Zurz v. 770 West Broad Aga

• Decision Date: 24 February 2011
• Docket Number: No. 10AP–154.,10AP–154.
• Citation: 949 N.E.2d 595,192 Ohio App.3d 521
• Parties: ZURZ, Dir., et al., Appellants,v.770 WEST BROAD AGA, L.L.C., et al., Appellees.
• Court: Ohio Court of Appeals

192 Ohio App.3d 521

949 N.E.2d 595

2011 -Ohio- 832

ZURZ, Dir., et al., Appellants,

v.770 WEST BROAD AGA, L.L.C., et al., Appellees.

No. 10AP–154.

Court of Appeals of Ohio, Tenth District, Franklin County.

Decided Feb. 24, 2011.

Michael DeWine, Attorney General, and Lindsay M. Sestile and Aaron W. Johnston, Assistant Attorneys General, for appellants.Thompson Hine L.L.P., Michael W. Currie, and Gabe J. Roehrenbeck; and Kooperman Law Offices, L.L.C., and Brian T. Kooperman, Columbus, for appellees.FRENCH, Judge.

[Ohio App.3d 523] {¶ 1} Plaintiffs-appellants, the Ohio Department of Commerce and its director, Kimberly Zurz (collectively, “DOC”), appeal from the Franklin County Court of Common Pleas' entry of summary judgment in favor of defendants-appellees, 770 West Broad AGA, L.L.C. (“AGA”), Leed Construction, Ltd., Anchor Realty Construction, Inc., Jason Gunsorek, and Megan Gunsorek Burkholder (collectively, “appellees”), on DOC's claim for violations of Ohio's prevailing-wage laws. We reverse.

{¶ 2} Effective January 15, 2008, AGA, an Ohio limited-liability company, and the state of Ohio, acting through the Department of Administrative Services (“DAS”), entered into a lease, pursuant to which AGA leased real property located at 770 West Broad Street, in Columbus (“the property”), to the state for use by the Department of Rehabilitation and Correction (“DRC”). Under the lease, AGA agreed to construct and pay for specified improvements to the property (the “project”). Section XI(C) of the lease required AGA to comply with applicable provisions of R.C. Chapter 4115 and Ohio Adm.Code 4101:9–4 relating to payment of prevailing wage. No public funds were spent on the project.

{¶ 3} DOC commenced this action against appellees in September 2009, alleging prevailing-wage violations, relating to the project. Appellees moved for summary judgment, arguing that Ohio's prevailing-wage law is facially unconstitutional and that, alternatively, prevailing-wage law did not apply to the project. The trial court refused to address appellees' constitutional challenge but granted [Ohio App.3d 524] appellees' motion, concluding that prevailing-wage law was inapplicable because no public funds were spent on the project.

{¶ 4} DOC has filed a timely notice of appeal and asserts the following assignment of error:

The trial court erred in finding that improvements made to a property leased to the state of Ohio, to be occupied by a state agency, are not subject to prevailing wage law, R.C. 4115.03 et seq.

{¶ 5} We review a summary judgment de novo. Koos v. Cent. Ohio Cellular, Inc. (1994), 94 Ohio App.3d 579, 588, 641 N.E.2d 265, citing Brown v. Scioto Cty. Bd. of Commrs. (1993), 87 Ohio App.3d 704, 711, 622 N.E.2d 1153. When an appellate court reviews a trial court's disposition of a summary-judgment motion, it applies the same standard as the trial court and conducts an independent review, without deference to the trial court's determination. Maust v. Bank One Columbus, N.A. (1992), 83 Ohio App.3d 103, 107, 614 N.E.2d 765; Brown at 711.

{¶ 6} Pursuant to Civ.R. 56(C), summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Accordingly, summary judgment is appropriate only under the following circumstances: (1) no genuine issue of material fact remains to be litigated, (2) the moving party is entitled to judgment as a matter of law, and (3) viewing the evidence most strongly in favor of the nonmoving party, reasonable minds can come to but one conclusion, that conclusion being adverse to the nonmoving party. Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 66, 8 O.O.3d 73, 375 N.E.2d 46. Because summary judgment is a procedural device to terminate litigation, courts should award it cautiously after resolving all doubts in favor of the nonmoving party. Murphy v. Reynoldsburg (1992), 65 Ohio St.3d 356, 358–359, 604 N.E.2d 138, quoting Norris v. Ohio Std. Oil Co. (1982), 70 Ohio St.2d 1, 2, 24 O.O.3d 1, 433 N.E.2d 615.

{¶ 7} The crux of this case is whether Ohio's prevailing wage law applies to the project. “Ohio's prevailing wage law applies to all construction projects that are ‘public improvements,’ as defined in R.C. 4115.03(C).” Episcopal Retirement Homes, Inc. v. Ohio Dept. of Indus. Relations (1991), 61 Ohio St.3d 366, 369, 575 N.E.2d 134; U.S. Corr. Corp. v. Ohio Dept. of Indus. Relations (1995), 73 Ohio St.3d 210, 218, 652 N.E.2d 766; see also Northwestern Ohio Bldg. & Constr. Trades Council v. Ottawa Cty. Improvement Corp., 122 Ohio St.3d 283, 2009-Ohio-2957, 910 N.E.2d 1025, ¶ 15, citing Episcopal Retirement Homes; [Ohio App.3d 525] R.C. 4115.10(A) (“No person, firm, corporation, or public authority that constructs a public improvement with its own forces * * * shall violate the wage provisions of sections 4115.03 to 4115.16 of the Revised Code”).

{¶ 8} Despite the Supreme Court of Ohio's clear statement of the law in Episcopal Retirement Homes and U.S. Corr. Corp., the trial court held that “in order for Ohio's prevailing wage law to apply to a project, it must be a public improvement and it must be paid for with public funds.” (Emphasis sic.) The trial court relied exclusively on the Northwestern syllabus to conclude that Ohio's prevailing-wage law did not apply, because no public funds were spent on the project. Before turning to Northwestern, however, we will first review the applicable statutory language and prior Supreme Court precedent regarding the applicability of prevailing-wage law.

{¶ 9} The trial court correctly acknowledged that prevailing-wage law applies only to a project that is a “public improvement.” R.C. 4115.03(C) defines “public improvement,” as follows:

“Public improvement” includes all buildings * * * and all other structures or works constructed by a public authority of the state or any political subdivision thereof or by any person who, pursuant to a contract with a public authority, constructs any structure for a public authority of the state or a political subdivision thereof. When a public authority rents or leases a newly constructed structure within six months after completion of such construction, all work performed on such structure to suit it for occupancy by a public authority is a “public improvement.”

On appeal, DOC contends that the project qualifies as a “public improvement” under both sentences of R.C. 4115.03(C), thereby mandating compliance with prevailing-wage law. More specifically, DOC contends that the project qualifies as a “public improvement” for two reasons: (1) it was completed pursuant to a contract with DRC for DRC's use and (2) DRC leased the structure within six months after work was performed to suit DRC.

{¶ 10} The Supreme Court of Ohio has provided guidance on applying the statutory definition of “public improvement” for purposes of determining the applicability of prevailing-wage law. See Episcopal Retirement Homes, 61 Ohio St.3d 366, 575 N.E.2d 134; U.S. Corr. Corp., 73 Ohio St.3d 210, 652 N.E.2d 766. As applicable here, to satisfy the first sentence of R.C. 4115.03(C), the project must be constructed “pursuant to a contract with a public authority” and “for a public authority.” See Episcopal Retirement Homes at 369. A project is constructed pursuant to a contract with a public authority when the contract is the “animating force” for the construction. Id. To be constructed for a public authority, “the public authority [must] receive the benefit of the construction, either through maintaining a possessory or property interest in the completed [Ohio App.3d 526] project or through the use of public funds in the construction of the project.” Id. at 370.

{¶ 11} The Supreme Court applied the statutory definition of “public improvement” in U.S. Corr. Corp. There, United States Corrections Corporation (“USCC”), a private company, entered into a Lease and Correctional Housing Services Agreement (the “agreement”) with Hamilton County, Ohio. The agreement provided that USCC would renovate the Kruse Hardware Building in Cincinnati for use as a minimum-security correctional institution and would lease the completed facility to the county for a specified term. USCC directly contracted and paid for renovations to meet the terms of the agreement. The Supreme Court ultimately concluded that the renovations fit within both definitions of “public improvement” in R.C. 4115.03(C) and were, therefore, subject to Ohio's prevailing-wage requirements.

{¶ 12} The Supreme Court first applied the test utilized in Episcopal Retirement Homes, 61 Ohio St.3d 366, 575 N.E.2d 134. The court determined, 73 Ohio St.3d at 219, 652 N.E.2d 766, that the agreement was the “animating force” behind the renovation because USCC renovated the building to comply with the agreement's terms, which outlined specifications for the renovation, a timeline for completion, and a schedule of occupancy. Accordingly, the court concluded that the renovated facility was constructed pursuant to a contract with a public authority. The court further determined that the county's possessory interest in the completed facility, pursuant to the terms of the agreement, indicated that the correctional facility was constructed for a public authority. Thus, the court concluded that the renovation project fit squarely within the definition of “public improvement” in the first sentence of R.C. 4115.03(C).

{¶ 13} The Supreme Court then considered whether the renovation also satisfied the second sentence of R.C. 4115.03(C), which provides that when a public authority leases a newly constructed structure within six months after completion of construction, all work performed to suit the structure for...