Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-95-05162/USCOURTS-caDC-95-05162-0/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 5, 1996 Decided April 19, 1996

No. 95-5162

VULCAN ARBOR HILL CORPORATION, A/K/A

ARBOR HILL ASSOCIATES, ET AL.,

APPELLANTS

v.

ROBERT B. REICH,

SECRETARY, DEPARTMENT OF LABOR AND

HENRY CISNEROS, SECRETARY, DEPARTMENT OF

HOUSING AND URBAN DEVELOPMENT,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 87cv03540)

Karen M. Lockwood argued the cause for appellants, with whom William J. Rodgers and Charles B.

Long were on the briefs.

Robert M. Loeb, Attorney, United States Department ofJustice, argued the cause for appellees, with

whom Frank W. Hunger, Assistant Attorney General, Eric H. Holder, Jr., United States Attorney,

and Douglas N. Letter, Litigation Counsel, United States Department of Justice, were on the brief.

Before: EDWARDS, Chief Judge, WALD and HENDERSON, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

Dissenting opinion filed by Circuit Judge HENDERSON.

WALD, Circuit Judge: The developer of a project partially financed by the Department of

Housing and Urban Development ("HUD") to rehabilitate 82 dilapidated row houses in inner-city

Albany, New York appeals a determination by the Wage and Appeals Board of the Department of

Labor ("Board") that it wasrequired to pay "prevailing" wages as determined under the Davis-Bacon

Act, 40 U.S.C. § 276a, to laborers who worked on the rehabilitation ofthe houses. The Board based

its decision on section 110 of the Housing and Community Development Act, 42 U.S.C. § 5310,

which requires recipients of HUD grant funds to pay Davis-Bacon wages provided the property at

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issue "is designed for residential use for eight or more families." The developer, Arbor Hill, argued

that section 110 did not apply because each separate building being renovated contained fewer than

eight residential units. Arbor Hill also argued that HUD, not the Department of Labor, had primary

responsibility for interpreting section 110. The Board, however, refused to accord HUD's

interpretation of section 110 deference, and held that this project was covered by Davis-Bacon

because the residential unitsin each of the 82 houses under rehabilitation must be aggregated for the

purpose of applying the eight-unit threshold. The district court affirmed this decision, holding that

the Department of Labor, not HUD, is principally charged with interpreting section 110, and that its

interpretation was correct in this case. In addition, the district court agreed with two of the three

members of the Board who, writing separately, had found that irrespective ofsection 110, Arbor Hill

had contractually agreed to pay Davis-Bacon wages in a legally binding agreement with the City of

Albany. We affirm the district court's judgment on this latter ground, finding that Arbor Hill did, in

fact, contractually agree to pay Davis-Bacon wages. Thus we do not reach the issue of whether

Arbor Hill was statutorily required to pay Davis-Bacon wages or which agency has been delegated

authority to interpret section 110.

I. BACKGROUND

A. Statutory and Regulatory Framework

The Davis-Bacon Act, 40 U.S.C. § 276a, was passed during the Great Depression "to ensure

that workers on federal construction projects would be paid the wages prevailing in the area of

construction." Building & Const. Trades' Dep't, AFL-CIO v. Donovan, 712 F.2d 611, 613 (D.C.

Cir. 1983), cert. denied, 464 U.S. 1069 (1984). The Act was aimed at preventing companies from

competing for contracts by bringing in laborers from distant areas who would work for substandard

wages. Under the Act, the Secretary of Labor sets "prevailing" minimum wage rates which

contractors must pay to their employees on any construction project over $2,000 to which the United

States is a party. See 40 U.S.C. § 276a(a).

Although the Davis-Bacon Act by its terms applies only to contracts to which the United

Statesis a party, there are more than 50 other statutes which require contractorsto pay Davis-Bacon

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1Section 110 was amended by Pub. L. No. 100-242, § 523 (1987), which replaced the phrase

"is designed for residential use of eight or more families" with "contains not less than 8 units." All

further references to section 110 are to the version of the Act in effect before the 1987

amendment. 

wages under contracts to which the United States is not a party, but which are financed in whole or

in part with federal funds. See 29 C.F.R. Part 1, App. A (1995) (collecting statutes). These statutes

run the gamut of federal activities, from housing to highway construction to pollution control.

One of these Davis-Bacon related provisions, section 110 of the Housing and Community

Development Act of 1974, 42 U.S.C. § 5310, is at the vortex of this dispute. At the time of the

events here, section 110 provided:

All laborers and mechanics employed by contractors or subcontractors in the

performance of construction work financed in whole or in part with assistance

received under this chapter shall be paid wages at rates not less than those prevailing

on similar construction in the locality as determined by the Secretary of Labor in

accordance with the Davis-Bacon Act.... Provided, that thissection shall apply to the

rehabilitation of residential property only if such property is designed for residential

use for eight or more families. The Secretary of Labor shall have, with respect to

such labor standards, the authority and functions set forth in Reorganization Plan

Number 14 of 1950.1

The "ReorganizationPlan" referred to in section 110 was originallypromulgated byPresident

Truman, and confers on the Department of Labor the authority and responsibility to coordinate the

enforcement not only of the Davis-Bacon Act itself, but also Davis-Bacon related statutes. The Plan

provides:

In order to assure coordination of administration and consistency of enforcement of

labor standards provisions of each of the following Acts by the Federal agencies

responsible for the administration thereof, the Secretary of Labor shall prescribe

appropriate standards, regulations and procedures, which shall be observed by these

agencies....

Reorganization Plan No. 14 of 1950, reprinted at 5 U.S.C.A. App. at 242.

Under this framework, the contracting agency (here, HUD) has the "initial responsibility for

determining whether a particular contract issubject to the Davis-Bacon Act." Universities Research

Ass'n v. Coutu, 450 U.S. 754, 760 (1981); see also 29 C.F.R. § 5.5(a). If Davis-Bacon applies, the

contracting agency determines the "prevailing" wages, either by consulting wage rates published in

the Federal Register, or by requesting a project wage determination from the Wage and Hour

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2The City intended to lend this money to Arbor Hill for the rehabilitation project. 

Division ofthe Department ofLabor. See Id. §§ 1.5, 1.6. The determination made by the contracting

agency is "subject to administrative review" by the Department of Labor. Coutu, 450 U.S. at 760.

The first step in the appeal process is to request a ruling from the Wage and Hour Administrator of

the Department of Labor. Id. § 5.13. A dissatisfied party may then appeal further to the Board,

which renders a final agency decision on the matter. See Id. § 7.1(d).

B. Factual and Procedural Background

This case involves a project in inner-city Albany to renovate 82 dilapidated residential

rowhousesa project financed in part by a grant from HUD to the City of Albany. The project

developer, Arbor Hill, planned to purchase each of these 82 buildings prior to renovation, and then

to hire mostly local, inner-city residents to do the rehabilitation work. After the renovations were

completed, Arbor Hill would own and manage the buildings for at least 12 years before selling them

back to individual buyers. The total cost of the project was estimated at $13 million.

1. Arbor Hill's Contractual Agreement

Prior to the city's securing the grant, Arbor Hill wrote to HUD's Washington, D.C. office on

September 20, 1984, discussing the financing details of the project, the construction schedule, and

then, in its concluding sentence stating that "Developer acknowledges that with the guidance of the

Buffalo area office of the U.S. Dept. of Housing and Urban Development that if Davis-Bacon is

required by the area office, such wages will be paid by the developer." Letter fromMark J. Simmons

to Stanley Newman, reprinted in App. 510. This sentence, Arbor Hill would later contend, reflected

its belief that it was not clear whether Davis-Bacon wages would be required and that it intended to

pay them only if the Buffalo HUD office so required. See Affidavit of Mark Simmons, reprinted in

App. 733.

Three monthslater, on December 27, 1984, HUD approved the $3.5 million grant to the City

of Albany, under the Urban Development Action Grant program of the Housing and Community

Development Act of 1974, 42 U.S.C. §§ 5301, et seq.2 Contemporaneously with the approval of the

grant, HUD and the city signed a "Grant Agreement," which contemplated a starting date of July 1,

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1985 for the rehabilitation work. The Grant Agreement also provided that "[p]articipating Parties

will, prior to any use of grant fundsfor the Project, enter into legally binding agreements evidencing

the commitments which were so relied upon by the Secretary." Grant Agreement § 10.01, reprinted

in App. 112 (emphasissupplied). Thus, as a condition of the grant, Arbor Hill and the City of Albany

were required to enter into a legally binding agreement before any funds could be expended.

Before Albany and Arbor Hill entered into their agreement, W. Vito Zambelli, the Director

of Labor Relations for HUD's Buffalo Area Office, sent a letter to the Albany Urban Renewal

Agency, the city agency in charge of the project. In his February 7, 1985 letter, Zambelli enclosed

a copy of the "Wage Decision" issued by the Department of Labor for the Arbor Hill project, which

set forth in minute detail the hourly rates, fringe benefits, and paid holidays required for each

classification of worker, in accordance with Davis-Bacon. See App. at 465. Zambelli directed that

"[t]his decision should be reproduced and incorporated into the contract specifications before

release to prospective bidders." Id. (emphasis supplied). Although this letter put Arbor Hill on

notice that the Department of Labor believed Davis-Bacon wages applied, and that HUD's Buffalo

Office intended to enforce the application of Davis-Bacon, Arbor Hill lodged no protest at that time.

Instead, on April 1, 1985, Arbor Hill entered into the legally binding agreement with the City

of Albany required under the Grant Agreement. That document, entitled "Legally Binding

Commitment (LBC) City of Albany, Albany Local Development Corporation and Arbor Hill

Associates," specified project details both large (e.g., how much money would be loaned) and small

(e.g., that Arbor Hill would post a HUD-approved sign at the project). See LBC, reprinted in App.

354-60. The document included the following critical clause:

Arbor Hill Associates agrees that it will require its Construction Manager and those

parties who are its prime and sub-contractors to comply with the provisions of the

Davis-Bacon Act.

App. 357 (emphasis supplied).

2. Arbor Hill's Protest

Arbor Hillfirst protested the Davis-Baconwages almost two months aftersigning the Legally

Binding Commitment, when it wrote a letter to HUD's Washington, D.C. office objecting both to the

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3Separately, in a June 5, 1985 letter to the Department of Labor, Arbor Hill had challenged the

calculation of the wage rates, though not the applicability of Davis-Bacon. See App. 437. 

calculation of the wages (claiming they were inaccurate and substantially above actually prevailing

rates) and also to the very applicability of the Davis-Bacon wage requirements. Letter of May 22,

1985, reprinted in App. 444-45. According to Arbor Hill, the proviso in section 110 that "this

section shall apply to the rehabilitation of residential property only if such property is designed for

residential use for eight or more families " (emphasis supplied) exempted this project from paying

Davis-Bacon wages. In Arbor Hill's view, even though the project involved the rehabilitation of 82

houses, each of the houses was a separate property, with a separate deed, separate gas and electric

meters, separate tax assessments, etc. Since none of the houses contained more than five residential

units, Arbor Hill argued that the entire project fell within the section 110 exception.

HUD's Washington, D.C. office never replied to this letter, and Arbor Hill began a series of

correspondencewithHUD'sBuffalo AreaOffice. In letters communicating increasing urgency, Arbor

Hill asked Mr. Zambelli to rule that the project fell within the section 110 exception, and thus that

Davis-Bacon wages need not be paid. See Letter ofJuly 15, 1985, reprinted in App. 333; Letter of

August 22, 1985, reprinted in App. 171.3 On September 27, 1985, Zambelli wrote to Arbor Hill,

informing the developer that he had accepted its argument that the exception to section 110 applied

to this project, and thus that Davis-Bacon wages were not required. Zambelli made no particular

representation with respect to his authority to rule on the matter, but did say that "[t]his exemption

has been consistently applied by the Department [of HUD] for the past twelve yearsfor rehabilitation

and new construction, whether the project consists of a single property with fewer than eight units

or several properties each with fewer than eight units."

In the meantime Arbor Hill had signed a construction agreement with co-appellant Barry,

Bette & Led Duke Residential, Inc. ("BBLR"), the general contractor. That agreement did not

explicitlystate whether Davis-Baconwages were required, but instead said that the contractor agreed

to pay Davis-Bacon wages "if applicable." In August, 1985, construction began on the project. The

contractor was able to hire a large percentage of local, minority workers, but for wages below those

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4This action was apparently prompted by requests from area unions. 

5While this matter was still under consideration, on February 14, 1986, the General Counsel of

HUD wrote to the Department of Labor, saying that HUD had again changed its position and had

decided that for ease of administration it was better to consider this project on a

property-by-property basis, rather than aggregating the properties. Thus, HUD urged the

Department of Labor to find that Arbor Hill was not required to pay Davis-Bacon wages. 

required by Davis-Bacon.

In December, 1985, HUD's Associate General Counsel in Washington repudiated Zambelli's

interpretation of section 110.4 Relying on precedents for aggregating the units in a project to

determine whethersection 110 applied, the Associate GeneralCounsel advised Arbor Hill that it was

required to pay Davis-Bacon wages, retroactive to the start of construction. Arbor Hill was advised

that it could present further arguments to HUD's General Counsel and/or could appeal to the Wage

and Hour Administrator of the Department of Labor.

3. Arbor Hill's Appeals

Arbor Hill appealed this HUD determination to the Wage and Hour Administrator of the

Department of Labor,5 who issued an opinion finding that Arbor Hill was required to pay DavisBacon wages. Arbor Hill then filed a civil action in the district court challenging the Administrator's

decision, but the court dismissed the action, finding that Arbor Hill must first exhaust administrative

remedies by petitioning for review by the Department of Labor's Wage Appeals Board. The Wage

Appeals Board subsequently affirmed the Administrator's decision, in a split decision. The "Decision

for the Wage Appeals Board" found that HUD's interpretation of section 110 was not entitled to

deference, and concluded that "the developers [were], in reality, treating this undertaking as one

entire property," because:

The UDAG grant provides funds directly for the construction of the entire

undertaking; all the structures are under one common ownership; the general

contractor and subcontractors are performing interchangeably on all the structures;

and petitioners indicated that the laborers and mechanics were also performing

activities if not on all the structures, at least on more than one.

Decision of the Wage Appeals Board, reprinted in App. 651. The Chairman of the three-member

Board wrote a separate concurring opinion, agreeing with the Board's analysis of section 110. Id.,

Statement of Chairman Bramow, reprinted in App. 662. In addition, Chairman Bramow opined that

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6Member Rothman, however, disagreed with the majority's interpretation of section 110. 

Arbor Hill had contractually agreed to pay Davis-Bacon wages:

Also, it appearsfrom the facts of this case that the question of Davis-Bacon coverage

is moot. The specifications which have been made a part of petitioners' contract

contain Davis-Bacon coverage. Therefore by contract petitioners have agreed to

apply the Davis-Bacon labor standards. Under these circumstances, the petitioners

cannot be permitted to circumvent their agreed-to obligations under the contract.

Id., reprinted in App. 663. Member Rothman, in an opinion concurring and dissenting, agreed with

Chairman Bramow that Arbor Hill had contractually agreed to pay Davis-Bacon wages:

There is nothing that prohibits a recipient offederalfinancial assistance from agreeing

in a LegallyBinding Commitment to apply Davis-Bacon to the undertaking.... There

I would end the decision and the holding in this case.

Id., Statement of Member Rothman, reprinted in App. 668. Rothman also argued that Arbor Hill's

petition for review was untimely:

If a HDCA participant believes Davis-Bacon does not apply and does not want to

commit to pay the Davis-Bacon wage predeterminations, that is a matter to be

resolved before the quid pro quo grant is given.

Id.6In sum, two of three Board members (Bramow and Dunn) believed that section 110 covered this

project; two (Bramow and Rothman) believed that Arbor Hill was obliged in any case to pay DavisBacon wages due to its legally binding commitment; and one (Rothman) believed that Arbor Hill's

petition for review was untimely.

Arbor Hill filed a civil action to have the Board's decision vacated, and the district court

granted summary judgment in favor of the government. The court found that the Department of

Labor has primary responsibility for interpreting section 110, and that the Board's interpretation in

this case was reasonable. In addition, the district court found that Arbor Hill had entered into a

"binding contract" to ensure that Davis-Baconwages were paid, rejecting Arbor Hill's contention that

it had only conditionally agreed to pay Davis-Bacon wages. Arbor Hill appeals the district court's

decision here.

II. DISCUSSION

On appeal, Arbor Hill raises several claims: It asserts that HUD, not the Department of

Labor, is charged with interpreting the scope of section 110, and that the Wage Appeals Board and

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7Our recent decision in Ball, Ball & Brosamer, Inc. v. Reich, 24 F.3d 1447 (D.C. Cir. 1994),

is not to the contrary. In Ball, Ball & Brosamer the Secretary of Labor had attempted to

foreclose judicial review of his decisions by requiring, in a regulation, that the parties insert a

sentence in every contract providing that "[a]ll rulings and interpretations of the Davis-Bacon and

Related Acts contained in 29 C.F.R. Parts 1, 3, and 5 are herein incorporated by reference in this

contract." See id. at 1449. The court found that the Secretary was attempting by this device to

force every contracting party to agree in advance to the Secretary's interpretations of statutory

terms such as "employed directly upon the site of the work." Id. (citing Davis-Bacon Act).

Such contractual language, we held, was unenforceable, because "[t]he Secretary ...

cannot adopt regulations erasing the presumption of reviewability embodied in the APA...." Id. at

1450. Here, however, Arbor Hill had a choice between acceding to the Davis-Bacon directive of

February, 1985 or administratively challenging it. The choice of contract language was left up to

Arbor Hill and the City of Albany, and was not, as in Ball, Ball & Brosamer, compelled by any

regulation aimed at precluding judicial review. 

the district court erred in ruling that the Arbor Hill Project came under section 110. In addition,

Arbor Hill claimsthat even if the project falls within section 110, the government should be estopped

from retroactively enforcing Davis-Bacon because of the representations made by the Buffalo HUD

office that Davis-Bacon wages would not apply. Arbor Hill also claims that the Wage Appeals Board

hearing was tainted by bias and that the Board improperly failed to grant it an evidentiary hearing.

Finally, Arbor Hill argues that the Board and the district court erred in finding that it had

contractually agreed to pay Davis-Bacon wagesregardless of any legalrequirement to do so. We are

persuaded that Arbor Hill did in fact unambiguously commit itself to paying Davis-Bacon wages in

its April 1, 1985 Legally Binding Commitment, and accordingly, affirm the district court's decision

on that ground.

A. Contract Issue

It is axiomatic that even if a contractor or developer is not required by force ofstatute to pay

Davis-Bacon wages, it can nonetheless bind itself to do so by contract. See Woodside Village v.

Department of Labor, 611 F.2d 312 (9th Cir. 1980). As the Ninth Circuit in Woodside aptly noted:

[I]f the Davis-Bacon Act applies to a contract, the contractor must pay [prevailing]

wages.... But the converse is not necessarily true. Nothing in the Davis-Bacon Act

precludes the parties from contracting with reference to it, even if by proper

interpretation its requirements may not have been applicable by force of law to the

project in question.

Id. at 315 (internal citation omitted);7see also Walsh v. Schlecht, 429 U.S. 401, 411 (1977) (the

Davis-Bacon Act's "objective [of protecting workers from substandard wages] is clearly not

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8

In all the cases cited by Arbor Hill for a contrary result, the court was presented with a

contract which was clearly ambiguous, or where the party claiming ambiguity could articulate a

definite and different meaning. E.g., Davis v. Chevy Chase Fin. Ltd., 667 F.2d 160, 169-70

(D.C. Cir. 1981) (one paragraph of agreement used language "shall sell" to describe the

mandatory nature of appellant's obligation to tender shares, while another paragraph used

language "shall first offer"); Wards Co., 761 F.2d at 120 (each side believed the contractual

phrase "without the consent of lessor" modified a different clause); Heyman v. Commerce &

"frustrated' when contractual arrangements between employers and their employees result in higher

compensation and benefits than the floor established by the Act"). Here as in Woodside Village, we

find that Arbor Hill contractually committed itself to pay Davis-Bacon wages in its Legally Binding

Commitment with the city, and it is on that ground we rest our decision.

Arbor Hill of course disputes that it contractually agreed to pay Davis-Bacon wages. It

arguesto us, at it did to the district court, that in construing the "contract" we must consider not only

the LegallyBinding Commitment of April 1, 1985, but also the other documentssigned byArbor Hill

in the same time period, includingmost importantlythe letter that Arbor Hill's President sent to

HUD's Washington office in September, 1984 (the "September Letter"), in which Arbor Hill said it

would pay Davis-Bacon wages if the Buffalo HUD office determined such wages were required.

Finally, Arbor Hill notesthat when it entered into the construction agreement with general contractor

BBLR in June, 1985, the agreement said that BBLR was required to pay Davis-Bacon wages only

"if applicable." These documents, Arbor Hill claims, when read in pari materia, show that it never

intended to commit itself to paying Davis-Bacon wages in the Legally Binding Commitment unless

HUD's Buffalo Office determined that such wages were required.

We do not find this argument persuasive, because the language of the Legally Binding

Commitment is not in the least ambiguous: "Arbor Hill Associates agrees that it will require its

Construction Manager and those who are its prime and sub-contractors to comply with the

provisions of the Davis-Bacon Act." Arbor Hill's defense to the import of these words is that "the

language in the legally binding commitment, cited by the district court, does not have a "clear

meaning' so as to bar other evidence of the intentions of the parties." Brief for Appellant at 36.

Arbor Hill, however, tellingly fails to provide us with any other reasonable meaning as to which the

seemingly plain words are susceptible.8 Cf. Wards Co. v. Stamford Ridgeway Associates, 761 F.2d

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Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975) (contract was not clear as to whether a

"replacement" building must be of comparable size as the original building or whether the insured

could collect the full insurance amount when it replaced the damaged building with a smaller one). 

117, 120 (2d Cir. 1985) ("We stress that the meaning urged by the non-moving party must be "fairly

reasonable,' for, indeed, it is the rare sentence that cannot be read in more than one way if the reader

is willing either to suspend the rules of common English usage or ignore the conventions of a given

commercial setting.").

If the Legally Binding Commitment had said only that "Arbor Hill agrees to comply with

section 110," then Arbor Hill would have a better case that the language was ambiguous. A promise

to comply with section 110 could mean one of two things: (1) that Arbor Hill conceded that section

110 applied to it, and would pay Davis-Bacon wages or (2) that Arbor Hill believed it fell under the

exception contained within section 110, and thus did not need to pay Davis-Bacon wages. Either

way, Arbor Hill would be "complying" with section 110. But the Legally Binding Commitment,

rather than committing Arbor Hill to comply with section 110, committed it to "comply with the

provisions ofthe Davis-Bacon Act," and there was only one way to "comply" with Davis-Baconby

ensuring that prevailing wages were paid.

Where the language of a contract is wholly unambiguous, we will not consider extrinsic

evidence of the parties' intent. Compare American Postal Workers Union v. United States Postal

Serv., 940 F.2d 704, 707-08 (D.C. Cir. 1991) ("In the absence of ambiguity in the collective

bargaining agreement, however, we have not cause to examine extrinsic evidence of the parties'

intent.") with Wilson & Sons Heating & Plumbing v. N.L.R.B., 971 F.2d 758, 761 (D.C. Cir. 1992)

("in light of the linguistic ambiguity we press on to examine the extrinsic evidence"). Because we

believe the language of the contract was unambiguousin thisinstance, we do not find it necessary or

helpful to consult the extrinsic material pressed on us by Arbor Hill.

Moreover, the clarity of the words in the LBC is not diminished even when those words are

read along with the language in the Grant Agreement between Arbor Hill and HUD. Our dissenting

colleague is correct that the Grant Agreement incorporated the grant application, and that the

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9

It is true that the LBC incorporates the grant agreement by reference in those instances where

the grant agreement's terms "are pertinent and apply." See LBC, reprinted in App. 354. But we

fail to see how this general incorporation clause could possibly mean that the unambiguous

promise made by Arbor Hill in the LBC itself could be somehow rendered ambiguous by an earlier

contradictory statement incorporated by reference in the Grant Agreement. Though mindful of

the requirement that we should strive to give effect to all provisions of a contract (or contracts

being interpreted together), the absolutely clear language in the LBC would have to be bent

totally out of shape to bring it into accord with the language of the September Letter. 

10Here the promisor in the LBC was Arbor Hill, the promisee was the City of Albany, and the

beneficiary of the LBC was HUD. 

application included the September Letter, in which Arbor Hill said "Developer acknowledges that

with the guidance of the Buffalo area office of the U.S. Dept. of Housing and Urban Development

that if Davis-Bacon is required by the area office, such wages will be paid by the developer." See

Diss. Op. at 7-9. However, even assuming that this language from the September letter does say that

Arbor Hillwould pay Davis-Bacon wages only if the Buffalo office so required, we do not agree that

its incorporation by reference into the Grant Agreement introduces ambiguity into the otherwise

unequivocal language of the LBC.

The Grant Agreement, as our colleague admits, did not represent the final word on the

obligations of Arbor Hill. See Diss. Op. at 5-6. To the contrary, the Grant Agreement required

Arbor Hill and Albany to enter into a separate LegallyBinding Commitment, and only when the LBC

was approved by HUD would the fundsfor the project be released. See also 24 C.F.R. § 570.460(5)

(preliminary approval becomesfinal only after HUD hasreviewed and approved the LegallyBinding

Commitment). Thus even if HUD and Arbor Hill preliminarily agreed that payment of Davis-Bacon

wages would be conditional, the final agreement was that Arbor Hill would "comply ... with DavisBacon."9 To allow an earlier understanding to trump a clearly expressed subsequent agreement

would be contrary to the general rule of contract interpretation whereby "If the beneficiary (C)

consents, the promisor (A) and promisee (B) are generally free to make a subsequent agreement that

will modify the promisor's duty to the beneficiary."10 E. ALLAN FARNSWORTH, FARNSWORTH ON

CONTRACTS, § 10.8 (1990).

Indeed, in a similar situation, the Eighth Circuit held that an agreement entered into as a

condition precedent to the federal government's release of funds should control over a conflicting

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11The case authority cited by the dissent is not to the contrary. In Commander Oil v. Advance

Food Serv. Equip., 991 F.2d 49 (2d Cir. 1993), two companies (one of which had bought the

assets of another) had entered into two separate agreements which addressed the question of

whether the purchaser was required to indemnify the seller in the event of future lawsuits. 

Although the Second Circuit approved of looking at both agreements in determining whether the

purchase had agreed to indemnify, it never found (as we do here) that the second agreement was

itself unambiguous. 

12Contrary to our dissenting colleague's suggestion, see Diss. Op. at 10, we do not place

"critical" or even "great" weight on the February letter. As the preceding discussion reflects, we

rest our decision primarily on the unambiguous language of the Legally Binding Commitment, and

not on extrinsic evidence. To the extent we discuss the February letter, and other events

surrounding this project, we have done so merely to illuminate the activities that were taking place

contemporaneously and to place them in context. 

provision, even where the two documents were interpreted together. In Dakota Gasification v.

Natural Gas Pipeline Co., 964 F.2d 732 (8th Cir. 1992), a group of gas pipeline companies entered

into a partnership agreement, one term of which required the parties to submit any dispute to

arbitration. At the same time, the partnership signed an agreement with the federal government in

order to get a $1.5 billion loan to build a coal gasification plant, under which the parties agreed that

any dispute would be litigated in United States District Court. When the government transferred

operation of the plant to a private operator and a dispute arose, the gas companies asserted that the

original arbitration agreement should control. The court disagreed, however, finding that since the

signing of the agreement with the federal government was a "condition precedent" to obtaining the

federal loan, even if the two contracts were interpreted together, the promise on which the federal

government relied in releasing the funds had to control. Id. at 735-36. Similarly, in this case, the

Grant Agreementspecificallyrequired the partiesto "enterinto legallybinding agreements evidencing

the commitments which were so relied upon by the Secretary," and thus the unconditional promise

to comply with Davis-Bacon, on which HUD relied on in releasing the grant funds, must control.11

Though we are convinced that Arbor Hill's obligation was unambiguous, we do note that in

the context of the events of late 1984 and early 1985 to which we have alluded, it is entirely

understandable that Arbor Hill would have made such a promise to pay Davis-Bacon wages.12In

February, Arbor Hill, through the Albany Urban Renewal Agency, was sent a letter setting forth the

Davis-Bacon wage rates that would be required for the project and instructing it to put those wage

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13The dissent claims that we have made an improper inference in assuming that Arbor Hill

received the February letter before signing the LBC. See Diss. Op. at 10. The record, however,

belies this conclusion. While nothing in the record reflects the exact date Arbor Hill received the

letter, the affidavit of Arbor Hill's President, Mark Simmons, makes it clear that the letter was

received before the signing of the LBC. The affidavit, which sets forth the relevant events in

chronological order, indicates that Simmons received the February letter before signing the LBC. 

Simmons Affidavit at 7, reprinted in App. 739 ("[p]rior to signing the Legally Binding

Commitment, the request for wage determination was informational in nature,") (emphasis

supplied). Indeed, Arbor Hill, in its own pleadings before the district court said that:

Mr. Simmons also complained that he and BBLR had determined the wage rates

listed in the wage determination were substantially above actual area prevailing

rates for residential construction.... After these discussions, the City and Arbor

Hill Associates entered into a Legally Binding Commitment....

Plaintiff's Memorandum of Points and Authorities Opposing Defendants' Motion for Summary

Judgment, reprinted in App. 677 (emphasis supplied).

Thus it does not appear ever to have been in dispute that Arbor Hill received the February

letter before signing the LBC in April. Arbor Hill has not disputed before the district court or in

its briefs on appeal that it received the February letter before signing the LBC, nor at oral

argument did it dispute the basic chronology:

The Court: Yes, well, the in pari materia includes the fact that before you got

that contract, you got a clear indication as to what you were going to be required

to pay. Then you signed a contract with that understanding.

Counsel: Actually, the contract itself was signed earlier, in December of 1984. It

was only this legally binding commitment, which is a paper put in place later.

Oral Argument Transcript at 32. 

ratesinto its contract specifications.13 As of April 1, when it signed the Legally Binding Commitment

with Albany, Arbor Hill had lodged no challenge or protest to the applicability of these Davis-Bacon

wage determinations. Although Arbor Hill repeatedly stresses that its earlier, September letter clearly

established its position that it would payDavis-Bacon wages only ifthe Buffalo office required them,

in February 1985 the very Buffalo Office on which it was planning to rely sent the Albany Urban

Renewal Agency a copy of the Department of Labor's Davis-Bacon wage levels and told the agency

that Arbor Hill should be instructed to incorporate those levels into its own contracts with its

contractors. Had Arbor Hill wished to formally maintain its opposition to paying Davis-Bacon

wages, this was precisely the point at which it should have lodged a challenge to the applicability of

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14The government on a similar theme argues that Arbor Hill's petition to the Board was

untimely, directing this court to 29 C.F.R. § 1.6(c)(2)(ii): "Modifications to project wage

determinations and supersedeas wage determinations shall not be effective after contract award

(or after the beginning of construction where there is no contract award)."

It is not entirely clear, however, that § 1.6(c)(2)(ii) would apply in this case. The

regulation refers to "[m]odifications" to wage determinations, not challenges to their very

applicability. Cf. ICA Construction v. Reich, 60 F.3d 1495 (11th Cir. 1995) (contractor was

challenging only modification of wage rates, not their applicability). Thus the situation may be

covered only by the Wage Appeals Board's general regulation, 29 C.F.R. § 7.4(a): "Requests for

review of wage determinations must be timely made. Timeliness is dependent upon the pertinent

facts and circumstances involved...."

Moreover, even were the government correct that Arbor Hill's petition for review was

untimely, the Board did not rely on that rationale in reaching its decision. Only Member

Rothman, writing in concurrence and dissent, alluded to the fact that the petition was untimely. It

is well-settled law that an agency's action may not generally be upheld on grounds other than

those relied upon by the agency. See National R.R. Passenger Corp. v. Boston & Maine Corp.,

503 U.S. 407 (1992) (citing SEC v. Chenery Corp., 318 U.S. 80, 88 (1943)). 

15One further example of this is the June, 1985 contract between Arbor Hill and its chief

contractor BBLR which provided that BBLR would pay Davis-Bacon wages "if applicable." 

Those self-serving statements, however, could not undo the Legally Binding Commitment made

by Arbor Hill to the City of Albany. 

Davis-Bacon, rather than entering into a Legally Binding Commitment promising to comply.14

Moreover, if there really had been a mutual understanding between HUD and Arbor Hill that

the Buffalo Office would determine whether Davis-Bacon wages would apply, it is all the more

difficult to understand whyArbor Hill, when it came time to "enterinto [a] legally binding agreement[

] evidencing the commitments which were relied upon by the Secretary," chose to use such

unconditional language (i.e., that it would "comply with the provisions of the Davis-Bacon Act").

Considering this sequence of events, we must conclude that Arbor Hill decided to forge ahead with

the payment of Davis-Bacon wages rather than risk possible delays if it appealed the determination

of Davis-Bacon's applicability. Everything that followed was rear guard action aimed at undoing the

April 1 commitment.15

In sum, we find that Arbor Hill contractually agreed to pay Davis-Bacon wages.

B. Wage Appeals Board Process

Although we base our affirmance of the district court's judgment exclusively on Arbor Hill's

contractual commitment, Arbor Hill's claims that the Wage Appeals Board process was tainted by

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16In addition, it appears that Arbor Hill may have withdrawn its objection to Dunn's hearing the

case. The Board's majority opinion (authored by Dunn) says, "[a]fter Member Dunn explained

that he no longer is associated with the law firm in any way, the Petitioners' objection was

withdrawn." 

bias and that the Board improperly failed to conduct a hearing merit brief responses.

Arbor Hill claims the Wage Appeals Board process was tainted by bias because one of its

three members, Thomas Dunn, failed to recuse himself. Dunn's former firm, Sherman, Dunn, Cohen

& Leiter, had represented the unions which had sought to intervene in this case to argue against the

exclusion of the program under section 110. We have recently held:

We review an agency member's decision not to recuse himself from a proceeding

under a deferential, abuse of discretion standard. In an adjudicatory proceeding,

recusal is required only where "a disinterested observer may conclude that [the

decisionmaker has in some measure adjudged the facts as well as the law of a

particular case in advance of hearing it." In other words, we will set aside a

commissionmember's decision not to recuse himselffromhis duties onlywhere he has

"demonstrablymade up [his] mind about important and specific factual questions and

[is] impervious to contrary evidence."

Metropolitan Council of NAACP Branches v. FCC, 46 F.3d 1154, 1165 (D.C. Cir. 1995) (quoting

United Steelworkers of Am. v. Marshall, 647 F.2d 1189, 1209 (D.C. Cir. 1980), cert. denied, 453

U.S. 913 (1981)). Here, the record reflects that while Dunn's former firm represented the unions in

this matter, Mr. Dunn was himselfretired fromthe firm. In its briefs, Arbor Hill does not suggest that

Dunn had a financial interest in this matter, that Dunn himself had worked on this matter while at the

firm, or that anything in the record suggeststhat Dunn had "demonstrably made up [his] mind" about

the issues here.16 The fact that Dunn's former firm had an interest in the matter, without more, is not

sufficient for this court to rule that the Wage Appeals Board's process was tainted by bias.

Arbor Hill also alleges that it was improperly denied an evidentiary hearing. Under

Department of Labor regulations, a hearing is required where "the Administrator determines that

there is a relevant issue offact." 29 C.F.R. § 5.11(c)(2)(ii). Arbor Hill claims that material facts were

in dispute, and directs usto Section III.C of its briefthe section setting forth the entire facts of the

case. Nowhere in its briefs, however, does Arbor Hill identify a single specific disputed material fact.

Nor does a comparison of Arbor Hill's position with that of the government reveal any material

dispute as to the facts. Accordingly, we agree with the district court that "plaintiffs have failed to

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17We repeat that given our disposition of this case, it is not necessary to reach the merits of the

dispute as to the proper interpretation of section 110. 

demonstrate that there were any materialfactsin dispute," and find that the Wage Appeals Board did

not deprive Arbor Hill of its right to an evidentiary hearing.17

III. CONCLUSION

We find that Arbor Hill contractually agreed to pay Davis-Bacon wages, and accordingly,

affirm the judgment of the district court.

So ordered.

KAREN LECRAFT HENDERSON, Circuit Judge, dissenting:

On April 1, 1985 Vulcan Arbor Hill Corporation (developer) signed a Legally Binding

Commitment (LBC) agreeing "to complywith the provisions ofthe Davis-Bacon Act." JA 144. The

DavisBaconAct (DavisBacon) "guarantee[s]to workers onfederalconstructionprojects aminimum

wage based on locally prevailing wage rates." Building & Constr. Trades' Dep't, AFL-CIO v.

Donovan, 712 F.2d 611, 613 (D.C. Cir. 1983); see 40 U.S.C. § 276a. The majority concludes that

"the language of [the] contract" unambiguously commits the developer to pay prevailing wages and

therefore does "not consider extrinsic evidence of the parties' intent." Maj. Op. at 14 (citing

American Postal Workers Union v. United States Postal Serv., 940 F.2d 704, 707-08 (D.C. Cir.

1991)). Because I believe the contract issue cannot be decided on this record, I would remand for

further proceedings to consider the contracting parties' intent. Unless the developer contracted to

pay prevailing wages, I would hold the developer exempt from Davis Bacon's prevailing wage

requirement under section 110 of the Housing and Community Development Act. See 42 U.S.C. §

5310(a).

I. The Contract Issue 

A. Interpreting Provisions of Multi-Document Contract: Three Steps

We must interpret a contract provision so that it "is consistent with the contract as a whole,"

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BWX Elecs., Inc. v. Control Data Corp., 929 F.2d 707, 711 (D.C. Cir. 1991) ("It is a fundamental

tenet of contract interpretation that a contract provision should be interpreted, where possible, as

consistent with the contract as a whole."); Cruden v. Bank of N.Y., 957 F.2d 961, 976 (2d Cir. 1992)

("[T]he entire contract must be considered, and all parts of it reconciled, if possible, in order to avoid

an inconsistency."); 24 Corbin, Contracts § 549 (1963) ("the terms of a contract are to be interpreted

and their legal effects determined as a whole"); the goal is to determine what the parties intended a

provision to mean. See Davis v. Chevy Chase Fin. Ltd., 667 F.2d 160, 169 (D.C. Cir. 1981). If the

contract consists of more than one document, the court conducts a three-step inquiry.

Step One

Partiesto a contract can include more than one document in their agreement. Consarc Corp.

v. Marine Midland Bank, N.A., 996 F.2d 568, 572 (2d Cir. 1993) ("Under New York law a written

contract may be formed from more than one writing."); Friedman v. Manfuso, 620 F. Supp. 109,

117 (D.D.C. 1985) (" "Where severalinstruments, executed contemporaneously or at different times,

pertain to the same transaction, theywill be read together although they do not expressly refer to each

other.' ") (quoting 17A C.J.S. Contracts § 298 (1963)); 24 Corbin, Contracts § 549 (1963) ("In

many cases... the terms of agreement may be expressed in two or more separate documents."). They

may also decide to exclude specific documents. Friedman, 620 F. Supp. at 117 ("If documents are

in fact independent, they may not be considered together even though they involve the same parties

or the same subject matter."). To determine which documents the parties intended to include in their

contract, one authority suggests asking "if the parties assented to all the promises as a whole, so that

there would have been no bargain whatever if any promise or set of promises had been stricken."

Commander Oil v. Advance Food Serv. Equip., 991 F.2d 49, 53 (2d Cir. 1993) (quoting 6 Williston,

Contracts § 863 (1979)). The court also considers whether the separate documents involve the same

subject matter, the same parties, the same date of signing and whether the documents refer to each

other. See, e.g., Greene's Ready Mixed Concrete Co. v. Fullmore Pac. Assocs. Ltd. Partnership.,

808 F. Supp. 307, 310 (S.D.N.Y. 1992).

Step Two

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Once the relevant documents are assembled, the court considers the meaning of the contract

provision in dispute. Interpreting the contract "as a whole" often allows us to easily reject alternative

interpretations of the provision. See, e.g., BWX Elecs., Inc., 929 F.2d at 711 (declining to interpret

contract provision to forbid seller from negotiating with other potential buyers of building before

certain date even though contract provided "[s]eller agreesto negotiate exclusively and in good faith

with [b]uyer" before certain date because the "reading ... is flatly inconsistent with the rest of"

contract). Language which appears in one provision to be "susceptible to only one meaning" can

mean something different when other contract documents are considered. See, e.g., United States

v. ITT Continental Baking Co., 420 U.S. 223, 233 (1975) (rejecting "literal" argument that

"acquiring" as used in consent decree "unambiguously refers only to the initial transaction" because

"other documents expressly incorporated in the decree" used "acquiring" to include more than initial

transaction); Commander Oil v. Advance Food Serv. Equip., 991 F.2d 49 (2d Cir. 1993) (discussed

below); cf. Davis v. Chevy Chase Fin. Ltd., 667 F.2d 160, 170 (D.C. Cir. 1981) (conflicting

provisions in single document create ambiguity).

Step Three

If the relevant documents make an otherwise "wholly unambiguous" clause "susceptible" to

more than one "reasonable interpretation," the court allows the contracting parties to offer extrinsic

evidence of their intent. Davis, 667 F.2d at 171; Consarc Corp., 996 F.2d at 573; Wards Co., Inc.

v. Stamford Ridgway Assocs., 761 F.2d 117, 120 (2d Cir. 1985) ("[T]he non-moving party has a right

to present extrinsic evidence" "where text of an agreement reasonably allows for varying

interpretations."); Wilson &Sons Heating &Plumbing v. NLRB, 971 F.2d 758, 761 (D.C. Cir. 1992)

("[I]n light ofthe linguistic ambiguitywe press on to examine the extrinsic evidence"). If both parties

offer " "fairly reasonable' " but different interpretations of a contract, "a material issue exists

concerning the parties' intent." Wards Co. Inc., 761 F.2d at 120. We have summarized this step as

follows: "However the test for determining the clarity of contract terms is formulated, the core

notion is clear: summary judgment on a contract is appropriate only when the relevant provisions are

so straightforward that they can be read in but one way." Davis, 667 F.2d at 169-70.

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An Example

In Commander Oil v. Advance Food Serv. Equip., 991 F.2d 49 (2d Cir. 1993), the court

applied the three-step inquiry to a multiple document contract. The case involved an asset purchase

agreement and a lease. The purchase agreement provided that the purchaser of the facility was

responsible for "[a]ll other litigation occurring from and after the date of the [a]greement." Id. at 50.

The lease stated that the lessee was not responsible for "pre-transfer on-site [environmental]

contamination." Id. at 51. After the seller was sued for environmental response costs arising from

pre-transfer damage alleged to have been caused by the facility's waste, the seller impleaded the

purchaser, arguing that the suit constituted post-agreement "other litigation" within the

indemnification provision of the asset purchase agreement. Id. The purchaser argued that the

indemnification provision of the lease, limiting its responsibility for environmental damage to

post-transfer contamination, controlled. Id. The district court granted summary judgment to the

purchaser but the Second Circuit reversed.

Applying New York law, the Second Circuit interpreted the purchase agreement in light of

the lease. First, the court noted that the two documents expressly referenced each other. The lease

and the asset purchase agreement were signed at the same time and by the same parties; the court

noted, however, that contemporaneous signing was not required. The assets were located on the

leased property so the two documents involved the same subject matter. The court concluded that

"the two transactions were intertwined": "Each depended on the other; neither stood alone." 

Commander Oil, 991 F.2d at 53. It concluded that the purchase agreement and the lease comprised

a single contract and therefore should be interpreted together.

Next, the court found the asset purchase agreement's "all litigation" indemnification clause

ambiguous. Commander Oil, 991 F.2d at 55. It acknowledged that the clause "could be read to

extend indemnification coverage" but found that the lease contained "certain provisions which could

be read to restrict coverage." Id. at 54. The court concluded that "the language of the

indemnification provisionsin the Asset Purchase Agreement when read in connection with the Lease

is ambiguous as a matter of law." Id. at 55. Finally, to resolve the ambiguity, the court held that

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1HUD's implementing regulations provide in part:

Preliminary approval constitutes the first step in a process which may result in a

extrinsic evidence "bearing on the intent ofthe parties asto [the purchaser's] obligation to defend and

indemnify" must be examined. Id. Accordingly, the court reversed the grant of summary judgment

and remanded for further proceedings.

B. Relevant Facts

Because the majority construes only the Legally Binding Commitment, its marshaling of the

facts leaves some gaps. The gaps relate both to the documents that, as discussed below, comprise

the contract and to the extrinsic evidence.

Grant Process

Under the Housing and Community Development Act of 1974, 42 U.S.C. §§ 5301 et seq.,

Congress has authorized "urban development action grants [UDAGs] to cities and urban counties

which are experiencing severe economic distress to help stimulate economic development activity

needed to aid in economic recovery." 42 U.S.C. § 5318(a). A city or county of any size may apply

for a UDAG provided it has "demonstrated resultsin providing housing ... and employment for lowand moderate-income persons." Id. § 5318(b). Each applicant must also show "economic distress"

as determined by "factorssuch asthe age of housing; the extent of poverty; the extent of population

lag; growth of per capita income; and, the extent of unemployment, job lag, or surplus labor." Id.

The Department of Housing and Urban Development (HUD), the federal agency responsible for

administering the UDAG program, finances a grant application based on "the comparative degree of

economic distress among applicants," the "comparative degree of economic deterioration" and "the

extent to which the grant willstimulate economic recovery by leveraging private investment." Id. §

5318(d); see 24 C.F.R. § 570.459(b).

Before receiving UDAG funds, an application must win both "preliminary" and "final"

approvalfromHUD. Considering the statutoryfactors, HUD decides whether to grant an application

"preliminary approval." 24 C.F.R. § 570.460(c)(1). Preliminary approval, however, is only the "first

step" to receipt of UDAG funds.1 Receipt first requires the execution of at least two separate

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signed grant agreement between the recipient and HUD and legally binding

commitments between the recipient and the private sector. The terms of the

preliminary approval are not finalized until the recipient and HUD have executed a

grant agreement setting forth the terms and conditions of the approved project and

the responsibilities of all participating parties. Preliminary approval does not

become final until legally binding commitments between the recipient and the

private and public participating parties have been submitted and approved by

HUD. Release of grant funds is contingent upon the recipient's meeting each and

every condition set forth in the grant agreement.

24 C.F.R. § 570.460(c)(5). 

documents: (1) the UDAG agreement (Grant Agreement) between HUD and the grant recipient and

(2) the Legally Binding Commitment(s) (LBC) between the grant recipient and the private sector

(including the developer). § 570.461(b) ("[D]rawdown of grant funds is conditioned upon the written

acceptance by HUD of the legally binding commitment as specified in the grant agreement."). Once

HUD and the recipient execute the Grant Agreement, which spells out the responsibilities of all of

the participating parties, including the responsibilities ofthe private sector developer contained in the

LBC, preliminary approval is "finalized." Preliminary approval ripens into final approval when HUD

approves the LBC. Id. ("Preliminary approval does not become final until legally binding

commitments between the recipient and the private and public participating parties have been

submitted and approved by HUD.") See City of Kansas City, Mo. v. HUD, 923 F.2d 188, 189 (D.C.

Cir. 1991) ("Final [UDAG] grant approval and actual disbursement of grant funds are conditioned

on the submission and acceptance of these legally binding commitments."). Grant funds are released

in stages asthe recipient adheresto the Grant Agreement'sschedule. § 570.461(d) ("[G]rant funding

shall be conditioned upon the performance of the recipient in meeting the schedule set forth in its

grant agreement.").

Three Documents

The City of Albany (City or Albany) applied for a $3.5 million UDAG to help rehabilitate

residential properties in Albany's Arbor Hill neighborhood. Pursuant to the Arbor Hill proposal, the

City agreed to transfer the UDAG funds to the Albany Local Development Corporation (ALDC), a

nonprofit agency established for the grant, which agreed to lend the money to the developer. JA 123.

The Albany Urban Renewal Agency (AURA) administered the grant for the City. Each stage of the

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2Article X states in pertinent part:

In selecting the Recipient for the award of this grant, the Secretary has relied, in

material part, upon the representations of the Recipient and Participating Parties

that the Recipient and the Participating Parties (i) will carry out certain activities

connected with the Project; (ii) will complete those activities; (iii) have, or will

have, the financial capability to assure the carrying out of these activities to their

completion and (iv) will invest, or cause to be invested, a specific value amount in

the Project. The Secretary has also relied upon the Recipient and Participating

Parties' representations that such participating Parties will, prior to any use of

grant funds for the Project, enter into legally binding agreements evidencing the

commitments which were so relied upon by the Secretary.

JA 112 (emphasis added). 

UDAG application-to-receipt process has produced a relevant document.

1. Application: September 20, 1984 Letter

In a letter dated September 20, 1984 from Mark Simmons, the developer's president, to

William Seedyke, the Washington HUD official who reviewed Albany's grant application, the

developer "accept[ed]the terms ofthe UDAG Loan." September Letter, JA 508. After summarizing

the terms ofthe Arbor Hill proposal, the letter statesin the finalsentence: "Developer acknowledges

that with the guidance of the Buffalo area office of the U.S. Dept. of Housing and Urban

Development [HUD Buffalo Office] that if Davis-Bacon is required by the area office, such wages

will be paid by the developer." JA 510 (emphasis added). The letter makes no other mention of

wage rates.

2. Preliminary Approval: Grant Agreement

The City's UDAG application was successful. On October 4, 1984 HUD gave preliminary

approval to the application. JA 98. HUD and the City executed the Grant Agreement on December

27, 1984. JA 98.

The Grant Agreement expressly incorporates the September Letter as a rider thereto. The

rider liststhe documents contained in the City's application, including the September Letter. JA 120.

In Article X of the Agreement HUD expressly relies on the City's and, more importantly, the

developer's "representations" and "commitments."2 The developer's only "representations" and

"commitments" of record are those set forth in the September Letter. The Grant Agreement itself

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3The Grant Agreement provides in part: "the parties hereby agree to be bound by the terms of

the UDAG Agreement ... and the parties incorporate said UDAG Agreement into this

commitment by reference." JA 141. 

makes no mention of the Davis Bacon Act or wage rates. Accordingly, as of December 27, 1984 the

participating parties' only representation regarding the applicability of the Davis Bacon prevailing

wage requirement is the September Letter which commits the developer to pay prevailing wages if

required by the HUD Buffalo Office.

3. Final Approval: Legally Binding Commitment

In accordance with HUD regulations and the Grant Agreement, JA 106, on April 1, 1985 the

City entered into a "legally binding commitment" with the ALDC and the developer. JA 141-44.

Most of the LBC addressesthe mortgage agreements governing the project. Id. It also contains two

referencesrelevant to our inquiry. First, it contains the provision that the majority finds determinative

of the appeal: "Arbor Hill Associates agrees that it will require its Construction Manager and those

parties who are its prime and sub-contractorsto comply with the provisions of the Davis-Bacon Act."

JA 144 (emphasis added). Second, the LBC expressly incorporates the Grant Agreement, and, with

it, the September Letter.3

Extrinsic Evidence

The record contains other evidence that the developer did not, by signing the LBC, intend to

commit unconditionally to pay prevailing wages. On June 21, 1985 the developer signed a

construction contract with its contractor, Barry, Bette & Led Duke Residential, Inc., which required

the contractor to pay Davis Bacon prevailing wages "if applicable." JA 739. After signing the LBC,

Simmons continued to seek the statutory exemption in a series of letters "communicating increasing

urgency." Maj. Op. at 7; see August 22, 1985 letter, JA 710 ("We ... are in a rather peculiar position

since we do not yet know if Davis-Bacon wage standards apply to our project."). On August 30,

1985 the HUD Buffalo Office granted the developer the section 110 exemption, JA 174, and

constructionproceededwithwages being paid belowthose "prevailing," apparentlywithout objection

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4Affidavits opposing DOL's summary judgment motion also indicate that the parties to the

LBC did not intend that the developer be unconditionally committed to pay prevailing wages. 

Simmons's affidavit declares: "When I signed the Legally Binding Commitment (LBC) between

Vulcan and the City of Albany, it was understood and agreed to by Vulcan and the City that I

would apply for the Exemption from Davis Bacon." JA 740. An affidavit from an ALDC

employee states: "At the time of the execution of the LBC by the parties, it was understood by

the ALDC that the Developer was intending to attempt to secure an exemption from Davis-Bacon

provisions." JA 790. At the summary judgment stage, the non-movant's affidavits, even if

self-serving, must be considered. See Davis, 667 F.2d at 169 ("When reviewing a grant of

summary judgment, we are, of course, obliged to view the record in the light most favorable to

the party opposing the motion and to resolve all questions of inference in favor of that party."). 

5

It is far from clear when or how the developer learned of the February Letter. The majority

implies that the developer received a copy of the wage determination in February. See Maj. Op.

at 17 ("[i]n February, Arbor Hill, through the Albany Renewal Agency, was sent a letter")

(emphasis added). But the February Letter is addressed to AURA and does not show copies to

the developer or to ALDC. JA 463. ("Please furnish your architect/engineer a copy of this letter

and the wage decision."). From Simmons's affidavit we know that he was probably aware of the

February Letter before April 1st, the date the LBC was signed. JA 739. ("Prior to signing the

from the City or from ALDC.4

The majority places great, even critical, weight on a February 7, 1985 letter (FebruaryLetter)

from the Director of Labor Relations of the HUD Buffalo Office to AURA. Three months earlier,

in November 1984, soon after HUD had given preliminary approval to Albany's UDAG application,

the HUD Buffalo Office requested, apparentlyat the developer's urging, a "wage determination" from

the Department of Labor (DOL). JA 464. One day after the Grant Agreement was signed, the DOL

issued a wage decision applying prevailing wagesto the Arbor Hill project. JA 464; see also JA 442.

On February 7, 1985 the HUD Buffalo Office sent AURA a copy of the DOL wage decision with

instructions to incorporate it into contract specifications for prospective bidders. JA 463.

The majority concludes from the February Letter that the developer then knew that the

Buffalo Office intended to enforce Davis Bacon wages. Maj. Op. at 6 ("This letter put Arbor Hill

[the developer] on notice that the Department ofLabor believed Davis Baconwages applied, and that

HUD's Buffalo Office intended to enforce the application of Davis Bacon."). Its conclusion rests on

an inference made against the developer although, as earlier noted, at this stage the developer is

entitled to have factual inferences resolved in its favor. See Fed. R. Civ. P. 56(c). The inference is

that the parties to the LBC interpreted the February Letter to mean that "HUD's Buffalo Office

intended to enforce the application of Davis-Bacon." Maj. Op. at 6 (emphasis added).5 The February

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Legally Binding Commitment, the request for wage determination was informational in nature."); 

cf. JA 76 ("Both the developer and the prime contractor were provided a copy of the wage

determination at the preconstruction conference on April 3, 1985."). At that point, however,

Simmons believed it to be "informational" only. JA 739. 

6A comparison of the extrinsic evidence here with the evidence in Woodside Village v.

Department of Labor, 611 F.2d 312 (9th Cir. 1980), reveals why Woodside provides the majority

opinion little support. In Woodside, the developer signed both a construction contract and a

mortgage contract promising to pay prevailing wages. Id. at 314. In addition, the developer

submitted payroll reports to HUD maintaining, inaccurately, that he was paying prevailing wages. 

The court agreed with the DOL decision, "based on comprehensive findings," that the developer

"voluntarily and knowingly agreed to perform the contract in conformity with" the Act. Id. at

315-16. 

7The Grant Agreement, incorporated in the LBC, provides that: "provisions of this Grant

Agreement shall be governed by and construed in accordance with the laws of the Recipient's

State." JA 117. 

Letterindicatesthat the HUD Buffalo Office considered the wage determination to be DOL's decision

to apply Davis Bacon wages. See JA 463. On the other hand, HUD's subsequent granting of the

statutoryexemption (in September) casts doubt on the majority'sinterpretation ofthe FebruaryLetter

as manifesting HUD's intent to abandon any effort to apply the section 110 exemption. See JA 174.

It may well be, as the developer contends, App. Br. at 12 n.13, that HUD and ALDC and perhaps

even AURA, like the developer, considered the February Letter "informational." Again, at the

summary judgment stage, the facts and inferences are to be construed in the developer's favor.6

C. Interpreting Legally Binding Commitment: Applying Three Steps

Under New York contract law, it is beyond dispute that the Grant Agreement and the Legally

Binding Commitment form a single contract.7 Although signed several months apart and, in part, by

different parties, the latter expressly incorporates the former and they both cover the same subject

matter. More important, the "two are intertwined ... one would not exist without the other."

Commander Oil v. Advance Food Serv. Equip., 991 F.2d 49, 53 (2d Cir. 1993). The Grant

Agreement contains the "representation" that the City and the developer will "enter into legally

binding commitments" and the LBC constitutesthe fulfillment ofthat representation. See 6 Williston,

Contracts § 863 ("[T]he terms of agreement may be expressed in two or more separate documents,

some of them containing promises and statements as to their agreed consideration, and others, such

as deeds, mortgages and trust indentures, being performances agreed on rather than a statement of

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8The application (including the September Letter) was expressly made part of the grant

contract. See Grant Agreement Article I ("This agreement shall consist of this Grant Agreement

and the Application.") JA 101 (emphasis added); Article II ("In consideration of the various

obligations undertaken by the Recipient pursuant to this Grant Agreement, and in consideration of

the obligations to be undertaken by Participating Parties, as represented by the Recipient in the

Application, the Secretary agrees ... to provide the Recipient with grant funds.") JA 102

(emphasis added). 

9The majority agrees that the LBC incorporates the Grant Agreement containing the

September Letter's "contradictory statement." Maj. Op. at 15 n.9. Nevertheless, the majority

concludes that "the absolutely clear language in the LBC would have to be bent totally out of

shape to bring it into accord with the language of the September Letter." Id. (emphasis added). 

As already noted, one legitimate reading of the LBC's "comply with ... Davis-Bacon provision" is

that it commits Arbor Hill to "comply with the Buffalo Office's Davis-Bacon decision." The

majority provides not a single reason for rejecting this reading of the LBC. 

terms to be performed ... these documents should be interpreted together"). Accordingly, the

otherwise "unambiguous" Davis Bacon language contained in the LBC must be read together with

the Grant Agreement because the two documents together formed the contract.8

The contract's two Davis Bacon provisions appear to conflict. While, read alone, the LBC

language "comply with ... Davis-Bacon" unconditionally requires the developer to pay prevailing

wages, the LBC also incorporates the September Letter, via the Grant Agreement, stating "if Davis

Bacon isrequired by the area office,such wages will be paid by the developer." This provision makes

the developer's agreement to payprevailing wages depend on the decision ofthe HUD Buffalo Office.

Reading the contract "as a whole," I cannot but conclude that the LBC's "comply with the

provisions of the Davis-Bacon Act" language is ambiguous. Like the seller in Commander Oil, the

majority seizes on one broad phrase in one document. (Compare "[a]ll other litigation" with "comply

with ... Davis-Bacon"). Like the Commander Oil court, however, I believe that language in another

document that is part of the contract makes the otherwise unambiguous phrase ambiguous and thus

requires resort to extrinsic evidence. The contract's "if Davis-Bacon is required" language read

together with its "comply with ... Davis-Bacon" language may commit the developer to prevailing

wages onlyifthe HUD area office so required. On this reading, "comply with ... Davis-Bacon" means

"comply with the Buffalo Office's Davis-Bacon decision." It therefore takes far less than "contorted

semantic[s]," see Wards Co., Inc., 761 F.2d at 120, to claim that it is not "wholly unambiguous"

whether the developer agreed unconditionally to pay prevailing wages.9

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10Section 110(a) then provided:

All laborers and mechanics employed by contractors or subcontractors in the

performance of construction work financed in whole or in part with assistance

received under this chapter shall be paid wages at rates not less than those

prevailing on similar construction in the locality as determined by the Secretary of

Labor in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a-5); 

Provided that this section shall apply to the rehabilitation of residential property

only if such property is designed for residential use for eight or more families.

The Secretary of Labor shall have, with respect to such labor standards, the

authority and functions set forth in Reorganization Plan Number 14 of 1950 (15

Fed. Reg. 3176; 64 Stat. 1267) and section 276c of Title 40.

Housing and Community Development Act of 1974, Pub. L. No. 93-383, § 110, 88 Stat. 633,

649 (1974) (emphasis added). In 1988, Congress amended section 110, replacing "is designed for

residential use for eight or more families" with "contains not less than 8 units." Pub. L. No. 100-

242, § 523 (1988); see 42 U.S.C. § 5310. 

Because "the relevant provisions" are not "so straightforward that they can be read in but one

way," summary judgment based solely on the contract provisions is inappropriate. Davis, 667 F.2d

at 170. Nevertheless, the record contains too many gaps to grant summary judgment in favor of the

developer. Accordingly, I would remand the case to the district court for further proceedings on the

contract issue.

II. The Statutory Exemption

Remand is necessary because, in my opinion, without a contractual commitment, the

developer is exempt from the Davis Bacon prevailing wage requirement. At the time of the Arbor

Hill proposal, Section 110 of the Housing and CommunityDevelopment Act (section 110) exempted

a residential rehabilitation project from the prevailing wage requirement if the "property" to be

rehabilitated "is designed for residential use" by fewer than eight families.10 Because each property

in the Arbor Hill rehabilitation project was designed for residential use by fewer than eight families,

the developer is exempt from paying prevailing wages.

IfCongress answers "the precise question at issue, that intention isthe law and must be given

effect." Chevron, 467 U.S. at 843 n.9. To apply the Chevron "step one" test we first describe "the

precise question at issue" and then, "having studied the statutory text," id., decide whether Congress

answered the question. See Alabama Power Co. v. EPA, 40 F.3d 450, 454 (D.C. Cir. 1994) ("Our

primary inquiry is whether Congress has directly spoken to the question.") If Congress has answered

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11In the DOL administrative proceedings, JA 551, HUD argued that DOL's interpretation of

the statute was wrong. Nevertheless, HUD took the position that it must enforce the DOL

decision, apparently relying on section 110's reference to Reorganization Plan Number 14 of

1950. To that end, HUD directed the City to "cause the withholding of $700,000 from Vulcan's

3.5 million dollar UDAG for possible back wages." JA 643. As the Supreme Court has noted,

however, the "binding effect of the [Labor] Department's coverage determination on the

contracting agency is disputed." Universities Research Ass'n, v. Coutu, 450 U.S. 754, 760 n.9

(1981). 

12The district court, also without explanation, found ambiguity "apparent from the fact that a

central issue in this case concerns the reasonableness of the Board's interpretation of the term." 

JA 972. 

13"Accordingly, the Board concludes that the eight unit threshold in Sec. 110 for application of

Davis Bacon prevailing wage requirements to the rehabilitation of residential property refers to

the aggregate number of units in all the buildings being rehabilitated whenever they are commonly

owned, will be operated as a single project, and are situated either side-by-side or on contiguous

lots." JA 653. 

the very question at issue, "that is the end of the matter." Chevron, 467 U.S. at 842.

The pre-1988 version ofsection 110 exemptsfrom the prevailing wage requirement a project

involving "the rehabilitation of residential property" unless the property is "designed for residential

use for eight or more families." 42 U.S.C. § 5310(a). The issue is whether a developer who, acting

under a UDAG, rehabilitates multiple residential properties, none of which is designed for use by

more than seven families, must pay prevailing wages. The Wage Appeals Board, rejecting HUD's

contrary interpretation, held that section 110 did not exempt the developer from paying prevailing

wages.11

DOL's statutory interpretation relied on two conclusions. First, without explanation, DOL's

Wage Appeals Board announced that the language of section 110 is "ambiguous."12 JA 650. After

asserting ambiguity, the Board voiced its concern that, if the developer were exempt from paying

unionwages, "one rehabilitation contract for $1,000,000 coveringmanyresidentialbuildings on a one

owner tract of land ... connected by walks, enclosed by a fence and [ ] served by private roads and

common recreational facilities such as clubhouse, swimming pool, tennis courts and play ground

[would also be exempt from] Davis-Bacon wage rates." Id. DOL then interpreted section 110 so that

both the developer and the hypothetical complex would have to pay union wages.13

I am convinced that both DOL conclusions are wrong. First, and most significantly, section

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14An agency assertion of ambiguity does nothing to establish that the statute is in fact

ambiguous; we "must reject administrative constructions which are contrary to clear

congressional intent." Chevron, 467 U.S. at 843 n.9. 

15That the eighty-two individual properties were concurrently rehabilitated, were in the same

neighborhood and, to secure financing, were owned after renovation for a limited period by the

developer does not alter the fact that each property remained, and presumably remains to this day,

a separate "property." 

110 is not ambiguous.14 I find it impossible to read section 110 other than to express the clear

Congressionalintent to base the exemption on the "design[ed] use" ofthe "property." The Arbor Hill

"rehabilitation of residential property" rehabilitates eighty-two separate properties none of which is

"designed for residential use for eight or more families."15 In light of the "unmistakable conclusion

that Congress had an intention on the precise question at issue," Chevron, 468 U.S. at 843 n. 9, I

believe the developer is exempt from the prevailing wage requirement: that is "the end of our

inquiry." See Liberty MaritimeCorp. v. United States, 928 F.2d 413, 420 (D.C. Cir. 1991) (Buckley,

J., concurring).

Moreover, even though the proviso's clear text exemptsthe developer frompaying prevailing

wages, the statute would not similarly exempt DOL's hypothetical complex. If the residential

property to be rehabilitated is designed as a complex, the "property" is then designed for residential

use for eight or more families and the rehabilitation project would not be entitled to the section 110

exemption.

Conclusion

When contracting parties become litigating parties, the role of the court is to give effect to

the parties' intent as evidenced, if possible, by the text they agreed to. It plays a similar role when

interpreting statutory text. See Alabama Power, 40 F.3d at 454, quoting Chevron, 467 U.S. at 842-

43 (" "If the intent of Congressis clear, that isthe end of the matter.' "). Additionally, the court must

consider the entire document, be it a contract or a statute. See Alabama Power, 40 F.3d at 455

("Statutory text is to be interpreted to give consistent and harmonious effect to each of its

provisions.") This case illustrates the difference between contractual ambiguity and statutory clarity.

Because interpreting the "whole" contract renders the Davis Bacon language in the Legally

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Binding Commitment ambiguous, the district court must consider extrinsic evidence of the parties'

intent. Accordingly, I would remand to the district court to resolve whether the parties intended the

Legally Binding Commitment to preclude the developer from seeking an exemption from the Davis

Bacon prevailing wage requirement under section 110. On the other hand, section 110 is not

"ambiguous" because the text plainly states "property," not "an aggregation of properties," and no

"property" was designed to be used as a residence for eight or more families. If the parties did not

otherwise agree by contract to preclude the developerfromseeking a section 110 exemption, I would

hold the developer exempt from the Davis Bacon Act.

Accordingly, I dissent.

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