North Marion Sch. Dist. # 15 v. Acstar Ins.
| Decision Date | 03 May 2006 |
| Docket Number | 0006-05846.,A119438. |
| Citation | 205 Or. App. 484,136 P.3d 42 |
| Parties | NORTH MARION SCHOOL DISTRICT # 15, for the use and benefit of: Gonzalo Aranda Trejo, William Alan Avery, Eugene Beebe, Cory Breno, Joe Brockamp, Ray Cannon, Ronald Cooper, Chuck Craig, Keith Dossey, Allen Filer, Robin Fisk, David Flippin, David Gast, Lucas Glenn, Darrell Gutherie, Basilio Gutierrez, David Hill, Derek Holcomb, Monte Holcomb, Jeff Jones, Darren King, Fred Knipe, Donald Kuhns, John Ledoux, James Manning, Ignacio Mejia Valencia, Jose Luis Mejia Valencia, Guy Meyers, Nathan Morris, Tod Mundell, Steven Nichol, John Partlow, Nemesio Pina-Mondragon, Jason Portlock, Basilio Rudometkin, Clayton Sabine, Kirt Siegwald, Alan Sims, Daniel Stephens, Jerry Tallmon, Dennis Tidwell, Robert Tuttle, Martin Vandervies, Micah Walter, Warren Wegleitner, Richard Witbeck, and Charles Wolcott, Appellants, v. ACSTAR INSURANCE CO.; American Home Assurance Company, a foreign corporation; OC America Construction, Inc., a foreign corporation; and Christopher J. Vander Kley, an individual, dba Vander Kley & Co., Respondents. |
| Court | Oregon Court of Appeals |
Jacqueline L. Koch, Portland, argued the cause for appellants. With her on the joint briefs were Koch & Deering, and J. Dana Pinney, and Bailey, Pinney & Associates.
Darien S. Loiselle, Portland, argued the cause for respondents Acstar Insurance Co., America Home Assurance Company, and OC America Construction, Inc. With him on the brief were Kelly T. Hagan and Schwabe, Williamson & Wyatt, P.C.
Loren S. Scott argued the cause for respondent Christopher J. Vander Kley. With him on the brief were Rohn M. Roberts, Eugene, and Arnold, Gallagher, Saydack, Percell, Roberts & Potter, P.C.
Before EDMONDS, Presiding Judge, and WOLLHEIM and SCHUMAN, Judges.
Plaintiffs are employees on a public works project, and defendants are the general contractor, the subcontractor who employed plaintiffs, and the respective sureties of the general and subcontractor. Plaintiffs alleged that they provided labor for which they were not paid and alleged that each defendant was liable for their unpaid wages, liquidated damages, and statutory penalty wages. Plaintiffs and defendants filed motions for summary judgment, and the trial court granted defendants' motions, denied plaintiffs', and entered judgment in favor of defendants. We affirm.
We begin our discussion with the pertinent facts. North Marion School District hired defendant OC America Construction, Inc., (OC) to be the general contractor for a public improvement project. OC obtained a labor and materials bond from defendant American Home Assurance Company (AHA). Defendant Vander Kley was one of the subcontractors on the project. Vander Kley obtained two labor and materials bonds from defendant Acstar Insurance Co. (Acstar).1
After work on the project had begun, Vander Kley developed financial difficulties and did not pay his employees on time. In March 2000, OC wrote to Vander Kley demanding that he pay his employees on time. Then, in April 2000, Vander Kley became financially insolvent and could no longer pay his employees. OC informed Acstar of the situation, and Acstar prepared the paychecks for Vander Kley's employees. However those paychecks were not timely issued. On May 8, 2000, plaintiffs provided notice to defendants of their claims for nonpayment of wages pursuant to ORS 279.528. The notices stated:
Acstar delivered paychecks to plaintiffs on May 25, 2000.2 After plaintiffs received their paychecks, they filed this action for penalty wages, liquidated damages, and attorney fees. Plaintiffs' complaint contained three claims for relief.3 The first claim was captioned "Wage Claim, Statutory Penalty Wages," and alleged that plaintiffs were entitled to statutory penalty wages pursuant to ORS 652.150. The second claim for relief, captioned "State Minimum Wage Claim, Civil Penalty," alleged that "Defendant Vander Kley & Company was required to pay Plaintiffs at the then prevailing State of Oregon minimum wage rate for all hours worked, when those wages were due," and that Vander Kley failed to pay plaintiffs' wages when due and that plaintiffs are therefore entitled to a penalty under ORS 653.055.4 Plaintiffs' third claim for relief, entitled "ORS 279.356 Liquidated Damages," alleged that defendants had failed to pay plaintiffs at the prevailing wage rate as required by ORS 279.350 and that plaintiffs were entitled to an amount equal to the unpaid wages as liquidated damages.5
Plaintiffs and defendants each filed motions for summary judgment. The trial court concluded, among other things, that the sureties could not be liable for penalty wages, that plaintiffs failed to comply with the notice provisions of ORS chapter 279, and that plaintiffs' claims against Vander Kley were barred by his discharge in bankruptcy. Accordingly, the trial court granted defendants' motions for summary judgment on all claims and denied plaintiffs' motion.
On appeal, plaintiffs assert seven assignments of error, which together raise the following four issues:6 (1) whether a surety is liable for penalty wages pursuant to ORS 652.150 in an action on a labor and materials bond under ORS 279.526; (2) whether late payment of wages also constituted a violation of the prevailing wage statute, ORS 279.350 entitling plaintiffs to liquidated damages pursuant to ORS 279.356; (3) whether plaintiffs' notice substantially complied with ORS 279.528; and (4) whether plaintiffs could obtain a judgment for penalty wages against Vander Kley despite Vander Kley's discharge in bankruptcy. Given our disposition of the first, second, and fourth issues concerning penalty wages, liquidated damages, and the liability of Vander Kley, we need not address whether plaintiffs' notice was sufficient because, even if it was, plaintiffs still would not be entitled to recover.
We begin with plaintiffs' arguments that the trial court erred in concluding that Acstar, Vander Kley's surety, could not be liable for penalty wages under ORS 652.150 in an action to recover against a bond under ORS 279.526. ORS chapter 279 governed, among other things, the bidding, awarding, and conditions of public contracts. Under ORS 279.029, a successful bidder for a public contract for public improvement was required to "execute and deliver to the public contracting agency a good and sufficient bond, to be approved by the public contracting agency, in a sum equal to the contract price for the faithful performance of the contract."
ORS 279.526, in turn, provided a mechanism for recovery against a bond for a public improvement contract. That statute provided, in part:
To satisfy its obligation under ORS 279.029, Vander Kley obtained a labor and materials bond from Acstar for its work on the North Marion School District Project. The dispute between plaintiffs and Acstar centers on whether penalty wages, which are assessed against an employer who fails to pay wages when due, are recoverable in an action on the labor and materials bond under ORS 279.526(1). According to plaintiffs, whether they "were `paid in full' [under ORS 279.526(1)] depends on whether the penalty wages they earned were wages that could be collected against the bond." Acstar counters that penalty wages are available only under ORS 652.150 and only as a remedy against an employer; thus, penalty wages may not be sought against a surety in an action on a bond.
The question whether penalty wages are available in an action on a bond is a matter of statutory construction. Specifically, the issue turns on whether, in an action under ORS 279.526 to recover on a labor and materials bond, the legislature intended to provide for recovery of penalty wages that may have accrued against an employer pursuant to ORS 652.150.
As an initial matter, the text of ORS 279.526(1) does not refer to wage claims asserted under ORS chapter 652. Nor do any provisions of ORS chapter 652 explicitly provide for an action on a bond under ORS chapter 279. Nonetheless, plaintiffs argue that the two schemes—ORS chapter 279 and ORS chapter 652—must be read together and harmonized because both "contain provisions to protect workers and neither of them restrict their protections to exclude protection under other employment laws." Plaintiffs' argument, however, misses the point. The question is not whether ORS chapter 279 precludes protection under other employment laws; the question is...
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