O. G. Sansone Co. v. Department of Transportation

Citation127 Cal.Rptr. 799,55 Cal.App.3d 434
CourtCalifornia Court of Appeals Court of Appeals
Decision Date19 February 1976
Parties, 22 Wage & Hour Cas. (BNA) 1008 E. G. SANSONE CO. and Robert E. Fulton Co., Plaintiffs and Appellants, v. DEPARTMENT OF TRANSPORTATION, formerly known as Department of Public Works, Defendant and Respondent. Civ. 45232.
Grant & Popovich and Irvin Grant, Los Angeles, for plaintiffs and appellants

Harry S. Fenton, Chief Counsel, Kingsley T. Hoegstedt, Asst. Chief Counsel, and Orrin F. Finch and William B. Bassett, Sacramento, for defendant and respondent.

Van Bourg, Allen, Weinberg, Williams & Roger, Victor J. Van Bourg, San Francisco, and David A. Rosenfeld, El Cerrito, as amici curiae on behalf of defendant and respondent.

FORD, Presiding Justice.

Plaintiffs O. G. Sansone Co. and Robert E. Fulton Co., as joint venturers, were prime contractors for defendant Pepartment of Transportation on a federally funded public works project for the construction of 17.4 miles of Interstate Highway 5 in Kings County, California. After plaintiffs' work on the project had been accepted as complete, defendant withheld from the amount earned by plaintiffs the sum of $29,578.65 on the ground that there had been violations of both state and federal laws relating to the payment of prevailing wages on a public works construction project. Thereafter plaintiffs brought this action seeking declaratory relief with respect to the constitutionality of Labor Code sections 1726, 1727 and 1775 and the Work Hours Standards and Safety Act of 1962 and wife respect to the applicability of those statutes under the circumstances of this case. Plaintiffs also sought release of the sum withheld from them by defendant.

At the trial the case was submitted by plaintiffs and defendant on the 'facts established by the pleadings, Answers to Interrogatories, response to Request for Admissions, and stipulation of the parties,' as well as certain other evidence which was documentary in nature. The court made findings of act and conclusions of law and rendered its judgment in favor of defendant.

The trial court found that defendant awarded to plaintiffs the contract to construct 17.4 miles of Interstate Highway 5 in Kings County, California, which was to be part of the Federal Interstate Highway System, for the bid sum of $7,656,921.80. The contract included, among other matters, the general prevailing wage rate publication dated May 1970. The construction involved Federal financing. Federal prevailing wage rate provisions were included in section 5--2 of the contract special provisions.

Plaintiffs subcontracted pay item 18 under the contract which called for 'incorporation of approximately 126,000 cubic yards of Class 3 aggregate subbase into the construction project.' On June 23, 1971, plaintiffs requested 'that the STATE approve an intention to subcontract 33 percent of pay item 18 to L. D. Folsom, Inc., of Coalinga, California, that work being loading, placing, and compacting of the material, and 41 percent of pay item 18, involving hauling only, to Wright Brothers Transportation of Bisalia, California.' The state approved the request as to a subcontract with Wright Brothers on July 21, 1971.

Plaintiffs entered into an agreement, designated as a subcontract, with Buddy Wright, an individual doing business as Wright Brothers Transportation, which incorporated the provisions of the prime contract and directed the attention of the subcontractor to section 7 of the State Highway Contract Special Provisions entitled 'Federal Requirements for Federal Aid Construction Projects.'

Wright Brothers Transportation (hereinafter designated as 'Wright') subcontracted a portion of its work to John W. Heck Trucking, Inc. (hereinafter designated as 'Heck'). The court found that 'there was no privity of contract between plaintiffs and Heck, and Heck was never specifically requested as a subcontractor nor approved by the State . . . but did function as a second-tier subcontractor to Wright.' At all times herein involved Wright and Heck were 'independent truckers serving the general public' and at no time were they licensed as contractors by the State of California.

Wright and Heck hauled 'Class 3 aggregate subbase materials from locations not on the project site, but located adjacent to and established exclusively to serve the project site pursuant to private borrow agreements between plaintiffs and third parties.'

The court found that from June 21, 1971, through July 14, 1971, and from September 8, 1971, through October 19, 1971, and on November 23, 1971, employees of Wright and Heck worked on the project and during that time Wright and Heck 'submitted false and fraudulently certified weekly payroll documents to plaintiffs for submission to the State' and that those 'certified documents purported to evidence the payment of at least the minimum contract prevailing wage rates specified to the employees of WRIGHT and HECK.' The state notified plaintiffs by letter dated December 23, 1971, that Wright and Heck had failed to pay prevailing wages and fringe benefits to their employees pursuant to the terms of the contract. Plaintiffs' work was accepted by the state as having been completed and notice of completion was filed on February 29, 1972.

As a result of the wage underpayments and violations of both state and federal prevailing wage laws, the state withheld the sum of $29,578.65 from money earned by plaintiffs. The state determined that the underpayment of wage and fringe benefits with respect to the employees of Wright and Heck and the penalties resulting therefrom were as follows:

                                                Wage and
                                                 Fringe      State     Federal
                                                Benefits   Penalties  Penalties
                                                ---------  ---------  ----------
                Wright Brothers Transportation  $8,102.45  $9,850.00  $1,470.00
                John W. Heck Trucking, Inc.     $4,677.96  $9,850.00  $1,340.00"
                

The court further found: 'Plaintiffs were not given prior notice, apart from the language of the controlling State and Federal statutes and the terms of the contract documents, that defendants would withhold amounts earned by plaintiffs for work performed on the project by reason of the specific alleged failure of WRIGHT and HECK to pay prevailing wages. ( ) . . . There was no hearing conducted by defendant, either prior to or subsequent to the withholding of amounts earned by plaintiffs for work performed on the project here involved by reason of the failure of WRIGHT and HECK to pay the contract minimum prevailing wage rates.'

Plaintiffs filed a claim with the State Board of Control which was denied. Thereafter this action was timely commenced.

I THE COVERAGE ISSUE

At the times pertinent herein Labor Code section 1771 provided as follows: 'Not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed Plaintiffs contend that the California and federal statutes relating to payment of prevailing wages on public works projects apply only to wages paid by either the contractor or a subcontractor and that Wright and Heck were not subcontractors within the meaning of the state and federal prevailing wage statutes.

as provided in this chapter, shall be paid to all workmen employed on public works exclusive of maintenance work.' Labor Code section 1772 was as follows: 'Workmen employed by contractors or subcontractors in the execution of any contract for public work are deemed to be employed upon public work.' Labor Code section 1774 provided: 'The contractor to whom the contract is awarded, and any subcontractor under him, shall pay not less than the specified prevailing rates of wages to all workmen employed in the execution of the contract.'

We have found no California cases discussing who is and who is not a subcontractor under the state's prevailing wage laws. In contending that Wright and Heck were not subcontractors under the circumstances of this case, plaintiffs rely on cases dealing with the definition of a subcontractor under the mechanic's lien law. (Theisen v. County of Los Angeles, 54 Cal.2d 170, 183, 5 Cal.Rptr. 161, 352 P.2d 529; Hihn-Hammond Lumber Co. v. Elsom, 171 Cal. 570, 574--575, 154 P. 12; George F. Kennedy, Inc. v. Miles & Sons Constr. Division, 5 Cal.App.3d 516, 520, 85 Cal.Rptr. 298.) In Thiesen a subcontractor is defined as follows (54 Cal.2d at p. 183, 5 Cal.Rptr. at p. 170, 352 P.2d at p. 538): '. . . one who agrees with the prime contractor to perform a substantial specified portion of the work of construction which is the subject of the general contract in accord with the plans and specifications by which the prime contractor is bound has 'charge of the construction' of that part of the work of improvement (Code Civ.Proc., § 1182, subd. (c)) and is a subcontractor although he does not undertake to himself incorporate such portion of the projected structure into the building.'

However, the reasoning of another case, also cited by plaintiffs, affords more guidance with respect to the resolution of the question presented in this case. In H. B. Zachry Company v. United States (1965) 344 F.2d 352, 170 Ct.Cl. 115, the federal court considered whether a trucking company was a subcontractor under the provisions of the Davis-Bacon Act (40 U.S.C.A. §§ 276a to 276a--7), the federal prevailing wage statute. In Zachry the plaintiff was the prime contractor for the United States with respect to two construction projects at Holloman Air Force Base. One of the projects called for the construction of the principal runways and adjacent aprons and the other called for the construction of certain aircraft parking areas. To perform the contracts plaintiff had to acquire certain...

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    ...SnSands Corp. (2007) 156 Cal.App.4th 742, 752, 67 Cal.Rptr.3d 606 ( Williams ); O.G. Sansone Co. v. Department of Transportation (1976) 55 Cal.App.3d 434, 443–444, 127 Cal.Rptr. 799 ( Sansone ).) These cases turn on the application of section 1772, which provides: "Workers employed by contr......
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    ...the Legislature codified this holding when it amended section 1771 in 1974. ( O.G. Sansone Co. v. Department of Transportation (1976) 55 Cal.App.3d 434, 459, 127 Cal.Rptr. 799 ( Sansone ).) Bishop was a closely contested 4–3 decision. The majority focused on provisions in the prevailing......
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