Source: https://law.justia.com/cases/california/supreme-court/4th/2/962.html
Timestamp: 2019-10-16 06:54:04
Document Index: 441952307

Matched Legal Cases: ['§ 1720', '§ 810', '§ 472', '§ 472', '§ 1720', '§ 1770', '§ 1773', '§ 98', '§ 98', '§ 1194', '§ 815', '§ 814', '§ 818', '§ 818', '§ 815']

Aubry v. Tri-City Hospital Dist. (1992) :: :: Supreme Court of California Decisions :: California Case Law :: California Law :: US Law :: Justia
Justia › US Law › Case Law › California Case Law › Cal. 4th › Volume 2 › Aubry v. Tri-City Hospital Dist. (1992)
Aubry v. Tri-City Hospital Dist. (1992)
We granted review to decide whether Government Code section 815.6 provides a cause of action against a public entity that fails to comply with its obligations under the prevailing wage law. (Lab. Code, § 1720 et seq.) We conclude that the Court of Appeal was correct in holding that Government Code section 815.6 does not provide a cause of action in these circumstances. However, we also conclude that the Division of Labor Standards Enforcement (the DLSE) should be granted leave to amend its complaint to attempt to allege a cause of action under an alternative theory. [2 Cal. 4th 965]
Lusardi filed suit for declaratory and injunctive relief against the Director and the DLSE in November 1986 in the Orange County Superior Court. The DLSE cross-complained fn. 1 against the District, seeking declaratory relief and damages for violation of the prevailing wage law. In the main action, the trial court granted Lusardi's motion for summary judgment enjoining the DLSE from enforcing the public works law against it, its subcontractors, or the District. The Court of Appeal affirmed, and we granted review. In the separate opinion in the main action, Lusardi Construction Co. v. Aubry (1992) 1 Cal. 4th 976 [4 Cal. Rptr. 2d 837, 824 P.2d 643], this court held that when a public entity and a private contractor enter into an arrangement that is in substance a contract for a public work under the Labor Code but fails to provide for the payment of the prevailing wage for public works, the Director may seek statutory remedies for underpayment of the prevailing wage against the contractor. [2 Cal. 4th 966]
[2] On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. The [2 Cal. 4th 967] reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. (Blank v. Kirwan (1985) 39 Cal. 3d 311, 318 [216 Cal. Rptr. 718, 703 P.2d 58]; Buckaloo v. Johnson (1975) 14 Cal. 3d 815, 828 [122 Cal. Rptr. 745, 537 P.2d 865].) The court does not, however, assume the truth of contentions, deductions or conclusions of law. (Moore v. Regents of University of California (1990) 51 Cal. 3d 120, 125 [271 Cal. Rptr. 146, 793 P.2d 479].) The judgment must be affirmed "if any one of the several grounds of demurrer is well taken. [Citations.]" (Longshore v. County of Ventura (1979) 25 Cal. 3d 14, 21 [157 Cal. Rptr. 706, 598 P.2d 866].) However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. (Barquis v. Merchants Collection Assn. (1972) 7 Cal. 3d 94, 103 [101 Cal. Rptr. 745, 496 P.2d 817].) And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)
[3a] The DLSE contends that it has properly alleged a cause of action against the District under Government Code section 815.6. This statute [2 Cal. 4th 968] provides: "Where a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty."
In defining "injury" as it did, the Legislature set limits on the injuries for which public bodies are liable. The DLSE has not been able to direct us to [2 Cal. 4th 969] any authority establishing liability under the Tort Claims Act for an injury of this nature. In response to the District's argument that Government Code section 815.6 only applies to actions for negligent conduct, fn. 4 the DLSE points out that Government Code section 815.6 has been used to hold public entities liable for intentional violation of a mandatory duty. However, neither of the cases cited by the DLSE persuades us that section 815.6 should be extended to apply to the present situation. In Sullivan v. County of Los Angeles (1974) 12 Cal. 3d 710 [117 Cal. Rptr. 241, 527 P.2d 865], a sheriff falsely imprisoned the plaintiff. In Ramos v. County of Madera (1971) 4 Cal. 3d 685 [94 Cal. Rptr. 421, 484 P.2d 93], two children became physically ill after working in the fields when the defendant county's welfare department employees coerced several children to harvest grapes for private employers in violation of the child welfare laws. [4] (See fn. 5.) Thus, both cases relied on by the DLSE involve tort actions for personal injury "of such nature that it would be actionable if inflicted by a private person." (See Gov. Code, § 810.8.) fn. 5 [3b] It would be an unwarranted extension of the law to hold that Government Code section 815.6 was intended to impose liability for the failure of an awarding body to ensure that contractors paid their workers prevailing wages on a public works project. This is an injury that could not exist in an action between private persons, and so it is outside the scope of the Tort Claims Act. fn. 6 [2 Cal. 4th 970]
The trial court sustained the District's demurrer to the DLSE's second amended cross-complaint without leave to amend. [5] "Where the complaint is defective, '[i]n the furtherance of justice great liberality should be exercised in permitting a plaintiff to amend his complaint, and it ordinarily [2 Cal. 4th 971] constitutes an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable possibility that the defect can be cured by amendment. [Citations.]' " (Scott v. City of Indian Wells (1972) 6 Cal. 3d 541, 549 [99 Cal. Rptr. 745, 492 P.2d 1137]; see Code Civ. Proc., § 472c.) This abuse of discretion is reviewable on appeal "even in the absence of a request for leave to amend" (Scott, supra, 6 Cal.3d at p. 550, citing Code Civ. Proc., § 472c), and even if the plaintiff does not claim on appeal that the trial court abused its discretion in sustaining a demurrer without leave to amend. (Baldwin v. Marina City Properties, Inc. (1978) 79 Cal. App. 3d 393, 413-414 [145 Cal. Rptr. 406].)
Although the DLSE had the opportunity to amend the first amended cross- complaint, this leave to amend was granted for the sole purpose of permitting the DLSE to attempt to state a cause of action under Government Code section 815.6. It does not appear from these facts that the DLSE had a fair opportunity to amend its complaint to state a cause of action under any other legal theory. (See Larwin-Southern California, Inc. v. JGB Investment Co. (1979) 101 Cal. App. 3d 626, 635 [162 Cal. Rptr. 52]; Barquis v. Merchants Collection Assn., supra, 7 Cal.3d at p. 103.)
We conclude that the DLSE should be granted leave to amend its complaint to allege a cause of action on a third party beneficiary theory. Because the DLSE has not yet attempted to plead this cause of action, and since the trial court has not ruled on its merits, we believe that any discussion of the viability of such a claim would constitute an advisory opinion. Accordingly, we do not decide here, nor do we express any opinion concerning, whether the DLSE will be successful on any amended complaint which states such a cause of action. Instead, the matter should be remanded to give the DLSE the opportunity to attempt to do so. fn. 8 [2 Cal. 4th 972]
As we have recently noted in the companion to this case, Lusardi Construction Co. v. Aubry (1992) 1 Cal. 4th 976, 981 [4 Cal. Rptr. 2d 837, 824 P.2d [2 Cal. 4th 973] 643] (Lusardi), the prevailing wage law governs wages and other conditions of employment on public works, which includes any construction work "done under contract and paid for in whole or in part out of public funds ...." (Lab. Code, § 1720, subd. (a).) All workers employed on public works costing more than $1,000 must be paid not less than the general prevailing wage determined by the Director of the Department of Industrial Relations. (Lab. Code, §§ 1770, 1771 & 1774.) The public entity awarding a public works contract, "or otherwise undertaking any public work," is required to obtain the prevailing wage rate from the Director and to provide notice of the rates in its call for bids, bid specifications, and contract, either by reciting the rates themselves or by specifying that the rates are on file in its office. (Lab. Code, §§ 1773, 1773.2.)
When this arrangement came to the attention of the DLSE, it filed an action against the District to recover the prevailing wages that were not paid as a result of the District's failure to comply with its obligations under the prevailing wage law. fn. 1 Although the Labor Code authorizes actions by the DLSE on behalf of workers to collect wages (Lab. Code, § 98.3), it does not expressly establish a cause of action by the DLSE against an awarding body. Thus, in its second amended cross-complaint the DLSE sought to state a [2 Cal. 4th 974] cause of action against the District for breach of a mandatory duty under Government Code section 815.6, a part of the Tort Claims Act. fn. 2
We held in Lusardi, supra, 1 Cal.4th at pages 986-988, that the obligation of a contractor to pay the prevailing wage on a public works project arises [2 Cal. 4th 975] separately from statute and from contract. The Legislature has recognized that individuals who are owed unpaid wages by employers have "valid and enforceable" claims against those employers that they may pursue independently or that the DLSE may pursue on their behalf. (Lab. Code, § 98.3, subd. (a). fn. 3 ) And, as we noted in Lusardi, the legislative history of the prevailing wage law shows that the Legislature intended remedies against the contractor for violation of the prevailing wage law to be cumulative and nonexclusive. (Lusardi, supra, 1 Cal.4th at p. 988, fn. 3.)
The majority's claim is untrue because an action against a contractor for the payment of statutorily required wages is not dependent on a contractual agreement to pay statutorily required wages. We so held in Lusardi, supra, 1 Cal. 4th 976, in the context of an action between a contractor and the Director of the Department of Industrial Relations. The same is true when a worker sues a contractor directly.
An example demonstrates the error of the majority's claim. An employer and an employee agree that the employee will work for the employer at a wage less than the prevailing wage. The employee then discovers that the wage the employee has agreed to is less than that required by statute. If the employee could sue only for breach of contract, the employee would have no [2 Cal. 4th 976] right of action, because the employer did not violate the contract. The employer, however, did violate the statute by paying less than the prevailing wage. In that situation, the employee has a statutory right of action. (Lab. Code, § 1194, subd. (a). fn. 4 ) The action is statutory in nature, and not contractual, because " 'the liability would not exist but for the statute, and the obligation is created by law in the absence of an agreement.' " (Aubry v. Goldhor, (1988) 201 Cal. App. 3d 399, 404 [247 Cal. Rptr. 205].)
The District advances several other grounds on which it asserts that its demurrer to the DLSE's complaint was properly sustained. I have reviewed those arguments, and have determined that they lack merit. But because the majority does not discuss additional arguments made by the District, I decline to address them here. fn. 5 [2 Cal. 4th 977]
FN 1. Technically, the cross-complainant is Lloyd W. Aubry, Jr., as Labor Commissioner etc. For the purpose of clarity, the cross-complainant is referred to as "the DLSE" throughout.
FN 2. We have no occasion in this case to decide whether the trial court was correct in sustaining the District's demurrer to the DLSE's first amended cross-complaint. Rather than appealing the trial court's order, the DLSE chose to amend its complaint. By doing so, it waived its right to appeal any error in the sustaining of the first demurrer. (See Sheehy v. Roman Catholic Archbishop (1942) 49 Cal. App. 2d 537, 540-541 [122 P.2d 60].) Accordingly, the question of whether the Labor Code provides a cause of action against an awarding body for prevailing wages and penalties is not before us.
FN 3. The trial court stated in its order that the demurrer was sustained because the action was time barred and "[f]or the reasons set forth in Cross-Defendant's points and authorities."
FN 4. The California Law Revision Commission Comment following this statute states, "This section declares the familiar rule, applicable to both public entities and private persons, that failure to comply with applicable statutory or regulatory standards is negligence unless reasonable diligence has been exercised in an effort to comply with those standards." (Cal. Law Revision Com. com., Deering's Ann. Gov. Code, supra, § 815.6, p. 157.)
FN 5. Contrary to the dissent's bald assertion that a worker may proceed directly against a contractor who has not agreed to pay the statutory prevailing wages, this court has not yet had the opportunity to decide that issue. Lusardi Construction Co. v. Aubry, supra, 1 Cal. 4th 976, established that the DLSE can proceed against the contractor under Labor Code section 1775 for prevailing wages even where the contractor has not agreed to pay those wages. We did not address whether the workers have a right of action against the contractor.
However, even if such an action is available, it does not bring the present action within the scope of the Tort Claims Act. Any action by a worker against a contractor for wages must necessarily be based on the worker's contractual relationship with the contractor, for absent an express or implied contractual relationship with the worker, the contractor has no duty to pay that worker any wages, let alone statutory prevailing wages. Thus, a worker's action against an employer for unpaid statutorily required wages sounds in contract. (See Longshore v. County of Ventura, supra, 25 Cal.3d at pp. 22-23 and cases cited therein.) As we recently stated in a unanimous decision, "[t]he Tort Claims Act is a comprehensive statutory scheme that sets forth the liabilities and immunities of public entities and public employees for torts." (Kizer v. County of San Mateo (1991) 53 Cal. 3d 139, 145 [279 Cal. Rptr. 318, 806 P.2d 1353], italics in original.) The Tort Claims Act was not intended to address injuries to contractual interests. (See Gov. Code, § 814.)
FN 6. The Court of Appeal stated as an additional reason for rejecting the DLSE's claims that the Tort Claims Act's definition of injury does not include injury to rights created by statute where those rights are of the type that did not exist at common law. However we have no reason, in this case, to decide that question.
FN 7. Because we conclude that Government Code section 815.6 does not provide a cause of action for either the shortfall in wages or the penalties, we need not consider whether the DLSE's action was barred in large part by the statute of limitations, which formed an alternate basis for the Court of Appeal's decision and for the trial court's ruling on the demurrer. Nor do we need to reach the question of whether either public entity's immunity from punitive damages (Gov. Code, § 818) or immunity for an employee's misrepresentation (Gov. Code, § 818.8) protects the District from liability in this case.
FN 8. We note that in Lusardi Construction Co. v. Aubry, supra, 1 Cal. 4th 976, this court held that the DLSE may proceed against Lusardi under the prevailing wage law to recover the unpaid wages. Obviously, if this case goes forward, the DLSE may not recover for the same injury twice. (See Witt v. Jackson (1961) 57 Cal. 2d 57, 73 [17 Cal. Rptr. 369, 366 P.2d 641].) In such a case, the trial court may consider staying proceedings in one action while the other action is proceeding.
FN 1. Nominally, the cross-complainant in this action is Lloyd W. Aubry, Jr., chief of the DLSE and Labor Commissioner. For convenience, the cross-complainant is referred to as "the DLSE" in this opinion.
FN 2. Government Code section 815.6 provides: "Where a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty."
FN 3. Labor Code section 98.3, subdivision (a) provides:
FN 4. Labor Code section 1194, subdivision (a) provides: "Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney's fees, and costs of suit."
FN 5. I note, however, that the majority correctly concludes that the DLSE is not authorized to seek recovery under the Tort Claims Act of statutory penalties a contractor would be required to pay under Labor Code section 1775. Because a worker injured by a contractor's failure to pay the prevailing wage could not recover statutory penalties in addition to unpaid wages in an action against the contractor, the DLSE, acting on the worker's behalf under the Tort Claims Act, cannot recover the penalties either. (Gov. Code, § 815.6.)