Opinion
A134518
08-15-2013
INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 595, Plaintiff and Appellant, v. B SIDE, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Alameda County
Super. Ct. No. RG 11-577568)
I.
INTRODUCTION
The International Brotherhood of Electrical Workers, Local 595 (the Union) commenced this action in an effort to enforce a stop notice, and to recover $159,262.72 against B Side, Inc. (B Side), the primary contractor on a construction project for the Oakland Unified School District (the School District). The Union appeals after the trial court granted B Side's motion for judgment on the pleadings without leave to amend based on the trial court's finding that the Union had failed to establish standing to enforce the stop notice on a public work of improvement. We conclude that while the trial court's finding was correct based on the allegations made in the Union's original complaint, this case must be reversed and remanded because the trial court abused its discretion by granting the motion without leave to amend. The Union should be allowed an opportunity to remedy deficiencies in its complaint, such as adding: (1) additional named plaintiffs; (2) allegations clarifying the basis for the Union's argument that it was a proper claimant under the stop-notice statutes because it conferred "skill or other necessary services on" the project (§§ 3110; 3181); and (3) allegations attempting to fit within the statutory definition of "laborer" (§ 3089, subd. (b)). Consequently, we reverse with directions to grant the motion with leave to amend.
The trial court's decision was based on the stop-notice statutes in the Civil Code that were in effect at the time. Since then, the entirety of Title 15, Civil Code sections 3082-3267, has been repealed by the Legislature and replaced with a new Part 6 to Division 4 of the Civil Code, sections 8000 to 9566, effective July 1, 2012. (Stats. 2010, ch. 697, § 16.) Under current Civil Code section 8052, subdivision (b), "the effectiveness of a notice given or other action taken on a work of improvement before July 1, 2012, is governed by the applicable law in effect before July 1, 2012, and not this part." Therefore, unless otherwise indicated, all statutory references are to the former Civil Code, which was in effect at all times material to this appeal.
As we note below, although we are reversing to allow the Union an opportunity to amend its complaint we do not reach any conclusions at to whether such amendments will cure the standing issues raised by the parties, nor do we intend to imply that any potential amendment will adequately plead legal standing.
II.
FACTS AND PROCEDURAL HISTORY
The School District hired B Side as the primary contractor to replace the fire alarm system at Roosevelt Middle School (the project). The parties entered into a "Project Labor Agreement" (PLA), which was negotiated by the Union, governing the wages and hours, and terms and conditions of employment for the project. Zoom Electric, Inc. (Zoom Electric) was hired by B Side as an electrical subcontractor. Zoom Electric, a non-Union electrical contractor, also agreed to be bound by the terms of the PLA while performing work on the project.
The PLA set forth certain requirements for hiring workers for the project, including that contractors must hire Union members who are out of work, in a one-to-one ratio with the contractor's own employees, until the contractor has a sufficient crew for the job. The hiring of Union members must take place through the Union's referral system.
All contractors who were signatories to the PLA were also obligated to provide wages and benefits at certain specified rates, in accordance with the PLA. Contractors also agreed to "pay contributions to the established vacation, pension or other form of deferred compensation plan, apprenticeship, and health benefit funds for each hour worked on the Project" in certain specified amounts.
The PLA also established a "Grievance Arbitration Procedure." Under this procedure, if parties were unable to resolve a dispute arising "out of the meaning, interpretation or application of the provisions of [the PLA]" by meeting and conferring about the dispute, they were required to submit the dispute to the Joint Administrative Committee (JAC), which must attempt to resolve the grievance.
On December 20, 2010, a Union representative visited Roosevelt Middle School and observed Zoom Electric employees working without any accompanying Union workers. The Union subsequently initiated the PLA grievance procedure against Zoom Electric, alleging that Zoom Electric failed to comply with the PLA's referral process. The Union demanded payment for the wages that should have gone to Union workers and for employee benefit contributions for all hours Zoom Electric employees worked on the project.
The JAC held a hearing on January 31, 2011, and eventually issued an award in the Union's favor. The JAC's award against Zoom Electric implicated two separate sets of workers. The JAC awarded $116,299.36 to "workers on the [Union's] Available for Work list" for hours that they should have been working on the project but were not because of Zoom Electric's failure to abide by the PLA's worker referral provisions. The JAC also made a $42,963.36 award "on behalf of employees of Zoom Electric, Inc. . . . to the [employee benefit] Trust Funds" for the hours that the Zoom Electric employees did in fact work on the project and for which they were entitled to have a fringe benefits contributions made on their behalf to the employee benefit trust funds.
Although Zoom Electric sought to vacate the award against it, we have taken judicial notice of the recent decision by the United States District Court for the Northern District of California rejecting Zoom Electric's challenge and confirming the JAC's award. (Zoom Electric, Inc. v. International Brotherhood of Electrical Workers, Local 595 (N.D. Cal., March 20, 2012) 2012 WL 951778.)
The persons and entities awarded monetary compensation in the JAC proceeding--the employee benefit trust funds and the 254 individual union employees who were available to work on the project— then filed a timely stop notice with the School District pursuant to section 3186, thereby intercepting an amount sufficient to cover the stop-notice claim.
The Union filed this action against B Side and the School District to enforce the stop-notice claim. B Side moved for judgment on the pleadings, and the trial court granted the motion because the Union, the only named plaintiff, was not a proper party to bring this action. The trial court found that the Union "was not statutorily authorized to use the stop[-]notice procedure to enforce its claim" because the Union had not performed work on the project and was not among those entitled to the benefit of the stop-notice remedy, citing sections 3110 and 3181.
The School District has been dismissed as a defendant.
III.
DISCUSSION
A. Standard of Review
" 'In an appeal from a motion granting judgment on the pleadings, we accept as true the facts alleged in the complaint and review the legal issues de novo. "A motion for judgment on the pleadings, like a general demurrer, tests the allegations of the complaint or cross-complaint, supplemented by any matter of which the trial court takes judicial notice, to determine whether plaintiff or cross-complainant has stated a cause of action. [Citation.] Because the trial court's determination is made as a matter of law, we review the ruling de novo, assuming the truth of all material facts properly pled." ' [Citation.]" (Rice v. Center Point, Inc. (2007) 154 Cal.App.4th 949, 954.) Furthermore, "to the extent the trial court's decision depends on the proper construction of [statutory provisions], as here, the issue is a question of law, which we review de novo. [Citations.]" (Zhou v. Unisource Worldwide (2007) 157 Cal.App.4th 1471, 1476.)
Because we review the trial court's decision de novo, we affirm the judgment if it is correct for any reason, regardless of the trial court's stated reasons. (See Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) This aspect of our review renders irrelevant many of the Union's arguments claiming the trial court misinterpreted the facts and cited inapplicable law in determining the Union was not a proper party to bring the stop-notice enforcement proceeding. The trial court's reasoning, even if incorrect, is irrelevant, so long as we agree with its result. (Scott v. City of Del Mar (1997) 58 Cal.App.4th 1296, 1305 [we review the trial court's order, not its reasoning, and affirm an order if it is correct on any theory apparent from the record].)
Additionally, the trial court has discretion to grant the motion for judgment on the pleadings with or without leave to amend. (Code Civ. Proc., § 438, subd. (h)(1).) That discretion "must be exercised liberally in favor of amendment where [the motion] is interposed to an initial complaint." (Powers v. Ashton (1975) 45 Cal.App.3d 783, 790 (Powers).) "If there is a reasonable possibility a . . . defect could be cured by amendment, it is ordinarily an abuse of discretion to deny leave to amend, a drastic step which leads to complete termination of the pleader's action. [Citation.]" (Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768; accord, Camacho v. Automobile Club of Southern California (2006) 142 Cal.App.4th 1394, 1398, fn. 4 [same rule in context of judgment on pleadings].)
B. General Principles Governing the Union's Standing
"[T]he Legislature has, on public works projects, provided the stop-notice procedure . . . for intercepting funds due from a public agency to the contractor." (Sunlight Elec. Supply Co. v. McKee (1964) 226 Cal.App.2d 47, 50.) In general, on public works projects, a laborer not paid the wages due him, or a trust fund not paid the fringe benefit portion of a worker's compensation, may file a stop notice which prevents the awarding body from paying the general contractor in full. (§ 3181.)
B Side argues, without supporting authority, that technical noncompliance with the stop-notice procedural requirements—the counter-affidavit was not signed under penalty of perjury and there was no proof service—should somehow result in the draconian sanction of dismissal of the Union's action to enforce the stop notice. As far as we can tell, the adequacy of the stop-notice claim has never been questioned until now. Given that there is no dispute that the stop notice was properly and timely served and no prejudice has resulted from failing to strictly comply with the procedural requirements for filing a stop notice, we reject B Side's request for dismissal on this ground.
Once a stop notice is filed by a claimant with the appropriate public entity, that entity is required by section 3186 to withhold the amount claimed together with sufficient funds to cover litigation and court costs. The primary contractor is then entitled to payments "in excess of an amount sufficient to answer the total amount of the claims stated in stop notices on file at the time of such payment . . . ." (§ 3187.) In this case, the School District withheld $199,078.40 from B Side, the prime contractor, which is an amount sufficient to cover the stop-notice claim and the reasonable cost of any related litigation. (§ 3186.)
As noted, the stop-notice enforcement action was filed by the Union as the sole plaintiff on its own behalf, alleging it was enforcing "its claim to funds withheld . . . pursuant to a stop notice." (Italics added.) B Side emphasizes "the Stop Notice claimants were the Trust Funds and a list of union workers, not the Union," nevertheless, the Union did not file this action in any representative capacity. (Original italics.) In addition, B Side points out the Union "plead no other basis upon which standing might be proper, such as an assignment of rights by the Union members on the available to work list."
The Union claims that even if it cannot establish direct standing to bring this action, it has "organizational standing" to assert the rights of the stop-notice claimants—the employee benefit trust funds and the individual Union workers who were available, but not called, to work on the project. The general rule is that litigants seeking relief must assert their own legal rights rather than rely on the rights or interests of third parties. (See, e.g., Matrixx Initiatives, Inc. v. Doe (2006) 138 Cal.App.4th 872, 877; Independent Roofing Contractors v. California Apprenticeship Council (2003) 114 Cal.App.4th 1330, 1341.) However, in certain circumstance, a voluntary membership organization, such as a union, may have standing to file an action on behalf of its affiliated entities and some or all of its members. Warth v. Seldin (1975) 422 U.S. 490, 511; Property Owners of Whispering Palms, Inc. v. Newport Pacific, Inc. (2005) 132 Cal.App.4th 666, 672-673 (Property Owners).) " '[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. [Citations.]' "(Property Owners, at pp. 672-673, quoting Hunt v. Washington State Apple Advertising Comm'n (1977) 432 U.S. 333, 343; see Brotherhood of Teamsters & Auto Truck Drivers v. Unemployment Ins. Appeals Bd. (1987) 190 Cal.App.3d 1515, 1521-1522.)
C. Employee Benefit Trust Funds We first address whether the employee benefit trust funds would have standing to sue in their own right. Section 3181 identifies the workers and entities who are entitled to bring a stop-notice proceeding for a public project. (Department of Industrial Relations v. Fidelity Roof Co. (1997) 60 Cal.App.4th 411, 423.) It provides, in pertinent part: "Except for an original contractor, any person mentioned in Section 3110, 3111, or 3112 . . . or furnishing provisions, provender, or other supplies, may serve a stop notice upon the public entity responsible for the public work in accordance with this chapter." As so defined, "person[s]" eligible to file a stop notice under section 3181 include section 3111 trust funds. Section 3111 provides: "For the purposes of this chapter, an express trust fund established pursuant to a collective bargaining agreement to which payments are required to be made on account of fringe benefits supplemental to a wage agreement for the benefit of a claimant on particular real property shall have a lien on such property in the amount of the supplemental fringe benefit payments owing to it pursuant to the collective bargaining agreement." (Italics added).
As our Supreme Court explained in (Carpenters So. Cal. Admin. Corp. v. El Capitan Development Co. (1991) 53 Cal.3d 1041, 1052 (Carpenters), "In essence, section 3111 creates a new state cause of action for the collection of contributions owed to benefit plans and makes an additional entity liable for such contributions." Undoubtedly, section 3111 provides a cause of action to the employee benefit trust funds, listed as claimants in the stop notice, to initiate enforcement proceedings on their own behalf. This point is effectively conceded by B Side in making the following argument: "Section 3111 entitles a trust fund not a union to engage in the Stop Notice procedure to recover unpaid fringe benefits. (Original italics.)"
The stop-notice procedure "creates a new substantive right against the property of a third party . . . and, thus, goes beyond a mere means of enforcing a judgment. [Citation.]" (Carpenters, supra, 53 Cal.3d at p. 1055.) Therefore, we reject B Side's claim that the stop-notice procedure is being improperly used to enforce an arbitration award to which B Side was not a party.
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The employee benefit trust funds are not parties to this proceeding. As noted by the Ninth Circuit, an employee benefit trust fund is "a distinct and independent entity separate from the union that negotiates the collective bargaining agreement establishing a trust. [Citation.]" (Waggoner v. Dallaire (9th Cir. 1981) 649 F.2d 1362, 1368; accord, Provience v. Valley Clerks Trust Fund (1984) 163 Cal.App.3d 249, 259, fn. 5 ["the [employee benefit trust] Fund and the union are separate legal entities"].) Moreover, the PLA attached as an exhibit to the complaint reflects that the Union was not entitled to collect employee benefit contributions on the trust funds' behalf. Instead, the PLA required the contractors to pay contributions directly the trust funds, not the Union.
The Union has not filed, nor has it been provided with an opportunity to file, an amended complaint to cure any defects in its operative, and only, complaint. The Union claims, "Assuming for the sake of argument that [the Union] does not have standing to bring this suit under applicable laws, it is undisputed that the trust funds, listed as claimants in the stop notice, do have standing to enforce a stop notice under section 3111 . . . . Joining the trust funds as plaintiffs in this action is an amendment that the trial court could have easily granted." We agree.
"An action is sometimes brought by a plaintiff without the right or authority to sue, and the amendment seeks to substitute the real party in interest. Although the original complaint does not state a cause of action in the plaintiff, the amended complaint by the right party restates the identical cause of action, and amendment is freely allowed. [Citation.]" (5 Witkin, Cal. Procedure (5th ed. 2008 & 2013 supp.) Pleading, § 1223, p. 658, italics added.) The Union's failure to bring the employee benefit trust funds into the case could have been easily cured by an amended pleading; and leave to amend should have been granted. (See Powers, supra, 45 Cal.App.3d at p. 790 [reversal on appeal with directions to permit amendment of complaint to name the trustees of a trust as plaintiff in place of the administrator of the trust, who lacked standing].)
D. Bestowing Skill or Other Necessary Services—Awarding Wages for Unperformed Work
While there is no question that the employee benefit trust funds have standing to sue in their own right in this stop-notice enforcement proceeding, application of section 3181 is not so straightforward when it comes to the back pay awarded to the Union workers who performed no work on the project, even though they were entitled under the PLA to be part of the workforce. Section 3110, which is incorporated by reference into section 3181 (the law identifying proper claimants on stop notices for public works of improvement), entitles "all persons and laborers of every class performing labor upon or bestowing skill or other necessary services on, or furnishing materials or leasing equipment to be used or consumed in . . . a work of improvement shall have a lien upon the property upon which they have bestowed labor or furnished materials . . . for the value of such labor done or materials furnished . . . ." (§ 3110, italics added.)
Behind this law is an equitable principle. Anyone who provides labor or materials to a construction project "owns" a piece of the resulting project to the extent of the value added by the provider of labor or materials, unless and until the provider is paid. This ownership takes the form of a lien that may be placed on the project. (§§ 3110-3112; see generally, Pangborn Plumbing Corp. v. Carruthers & Skiffington (2002) 97 Cal.App.4th 1039, 1054 ["The real property's value is a fund that the mechanic's lien claimants helped create; the improved property's total value reflects value added by the claimants' labor, goods and services"].) B Side claims that because the union workers did not actually furnish labor or materials on the project, they did not add value to the project. Therefore, they are not contemplated beneficiaries of the stop-notice remedy under section 3110; and by extension, the Union cannot establish standing by bringing suit on their behalf.
As the Union noted below: There is "no authority addressing the circumstance of stop notice claimants who were wrongfully denied the opportunity to perform labor on a work of improvement . . . ." While there is no case precisely on point, the law interpreting section 3110 lends support to B Side's argument. For example, the court in Primo Team, Inc. v. Blake Construction Co. (1992) 3 Cal.App.4th 801 held that an entity that assisted a subcontractor on a public work of improvement in assembling a work force, administering the personnel, and advancing funds for the subcontractor's payroll and related obligations, was not an entitled claimant under section 3110. The court pointed out that the status of claimant under section 3110 may be given to those who physically labor on the job site and can even include those who furnish the workers. (Id. at p. 807.) Nevertheless, an entity that neither employs the workers nor supervises the construction activities is not entitled to that status. While the services may have been necessary to the subcontractor, the services are not bestowed on the work of improvement, and did not directly improve the property of another and increase its value. (Ibid.;see also Sweet v. Fresno Hotel Co. (1917) 174 Cal. 789, 795 [contract for Sweet to pay wages to laborers and act as superintendent of the work on a construction project did not entitle Sweet to claimant status, as Sweet was not performing labor on the building nor was Sweet the laborers' employer].)
When the pleaded facts are considered, the Union has not identified anything that would allow a court to reasonably infer that it could overcome these holdings and establish standing under section 3110. However, the Union claims if it is given an opportunity to amend the complaint it intends to add allegations showing that it "bestowed skills and furnished necessary services to [the project] within the scope of the statute when it made its members available to work that enhanced the value of the project" The Union also explains that in executing the PLA, B Side "received from the Union a binding commitment to supply skilled labor to its projects" and was also given the Union's assurance that it would "refrain from striking, picketing, or engaging in any other self-help remedy to protect its interests." The Union claims B Side received the benefit of these assurances which constituted a direct contribution to the project's completion, within the meaning of "bestowing skill or other necessary services on" the project. (§ 3110.)
Therefore, the Union asserts that, if given the opportunity to amend, it can establish direct standing in its own right to advance these arguments because the statutory definition of "laborers" as used in section 3110 includes a person or entity that is paid a portion of the individual's compensation pursuant to an agreement with his or her collective bargaining agent. (§ 3089, subd. (b).) This would include alleging "further detail" that a portion of the compensation paid to workers on the project is paid to the Union as dues and agency fees, qualifying the Union for direct standing under section 3089, subdivision (b).)
At this juncture, we are not prepared to say that any proposed amendment would be futile. (Lee v. Los Angeles County Metropolitan Transportation Authority (2003) 107 Cal.App.4th 848, 854 [unless the complaint shows on its face that it is incapable of amendment, denial of leave to amend constitutes an abuse of discretion].) Whether the Union can state a claim under section 3110 cannot be determined unless and until an amended complaint has been filed and tested. Given the fact that the Union has never had an opportunity to amend its complaint, we believe the Union should be given an opportunity to fully articulate its theory that it is within the class of claimants protected by section 3110.
IV.
DISPOSITION
The judgment is reversed. The trial court is ordered to vacate its order granting the motion for judgment on the pleadings without leave to amend and enter a new and different order granting the motion with leave to amend, giving the Union an opportunity to amend its complaint. The parties are to bear their own costs on appeal.
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RUVOLO, P. J.
We concur: ___________
REARDON, J.
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RIVERA, J.