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Brandt Construction Co. v. Ludwig

September 21, 2007

BRANDT CONSTRUCTION COMPANY, ILLINOIS CORPORATION, PLAINTIFF-APPELLEE,
v.
ARTHUR LUDWIG, DIRECTOR OF THE DEPARTMENT OF LABOR, STATE OF ILLINOIS DEFENDANT-APPELLANT.



Appeal from the Circuit Court an for the 14th Judicial Circuit, Rock Island, Illinois, 04-CH-0025 The Honorable Jeffery W. O'Connor, Judge, Presiding.

The opinion of the court was delivered by: Justice McDADE

Published opinion

Defendant, Arthur Ludwig, Director of the Illinois Department of Labor, appeals from an order of the circuit court of Rock Island denying his motion to dismiss plaintiff Brandt Construction Company's complaint for declaratory and injunctive relief. Defendant also appeals from the circuit court's order granting Brandt's motion for summary judgment. Upon review, we affirm in part, reverse and vacate in part, and remand this matter for further proceedings.

FACTS

The Complaint On January 16, 2004, Brandt filed a complaint for declaratory and injunctive relief against the Director of the Department of Labor (Department). According to counts I through IV of its complaint, between December 2002 and June 2003, Brandt had performed four construction jobs under the contracts with certain cities -- Rock Island, Moline and Milan (Cities). With respect to each job, the complaint alleged that sometime after the contract date, the Department raised the prevailing rate of hourly wages applicable to Brandt's employees but that Brandt was not given notice of the increase. As a result of the lack of notice, Brandt failed to pay its employees at the prevailing wage. Brandt alleged that it had received letters from a Department labor conciliator directing it to pay accrued back wages and penalties, setting forth the amounts owed for each job -- approximately $23,190 in back wages and $4,638 in penalties in total for all four jobs.

Brandt contended that the Prevailing Wage Act (Act) (820 ILCS 130/0.01 et seq. (West 2004), required the Cities to provide Brandt with actual notice of an increase in the prevailing wage rate. Brandt argued that the Cities failed to comply with this statutory requirement. Based on this alleged failure, Brandt sought a declaration for each job that Brandt "does not owe the [Department] or [Brandt] employees any back wages resulting from the increased wage rates and [Brandt] does not owe any penalties, interest or liquidated damages." Brandt also sought an injunction (in count VI), asking the court to enjoin the Department from collecting back wages or other monies for the relevant construction jobs.

Another count of the complaint (count V) alleged that, with respect to two additional construction jobs for the City of Moline, the Department was auditing Brandt's payroll records. Brandt alleged that once the audits were completed, it expected the Department to take the position that Brandt had failed to pay the prevailing wage rate for these jobs as well. Reiterating its lack-of-notice defense, Brandt sought declaratory and injunctive relief prohibiting the Department from collecting unpaid wages or penalizing Brandt for non-compliance relating to these two Moline jobs.

Department's Motion to Dismiss

On February 24, 2004, the Director of the Department moved to dismiss Brandt's complaint. The Department argued that the case was premature as the Department had not initiated any proceedings to debar Brandt from other public works jobs; that Brandt failed to exhaust its administrative remedies; and that Brandt was improperly seeking a declaration of non-liability for past conduct. Brandt contested the Department's motion. Upon hearing argument, the circuit court entered an order dismissing Brandt's complaint, finding that "the action is premature and without exhaustion of administrative remedies."

Brandt's Motion for Reconsideration

On October 8, 2004, Brandt filed a motion asking the circuit court to reconsider its dismissal order and reinstate the complaint. The Department opposed the motion. Following argument, the circuit court entered an order granting Brandt's motion to reconsider and reinstating all but count V of Brandt's complaint. The court determined that the Department's letters directing Brandt to pay unpaid wages and penalties were "sufficient to demonstrate an actual controversy for the purposes of a declaratory judgment action." However, the court sustained the dismissal of count V of the complaint, which described two additional jobs the Department was still investigating, observing that "[m]atters under investigation do not rise to a 'controversy' for the purpose of declaratory relief."

Additionally, the court determined that Brandt need not exhaust its administrative remedies, but instead could properly maintain its declaratory judgment action. The court observed that while administrative agencies are given wide latitude in resolving factual issues, this case presents "a question of law for the Court to decide, the answer [to] which could foreclose needless litigation." Thus, the court reversed its earlier dismissal order and directed the Department to answer Brandt's complaint. The court also temporarily enjoined the Department from commencing proceedings against Brandt for alleged violations of the Act.

Subsequent Proceedings

The Department answered the complaint and Brandt filed a motion for permanent injunction on April 5, 2006. Brandt maintained that the Department should be permanently enjoined from pursuing any "administrative or legal remedy" against Brandt due to the Cities' failure to give Brandt actual notice of increases in the prevailing wage.

On April 20, 2006, Brandt filed a motion for summary judgment. Brandt contended that the Act requires public bodies to provide actual notice to contractors of prevailing wage increases, but that the Cities "did not provide Brandt with a notice that prevailing wage rates increased after the contracts were let to Brandt." Brandt relied on the testimony from certain Brandt representatives (who denied receiving actual notice) and testimony from various representatives of the Cities (who acknowledged not sending such notice). Based on the claimed lack of actual notice, Brandt argued that "it did not have [an] obligation to pay revised rates, penalties and interest."

On April 25, 2006, the circuit court held a hearing on Brandt's pending motions. While the Department filed a response opposing Brandt's motion for a permanent injunction, it requested additional time to respond to the summary judgment motion because that motion raised an additional issue -- the sufficiency of notice by ordinance -- that was not raised in the permanent injunction motion and therefore had not been addressed in the Department's response. The court denied the Department's request for an extension.

After hearing argument, the court granted both Brandt's motion for a permanent injunction and its motion for summary judgment. It stated in pertinent part:

"Actually, there's no facts at all to indicate that [Brandt] got actual notice. * * * The statute required notice, they didn't get it. And that's a very, very narrow issue of law."

The court followed its oral ruling with a written order entered the same day. The court determined that, under the Act, the Cities were required to notify Brandt of increases in the prevailing wage, but failed to provide adequate statutory notice. The court determined that neither "publication on the [Department] website" nor "passage of an ordinance by a municipality or other governmental body" satisfied the "notification requirement contemplated by statute." Specifically, the court stated:

"[B]randt, having not received any notice as to a revised prevailing wage, owes nothing in penalties, interest or liquidated damages. Whether plaintiff owes for back wages resulting from the increased wage rates are reserved for further hearing on that matter only and as not inconsistent with the Order herein."

The court proceeded to enjoin the Department from commencing any proceeding under "820 ILCS 130A" or seeking back wages under the Act. The Department now appeals.

ANALYSIS

This appeal calls us to review the statutory provisions contained within the Prevailing Wage Act (Act) (820 ILCS 130/0.01 et seq. (West 2004)) The stated policy of the Act is that "laborers, workers and mechanics employed by or on behalf of any and all public bodies engaged in public works" shall be paid "the general prevailing hourly rate as paid for work of a similar character in the locality in which the work is performed." 820 ILCS 130/1 (West 2004). The statute provides the public body awarding a contract for public work "shall ascertain the general prevailing rate of hourly wages in the locality in which the work is to be performed." 820 ILCS 130/4(a) (West 2004). The statute further states the following:

"The public body awarding the contract shall cause to be inserted in *** the contract a stipulation to the effect that not less than the prevailing rate of wages as found by the public body or Department of Labor or determined by the court on review shall be paid to all laborers, workers and mechanics performing work under the contract." 820 ILCS 130/4(a) (West 2004).

Additionally, to further "effectuate the purpose and policy of [the] Act each public body shall, during the month of June of each calendar year, investigate and ascertain the prevailing rate of wages." 820 ILCS 130/9 (West 2004). As to changes in the prevailing rate, the Act provides:

"If the Department of Labor revises the prevailing rate of hourly wages to be paid by the public body, the revised rate shall apply to such contract, and the public body shall be responsible to notify the contractor and each subcontractor, of the revised rate." 820 ILCS 130/4(d) (West 2004).

The statute also specifies the manner in which its provisions are to be enforced. In addition to criminal prosecution and suits by the state for injunctive relief, the Act also creates a right of action for the "laborer, worker or mechanic employed by" the contractor. 820 ILCS 130/6, 11 (West 2004). "The Department shall also have a right of action on behalf of any individual who has a right of action under this Section." 820 ILCS 130/11 (West 2004). With this statutory background in mind, we now turn our attention to the merits of the Department's appeal.

Declaratory Relief

The Department's first claim on appeal is that the circuit court erred in denying its motion to dismiss Brandt's complaint for declaratory relief. We review an order granting a motion to dismiss pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2004)) de novo. Mt. Zion State Bank & Trust v. Consolidated Communications, Inc., 169 Ill. 2d 110, 115, 660 N.E.2d 863, 867 (1995). On appeal, we must determine whether the allegations of the plaintiff's complaint, when construed in the light most favorable to him, are sufficient to establish a cause of action upon which relief may be granted. Connick v. Suzuki Motor Co., 174 Ill. 2d 482, 490, 675 N.E.2d 584, 588 (1996). All well-pleaded facts in the complaint must be considered as true. Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 86, 672 N.E.2d 1207, 1213 (1996).

The Department raises three grounds in support of its assertion that the circuit court erred in denying its motion to dismiss Brandt's complaint for declaratory relief. First, the Department argues that there is no actual controversy ripe for determination. Second, it claims Brandt is improperly seeking a declaration of non-liability for past conduct. And finally, it asserts dismissal is warranted on the basis that ...


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