C. Chalfant, Judge.
Mahoney & Soll, Paul M. Mahoney and Richard A. Soll for Plaintiff and Appellant.
Ronald Beals, Chief Counsel, Thomas C. Fellenz, Deputy Chief Counsel, Daniel A. Near, Assistant Chief Counsel, and Aleksandra Sachowicz for Defendant and Respondent.
ROTHSCHILD, Acting P. J.
The California Department of Transportation (Caltrans) assessed a monetary penalty on Highland Construction, Inc., the successful bidder on a Caltrans construction project, because Highland used a subcontractor on the project that it did not list in its bid. An administrative judge upheld the penalty and Highland filed a petition for a writ of administrative mandate challenging that decision. The superior court denied the writ and Highland appeals. We affirm.
FACTS AND PROCEEDINGS BELOW
Highland Construction successfully bid on a public works contract with Caltrans to pave five “turnouts” on a highway in Riverside County for $364,390. The Public Contract Code requires the prime contractor bidding on a Caltrans project to list in its bid any subcontractor it intends to use on the project who will perform a certain percentage of the total bid and authorizes Caltrans to assess a monetary penalty not to exceed 10 percent of the amount of the unlisted subcontract for noncompliance. (Pub. Contract Code §§ 4104, subd. (a)(1), 4110.) Highland’s bid did not name Ortiz Asphalt Paving as a subcontractor.
All statutory references are to the Public Contract Code except where otherwise specified.
After the project was completed, Caltrans notified Highland that because it used Ortiz, an unlisted subcontractor, Caltrans intended to penalize Highland for the violation under section 4110. Caltrans afforded Highland an administrative hearing in which to contest the proposed penalty.
At the hearing, Caltrans introduced into evidence a diary of the work performed by Ortiz and Highland on September 25, 2006. The diary, prepared on site by a Caltrans consultant, showed that on September 25, Ortiz provided a paver, three rollers, four trucks and a skip loader with three operators. It also showed that Ortiz provided a foreman, a screedman, three rakers and three roller men. Michael Chen, Caltrans’ Assistant Resident Engineer for the project testified that he visited the project on September 25, and observed that it was “Ortiz Paving Corporation doing the paving.”
In the industry, equipment rented with an operator is referred to as “operated equipment” and equipment rented without an operator as “bare equipment.” It is undisputed that the equipment Ortiz rented to Highland was “operated equipment.”
Caltrans also produced evidence that Ortiz not only held licenses as an earthwork and paving contractor and a general engineering contractor but it also acted like a contractor on the job. It coordinated the design of the 600 metric tons of asphalt mix with Vulcan Materials Company, the company that supplied the asphalt for the job,, Vulcan referred to Ortiz, not Highland, as its “customer” in its correspondence, invoices and weight certificates and Highland issued a check for the asphalt in the amount of $61,850.79 payable jointly to Vulcan and Ortiz. Highland paid Ortiz separately the amount of $38,619.21 for its equipment and personnel.
Highland countered with a letter from Ortiz stating that it was not a subcontractor but only a renter of equipment and testimony from Highland’s Operations Manager, Kristi Stelle, who claimed that “[a]ll of the paving work was done by Highland.” Ortiz was not a subcontractor, Stelle explained, but an equipment renter that always includes operators with its equipment because the equipment is “very expensive and very sophisticated [and] Ortiz does not want anyone to operate its equipment except Ortiz’s own specially trained employees.” Stelle further testified that a Highland employee was the “superintendent and supervised and directed the work on this project” and that Ortiz did not provide any job superintendents to supervise or direct work on the project. Ortiz’s employees were instructed to take direction from Highland’s foreman concerning “the paving operations being performed by Ortiz’s people.” In addition, Stelle testified, it was Highland who directed Ortiz when to start work, when to stop, where to start work and what type and size of equipment to use to perform the work. According to Stelle the means, method and manner of performing the work were under the supervision of Highland which had the right to terminate Ortiz at any time because Highland was renting Ortiz’s equipment by the hour.
Stelle also testified that Highland and Ortiz had not entered into a written agreement nor had they agreed to a fixed price. Rather, Highland selected the equipment and rented it from Ortiz on an hourly basis. Highland paid Ortiz based on the number of hours of equipment use. Different pieces of equipment rented at different rates. Highland also paid Ortiz hourly rates for the work done by Ortiz’s forepersons, operators laborers and rakers.
On cross-examination, Stelle testified that the machines Highland rented from Ortiz came with more than just operators. The paving machine, for example, “comes with a couple of laborers, couple of screen operators, a couple of operator engineers. There is probably six or seven guys that go with it.”
Highland was unable to produce a rental agreement or an invoice from Ortiz for the equipment. Stelle testified that Highland agreed on the amount to pay Ortiz based on a telephone conversation between the head of Ortiz and her.
The hearing officer found that Ortiz was an unlisted subcontractor on the project and assessed 10 percent of the amount Highland paid to Ortiz, $3861.92, as a penalty.
Highland filed a petition for a writ of administrative mandate contending that it did not have to list Ortiz as a subcontractor because Ortiz was merely a renter of operated equipment and the hearing officer’s decision to the contrary was not supported by substantial evidence. The trial court denied the petition and Highland filed a timely appeal.
DISCUSSION
I. STANDARD OF REVIEW
In reviewing the decision of an administrative agency not involving a fundamental right the trial court reviews the whole record to determine whether the decision is supported by substantial evidence. On appeal, we stand in the shoes of the trial court and apply the same standard of review. (Donley v. Davi (2009) 180 Cal.App.4th 447, 455–456.) In applying this deferential review we presume the agency’s findings are supported by the administrative record; it is the appellant’s burden to show that they are not. We do not reweigh the evidence but indulge in all presumptions and resolve all conflicts in favor of the agency’s decision. (Id. at p. 456.)
The issue before us is whether substantial evidence in the record supports the hearing officer’s decision that Ortiz was a subcontractor on the project. We hold that it does.
There is sufficient evidence to sustain the administrative decision without considering the testimony of Richard Navarro, a labor compliance officer employed by Caltrans, and Steve Grove, an enforcement supervisor with the Contractor’s License Board. Therefore we do not address Highland’s hearsay objections to their testimony.
II. EVIDENCE THAT ORTIZ ACTED AS A SUBCONTRACTOR ON THE PAVING PROJECT
A. Definition Of A Subcontractor
Section 4113 defines a subcontractor as “a contractor, within the meaning of [Business and Professions Code section 7026], who contracts directly with the prime contractor.” Business and Professions Code section 7026 defines a contractor in relevant part as “any person who undertakes to... or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, [or] improve... any... highway [or] road.... ‘Contractor’ includes subcontractor and specialty contractor.”
B. Application of the Definition to Cases Involving “Suppliers”
Specifically excluded from the definition of a contractor is “any person who only furnishes materials or supplies without fabricating them into, or consuming them in the performance of, the work of the contractor.” (Bus. & Prof. Code, § 7052.) Thus, California courts have long recognized that “a person or company in the business of supplying equipment or hiring out laborers to be supervised by others does not act in the capacity of a contractor.” (Contractors Labor Pool, Inc. v. Westway Contractors, Inc. (1997) 53 Cal.App.4th 152, 166.)
The distinction between a contractor and a supplier is illustrated by the two following cases.
In Dahl-Beck Electric Co. v. Rogge (1969) 275 Cal.App.2d 893, the court upheld the jury’s finding that the defendant was a supplier, not a contractor. There, the plaintiff, an electrical contractor, telephoned the defendant and cross-complainant, Rogge, and asked to rent a backhoe accompanied by an operator to dig a trench. Rogge sent a backhoe and operator to the jobsite for the agreed rate of $14 per hour. Plaintiff did not pay Rogge for the work performed but brought an action against him and the operator alleging negligence in the excavation work. Rogge cross-complained for the rent of the equipment and the cost of the operator. (Id. at pp. 897–898.) A jury found in favor of Rogge on plaintiff’s complaint and Rogge’s cross-complaint. On appeal plaintiff claimed that Rogge was an unlicensed contractor barred under Business and Professions Code section 7031 from bringing an action for compensation for work performed. Rogge claimed he was an employee of the plaintiff and entitled to compensation. (Id. at p. 899.) The court held that substantial evidence supported the jury’s verdict for Rogge. The court began by stating the applicable law: “‘The determination of whether the status of an employee or that of an independent contractor exists is governed primarily by the right of control which rests in the employer....’” (Id. at p. 900, citation omitted.) In the present case, the court held, “there was direct testimony that plaintiff’s representative told [the backhoe operator] where to dig, when to come to work and what degree of care was required. There was no evidence of any supervision by defendant Rogge.... [¶] The circumstance that Rogge furnished the backhoe and its operator... does not make Rogge a contractor as a matter of law.” (Id. at p. 901.)
In contrast, the court held in Leonard v. Hermreck (1959) 168 Cal.App.2d 142 that the plaintiff was a contractor, not “a mere conveyor of dirt.” (Id. at p. 145.) In Leonard, the defendants, the prime contractors on a highway project, contracted with the plaintiff to haul 220, 000 tons of dirt from a pit to the roadbed of the highway. By the terms of the contract plaintiff agreed to furnish trucks, drivers and loaders for hauling the dirt and defendants agreed to pay plaintiff 11 cents per ton for all dirt hauled. (Id. at p. 143.) When the defendants refused to pay for the hauling, plaintiff sued for the value of its services rendered. The trial court granted defendants’ motion for nonsuit on the ground that plaintiff was an unlicensed contractor and therefore barred from recovering for its services under Business and Professions Code section 7031, discussed above. (Id. at p. 144.) On appeal plaintiff contended he was not a contractor “because he did nothing except deposit dirt on the roadbed, and that the grading, tamping and other work was performed by defendants and at defendants’ direction.” (Id. at p. 145.) The Court of Appeal rejected this argument. It reasoned plaintiff came within the definition of a contractor in Business and Professions Code section 7026, quoted above, because he “did ‘subtract from the pit’ and he ‘added to and improved’ the highway, which brought his work within the provisions of the section.” (Ibid.) The court also noted that plaintiff agreed in his contract with defendant to comply with the engineering plans and drawings for the construction of the freeway as prepared by defendant. These facts established that plaintiff was more than just a supplier of material. (Ibid.)
C. Application of the Definition of Subcontractor to This Case
The undisputed evidence showed that Ortiz met the definition of a contractor in Business and Professions Code section 7026 (quoted above at page 5) because, like the contractor in Leonard v. Hermreck, supra, 168 Cal.App.2d at p. 145, it “added to” and “improved” the highway by bringing, unloading, spreading and rolling 600 tons of asphalt on the highway bed. In doing so, Ortiz did not “only furnish[] materials or supplies” to Highland but “fabricat[ed] them into... the work of the contractor, ” thus taking itself outside the definition of a supplier in Business and Professions Code section 7052 (quoted above at page 5).
Additional evidence showed that Ortiz was more than a mere purveyor of asphalt and operated asphalt paving equipment. Ortiz ordered the asphalt and specified the formula for mixing it. Vulcan, the company that supplied the asphalt, referred to Ortiz as its customer and billed Ortiz for the product. Neither Highland nor Ortiz notified Vulcan it was mistaken in its reference or its billing. Ortiz paid for the asphalt and was reimbursed by Highland. Ortiz had a foreman, Matt Brown, on site during the entire paving operation on September 25.
Finally, there was circumstantial evidence supporting an inference that Ortiz was acting as a contractor, not just a supplier. Ortiz was a licensed contractor. Highland’s claim that it merely rented operated equipment from Ortiz was inconsistent with the amount Highland paid Ortiz. The hearing officer found that the $38,619.21 Highland alleged it paid Ortiz for renting operated equipment did not correlate with Ortiz’ rental rates for that equipment which totaled approximately $14,000. The hearing officer noted that according to the customs of the industry, a supplier of operated equipment normally (1) does not supervise the work or include nonoperators to assist in the work; (2) does not order and pay for materials to be used in the work; (3) performs services under a rental agreement containing a detailed estimate of costs; and (4) would be paid on the basis of a detailed written invoice.
The evidence is enough to support the hearing officer’s conclusion that Ortiz was a subcontractor and therefore had to be listed in Highland’s bid.
Highland requests us to take judicial notice of the decision by the Contractors’ License Board finding that Ortiz was not a subcontractor of Highland’s on the same highway project involved in our case. Caltrans did not file a response to this request. We decline to take notice of the decision by the Contractors’ License Board because we cannot determine from the record the evidence that the Board considered in reaching its decision and, even if the facts in the two proceedings were identical, that would not necessarily show that one of the decisions lacked substantial evidence-only that reasonable minds can differ.
III. FAIRNESS OF THE ADMINISTRATIVE HEARING
Highland argues that because the hearing officer and “prosecutor” were both Caltrans employees it was denied a fair administrative hearing. We find no merit in this argument.
No citation of authority accompanies this argument which is reason enough to reject it. (Cal. Rules of Court, rule 8.204(a)(1)(B).) In any event, it is “well established that a party is not denied an impartial adjudicator merely because an administrative entity performs both the functions of prosecutor and judge.” (Hongsathavij v. Queen of Angels etc. Medical Center (1998) 62 Cal.App.4th 1123, 1142.)
DISPOSITION
The judgment is affirmed.
We concur: CHANEY, J. JOHNSON, J.