City of Long Beach v. Indus. Relations

• Decision Date: 14 July 2003
• Docket Number: No. B159333.,B159333.
• Citation: 110 Cal.App.4th 636,1 Cal.Rptr.3d 837
• Court: California Court of Appeals Court of Appeals
• Parties: CITY OF LONG BEACH, Plaintiff and Respondent, v. DEPARTMENT OF INDUSTRIAL RELATIONS, Defendant and Appellant.

1 Cal.Rptr.3d 837

110 Cal.App.4th 636

CITY OF LONG BEACH, Plaintiff and Respondent, v. DEPARTMENT OF INDUSTRIAL RELATIONS, Defendant and Appellant.

No. B159333.

Court of Appeal, Second District, Division 7.

July 14, 2003.

Review Granted October 1, 2003.

John M. Rea, Chief Counsel, Steven A. McGinty, Assistant Chief Counsel, Anthony Mischel, Staff Counsel, Department of Industrial Relations, for Defendant and Appellant.

Robert E. Shannon, City Attorney, Daniel S. Murphy, Principal Deputy, City of Long Beach, for Plaintiff and Respondent.

Altshuler, Berzon, Nussbaum, Rubin & Demain, Stephen P. Berzon, Scott A. Kronland, San Francisco, and Victor M. Ortiz-de-Montellano, for The State Building and Construction Trades Council of California, AFL-CIO as Amicus Curiae on behalf of Defendant and Appellant.

Rutan & Tucker, M. Katherine Jenson and Mark J. Austin, Costa Mesa, for 44 California Cities as Amici Curiae on behalf of Plaintiff and Respondent.

JOHNSON, J.

The Department of Industrial Relations appeals from a judgment granting a petition for writ of mandate filed by the City of Long Beach. The city seeks to overturn the department's determination a construction project financed in part with city funds was subject to the state's prevailing wage law, Labor Code section 1720 et seq.

We conclude when a city contributes its funds to a private non-profit organization for the specific purpose of constructing a facility to be used by the general public the facility is a "public work" within the meaning of Labor Code section 1720 and therefore subject to the state's prevailing wage law.

We further conclude the city's status as a charter city does not exempt the project from the state's prevailing wage law for two independently sufficient reasons: (1) the animal shelter is not a strictly municipal affair and (2) the state's prevailing wage law addresses matters of statewide concern.

We also reject the city's arguments the department is barred by the doctrines of estoppel and laches from making a coverage determination in this case.

FACTS AND PROCEEDINGS BELOW The facts are not in dispute.

In 1998, the City of Long Beach (City) entered into an agreement with the Los Angeles Society for the Prevention of Cruelty to Animals (SPCA-LA) under which it agreed to contribute $1.5 million to the construction of a facility in the City which would serve as an animal shelter and the administrative headquarters of the SPCLA-LA as well as provide kennels and office space for the City's animal control department.

The agreement required the City's funds be placed in a segregated account and used only for expenses related to development of the project including SPCA-LA's "investigation and analysis" of the property on which the shelter was to be built, "permit, application, filing and other fees and charges" and "design and preconstruction costs." The SPCA-LA was specifically precluded from using any of the City's funds "to pay overhead, supervision, administrative or other such costs" of the organization or in support of any "political activity." The agreement further provided it was "interdependent" with lease and lease-back agreements between the parties with respect to the City land on which the project would be built and "if either the lease or lease-back is terminated, then this agreement shall also terminate automatically and without notice." Finally, the agreement provided "[i]f there is a claim relating to the payment of wages arising from the construction described herein" the City shall pay 95 percent of "all costs, expenses, penalties, payments of wages, interest, and other charges related to the claim, including attorneys' fees and court or administrative costs and expenses[.]"

Acting on an inquiry by a labor organization, the Department of Industrial Relations (DIR) began an investigation to determine whether the project was a "public work" under Labor Code section 1720¹ and therefore subject to the prevailing wage rates mandated by section 1771.² The City took the position the project was not a public work but even if it was the prevailing wage law did not apply because the project was a strictly "municipal affair" of a charter city. Following its investigation the DIR concluded the project was a public work and was not exempt from the prevailing wage law by reason of the City's status as a charter city. This determination was affirmed on an administrative appeal.

Evidence submitted by the City on its administrative appeal showed approximately $1 million of the City's $1.5 million contribution was spent on architecture ($318,333), project management ($440,524), legal fees ($16,645), surveying ($14,500), and insurance ($23,478). Evidence obtained from the SPCA-LA showed the project was intended to serve the entire Los Angeles County area and parts of Orange County. Animals from all these areas would be housed at the shelter, not just animals from Long Beach. In addition, the facility would also house the SPCA-LA's headquarters.

When the City lost its administrative appeal it filed a petition for a writ of mandate under Code of Civil Procedure section 1085 challenging the DIR's decision the state's prevailing wage laws applied to the shelter project. In addition to contending it was exempt from the prevailing wage law the City contended the DIR was barred by the doctrines of estoppel and laches from determining its charter city exemption did not apply to this project. The trial court granted the writ based on the City's first two contentions. It did not address the estoppel and laches arguments. The DIR filed a timely appeal.

For the reasons discussed below we reverse.

DISCUSSION

I. STANDARD OF REVIEW.

The DIR's determination a project is subject to the prevailing wage law is a quasi-legislative decision reviewable by traditional mandate proceedings under Code of Civil Procedure section 1085.³ Where, as here, the facts are undisputed, we review the DIR's determination de novo.⁴

In conducting our review we bear in mind California's prevailing wage law was enacted to protect and benefit workers and the public⁵ and is to be liberally construed.⁶ This is especially so in the present case where the question is not whether the workers are entitled to receive prevailing wages as determined by the DIR or as determined by the City but whether they are entitled to receive prevailing wages at all.

II. THE ANIMAL SHELTER PROJECT IS A "PUBLIC WORK."

At the time the City entered into its agreement with the SPCA-LA, section 1720, subdivision (a) defined "public works" as "[construction, alteration, demolition, or repair work done under contract and paid for in whole or in part out of public funds ..."⁷ The DIR contends, and we agree, the facility at issue here is a "public work" as defined in section 1720.

Under section 1720 a project is a public work if it meets three criteria: (1) the project involves construction, alteration, demolition or repair work; (2) the work is done under contract; and (3) the work is paid for in whole or in part out of public funds.

In deciding whether the project at issue is a public work the principal issue is the meaning of the word "construction."

The DIR interprets "construction" broadly to include the planning, design and pre-building phases of a project such as architectural design, project management and surveying—all of which were undisputedly paid for out of the City's financial contribution to the project at issue here.

The DIR's position is supported by the common meaning of the word "construction," its own regulations interpreting and implementing the prevailing wage law and an opinion by the California Attorney General regarding prevailing wage coverage for city engineers.

Our state-issued dictionary gives as the primary meaning of the word construction "[t]he act or process of constructing."⁸ Similarly, in Priest v. Housing Authority, the court observed when "one thinks of `construction' one ordinarily considers the entire process ... which may be required in order to erect [a] ... structure."⁹

The DIR has long held the view "construction" means more than simply erecting a structure. It also includes activities "integral to the specific public works project in the design, preconstruction, or construction phase."¹⁰ Since at least 1978, the DIR has taken the position "`[s]urveying, whether performed in the preparation or construction stage, is a necessary prerequisite and integral part of construction without which the work could not proceed and is performed by the type of classification of worker intended to be covered by the [prevailing wage law].'"¹¹ The contemporaneous construction of a statute by the administrative agency charged with its enforcement is, of course, entitled to great weight and will be overruled only if it is clearly erroneous or unauthorized.¹²

The California Attorney General applied the DIR's reasoning with respect to surveyors to hold the prevailing wage law covered the employees of an engineering firm hired to perform the duties of city engineer.¹³

The City interprets "construction" narrowly to mean only the actual building of the facility—hammering nails, spreading mortar, installing pipes, and the like.

The City offers little support for this narrow interpretation. It chiefly relies on the fact that after the agreement was signed and work began on the project the Legislature amended section 1720, subdivision (a) by adding a sentence stating: "For purposes of this subdivision, `construction' includes work performed during the design and preconstruction phases of construction including, but not limited to, inspection and land surveying work."¹⁴ The City views this amendment as a change in the law demonstrating that before its enactment the term "construction" did not include work performed during the design and preconstruction phases of construction. The legislative history of the amendment, however, shows it was not intended as a change...