North Marion Sch. Dist. # 5 v. Acstar Ins.
Jurisdiction | Oregon |
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, Petitioners on Review, v. ACSTAR INSURANCE CO., a foreign corporation; American Home Assurance Company, a foreign corporation; OC America Construction, Inc., a foreign corporation; and Christopher J. Vander Kley, an individual, d.b.a. Vander Kley & Co., Respondents on Review. |
Citation | 169 P.3d 1224,343 Or. 305 |
Docket Number | CC 0006-05846; CA A119438; SC S53662. |
Court | Oregon Supreme Court |
Decision Date | 11 October 2007 |
Jacqueline L. Koch argued the cause for petitioners on review. With her on the joint briefs were Koch & Deering, and J. Dana Pinney, Portland, and Bailey, Pinney & Associates.
Darien S. Loiselle, Portland, argued the cause for respondents on review Acstar Insurance Co., American Home Assurance Co., and OC American Construction, Inc. With him on the brief were Schwabe, Williamson & Wyatt, P.C., Kelly T. Hagan, and Sara Kobak, Portland.
No appearance on behalf of respondent Christopher J. Vander Kley.
Erika L. Hadlock, Assistant Attorney General, argued the cause on behalf of amicus curiae, Bureau of Labor and Industries. With her on the brief were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General, Salem.
Plaintiffs, former workers on a public works project, filed this action to recover statutory penalty wages and liquidated damages from a surety who issued construction bonds to plaintiffs' employer, a subcontractor on the project. The dispute arose when plaintiffs' employer became financially unable to meet its payroll and terminated plaintiffs' employment without paying plaintiffs' final wages on the date that those wages were due. Within one month, the employer's surety, Acstar Insurance Co. (Acstar), paid plaintiffs the amounts that the employer failed to pay them. In their actions, however, plaintiffs alleged that, because their final wages were paid late, they also were entitled to penalty wages and liquidated damages from the surety. On the parties' cross motions for summary judgment, the trial court concluded that the surety was not statutorily liable in an action on the bond for either penalty wages or liquidated damages based on the late payment of wages. The trial court therefore granted defendant Acstar's motion, denied plaintiffs' motion, and entered judgment accordingly.1 The Court of Appeals affirmed. North Marion Sch. Dist. # 15 v. Acstar Ins. Co., 205 Or.App. 484, 136 P.3d 42 (2006).
Plaintiffs petitioned for this court's review and, in support of their petition, the Commissioner of the Bureau of Labor and Industries (BOLI) filed an amicus brief urging that the Court of Appeals resolved the liquidated damages issue incorrectly. We granted review to address: (1) whether a surety is liable for penalty wages under ORS 652.150 in an action on a construction bond pursuant to ORS 279.526; and (2) whether the late payment of wages violates the prevailing wage statute, ORS 279.350(1), thereby entitling plaintiffs to liquidated damages from the surety under ORS 279.356(1).2 As we explain below, we affirm the decision of the Court of Appeals and the judgment of the trial court as to both issues.
We take the facts from the Court of Appeals opinion and the record. North Marion School District # 15 hired defendant OC America Construction, Inc. (OC), to be the general contractor for the North Marion School District Facility Improvements, a public improvement project. OC hired defendant Vander Kley as a subcontractor on the project; Vander Kley, in turn, employed plaintiffs. As required by ORS 279.029,3 both OC and Vander Kley obtained construction bonds to cover their contractual obligations on the project. Vander Kley obtained his bonds from defendant Acstar. After work on the project commenced, Vander Kley developed financial difficulties and began to issue late paychecks to his employees. In March 2000, OC demanded in writing that Vander Kley pay his employees timely. On April 27, 2000, Vander Kley became financially insolvent and could not pay his employees at all. Vander Kley advised OC of his financial distress and terminated his employees. Vander Kley was unable to pay them their final wages, which were due the next day. OC informed Acstar of Vander Kley's situation so that Acstar would pay Vander Kley's final payroll from the bond. Acstar attempted to determine the correct amount owed to each employee by obtaining the certified payroll statements that Vander Kley had filed with North Marion School District.4 Acstar did not immediately receive those statements, however.
Meanwhile, on May 8, 2000, a little over a week after their employment terminated, plaintiffs—47 of Vander Kley's former employees—sent notices to Acstar, pursuant to ORS 279.528, of their claims for nonpayment of wages. The notices identified the employees by name, but did not describe the work performed or the amount of wages sought. Acstar's counsel immediately asked plaintiffs' counsel for that information, but plaintiffs' counsel did not provide it, asserting instead that Acstar, as the surety, was responsible for determining the amount of wages due to each employee. On May 19, 2000, Acstar succeeded in obtaining copies of Vander Kley's certified payroll statements. About a week later, on May 25, 2000, Acstar delivered paychecks to each plaintiff. Plaintiffs do not dispute that Acstar paid them all wages that Vander Kley owed as of their last payday, nor do they dispute that those wages were calculated at the correct wage rates.
After plaintiffs received their paychecks, they filed this action on the contractor's bond pursuant to ORS 279.536. They alleged that they were entitled to penalty wages under ORS 652.150 for late payment of their final wages. They also sought liquidated damages under ORS 279.356(1), claiming that the late payment of their wages violated the prevailing wage rate statute.5 At trial, plaintiffs and defendant Acstar each filed motions for summary judgment. As pertinent to the issues on review, the trial court concluded that (1) Acstar, as a surety for Vander Kley, was not liable for penalty wages under ORS 652.150 for Vander Kley's late payment of wages; and (2) plaintiffs failed to comply with the notice provisions of ORS 279.528 and therefore could not pursue an action on Acstar's bond for liquidated damages under ORS 279.356(1). Accordingly, the trial court granted Acstar's motion for summary judgment and denied plaintiffs' motion. Plaintiffs subsequently appealed.
The Court of Appeals affirmed the trial court's judgment. On the penalty wages issue, the Court of Appeals agreed with the trial court that Acstar, as a surety on a public works project, was not liable for penalty wages under ORS 652.150. On the liquidated damages issue, the Court of Appeals did not decide the adequacy of plaintiffs' notice of claim. It instead concluded, more undamentally, that late payment of wages does not violate the prevailing wage rate statute and therefore does not give rise to liability under ORS 279.356(1). On review, plaintiffs take issue with both of those legal conclusions on the Court of Appeals' part.6 BOLI, in its amicus capacity, sides with plaintiffs only on the issue of plaintiffs' entitlement to liquidated damages under ORS 279.356(1) based on the late payment of their final wages.
To sketch the landscape for our discussion, we begin by briefly outlining the three statutory schemes involved. The first of the three—Oregon's wage and hour statutes, ORS 652.010 to 652.5707—governs the relationship between employers and employees on matters such as the maximum number of working hours, discriminatory wage rates, and when wages must be paid. With only a few exceptions, the wage and hour statutes apply to all employees in Oregon working at a fixed rate of compensation and give them common rights and remedies with regard to timely payment of wages.8 Pertinent to this case are the provisions that require an employer to pay a worker on a regular or statutorily specified payday. In general, ORS 652.120(1) provides that "[e]very employer shall establish and maintain a regular payday, at which date all employees shall be paid the wages due and owing to them." For discharged employees, such as plaintiffs, ORS 652.140(1) requires an employer to pay all earned and unpaid wages within one business day after termination from employment. If a discharged employee is not timely paid final wages, the employer is subject to a penalty in the form of the continued accrual of the employee's daily wages until those wages are paid. ORS 652.150(1).
The second of the three statutory schemes—Oregon's prevailing wage rate statutes, ORS 279.348 to 279.380—is modeled on the federal Davis-Bacon Act.9 Unlike the wage and hour provisions of ORS chapter 652, the prevailing wage rate statutes apply only to a narrow class of employees—workers on government construction (i.e., public works) projects. Under ORS 279.350(1), contractors (and their subcontractors) who successfully bid for public works projects are obligated to pay their workers what is termed the "prevailing rate of...
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