Thompson v. Peninsula School Dist. No. 401, 16721-2-II

• Citation: 77 Wn.App. 500,892 P.2d 760
• Decision Date: 13 April 1995
• Docket Number: No. 16721-2-II,16721-2-II
• Court: Court of Appeals of Washington
• Parties: , 99 Ed. Law Rep. 600 W.R. "Rex" THOMPSON and Sheila Thompson, dba RTC Construction Company, Appellants, v. PENINSULA SCHOOL DISTRICT NO. 401, a Washington School District, Respondents/Third Party Plaintiffs, v. STATE of Washington DEPARTMENT OF LABOR AND INDUSTRIES, Clemens Massine and Christine Anne Massine, husband and wife, and Donald Blakeney, Third Party Defendants.

Page 500

77 Wn.App. 500

892 P.2d 760, 99 Ed. Law Rep. 600

W.R. "Rex" THOMPSON and Sheila Thompson, dba RTC

Construction Company, Appellants, v. PENINSULA SCHOOL DISTRICT NO. 401, a Washington School

District, Respondents/Third Party Plaintiffs, v. STATE of Washington DEPARTMENT OF LABOR AND INDUSTRIES,

Clemens Massine and Christine Anne Massine,

husband and wife, and Donald Blakeney,

Third Party Defendants.

No. 16721-2-II.

Court of Appeals of Washington,

Division 2.

April 13, 1995.

Terry Ray Marston, Hintze & Wright, Seattle, for appellants.

Darrel B. Addington, Vandeberg, Johnson & Gandara, Tacoma, for respondents.

SEINFELD, Chief Judge.

This case involves an interpretation of the public works prevailing wage law and prompt payment law. Peninsula School District No. 401 (District) delayed the final payment on its contract with W.R. "Rex" Thompson's RTC Construction Company (Thompson) because an employee of the Department of Labor & Industries (DLI) filed a claim alleging that Thompson had not paid two of its employees consistent with State wage laws. Thompson seeks interest on the delayed payment and attorney's fees incurred in bringing this action. The trial court granted the District's motion for summary judgment and awarded it attorney's fees. We reverse.

FACTS

Thompson contracted with the District in 1989 to construct school playing fields. The District made monthly progress payments to Thompson, withholding 5 percent from each payment as the retained percentage. It withheld a total of $7,697.24, which it deposited in an escrow account.

The District concedes that Thompson complied with the requirements in RCW 39.12.040 that it submit a "Statement of Intent to Pay Prevailing Wages" and an "Affidavit of Wages Paid", both approved by the industrial statistician for DLI. ¹ However, by letter dated August 8, 1990, Inez Levin, a regional supervisor for DLI, advised the District that DLI had:

found RTC Construction in violation of RCW 39.12, non payment of the Prevailing Wage rate, and non payment of overtime.

....

The Department will be filing a Lien on this project for the wages listed above.

On September 13, 1990, the Board of Directors of the District formally accepted Thompson's work. On October 8, 1990, before the District released the retained monies, the District received notice of a $7,096.90 claim Levin had filed against the retained percentage on behalf of workers Clemens Massine and Donald Blakeney.

On February 9, 1991, the 4 month time period expired for DLI, Massine, or Blakeney to file a lawsuit to perfect their claims. Nonetheless, the District still did not release the retainage. Finally, on March 27, 1991, counsel for Thompson wrote the District requesting immediate payment. Concerned about the unsatisfied expired wage claims, the District refused.

On April 1, 1991, the District received a call from Levin, who advised the District not to release the funds. On September 4, 1991, the District received a copy of a DLI "Notice of Violation" against Thompson dated June 11, 1991. DLI claimed that Thompson (1) failed to pay the prevailing wage rate (RCW 39.12.020); (2) submitted a false "Statement of Intent to Pay Prevailing Wages" (RCW 39.12.040); and (3) failed to keep accurate payroll records (WAC 296-127-320). It assessed a total of $9,516.28 in unpaid wages and civil fines against Thompson. Thompson responded to the notice by requesting a hearing.

Meanwhile, in August and again in early October 1991, Thompson's counsel wrote additional letters to the District requesting release of the retained percentage. The District continued to refuse payment, and on October 28, 1991, Thompson brought this action. The District then sought to interplead DLI and the former employees. However, DLI and the former employees disclaimed any rights to claim against the retainage. The District then notified Thompson that it was prepared to release the funds. Its representative signed the release on January 7, 1992.

Thompson moved for summary judgment on its claim for statutory interest at 12 percent per annum on the retained percentage from February 9, 1991, the date the workers' lien rights expired ², to January 1992, for a total award of $639.45 ³. Thompson also requested an award of attorney's fees. The District filed a cross motion for summary judgment of dismissal and for attorney's fees. The trial court denied Thompson's motion and entered judgment in favor of the District.

On appeal, Thompson claims that the trial court erred by failing to strike as hearsay certain portions of the District's declarations and by concluding that it was not entitled to interest and attorney's fees.

I

Thompson asserts that the trial court erred by failing to strike from the record those portions of the declarations of the District's attorney and its administrative secretary characterizing Thompson's "Affidavit of Wages Paid" as false. Thompson claims that these statements rely upon inadmissible hearsay of DLI's Inez Levin.

The challenged statements are relevant to show the state of mind of the District. Thus, they are not inadmissible hearsay. See ER 801(c).

II

Thompson claims the trial court erred in denying him unpaid interest on the retained percentage and attorney's fees. RCW 39.76. In reviewing a summary judgment, we engage in the same inquiry as the trial court. Marincovich v. Tarabochia, 114 Wash.2d 271, 274, 787 P.2d 562 (1990).

A summary judgment motion can be granted only when there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). The court must consider the facts in the light most favorable to the nonmoving party, and the motion should be granted only if, from all the evidence, reasonable persons could reach but one conclusion. Wilson, at 437 .

Marincovich, at 274, 787 P.2d 562; CR 56(c).

The District does not dispute that Thompson is entitled to interest if it failed to make timely payment to Thompson and withheld an amount due him. See RCW 39.76.010(1) (Subject to certain exceptions set forth in RCW 39.76.020, all units of local government are required to pay interest at the rate of 1 percent per month on amounts due on written contracts for public works "whenever the state agency or unit of local government fails to make timely payment".) Rather, the District appears to contend that it did not need to pay Thompson because DLI disavowed its approval of Thompson's "Affidavit of Wages Paid". Both parties concede that the filing of such an affidavit, approved by the statistician of DLI, is a requirement for payment. RCW 39.12.040(1); RCW 39.12.040(2)(b).

The District also argues that it should not be liable for interest because it acted reasonably under the circumstances. However, as Thompson notes, the District fails to cite any authority, and we are aware of none, that adopts a reasonableness standard as opposed to a requirement that the District comply with applicable statutes.

RCW 60.28 is the lien statute for public works. RCW 60.28.010 requires a public agency to retain a sum from the moneys earned by the contractor as a trust fund for the protection of all persons who furnish labor on the public work. Puget Sound Elec. Workers Health and Welfare Trust Fund v. Merit Co., 123 Wash.2d 565, 567-68, 870 P.2d 960 (1994). The statute gives lien rights against the fund to the protected workers. Workers, at 568, 870 P.2d 960; RCW 60.28.010(1). "[T]he clear purpose of [RCW 60.28.010] is to benefit those persons within the protected class." Keller Supply Co. v. Lydig Constr. Co., 57 Wash.App. 594, 600, 789 P.2d 788, review denied, 115 Wash.2d 1012, 797 P.2d 513 (1990).

A claimant must comply with the requirements of RCW 60.28 in order to recover from the retained percentage. Keller, 57 Wash.App. at 598, 789 P.2d 788; RCW 60.28.010; RCW 60.28.030; RCW 39.08.030. The claimant must give notice of its claim within 30 days from the date the owner accepts the completed work. RCW 60.28.010; RCW 39.08.030. Shope Enter. v. Kent School Dist., 41 Wash.App. 128, 130, 702 P.2d 499 (1985). The claimant then has 4 months to file an action to foreclose the lien. RCW 60.28.030. If the claimant fails to file its action within the 4-month period, it is barred from recovery against the retained percentage. Airefco, Inc. v. Yelm Comm'ty Schools 2, 52 Wash.App. 230, 233-34, 758 P.2d 996, review denied, 111 Wash.2d 1029 (1988); Shope, 41 Wash.App. at 130, 702 P.2d 499; RCW 60.28.030. "The right to a lien ceases to exist when the designated period is over." Shope, at 131, 702 P.2d 499. "Lien statutes are in derogation of the common law and should be strictly construed." Airefco, 52 Wash.App. at 233, 758 P.2d 996.

RCW 39.12, the prevailing wage law for public works, is intended " 'to protect the employees of government contractors from substandard earnings and to preserve local wage standards'." Lockheed Shipbuilding Co. v. Department of Labor & Industries, 56 Wash.App. 421, 427, 783 P.2d 1119 (1989), review denied, 114 Wash.2d 1017, 791 P.2d 535 (1990) (quoting Everett Concrete Prod., Inc. v. Department of Labor & Industries, 109 Wash.2d 819, 823, 748 P.2d 1112 (1988)). The government contracting agency cannot pay a contractor before it receives the "Statement of Intent to Pay Prevailing Wages". RCW 39.12.040(1). Upon completion of the project, the contractor must submit an "Affidavit of Wages Paid". RCW 39.12.040(1)(b). Upon receipt of the affidavit of wages paid, the awarding agency may pay the contractor or subcontractor in full, including funds that would...