1. On June 28, 2013, DMI retained Norcal Contractors Consulting Inc. (Norcal) to assist with replacing its qualifier, Stephen Burnthon, with Joseph Guglielmo. Trudy Fielding was the primary point of contact at Norcal. Ex. 36.
2. In the same June 28, 2013 correspondence, Mr. Guglielmo advised Norcal that he was returning the signed form to become the qualifier and would get a check out "next week." Ex. 36.
3. On July 2, 2013, Mr. Burnthon signed the disassociation request. Ex. 38.
4. On July 3, 2013, Mr. Burnthon notified DMI of his disassociation via email. Ex. 38.
5. On July 12, 2013, CSLB rejected Mr. Burnthon’s disassociation because no disassociation date was provided. Ex. 41.
6. On July 12, 2013, CSLB notified DMI that the disassociation request lacked a date of disassociation. Ex. 41.
7. On July 12, 2013, DMI and ATMGP executed the WTP subcontract. Ex. 77.
8. On July 15, 2013, Norcal advised Mr. Guglielmo that it required two of the disassociation request forms. Ex. 44.
9. On August 16, 2013, Mr. Guglielmo prepared applications for additional classification and prepared a disassociation request to disassociate his previous licenses from his inactive company—JAMG, Inc. Ex. 46.
10. On August 16, 2013, Mr. Burnthon departed from DMI. Record, 9/20/17 p. 28:16-19.
11. In September of 2013, CSLB contacted DMI via telephone, advising it could not approve replacement of the qualifier because the former officer of a company, Mr. Guglielmo, had unsatisfied judgments. Record, 9/21/17 pp. 208:21-209:13.
12. In September of 2013, CSLB requested DMI withdraw its application to avoid processing and rejection. Record, 9/21/17 pp. 209:25-210:1-8.
13. On September 4, 2013, Mr. Guglielmo overnighted his signed applications for additional classification and disassociation request form to Norcal. Ex. 46.
14. On September 6, 2013, Mr. Guglielmo emailed Norcal the disassociation request signed by Mr. Burnthon. Ex. 47.
15. On September 12, 2013, DMI and ATMGP executed the Utilities Subcontract. Ex. 77.
16. On September 16, 2013, DMI sent Norcal the applications for replacing the qualifier via FedEx. These applications were dated July 19, 2013. Ex. 45; Record, 9/21/17, p. 167:3-20
17. On September 19, 2013, DMI sent CSLB a letter requesting a 90-day extension to replace its qualifier. Ex. 48.
18. On September 27, 2013, DMI overnighted eight checks to Norcal for CSLB application fees. Ex. 49.
19. On October 11, 2013, Mr. Burnthon faxed a second request to the CSLB with a July 15, 2013 date of disassociation. Ex. 51.
20. ATMGP’s certified payroll documents reflected that DMI performed work on the WTP Subcontract beginning on October 14 through December 10 of 2013. (Ex. 72, declaration of Lorraine DeLap).
21. On October 17, 2013, CSLB sent DMI its notice of license suspension, effective October 13, 2013, for failure to replace its qualifier within 90 days. Ex. 52; 53.
22. On October 23, 2013, DMI filed its application to add a new qualifier to the corporation. Ex. 54.
23. ATMGP’s certified payroll documents reflected trade labor on site for the Utilities Subcontract beginning October 28 through December 10 of 2013 (Ex. 72, declaration of Lorraine DeLap).
24. On November 12, 2013, DMI submitted its notice of Mr. Burnthon’s disassociation. Ex. 76.
25. On November 13, 2013, DMI retained Capitol Services to assist with the CSLB. Ex. 58.
26. On November 14, 2013, DMI sent its application for its new qualifier, Richard Felix, and requested the application be expedited. Ex. 60.
27. On November 22, 2013, CSLB denied DMI’s request to expedite processing and requested further supplementation to reconsider the matter. Ex. 62.
28. On December 10, 2013, Mr. Felix’s fingerprinting was completed. Ex. 63.
29. On December 11, 2013, CSLB reinstated DMI’s license with Mr. Felix as the RMO. Ex. 64.
Q. And, in that e-mail, Mr. Burnthon included the very disassociation forms for each of the three states where he was listed as a qualifier, right?
A. I didn’t see any forms associated with that e-mail.
Q. Okay. We can take a look at the e-mail. It’s Exhibit 38.
A. Excuse me. What number?
Q. Thirty-eight. Just let me know when you’re there. So we’ve been — we’ve reviewed this e-mail several times, but if you take a look at pages 2, 3, and 4, you’ll see -
A. If you take a look at page 1, this is to Casey Condron, not to me.
Q. Okay. So you never - you were not aware that Mr. Burnthon had attached these forms to his e-mail at the time you signed your declaration?
A. Not to my knowledge, not that I recall.
Q. This was the email from Mr. Burnthon to Casey Condron?
Q. And it attaches - it’s dated July 3rd, correct?
Q. And it attaches copies of the disassociation request, that Andre had already sent in?
A. It appears that way.
Q. Is that what you meant by "he abruptly disassociated" when you wrote that in your declaration?
Record, 9/21/17, pp. 214:15-215:7. The Panel finds that DMI knew Mr. Burnthon was disassociating July 3, 2013 based upon his email and attached disassociation forms. DMI knew he would soon file a disassociation form with the CSLB. DMI had an independent and direct obligation to put CSLB on notice in timely manner.
Is anyone listed on this application, ... or any company the person was a part of, or any immediate family member of the applicant named in or responsible for any entered and unsatisfied judgments, liens, and/or claims against any bond or cash deposit pertaining to a construction project?
Question No. 10 went on to specify that if the answer was "yes," the applicant was to attach a statement identifying all judgments "with a detailed description of the situation." Id. In this application, Mr. Guglielmo did not answer the question in the affirmative and did not attach any statement describing the judgments against the Scott Companies, even though he was aware of the judgments at the time. Record, 9/21/17, pp. 178:15-180:14; Ex. 70.
• 10/23/13 - received application;
• 10/28/13 — sent acknowledgement letter to DMI;
• 10/29/13 - application sent to the CSLB’s judgment unit for review;
• 10/31/13 - judgment unit returned application to program technician;
• 11/8/13 - application rejected on account of judgments against the Scott Companies;
• 11/18/13 - application withdrawn per Mr. Guglielmo’s letter;
• 11/18/13 - application deemed void by the CSLB.
Record, 9/20/17, pp. 61:1-17, 66:4-13; Ex. 78. DMI’s expert agreed that the CSLB "acted promptly" in taking the above steps. Record, 9/21/17, pp. 283:15-284:14.
We were unaware that matters associated with the other licenses where I was an officer would prevent me from becoming the RMO on our current license. By the time we were informed of this, we asked for an extension of time ....
Record, 9/21/17, pp. 204:20-206:6; Ex. 60. This statement was at best ignorant and at worst, a material misrepresentation. Mr. Guglielmo was aware, since 2004, that the CSLB prohibited anyone listed on a license that is under judgment suspension from being listed on any other license. Record, 9/21/17, p. 205:17-22. Again, the evidence shows that Mr. Guglielmo made inconsistent statements to the CSLB in an apparent effort to gain some advantage during the process of replacing Mr. Burnthon. This practice is troubling and further demonstrates lack of good faith and reasonableness on DMI’s part.
"[P]ermits a court to find that there has been 'substantial compliance with licensure requirements ... if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith in maintaining proper licensure, (3) did not know or reasonably should not have known that he or she was not duly licensed when performance of the act or contract commenced, and (4) acted promptly and in good faith to reinstate his or her license upon learning that it was invalid.’"
The Bardos court concluded, that Cadmus, the unlicensed contractor, failed to satisfy the first factor because Cadmus was not licensed prior to the performance of its work for Palms. As to the second and fourth factors, the Court of Appeals held that Cadmus had not acted reasonably and in good faith and promptly because it was not until after the construction project was completed that it attempted to obtain a license. And finally, as to the third factor, the Court of Appeals held that Cadmus knew that it did not have its own contractor’s license.
1. DMI knowingly performed work on the Project while unlicensed.
2. DMI was not diligent in keeping its license current. DMI’s executives knew their RME was going to leave as of late June of 2013. DMI did not notify the CSLB of that event. DMI stalled for several months, then proposed an ineligible replacement who had outstanding judgments against a former company where he was CEO. DMI did not forward required fees and fingerprinting in a timely manner.
3. DMI was working on the Project while fully aware of its potential suspension, as they were not following up with the CSLB on a timely basis. DMI certainly had complete knowledge of its lack of a license when it received the CSLB’s suspension letter dated October 17, 2013, which was received on or about October 20, 2013. DMI did not get its license reinstated until December 11, 2013,
4. Finally, DMI got the notice of suspension, but did not submit a new application with an eligible employee as RME until November 14, 2013. DMI did not bother to get that qualifier fingerprinted until December 10, 2013. DMI engaged in almost two months of unlicensed activity on a major project with no apparent urgency to fix its licensure problem.
(1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.
(State Farm Mutual Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 418 (citing BMW of North America, Inc. v. Gore (1996) 517 U.S. 559). These guideposts are wholly inapplicable in this arbitration proceeding and in no way limit an award of statutory civil penalties under Cal. Bus. & Prof. Code § 7031(b). DMI’s arguments on this point are wrong for four reasons.
Id. Courts have routinely applied the disgorgement penalty against unlicensed contractors without any reference to constitutional constraints or "equitable considerations." (E.g., White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 509; Twenty-Nine Palms Enterprises Corp. 210 Cal.App.4th at 1437).
Dated: November 13, 2017
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