Krane v. Cade (In re Port of Wilmington Gantry Crane Litig.)

• Decision Date: 20 August 2020
• Docket Number: C.A. No. N17C-12-339 PRW CCLD,C.A. No. N17C-11-276 PRW CCLD (Consolidated)
• Citation: 238 A.3d 921
• Parties: IN RE PORT OF WILMINGTON GANTRY CRANE LITIGATION Kocks Krane, GmbH, Plaintiff, v. Cerron Cade, et al., Defendants.
• Court: Delaware Superior Court

238 A.3d 921

IN RE PORT OF WILMINGTON GANTRY CRANE LITIGATION Kocks Krane, GmbH, Plaintiff,

v.Cerron Cade, et al., Defendants.

C.A. No. N17C-11-276 PRW CCLD (Consolidated)

C.A. No. N17C-12-339 PRW CCLD

Superior Court of Delaware.

Submitted: May 28, 2020

Decided: August 20, 2020

Raymond H. Lemisch, Esquire, Sean M. Brennecke, Esquire, KLEHR HARRISON HARVEY BRANZBURG LLP, Wilmington, Delaware, Attorneys for Plaintiff Kocks Krane GmbH.

Oliver J. Cleary, Esquire, DEPARTMENT OF JUSTICE, Wilmington, Delaware, Attorney for the State of Delaware.

OPINION AND ORDER

WALLACE, J.

This particular decision in this complex consolidated action concerns the application of Delaware's Prevailing Wage Law, 29 Del. C. § 6960 (the "PWL"), to a contract between the Diamond State Port Corporation ("DSPC") and Kocks Krane GmbH ("KKG") for the purchase and assembly of two ship-to-shore gantry cargo cranes, and the employment of workers engaged for that work (the "Contract"). KKG was engaged as the prime contractor responsible for delivering and assembling certain gantry cranes at the Port of Wilmington. Following an investigation of KKG's subcontractors for PWL violations, the Delaware Department of Labor ("DDOL") ordered DSPC to withhold over $1 million from KKG (the "Withholding Orders").

In response, KKG initiated this declaratory judgment action (the "Complaint") to secure the money DSPC allegedly owes KKG under the Contract. The DDOL then filed its counterclaim in this action (the "Counterclaim"), seeking to recover over $1 million from KKG for the alleged wage deficiencies.

Before the Court is KKG's Motion for Partial Summary Judgment (the "Motion"). KKG has moved for summary judgment on two counts: (1) Count I of its Complaint for a judgment declaring that DDOL is not authorized under the PWL to withhold funds from KKG; and (2) the DDOL's Counterclaim that DDOL can seek recovery directly from KKG for payment of alleged wage deficiencies by KKG's subcontractor and that subcontractor's subcontractor of the amounts paid to their employees.

Having considered the record and the parties’ arguments, the Court DENIES KKG's Motion and, instead enters final declaratory judgment in favor of the DDOL on both challenged counts—except to the extent the Counterclaim seeks recovery for KKG's alleged direct administrative violations of the PWL.

I. FACTUAL BACKGROUND

KKG is a German company that manufactures cranes and crane systems.¹ KKG was engaged as the prime contractor responsible for delivering and assembling certain gantry cranes. DSPC is a Delaware corporation tasked with overseeing the Port of Wilmington. In April 2015, DSPC and KKG entered into the Contract. KKG agreed to deliver, install and erect two Ship-to-Shore Gantry Cranes along with related equipment.² KKG subcontracted with certain third parties, including Industrial Crane Services, Inc. ("ICS"), to assist in fulfilling the Contract. ICS in turn contracted with certain subcontractors including, among others, Romar Offshore Welding Services, LLC ("Romar").

In 2017, the DDOL investigated whether several of the involved entities, including ICS and Romar, failed to pay their employees a prevailing wage. The DDOL ultimately concluded that there were in fact wage deficiencies and issued wage notices.³

The ICS Wage Notice: (a) identified the employees that were allegedly underpaid; (b) contained the asserted amount of the underpayments; (c) demanded that ICS cure the deficiency within 15 days; and (d) warned that ICS's failure to cure or respond may result in additional penalties and an order directing the contracting agency, DSPC or the prime contractor (which was KKG), to withhold payments from ICS.⁴ The Romar Wage Notice provided substantially similar information and warnings concerning Romar's alleged failure to pay its employees a prevailing wage.⁵ The Wage Notices did not mention KKG, allege KKG failed to pay its employees a prevailing wage, or threaten to withhold payments from KKG.⁶ And the DDOL did not provide KKG with a copy of either Wage Notice.⁷

By letter dated August 16, 2017, the DDOL advised DSPC of ICS's alleged PWL violations and ordered it to withhold $738,505 from ICS.⁸ In this letter, the DDOL stated explicitly that "[ICS] has failed to pay" the identified workers "the correct prevailing wage rates."⁹

DSPC advised the DDOL that it had only contracted with KKG, not ICS.¹⁰ The DDOL therefore orally advised DSPC to withhold $738,505 from KKG. On August 25, 2017, DSPC emailed the DDOL, copying KKG, seeking written confirmation of DDOL's order.¹¹ That same day, the DDOL responded to DSPC with a withholding order (the "ICS Withholding Order").¹² The ICS Withholding Order identifies the purported legal basis for withholding payments from ICS, the associated notices to ICS, and the purported legal basis for directing KKG to withhold payment from ICS.¹³ The ICS Withholding Order does not identify any notice provided to KKG nor any other basis for withholding payments from KKG.¹⁴ DSPC explained in a September 14, 2017 letter: "[i]f and when the [DDOL] rescinds [the Withholding Orders], DSPC will promptly make all payment(s) to [KKG] that are due and payable to [KKG] in accordance with our contract."¹⁵

Several months after sending the Wage Notices, the DDOL revised its demands. On October 27, 2017, the DDOL sent Romar a revised demand letter in which it amended the amount of the alleged deficiency to $301,530.39.¹⁶ Similarly, in early 2018, the DDOL revised its calculation of ICS's alleged deficiency.¹⁷ In a letter from the DDOL to ICS dated March 19, 2018, the DDOL advised that ICS's deficiency was $964,634.03.¹⁸ The revisions in the deficiency amounts arose because the DDOL determined that the appropriate prevailing wage rates to apply to the project were the 2015 prevailing wage rates.¹⁹ On March 19, 2019, the DDOL issued a revised deficiency letter to ICS, reflecting a reduced purported deficiency amount for failure to pay wages of $878,858.55.²⁰ On the same date, the DDOL issued a revised deficiency letter to Romar, reducing the purported amount of Romar's deficiency to $297,985.05.²¹

Ten days later, the DDOL provided DSPC with the revised deficiency notices for ICS and Romar and demanded that DSPC continue to withhold from KKG payments in the amount of $1,176,843.60 based on those amended notices.²² The DDOL also ordered DSPC to withhold further amounts from KKG by reason of certain alleged penalties the DDOL claimed were owed by either ICS or KKG.²³

In total, on March 29, 2019, the DDOL ordered DSPC to withhold $1,506,843.60 from KKG based upon DDOL's various claims.²⁴

II. THE PARTIES’ CONTENTIONS

KKG contends that the PWL does not permit the DDOL to direct the withholding of payment to a prime contractor in connection with the DDOL's enforcement of PWL claims against a subcontractor. In KKG's view, the DDOL may only order the withholding of payments or seek to recover alleged unpaid wages from the individual employees’ direct employer, which KKG contends it was not.

The DDOL argues that the PWL provides broad remedial authority to enforce the terms and purposes of the statute, and that by the plain terms of the statute a prime contractor such as KKG may be liable for any alleged wage underpayment. In the DDOL's view, to hold otherwise would too narrowly construe the PWL as extracting a prime contractor from the PWL enforcement scheme and shielding it from any liability for any of its subcontractors’ unpaid or underpaid wages.

III. APPLICABLE LEGAL STANDARDS

The standard of review on a motion for summary judgment is well-settled. The Court's principal function when considering a motion for summary judgment is to examine the record to determine whether genuine issues of material fact exist, "but not to decide such issues."²⁵ Summary judgment will be granted if, after viewing the record in a light most favorable to a non-moving party, no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law.²⁶ If, however, the record reveals that material facts are in dispute, or if the factual record has not been developed thoroughly enough to allow the Court to apply the law to the factual record, then summary judgment will not be granted.²⁷

The moving party bears the initial burden of demonstrating that the undisputed facts support that party's claims or defenses.²⁸ If the motion is properly supported, then the burden shifts to the opponent to demonstrate that there are material issues of fact for the resolution by the ultimate fact-finder.²⁹ And that opposing party must do "more than simply show that there is some metaphysical doubt as to material facts."³⁰

If the Court concludes that the moving party is not entitled to summary judgment, and the state of the record is such that the opponent clearly is entitled to such relief, the judge may summarily grant final judgment in favor of that motion's opponent.³¹ Because, "[t]he form of the pleadings does not place a limitation upon the court's ability to do justice."³²

IV. ANALYSIS

There is no material dispute of fact here. This is a simple question of statutory interpretation. So the Court is "to determine and give effect to the legislature's intent."³³ And, in doing so, "this Court's role is to interpret the statutory language that the General Assembly actually adopt[ed], even if unclear and explain what [the Court] ascertain[s] to be the legislative intent without rewriting the statute to fit a particular policy position."³⁴ When a questioned statute read as a whole is unambiguous, that is accomplished by applying the plain, literal meaning of its words.³⁵

For a court is allowed to look behind the statutory language itself only if the statute is truly ambiguous.³⁶ But a statute isn't ambiguous simply because the parties disagree about the meaning of the statutory language.³⁷ No, a statute is ambiguous only if it is "reasonably susceptible to different interpretations, or if giving a literal...