L.T.G. Construction Co., Inc., 1991-DBA-94 (ALJ Dec. 7,
1999)
U.S. Department of
Labor
Office of Administrative Law Judges 2600 Mt. Ephraim Avenue
Camden, NJ 08104
(856) 757-5312 856-757-5403 (FAX)
ARB CASE NO.: 1998-028
ALJ CASE NO.: 1991-DBA-00094
DATE: December 7, 1999
In the Matter of:
LLOYD T. GRIFFIN, JR.,
LTG CONSTRUCTION CO., INC.,
PHOENIX-GRIFFIN GROUP II, LTD.,
GATSBY HOUSING ASSOCIATES, INC.,
RESPONDENTS,
v.
SECRETARY, U.S. DEPARTMENT OF LABOR,
and ADMINISTRATOR, WAGE AND HOUR DIVISION,
U.S. DEPARTMENT OF LABOR,
COMPLAINANTS,
and
BUILDING AND CONSTRUCTION TRADES DEPARTMENT,
AFL-CIO
INTERVENOR.
Appearances:
Alden C. Harrington, Esquire (Boyajian, Harrington & Richardson), Providence, RI, for the
Respondents
David L. Baskin, Esquire (U.S. Department of Labor, Office of the Solicitor), Boston, Massachusetts,
for the Complainants
Terry R. Yellig, Esquire (Sherman, Dunn, Cohen, Leifer & Yellig), Washington, D.C., for the
Intervenor
Before: Daniel F. Sutton
Administrative Law Judge
DECISION AND ORDER ON REMAND
I. Background
This case is before the Office of Administrative Law Judges for a second time
pursuant to a remand from the United States District Court for the District of Rhode Island in
Griffin v. Reich, 956 F.Supp. 98 (1997). The case arises under the provisions of the Davis-
Bacon Act, 40 U.S.C. §§276a et seq.(1994), and the Related Acts, see
29 C.F.R. §5.1 (1996), and the regulations at 29 C.F.R. Parts 5, 6 and 7 (1997) in the
context of a complaint by the Complainants (hereinafter referred to as "DOL") that the
Respondents failed to pay prevailing wages required by the Davis-Bacon and Related Acts
("DBRA") for certain work performed on the Turnkey Housing Project in Providence,
Rhode Island.
[Page 2]
The Turnkey Housing Project itself is a byproduct of extensive litigation between
a tenant advocacy organization, the Providence Housing Authority ("PHA") and the
Department of Housing and Urban Development ("HUD") which grew out of PHA's
decision to demolish high-rise public housing units in Providence. The advocacy group filed suit in
federal district court seeking a preliminary injunction against the proposed demolition. The Court
(Pettine, Senior Judge) denied the injunction but issued an order establishing a time schedule for the
construction of replacement housing. Project B.A.S.I.C. v. Kemp, 721 F.Supp. 1501 (D.R.I.
1989). While that litigation was pending, PHA sought proposals for the Turnkey project, and Phoenix-
Griffin Group II, Ltd. ("Phoenix-Griffin") was selected in July 1989 as the developer for the
first phase of the project. After the case was remanded for consideration of alternative legal bases for
the replacement housing time schedule, Project B.A.S.I.C. v. O'Rourke, 907 F.2d 1242 (1st
Cir. 1991), the parties entered into a settlement stipulation which incorporated the District Court's
original July 21, 1991 deadline for completion of the replacement housing units.
1 The documentary evidence in the record
is identified as "CX" for exhibits offered by DOL, "RX" for exhibits offered by
the Respondents, and "ALJX for exhibits offered by the administrative law judge. References to
the transcript of the original hearing conducted in this matter will be designated as "TR"
while references to the transcript of the hearing held on remand will continue to be designated as
"RTR".
2 In April 1996, the Secretary of
Labor established the Administrative Review Board to succeed the former Board of Service Contract
Appeals, Wage Appeals Board and Office of Administrative Appeals. 61 Fed. Reg. 19978 (May 3,
1996).
3 An appearance at the remand
hearing was also made by a HUD attorney in view of the fact that HUD employees had been
subpoenaed by the Respondents to testify. RTR 10-11.
4 Post-hearing submissions and orders
have been identified as the following Administrative Law Judge exhibits: ALJX 51 - the Respondents'
January 19, 1999 letter re: RX 124; ALJX 52 - DOL's objection to the admission of RX 124; ALJX
53 - order issued on January 28, 1999; ALJX 54 - the Intervenor's unopposed motion for extension of
time in which to file post-hearing memorandum; ALJX 55 - the Respondents' post-hearing brief; ALJX
56 - DOL's post-hearing brief; and ALJX 57 - the Intervenor's post-hearing brief.
5 Although Phoenix-Griffin's proposal
was accepted in July of 1989, there was an extended period of adjustments and modifications in design,
sites and scope of work in response to community concerns. TR 2308-2311 (Torbik); RTR 226
(Griffin); RX 56.
6 Mr. Griffin never completed the
purchase of the Veazie Street property, but he has continued to rent and utilize the building where he
set up the prefabrication plant. RTR 236-237 (Griffin).
7 Project No. RI43-P001-017 is the
designation assigned to Phase I of the Turnkey Project for which Phoenix-Griffin had been selected as
developer. RTR 106-107 (Torbik).
8 As noted by Judge Lagueux, Judge
Pettine found in Project B.A.S.I.C. v. Kemp, 768 F.Supp. 21, 25 (D. RI. 1991) that Phoenix
Griffin had "relied upon HUD's assurance (through the PHA) that the wage law did not apply to
the Veazie Street site." 956 F.Supp. at 109, n 9.
9 The Court in Dantran
additionally observed that "if a statute or regulation clearly limns a party's legal obligations, the
party cannot justifiably rely for estoppel purposes on a government agent's representations that the law
provides to the contrary." Id. at 67. In the instant case, the law and regulations, as
discussed later in this decision, did not clearly require the payment of prevailing wage rates to
employees involved in the prefabrication of housing panels at the Veazie Street plant. Therefore, on the
facts of this case, the Respondents could rely for estoppel purposes on the affirmative representations
that prevailing wage rates were not required.
10 It is noted that the evidence of
record supports of a finding that, in part due to events outside of the Respondents' control such as the
cancellation or delay of other housing projects and HUD's withholding of funds which deprived the
Respondents of capital that might have enabled utilization of the plant for commercial ventures, the
predominant use of the Veazie Street plant to date has been the manufacture of housing panels for
Phase I of the Turnkey Project. However, even if it were determined that the facts show that the plant
was "dedicated" on a near exclusive basis to Phase I of the Turnkey Project, I would
nonetheless conclude that the Respondents complied with HUD's policy because the plain language of
Handbook section 7-12 requires that a prefabrication plant be both temporary and dedicated
exclusively, or nearly so, to the project to fall out of the prevailing wage exemption. As discussed
above, the facts demonstrate that the Veazie Street plant is not temporary.
11 Note is taken of the Intervenor's
argument that allowing the Respondents to invoke equitable estoppel to prevent DOL from recovering
back wages owed to the individuals who worked on the Turnkey Project will frustrate the public
interest embodied in the DBRA of protecting local wage standards for the benefit of construction
workers. ALJX 57 at 33-34, citing Universities Research Assn. v. Coutu, 450 U.S. 754,
771 (1980), United States v. Binghampton Construction Co., 347 U.S. 171, 178 (1954)
and Walsh v. Schlect, 429 U.S. 401, 411 (1977). Accepted at face value, the
Intervenor's argument would mean that equitable estoppel would never be available to a party involved
in litigation with the Government over a prevailing wage dispute. However, an absolute bar to the
invocation of equitable estoppel against the Government was clearly rejected by the Court, and the
instructions to be followed on remand leave no room for weighing the public interest as an additional
criterion to be satisfied by the Respondents. Rather, the Court held that "equitable estoppel
should apply in this case if plaintiffs relied on HUD's written and/or oral representations and plaintiffs
were in compliance with HUD's policies and representations concerning the applicability of
Davis-Bacon requirements." 956 F.Supp. at 109.
12 The apparent exemption from
prevailing wage requirements of working subcontractors in section 7-3 of the HUD Handbook is
contradicted the Department of Labor's DBRA implementing regulations at 29 C.F.R §5.2(o)
which are appended to the HUD Handbook. CX 38 at 73-87. Section 5.2(o) of the regulations
states,
Every person performing the duties of a laborer or mechanic in the
construction, prosecution, completion, or repair of a public building or
public work financed in whole or in part by loans, grants, or guarantees
from the United States is "employed"regardless
of any contractual relationship alleged to exist between the contractor
and such person.
The conflict between section 7-3 of the Handbook and 29 C.F.R. §5.2(o) was brought to
light during the Department of Labor's DBRA compliance investigation of the Turnkey Project when
HUD Regional Labor Relations Director William Bieryla referred an inquiry from the PHA to the
Regional Solicitor for the Department of Labor. In response to this inquiry, the Regional Solicitor,
Albert H. Ross, advised Mr. Bieryla in a letter dated September 30, 1992 that the HUD Handbook
incorrectly implies that an individual meeting the section 7-3 indicia is a bona fide
subcontractor and exempt from the DBRA. CX 99. Interestingly, PHA and HUD officials have
expressed serious doubts, if not outright disagreement, regarding the correctness of this position despite
the Department of Labor's primacy in interpreting and enforcing the DBRA. TR 2145-2148, 2153-
2156 (Torbik); RTR 153 (Bieryla).
13 The Court found that "the
reliance issue was inadequately considered, and the finding was not based on articulated substantial
evidence", and it made the following general observation concerning Judge DiNardi's finding that
the Respondents did not rely on HUD's assurances: "However, the ALJ never explains why it is
'obvious,' that the project was underbid nor does he refute evidence in the record explaining that Griffin
would not have participated in the project or would have handled labor matters differently if HUD's
advice had been different." Three issues with respect to which plaintiffs assert the doctrine of
equitable estoppel as separate matters involving different factual foundations. 956 F.Supp. at 108-109
(quotations in original). The Court did not, however, find any fault with Judge DiNardi's conclusion
that the Respondents had engaged in an unlawful scheme respecting the use of subcontractors in an
attempt to evade the requirements of the DBRA, and it is noted that the evidence in the record, which I
have previously discussed, that "Griffin would not have participated in the project or would have
handled labor matters differently if HUD's advice had been different" related to HUD's
assurances concerning the Veazie Street plant and not to the use of subcontractors. As the Court
pointed out, the "three issues with respect to which . . . [Respondents] assert the doctrine of
equitable estoppel . . . [are] separate matters involving different factual foundations." 956
F.Supp. at 109. Accordingly, the Respondents can not use the factual foundation of reliance that they
have established with respect to one issue (the Veazie Street plant) as a springboard to establish
reliance with respect to another issue (here, the use of subcontractors) for which there is no factual
foundation of either reliance on or compliance with HUD's policies.