NewMech Companies, Inc. v. Independent School Dist. No. 206, Alexandria
| Decision Date | 06 October 1995 |
| Docket Number | C8-93-1509,Nos. C1-93-1500,s. C1-93-1500 |
| Citation | 540 N.W.2d 801 |
| Parties | 131 Lab.Cas. P 58,068, 105 Ed. Law Rep. 719, 2 Wage & Hour Cas.2d (BNA) 1781 NEWMECH COMPANIES, INC., Respondent (C1-93-1500), v. INDEPENDENT SCHOOL DISTRICT NO. 206, ALEXANDRIA, Minnesota, Petitioner, Appellant (C1-93-1500), Manning Mechanical, Inc., a North Dakota corporation, Petitioner, Appellant (C1-93-1500), Defendant (C8-93-1509), State of Minnesota, Intervenor, Respondent (C1-93-1500), Intervenor Below (C8-93-1509). Scott ANDERSON, et al., Petitioners, Respondents (C8-93-1509), v. INDEPENDENT SCHOOL DISTRICT NO. 206, ALEXANDRIA, Minnesota, Petitioner, Appellant (C8-93-1509). |
| Court | Minnesota Supreme Court |
Syllabus by the Court
A school district's receipt of state funds under the Debt Service Equalization Aid statute or the Homestead and Agricultural Credit Aid statute does not trigger the requirements of the Prevailing Wage Act, Minn.Stat. §§ 177.41-.44.
John C. Lervick, Alexandria, for ISD No. 206.
LaDonne R. Vik, Brad A. Sinclair, Fargo, ND, for Manning Mechanical, Inc.
Gerald S. Duffy, Rosemary Tuohy, Minneapolis, for NewMech Companies, Inc.
Stephen D. Gordon, Paul W. Iverson, Minneapolis, for Scott Anderson, et al.
Hubert H. Humphrey, Attorney General, Scott R. Strand, Assistant Attorney General, St. Paul, for State of Minn.
Gregg J. Cavanagh, Minneapolis, for Amicus Curiae, MN Chapter of Assoc. Builders.
James E. Knutson, Stephen M. Knutson, Marie C. Skinner, St. Paul, for Amicus Curiae, MN School Boards Assoc. and ISD No. 206.
Heard, considered and decided by the court en banc.
This case arises from lawsuits filed by NewMech Companies, Inc. and the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry, Local 126, and three of its members, Scott Anderson, Ron Haarstad and Leonard Johnson (Local 126). The plaintiffs alleged Independent School District No. 206 (the District) violated the Prevailing Wage Act (the PWA), Minn.Stat. §§ 177.41-.44, by failing to require payment of the prevailing wage on the mechanical contract for the construction of a new junior high school building in Alexandria, Minnesota. Manning Mechanical, Inc. was the low and successful bidder on the mechanical contract for the school construction project. NewMech was the second low bidder. Local 126 represents the plumbers and pipefitters employed by NewMech for all its plumbing and pipefitting work.
NewMech and Local 126 filed separate lawsuits against the District on June 14, 1993. NewMech's complaint also named Manning as a defendant. Each plaintiff alleged the PWA applied to the school construction project because the project was financed at least in part by state funds, specifically, Debt Service Equalization Aid (DSEA) 1 and Homestead and Agricultural Credit Aid (HACA). 2 The plaintiffs sought, among other things, a permanent injunction against performance of the mechanical contract.
The trial court issued a temporary restraining order on June 16 enjoining the District and Manning from performing the project's mechanical contract. After a hearing, the trial court concluded the District's receipt of DSEA and HACA did not result in the project being financed in whole or part by state funds, and dismissed both complaints. The court also concluded Local 126 did not have standing to challenge the mechanical contract.
NewMech's and Local 126's appeals were consolidated, and the Minnesota Court of Appeals held the District's receipt of DSEA resulted in the project being financed in part by state funds. Because it concluded DSEA payments received by the District constituted state financing of the school construction project, the court of appeals did not reach the issue of whether HACA payments to the District constituted state financing. In addition, the court of appeals affirmed the trial court's determination that Local 126 lacked standing to challenge the mechanical contract.
We are asked to review three issues: (1) whether the District's receipt of DSEA or HACA payments constitutes state financing of the school construction project within the purview of the PWA; (2) whether Local 126 has standing to challenge the project's mechanical contract; and (3) if the PWA does apply to the project, whether our decision should have only a prospective effect, and should not apply to the parties in this case. DSEA or HACA payments to a school district are intended to provide property tax relief to taxpayers, not to pay for or subsidize construction costs. We hold, therefore, that DSEA or HACA payments to the District do not constitute state financing of the school construction project within the meaning of the PWA, and we reverse.
At issue in this case is the source of financing for the construction of a new junior high school by Independent School District 206. The construction project was expected to cost almost $16 million. Project-specific state aid, in the form of grants or loans, and nonproject-specific state aid, such as capital expenditure aid, is sometimes available to assist a school district in paying the costs of constructing a new school building. Minn.Stat. § 124.243 (1994); Minn.Stat. § 124.431 (1994); Minn.Stat. §§ 124.491-.495 (1994). The District, however, did not receive either type of state assistance on this construction project. Instead, to raise the money needed to construct the new school, the voters of the District approved the issuance of general obligation tax exempt bonds totalling $15,888,000. The District sold bonds in that amount and thereby raised all the funds necessary to finance the construction project.
The Prevailing Wage Act, Minn.Stat. § 177.41 (1994), sets forth the policy supporting the statute:
It is in the public interest that public buildings and other public works be constructed and maintained by the best means and highest quality of labor reasonably available and that persons working on public works be compensated according to the real value of the services they perform. It is therefore the policy of this state that wages of laborers, workers, and mechanics on projects financed in whole or part by state funds should be comparable to wages paid for similar work in the community as a whole.
A "project" means "erection, construction, remodeling, or repairing of a public building or other public work financed in whole or in part by state funds." Minn.Stat. § 177.42, subd. 2 (1994). The PWA does not define the term "financed." Because violation of the PWA is a misdemeanor, Minn.Stat. § 177.43, subd. 5 (1994), it is a penal statute and therefore its terms must be narrowly or strictly construed so as not to go beyond the clear meaning or definite scope of the statute. Beck v. Groe, 245 Minn. 28, 34, 70 N.W.2d 886, 891 (1955); Anderson v. Burnquist, 216 Minn. 49, 11 N.W.2d 776 (1943); cf. Muskegon Bldg. and Constr. Trades v. Muskegon Area Intermediate Sch. Dist., 130 Mich.App. 420, 343 N.W.2d 579, 587 (1983) ().
The term "financed" must be defined according to its common and approved usage in accordance with the applicable rules of statutory construction. Minn.Stat. § 645.08(1) (1994). The trial court noted that Webster's New Lexicon of the English Language Dictionary defines the verb "finance" as follows: "to provide with money for; to raise the money for." New Lexicon Dictionary, p. 352 (1988 ed.). The court reasoned that the "financing" for the project at issue here, the new junior high school, was accomplished by "raising the money for" its construction. The District raised the money for construction by selling bonds. Raising money for construction of a specific project, such as a new school building, is different from receiving money year by year to pay the principal and interest due on a school district's outstanding debt. The court found that in order to be used "in whole or in part" to finance a project, state funds must be available to be spent at the time the construction project's costs are incurred.
We agree with the reasoning of the trial court. DSEA or HACA, scheduled to be received in a later period, are not available at the time the project's costs are incurred. The term "financed" thus contemplates a direct relationship between the funding and the project. Funding that lacks this direct relationship to the project does not qualify as "financed in whole or in part by state funds" under the PWA. Statutes governing project-specific construction grants or loans and the statute governing capital expenditure aid demonstrate that, to establish this direct relationship and thereby constitute financing for purposes of the PWA, state funds must be available at the time of construction to pay directly the costs of constructing the project. See Minn.Stat. § 124.243; Minn.Stat. § 124.431; Minn.Stat. §§ 124.491-.495; see also Faribault County v. Minnesota Dept. of Transportation, 472 N.W.2d 166, 167 (Minn.App.1991) (), pet. for rev. denied (Minn., Aug. 29, 1991).
The District's resolution authorizing the sale of the bonds requires that "[m]oney in the Debt Redemption Fund shall be used for no purpose other than payment of principal and interest on obligations of the [District], including Bonds issued pursuant to this resolution." The resolution further provides that "all monies received for or appropriated to the payment of the bonds and interest thereon shall be paid into the Debt Redemption Fund." These provisions are included in the District's resolution pursuant to Minn.Stat. § 475.61, subd. 1 (1994), which requires that the bond "resolution should irrevocably appropriate the taxes so levied and any...
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