Farley v. Zapata Coal Corp.

Decision Date17 July 1981
Docket NumberNo. 14413,14413
Citation281 S.E.2d 238,167 W.Va. 630
CourtWest Virginia Supreme Court
Parties, 26 Wage & Hour Cas. (BNA) 307, 20 A.L.R.4th 1256 Clyde P. FARLEY, et al. v. ZAPATA COAL CORPORATION, etc., et al.

Syllabus by the Court

1. The "value of such work or labor" as contained in W.Va. Code § 38-2-31 (1966) means all compensation contracted to be paid by the employer for the employee's services regardless of the nature of such compensation.

2. W.Va. Code § 38-2-31 (1966) is properly used in aid of the enforcement of a lien for liquidated damages granted under W.Va. Code § 21-5-4(e) (1978 Replacement Vol.).

3. An employee who succeeds in enforcing a claim under W.Va. Code Chapter 21, article 5 should ordinarily recover costs, including reasonable attorney fees unless special circumstances render such an award unjust.

Bradley J. Pyles, Robert Poyourow, Crandall, Pyles, Crandall & Poyourow, Logan, for appellants.

Campbell, Woods, Bagley, Emerson, McNeer & Herndon, Selden S. McNeer, Jr., Huntington, for appellees.

McGRAW, Justice:

This appeal presents three issues which are here for the first time: (1) does a mechanic's lien for the value of work and labor performed include vacation and sick pay; (2) may a lien for liquidated damages, which arises upon a contractor's default in payment of wages, be enforced in a mechanics' lien proceeding against the corporation employing the contractor; and (3) are attorney fees recoverable in a suit to enforce mechanics' liens. The first issue deals solely with the interpretation of our mechanics' lien statutes, specifically W.Va.Code § 38-2-31 (1966). The latter two issues involve the interrelationship of those statutes with the Wage Payment and Collection Act. W.Va.Code § 21-5-1 et seq. (1978 Replacement Vol.).

The twenty-two appellants are former employees of M & T Coal Corporation, a corporation which operated a strip mine in Logan County, West Virginia. M & T operated the mine as a general contractor for Zapata Coal Corporation, the lessee of the coal rights and holder of the strip mining permit issued by the Department of Natural Resources. Nineteen of the appellants were members of the United Mine Workers of America. The terms and conditions of their employment were governed by the 1974 Bituminous Coal Wage Agreement. The remainder of the appellants had individual employment contracts with M & T.

On March 18, 1977, M & T ceased operations and its owner disappeared. At that time, M & T's employees were owed four weeks' wages. In addition, most of them were also owed accrued vacation pay and compensation for unused paid sick days pursuant to the terms of the 1974 Bituminous Coal Wage Agreement. Several of the nonunion management employees were also owed vacation pay by virtue of their individual employment contracts.

At the time of its collapse, M & T Coal Corporation had no tangible assets. Its equipment was either leased, or subject to purchase money security interests, and its bank account was empty.

In June 1977, within the statutory period of ninety days after performing their last work, the appellants filed mechanics' liens against both M & T Coal Corporation and Zapata Coal Corporation. They claimed actual wages for the four weeks they were not paid, accrued vacation and sick pay, and liquidated damages under W.Va.Code § 21-5-4 (1978 Replacement Vol.). On August 26, 1977, an action was brought in the Circuit Court of Logan County to enforce the liens, at which time the appellants also requested, pursuant to W.Va.Code § 21-5-12 (1978 Replacement Vol.), an award of attorney fees and costs expended in enforcing their liens.

M & T Coal Corporation did not file an answer or otherwise appear in the action. Since there were no assets of M & T available against which the appellants' liens could be enforced, no further action was taken against M & T in the circuit court. Zapata Coal Corporation did file an answer and the action proceeded solely against it. The parties stipulated to the amounts due the appellants at the time M & T ceased operations, and to the amount of liquidated damages for which M & T would have been liable pursuant to W.Va.Code § 21-5-4(e), due to its failure to pay the appellants. The case was then presented to the circuit court on the appellants' motion for summary judgment.

Zapata conceded that the appellants were entitled to enforce their liens for the four weeks of regular wages due at the time M & T's operations ceased, and the court ruled that the liens could be enforced against Zapata for those amounts. However, Zapata denied liability for vacation pay, compensation for unused sick leave days and other fringe benefits, liquidated damages, and attorney fees. With respect to these amounts, the court ruled: (1) that the appellants could not enforce their mechanics' liens against Zapata for accrued vacation pay, compensation for unused sick leave days or any other fringe benefits; (2) that the appellants' liens for liquidated damages under W.Va.Code § 21-5-4 could not be enforced against Zapata; and (3) that the appellants were not entitled to an award of attorney fees, pursuant to W.Va.Code § 21-5-12. The appellants contend these three rulings were erroneous.

I

The mechanics' lien statute involved in this appeal provides that every laborer who performs any work for an incorporated company "shall have a lien for the value of such work or labor upon all real estate and personal property of such company." W.Va.Code § 38-2-31. The court below was of the opinion that this language encompassed only the hourly rate of wages and nothing more. We disagree.

The purpose of our mechanics' lien statutes is to protect the workman who, by the fruits of his labor, benefits another. The statutes act as an aid in the prompt collection of all compensation due the worker. They are remedial in nature, and are to be liberally construed in order that they serve the purpose for which they were enacted. Carolina Lumber Co. v. Cunningham, 156 W.Va. 272, 192 S.E.2d 722 (1972). We have in the past enforced a mechanic's lien which included the value of accrued vacation pay, State ex rel. Davis v. Iman Mining Co., 144 W.Va. 46, 106 S.E.2d 97 (1958), 1 and have also recognized the compensatory nature of fringe benefits such as vacation pay in the context of unemployment compensation proceedings. Eastern Gas & Fuel Associates v. Hatcher, 144 W.Va. 229, 107 S.E.2d 618 (1959).

We find our holdings in State ex rel. Davis v. Iman Mining Co., supra, and Eastern Gas & Fuel Associates v. Hatcher, supra, to be consistent with the decisions of numerous other courts which have also held fringe benefits such as vacation pay to constitute compensation for work performed in various factual contexts. See Hartman v. Freedman, 197 Colo. 275, 591 P.2d 1318 (1979); People v. Bishopp, 56 Cal.App.3d Supp. 8, 128 Cal.Rptr. 923 (1976); Jones v. District Parking Management, 268 A.2d 860 (D.C.App.1970); Nilsen v. Oregon State Motor Association, 248 Or. 133, 432 P.2d 512 (1967); Moore v. State Unemployment Compensation Commission, 167 A.2d 76 (Del.1961); Carter v. Board of Review, 323 P.2d 362 (Okla.1958); Textile Workers Union v. Williamsport Textile Corp., 136 F.Supp. 407 (M.D.Pa.1955); Ericson v. General Motors Corp., 177 Kan. 90, 276 P.2d 376 (1954); Calvine Cotton Mills, Inc. v. Textile Workers Union, 238 N.C. 719, 79 S.E.2d 181 (1953); Textile Workers Union v. Paris Fabric Mills, 18 N.J.Super. 421, 87 A.2d 458, aff'd, 22 N.J.Super. 381, 92 A.2d 40 (1952).

Fringe benefits, including vacation pay, are also deemed wages by regulations promulgated by the West Virginia Commissioner of Labor pursuant to the Wage Payment and Collection Act, W.Va.Code § 21-5-1 et seq., 2 and by federal decisions determining the priority of wage claims under former § 64(a)(2) of the Bankruptcy Act, 11 U.S.C. § 104 (1976). See Re Ad Service Engraving Co., 338 F.2d 41 (6th Cir. 1964); Sulmeyer v. Southern California Pipe Trades Trust Fund, 301 F.2d 768 (9th Cir. 1962); United States v. Munro-Van Helms

Co., 243 F.2d 10 (5th Cir. 1957); Kavanas v. Mead, 171 F.2d 195 (4th Cir. 1948); Re Public Ledger, 161 F.2d 762 (3rd Cir. 1947); Re Wil-Low Cafeteria, 111 F.2d 429 (2nd Cir. 1940). 3

Vacation pay and other similar benefits are not gratuities which employers benevolently bestow upon their employees. Rather they are integral components of a compensation package bargained for and agreed upon by the parties. One expects that both employers and employees strive for a fair exchange in the employment market place. A factor the employee undoubtedly considers when gauging the fairness of an employment offer is the value of benefits the employer offers in addition to take home pay. Conversely, the employer also takes into account the cost of fringe benefits when determining the salary or hourly wage rate it will offer its prospective employees. Obviously if fringe benefits such as vacation and sick pay were absent from the compensation package, wages would be higher.

Consequently, in light of the policy of our mechanics' lien statutes and the considerations discussed above, we construe "value of such work or labor", as contained in W.Va.Code § 38-2-31, to mean all compensation contracted to be paid by the employer for the employee's services regardless of the nature of such compensation. It was therefore error for the court below to rule that the appellants could not enforce mechanics' liens for accrued vacation pay, compensation for unused sick leave days or any other fringe benefits.

II

The appellants' claim for liquidated damages is based upon the West Virginia Wage Payment and Collection Act. W.Va.Code § 21-5-1 et seq. Under the provisions of the act, when an employee is laid off for any reason the employer must pay the employee, no later than the next regular payday, wages earned at the time of the layoff. W.Va.Code § 21-5-4(d). If the employer fails...

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