February 08, 2001

Plaintiff, AEH Construction, Inc. (AEH), filed suit fordeclaratory judgment against the Illinois Department of Labor(Department) seeking a declaration that it was not in violation ofthe Illinois Prevailing Wage Act (Act). 820 ILCS 130/6, 130/11a(West 1998). The Department filed a motion to dismiss on thegrounds that the complaint was premature. AEH filed a motion forsummary judgment, asserting that the Prevailing Wage Act onlyapplied to workers on a construction site. The trial court ruledthat the complaint was not premature, denied the Department'smotion and granted AEH's motion. The Department appeals. Wereverse.

AEH entered into a contract with the City of Galesburg toremove bricks from certain city streets, repair and level thesubsurface, and then relay the bricks. After removal of thebricks, AEH transported them to its office where employees cleanedand repalleted the bricks. The bricks were then transported to astorage facility and then to the street to be reinstalled. AEHperformed no cleaning at the actual construction sites.

On November 23, 1998, the Department notified the City ofGalesburg that the location where the cleaning was performed wasirrelevant, and that the work of cleaning the bricks was covered bythe Act. The letter stated that, "this correspondence [will] serveAEH with notice that the work being performed for the City ofGalesburg is covered * * * under the Prevailing Wage Act."

On January 27, 1999, AEH filed a complaint for declaratoryjudgment seeking an interpretation of the applicability of the Actto the brick cleaners. The Department filed a motion to dismissasserting that no actual controversy existed.

Meanwhile, pursuant to standard departmental procedures, theDepartment continued to investigate AEH's payroll records in April,1999, to determine compliance with the Act. On May 18, 1999, theDepartment's investigator issued a letter to AEH stating thatcertain employees had received less than the prevailing wage andthat wages of $12,151.46, an underpayment penalty of $2,430.29 andpunitive damages of $243.02 were due. AEH requested an expeditedadministrative hearing on the matter. The Office of the AttorneyGeneral notified AEH that an administrative hearing was notavailable because AEH had only received one notice and two wererequired for an administrative hearing.

The trial court denied the Department's motion to dismiss onJune 24, 1999. The Department answered the complaint. AEH fileda motion for summary judgment, which the trial court granted.

The Department asserts that the trial court erred because thecase was not ripe for decision because 1) no controversy existed,and 2) AEH failed to exhaust its administrative remedies. Becausewe agree with the Department that the complaint for declaratoryjudgment was premature, we need not address the substantive issuesraised in this appeal.

The Department argues that there was no actual controversycapable of judicial resolution because AEH commenced its complaintbefore the Department initiated an enforcement proceeding. Merenotice of a potential action against AEH does not create a claimcapable of judicial resolution. Therefore, the declaratoryjudgment action was premature.

The purpose of declaratory judgment is "to allow the court toaddress a controversy one step sooner than normally, after thedispute has arisen but before steps are taken which give rise to aclaim for damage or other relief." Tait v. County of Sangamon, 138Ill. App. 3d 169, 485 N.E.2d 558 (1985) (citing Kaske v. City ofRockford, 96 Ill.2d 298, 450 N.E.2d 314 (1983)). To maintain anaction for declaratory relief, it is essential that there be an"actual controversy" and that the party seeking the declarationmust have a tangible legal interest in that controversy. Underground Contractors Association v. City of Chicago, 66 Ill.2d371, 362 N.E.2d 298 (1977). A complaint for declaratory judgmentwhich recites an actual controversy between the parties insufficient factual detail and requests a declaration of rights issufficient to state a cause of action. Schwanke, Schwanke & Assoc.v. Martin, 241 Ill. App. 3d 738, 744, 609 N.E.2d 654, 659 (1992).

In order to have an "actual controversy," a party mustdemonstrate "that the underlying facts and issues of the case arenot moot or premature, so as to require the court to pass judgmenton mere abstract propositions of law, render an advisory opinion,or give legal advice as to future events." UndergroundContractors, 66 Ill.2d at 375, 362 N.E.2d at 300. The case mustpresent a concrete dispute requiring the immediate and definitivedetermination of the parties' rights, the resolution of which willadvance the conclusion of the controversy or some part thereof. Underground Contractors, 66 Ill.2d at 375, 362 N.E.2d at 300. Adeclaration of nonliability for past conduct is not the function ofthe declaratory judgment statute. Howlett v. Scott, 69 Ill.2d 135,370 N.E.2d 1036 (1977).

In Schwanke, the plaintiff had received two notices ofviolation from the Department. The Department notified theplaintiff that the matter would be scheduled for an administrativehearing on debarment at which the plaintiff would be allowed topresent evidence and legal arguments in support of its positionthat it was not subject to the Act. Plaintiff filed for adeclaratory judgment prior to the hearing, seeking a finding thatit had not violated the Act.

On appeal, the court upheld the dismissal of the complaint. The court stated that although the complaint alleged a disagreementbetween the parties, it failed to state an actual legal controversybecause there was no allegation that the plaintiff was placed onthe debarment list. Since the complaint sought an advisory opinionon matters only potentially at issue, the plaintiff's action was "achallenge of the Department's investigation into whether plaintiffwas in violation of the Act." Schwanke, 241 Ill. App. 3d 738, 609N.E.2d 654.

In this case, AEH's complaint alleged that it had received asingle notice of violation from the Department. A letter to theCity of Galesburg, dated November 23, 1998, stated, "Let thiscorrespondence serve AEH with notice that the work being performedfor the City of Galesburg is covered, from beginning to end, underthe Prevailing Wage Act."⁽¹⁾ Therefore, if AEH violates the Act asecond time, it would be subject to debarment proceedings.

AEH argues that a second notice will subject it to automaticdebarment and permanent harm because public works projects comprisethe "vast majority" of its business. In support of this argument,AEH cites a second letter it received from the Department dated May18, 1999, which stated that if AEH had been notified of a previousviolation, it "may be subject to automatic debarment."

Although it could not demand an administrative hearing at thetime this suit was filed, AEH was not without options. It couldhave paid the additional wages and brought an action to recoverback payments owed, or waited for the Department to refer thematter for prosecution. See Schwanke, 241 Ill. App. 3d 738, 609N.E.2d 654.

Furthermore, if the Department sends a second notice, AEH canrequest a hearing within 10 days, which stays any placement on thedebarment list. If the result of the debarment hearing isunfavorable to AEH, debarment may be further stayed by the circuitcourt. Receipt of a second notice is not tantamount to automaticdebarment.

While the complaint certainly alleges a disagreement betweenthe parties, it fails to allege an actual, legal controversy. Instead, AEH seeks a declaration of rights dependent upon futureevents which may or may not happen, i.e., a second notice placingAEH on the debarment list. Like Underground Contractors andSchwanke, the complaint requests both an advisory opinion onmatters which would be at issue in the future and a declaration ofnonliability for past conduct.

A plaintiff seeking declaratory judgment must specify allfacts necessary to justify the unusual relief sought. Schwanke,241 Ill. App. 3d at 748, 609 N.E.2d at 661. AEH failed to allegeor establish the existence of an actual controversy ripe forjudicial determination. The trial court erred in denying theDepartment's motion to dismiss.

The Department also argues that the complaint should have beendismissed on the grounds that it was barred by the exhaustion ofremedies doctrine. AEH responds that an administrative hearingwould be futile because the Department had already determined thatAEH had violated the Act.

The principles of ripeness and exhaustion of remedies areclosely related in that both involve the general issue of theprematurity of the action. Schwanke, 241 Ill. App. 3d at 748, 609N.E.2d at 661. Parties aggrieved by the action of anadministrative agency ordinarily are precluded from seeking reliefin the courts without first pursuing all administrative remediesavailable to them under the applicable statute. Castaneda v.Illinois Human Rights Comm'n, 132 Ill.2d 304, 547 N.E.2d 437(1989). Relief by means of declaratory judgment is not availablewhere the legislature has vested the agency with the authority toadminister the statute. People ex rel. Fahner v. AmericanTelephone & Telegraph Co., 86 Ill.2d 479, 427 N.E.2d 1226 (1981). Therefore, judicial interference must be withheld until theadministrative process has run its course. Fahner, 86 Ill.2d 479,427 N.E.2d 1226.

Although Illinois recognizes a "futility" exception to theexhaustion of remedies doctrine, it is a limited one. Dock Club,83 Ill. App. 3d 1034, 404 N.E.2d 1050. Even clear indications thatthe administrative agency will rule adversely are not sufficient tobypass or terminate the administrative process. Dock Club, 83 Ill.App. 3d 1034, 404 N.E.2d 1050. The exhaustion of remediesrequirement cannot be avoided simply because relief may be, or evenprobably will be, denied by the agency. Northwestern University v.City of Evanston, 74 Ill.2d 80, 383 N.E.2d 964 (1978).

Under the Administrative Review Act a plaintiff can presentits arguments to the administrative agency and, in the event of anunfavorable ruling, can present them again to the circuit court,which is empowered to stay the administrative decision. Dock Club,83 Ill. App. 3d 1034, 404 N.E.2d 1050. Circumventing thestatutorily created administrative proceeding deprives the agencyof the jurisdiction conferred upon it by the legislature. Fahner,86 Ill.2d 479, 427 N.E.2d 1226.

In this case, if the Department does not believe that AEHviolated the Act a second time, no debarment hearing would be held. The administrative process is never commenced. However, if asecond letter is sent, AEH would have the opportunity to presentevidence and argument under the Act. 735 ILCS 5/3-101 et. seq. The Act also provides for administrative review of an adversedecision at such a hearing and, ultimately, judicial review of thefinal administrative determination.

If the declaratory judgment action was allowed to proceed, acourt decision inevitably forecloses further proceedings by theDepartment. Our legislature has statutorily empowered theDepartment to exercise its expertise and make initialdeterminations concerning enforcement of the Act governing wages tobe paid for work on public projects. Schwanke, 241 Ill. App. 3d at752, 609 N.E.2d at 664. We should not lightly dismiss the agency'srole under the Act. The declaratory judgment action was prematurebecause AEH did not exhaust its administrative remedies. The trialcourt should have granted the Department's motion to dismiss.

The judgment of the circuit court of Knox County is reversed.

Reversed.

BRESLIN and SLATER, JJ., concur.

1. The Department disputes that the November 23 letterconstituted a notice of violation to AEH because it was sent tothe City of Galesburg not to AEH, was too informal, and was onlyauthorized by the admonition to "inquire diligently." In ouranalysis, the issue of whether the letter met the requirements ofa formal notice of violation is not material. We will assume,for purposes of argument, that the letter was a notice ofviolation.