Filed 12/17/18 ; Certified for Publication 1/3/19 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

JMS AIR CONDITIONING AND APPLIANCE SERVICE, INC.,
Plaintiff and Appellant,

v.
SANTA MONI CA COMMUNITY COLLEGE DISTRICT et al.,
Defendants and Respondents;

BERNARDS BROS., INC.,
Real Party in Interest and Respondent. B284068

(Los Angeles County Super. Ct. No. BS163309)

Appeal from a judgment of the Superior Court o f Los Angeles County, Amy D. Hogue, Judge. Affirmed.
Pitre & Teunisse and Randall J. Pitre for Plaintiff and Appellant JMS Air Conditioning and Appliance, Inc. Carpenter, Rothans & Dumont, Justin Reade Sarno, and
Louis R. Dumont for Defendants and Respond ents Santa Monica Community College District and Greg Brown. Pepper Hamilton, Ted R. Gropman, and Luke N. Eaton for Real Party in Interest and Respondent Bernards Bros., Inc.2 Plaintiff and appellant JMS Air Conditioning and Appliance, Inc. (JMS) appeals f

rom the superior court’s June 5, 2017 denial
of JMS’s petition for writ of administrative mandate

. That petition asked the superior court to set aside an administrative decision by defendant and respondent Santa Monica Community College District (the Dist rict) that allowed a contractor with the District, real party in interest and respondent Bernards Bros., Inc.

, to substitute another
subcontractor in the place of JMS on a construction project for the District. The court denied JMS’s petition, and for the reasons discussed below, we affirm the court’s denial.

FACTUAL AND PROCEDURAL BACKGROUND

JMS challenges a decision the District issued pursuant to procedures in the Subletting and Subcontracting Fair Practices Act (the Act) (Pub. Contract Code, § 4100 e t seq.). 1 The Act stems from legislative concerns about the practices of “bid shopping” and “bid peddling” on public works projects. “Bid shopping” is “the use of the low bid already received by [a] general contractor to pressure other subcontrac tors into submitting even
lower bids.” ( Southern Cal. Acoustics Co. v. C. V. Holder, Inc. (1969) 71 Cal.2d 719, 726, fn. 7 ( Southern Cal. Acoustics ).) A subcontractor engages in “bid peddling” when it attempts to “undercut known [subcontract] bids already submitt ed to the general contractor in order to procure the job.” ( Ibid. ) The Legislature found that these practices result in “poor quality of material and workmanship to the detriment of the public, deprive the public of the full benefits of fair competition

1 Unless otherwise specified, all statutory references are to the Public Contract Code.3

among prime contractors and subcontractors, and lead to insolvencies, loss of wages to employees, and other evils.” (§ 4101.) The Act seeks to prevent these evils by “provid[ing] an opportunity to the awarding authority to investigate and approve the
in itial subcontractors and any proposed substitutions.” ( Southern Cal.
Acoustics

, supra , 71 Cal.2d at pp. 725

– 726.) It requires that a general contractor specifically list in a bid for public work the subcontractors it intends to use for the project. (§ 4 104

. ) Once the awarding authority accepts a bid, the Act permits the general contractor to
substitute out a listed subcontractor only on certain enumerated bases, all but one of which relate to the subcontractor’s ability or willingness to perform the wor k, or to perform it appropriately. 2 (§ 4107, subd. (a).) The general contractor must receive approval
from the awarding authority for any such substitution, and the Act establishes procedures for such requests. ( Ibid. ) These procedures require that a s ubcontractor receive written notice of a substitution request and, if the subcontractor timely objects, “the awarding authority” must hold a hearing to decide if it will allow the substitution. ( Ibid. )

2 Specifically, section 4 107, su bdivisions (a) (1)

– (a)(4), (a)(6) & (a)(7) provide the following bases for substitution : ( a) subcontractor refuses to ex ecute subcontract ; ( b ) su bcontractor becomes bankrupt or insolvent ; ( c ) subcontrac tor fails or refuses to perform ; ( d ) subcontractor fails or refuses to meet bond requirements ; ( e ) subcontractor is not licensed ; and ( f ) awarding aut hority determines subcon tractor ’ s work is subs tantially unsatisfactory

or not in substantial accordance with the specifications, or is substantially delaying or disrupting the progress of the work.4

A. JMS’s Work for the District

The District contrac ted with the general contractor Bernards Bros., Inc. (Bernards) to construct a new facility. In Bernards’s bid to the District for this work, it listed JMS as the subcontractor to install the heating, ventilation, and air conditioning system at the facili ty, per division 23 of the project specifications (the HVAC Specification).
JMS holds a C

- 20 California contractor’s license to perform “warm

- a ir heating, ventilating and air

- conditioning” work. (Capitalization omitted.) Bernards and JMS entered into a subcontractor agreement
in November 2014, and JMS commenced work in April 2015. The scheduled payment for all work JMS was to perform under the subcontract is approximately $8.2 million.

B. Bernards’s Substitution Request and the Substitution Hearing

On M arch 30, 2016, Bernards requested in writing that
the District permit it to “substitute another [s]ubcontractor for
JMS” because JMS had “failed or refused to perform its subcontract obligations and may not be properly licensed for a portion of its
work pu rsuant to the [c]ontractors [l]icense [l]aw.” Bernards cited
section 4107 subdivisions (a)(3) and (a)(6) as the statu tory bases
for its request, but provided no further detail. ( Ibid. ) The District forwarded a copy of the request to JMS that same day. In an April 5, 2016 letter to the District, JMS object ed to Bernards’s request. This objection tri ggered JMS’s right to a section 4107 substitution hearing. (See § 4107.) On April 12, 2016, the District proposed a hearing date of April 18, identified t he “[h]earing [o]fficer” as Greg Brown, and set forth time limitations for the hearing. Brown is the facilities manager5

for Santa Monica Community College and thus “generally knowledgeable about the [p] roject.” JMS objected to the April 18 date and the pr oposed time restrictions, and requested the District reschedule the hearing to no earlier than May 2. The District ultimately rescheduled the hearing for May 6, 2016. Brown informed the parties in advance that the hearing would be limited to two hours an d that neither “[t]echnical rules of evidence” nor a right to cross

- examine witnesses would apply. At Brown’s invitation, JMS and Bernards each submitted written statements detailing their positions. Brown set no page limits on these statements, nor did h e restrict the number of exhibits or
written witness statements the parties could submit. In JMS’s April 25, 201 6 “Statement of Position,” JMS d enied that it had refused to perform any work. As to Bernards’s claim that JMS lacked the proper
license to do “a portion of ” work, JMS assumed that the claim related
to the hydronic plumbing work listed in the HVAC Specification

. JMS
contended that this claim lacked merit because JMS’s C

- 20 HVAC license covered such plumbing work as “incidental and supplemental ”
or “essential” to HVAC work. JMS relied on Business and Professions Code section 7059, permitting specialty contractors to perform work that is “incidental and supplemental to the performance of the work
in the craft for which the specialty contractor i s licensed

, ” (Bus. & Prof. Code, § 7059, subd. (a)), as well as a C alifornia State Licensing
Board (CSLB) regulation that defines “incidental and supplemental” as “essential to accomplish the work in which the contractor is classified.” (Cal. Code Regs., tit. 16, § 831.) Bernards submitted a May 3, 2016 “Statement of Position

, ” which JMS counsel purports to have received on May 4, 2016,
that describes the factual basis for Bernards’s substitution request.
In it, Bernards identified two types of work it c ontended JMS6

was not licensed to perform: T he hydronic boiler work and the hydronic plumbing work listed in the HVAC Specification. The
statement attaches a 250

- page “ Exhibit Book,” which contains, among other materials, documents detailing 21 “Performan ce Deficienc[ies],” and a written statement of Robert B. Berrigan, a lawyer and former licensing deputy for CSLB. In this unsworn statement, Berrigan stated that, while working at CSLB, he “reviewed the plans and specifications for all public
work project s performed by” several public agencies “to determine
the proper classification of contractor to perform the work involved.” He described his role there as “the ultimate administrative authority in [s]tate [g]overnment for determining whether a contracto r’s license was required for any project or type of work,” and noted he often gave “expert testimony” in administrative hearings and civil litigation on this topic. Berrigan opined that JMS is not licensed to perform the boiler work listed in the HVAC Spec ification. He concluded that boiler work is not “incidental and supplemental” or “essential” to HVAC work. On this basis, he further concluded that such boiler work is not covered by
JMS’s C

- 20 HVAC contractor license and would instead require a C

- 4
boil er license. Berrigan noted that he “ha[d] not formed an opinion” on whether JMS required a separate C

- 36 plumbing license to perform the hydronic plumbing work JMS had performed to date. On May 6, 2016, Brown conducted the substitution hearing assisted by campus counsel, who “serv[ed] as [a] legal advisor to [Brown].” At the hearing, Brown accepted the written materials
from both sides and afforded each side 40 minutes to present its case, as well as a 10

- minute right of reply and brief closing arguments. Bernards offered two of its employees as witnesses: Michael Toepfer, a senior project manager, and Dave Iman, a superintendent. None of7

the witnesses who spoke at the hearing did so under oath, nor did either party object to this. Both Toepfer’s and Im an’s statements focused on complaints about the quality and timeliness of JMS’s
work. Toepfer, however, stated that JMS had not delayed the overall “critical path” of the project. Neither of Bernards’s witnesses disputed
JMS’s contention that JMS had com pleted all work under the

contract. At the hearing, JMS provided Brown with written responses to the alleged performance deficiencies detailed in Bernards’s Exhibit
Book

. JMS p resident, Joe Messica , was JMS’s sole witness at the hearing

. Messica is the “ qualifier on JMS’s [C

- 20 contractor ] license,” meaning he possesses “the degree of knowledge and experience in the [C

- 20 HVAC] classification

. . . and the general knowledge of the building, safety, health, and lien laws of the state and of the
administrat ive principles of the con tracting business that [CSLB] deems necessary for the safety and protection of the public.” (See
Bus. & Prof. Code

, § 7068 , subd. (a) .) Messica stated that he had completed HVAC installations similar to the project, including
“a $9.2 million project with UCLA Weyburn.” Messica further stated
that he viewed the boiler work set forth in the HVAC Specification and the piping work JMS had done to date on the project as “esse ntial to the HVAC system

. . . installed by JMS.” JMS couns el reiterated
its arguments that the boiler and plumbing work were “essential” to HVAC work, and that, therefore, both were covered by JMS’s license.

C. The Substitution Decision On May 10, 2016, Brown se nt a letter to the parties (the
Substitution Decisio n), approving Bernards’s substitution request under section 4107, subdivision (a)(3) (failure to perform) and subdivision (a)(6) (lack of license). In the Substitution Decision, Brown declined to consider the argument Bernards raised in its8

statement of p osition that section 4107, subdivision (a)(7) (regarding unsatisfactory work) provides an additi onal basis for substitution,

as Bernards did not list this basis in its initial substitution request. Brown did, however, consider the purported deficiencies i n JMS’s
work as relevant to other bases for substitution. Specifically, Brown concluded that JMS had “failed to perform” under the subcontract
in that JMS had not performed its work “in the most sound, workmanlike, and substantial manner,” which the s ubco ntract required. Brown also found JMS was not licensed to perform “the work” under the subcontract, and that this provided another basis for
substitution. He relied heavily on Berrigan’s statement for this conclusion, describing Berrigan as a “qualified e xpert in licensing” and noting that JMS “offered no expert testimony to rebut

. . . Berrigan.” Brown described the Berrigan statement as “expressly reject[ing]”
that either the C

- 4 boiler work or the C

- 36 plumbing work was “incidental and supplemental” to work covered by JMS’s C

- 20 HVAC license. Finally, Brown noted in the Substitution Decision that JMS had performed over $3 million worth of boiler and piping work, and
that such a substantial amount of work could not be “incidental and supplemental.”

D. J MS’s Petition and Appeal JMS filed a timely petition for writ of administrative
mandamus. At the hearing on the writ, JMS argued that Brown lacked jurisdiction to hold the substitution hearing, that JMS was denied due process, and that the evidence presen ted at the hearing did not support the Substitution Decision. The court rejected
JMS’s jurisdictional and due process arguments. The court found substantial evidence supported substitution based on improper licensure, but found that there was no substant ial evidence to support9

substitution based on a “[f]ailure or [r]efusal to [p]erform.” (Italics and underlining omitted.) The court denied JMS’s petition and JMS timely appealed.
DISCUSSION

I

. Brown Had Jurisdiction to Approve Bernards’s Request for Su bstitution under Section 4107 JMS contends that Brown lacked jurisdiction to hear the substitution request because section 4107 authorizes only the
District

— and not any delegate thereof

— to conduct a contested substitution hearing.
The District argues that this is a non

- jurisdictional argument
that JMS forfeited when JMS failed to raise the issue below

. We disagree. Basically, JMS’s argument is that the entity making a decision affecting a statutory right and affording specific relief lacked authority to d o so. This is the definition of a jurisdictional issue. (See
Black’s Law Dic t. (10th ed. 2014) p. 980, col. 1 [defining “jurisdiction” as “[a] co urt’s power to decide a case or issue a decree”]; id. , at p. 983, col. 2 [defining “subject

- matter jurisdicti on” as “[j]urisdiction over the nature of the case and the type of relie f sought; the extent to which

a court can rule on the conduct of persons or the status of things”].)
And a litigant cannot correct a jurisdic tional deficiency by failing

to object. ( Harrington v. Superior Court (1924) 194 Cal. 185, 188; People v. Ainsworth (1990) 217 Cal.App.3d 247, 255.) We will
therefore review the court’s decision that Brown had jurisdiction to hold the substitution hearing. Our review is de novo, as this issue

p resents a pure question of law. ( Nasha v. City of Los Angeles (2004)

125 Cal.App.4th 470, 482.) JMS argues that the literal language of section 4107 supports its jurisdictional argument, and that any other reading would make section 4114 superfluous. We disagree.10 JMS points out that virtually every time section 4107 references “the ‘awarding authority,’ ” it includes the qualifying language “or
its duly authorized officer.” The only time the statute does not use this full phrase (“the awarding authority, or its duly authorized officer”) is when section 4107 identifies the entity to hold substitution hearings as simply “the awarding authority.” According to JMS, this shows the Legislature intentionally omitted the “duly authorized officer” qualifier to as sure the awarding authority itself will conduct substitution hearings. But the “plain meaning [of a statute] is discerned by reading the

statute in context .” ( Titan Electric Corp. v. Los Angeles Unified School
Dist. (2008) 160 Cal.App.4th 188, 203, italic s added.) Thus, “[l]iteral construction should not prevail if it is contrary to the legislative intent apparent in the statute.” ( Lungreen v. Deukmejian (1988) 45 Cal.3d 727, 735 ( Lungreen ).) Courts also consider the purpose of a statute
in determining whether the Legislature inte nded to omit certain language. For example, in Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111, 1118, the court considered the history of statutory amendments in concluding the Legislature had intentionally
omitte d language from a statute. And in Pasadena Police Officers Assn. v. City of Pasadena (1990) 51 Cal.3d 564, the court looked to
the “competing interests underlying the Act” as “lend[ing] further support for” its decision not to imply use of a phrase the st atu te uses elsewhere. ( Id . at p. 577.) Thus, although JMS is correct that courts generally should not insert words into a statute after the Legislature has chosen to omit them, that maxim does not permit this court to ignore the broader goals of the stat ute

— particularly where the Legislature has codified those goals. (See § 4101.)11 Nothing in the record, nor the Act’s history, nor its overall structure suggests that preventing an awarding authority’s agent from conducting a substitution hearing might he lp combat bid shopping or bid peddling. Moreover, JMS reads section 4107 as
micro

- managing which individuals the awarding authority may designate to act on its behalf. Such an interpretation is at odds
with the Act’s goal of more control for the awarding authority in selecting subcontractors. Our interpretation is also consistent with
section 4107 subdivision (a), which requires “the awarding authority

or its duly authorized agent ” to consent to or reject the substitution. (Italics added.) Finally, our interpretation most efficiently services the statute’s goals. The District is an educational institution, and
the primary purpose of its governing board is thus to educate

— not

to referee construction disputes. (See Doe v. Regents of University of Califo rnia (2016) 5 Cal.App.5th 1055, 1078 [“ ‘A university’ s primary purpose is to educate students: “ [a ] school is an academic institution, not a courtroom or administrative hearing room.” ’ ”].) Moreover,

m embers of the District’s governing board do not nec essa rily have any background in construction; indeed, such background would be only fortuitous. Thus, requiring the District’s governing board

— as opposed to a duly authorized delegate thereof with background and job responsibilities related to constructio n

— to adjudicate a construction dispute would be a n inefficient allocation of public resources. JMS also urges that its literal in terpretation of section 4107 is necessary to avoid rendering another section in the Act, section 4114, superfluous. Section 41 14 expressly authorizes a county board of supervisors to “delegate its functions” as an awarding authority
under section 4107 “to any officer designated by the board.” (§ 4114.) According to JMS, section 4114 would serve no purpose an d make

no sense if s ection 4107 already permits any awarding authority to12

delegate its section 4107 responsibilities. We agree that the interplay between these statutes renders the language of section 4107 less clear.
What is clear, however, is the Legislatu re’s stated purp ose in drafting the Act. And if it is possible to read the “letter” of both section 4107 and section 4114 in a way that “conform[s] to the spirit of the act,”

we must do so. ( Lungreen

, supra , 45 Cal.3d at p. 735.) We conclude
this is possible by adoptin g our interpretation of section 4107 . As discussed above, delegating the burden of conducting a section 4107 hearing to an employee with relevant job responsibilities or other qualifications is highly efficient. This i s particularly true for

an awardin g authority, such as a board of supervisors, shouldering

a broad range of responsibilities. It ma kes sense, therefore, that
the L egislature chose to reiterate, via section 4114, an awarding authority’s ability to delegate section 4107 responsibilities in
si tuations where the authority is a board of supervisors. Our interpretation of section 4107 thus “conform[s] to the spirit” of the
Act : encouraging awarding authority involvement in subcontracting
decisions

— in a manageable and practical way

— with the large r goal
of preventing bid shopping and bid peddling. We therefore reject JMS’s interpretation of section 4107 and conclude that Brown had jurisdiction to conduct JMS’s substitution hearing under section 4107.

II. Neither the Substitution Hearing, Nor th e Substitution Decision Affected a Fundamental Vested Righ t JMS’s remaining arguments on appeal challenge (i) the
due process afforded him at the substitution hearing, and (ii) the sufficiency of the evidence supporting the Substitution Decision.
Crucial to our analysis of both arguments are the nature and scope
of the rights at issue at substitution hearings and in the substitution decisions resulting therefrom. First, which subcontractor rights13

section 4107 affects informs the level of due process a sub stitution hearing must afford a subcontractor like JMS. (See Hannah v.
Larche (1960) 363 U.S. 420, 442 ( Hannah ) .) Second, whether Brown’s
Substitution Decision substantially affects a fundamental vested right dictates the standard of review we must apply to JMS’s arguments regarding the sufficiency of the evidence. ( Strumsky v. San Diego County Employees Ret irement Assn. (1974) 11 Cal.3d 28, 32 ( Strumsky ) ; Bixby v. Pierno (1971) 4 Cal.3d 130, 144 ( Bixby) .) Because the nature and scope of the rights impl icated are threshold issues

,

we discuss them before directly addressing JMS’s due process and evidentiary arguments.

A. The Act Affords Subcontractors Only Limited, Ancillary Rights The Act’s express and singular purpose is to prevent bid shopping and bid peddling. (See Discussion ante , part I.) As a byproduct of the Act’s efforts to accomplish this, subcontractors listed in a public bid enjoy limited statutory rights: T he right to “perform
the subcontract unless statutory grounds for a valid substitutio n exist” and the right to a section 4107 hearing, if the subcontractor timely objects to a substitution request. (See Southern Cal. Acoustics

, supra , 71 Cal.2d at p. 727; see § 4107 [requiring hearing for properly contested substitution request]; see also Affholder, Inc. v. Mitchell Engineering, Inc. (2007) 153 Cal.App.4th 510, 517

- 518.) These rights are ancillary to the Act’s larger objectives; the Act did not set out to create and does not focus on rights for subcontractors. (See, e.g., id.

at p. 518.) Indeed, the Act protects subcontractors only to the extent
that preventing bid peddling and bid shopping might protect them

. (See Southern Cal. Acoustics, supra, 71 Cal.2d at p. 726 [Act’s goal
is “to protect the public and subcontractors from the evils

. . . of bid shopping and bid peddling subsequent to the award of the prime14

contract for a public [project]”].) The Act’s history confirms this

. (See
Discussion ante , part I.)

B. A Substitution Decision Affects Only a Subcontractor’s Limite d Ancillary Rights Under the Act A substitution hearing affects only th e statutory right s of a
subcontractor under section 4107. This is because substitution hearings are entirely creatures of the Act

— without section 4107 , no administrative action could second

- gues s a general contractor seeking to replace one of its subcontractors. The corollary to this is that a section 4107 substitution hearing does not adjudicate anything beyond
those limited rights section 4107 created.
Thus , a subcontractor like JMS remains free to pursue claims against the prime contractor that are not based on section 4107 statutory rights or duties . For example, if JMS believes it was wrongfully terminated under the terms of the subcontract with Bernards, it may seek redress under the ter ms of that contract. Indeed, JMS has sought such redress. 3 Likewise, JMS’s defenses

3 On April 5, 2018, we granted JMS’s unopposed r equest for j udicial n otice on a ppeal, which attached a complaint JMS filed against Bernards on December 1, 2017, titled “c omplaint for d amages for b reach of c ontract; c ommon c ounts; f or r ecovery on p ayment b ond.” (Capitalization omitted.) In it, JM S alleges Bernards breached the s ubco ntract regarding the p roject “wrongfully and without legal justification” when Bernards “removed JMS from the [p] roject.” The

c omplaint notes that JMS is suing primarily to stay the statute of limitations on these claims, as the subcontract provides for a rbitration of disputes.15

against the indemnification claims JMS’s surety has filed

, 4 or in any future CSLB licensing proceeding, remains un affected in the wake of
the S ubstitution D ecision.
Mor eover , as JMS points out in its own brief, the findings in
the Substitution Decision do not “possess a judicial character” and
thus have no binding effect in non

- section 4017 civil or administrative
actions

. (See, e.g., Y.K.A. Industries, I nc. v. Redevelo

pment Agency of City of San Jose (2009) 174 Cal.App.4th 339, 357 [“ ‘ For an administrative decision to have collateral estoppel effect, it and its prior proceedings must possess a judicial character . . . includ [ing] . . . testimony given under oath or aff irmation [and] a party’s ability

to subpoena, call, examine, and cross

- examine witnesses .’ ”].) For example, the Substitution Decision does not prevent the trier of fact in any such case from determining that JMS did not need any additional
licenses in or der to perform the boiler and plumbing work, or from

4 Exhibit 13 to JMS’s request for judicial notice (see fn. 3, ante ) contains a verified complaint of JMS’s surety, Berk ley Insurance Company, against JMS and its principals. The complaint seeks indemnification under an agreement between JMS and Berkley, executed as a condition of the bond Berkley issued regarding JMS’s work on the project. The complaint alleges Bernards has sought to collect from Berkley based on JMS being in “default” following its termination from the project. Specifically, the complaint attaches correspondence from Bernards to Berkley informing the former of JMS’s termination from the project, that Bernards will be engaging the services of another subcontractor to complete the project, and that Bernards will s eek from Berkley any costs associated with this work that exceed the price under the subcontract with JMS.16

reaching a conclusion regarding whether JMS performed its work to the required standard. 5 In short, the Substitution Decision affects only JMS’s rights
under section 4107

. All of JMS’s other rights and remedies remain

un affected.

C. The Substitution Decision Does Not Affect “Fundamental, Vested Right s ”

Courts determine on a case

- by

- case basis whether a right is “vested” and “fundamental,” taking into account both economic effects
and effects “in human te rms and the importance of [the right] to the individual in the life situation.” ( Bixby

, supra , 4 Cal.3d at p. 144 .) Courts have rarely viewed purely econom ic interests, such as the right to profit under a particular business venture

, as a fundamental

ves ted right. (See, e.g. , Kawasaki Motors Corp. v. Superior Court (2000) 85 Cal.App.4th 200, 204 ( Kawasaki Motors Corp. ) [privilege

5 Interior Systems, Inc. v. Del E. Webb Corp. (1981) 121 Cal.App.3d 312, does not require a different collateral estoppel analysis. In that case, after receiving a prime contractor’s request
to substitute one of its subcontractors, an awarding authority conducted a section 4107 substitution hearing and concluded statutory grounds existed for the substitution. ( Id. at pp. 314

- 3 15 .) The subcontracto r did not pursue administrative review of the Substitution Decision, and instead sued the prime contractor for damages, alleging the prime contractor had violated its “statutory duty” under section 4107. ( Id. at pp. 314

- 3 15, 319.) The court held that the subcontractor could only challenge th e Substitution D ecision by writ of mandate. ( Id. at p. 320; see id. a t pp. 318

- 319.) Applying this same logic here, because we affirm the Substitution Decision, JMS is precluded from suing for violation of section 41 07. But this preclusion does not apply to any other actions or defenses.17

to operate a Kawasaki dealership is not a fundamental right]. )
The Substitution Decision terminates JMS’s right to work on

on e particular project , nothing more. Thus, although it may

cause JMS to lose money, it affects a purely economic right that is

not fundamental. ( See Champion Motorcy cles, Inc. v. New Motor
Vehicle Bd. (1988) 200 Cal.App.3d 819, 825 [rejecting argument tha t “enormous” financial losses affect ed fundamental rights ] .) Purely financial effects will only affect “fundamental” rights in e xtreme, unique situations, such as w hen an administrative decision imposes

“ operating conditions [that] severely impair their a bility to function

or . . . drive [the company] out of business.” (See Benetatos v. City of Los Angeles ( 2015) 235 Cal.App.4th 1270, 1281

- 1282 .) The Substitution Decision does no such thing. It imposes no restrictions on JMS’s ability to function. An d, as we have discussed, to the extent JMS argues other proceedings, such as the indemnification suit, threaten to put the company out of business, the decisions in those separate proceedings

— proceedings in which the the Substitution Decision findings can have no collateral estoppel effect

— would be the cause, not the Substitution Decision

. Bearing in mind the limited scope and non

- fundamental nature of the rights the substitution hearing and Substitution Decision affect, we consider JMS’s due proce ss and e videntiary arguments.

III. The Hearing Afforded JMS the Due Process Required for a Substitution Hearing JMS contends that several aspects of the substitution hearing
denied it due process. These arguments present primarily legal
issues and involve mainly undisputed facts. T herefore, we will
“exercise our own judgment” regardin g “whether appellant received

a fair administrative trial.” ( Vollstedt v. City of Stockton (1990)18

220 Cal.App.3d 265, 273.) Exercising such judgment, we conclude
that JMS received the due process required for a substitution hearing. JMS does not dispute that it presented its case to a neutral
decision maker ; it had an unlimited opportunity to present documents, written witness statements and argument; it had the opportunity to prese nt in

- person witnesses and oral argument at the hearing. Moreover, JMS availed itself of these opportunities. And although JMS disputes whether the notice JMS received was timely (see Discussion post , part III.C), JMS received a detailed desc ription
of B ernards’s complaints in advance of the substitution hearing. Nothing prevented JMS from requesting a continuance if it needed more time to prepare. Nevertheless, JMS argues the substitution hearing did not
constitute a fair trial because: (1) Brown, ra ther than the District’s governing board, conducted the hearing; (2) JMS did not have the opportunity to cross

- examine witnesses; (3) the hearing was too short in light of the complex issues presented; and (4) JMS received insufficient notice of the specif ic factual bases for the substitution
request. What procedural safeguards are necessary to achieve due process “varies according to specific f actual contexts” and depends

on “a complexity of factors,” including “nature of the alleged right involved, the na ture of the proceed ing, and the possible burden on that proceeding.” ( Hannah, supra, 363 U.S. at p. 442.) Due process ultimately requires that proceedings “ ‘ “be tailored, in light of the decision to be made, to ‘the capacities and circumstance s of thos e who are to be heard,’ [citation] . . . to insure that they are given a meaningful opportunity to present their case.” ’ ” ( Doe v. Regents of University of California

, supra , 5 Cal.App.5th at p. 1078.)
As discussed above, the “decision to be made” at a section 410719

substitution hearing is entirely a construct of the Act and affects only those limited rights the Act itself creates for the limited

purpose the Act identifies. (See Discussion ante , parts I & II.) In
the context of that limited purpose and the limited nature of the rights affected, we conclude that a substitution hearing requires a correspondingly limited amount of process. We further conclude that

, for the reasons discussed in more detail below, neither any of JMS ’s proffered deficiencies individually, nor their cumulative effect on the substitution hearing, deprived JMS of the limited due process required at a substitution hearing.

A. Hearing Officer JMS argues the substitution hearing did not constitute a fair trial because Brown, rather than the District governing board, conducted the hearing. As discussed above, we disagree with JMS’s argument that section 4107 permits only the “awarding authority” itself to conduct a substitution hearing. (See Discussion ante , part I.)

B. Cross

- Exam ination and Length of Proceedings JMS argues it did not have a me aningful opportunity to present its defense, because it could not cross

- examine any witnesses 6 or sufficiently address the complex issues in the two hours Brown allotted for the hearing.
N o thing in section 4107 req uires a hearing of a particular length or the opportunity to cross

- examine witnesses. Nor does due process require “full rights of confrontation and cross

- examination” at all

6 Before and during the substitution hearing, JMS did not object to the lack of cross

- examination . It has thu s forfeited the issue. Nevertheless, we exercise our discretion to add ress JMS’s argument, and conclude it has no merit.20

administrative proceedings. ( Saleeby v. State Bar (198 5) 39 Cal.3d 547, 565.) Instead, as discussed above, it requires a reasonable opportunity to be heard

, taking into account the “specific factual
context.” ( Hannah

, supra , 363 U.S. at p. 442.) We see nothing in
the specific facts of this case to suggest that either the length of
the hearing or the lack of cross

- examination prevented JMS from meaningfully defending itself. At and before the hearing, JMS
offered evidence and argument responding to Bernards’s witnesses.
It received Berrigan ’s statement pri or to the hearing and presented

a witness and legal arguments responding to the licensing opinions Berrigan offered. Bernards’s two witnesses described the quality
of JMS’s work and the notices of deficiency, all of which JMS had
received in advance of th e hearing (first in the normal course of business, then in Bernards’s May 3, 2016 Exhibit Book). At the hearing, JMS offered the in

- person statement of its president and additional documents responding to Bernards’s complaint s. Brown
did not limit the am ount of written evidence or written advocacy that
JMS could offer before or at the hearing.
We also consider the burden on the District

— whose mission

,

as previously noted , is to educate, not to conduct hearings regarding construction disputes

— were we to re quire a longer, more formal hearing. ( Hannah

, supra , 363 U.S. at p. 442 [due process analysis considers “the possible burden on that proceeding”]; see Doe v. Regents of Univ ersity of California , supra, 5 Cal.App.5th at p. 1078 [ university disciplinary hea ring need not include al l the formalities of a trial

as this“ ‘ would divert both resources and attention from a university’s main calling, that is education’ ”]

. )21 Finally, we consider the practical need to resolve these disputes quickly to prevent delay in completing a project. It would be inefficient to subject the timeline of a public works projects to potentially significant delays in order to accommodate that process. On these facts, and in the context of a section 4107 hearing,
neither the lack of cross

- examination, nor the length of the

s ubstitution h earing denied JMS a reasonable opportunity to be
heard.

C. Sufficiency of Notice Bernards’s initial substitution request stated that JMS might not be licensed to perform “som e portions” of the subcont ract. Two
d ays before the hearing, JMS learned the specific work Bernards felt JMS was unlicensed to perform: H ydronic piping and hydronic boiler work. This, JMS argues, does not comply with section 4107’s notice requirement and did not afford JMS enoug h time to develop a robust defense to the licensing arguments. We disagree. First, t he District complied with the notice requirements in
section 4107, subdivision (a) by informing JMS about the hearing

more than five days in advance thereof (see § 4107, subd. (a)) , and by telling JMS “in writing” the “reasons for the request” well before the District approved it. ( Ibid .) Second, notice comports with due process where it provides sufficient information, in light of the particular circumstances, to
“ful ly and fairly apprise[] [an administrative litigant] of the charges with sufficient certainty to prepare his defense thereto.” ( Stoumen v.
Munro (1963) 219 Cal.App.2d 302, 307.) Where a litigant receives “reasonable notice and a reasonable opportunity to be heard, that is all that is required.” ( Drummey v. State Bd. of Funeral Directors (1939) 13 Cal.2d 75, 80

– 81.) In the context of the statutory purpose of the Act, the limited legal consequences of a substitution decision, and22

practical concerns regard ing timing, we conclude JMS received such
reasonable notice

, suff icient to satisfy due process.
More than two weeks before the hearing, JMS stated that it “understand[s] that Bernards is contending JMS needs a C

- 36 (plumbing) license to in stall the hydroni c and/or refrigerant piping
that is int egral to moving water and refrigerant within each of the systems JMS is installing.” Thus, the only specific complaint JMS
was first aware of two days before the hearing was the lack of
licensure for the boiler work. Nonetheless , at the hearing, JMS fai led to request a continuance to prepare additional evidence and argument

to defend against Bernards’s boiler licensure argument. Instead, JMS presented testimony and documents responsive to both the plumbing
and boile r license issues

. JMS also contends that it did not receive sufficient notice
of Bernard’s substitution request based on a “fail[ure] or refus[al] to perform” under section 4107, subdivision (a)(3). The superior court concluded, however, that the evidence was insufficient to support
substitution on this basis. Neither party has challenged that conclusion. Whether JMS received sufficient notice regarding this ground is therefore a moot question we need not address.

III. Substantial Evidence Supports the Substitution Decision Lastly, we turn to JMS’s challenge to the sufficiency of the evidence supporting the Substitution Decision. The parties disagree as to the appropriate standard of review. JMS urges this court to conduct an independent review of the Substitution Decision, while
the District maintains that substantial evidence review is appropriate.
Because the Substitution D ecision did not substantially affect a
fundamental vested right (see Discussion ante , part II.B), the
substantial evidence stan dard applies. We further conclude that substantial evidence supports Brown’s ultimate decision to grant23

Bernard’s substitution request based on JMS’s lack of a C

- 4 boiler
license.

A. We Review the Substi tution Decision for Substantial Evid ence, Because th e Decision Does Not Substantially Affect Any Fundamental, Vested Right Code of Civil Procedure section 1094.5 permits review of administrative actions by writ of mandate to determine “whether there was any prejudicial abuse of discretion.” (Code Civ. Proc. § 1094.5, subd. (b).) Where the petitioner contends administrative findings are unsupported by the evidence, Code of Civil Procedure

s ection 1094.5 contemplates two possible standards of review for
the superior court, depending on the nature of the right involved. ( Strumsky

, supra, 11 Cal.3d at p. 32; Code Civ. Proc., § 1094.5,
subd. (c).) If the administrative decision “substantially affects” a
“fundamental [

, ] vested right,” the superior court must exercise its independent judgment on the evi dence. ( Strumsky

, supra , 11 Cal.3d at p. 32; Bixby

, supra , 4 Cal.3d at p. 144.) In all other cases, the superior court will determine whether the administrative findings

are “supported by substantial evidence in the light of the whole
record.” (Code Civ . Proc., § 1094.5, subd. (c).) The concern motivating
a less deferential review of administrative decisions affec ting fundamental rights is that such rights should not be “extin[g uished] or abridge[d] by a body lacking judicial power.” ( Frink v. Prod (19 82) 31 Cal.3d 166, 176 ( Frink ) .)
A C ourt of A ppeal then review s for substantial evidence, but
what the appellate court reviews depends, again, on whether a fundamental vested right is involved. If it is, “and the trial court therefore exercised independen t judgment, it is the trial court ’ s judgment that is the subject of appellate court review. [Citations.]24

On the other hand, if the superior court properly applied substantial evidence review because no fundamental vested right was involved, then the appe llate court ’ s function is identical to that of the trial

court. It reviews the administrative record to determine whether
the agency ’ s findings were supported by substantial evidence

. ( JKH Enterprises, Inc. v. Dep artment of Indus trial Relations (2006)

14 2 Cal.App.4th 1046, 1058.) As discussed above, the Substitution Decision regarding JMS
affects only JMS’s rights under section 4107 , including its right to work on the project, absent a statutorily enumerated basis for substitution. (See Discussion ante , part II.B.) This is not a fundamental vested right. (See ibid. ) JMS nevertheless argues that
the Substitution Decision will indirectly affect other rights, and that those indirectly

- affected rights are fundamental. JMS first suggests the Substitution Decision’s findings that
JMS “ ‘failed and refused’ to perform” and was unlicensed to perform
some of the subcontract work has set i n motion a chain of events
that threaten JMS’s financial viability. But the indirect causal relationships JMS posits betwe en the Substitution Decision and events potentially affecting JMS’s financial viability do not transform the nature of that decision, such that it “substantially affects” JMS’s ability to do business. For example, JMS argues th ese findings have “impaired JMS’s bonding capacity, which mean s it cannot obtain public works projects.” Yet the Substitution Decision has no binding legal effect on JMS’s ability to procure bonding; the District could not and did not consider that issue at the substitution hearing. Similarly,
JMS contends the Substitution Decision led to indemnification claims against JMS in excess of $3 million. But again, these claims

— not the Decision

— are the source of the financial losses JMS fears. What financial effect, if any, these indemni fication claims will have on JMS25

depends on separate judicial proceedings in which, again, the Substitution Decision can have no preclusive effect. JMS next argues the Substitution Decision significantly affects JMS’s fundamental right to its HVAC licens e. JMS identifies the following causal chain: The Substitut ion Decision found that JMS
had performed work for which JMS was n ot properly licensed; this is

a basis for the state licensing board to discipline JMS (Bus. & Prof. Code, § 7090); and such disci pline could include terminating
JMS’s current HVAC license. (Bus. & Prof. Code, § 7095 [modes
of discipline].) But again, the Substitution Decision can have no preclusive effect in the CSLB’s licensing decisions or any judicial review of those licensing decisions. To support its arguments that indirect or delayed effects sufficiently implicate a fundamental vested right, JMS relies primarily on Wences v. City of Los Angeles (2009) 177 Cal.App.4th
305. Wences involved a police department’s official repr imand for misconduct. ( Id. at p. 311). The reprimand was placed in Wences’s employment file and did not have any immediate financial or employment consequences. ( Id. at p. 316.) The court nevertheless concluded the reprimand significantly affected Wenc es’s fundamental right to public employment, because it would affect any future police department discipline or employment decisions. ( Ibid. )
JMS’s reliance on Wences is misplaced not only because
the requisite causal connection between the Substituti on Decision
and HVAC licensure is lacking, but also because the policy motivating
Wences is wholly inapplicable here. Independe nt review of evidence presented to an administrative entity is only necessary where
the right affected is “too important to the ind iv idual to relegate
it to exclusive administrative extinction.” ( Bixby

, supra , 4 Cal.3d

at p. 144.) Put differently, the goal is to prevent administrative26

decision makers from acting as largely unchecked final arbiters of fundamental rights. This risk e xisted in Wences , because the police department was the arbiter of both the reprimand at issue and all future employment decisions that reprimand might affect. Thus, deferring too strongly to the police department threatened to make
it a nonjudicial final arbiter of Wences’s fundamental right to public employment. Under such circumstances, substantial evidence review
was insufficient. By contrast, the District is not the arbiter of whether JMS
retains its HVAC license. T he CSLB must make that determina tion independent of the Substitution Decision itself. In addition, JMS
will have the opportunity to seek judicial review of any such CSLB decision, and the court conducting such a review will consider the nature of JMS’s right to its HVAC license in selec ting the appropriate standard of review to apply. Thus, our decision that a substantial evidence standard of review applies to the Substitution Decision will not leave the fate of JMS’s HVAC license in nonjudicial hands

— far
from it. Wences is distinguish abl e on this basis and does not counsel in favor of a heightened standard of review. Finally, t he unique nature of a section 4107 substitution decision renders a deferential standard of review particularly appropriate. S ection 4107 presents a “regulator y interference with contractual rights,” such that “very different policies govern” than
would in a purely regulatory context. ( Kawasaki Motors Corp.

, supra , 85 Cal.App.4th at p. 204 [distinguishing “privilege to operate a Kawasaki dealership” from a righ t to renew a city permit].) Moreover, in determining the scope of our review, we are cognizant of the goals of the statute; with these in mind, we will not be quick to second

- guess the findings of awarding authorities, to which section 4107 seeks to give more control, not less.27 The superior court therefore correctly applied the substantial evidence standard of review, and we review “the agency’s decision,
rather than the trial court’s decision” under the substantial
evidence standard as well. ( Schafer v . City of Los Angeles (2015)
237 Cal.App.4th 1250, 1261.) This standard of review is highly deferential, and we must

“ ‘resolv[e] all conflicts in the evidence and draw[] all inferences in
support of [the administrative findings].’ ” ( Tennison v. Califo rnia Victim Comp. & Government Claims Bd. (2007) 152 Cal.App.4th 1164, 1180

- 1181.) A review for substantial evidence tests only whether there is substantial evidence to support the decision, not
whether other facts in the record contradict that evidence. ( Escamilla v. Department of Corrections & Rehabilitation (2006) 141 Cal.App.4th 498, 514.) “[S]ubstantial” refers to the quality, not the quantity of
the evidence presented. ( Hope v. California Youth Authority (2005) 134 Cal.App.4th 577, 589.)

B. Substa ntial Evidence Supports the Finding T hat JMS Was Not Licensed to Perform the Boiler Work Set Forth in the Specification At the substitution hearing, th e parties presented conflicting testimony on whether the boiler work was “incidental and suppleme ntal” or “essential” to HVAC work. Messica stated that it is; Berrigan offered his written opinion that it is not. Berrigan further opined that JMS’s C

- 20 HVAC license did not permit JMS to perform the boiler work under the HVAC Specification. We must d efer to the administrative decision maker regarding credibility of witnesses and the relative weight to give two pieces of conflicting testimony. ( City of Fontana v. California Dept. of Tax & Fee Administration (2017)

17 Cal.App.5th 899, 919 ( City of Font ana ) [“ ‘ “[i]t is for the agency to weigh the preponderance of conflicting evidence” ’ ”]; see Leff v. Gunter28

(1983) 33 Cal.3d 508, 518 [“ ‘we have no power to judge

. . . the
effect or value of the evidence, to weigh the evidence, to consider the
credibi lity of the witnesses, or to resolve conflicts in the evidence’ ”].)
Under the substantial evidence standard, courts may reverse an agency’s decision only if, based on the evidence before the agency,
“a reasonable person could not reach the conclusion reac hed by
the agency.” ( City of Fontana

, supra , 17 Cal.App.5th at p. 919.) We
have no such basis for second

- guessing Brown’s decision to believe Berrigan’s testimony over Messica’s. 7 Berrigan worked for several years for CSLB and was responsible for determ ining whether a particular contractor was licensed to perform a particular project. Berrigan also has offered expert testimony in other matters regarding which licenses CSLB would require for a particular construction project. 8 (See, e.g., Ron Yates Cons truction Co. v. Superior Court (1986) 186 Cal.App.3d 337, 347. ) On this record, and given the deferential nature of our review, substantial evidence supports the District’s finding that JMS was not licensed to perform the boiler work in the HVAC Specifica tion.

7 We need not address JMS’s argument that the Berrigan
statement constitutes hearsay, as JMS failed to object to the declaration on this basis at the s ubstitution h earing. Nor are we convinced that case law limiting the use of hearsay in administrative proceedings necessarily applies in the limited context of section 4107 substitution hearings, given their informal nature, narrow scope, and minimal preclusive effect.

8 JMS argues that the Berrigan sta tement offers legal conclusions masquerading as expert opinion and thus cannot provide “substantial evidence.” JMS did n ot object on this basis at the substitution h earing and therefore has forfeit ed the issue.29 C. Substantial Evidence Does Not Support the Finding T

hat JMS Was Not Licensed to Perform the Plumbing Work Set Forth in the HVAC Specification The Berrigan statement and the parties’ briefing discuss two distinct categories of work for which t he District contends JMS was
not licensed: p lumbing work and boiler work. As we have discussed above, sufficient evidence supports Brown’s decision regarding
the boiler work. Berrigan , however, expressly disclaim ed offering any opinion on whether “the e xtensive piping work that JMS performed

on the project was outside of the C

- 20 Classification,” though he note d such work “could be performed by a C

- 36 Plumbing Classification.”
He likewise offer ed no opinion about whether that plumbing work is
“essential ” or “incidental and supplemental” to HVAC work (and

, thus, according to JMS, work covered by JMS’s HVAC license). (See Factual and Procedural Background ante , part B .) As the Berrigan

statement is silent on this issue, the only evidence the parties offe red regarding plumbing licensure is (1) Messica’s testimony that such
work is “essen tial” to HVAC work, and (2) the over $1.6 million scheduled value of plumbing work covered by the HVAC Specification,
which the Substitution Decision cites as supporting th e finding that
such work is not “incidental and su pplemental” to approximately $8 million worth of HVAC work

. Even affording great deference

to Brown’s assessment of the evidence, and even acknowledging his familiarity with the project, we cannot accept B rown’s conclusion
that the value or extent of the plumbing work alone determines its relationship to HVAC work. And because no other evidence supports the conclusion regarding JMS’s licensure to perform the plumbing work in the HVAC Specification, the fin ding fails the substantial evidence test. In order for substantial evidence to support the Substitution Decision, we need only find substantial evidence30

supporting one of the grounds for substitution the decision identifies. Thus, in light of our previou s conclusion that substantial evidence supports Brown’s approval of the substitution based on JMS’s lack
of boiler licensure, the lack of substantial evidence supporting substitution based on plumbing licensure issues does not require
reversal of the trial court’s decision.

IV. The Court Properly Denied JMS’s Petition Because Brown had jurisdiction to hold the substitution hearing, because that hearing afforded JMS the limited due process appropriate in the context of section 4107, and because substantial

e vidence supports Brown’s Substitution Decision, w e conclude that
the superior court did not err in denying JMS’s petition for a writ of administrative mandamus. We note, however, that our conclusion is driven by the very limited nature of our role as a cou rt reviewing a section 4107 substitution decision. In this role, we may not and
do not reach any conclusions regarding whether or how JMS has performed under the subcontract, or the type of work JMS is licensed to perform. Ours is to determine whether th e record before us contains substantial evidence supporting the Substitution Decision. The Substitution Decision is not a typical administrative decision. Rather, it is the product of a unique statutory scheme with very specific, limited objectives, and thus affects very specific, limited rights. With the scope and nature of these objectives and effects
in mind, based on the record before us, and applying a deferential standard of review to this type of quasi

- administrative action, we affirm.31 DISPOSITION

The judgment is affirmed. Respondents are awarded their costs on appeal.

ROTHSCHILD, P. J.
We concur.

CHANEY, J.

BENDIX, J.Filed 1/3/19 

### CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNI A

SECOND APPELLATE DISTRICT

DIVISION ONE

JMS AIR CONDITIONING AND APPLIANCE SERVICE, INC.,
Plaintiff and Appellant,

v.
SANTA MONICA COMMUNITY COLLEGE DISTRICT et al.,
Defendants and Respondents;

BERNARDS BROS., INC.,

Real Par ty in Interest a nd Respondent. B284068

(Los Angeles County Super. Ct. No. BS163309)

ORDER CERTIFYING PUBLICATION OF OPINION

THE COURT:
The opinion in the above

- entitled matter filed on December 17, 2018, was not certified for publica tion in the Official Reports. For good cause, it now appears that the opinion should be published in
th e Official Reports and it is so ordered.

_ ___ ___________________________ ______________________________ ROTHSCHILD, P. J. CHANEY, J. BENDIX , J.