Preview:

No.

82-396

I N T E SUPREME COURT O THE STATE O MOFJTANA H F F

1983

S. DENNIS THOP4PKINS, d/b/a PYRAMID BUILDERS I P l a i n t i f f s and R e s p o n d e n t s ,

DAVID FULLER, COb!lMISSIONER O THE F DEPARTMENT O L B R AND IIlDUSTRY, F A O STATE O MONTANA, F

Defendant and A p p e l l a n t .

Appeal from:

D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County o f Lake, The H o n o r a b l e James B . W h e e l i s , J u d g e p r e s i d i n g .

C o u n s e l o f Record: For Appellant: P a u l J . Van T r i c h t a r g u e d , Dept. of L a b o r , Heilena Montana For Respondents: Thomas Hoover a r g u e d , Big F o r k , Montana F o r Amicus C u r i a e : J o s e p h PJ. Duffy a r g u e d , Great F a l l s , Montana (Montana S t a t e Bldg. T r a d e s C o u n c i l )

submitted: Decided:

A p r i l 21,

1983

J u l y 21, 1983

Filed:

Jut 2 11983

Clerk

Mr. J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d Court. The D e p a r t m e n t of the District Lake. building Court of Labor

t h e O p i n i o n of

the

and I n d u s t r y a p p e a l s a d e c i s i o n of County of by a

the Fourth J u d i c i a l D i s t r i c t , the amount of on a

This dispute deals with contractor to his

wages p a i d

employees

s t a t e - f inanced

construction project.

Essentially,

t h i s case involves interpreAct
,I1

t a t i o n of M o n t a n a ' s L i t t l e "Davis-Bacon et. seq., to
MCA

s e c t i o n s 18-2-401,

( 1 9 7 9 ) , which r e q u i r e s c o n t r a c t o r s on p u b l i c protheir employees " t h e standard prevailing r a t e of the

jects wages work

pay

. . .
is

a p p l i c a b l e t o t h e county o r performed." Section

l o c a l i t y i n which
MCA,

being

18-2-403(1),

(1979).

I n i t i a l l y , w e note t h a t t h e 1979 s t a t u t e s a r e a p p l i c a b l e t o t h i s case. fees. In 1980 the University of Montana let contracts for the W a f f i r m t h e judgment w i t h t h e e x c e p t i o n of t h e a t t o r n e y ' s e

c o n s t r u c t i o n of a r e s e a r c h l a b o r a t o r y a t Y e l l o w Bay on F l a t h e a d Lake. The r e s p o n d e n t was a c c e p t e d a s t h e m e c h a n i c a l c o n t r a c t o r .

P r i o r t o t h i s time, r e s p o n d e n t was p r i m a r i l y i n v o l v e d i n res i d e n t i a l construction. governmental e n t i t y . c o l l e c t i v e bargaining nonunion. The c o n t r a c t r e q u i r e d laws of t h e S t a t e of t h e r e s p o n d e n t t o a b i d e by t h e l a b o r specifically, he was r e q u i r e d to The l a b o r a t o r y was h i s f i r s t c o n t r a c t w i t h a The r e s p o n d e n t was n o t a s i g n a t o r y t o any agreement, and a l l of h i s e m p l o y e e s were

Montana;

p a y h i s e m p l o y e e s t h e " s t a n d a r d p r e v a i l i n g r a t e " (SPR) a p p l i c a b l e t o t h e c o u n t y o r l o c a l i t y i n which t h e work was b e i n g p e r f o r m e d . The c o n t r a c t l a n g u a g e was t a k e n from v a r i o u s p a r t s of M o n t a n a ' s L i t t l e Davis-Bacon A c t . C o n c e r n i n g h i s r e s p o n s i b i l i t i e s , he conNothing also

t a c t e d a K a l i s p e l l a t t o r n e y who r e v i e w e d t h e c o n t r a c t . was discussed concerning the SPR p r o v i s i o n .

Respondent

t a l k e d t o t h e p r o j e c t a r c h i t e c t and a c o n t r a c t o r f r i e n d who had b e e n c o a c h i n g him. T h r o u g h t h e s e d i s c u s s i o n s he b e l i e v e d h i m s e l f

t o be i n f u l l c o m p l i a n c e w i t h Montana law.

Construction

began

and

thereafter

the

State

received

a

c o m p l a i n t t h a t r e s p o n d e n t was n o t p a y i n g h i s e m p l o y e e s t h e SPR. The c o m p l a i n t was made by t h e b u s i n e s s c a r p e n t e r s u n i o n of N o r t h w e s t Montana. t e s t i f i e d i n p a r t a s follows:
"Q. Did you have a conversation with Thompkins on t h i s project? A. Yes, I e n c o u r a g e d him t o j o i n t h e U n i o n .
"Q. A.

representative

for

the

The u n i o n r e p r e s e n t a t i v e

Did you e n c o u r a g e him t o j o i n t h e U n i o n ?
I did.

"Q. What d i d you t e l l him when he w o u l d n ' t I s a i d I ' d have t o do my j o i n t h e U n i o n ? A. j o b and w h a t e v e r was a v a i l a b l e t o m e t o t r y and g e t him t o j o i n .
"Q. And what d i d you d o ? A. I r e p o r t e d it t o t h e D e p a r t m e n t of Labor t h a t I d i d n ' t t h i n k h e was p a y i n g p r e v a i l i n g wage. "

The S t a t e i n v e s t i g a t e d and c o n c l u d e d t h a t t h e c o m p l a i n t was legitimate. a c t u a l l y paid Below by t h e

is

a

chart

showing

the

wages

that

were

r e s p o n d e n t and

t h e wages which t h e S t a t e

c l a i m s s h o u l d have been p a i d a s t h e SPR. EMPLOYEE Mar t o n Becker Ryland Thompkins Hale Raudebaugh
JOB

WAGES ACTUALLY PAID

"STANDARD PREVAILING RATE" AS DETERMINED BY THE STATE Carpenters : 12.05/hour--5/1/79-4/30/80 13.02/hour--5/1/80-4/30/81 Laborers : l o . 55/hour--7/1/79-6/30/80 11,45/hour--7/1/80-6/30/81

c a r p e n t e r $9.00/hour c a r p e n t e r $9.00/hour c a r p e n t e r $8.00/hour c a r p e n t e r $ll.OO/hour laborer $6.00/hour carpenter/ salaried superintendent

The S t a t e c l a i m s t h a t i t c o n s i d e r e d t h r e e s o u r c e s of m a t i o n t o d e t e r m i n e t h e SPR: by the Employment Security

infor-

(1) wage r a t e i n f o r m a t i o n c o m p i l e d

~ i v i s i o n ; ( 2 ) Davis-Bacon

rates

p u b l i s h e d by t h e U n i t e d S t a t e s D e p a r t m e n t of L a b o r ; and ( 3 ) l o c a l c o l l e c t i v e bargaining agreements. However, t h e r a t e s e s t a b l i s h e d three, collective

b y t h e S t a t e were t a k e n v e r b a t i m from number b a r g a i n i n g agreements. variation between the

A c c o r d i n g t o t h e S t a t e , t h e r e was l i t t l e three sources, and i n such c a s e s it h a s agreements.

b e e n t h e p o l i c y t o a d o p t r a t e s from t h e b a r g a i n i n g

The r e s p o n d e n t commenced t h i s a c t i o n by s e e k i n g a d e c l a r a t o r y

judgment

i n the D i s t r i c t Court. praying for an

The S t a t e f i l e d an answer and requiring Thompkins to pay

counterclaim

order

p a s t due wages and p e n a l t i e s and a t t o r n e y f e e s . summary judgment b u t h i s m o t i o n was d e n i e d .

Thompkins s o u g h t

A n o n j u r y t r i a l was

h e l d a f t e r which t h e D i s t r i c t C o u r t e n t e r e d judgment i n f a v o r of the p l a i n t i f f/contr actor. then appealed. The a p p e l l a n t h a s r a i s e d t h e f o l l o w i n g i s s u e s : the District Court the erred erred by not adopting the
(1) whether

The Commissioner

Labor and I n d u s t r y

commissioner's ( 2 ) whether the

d e t e r m i n a t i o n of District phrase of Court

standard prevailing in

rate; of

its

interpretation

the

statutory

"work of a s i m i l a r c h a r a c t e r ; "

( 3 ) whether t h e admission

h e a r s a y e v i d e n c e was r e v e r s i b l e of attorney fees to

error; was

and

( 4 ) whether

the

award

respondent

proper.

W address e

these issues i n turn. Appellant's first issue

is

raised

in

response

to

the

f o l l o w i n g comment by t h e D i s t r i c t C o u r t : "Defendant [ a p p e l l a n t ] argues t h a t o n l y t h e Commissioner of t h e D e p a r t m e n t of Labor and Industry has the authority t o determine the p r e v a i l i n g r a t e of wages i n a g i v e n a r e a . D e f e n d a n t i g n o r e s t h e p l a i n meaning of t h e statute: 'The Montana Commissioner may determine ' M.C.A. 518-2-402(1979) B e c a u s e t h e power t o d e t e r m i n e t h e p r e v a i l i n g r a t e of wages i s n o t e x c l u s i v e l y t h a t of t h e C o m m i s s i o n e r , t h a t power, a t t h e time t h e p a r t i e s entered into the contract i n question, rested a l s o with the p l a i n t i f f , subject to the s t a n d a r d s s e t o u t i n t h e a p p l i c a b l e l a w s . The i s s u e , t h e n , on which p l a i n t i f f ' s r e q u e s t f o r d e c l a r a t o r y judgment t u r n s , i s w h e t h e r p l a i n t i f f r a t h e r t h a n t h e d e f e n d a n t h a s made t h e p r o p e r d e t e r m i n a t i o n of what t h e i r c o n t r a c t term ' s t a n d a r d p r e v a i l i n g r a t e of wages' a s d e f i n e d i n M.C.A. S 18-2-401 ( a ) ( 1 9 7 9 ) means. The i s s u e , c o n t r a r y t o d e f e n d a n t ' s p o s i t i o n , i s n o t w h e t h e r and under what s t a n d a r d s t h i s C o u r t may r e v i e w a d e c i s i o n o r d e t e r m i n a t i o n o f an a d m i n i s t r a t i v e a g e n c y .

. . .

. . .

"Plaintiff's request for a declaratory judgment would be a r e q u e s t f o r a r e v i e w of a d e c i s i o n o r d e t e r m i n a t i o n of a n a d m i n i s t r a t i v e a g e n c y i f i n f a c t t h e c o m m i s s i o n e r of l a b o r had d e t e r m i n e d t h e s t a n d a r d p r e v a i l i n g r a t e of wages f o r t h e j o b c l a s s i f i c a t i o n s i n q u e s t i o n . B u t t h e c o m m i s s i o n e r d i d n o t make t h e d e t e r m i n a t i o n he was a u t h o r i z e d t o make u n d e r M.C.A. 5 18-2-402(1)(1979)."

The D i s t r i c t

Court

o b v i o u s l y viewed

t h e problem

a s o n e of

contract interpretation. dent t o pay his

Here, t h e c o n t r a c t required t h e respont h e SPR y e t the contract. t h e r e were no specific

employees in

hourly rates

contained

The c o u r t f o c u s e d on

whether respondent,

a s a contracting party, properly interpreted

t h e c o n t r a c t term " s t a n d a r d p r e v a i l i n g r a t e The a p p e l l a n t a r g u e s t h a t : of the SPR and

."
have been granted

( 1 ) i t d i d make a d e t e r m i n a t i o n

its

determination

should

d e f e r e n c e by t h e c o u r t , and ( 2 ) t h e r e s p o n d e n t d i d n o t have t h e s t a t u t o r y power to determine the r a t e . T h a t power r e s t s e x c l u -

s i v e l y with the appellant. W agree with a p p e l l a n t ' s e second p o i n t ;
MCA,

t h e r e s p o n d e n t was (1979), t o determine

n o t empowered by s e c t i o n 1 8 - 2 - 4 0 2 ( 1 ) , t h e s t a n d a r d p r e v a i l i n g r a t e of wages. stated:

The s t a t u t e i n q u e s t i o n

" [ t ] h e Montana c o m m i s s i o n e r of l a b o r may d e t e r m i n e t h e
r a t e of wages i n the county o r l o c a l i t y in

standard prevailing which
MCA,

the

contract

i s t o be p e r f o r m e d . "

Section 18-2-402(1),

(1979). power

The D i s t r i c t C o u r t i n c o r r e c t l y c o n c l u d e d t h a t s i n c e in that the "commissioner

the

is permissive

. . .

may

determine the
A judge's

. . . rate,"

it must a l s o be n o n e x c l u s i v e .

task i n c o n s t r u i n g s t a t u t e s is "simply t o a s c e r t a i n

and d e c l a r e what i s i n t e r m s o r i n s u b s t a n c e c o n t a i n e d t h e r e i n , n o t t o i n s e r t what h a s been o m i t t e d The court clearly violated this

. . ."

S e c t i o n 1-2-101, The statute

MCA.

principle.

says

nothing about being nonexclusive.

On t h e c o n t r a r y ,

the history

o f t h i s l e g i s l a t i o n would i n d i c a t e o t h e r w i s e . The o r i g i n a l v e r s i o n of M o n t a n a ' s L i t t l e Davis-Bacon A c t was e n a c t e d i n 1931. S i n c e t h e n i t h a s been amended s e v e r a l times.

M o n t a n a ' s A c t i s a n a l o g o u s t o t h e F e d e r a l Davis-Bacon A c t which was a l s o e n a c t e d i n 1931. T h i s kind of l e g i s l a t i o n h a s a s o n e of The a c t p r e -

i t s p u r p o s e s t h e p r o t e c t i o n of l o c a l l a b o r m a r k e t s .

v e n t s c o n t r a c t o r s from i m p o r t i n g c h e a p l a b o r t o t h e d e t r i m e n t of l o c a l workers. T h i s p u r p o s e i s a c h i e v e d by r e q u i r i n g c o n t r a c t o r s i n the locality.
To a l l o w

t o p a y t h e r a t e of wages p r e v a i l i n g

potentially self-serving defeat Court the noted legislative

c o n t r a c t o r s t o d e t e r m i n e t h e r a t e would purpose.
As

t h e U n i t e d S t a t e s Supreme F e d e r a l Davis-Bacon
Act:

i n a case construing

the

" [ t ] h e l a n g u a g e of t h e A c t and i t s l e g i s l a t i v e h i s t o r y p l a i n l y show t h a t it was n o t t o benef i t contractors, but rather to protect t h e i r e m p l o y e e s from s u b s t a n d a r d e a r n i n g s by f i x i n g a f l o o r u n d e r wages on g o v e r n m e n t p r o j e c t s . C o n g r e s s s o u g h t t o a c c o m p l i s h t h i s r e s u l t by d i r e c t i n g t h e S e c r e t a r y of L a b o r t o d e t e r m i n e , o n t h e b a s i s of p r e v a i l i n g r a t e s i n t h e l o c a l i t y , t h e a p p r o p r i a t e minimum wages f o r e a c h project." United States v. Binghamton C o n s t r u c t i o n Co. ( 1 9 5 4 ) , 347 U.S. 1 7 1 , 176-77. 74 S . C t . 4 3 8 , 98 L.Ed. 594.
W h o l d t h a t t h e a u t h o r i t y t o d e t e r m i n e t h e SPR r e s t s e x c l u e
s i v e l y w i t h t h e c o m m i s s i o n e r of l a b o r u n d e r t h e s t a t u t e . c o n c l u d e t h a t t h e D i s t r i c t C o u r t was i n c o r r e c t
We also

i n allowing the

c o n t r a c t o r t o d e t e r m i n e t h e SPR i n t h e a b s e n c e of s u c h a d e t e r mination by the commissioner. t h a t the the While we agree with the

commissioner's s t a t u t o r y power

contention to

respondent d i d not have t h e SPR, this conclusion by the

determine

c o u r t is n o t r e v e r s i b l e e r r o r f o r t h e f o l l o w i n g s t a t e d r e a s o n s . A p p e l l a n t a r g u e s t h a t i t d i d make a d e t e r m i n a t i o n of t h e SPR and t h a t i t s f i g u r e s s h o u l d have b e e n a c c e p t e d u n l e s s t h e y w e r e shown t o be a r b i t r a r y o r c a p r i c i o u s . Here, t h e c o u r t f o c u s e d on c o n t r a c t p r i n c i p l e s ; framing t h e

i s s u e a s w h e t h e r t h e r e s p o n d e n t made t h e p r o p e r d e t e r m i n a t i o n of t h e c o n t r a c t term " s t a n d a r d p r e v a i l i n g r a t e . " t h e c o u r t reasoned had the power to t h a t the respondent, pay the his employees at I n o t h e r words,

a s a contracting party those rates which he

believed power

would meet

contract

requirements.

However,

this

i s n o t t h e same a s t h a t g r a n t e d t o t h e c o m m i s s i o n e r u n d e r

statute.

The c o m m i s s i o n e r d e r i v e s h i s power from s t a t u t e , w h e r e a s The D i s t r i c t

t h e r e s p o n d e n t d e r i v e s h i s power from t h e c o n t r a c t . Court confused t h i s d i s t i n c t i o n . court interpreted con

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