Filed 6/21/24 Stronghold Engineering v. City of Monterey CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

STRONGHOLD ENGINEERING, 

INCORPORATED,

Plaintiff and Appellant,

v.

CITY OF MONTEREY,

Defendant and Respondent.

D082763

(Super. Ct. No. CVRI2103427)

APPEAL from a judgment of the Superior Court of Riverside County, 

Chad W. Firetag, Judge. Affirmed in part, reversed in part and remanded.

Varela, Lee, Metz & Guarino and Andrew Van Ornum, for Plaintiff and 

Appellant.

Colantuono, Highsmith & Whatley; Michael G. Colantuono, Megan A. 

Wharton and Merete E. Rietveld; Christine Davi, City Attorney, for 

Defendant and Respondent.
2

Appellant Stronghold Engineering Incorporated (Stronghold) 

successfully bid to renovate the City of Monterey’s (the City) conference 

center and Portola Plaza (the Project). The City later issued a notice of 

violation against Stronghold under the Subletting and Subcontracting Fair 

Practices Act (Pub. Contract Code,1 § 4100 et seq., the Act) for allegedly 

substituting its concrete and waterproofing subcontractors without notice or 

the City’s consent. Stronghold appealed to the City’s Appeals Hearing Board 

(the Board) who sided with the City and assessed penalties against 

Stronghold for both substitutions. Stronghold filed this action challenging 

the Board’s decision and the role of a city attorney at the hearing. The trial 

court found in the City’s favor.

Stronghold appeals from the court’s ruling, contending: (1) the Board 

did not conduct a fair hearing consistent with due process; (2) the laches 

doctrine barred the City’s claims; and (3) substantial evidence does not

support the Board’s decision. We conclude the City’s claim as to the 

waterproofing subcontractor is barred by laches and remand the matter to 

the trial court to reverse this penalty assessment. We otherwise reject 

Stronghold’s arguments.

FACTUAL AND PROCEDURAL BACKGROUND2

In October 2015, Stronghold submitted a bid to the City for the Project. 

The bid listed West Coast Concrete as the concrete subcontractor and Gino 

Rinaldi, Inc. (Rinaldi) as the waterproofing subcontractor. In November 

2015, the City awarded the Project contract to Stronghold and the parties 

1 Undesignated statutory references are to the Public Contract Code.

2 This section provides a brief background regarding the parties’ 

disputes. We provide additional background facts in the sections of this 

opinion addressing Stronghold’s arguments on appeal.
3

entered into a written contract. Stronghold sub-contracted with Perry Coast 

Construction (Perry) for the concrete work in December 2015 and with F.D. 

Thomas, Inc. (F.D. Thomas) for waterproofing in April 2016.

In 2016, Stronghold sued the City regarding interpretation of the 

contract and later amended its complaint to seek damages due to the City’s 

alleged deficient design and resulting delays (the civil litigation). The City 

filed its initial cross-complaint in January 2018. In March 2020, the City 

claimed it learned of the subcontractor substitutions during discovery. In 

January 2021, it amended its cross-complaint to allege that Stronghold 

violated the Act based on its substitution of Perry for West Coast Concrete 

and F.D. Thomas for Rinaldi. The civil litigation is still pending.

Separately, in September 2020, the City’s public works director sent 

Stronghold a letter notifying it of the Act violations and that the matter had

been set for a hearing before the Board to consider the City’s request for 

$437,230 in statutory penalties. As relevant here, the letter claimed:

(1) Perry and West Coast Concrete were not the same company, and West 

Coast Concrete did not exist; and (2) Stronghold contracted with F.D. Thomas 

for the waterproofing, not Rinaldi as listed in the bid. After a hearing, on 

December 7, 2020, the Board issued a decision penalizing Stronghold for two 

violations of the Act. It imposed a $291,000 penalty for the concrete 

subcontractor substitution and $50,000 for the waterproofing subcontractor 

substitution, totaling $341,000.

Stronghold initiated this action by filing a combined petition for 

traditional mandamus (Code Civ. Proc., § 1085) and administrative 

mandamus (id., § 1094.5) challenging the Board’s decision. Among other 

things, Stronghold claimed the hearing process was unfair, the City’s 

allegations should have been time-barred, and the evidence did not support 
4

the Board’s decision. The trial court denied the writ, finding Stronghold 

received a fair hearing and substantial evidence supported the Board’s 

conclusion that Stronghold violated the Act.

DISCUSSION

I. THE BOARD’S HEARING WAS FAIR

Stronghold argues on appeal that the Board was unconstitutionally 

biased against it because the Board’s legal advisor at the hearing, Salameh, 

was an attorney in the office that was suing it in the civil litigation, i.e. the 

City Attorney’s Office.3

A. Additional Background

At the Board’s contested hearing to consider penalties against 

Stronghold based on alleged violations of the Act, the City was represented 

by outside counsel, the same outside counsel who represented the City in the 

civil litigation. Salameh was present at the hearing to advise the Board. 

Specifically, review of the hearing transcript shows Salameh acted as an 

advisor and moderator regarding proper hearing procedures. Because of 

Salameh’s involvement in the hearing, Stronghold objected to the hearing 

process as unfair. In response, Salameh made an unsworn statement 

claiming she has been segregated from other members of the City Attorney’s 

Office and has not communicated with the public works director or any other 

colleagues in her office regarding the Board hearing or their preparations for 

it. Davi made a similar unsworn statement for the record.

3 In the civil litigation, the caption of the amended cross-complaint lists

as representing the City both the City Attorney’s Office and City Attorney 

Christine Davi, and outside counsel. Salameh is not listed on the caption in 

the civil litigation.
5

After the hearing, Salameh drafted the Board’s proposed decision. At a 

subsequent hearing to adopt the proposed decision, she stated: “I tried to 

distill the Board’s deliberations from the November 18th, 2020 hearing and 

the findings they made and then the ultimate vote imposing penalties for two 

violations. So I tried to capture all of that in the written decision but, of 

course, you are welcome to edit and provide further direction as you see fit.” 

The Board adopted the proposed decision as its own.

Stronghold filed a verified petition for traditional mandamus and 

administrative mandamus in the superior court, seeking to set aside the 

Board’s decision. The court granted Stronghold’s motion to augment the

administrative record to include a privilege log from the City showing 

Salameh’s communications relating to the civil litigation. The privilege log 

shows that from November 10, 2014, to July 31, 2018, Salameh was copied on 

14 privileged communications. On March 9, 2018, after being copied on two 

privileged communications, Salameh prepared two privileged emails and 

directly received two privileged emails. After the privilege log was mentioned 

at the hearing, Salameh stated, “And, again, I’ll just say for the record, you 

know, those likely were e-mails with Staff from years ago. I have not been 

communicating with anyone in the Public Works Department regarding any 

of the subcontracting issues that are before the Board today.”

The trial court acknowledged that Stronghold had presented evidence 

showing Salameh was involved in the civil lawsuit but found that “the 

evidence does not show . . . bias on the part of the City, nor is there any 

evidence to conclude that Salameh’s representation [about being screened 

from the civil lawsuit] was untrue or unreliable.” The court stated:

“Here, the civil lawsuit was filed on 12/13/16. The bulk of 

the emails in the privilege log that involve Ms. Salameh,

just have her cc'ed on the email. Out of the 18 emails, she 
6

only prepared two of the emails on the privilege log and 

only directly received two emails, one of these emails was

sent before the civil lawsuit was filed. Petitioner has 

provided no evidence that Ms. Salameh had more 

involvement in this matter than the 18 emails listed on the 

privilege log, which span 4 years. It points to no evidence 

that Ms. Salameh had any involvement in the civil matter 

after July 2018. It points to no evidence that Ms. Salameh 

had any involvement in the investigation regarding 

[Act]violations. It fails to point to or provide any evidence 

that Ms. Salameh has any personal or financial interest or 

actual bias in the [Act] violations or civil lawsuit. There is 

no evidence in the record that Ms. Salameh has had any 

involvement in the civil lawsuit filed by Petitioner since 

July 2018, that her involvement in this matter was 

substantial, that she had any financial interest, or actual 

bias in the [Act] or civil matter.”

B. Analysis

The determination of whether the administrative proceeding was 

fundamentally fair is a question of law that we review de novo. (Nightlife, 

Partners, Ltd. v. City of Beverly Hills (2003) 108 Cal.App.4th 81, 87

(Nightlife).) If there are conflicts in the evidence, then we apply the 

substantial evidence test to the findings that support the trial court’s factual 

determinations. (Ibid.)

“When . . . an administrative agency conducts adjudicative proceedings, 

the constitutional guarantee of due process of law requires a fair tribunal. 

[Citation.] A fair tribunal is one in which the judge or other decision maker 

is free of bias for or against a party.” (Morongo Band of Mission Indians v. 

State Water Resources Control Bd. (2009) 45 Cal.4th 731, 737 (Morongo).) A 

due process violation can be established by proof of an agency’s actual bias; or 

“by showing a situation ‘in which experience teaches that the probability of 

actual bias on the part of the judge or decisionmaker is too high to be 
7

constitutionally tolerable.’ ” (Id. at p. 737; see also Knudsen v. Department of 

Motor Vehicles (2024) ___ Cal.App.5th ___, ___ [2024 Cal.App. LEXIS 228, 

*9].)

As a preliminary matter, we note that Stronghold does not assert that 

Salameh was involved in the preparation or presentation of the Act’s 

violations to the Board; instead, it contends that because the City’s crossclaims in the civil litigation included allegations of Act violations, they are 

functionally the same matter. Stronghold then argues that because Salameh 

had taken an adversarial role against Stronghold concerning the same 

disputes in the civil litigation, her role “tainted her from being impartial” 

before the Board and therefore tainted the Board’s decision.

We do not agree that the Board hearing and the civil litigation are the 

same proceeding, but we acknowledge the overlap between the allegations in 

the Board proceeding and the cross-claims in the amended complaint. 

Accordingly, we will consider Stronghold’s unfairness arguments as if they 

arose in the course of a single proceeding.

In Howitt v. Superior Court (1992) 3 Cal.App.4th 1575 (Howitt) our

court addressed “the foundational question . . . whether a county counsel’s 

office ‘is ever permitted to place [it]self in [the] position’ of acting as an 

advocate for one party in a contested hearing while at the same time serving 

as the legal adviser for the decision maker.” (Id. at p. 1579.) In Howitt, the 

decision maker was a quasi-independent commission established to resolve 

county employment disputes. (Id. at p. 1578.) During a contested 

evidentiary hearing over a complaint against the sheriff’s department by an 

employee, an attorney from the county counsel’s office represented the 

sheriff’s department, while a second attorney from that office advised the 

commission. (Ibid.) The court concluded that county counsel could not 
8

undertake this dual representation, in which the office was both advocate 

and adviser to the decision maker in a contested hearing, unless “there are 

assurances that the advisor for the decision maker is screened from any 

inappropriate contact with the advocate.” (Id. at p. 1586; see id. at pp. 1579, 

1587.)

The Howitt court stated that the party asserting proper screening had 

the burden “to demonstrate its existence and effectiveness.” (Howitt, supra, 3 

Cal.App.4th at p. 1587.) In a footnote, the Howitt court remarked on 

screening: “we do not envision that an adequate screening procedure for due 

process purposes requires the creation of functionally separate offices to 

advocate and advise. It should be sufficient if the lawyer advising the Board 

has no potential involvement in or responsibility for the preparation or 

presentation of the case.” (Id. at p. 1587, fn. 4.)4

Thus, our first inquiry is whether the City sufficiently demonstrated 

the “existence and effectiveness” of measures to ensure that Salameh had “no 

potential involvement in or responsibility for the preparation or presentation” 

in the civil litigation against Stronghold. (Howitt, supra, 3 Cal.App.4th at 

p. 1587 & fn. 4.) We conclude they have.

Salameh and Davi represented at the contested hearing that Salameh 

had been screened from other members of the City Attorney’s Office and had 

no contact with other members of the office regarding the Act violations.5 

The City’s privilege log supports this conclusion.

4 As noted ante, Stronghold does not contend that Salameh had any 

involvement in the preparation or presentation of the Acts violation before 

the Board, and Salameh and Davi specifically denied such involvement.

5 Although Salameh’s and Davi’s statements are unsworn, Stronghold 

did not object to them on this basis at the hearing, and therefore the 

contentions are forfeited. (Niles Freeman Equipment v. Joseph (2008)
9

The privilege log shows that between November 2014 and July 2018, 

Salameh was privy to a total of 18 privileged communications regarding the 

Project and that she authored two of those emails. Further, the privilege log 

shows Salameh’s last communication about the civil litigation was sent in 

July 2018, approximately 20 months before March 2020, when the City 

claimed it first learned of the subcontractor substitutions. Thus, Salameh’s 

brief and tangential involvement in the civil litigation ended well before the 

alleged Act violations were even discovered.

Salameh’s separation from the civil litigation makes the instant case 

distinguishable from the cases Stronghold relies on. For example, in 

Midstate Theatres, Inc. v. County of Stanislaus (1976) 55 Cal.App.3d 864, the 

appellate court found dual representation to be improper where a lawyer 

represented a county assessor whose valuations had been challenged, and the 

same lawyer then advised the board of equalization at hearings addressing 

the challenged assessments. (See also Howitt, supra, 3 Cal.App.4th 1575; 

Nightlife, supra, 108 Cal.App.4th at p. 94 [city attorney’s “role as advisor to 

the decision-maker” regarding denial of the plaintiff's regulatory permit 

“violated petitioners’ right to due process” because the attorney “acted as both 

an advocate of City’s position and as advisor to the supposedly neutral 

decision-maker”].)

161 Cal.App.4th 765, 787 [“issues not presented at an administrative hearing 

cannot be raised on review”].) Further, as the Board chair noted at the start 

of the contested hearing, the hearing was informal, the rules of evidence did 

not apply and “the Board may consider any evidence or information deemed 

relevant and reasonably reliable.” The trial court necessarily considered 

Salameh’s and Davi’s unsworn statements to be “reasonably reliable.” We do 

as well.
10

Having concluded that the City sufficiently screened Salameh from the 

civil litigation, we consider whether Stronghold met its burden of 

establishing bias. We begin with the presumption of impartiality.

In Morongo, supra, 45 Cal.4th 731, the Morongo Mission Band of 

Indians challenged the team of attorneys prosecuting a license revocation

case against the Band before the State Water Resources Control Board 

because one of the attorneys was also advising the board on an unrelated 

matter. (Id. at p. 734.) In considering the propriety of the dual 

representation, the court dismissed the notion of an absolute separation 

between an agency’s enforcement and advisory roles, emphasizing instead 

the importance of the board’s impartiality. (Id. at p. 739, see id. at pp. 741–

742.) It found that in the absence of financial or personal interest, and where 

the agency adheres to rules mandating internal separation of functions and 

prohibiting ex parte communications, “the presumption of impartiality can be 

overcome only by specific evidence demonstrating actual bias or a particular 

combination of circumstances creating an unacceptable risk of bias.” (Id. at 

p. 741.) The Morongo court rejected the idea of a blanket prohibition on 

agency attorneys holding both advisory and prosecutorial roles 

simultaneously, especially in unrelated matters. (Id. at pp. 739–741 & 740, 

fn. 2.)

Thus, under Morongo, we presume the Board’s impartiality, unless 

Stronghold can overcome the presumption “by specific evidence 

demonstrating actual bias or a particular combination of circumstances 

creating an unacceptable risk of bias.” (Morongo, supra, 45 Cal.4th at

pp. 741–742.) Stronghold has failed to present such evidence.
11

Relying on Ward v. Monroeville (1972) 409 U.S. 57 (Ward), Stronghold 

suggests that Salameh and the Board had a financial interest in the outcome 

of the hearing because penalties are paid to the City. We reject this 

argument. In Ward, a mayor, authorized by state statute to sit as judge in 

cases of certain traffic offenses, convicted the defendant of two such offenses 

and fined him a total of $100. (Id. at p. 57.) Under these circumstances, the 

court held that a possible temptation “to forget the burden of proof required 

to convict the defendant” plainly existed because “the mayor’s executive 

responsibilities for village finances may make him partisan to maintain the 

high level of contribution from the mayor’s court.” (Id. at p. 60.) 

In contrast, in Lent v. California Coastal Commission (2021)

62 Cal.App.5th 812 (Lent), the appellate court held the appellants, oceanfront 

landowners, did not carry their burden of demonstrating the Coastal 

Commission had such a disqualifying financial bias when it imposed a 

penalty of more than $4 million for obstructing public access to the beach. 

(Id. at pp. 825, 853.) The court found appellants “did not meet their burden 

of showing the commissioners have a strong enough institutional financial 

interest in the penalties they impose to create a constitutionally 

impermissible risk of bias,” because no evidence existed showing how much 

the commissioners rely on the penalties to carry out their executive duty to 

implement the Coastal Act. (Id. at p. 853.) Without such evidence the court 

could not “determine whether the commissioners’ motives are strong enough 

to reasonably warrant a ‘fear of partisan influence’ on the Commission’s 

judgment or to cause the commissioners “ ‘ “not to hold the balance nice, 

clear, and true between the state and the accused.” ’ ” (Ibid.) Similarly, 

Stronghold failed to produce any evidence to suggest that penalties fund the 

Board’s work or pay Salameh’s salary. Absent such evidence, an adjudicator 
12

with no financial interest in the outcome is “presumed to be impartial.” 

(Morongo, supra, 45 Cal.4th at p. 737.)

Bias may not be implied; instead, the requisite evidence must come 

from “ ‘concrete facts.’ ” (Nasha v. City of Los Angeles (2004) 125 Cal.App.4th 

470, 483 (Nasha).) “ ‘[A] party’s unilateral perception of an appearance of 

bias cannot be a ground for disqualification unless we are ready to tolerate a 

system in which disgruntled or dilatory litigants can wreak havoc with the 

orderly administration of dispute-resolving tribunals.’ ” (BreakZone Billiards 

v. City of Torrance (2000) 81 Cal.App.4th 1205, 1237.) Here, beyond 

Stronghold’s articulated concern about Salameh’s role, the record contains no

specific facts that establish actual bias or even the probability of bias on the 

part of the Board as a result of Salameh’s advisory position during the 

hearing.

Finally, Stronghold notes that the proposed decision Salameh drafted, 

which the Board subsequently adopted without change, contained two 

findings not directly ruled on by the Board, including: (1) “[i]n the interest of 

fairness, the Board’s decision places the burden on the City to establish by a 

preponderance of the evidence that [Stronghold] violated the [Act]”; and

(2) “This Board finds that [the City’s assessment of penalties was not barred 

by the statute of limitations].” Stronghold contends the Board likely adopted 

Salameh’s proposed decision based on her established relationship with the 

Board. Stronghold likens this to the facts in Quintero v. City of Santa Ana 

(2003) 114 Cal.App.4th 810,6 where the attorney played a leading role in 

advising the personnel board about revision of its procedural rules and had 

acted as the personnel board’s legal adviser in other matters during the years 

6 Quintero disapproved of in part in Morongo, supra, 45 Cal.4th at

p., 740, fn. 2.)
13

immediately preceding the discharge claim at issue. (Id. at p. 816.) Here, 

unlike Quintero, there is no evidence in the record showing Salameh had a 

longstanding relationship with the Board before the contested hearing.

Moreover, while Stronghold is correct that the Board did not debate 

who had the burden of proof or whether the City’s claims were untimely,

Stronghold raised both issues at the hearing and the City addressed the 

timeliness issue in its closing argument. Stronghold does not explain why it 

was improper for Salameh to include in the proposed decision two disputed 

issues that had been presented to the Board at the contested hearing. 

Additionally, the Board impliedly rejected Stronghold’s timeliness challenge 

when it adopted the motion to assess penalties against Stronghold.

Under the independent standard of review, the foregoing facts do not 

establish Stronghold was denied a fair hearing or suffered a due process 

violation.

II. TIMELINESS OF THE CITY’S CLAIMS

Stronghold argues that the City’s claims were barred by laches, that 

the one-year statute of limitations of Code of Civil Procedure section 340 

applied, and that the City knew the facts giving rise to its claims under the 

Act but inexcusably waited to initiate its claims.

A. Legal Principles 

“Laches is an equitable time limitation on a party’s right to bring suit, 

resting on the maxim that ‘equity aids the vigilant, not those who sleep on 

their rights.’ ” (Magic Kitchen LLC v. Good Things Internat., Ltd. (2007) 153

Cal.App.4th 1144, 1156 (Magic Kitchen).) This principle “has been made 

applicable to quasi adjudicative proceedings as a common law policy 

pursuant to the ‘inherent power [of courts] independent of statutory 

provisions to dismiss an action on motion of the defendant where it is not 
14

diligently prosecuted.’ ” (Brown v. State Personnel Bd. (1985) 166 Cal.App.3d 

1151, 1158).

Laches is an affirmative defense and the defendant has the burden of 

proof on each element of the defense. (Highland Springs Conference & 

Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 282.) Where, 

as here, “ ‘ “the trier of fact has expressly or implicitly concluded that the 

party with the burden of proof did not carry the burden and that party 

appeals,” ’ ” “ ‘ “the question for a reviewing court becomes whether the 

evidence compels a finding in favor of the appellant as a matter of law” ’ 

because ‘ “ the appellant’s evidence was (1) ‘uncontradicted and unimpeached’ 

and (2) ‘of such a character and weight as to leave no room for a judicial 

determination that it was insufficient to support a finding.’ ” ’ ” (Lent, supra, 

62 Cal.App.5th at p. 837 [applying this standard to a laches defense].) “We 

have no power on appeal to judge the credibility of witnesses or to reweigh 

the evidence.” (Bookout v. State of California ex rel. Department of 

Transportation (2010) 186 Cal.App.4th 1478, 1486.)

A laches defense has three elements: (1) the plaintiff delayed in 

asserting a right or a claim; (2) the delay was not reasonable or excusable; 

and (3) the defendant suffered prejudice.7 (Magic Kitchen, supra, 153 

Cal.App.4th at p. 1157.) In matters before administrative agencies, “the 

element of prejudice may be ‘presumed’ if there exists a statute of limitations 

which is sufficiently analogous to the facts of the case, and the period of such 

statute of limitations has been exceeded by the public administrative agency 

in making its claim. In [this] situation, the limitations period is ‘borrowed’ 

7 Prejudice “ ‘ “ensues when a defendant has changed his position in a 

way that would not have occurred if the plaintiff had not delayed.” ’ ” (Magic 

Kitchen, supra, 153 Cal.App.4th at p. 1161.)
15

from the analogous statute, and the burden of proof shifts to the 

administrative agency. To defeat a finding of laches, the agency . . . must 

then (1) show that the delay involved in the case . . . was excusable, and 

(2) rebut the presumption that such delay resulted in prejudice to the 

opposing party. [Citations.].’ ” (Fountain Valley Regional Hospital & 

Medical Center v. Bonta (1999) 75 Cal.App.4th 316, 324, fn. omitted

(Fountain Valley).)

We start, then, with determining the analogous statute of limitations.

B. Code of Civil Procedure section 388 is the analogous statute of limitation

Part 2 of Title 2 of the Code of Civil Procedure, entitled, “Of the Time of 

Commencing Civil Actions,” provides a set of potentially analogous statutes 

of limitations for consideration.

The trial court found the analogous statute of limitations for laches was 

the three-year period in Code of Civil Procedure section 338, subdivision (a),

which establishes a three-year statute of limitations for “[a]n action upon a 

liability created by statute, other than a penalty or forfeiture.” Stronghold 

counters that the analogous statute of limitations for the laches defense is 

Code of Civil Procedure section 340, subdivision (a), which establishes a

one-year statute of limitations for an action for a penalty.

Thus the question becomes whether the judgment against Stronghold 

constitutes a penalty. In The TJX Companies, Inc. v. Superior Court (2008) 

163 Cal.App.4th 80 (TJX Companies), the court considered which of the two 

statutes at issue here applied in an action on an alleged violation of the SongBeverly Credit Card Act of 1971 (Civ. Code, §1747). The court explained that 

the determining factor is whether the penalty is mandatory or discretionary. 

Code of Civil Procedure, section 340 subdivision (a) applies if the penalty is 

mandatory; and Code of Civil Procedure section 338 subdivision (a) applies if 
16

the penalty is discretionary. (TJX Companies, at p. 85.) The statute in TJX 

Companies provided that “[v]iolators ‘shall be subject to a civil penalty’ ” (id. 

at p. 86), and therefore the court concluded that Code of Civil Procedure 

section 340 subdivision (a) applied because the penalty was mandatory, even 

though the amount of the penalty remained in the discretion of the awarding 

authority. The TJX Companies court distinguished as permissive those

statutes in which the awarding authority had the discretion to decide 

whether to impose a penalty at all, such as Civil Code section 1790, which

contains the permissive language, “the judgment may include . . . a civil 

penalty . . . .” (See Jensen v. BMW of North America, Inc. (1995)

35 Cal.App.4th 112, 132, fn. 8.)

Here, the City asserted a statutory claim against Stronghold for 

violation of section 4107. After the Board found that Stronghold violated 

section 4107, it then assessed the award against Stronghold pursuant to 

section 4110, which states: “A prime contractor violating any of the 

provisions of this chapter violates his or her contract and the awarding 

authority may exercise the option, in its own discretion, of (1) canceling his or 

her contract or (2) assessing the prime contractor a penalty in an amount of 

not more than 10 percent of the amount of the subcontract involved . . . .” 

(Italics added.)

Whether a penalty under section 4110 is permissive or mandatory 

presents a question of statutory interpretation which we review de novo. 

(Ventura County Deputy Sheriffs’ Assnn. v. County of Ventura (2021) 61 

Cal.App.5th 585, 590.) We begin our analysis with the “ ‘ “actual words of 

[section 4110],” “giving them a plain and commonsense meaning . . . .” ’ ” 

(Mikkelsen v. Hansen (2019) 31 Cal.App.5th 170, 178.) The above italicized 
17

language in section 4110 shows that the imposition of any penalty under this 

section is permissive, not mandatory.

Our plain reading of section 4110 is supported by an opinion from the 

California Attorney General. The Attorney General was asked whether a 

public entity could accept a construction bid that violated section 4104. (86 

Ops.Cal.Atty.Gen. 90 (2003).) In reaching the conclusion the public entity 

had the discretion to accept the bid, the Attorney General stated: “The terms 

of section 4110 are permissive. The awarding authority is not required to 

cancel the contract or impose a penalty but ‘may’ do so in the exercise of ‘its 

own discretion.’ ” (Id. at p. 8.)8 The Attorney General also examined the 

legislative history of section 4110 and concluded this history supported the

“ ‘plain meaning’ of the statute.” (Id. at p. 9.)

Accordingly, because section 4110 permits but does not mandate the 

assessment of a penalty, we conclude that the claim here is “[a]n action upon 

a liability created by statute, other than a penalty or forfeiture” making the 

analogous statute of limitations the three-year period set forth in Code of 

Civil Procedure section 338, subdivision (a). (See TJX Companies, supra, 163 

Cal.App.4th at pp. 84–85.)

Turning then to the issue of delay, delay is “measured by the period 

‘from when the plaintiff knew (or should have known) of the allegedly 

infringing conduct, until the initiation of the lawsuit in which the defendant 

seeks to counterpose the laches defense.’ ” (Magic Kitchen, supra,

8 “Although we are not bound by the Attorney General’s interpretation of 

a statute, ‘ “ ‘[a]bsent controlling authority, [the Attorney General’s opinion] 

is persuasive because we presume that the Legislature was cognizant of the 

Attorney General’s construction of [the statute] and would have taken 

corrective action if it disagreed with that construction.’ ” ’ ” (Towner v. 

County of Ventura (2021) 63 Cal.App.5th 761, 773.)
18

153 Cal.App.4th at p. 1157.) Here, the action against Stronghold was 

initiated by the City’s notification letter in September 2020. The issue for us 

is when the City knew or should have known of the substitutions, so that we 

can determine whether that date occurred more than three years before

September 2020.

The Board concluded the City’s claims were not time-barred because 

evidence of the Act violations did not come to light until discovery in the 

parties’ litigation related to the Project in 2019. Stronghold contends that 

the City knew or should have known of the violations well before that time.

Because the facts regarding the City’s knowledge are different as to 

each of the two subcontractors, we separately address each subcontractor

substitution below.

1. The Concrete Subcontractor Substitution Claim is Timely

Stronghold contends the City knew Perry was “West Coast Concrete” 

no later than June 2016. Thus, it argues that even if the three-year 

limitation period applied, the City’s claims would be untimely because 

penalty claims were asserted more than three years after the substitutions 

and are not subject to tolling or the discovery rule. Specifically, Stronghold 

first argues the claim accrued when the substitution was made (i.e. when 

Stronghold contracted with Perry), in December 2015, not when the City 

discovered it. Stronghold cites no authority to support its contention that the 

City’s cause of action accrued when Stronghold made the substitution and we 

reject it. (In re Marriage of Stanton (2010) 190 Cal.App.4th 547, 561 [“When 

a party provides a brief without argument or citation of authority, we may 

‘treat the points as waived, or meritless, and pass them without further 

consideration.’ ”].)
19

Stronghold further argues that the City’s claim was not subject to 

tolling or the discovery rule, relying upon Eisenberg Village etc. v. Suffolk 

Const. Co., Inc. (2020) 53 Cal.App.5th 1201 (Eisenberg).9 In Eisenberg, the 

appellate court held that disgorgement claims against unlicensed contractors 

were a penalty that must be made within one year of completion of the work

under Code of Civil Procedure section 340, subdivision (a). (Eisenberg, at

pp. 1212, 1214–1215.) Eisenberg is inapposite because it did not address the 

equitable doctrine of laches. Rather, the delay element of the laches defense 

is “measured by the period ‘from when the plaintiff knew (or should have 

known) of the [wrongful] conduct, until the initiation of the lawsuit in which 

the defendant seeks to counterpose the laches defense.’ [Citation.]” (Magic 

Kitchen, supra, 153 Cal.App.4th at p. 1157.)

Stronghold next argues the City should have known of the substitution 

when Stronghold signed its subcontract with Perry in December 2015. We 

reject this assertion for two reasons. First, Stronghold had a statutory duty 

to give notice of substitutions. (§ 4107, subd. (a).) The City had no legal

obligation to monitor construction for improper substitutions.

Second, there is nothing in the record to indicate that the City would 

have been on notice that Stronghold had subcontracted with Perry (license 

No. 857992), instead of West Coast Concrete (license No. 811853), which was 

the entity named in its bid. Communications from Stronghold and 

9 The common law discovery rule postpones accrual until a plaintiff 

discovers or has reason to discover the cause of action. (Samuels v. Mix

(1999) 22 Cal.4th 1, 9.) In contrast, the equitable tolling doctrine “allows our 

courts, ‘in carefully considered situations’ [citation], to exercise their inherent 

equitable powers to ‘soften the harsh impact of technical rules’ [citation] by 

tolling statutes of limitations.” (Saint Francis Memorial Hospital v. State 

Dept. of Public Health (2020) 9 Cal.5th 710, 724.)
20

construction documents referred to the concrete subcontractor as West Coast 

Concrete. Moreover, as the trial court noted, Stronghold used the names 

West Coast Concrete and West Coast Construction interchangeably. In fact, 

Stronghold’s position on appeal is that West Coast Concrete and Perry are 

the same entity, an argument we reject. (Post, pt. III.) Stronghold does not 

explain how the City could have determined that West Coast Concrete and 

Perry were different entities when Stronghold itself continues to assert they 

are not different entities. The evidence further fails to show that the City 

ever acquiesced to the use of Perry instead of West Coast Concrete.

In sum, the evidence does not show that the City knew or should have 

known that Stronghold had substituted in Perry at any time before it learned 

of the substitution in 2019, well within the three-year statute of limitations.

Stronghold cannot establish prejudice, and there is no showing of delay or 

inexcusable delay. (See Fountain Valley, supra, 75 Cal.App.4th at p. 324.) 

Accordingly, the City’s claim as to the concrete subcontractor substitution is 

not barred by laches.

2. The Waterproofing Subcontractor Substitution Claim is Untimely

We adopt the relevant legal analysis from the preceding section in 

considering Stronghold’s substitution of F.D. Thomas for Rinaldi.

As to whether there was a delay causing prejudice, the evidence 

indicates that the City should have known of the substitution as early as 

June 28, 2016, when Ausonio, Inc. (Ausonio), the City’s construction 

manager, wrote to Stronghold asking for a current subcontractor list. That 

same day, Stronghold provided the list, which showed F.D. Thomas as the 

waterproofing subcontractor. In August 2016, Ausonio requested a proposal 

for the design-build of a system to seal underground concrete ductwork to 

prevent water intrusion. F.D. Thomas quoted that work on September 1, 
21

2016, and Stronghold passed along the quote to the City a few weeks later. 

The City later negotiated directly with F.D. Thomas regarding the scope and 

price of the work.

Although the City asserts Stronghold concealed its substitution of F.D. 

Thomas for Rinaldi, the only evidence it cites to support this contention is a 

construction record dated February 2017 from Stronghold listing Rinaldi as a 

“finisher” and “[s]etter.” This document does not list Rinaldi as working on 

waterproofing. Instead, the same document shows F.D. Thomas as doing the 

waterproofing. The City’s concealment claim lacks merit and we reject it. If 

anything, the construction record establishes that the very latest date that 

the City should have known of the substitution was February 2017, when 

Stronghold listed F.D. Thomas as the waterproofing subcontractor.

Whether the City “knew or should have known” of the substitution in 

June of 2016, when Stronghold told Ausonio that F.D. Thomas was the 

waterproofing subcontractor, or in February 2017, when the construction 

record listed F. D. Thomas as the waterproofing contractor, it is clear that 

over three years passed before the City notified Stronghold of the violation in 

September 2020. Thus, a presumption arises that a prejudicial delay 

occurred as to the F.D. Thomas substitution. (Magic Kitchen, supra, 153 

Cal.App.4th at p. 1157; Fountain Valley, supra, 75 Cal.App.4th at pp. 323–

324.)

The City cites no evidence to rebut this presumption. Nor did the City 

present any legally sufficient justification for their delay. Accordingly, even 

viewing all factual matters most favorably to the City, Stronghold’s “ ‘ 

“uncontradicted and unimpeached” ’ ” evidence compels a finding in its favor 

as a matter of law. (Ajaxo, Inc. v. E*Trade Financial Corp. (2020)

48 Cal.App.5th 129, 164.)
22

In sum, on this record the City’s delay in pursuing its claim as to the 

substitution of the waterproofing subcontractor was unreasonable and 

prejudiced Stronghold. Accordingly, the superior court abused its discretion 

in refusing to find that laches barred this claim. (Craig v. City of Poway

(1994) 28 Cal.App.4th 319, 343.) We remand the matter to the trial court to 

grant the administrative writ in part and set aside the $50,000 penalty 

assessment imposed as to the substitution of the waterproofing 

subcontractor.

III. SUBSTANTIAL EVIDENCE SUPPORTS THE BOARD’S 

CONCLUSION THAT STRONGHOLD VIOLATED THE ACT AS TO THE 

CONCRETE SUBCONTRACTOR10

Stronghold’s bid listed West Coast Concrete as the concrete 

subcontractor. Stronghold instead contracted with Perry for the concrete 

work. The Board found this substitution constituted a violation of the Act. 

The trial court concluded that substantial evidence supported the Board’s 

findings.

We address the relevant Act requirements and analyze whether 

substantial evidence supported the Board’s conclusions. (JMS Air 

Conditioning & Appliance Service, Inc. v. Santa Monica Community College 

Dist. (2018) 30 Cal.App.5th 945, 967 (JMS) [“we review ‘the agency’s decision, 

rather than the trial court’s decision” under the substantial evidence 

standard”].) 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 Board’s findings are 

supported by the administrative record; it is the appellant’s burden to show 

10 Because we conclude that the action against the waterproofing 

subcontractor is barred by laches, we do not address Stronghold’s further 

arguments regarding the waterproofing subcontractor.
23

that they are not. We do not reweigh the evidence but indulge in all 

presumptions and resolve all conflicts in favor of the Board’s decision. (Id. at 

p. 456.)

A. The Act

“The Legislature enacted the [Act] . . . to prevent ‘bid shopping’ and ‘bid 

peddling’ after the award of a public contract and to give the awarding 

authority the opportunity to investigate and approve the initial 

subcontractors and any replacements.” (Titan Electric Corp. v. Los Angeles 

Unified School Dist. (2008) 160 Cal.App.4th 188, 202, fn. omitted (Titan 

Electric).)11 The Act requires that for public work, a prime contractor must 

specifically list in its bid the subcontractors it intends to use for the project. 

(§ 4104.) The general contractor is required to provide “[t]he name, the 

location of the place of business, the California contractor license number, 

and public works contractor registration number issued pursuant to Section 

1725.5 of the Labor Code of each subcontractor who will perform work or 

labor or render service to the prime contractor . . . .” (Id., subd. (a)(1).)

Once the awarding authority accepts a bid, the Act permits the prime

contractor to substitute out a listed subcontractor only on nine enumerated 

conditions. (§ 4107, subd. (a).) Eight of these conditions relate to the 

unwillingness or inability of the listed subcontractor to perform the work. 

(Id., subd. (a)(1)–(4), (6)–(9).) The remaining condition occurs when the prime 

contractor demonstrates to the awarding authority that the name of the 

subcontractor listed in the original bid was an inadvertent clerical error, but 

11 “ ‘Bid shopping is the use of the low bid already received by the general 

contractor to pressure other subcontractors into submitting even lower bids. 

Bid peddling . . . is an attempt by a subcontractor to undercut known bids 

already submitted to the general contractor in order to procure the job.’ ” 

(Titan Electric, supra, 160 Cal.App.4th at p. 202, fn. 6.)
24

this condition is “subject to the further provisions set forth in Section 4107.5.” 

(Id., subd. (a)(5).)

Section 4107.5 requires that a prime contractor’s claim of inadvertent 

clerical error in the listing of the subcontractor be made “within two working 

days after the time of the prime bid opening by the awarding authority,” with 

timely notice to both the listed subcontractor and the intended subcontractor. 

The Act further provides for a public hearing if the listed subcontractor 

timely objects. “The two-day written notice provision of section 4107.5 fosters 

[the legislative purpose of the Act] by forcing the prime contractor to assert 

its error in short order, and on the record, thus minimizing the time in which 

the contractor can shop for lower bids and limiting the room for deceptive 

maneuver.” (Cal–Air Conditioning, Inc. v. Auburn Union School Dist. (1993) 

21 Cal.App.4th 655, 668.)

Additionally, after accepting a bid the general contractor cannot 

“[p]ermit a subcontract to be voluntarily assigned or transferred or allow it to 

be performed by anyone other than the original subcontractor listed in the 

original bid, without the consent of the awarding authority, or its duly 

authorized officer.” (§ 4107, subd. (b).) The agency has the right to 

investigate the proposed substitution and reject it if unacceptable. (See Titan 

Electric, supra, 160 Cal.App.4th at page 202 [the Act gives “the awarding 

authority the opportunity to investigate and approve the initial 

subcontractors and any replacements”].) “These procedures require that a 

subcontractor 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.” (JMS, supra, 30 Cal.App.5th at

p. 951.)
25

If a prime contractor violates the Act, it “violates [its] contract,” and the 

awarding authority has discretion to either cancel the contract or assess a 

penalty of up to “10 percent of the amount of the subcontract involved.”

(§ 4110.)

B. Additional Background

Stronghold’s bid listed West Coast Concrete, license number 811853, as 

the concrete subcontractor. License No. 811853 actually belongs to South 

Coast Concrete Construction dba South Coast Construction located in 

Riverside, California at 6770 Central Ave # B. On October 20, 2015, West 

Coast Construction, license No. 857992, submitted to Stronghold a written 

proposal for concrete work on the Project, and Stronghold accepted the 

proposal in December 2015. The Contractor’s State License Board lists 

license No. 857992 as belonging to Perry “dba West Coast Construction” 

located in Riverside, California on 14457 Meridian Parkway. In sum, 

Stronghold’s bid listed “West Coast Concrete,” license No. 811853, but it 

entered into the subcontract for the concrete work on the Project with Perry 

“dba West Coast Construction,” license No. 857992.

Perry has a “B-General Building Contractor” license, not the C-8 

concrete contractor’s license necessary for the Project. The City’s public 

works director and city engineer testified at the Board hearing that a class 

“B” contractor can do driveways and sidewalks but not structural work. The 

fact Perry did not have a license to do structural concrete concerned him 

because the Project required “a lot of structural concrete” of good quality to 

withstand earthquakes. Based on the erroneous information contained in the 

bid submitted by Stronghold, he could not determine which company was 

responsible for the work or what type of license that company held. Further, 
26

there is no evidence that Stronghold ever requested the City’s consent to 

substitute Perry for West Coast Concrete.

C. Analysis 

Stronghold argues the evidence shows it intended to contract with 

Perry, even though it failed to identify Perry by its correct name and wrote 

the wrong license number in its bid to the City.12 Stronghold argues the trial 

court erred in failing to interpret the contract and subcontract under the 

rules of contract interpretation to determine Stronghold’s intent and the 

City’s understanding. We disagree. The goal of contract interpretation is to 

ascertain the parties’ mutual intent at the time of contracting. (Civ. Code, 

§ 1636.) The mutual intent of the parties is determined by the words used in 

the agreement, which are to be understood in their ordinary and popular 

sense. (Id., § 1644.) Mutual intention is determined by objective 

manifestations of the parties’ intent including the surrounding circumstances 

under which the parties entered into the contract, the object, nature and 

subject matter of the contract, and the subsequent conduct of the parties. 

(Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912.)

The trial court concluded that Stronghold’s intent to contract with 

Perry is irrelevant. We agree. The relevant question is what Stronghold and 

the City intended at the time of contracting. On this issue, the only evidence 

is the bid Stronghold submitted to the City naming West Coast Concrete as 

the concrete subcontractor and listing a license number belonging to South 

12 If Stronghold’s inclusion in its bid of West Coast Concrete and license 

number 811853 was made in error, Stronghold could have avoided the bid 

mistake if it had followed the edicts of section 4104 by providing not only the 

subcontractor’s name and contractor license number but also the 

subcontractor’s place of business (id. subd. (a)(1)) and then confirming that 

the information it listed in its bid aligned with the subcontractor it allegedly 

intended, i.e., Perry.
27

Coast Concrete Construction. The bid Stronghold submitted did not alert the 

City that Perry “dba West Coast Construction” would be the concrete 

subcontractor.

Moreover, section 4107.5 directs what a prime contractor must do when 

it makes an inadvertent clerical error in its original bid. Namely, within two 

working days after the City opened the bid, Stronghold was required to give 

written notice to the City, West Coast Concrete, South Coast Concrete 

Construction, and Perry that the West Coast Concrete name and the South 

Coast Concrete Construction license number were listed in error. West Coast 

Concrete and South Coast Concrete Construction then had six working days 

to submit a written objection to Stronghold and the City. The failure of a 

listed subcontractor to timely file an objection constitutes “primary evidence 

of his or her agreement that an inadvertent clerical error was made.”

(§ 4107.5.) Thereafter, a public hearing must be held before the awarding 

authority may consent to the substitution. (Ibid.)

Thus, if the inclusion of West Coast was a typographical error, 

Stronghold was required to comply with section 4107.5, so that the error 

could be promptly rectified. Stronghold did not do so.

Alternatively, if Stronghold wished to make a substitution from West 

Coast to Perry, it was first required to comply with section 4107, subdivision

(b) and obtain the City’s consent to the substitution. Stronghold did not do 

so.

In summary, we conclude substantial evidence supports the Board’s 

finding that Stronghold unlawfully substituted its concrete subcontractor.
28

DISPOSITION

The judgment denying mandamus relief is affirmed in part and reversed

and remanded in part as follows: On remand, the trial court is directed to issue

a writ of administrative mandate compelling the Board to set aside the penalty 

assessment issued regarding the substitution of the waterproofing 

subcontractor. In all other respects, the judgment is affirmed. In the interests 

of justice, each side shall bear its own costs on appeal. (Cal. Rules of Court, rule 

8.278(a)(5).)

KELETY, Acting P. J.

WE CONCUR:

CASTILLO, J.

RUBIN, J.