Opinion
Appellants Ayodeji A. Ogundare, individually and doing business as Pacific Engineering Company (Pacific) and Davis Moreno Construction, Inc. (Davis), each moved to vacate a judgment entered against them pursuant to Labor Code section 1742.
Section 1742 describes a procedure under which the state can obtain a judgment against a contractor or subcontractor for violations of the state’s
Subdivision (d) of section 1742 provides that a judgment obtained pursuant to that section is appropriately entered in “any county in which the affected contractor or subcontractor has property or has or had a place of business.” In part II. of our decision, we hold that “any county in which the affected contractor or subcontractor . . . has or had a place of business” includes any county in which the affected contractor or subcontractor performed its work on the public works project on which the violations occurred.
FACTS
Pacific is in the construction business. In December 2008, Pacific was a subcontractor for Davis on a construction project for the Exeter Union Elementary School District in Tulare County (the School District). Davis was the general contractor. On December 3, 2008, the Labor Commissioner of the State of California, acting through the Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE), served Pacific and Davis with a “Civil Wage and Penalty Assessment” (the assessment). Under the heading “Notice of Right to Obtain Review—Formal Hearing,” the assessment expressly informed its recipients that “[i]n accordance with Labor Code section 1742, an affected contractor or subcontractor may obtain review of this Civil Wage and Penalty Assessment by transmitting a written request to the office of the Labor Commissioner . . . within 60 days after service of the assessment.” The assessment provided the address where any such request for review should be sent, and further stated: “Failure by a contractor or subcontractor to submit a timely Request for Review will result in a final order which shall be binding on the contractor and subcontractor . . . .” The assessment also informed its recipients: “In accordance with Labor Code section 1742[, subdivision] (d), a certified copy of a final order may be filed by the Labor Commissioner in the office of the clerk of the superior court in any county in which the affected contractor or subcontractor has property or has or had a place of business. The clerk, immediately upon the filing, shall enter judgment for the State against the person assessed in the amount shown on the certified order.”
Pacific did not submit a request for review to the Labor Commissioner. Nor did Davis. On February 5, 2009, the Labor Commissioner certified the final order of assessment and, on February 11, 2009, the Tulare County Superior Court entered judgment against Pacific and Davis jointly and severally for $185,590.83, plus an additional $12,000 in penalties against Pacific only.
Also in October 2009, Davis filed a motion to set aside the February 5, 2009, final order of assessment and the February 11, 2009, judgment entered in Tulare County Superior Court, and to order that defendant Davis be granted a review hearing of the assessment. Davis raised the same jurisdictional argument made by Pacific under section 1742, subdivision (d) and further contended its failure to submit a request for review to the Labor Commissioner was a direct result of representations by a deputy labor commissioner that Davis need not do so.
The court heard both motions and on November 25, 2009, issued its order denying both motions as untimely. The court’s ruling cited Pressler, supra,
I. The Trial Court Should Have Determined Whether the Final Assessment Order and Judgment Against Davis Was Obtained by Extrinsic Fraud
Davis’s primary contention is that the final order of assessment and judgment against it was obtained by extrinsic fraud, and that the superior court had the power to determine whether the final order of assessment and judgment was so obtained. Davis presented the declaration of its operations manager, Steven Abston. Abston declared that he received the assessment dated December 3, 2008, that it “related to the alleged failure by Pacific Engineering to pay certain wages and other items to its employees,” and that “[t]he employees who are the subject of the Civil Wage and Penalty Assessment were not employees of Defendant Davis Moreno.” He further stated that he spoke with Sherry Gentry of the DLSE on December 9, 2008. “When I spoke to her, it appeared that the assessment was indicating that the employees had been paid essentially nothing by Pacific Engineering for any of their work. She told me that she knew that the numbers indicated in the Civil Wage and Penalty Assessment were grossly inflated as they were based on each employee being paid nothing by Pacific Engineering for any of their work. She also told me that she knew that the employees had been paid, but that the DLSE was attempting to motivate Pacific Engineering to provide the recordkeeping documents that it requires. She further told me that, after receiving those records, DLSE intended to revise the numbers. She instructed me to do nothing further until further notice from the DLSE and to disregard the instructions in the Civil Wage and Penalty Assessment other than to simply discontinue paying Pacific Engineering. ... [f] ... I subsequently talked to Ms. Gentry again on December 11, 2008 and informed her that Ayo Ogundare [from Pacific] would be contacting her for a meeting. She indicated that she had already talked with Mr. Ogundare and that a meeting had been set up and she hoped that the issue would be resolved shortly, [f] Based upon the statements by Sherry Gentry of the DLSE, neither I nor Davis Moreno took any action, concerning the Civil Wage and Penalty Assessment, including seeking any review. Had I known that the DLSE intended to take action against defendant Davis Moreno other than asking it to hold any monies that were due to Pacific Engineering, I would have caused Defendant Davis Moreno to seek a timely review of the Civil Wage and Penalty Assessment.”
Abston further declared he did not become aware of the February 11, 2009, judgment until August 4, 2009, when he “was provided with a copy” of it. He stated that it was a representative of the School District who advised him of the judgment.
Section 1742 is part of California’s prevailing wage law. (§§ 1720-1861.) The “general thrust” (State Building & Construction Trades Council of California v. Duncan (2008)
“If the Labor Commissioner or his or her designee determines after an investigation that there has been a violation of this chapter, the Labor Commissioner shall with reasonable promptness issue a civil wage and penalty assessment to the contractor or subcontractor or both. The assessment shall be in writing and shall describe the nature of the violation and the amount of wages, penalties, and forfeitures due and shall include the basis for the assessment.” (§ 1741, subd. (a).)
Section 1742 describes the procedure available to a contractor or subcontractor who has been issued a civil wage and penalty assessment by the Labor Commissioner. “An affected contractor or subcontractor may obtain review of a civil wage and penalty assessment under this chapter by transmitting a written request to the office of the Labor Commissioner that appears on the assessment within 60 days after service of the assessment.” (§ 1742, subd. (a).) If a hearing is requested, it is held before an impartial hearing officer appointed by the director of the Department of Industrial Relations. (§ 1742, subd. (b).) At this hearing “[t]he contractor or subcontractor shall have the burden of proving that the basis for the civil wage and penalty assessment is incorrect. ...[][] Within 45 days of the conclusion of the hearing, the director shall issue a written decision affirming, modifying, or dismissing the assessment. The decision of the director shall consist of a notice of findings, findings, and an order.” (Ibid.)
A contractor or subcontractor dissatisfied with the decision of the director “may obtain review of the decision ... by filing a petition for a writ of mandate to the appropriate superior court pursuant to Section 1094.5 of the
In the matter before us, neither Davis nor Pacific requested a review of the assessment. “If no hearing is requested within 60 days after service of the assessment, the assessment shall become final.” (§ 1742, subd. (a).) “A certified copy of a final order may be filed by the Labor Commissioner in the office of the clerk of the superior court in any county in which the affected contractor or subcontractor has property or has or had a place of business. The clerk, immediately upon the filing, shall enter judgment for the state against the person assessed in the amount shown on the certified order.” (§ 1742, subd. (d).) There is nothing in section 1742, or in the regulations implementing it (see § 1742, subd. (b); Cal. Code Regs., tit. 8, §§ 17201-17270), expressly requiring the Labor Commissioner to serve notice on the affected contractor or subcontractor that a judgment has been entered against that contractor or subcontractor.
B. Extrinsic Fraud
“Extrinsic fraud occurs when a party is deprived of the opportunity to present his claim or defense to the court; where he was kept ignorant or, other than from his own negligence, fraudulently prevented from fully participating in the proceeding. [Citation.] Examples of extrinsic fraud are: . . . failure to give notice of the action to the other party, and convincing the other party not to obtain counsel because the matter will not proceed (and then it does proceed). [Citation.] The essence of extrinsic fraud is one party’s preventing the other from having his day in court.” (City and County of San Francisco v. Cartagena (1995)
A motion to vacate a judgment for extrinsic fraud is not governed by any statutory time limit, but rather is addressed to the court’s “ ‘ “inherent equity power” ’ ” to grant relief from a judgment procured by extrinsic fraud. (Moghaddam v. Bone, supra,
We do not agree with the superior court’s conclusion that Pressler, supra,
In Pressler, an employer attempted to appeal from an award of the Labor Commissioner. The employer received a copy of the Labor Commissioner’s decision on August 14, 1980. The employer’s attorney prepared a notice of appeal on August 18, 1980, and instructed his secretary “to mail the original to the superior court for filing .... However, the original with the filing fee was not mailed to the superior court until on or about August 26, 1980. As a result, the notice of appeal was not timely filed.” (Pressler, supra,
The “sole question presented by” the Pressler case was whether a court may consider an appeal which has been taken after the expiration of the 10-day period for filing an appeal, as prescribed by section 98.2, subdivision (a). (Pressler, supra, 32 Cal.3d at p. 834.) The court concluded that, just as with a “conventional appeal” (id. at p. 835) of a superior court judgment to
The Pressler case is distinguishable from the matter presently before us because here, appellant Davis is not seeking relief from any deadline for filing an appeal under Code of Civil Procedure section 473, subdivision (b) or for the court to expand its jurisdiction under its inherent power. Instead, Davis is seeking to set aside a final order of assessment and judgment obtained against it, contending both were obtained by extrinsic fraud and are therefore void under Code of Civil Procedure section 473, subdivision (d). In Pressler, the employer made no contention that the employee obtained a judgment by extrinsic fraud. Nothing the employee or the Labor Commissioner did in Pressler caused or was alleged to have caused a final order adverse to the employer without a hearing on the employee’s claim. The employee and employer did in fact have an administrative hearing, after which “the Labor Commissioner issued a decision awarding Pressler his full commissions.” (Pressler, supra, 32 Cal.3d at p. 833.) Furthermore, section 98.2 expressly points out that when no notice of appeal is filed, the order, decision, or award of the Labor Commissioner shall only be deemed a final order “in the absence of fraud.” (§ 98.2, subd. (d).) The Pressler opinion also expressly points out that “[t]he only exception” to a decision of the Labor Commissioner becoming final when no appeal is timely filed from that decision “is in the case of fraud.” (Pressler, supra, 32 Cal.3d at p. 837, fn. 10,) Since only a certified copy of the “final order” of the Labor Commissioner may be filed with the superior court to obtain a judgment (§ 98.2, subd. (e)), it follows that whenever a judgment is obtained by means of a purported final order that had been obtained by fraud, the judgment itself has been obtained by fraud, and an aggrieved party could move to vacate that judgment. Nothing in Pressler holds or even remotely suggests otherwise.
The superior court’s reliance on Maynard, supra, 36 Cal.4th 364 is similarly unpersuasive. The issue in Maynard was “whether relief under Code of Civil Procedure section 473, subdivision (b) is available when a party files an untimely request for a trial following an arbitration conducted pursuant to the mandatory fee arbitration act.” (Maynard, supra,
Actually, Maynard appears to provide further support for our conclusion that relief may be obtained from a judgment obtained by extrinsic fraud under section 1742. In its footnote 6, the Maynard court stated: “Pressler . . . was decided before [Code of Civil Procedure] section 473 was divided into subdivisions in 1996. (Stats. 1996, ch. 60, § 1.) As appropriate, references to [Code of Civil Procedure] section 473 made in connection with the text’s discussion of Pressler and other authority predating this amendment should be read as pertaining to the relief provisions now found within [Code of Civil Procedure] section 473, subdivision (b).” (Maynard, supra,
II. The Judgment Was Not Filed in the Wrong County
Section 1742, subdivision (d) states: “A certified copy of a final order may be filed by the Labor Commissioner in the office of the clerk of the superior court in any county in which the affected contractor or subcontractor has property or has or had a place of business. The clerk, immediately upon the filing, shall enter judgment for the state against the person assessed in the amount shown on the certified order.” The motions by Davis and Pacific asserted that the Tulare County judgment was void. Each contended (1) it had no property in Tulare County, and (2) it did not have and has not had a place of business in Tulare County. Davis presented the declaration of its president, Stephen Davis, so stating, and further declaring that its place of business was at a specified address in Fresno, which is in Fresno County. Pacific presented the declaration of its owner, Ogundare, similarly so stating, and further declaring that Pacific’s place of business was at a specified address in Bakersfield in Kern County.
The superior court agreed, stating “[t]he court concludes that the judgment was not a void judgment, as Defendants had an interest in the construction money retained in this district.” Although we assume the trial court concluded that retained monies, as intangibles, fell within the definition of “property” as defined in section 1742, subdivision (d), we need not address that issue on the limited record before us. As outlined below, we conclude that the phrase “any county in which the affected contractor or subcontractor . . . has or had a place of business” (§ 1742, subd. (d)) allowed the Labor Commissioner to file the final order against both Pacific and Davis in Tulare County.
We asked the parties to submit supplemental briefing specifically addressing the question “Why should this court not conclude that the ‘Multi-Use and Administration Building’ project was a ‘place of business’ in Tulare County for each appellant?” They did so. Davis and Pacific both contend that the Tulare County project site was not “a place of business” for either of them. Pacific argues that the phrase “a place of business” in section 1742, subdivision (d) means “a fixed place of business where the company receives mail, keeps an office, etc.” Davis similarly argues that “the phrase ‘place of business’ has a narrow application that implies a particular or fixed location where the scene of operations for Davis Moreno is located, as opposed to a particular transient worksite where employees of Davis Moreno are either presently working, or may have worked pursuant to a public works contract.” The DLSE, on the other hand, argues that “Tulare County, where [Davis] and [Pacific] performed the construction work, is a ‘place of business’ within the meaning of Labor Code section 1742(d).” As we shall explain, we agree with the DLSE on this issue.
The meaning of the phrase “a place of business” presents an issue of statutory construction. “When construing a statute, we must ‘ascertain the intent of the Legislature so as to effectuate the purpose of the law.’ (DuBois v. Workers’ Comp. Appeals Bd. (1993)
In part I. of this decision we explained, in general terms, the operation of the prevailing wage law insofar as it pertains to a contractor or subcontractor who wishes to contest a wage and penalty assessment issued by the Labor Commissioner. (§ 1741; see also Lusardi Construction Co. v. Aubry (1992)
California’s prevailing wage law is a minimum wage law. (Reyes v. Van Elk, Ltd. (2007)
The comprehensive statutory scheme for processing and handling prevailing wage claims is meant to be efficient and provide swift recourse for wage violations. The Labor Commissioner (acting through the DLSE) may investigate and determine prevailing wage violations and issue a civil wage and penalty assessment against a general contractor and/or subcontractor. The assessment is then served on the contractor, subcontractor and the awarding body, in this case, the School District. (§ 1742, subd. (a).) Upon receipt of an assessment, the awarding party must withhold sufficient money to satisfy the assessment. (§ 1727, subd. (a).) If, as alleged in this case, a timely review of the assessment is not made by the contractor or subcontractor, the assessment becomes final. (§ 1742, subd. (a).) Upon service of a certified copy of a final
As written, a certified copy of the final assessment is all that is necessary to collect the past due wages from the awarding party, for eventual payment to the workers. Under normal circumstances, a judgment is not required or necessary. Only when there are not sufficient monies held by the awarding body to pay the assessment is a judgment necessary.
To appreciate the legislative intent and policy considerations behind section 1742, particularly subdivision (d), it is instructive to examine the predecessor statutes, initially enacted in 1937. Under those statutes, to enforce prevailing wage compliance, the DLSE was authorized to issue a withholding order to a public agency requiring it to withhold and retain funds from prime contractors if the DLSE determined, after its own investigation, that the contractor or one of its subcontractors violated the prevailing wage law. (Former § 1727.) The withholding order included the amount of wages that had been underpaid, as well as a per diem penalty. (Former § 1775.) Although required to conduct an investigation before a notice to withhold could be issued, the DLSE was not required to give notice to the contractor or subcontractor or hold a hearing before the notice to withhold was issued. The remedy for the prime contractor was a civil lawsuit against the awarding body to recover the money withheld (former §§ 1730-1733), where the contractor had the burden of proof. If a suit was not brought within 90 days, the withheld funds were distributed to the workers. (See G & G Fire Sprinklers, Inc. v. Bradshaw (9th Cir. 1998)
The process for collecting wage and penalty assessments was eventually challenged for lack of due process protections for contractors and subcontractors because the then existing statutory scheme did not afford pre- or postdeprivation hearings when payments were withheld. (See G & G Fire Sprinklers, Inc. v. Bradshaw, supra,
Like its predecessor statutes, the purpose of section 1742, subdivision (d) is to facilitate the collection of the amount due from the contractor or subcontractor as determined by the “final order” (derived from the “withholding” order of the earlier statutes) of the DLSE. (§ 1742, subd. (d).) Unlike before, however, the new statutory scheme provides the right to notice and a hearing, if timely requested. The final order itself results from either the “decision of the director” after the hearing (§ 1742, subd. (b)) when no petition for writ of mandate is filed within 45 days after service of the decision (§ 1742, subd. (c)), or from the wage and penalty assessment itself when it is not contested and is allowed to “become final” (§ 1742, subd. (a)), which is what occurred in this case.
Under section 1742, subdivision (f), a judgment is not necessary for the DLSE to demand that the awarding body turn over the withheld money to the Labor Commissioner. “An awarding body . . . shall, upon receipt of a certified copy of a final order that is no longer subject to judicial review, promptly transmit the withheld funds ... to the Labor Commissioner.” (§ 1742, subd. (f).) The statute makes the turnover self-executing. A judgment is only necessary when, like before, there are insufficient monies withheld to satisfy the final order. If so, rather than filing a civil action in a county where the project was located and the work performed (as allowed under former § 1775), section 1742, subdivision (d) was adopted to authorize the DLSE to file the final order in the county where either the contractor or subcontractor has or had a place of business.
“[A] prevailing wage statute should be liberally construed in favor of the worker . . . .” (Walker v. County of Los Angeles (1961)
Pacific argues that the phrase “a place of business” is unambiguous and that we therefore need look no further than the words of the statute to conclude that the phrase “is commonly understood to mean a fixed location where a business receives mail and operates out of.” We see at least two problems with this argument. First, it is well known many contractors, large and small, may have a fixed business office in a single location, but most contractor’s work or business is performed “off-site,” where a building or structure is being constructed at any given time, from a few hours to years. Large construction companies may have fully equipped modular offices on these worksites, complete with utilities, where their employees work and the tools of their trade, equipment and construction materials are stored. Many smaller contractors may not have what could be considered a formal or structural “office,” but rather work out of their pickup trucks, where they store their tools, materials and equipment, and use their cell phones. In these situations, the contractor “operates out of’ those jobsites. Second, many businesses receive mail at a post office box address, and we do not think it can fairly be said that the business “operates out of’ a post office box. Certainly many businesses do have a structural office, with a mailing address at a particular street name and number, at which business is conducted. The phrase “a place of business” would certainly include such a structural office, but we reject the contention that the phrase “a place of business” unambiguously means only such a structural office or a mailing address.
We see nothing in the legislative history of section 1742, nothing in the regulations adopted by the Director of Industrial Relations setting forth procedures for wage and penalty assessment review hearings (see § 1742, subd. (d); Cal. Code Regs., tit. 8, § 17201 et seq.), and nothing in the Contractors’ State License Law (Bus. & Prof. Code, § 7000 et seq.) or in the rules and regulations adopted by the Contractors’ State License Board to carry out that law (see Bus. & Prof. Code, §§ 7000.5, 7008; Cal. Code Regs., tit. 16, § 810 et seq.), which would lend any support for the view that a
It is also beneficial to look to section 225.5, which provides for civil penalties for violations of various Labor Code provisions. Like section 1742, subdivision (d), section 225.5 allows for the filing of a certified copy of a final assessment of a civil penalty with “the superior court in any county in which the [person assessed] has or had a place of business. The clerk, immediately upon the filing, shall enter judgment . . . .” (§ 1742, subd. (d), italics added.) This specific provision was added in 1988, replacing a provision which allowed the Labor Commissioner to file a civil action to recover civil penalties “in any court of competent jurisdiction.” The proper venue for any such statutory action is where the labor was performed. (Code Civ. Proc., § 395, subd. (a).) Like Labor Code section 1742, section 225.5 was modified to streamline the collection process for collecting past due wages, and not to require the Labor Commissioner to file a civil action to collect the wages and penalties.
In People v. Marotta (1981)
In People v. Wooten (1985)
Pacific calls our attention to language in Wooten stating that “[t]he natural meaning of the term ‘place of business’ is a fixed location, simply because almost all businesses are conducted in some office, store or other building.” (Wooten, supra,
Davis’s reliance on Creditors v. Consumer’s Lumber Co. (1893)
Creditors thus actually appears to support, rather than detract from, our view that a place where a contractor or subcontractor conducts business is “a place of business” of that contractor or subcontractor. State of Connecticut v. Lutters, supra,
DISPOSITION
The order of the superior court denying the motion of Davis to vacate the final order of assessment and judgment is reversed. On remand, the court shall address Davis’s motion for relief on grounds of extrinsic fraud on its merits. If the court grants the motion, the court shall vacate the final order of assessment and judgment against Davis and order the Director of the
Gomes, Acting P. J., and Dawson, J., concurred.
Notes
All further statutory references are to the Labor Code unless otherwise indicated.
Appellant Pacific has filed a motion in this court asking this court to take judicial notice of various documents filed in a Kern County Superior Court action involving Pacific and the DLSE. Pacific argues that the Kern County Superior Court documents “simply are one example to establish for this Court that Respondent DLSE and Appellant Pacific Engineering Company have been, and continue to be, actively engaged in litigation, negotiation and
“ ‘Reviewing courts generally do not take judicial notice of evidence not presented to the trial court’ absent exceptional circumstances. [Citation.] . . . ‘This rule preserves an orderly system of [litigation] by preventing litigants from circumventing the normal sequence of litigation.’ [Citation.]” (Haworth v. Superior Court (2010)
As part of the adoption of section 1742, subdivision (d), section 1775 was again amended, deleting the provision for the DLSE to file an action to recover any underwithholdings in any county of competent jurisdiction.