Internat. Brotherhood of Elec. Workers
Local 595 v. B Side
Filed 8/15/13 Internat. Brotherhood of Elec. Workers Local
595 v. B Side CA1/4
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opinion has not been certified for publication or ordered published for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.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
FOUR
INTERNATIONAL
BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 595,
Plaintiff and Appellant,
v.
B SIDE,
INC.,
Defendant and Respondent.
A134518
(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.
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.
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
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.
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-
The Union filed this action against B Side and the School
District to enforce the stop-notice claim.
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.
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.]â€
(Rice v. Center Point, Inc.
(2007) 154 Cal.App.4th 949, 954.)
Furthermore, “to the extent the trial
construction of [statutory provisions], as here, the issue is a question of
law, which we review de
[Citations.]†(Zhou v.
Unisource Worldwide (2007) 157 Cal.App.4th 1471, 1476.)
Because we review the
de novo, we affirm the
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
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
“[T]he Legislature has, on public works projects,
provided the stop-
from a public agency to the contractor.â€
(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.)
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.â€
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
rather than rely on the rights or interests of third
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.
(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
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
upon the public entity responsible for the public work in accordance with this
chapter.†As so defined, “person[s]â€
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
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.â€
(Italics added).
As our Supreme Court explained in (
El Capitan Development Co. (1991) 53 Cal.3d 1041, 1052 (
action for the collection of contributions owed to benefit plans and makes an
additional entity liable for such contributions.â€
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.)â€
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
entitiesâ€].) 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
in the plaintiff, the amended complaint by the right party restates the
identical cause of action, and
(5 Witkin, Cal. Procedure (5th ed. 2008 & 2013 supp.)
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 . . . .â€
(§ 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 servicesâ€].)
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 . . . .â€
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
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
on a construction project did not
entitle Sweet to claimant status, as Sweet was not
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 onâ€
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).)
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
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.
_________________________
RUVOLO,
P. J.
We concur:
_________________________
REARDON, J.
_________________________
RIVERA, J.
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.
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.
