Caldas v. Affordable Granite & Stone, Inc.

• Decision Date: 26 September 2012
• Docket Number: No. A10–2173.,A10–2173.
• Citation: 820 N.W.2d 826
• Parties: Oscar CALDAS, et al., Appellants, v. AFFORDABLE GRANITE & STONE, INC., Respondent, Dean Soltis, Defendant.
• Court: Minnesota Supreme Court

820 N.W.2d 826

Oscar CALDAS, et al., Appellants,

v. AFFORDABLE GRANITE & STONE, INC., Respondent,Dean Soltis, Defendant.

No. A10–2173.

Supreme Court of Minnesota.

Sept. 26, 2012.

Syllabus by the Court

1. Pursuant to section 302 of the Restatement (Second) of Contracts (1981), a third party is an intended beneficiary under a contract when it is appropriate to recognize intended third-party beneficiary rights to effectuate the intent of the parties to the contract, and either the duty owed or the intent-to-benefit test is satisfied.

2. Appellants failed to establish that recognition of intended third-party beneficiary rights is appropriate to effectuate the intention of the parties.

3. Minnesota Statutes § 181.13 (2010) is a timing statute that requires prompt payment of wages actually earned. Because appellants have not established that they are intended third-party beneficiaries, the disputed prevailing wage was not actually earned within the meaning of the statute.

4. To prevail on an unjust enrichment claim, a claimant must establish the existence of an implied or quasi-contract and that the other party has been enriched in an illegal or unlawful manner. Because appellants are not intended third-party beneficiaries of the contract, they have failed to establish a legally supportable claim of unjust enrichment.

Justin D. Cummins, Brendan D. Cummins, Miller O'Brien Cummins, PLLP, Minneapolis, MN, for appellants.

David M. Wilk, Paula Duggan Vraa, Jennifer L. Young, Larson King, LLP, St. Paul, MN, for respondent.

Lori Swanson, Attorney General, Alan I. Gilbert, Solicitor General, Kelly S. Kemp, Assistant Attorney General, Angela Behrens, Assistant Attorney General, St. Paul, MN, for amicus curiae State of Minnesota.

Susan L. Segal, City Attorney, Peter W. Ginder, Deputy City Attorney, Minneapolis, MN, for amicus curiae City of Minneapolis.

Michael O. Freeman, Martin D. Munic, Daniel D. Kaczor, Minneapolis, MN, for amicus curiae Hennepin County Attorney Michael O. Freeman.

Mike L. Wilde, Kelly K. Francis, St. Paul, MN, for amicus curiae Fair Contracting Foundation.

Leslie L. Lienemann, Culberth & Lienemann, LLP, St. Paul, MN, Stephen L. Smith, The Law Firm of Stephen L. Smith, Dorene R. Sarnoski, Dorene R. Sarnoski Law Office, Minneapolis, MN, for amicus curiae National Employment Lawyers Association, Minnesota Chapter.

Dean B. Thomson, Jesse R. Orman, Fabyanske, Westra, Hart & Thomson, P.A., Minneapolis, MN, for amici curiae Carpentry Contractors Association, Minnesota Drywall and Plaster Association, Minnesota Environmental Contractors Association, Minnesota Mechanical Contractors Association, Minnesota Painting and Wallcovering Employers Association, Sheet Metal, Air Conditioning, & Roofing Contractors Association, Inc., and Thermal Insulation Contractors Association.

OPINION

DIETZEN, Justice.

The issue before us is whether appellants, who were employees of a contractor that performed work pursuant to a municipal contract with the City of Minneapolis (City), may recover for the contractor's alleged breach of a prevailing wage provision in the contract. Appellants Oscar Caldas, et al., were employed by respondent Affordable Granite & Stone, Inc. (AGS), to perform work at the Minneapolis Convention Center pursuant to a contract between AGS and the City. After completion of the project, appellants brought this action against AGS, alleging (1) that AGS failed to pay them the prevailing wage in breach of the contract with the City and that they are entitled to enforce the contract as third-party beneficiaries, (2) that the breach of the contract by AGS violated state wage statutes, and (3) that AGS was unjustly enriched as a result. The district court granted AGS's motion for summary judgment, concluding that appellants were not intended third-party beneficiaries and that without a viable claim for breach of contract, appellants' other claims failed. The court of appeals affirmed, and we granted review. Because we conclude that appellants are not intended third-party beneficiaries of the contract and that appellants' other claims lack merit, we affirm.

The material facts of this case are undisputed. In June 2007 the City issued a Request for Proposal (RFP) to repair and restore “terrazzo flooring, granite wainscoting, restroom floor and wall tile, and exhibition hall concrete flooring” at the Minneapolis Convention Center. The RFP stated that the selected contractor “will be asked to provide an action plan and timeline to completely repair all imperfections and polish approximately 130,000 square feet of terrazzo flooring.”

In July 2007 AGS filed a Submittal Request for Proposal with the City. The proposal stated, among other things, that the terrazzo tile “could be repaired and did not need to be replaced,” and that “cost savings” would result by restoring existing terrazzo rather than replacing the entire terrazzo floor. AGS proposed to utilize “a team of ten Floor Technicians led by three Onsite Foremen” to “effectively carry out the scope of the work.” The proposal also contained a prevailing wage certificate signed by AGS President Dean Soltis. The prevailing wage certificate explicitly incorporated the Contracts for Public Works Ordinance of the Minneapolis Code of Ordinances, which includes the prevailing wage ordinance. Minneapolis, Minn., Code of Ordinances tit. 2, ch. 24, art. IV, §§ 24.200–.260. The prevailing wage certificate provides:

Laborers and Mechanics shall be paid according to the [Public Works Ordinance], as amended, and the minimum wage rates and fringe benefits paid to the various classes shall be as determined by the Secretary of Labor of the United States for work in the City. Subject to and upon compliance with all requirements provided in the Rules of the Office of the Secretary of Labor of the United States.

Subsequently, the City chose AGS to perform the work at the Convention Center.

In December 2007 the City and AGS entered into a contract to perform the agreed-upon repair work at the Convention Center. The contract expressly incorporated the RFP and the proposal from AGS, including the prevailing wage certificate that Soltis had executed on behalf of AGS.

The AGS portion of the project commenced in December 2007 and continued through approximately August 2008.¹ Following consultation with the Service EmployeesInternational Union (SEIU) Local 26 and review of a collective bargaining agreement, AGS determined that appellants' work should be classified as repair persons/specialty crew, and that the prevailing wage for the work was $16.28 per hour. All parties agree that AGS paid appellants at this hourly rate throughout the project.

Several unions, however, complained to the City that appellants should have been classified as terrazzo mechanics and paid the higher prevailing wage of $44.31 per hour. Following an investigation, the Director of the City's Department of Civil Rights sent a letter dated September 12, 2008, to AGS and the unions, concluding that AGS was “paying the laborers in question an appropriate wage for the work that was being done and that there was no violation of the prevailing wage standards.” According to the Director, the critical issue was whether the work performed at the Convention Center should be classified as “construction” or “janitorial or maintenance.” He concluded that the work was “janitorial or maintenance” in nature and that AGS had paid appellants the appropriate prevailing wage of $16.28 per hour. A union official contacted the Hennepin County Attorney's Office and requested that it investigate the matter. As a result, a county prevailing wage specialist assisted the City's Department of Civil Rights in conducting a further investigation. Following the additional investigation, the prevailing wage specialist drafted a letter that reaffirmed the Director's previous determination and forwarded it to the Director for his signature. The letter, however, was never distributed to appellants or AGS. The Director then sent a letter to AGS's attorney requesting “complete payroll documentation,” but the City did not further pursue the matter.

Subsequently, appellants sued AGS for breach of contract; alleged violations of the Payment of Wages Act, Minn.Stat. §§ 181.01–.171 (2010) and alleged violations of the Minnesota Fair Labor Standards Act, Minn.Stat. §§ 177.21–.35 (2010); and unjust enrichment. Appellants alleged that they were intended third-party beneficiaries under the contract between AGS and the City, that AGS breached the contract by failing to pay them as terrazzo mechanics, tile layers, and/or cement masons, and therefore the appellants were entitled to recover the prevailing wage from AGS. As a result of AGS's failure to pay them as terrazzo mechanics, appellants also argued that AGS violated the Payment of Wages Act and the Minnesota Fair Labor Standards Act, and that AGS was unjustly enriched.

Following discovery, both parties moved for summary judgment. The district court granted AGS's motion for summary judgment and dismissed appellants' breach of contract claim because appellants failed to establish they were intended third-party beneficiaries of the contract. Additionally, the court dismissed appellants' other causes of action because they lacked merit. The court of appeals affirmed. Caldas v. Affordable Granite & Stone, Inc., A10–2173, 2011 WL 1938307, at *5 (Minn.App. May 23, 2011). We granted review.

I.

Appellants argue that the district court erred in granting summary judgment in favor of AGS. We review decisions granting summary judgment to determine whether there are any genuine issues of material fact that would preclude summary judgment, and whether the district court erred in its application of the law. Dykes v. Sukup Mfg. Co., 781 N.W.2d 578, 581 (Minn.2010). In doing so, we view the evidence in the light most favorable to the party against whom judgment was granted. Valspar Refinish, Inc. v. Gaylord's, Inc., 764...