Dobbs v. Knudson, Inc.

• Decision Date: 21 May 1980
• Docket Number: No. 63451,63451
• Citation: 292 N.W.2d 692
• Parties: William H. DOBBS d/b/a Bill Dobbs Construction and Dobbs Masonry, Appellee, v. KNUDSON, INC., a corporation, et al., Appellees, Contractors, Laborers, Teamsters and Engineers Health and Welfare Plan; Contractors, Laborers, Teamsters and Engineers Pension Plan; Omaha Construction Industry Health and Welfare Plan; and Omaha Construction Industry Pension Plan, Appellants.
• Court: Iowa Supreme Court

Page 692

292 N.W.2d 692

William H. DOBBS d/b/a Bill Dobbs Construction and Dobbs Masonry, Appellee, v. KNUDSON, INC., a corporation, et al., Appellees Contractors, Laborers, Teamsters and Engineers Health and Welfare Plan; Contractors, Laborers, Teamsters and Engineers Pension Plan; Omaha Construction Industry Health and Welfare Plan; and Omaha Construction Industry Pension Plan, Appellants.

No. 63451.

Supreme Court of Iowa.

May 21, 1980.

Eugene R. Commander of Smith, Peterson, Beckman & Wilson, Council Bluffs, David D. Weinberg of Weinberg & Weinberg, Omaha, Neb., and Dean G. Kratz of McGrath, North, O'Malley, Kratz, Dwyer, O'Leary & Martin, Omaha, Neb., for appellants.

David S. Lash of Porter, Lash, Reilly & Tauke, Council Bluffs, for appellees Knudson, Inc., and Universal Surety Company.

Considered by LeGRAND, P. J., and UHLENHOPP, HARRIS, McCORMICK and LARSON, JJ.

McCORMICK, Justice.

The question here is whether health, welfare and pension trusts may make public improvement lien claims for unpaid sums which subcontractors on the public improvement were obligated to pay for their employees. The trial court held they may not. We reverse and remand.

Knudson, Inc., contracted with the Iowa Department of Social Services ("the Department") to construct a building at the Glenwood State Hospital School. Knudson furnished a performance bond as required by § 573.2, The Code, with Universal Surety Company ("Universal") as surety. William H. Dobbs and Bourke Lumber were subcontractors on the project. Each of them had collective bargaining agreements which required them to pay sums to health, welfare and pension trusts based on hours their employees worked. These trusts were the Contractors, Laborers, Teamsters and Engineers Health and Welfare Plan, the Contractors, Laborers, Teamsters and Engineers Pension Plan, the Omaha Construction Industry Health and Welfare Plan, and the Omaha Construction Industry Pension Plan ("the trusts").

Disputes arose between Knudson and the subcontractors. Dobbs and Bourke filed claims with the Department under section 573.7 for payments allegedly in default on their contracts. The trusts filed claims for payments which Dobbs and Bourke allegedly owed to the trust funds pursuant to the collective bargaining agreements for work of their employees on the project.

The present action was initiated by Dobbs against Knudson, Universal, the trusts and other parties, pursuant to section 573.16, to determine the rights of the claimants to the retainage held by the Department in accordance with section 573.12. The trusts cross-claimed against Knudson and Universal for judgment on their claims. Knudson filed a bond to secure any possible judgments as provided in section 573.16 in order to obtain payment of the retainage.

Subsequently Knudson moved for summary judgment on the trusts' cross-claims. The trial court sustained the motion, and the trusts appealed.

Even though the summary judgment did not dispose of the entire case, it was final as to the trusts. Their claims are based on different contracts than those of other claimants. Therefore the summary judgment was final and appealable as to them under principles delineated in McGuire v. City of Cedar Rapids, 189 N.W.2d 592, 597-98 (Iowa 1971).

The appeal involves section 573.7, which provides in material part:

Any person . . . who has, under a contract with . . . subcontractors, performed labor, or furnished . . . service . . . in the construction of a public improvement, may file, with the officer, board, or commission authorized by law to let contracts for such improvement, an itemized sworn, written statement of the claim for such labor, or . . . service . . . .

We are obliged to construe the statute liberally with a view to promoting its objects and assisting the parties in obtaining justice. § 4.2, The Code; see Gollehon, Schemmer & Associates, Inc. v. Fairway-Bettendorf Associates, 268 N.W.2d 200, 201 (Iowa 1978).

Knudson's motion for summary judgment was based on its allegation that "the items for which claim is made by said trusts are not claims for 'labor or service' within the meaning of section 573.7, Code of Iowa," and the trial court sustained the motion on that ground. The court reasoned that the claims did not come within the section because they were for "fringe benefits" rather than wages. We disagree with this construction of the statute.

Section 573.7 requires that the claim be for "labor" or "service." Whether a claim is for labor or service is determined not by the nature of what the claimant receives but rather by the nature of what is done to be entitled to receive it. The issue, therefore, is not whether the payments to the trust funds are fringe benefits or wages but whether the employees of Dobbs and Bourke performed labor or service to become entitled to the payments on their behalf. See Forsberg v. Loss Construction Co., 218 Iowa 818, 825, 252 N.W. 258, 261 (1934) ("(U)nder the statute one who furnishes material or performs labor under contract with a subcontractor in the construction of a public improvement may file a claim.").

The employees were laborers, carpenters and bricklayers who indisputably performed labor for Dobbs and Bourke on the project and thereby earned the right to have the payments made to the trusts pursuant to the collective bargaining agreements. Thus we hold that the payments to the trusts are for labor within the meaning of section 573.7.

This holding is consistent with prior cases decided under both chapter 573 and under chapter 572, the general mechanics' lien statute, which this court has said is analogous to chapter 573. Cities Service Oil Co. v. Longerbone, 232 Iowa 850, 853, 6 N.W.2d 325, 326-27 (1942). Cases under chapter 572 relied on by Knudson involved situations where items which were not part of the consideration for the labor or service were held not to be lienable. See Wormhoudt Lumber Co. v. Union Bank & Trust Co., 231 Iowa 928, 934-35, 2 N.W.2d 267, 271 (1942) (workers' compensation insurance and social security taxes); Monona County v. O'Connor, 205 Iowa 1119, 1121, 215 N.W. 803, 804 (1927) (board and lodging). However, as the court explained in Crane Co. v. Westerman, 232 Iowa 1394, 1398, 8 N.W.2d 412, 414 (1943), those items were held not to be lienable only because they were not part of the consideration for the labor or service. Accordingly, in Crane, where the board and lodging were part of the agreed consideration for the labor, the items were held to be lienable. Id. at 1397, 8 N.W.2d at 413-14. It is established in this case that the applicable collective bargaining...