Court Opinion

ID: 9560908
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:59:02.81925+00
Date Added: 2024-06-11T09:13:19.780520
License: Public Domain

ARABIAN, J., Concurring and Dissenting.
Although I agree that the obligation to pay prevailing wage derives from statute as well as contract *1005and that the Director of the Department of Industrial Relations (the Director) retains the inherent and necessary authority ultimately to determine a project’s public work status, I cannot support the majority’s refusal to accord Lusardi Construction Company (Lusardi) a modicum of fairness under this scenario. In my view, the circumstances “clearly establish that a grave injustice would be done if an equitable estoppel were not applied.” (Cal. Cigarette Concessions v. City of L. A. (1960) 53 Cal.2d 865, 869 [3 Cal.Rptr. 675, 350 P.2d 715].) I would, therefore, affirm the judgment of the Court of Appeal.
The stipulated facts establish that the contract between Lusardi and Imperial Municipal Services Group, Inc. (Imperial) did not contain any reference, to the status of the expansion project as a public work or to any obligation to pay prevailing wages; that Lusardi inquired as to the nature of the project, expressly declining to enter into a public works contract; that in response the Tri-City Hospital District (the District) gave assurances, based on representations of its legal counsel, that the construction was private and no prevailing wage or payroll record obligations obtained; that Lusardi premised its agreement with Imperial upon those assurances and representations; and that in so doing Lusardi acted in good faith. Lusardi did all a business could do.
A simple recitation of these facts should thus suffice to confirm the right to invoke equitable estoppel: Lusardi acted to its detriment in justifiable reliance upon the inaccurate representations of a governmental agency charged with implementation and enforcement of the law. Nevertheless, the majority demur based upon an asserted lack of privity between the Director and the District and the potential nullification of “a strong rule of policy adopted for the benefit of the public.” (Maj. opn., ante, pp. 994-995.)
To reach its conclusion, the majority analysis hews to the “elements” of equitable estoppel. (See City of Long Beach v. Mansell (1970) 3 Cal.3d 462, 489 [91 Cal.Rptr. 23, 476 P.2d 423].) Dispensing equitable relief, however, depends upon a measure of flexibility as well as fairness and must accommodate compelling circumstances that may not precisely conform to “the rigid rules of law.” (Bechtel v. Wier (1907) 152 Cal. 443, 446 [93 P. 75].) “Equity does not wait upon precedent which exactly squares with the facts in controversy, but will assert itself in those situations where right and justice would be defeated but for its intervention.” (Times-Mirror Co. v. Superior Court (1935) 3 Cal.2d 309, 331 [44 P.2d 547]; Bisno v. Sax (1959) 175 Cal.App.2d 714, 729 [346 P.2d 814] [“ ‘no inflexible rule has been permitted to circumscribe the power of equity to do justice’ ”]; cf. Farina v. Bevilacqua (1961) 192 Cal.App.2d 681, 685 [13 Cal.Rptr. 791] [inability to restore precise status quo not invariable bar to rescission]; Nadell & Co. v. Grasso *1006(1959) 175 Cal.App.2d 420, 431 [346 P.2d 505] [“peculiar, and perhaps unique, facts” justified enforcement of restrictive covenant as to services; equitable servitudes not limited to chattels].)
Moreover, I am unpersuaded under the facts that equity should not charge the Director with the consequences of the District’s conduct. As head of the Department of Industrial Relations, the Director assumes primary responsibility for determining, monitoring, and enforcing prevailing wage laws on public works. (See generally Lab. Code, § 1770 et seq.) The awarding body has interrelated notification and implementation obligations pursuant to which it works in conjunction with the Director to ensure compliance. (See, e.g., Lab. Code, §§ 1773.2, 1773.3, 1773.4, 1775, 1776; cf. City and County of San Francisco v. Grant Co. (1986) 181 Cal.App.3d 1085, 1092 [227 Cal.Rptr. 154] [city not acting as arm or agent of state in failing to enforce building code regulations since city had initial and independent enforcement responsibility within its territory].) The statutory scheme thus contemplates a confluence of governmental interests and duties sufficient in my estimation to establish privity. (See Lemer v. Los Angeles City Board of Education (1963) 59 Cal.2d 382, 397-399 [29 Cal.Rptr. 657, 380 P.2d 97], and cases cited at fn. 10.) In finding to the contrary, the majority rely on the fact that the District in actuality assumed a position antagonistic to the Director. Lusardi, however, had no reason to anticipate such an eventuality, whereas the Director could well have taken measures to forestall the possibility. (See Lab. Code, § 1773.5 [Director may “establish rules and regulations for the purpose of carrying out this chapter, including, ... the responsibilities and duties of awarding bodies”].) Lusardi should not bear the burden of the Director’s default in failing to maintain adequate administrative controls over awarding bodies that share responsibility for implementing and enforcing prevailing wage laws.1
Furthermore, the Director retains the inherent authority to characterize a given project as a public work thereby invoking the obligation to pay *1007prevailing wages. (Maj. opn., ante, pp. 988-989.) Accordingly, at any and all times the Director could have intervened, notified Lusardi that the project constituted a public work, and mandated wage and reporting compliance. Cynically, I note such intervention did not occur until Lusardi had substantially completed the project in reliance upon contractual provisions and express representations by a governmental agency to the contrary. “[Njegligence or silence in the face of a duty to speak may suffice [to invoke estoppel], [Citation.]” (City and County of San Francisco v. Grant Co., supra, 181 Cal.App.3d at p. 1091; see also Dettamanti v. Lompoc Union School Dist. (1956) 143 Cal.App.2d 715, 721 [300 P.2d 78]; cf. People v. Department of Housing & Community Dev. (1975) 45 Cal.App.3d 185,195-196 [119 Cal.Rptr. 266] [comparing estoppel and laches]; 11 Witkin, Summary of Cal. Law (9th ed. 1990) Equity, § 14, pp. 690-692 [defense of laches].) While the District’s misfeasance may have instigated this predicament, the Director’s nonfeasance perpetuated it to Lusardi’s detriment.
As to the majority’s policy argument, I cannot agree that the Legislature enacted the prevailing wage laws “for the benefit of the public.” (See County of San Diego v. Cal. Water etc. Co. (1947) 30 Cal.2d 817, 826-828 [186 P.2d 124, 175 A.L.R. 747].) Whatever incidental salutary effect the general public may derive, in the words of the majority, “[t]he overall purpose of the prevailing wage law is to protect and benefit employees on public works projects.” (Maj. opn., ante, p. 985; see Lab. Code, § 90.5, subd. (a); O. G. Sansone Co. v. Department of Transportation (1976) 55 Cal.App.3d 434, 458 [127 Cal.Rptr. 799]; cf. 11 Witkin, Summary of Cal. Law, supra, Equity, § 183, at pp. 864-866, and cases cited therein [“no estoppel where it would defeat operation of a policy protecting the public”].) As between the two, the District, not Lusardi, had the primary statutory obligation to safeguard the interests of employees with respect to minimum labor standards. (See Lab. Code, § 1720 et seq.) Indemnification notwithstanding, I see no public policy fostered by requiring a nondefaulting party to assume that responsibility.2 (Waters v. Division of Labor Standards Enforcement (1987) 192 Cal.App.3d 635, 641-642 [237 Cal.Rptr. 546].)
As the Court of Appeal below summarized, “We have here a fact situation which shouts estoppel.” If no equitable mechanism exists by which Lusardi can extricate itself from the very litigation it attempted in good faith to avoid, then rectitude and fair dealing have ceased to function within our judicial framework. Regrettably, the chancellor’s conscience has fallen victim to the very rigidity of the rule of law it should seek to ameliorate. (See *1008Bechtel v. Wier, supra, 152 Cal. 443, 446; City of Los Angeles v. Cohn (1894) 101 Cal. 373, 376-378 [35 P. 1002].)

 Whether based on equity or otherwise, this court does not lack precedent for holding one governmental agency accountable for the actions of another. (See, e.g., People v. Sims (1982) 32 Cal.3d 468, 481-482 [186 Cal.Rptr. 77, 651 P.2d 321] [criminal charges of welfare fraud dismissed on collateral estoppel after evidence found insufficient in administrative hearing; “The People cannot now take advantage of the fact that the County avoided its litigation responsibilities and chose not to present evidence at the prior proceeding.”]; Kellett v. Superior Court (1966) 63 Cal.2d 822, 827-829 [48 Cal.Rptr. 366, 409 P.2d 206] [under Pen. Code, § 654, misdemeanor conviction will generally bar felony prosecution based on same act or course of conduct even when crimes are prosecuted by different public law offices]; Lucido v. Superior Court (1990) 51 Cal.3d 335, 351-352 [272 Cal.Rptr. 767, 795 P.2d 1223, 2 A.L.R.5th 995] [for reasons of public policy collateral estoppel does not preclude criminal prosecution after People fail to establish violation of probation based on same underlying conduct].)

In no respect do the facts imply a case of unjust enrichment or an unfair profit by Lusardi at the expense of employees who may otherwise have been entitled to a higher wage. Lusardi and the District premised their negotiations and the final terms of the contract on the absence of any prevailing wage obligations.