NORTHWESTERN OHIO BUILDING & CONSTRUCTION TRADES COUNCIL ET AL., APPELLANTS, v. OTTAWA COUNTY IMPROVEMENT CORPORATION ET AL., APPELLEES.
No. 2008-1069
Supreme Court of Ohio
June 30, 2009
122 Ohio St.3d 283, 2009-Ohio-2957
Submitted March 25, 2009
{¶ 23} Because the decision of the court of appeals is contrary to
Judgment reversed and cause dismissed.
LUNDBERG STRATTON, O‘CONNOR, O‘DONNELL, LANZINGER, and CUPP, JJ., concur.
PFEIFER, J., dissents.
PFEIFER, J., dissenting.
{¶ 24} Not everybody sits and counts his or her money every day. Mrs. Spiller has the certificate of deposit. The bank has nothing. The bank wins? I dissent.
Steven R. Fansler, for appellee.
Eastman & Smith, Ltd., Henry N. Heuerman, and Matthew D. Harper, for appellant.
Jeffrey D. Quayle; and Bricker & Eckler, L.L.P., Jeffery E. Smith, and Anne Marie Sferra, urging reversal for amicus curiae, Ohio Bankers League.
I. Introduction
{¶ 1} We are asked to determine whether the mere expenditure of public funds by an institution defined as a public authority in
II. Facts and Procedure
{¶ 2} Appellee Fellhauer Mechanical Systems, Inc. (“Fellhauer“) is a private, for-profit electrical, heating, cooling, and plumbing contractor located in Ottawa County. Fellhauer also has a retail business, which sells security systems, audio and video equipment, televisions, and home-theater systems.
{¶ 3} Fellhauer decided to purchase a building, the real property on which it stood, and office equipment and to renovate the portion of the building that was used for retail sales. Fellhauer financed the project through several sources, acquiring both public and private funding. Fellhauer applied for a loan from Ottawa County. The source of these funds was a Small Cities Community Developmental Block Grant, which consists of federal funds that are disbursed by the Ohio Department of Development (“ODOD“). Thus, Ottawa County filed an application for the grant on Fellhauer‘s behalf with the ODOD. The ODOD approved the grant, which expressly provided that Fellhauer was to use $300,000
{¶ 4} Fellhauer also acquired a loan for $36,750 from appellee Ottawa County Improvement Corporation (“OCIC“), which is a publicly funded corporation formed under
{¶ 5} Finally, in addition to $40,000 of John Fellhauer‘s own money, he secured $308,250 in private funding. He used $135,000 to finance renovation of the building, and the remainder of the private funds was applied to the balance of the acquisition costs.
{¶ 6} Thus, Fellhauer used public and private funds to finance the purchase of the real property, a building, and office equipment, but used only private funds to finance the renovation of the building.
{¶ 7} Appellant Kevin J. Flagg (now deceased), a state taxpayer, and appellant Northwestern Ohio Building & Construction Trades Council (“appellants“), wrote to the Ottawa County prosecutor, stating that Fellhauer‘s project was subject to Ohio‘s prevailing-wage law,
{¶ 8} When the prosecutor failed to take any action, appellants filed a verified complaint seeking preliminary and permanent injunctive relief. Appellants alleged that failure to comply with the prevailing-wage law would cause irreparable harm once construction contracts were awarded in the Fellhauer project. The complaint asked the court to compel OCIC and Ottawa County to comply with the prevailing-wage law in connection with public funds they disbursed for the Fellhauer project. Appellants also sought to enjoin the awarding of any contracts in connection with the project until the project came into full compliance with the law.
{¶ 9} The trial court accepted appellants’ assertion that Ottawa County and OCIC were institutions and public authorities as defined in
{¶ 10} The trial court also held that Fellhauer‘s project did not qualify as a public improvement to which the prevailing wage automatically applies under
{¶ 11} The court of appeals affirmed the judgment of the trial court on different grounds. The court of appeals reasoned that no entity that satisfied the definition of an institution as defined in
{¶ 12} Alternatively, the court of appeals held that even if an institution as so defined was associated with the project, no public funds were spent on any construction, i.e., the public funds were used to finance purchase of real property, a building, and office equipment. Id. at ¶ 33.
{¶ 13} We have accepted Northwestern‘s discretionary appeal, which raises the following propositions of law: (1) “An R.C. Chapter 1724 ‘Community Improvement Corporation’ is an ‘institution’ as defined by O.A.C. 4101:9-4-02(P), and a ‘public authority’ under R.C. 4115.03(A),” (2) “Expenditures of an institution supported in part by public funds trigger prevailing wage applicability under R.C. 4115.03(A) as a matter of law,” (3) “An Administrative Rule, 4101:9-4-02(BB)(1)(d), cannot be construed in a way that restricts the application of Revised Code, 4115.03(A),” and (4) “Subdividing a single public improvement project into construction and acquisition component parts to avoid prevailing wage applicability violates R.C. 4115.033 and O.A.C. 4101:9-4-17(C).”
III. Analysis
A. Ohio‘s Prevailing-Wage Law
{¶ 14} “The prevailing wage statutes,
{¶ 15} Prevailing wage applies to “construction projects that are ‘public improvements’ as defined in
{¶ 16} A “public authority” is defined as “any officer, board, or commission of the state or any political subdivision of the state, authorized to enter into a contract for the construction of a public improvement or to construct the same by the direct employment of labor, or any institution supported in whole or in part by public funds and said sections apply to expenditures of such institutions made in whole or in part from public funds.”
{¶ 17} Northwestern argues that an institution defined as a public authority in
{¶ 18} The phrase “said sections apply” within
{¶ 19} Moreover, Northwestern‘s argument that any spending of public funds by an
{¶ 20} Accordingly, we hold that the prevailing-wage law applies only when a public authority, including an institution, spends public funds to construct a “public improvement,” which by definition must be constructed by a public authority or must benefit a public authority. See Episcopal Retirement, 61 Ohio St.3d at 369, 575 N.E.2d 134 (a project must be constructed “for a public authority” in order for the prevailing-wage statutes to apply);
B. The Fellhauer Project
{¶ 21} Having concluded that the project at issue today must be subjected to the same prevailing-wage analysis as any other project, we turn now to the task of determining whether the prevailing-wage requirement applies under these facts.
{¶ 22} The Fellhauer project is not a “public improvement.” That term is limited to “all buildings, roads, streets, alleys, sewers, ditches, sewage disposal plants, water works, 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.” (Emphasis added.)
{¶ 23} Moreover, the Fellhauer project will not be (1) constructed (2) by or for a public authority as also required by
{¶ 24} The simple fact is that the Fellhauer project is not a “construction” of a “public improvement” by or for a public authority. Consequently, because no public funds were used to finance any actual construction of a public improvement that benefits a public authority, the prevailing-wage requirement does not apply to the Fellhauer project.
{¶ 25} Accordingly, we affirm the judgment of the court of appeals.
Judgment affirmed.
MOYER, C.J., and PFEIFER, O‘CONNOR, O‘DONNELL, LANZINGER, and CUPP, JJ., concur.
Ross, Brittain & Schonberg Co., L.P.A., Alan G. Ross, and Nick A. Nykulak, for appellee Fellhauer Mechanical Systems, Inc.
Squire, Sanders & Dempsey, L.L.P., Vincent Atriano, David S. Farkas, and Matthew L. Sagone; Mark E. Mulligan, Ottawa County Prosecuting Attorney; and Kohli & Christie and Gary A. Kohli, for appellees Ottawa County Improvement Corporation and Ottawa County Board of Commissioners.
Calfee, Halter & Griswold, L.L.P., Peter A. Rosato, and Stanley J. Dobrowski, urging reversal for amicus curiae Mechanical Contractors Association of Ohio.
Ross, Brittain & Schonberg Co., L.P.A., Alan G. Ross, and Nick A. Nykulak, urging affirmance for amicus curiae Associated Builders & Contractors of Ohio, Inc.