THOMAS J. CLEMENTS INC., 1982-DBA-27 (ALJ June 14, 1984)
CCASE:
THOMAS J. CLEMENTS
DDATE:
19840614
TTEXT:
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[1] [84-12.WAB ATTACHMENT]
U. S. Department of Labor Office of Administrative Law Judges
211 Main Street - Suite 600
San Francisco, California 94105
(415) 974-0514
FTS 8 454-0514
In the Matter of
THOMAS J. CLEMENTS, INC. CASE NO. 82-DBA-27
Respondent
Dennis B. Cook, Esq.
Thierman, Simpson & Cook
50 California Street, Suite 2840
San Francisco, California 94111
For the Respondent
Sandra K. Rogers, Esq.
U.S. Department of Labor
Office of the Solicitor
450 Golden Gate Avenue
San Francisco, California 94102
For the Department of Labor
Before: VIVIAN SCHRETER MURRAY
Administrative Law Judge
DECISION AND ORDER
This proceeding arises as a result of a dispute arising on
July 8, 1980 with regard to the payment of prevailing wage rates,
overtime pay and proper classification with respect to laborers and
mechanics employed by Thomas Clements, Inc., who performed work on
two construction rehabilitation projects, identified as Hud Project
Nos. 136-35541-PM-EC-L8 (Little Oak) and 136-35560-PM-EC (Park
Village), which projects were performed with federally assured
loans and therefore are subject to labor standards requirements.
This matter was duly referred to the Secretary of Labor for
determination under the procedures provided under Reorganization
Plan No. 14 of 1950 (64 Stat. 1267), the Davis Bacon Act, as
amended (40 U.S.C. [sec] 276(a), et seq.), Contract Work Hours and
Safety Standards Act, as amended (40 U.S.C. [sec] 327, et seq.),
and the applicable regulations (29 C.F.R. Part 5) issued
thereunder. [1]
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[2] A hearing in this matter was held November 2 and 3, 1983 in
Sacramento, California at which time the parties were respectively
represented by legal counsel.
The principal issues presented for decision are whether
employees hired by Thomas J. Clements, Inc. performed construction
work subject to labor standards requirements including Davis[-]
Bacon and if so:
1. Whether they were properly classified under the
applicable wage determination.
2. Whether the Department of Housing and Urban
Development (hereinafter HUD), the contracting
agency approved the use of "independent
contractors" for the performance of project work,
and if so with what affect.
3. Whether mechanics and laborers employed at the
Park Village and Little Oak Apartments projects
were entitled to wages determined under the Davis[-]
Bacon and related Acts.
4. Whether the partial payment of $44,723.60 made by
Thomas Clements on September 4, 1980 constituted a
compromise and settlement of the backwage claims
which exceeded $200,000, at that time.
5. Whether the equitable doctrine of laches has any
application in the instant proceeding.
6. Whether and to what extent, if any, Thomas J.
Clements, Inc., Thomas J. Clements and the owners
of the properties are liable for any back wage
assessment.
Findings and Conclusions
Background
Real Property Equities Company, in which Thomas J. Clements
and Barbara McNece were partners purchased the Park Village
Apartments in Stockton, California and the Little Oak Apartments
Sacramento, California, in early 1978. Subsequently two limited
partnerships were formed in which Thomas J. Clements and Barbara
McNece were, in each instance, the general partners. The purpose
of such limited partnerships was apparently to contract to
purchase, own, manage and operate real property. Real Property
Equities Company sold Little Oak Apartments to the Little Oak
Investors, a limited partnership and sold the Park Village
Apartments to the Park Village Investors, a limited partnership. [2]
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[3] It is clear from the testimony of Clements, consistent with
the powers accorded the general partners in limited partnerships,
that the general partners, conducted the business, acting for and
on behalf of the limited partnership. The limited partnerships
each employed Thomas J. Clements, Inc., a wholly owned corporation
consisting of its President, and sole shareholder Thomas J.
Clements, as managing agent, whose duties, consisted of
construction, the collection of rents and maintenance of the
properties.
On September 6, 1978 and November 30, 1978 respectively,
Thomas J. Clements as general partner of the respective limited
partnerships entered into a contract with Concept Interior Designs,
a contractor licensed under the laws of the State of California.
Such contracts were executed in consideration and anticipation of
the owners (the limited partnerships) obtaining federally secured
mortgage loans, which the owners represented by Thomas J. Clements
and Barbara McNece did. (Exs. 2, 7; Resp. Exs. C, D in Support of
Motion for Summary Judgment and Tr. 183-186).
Construction rehabilitation commenced in early 1979. There is
however, no indication to what extent, Concept Interior Designs,
the prime contractor rendered performance under the FHA approved
contracts. It may he assumed that to the extent that he performed
he did so in compliance with applicable [l]abor standards and is
otherwise without liability for the back wages here at issue, since
he is not a party to this action.
It does appear that Thomas J. Clements and persons employed by
him for the purpose, commenced work on both projects from or
shortly after construction and rehabilitation commenced.
Applicability of Davis[-]Bacon and related [l]abor standards
Counsel for the respondent's contention that the absence of an
express written contract incorporating or applying the Davis[-]
Bacon Act and related Labor standards to the construction
rehabilitation contracts renders such Labor standards inapplicable
is untenable. Where the projects' mortgages are insured by the
Federal Housing Administration, pursuant to the National Housing
Act (12 U.S.C. 1715(c)), the contractor is required to pay laborers
and mechanics prevailing wage rates as determined by the Secretary
of Labor. Any questions concerning applicability of the Davis[-]
Bacon provisions and related labor st[a]ndards were removed when
the application and the contract were approved. FSG Contrac[tin]g
Co./Hercules Electrical Co., Inc., 76 DB 110, 22 WH 1311 (1976).
Such standards are contained in the supplementary conditions of the
contract and are incorporated therein. See, C 5, C 4cc - Article
I - Labor Standards. Additionally, neither the testimony nor the
conduct of Clement[]s indicates or even suggests, that he
questioned the applicability of such provisions to the project
work. (Govt. Ex. 5) (42 U.S.C. 1437(j)). In this regard Clements
testified that [3]
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[4] there was a retention arrangement between the owners of the projects
i.e. the two limited partnerships and HUD, that is, a withholding of
funds by the contracting agency to ensure in part that prevailing wages
would be paid. (Tr. 202-204; Resp. Ex. B). Since Clement[]s, as
general partner of the limited partnerships, represented the owners in
his dealings with HUD, he is in no position to plead ignorance to or
disavow the terms of the contracts and the Laws applicable thereto,
particularly where his testimony shows prior similar contracts with the
government and a clear understanding of the purposes for which monies
are withheld by the contracting agency.
Personnel employed by Respondent
Counsel for the respondent asserts that the controversy in
this case arose because respondent's maintenance employees worked
side by side with the construction workers during the course of
construction and were therefore improperly determined to be
entitled to the prevailing wage for on-site construction workers.
The evidence indicates, however, that the government
recognized that certain maintenance personnel were in fact
performing maintenance work on both projects and did not seek
Davis[-]Bacon wages for such persons, when so engaged. Where such
persons were in fact performing construction and rehabilitation
work on vacant apartments, which were clearly a part of the
construction and rehabilitation project, the government did impose
the labor standards mandated by Davis[-]Bacon and related acts.
Accordingly, workers listed on Exhibit G4, who were employed in
construction work, on the Little Oak project in Sacramento,
California from November 3, 1978 to May 23, 1979 were determined to
be laborers and mechanics within the meaning of the applicable law
and were required to be paid no less than the basic hourly wage and
fringe benefit amount specified in the wage rate information (Exs.
4, G-1). Likewise, the workers employed on the Park Village
project in Stockton, California from February 2, 1979 to November
15, 1979 were determined to be working as laborers and mechanics
within the meaning of the Act and were required to be paid no less
than the applicable wage rate. (G-9, G-6). All of the aforesaid
persons were employees of the respondent.
Unrefuted evidence presented by the government establishes
beyond reasonable doubt that the workers for whom back wages were
sought were actually performing work on the construction and
rehabilitation project. The assertion that some of the work for
which back wages are sought was routine maintenance work appears to
rest primarily on the testimony of Mr. Clements, to the effect that
such work might in different circumstances be performed as routine
maintenance, for example, removal of a defective bath tub and its
replacement with a new tub. The testimony of Ms. Meadows,
respondent's construction bookkeeper on the Sacramento project and [4]
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[5] later general bookkeeper and personnel officer, shows that
Ms. Meadows in conjun[c]tion with her supervisor Ms. Werner, the
chief financial officer, determined the nature of the work
performed by each worker and the time spent on each particular job.
Such determinations are fully supported by recourse to other
relevant documents such as the contractor's mortgage cost break
down and the employees['] time sheets. The fact that work
performed in the course of the construction and rehabilitation of
the apartment units might, [*] in other circumstances [*], have
been performed in the course of maintenance is irrelevant where the
work actually performed in these circumstances was part of the
renovation construction contract. [*] [EMPHASIS IN ORIGINAL] [*]
Workers who performed such work are entitled to wages consistent
with applicable labor standards. The mere presence of workers on
the site did not determine their wage. It was determined by the
nature of the work performed. Daily timesheets devised by Ms.
Meadows on the Little Oak project were headed "for construction
employees only" and were utilized to further separate maintenance
personnel from project personnel. Ms. Meadows was advised and
instructed by the compliance officer on that project as to the
correct manner of classifying employees for purpose of
Davis[-]Bacon wages. At the time of hearing she demonstrated an
impressive grasp of the basis upon which differentiation is
properly made, as opposed to the manifest inadequacy and confusion
of Mr. Clements in this regard (Tr. 200, 201).
While the daily time sheets of Little Oak which were under
Ms. Meadows['] control provided an adequate record, the time sheets
kept on the Park Village project were woefully inadequate,
consisting of the record of hours worked with little or no
indication of the work performed. However, the testimony of the
witnesses presented at hearing, who worked on that project,
establishes that the work performed was not maintenance work but
clearly within the planned renovation of the project and was
performed in apartments which were totally vacant. Additionally,
there is no showing that there were any maintenance personnel at
the Park Village project, apart from Mr. Groves, who performed
maintenance work at times, as acknowledged by the government, and
at other times, performed project work. (Tr. 243-245; G-12). Mr.
Groves further volunteered at the close of his testimony that when
DOL investigators appeared on the site the foreman would tell the
workers to drop the tools of their trade and do something else,
indicating a clear attempt on the part of the respondent to evade
his responsibility under the Davis[-]Bacon Act.
Ms. Meadows who determined which workers performed project
work at the Park Village project consulted with the construction
foreman and supervisors of whom, one was the brother of Thomas J.
Clements, in order to ascertain the actual nature of the work which
the workers were performing and determined their w[a]ges
accordingly. (Tr. 119, 120). [5]
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[6] It would appear that the respondent believes that it is the
responsib[i]lity of the compliance officer in the first instance,
to provide classification and wage schedule and determine the wages
which the workers are to be paid. The inclusion of such schedule
in the contract is the duty of the contracting officer (HUD/FHA),
and was properly included in the instant case ( 29 C.F.R. Part I;
Govt. Ex. 6). The respondent could have applied to the
Administrator for reconsideration or modification of any
classification which he deemed to be incorrect. He did not do so
nor did he challenge the government's wage determinations or
dispute them in any way prior to July 8, 1981, or prior to
completion of the projects and may not now attempt to modify them
in this forum. Douglas Construction Co./Grandstaff Roofing and
Supply Co., 80 DB-267 (1981).
The duty of the compliance officer is to determine whether or
not the contractor is in compliance with the applicable wage
schedule. It is the respondent's duty to have kept accurate
records for such investigating officer's inspection so that his
records in conjunction with a check of the employees can be used as
a basis for determining the respondent's compliance. The
respondent's attempt to shift his regulatory and contractual
recordkeeping duties to the government and to present that
dereliction of duty as a defense is frivolous. Where a contractor
fails to maintain adequate and accurate records showing hours
worked and accurately stating the work classification for his
employees he may not complain that the necessarily reconstructed
facts lack precision but bears the burden of showing that each
employee was paid the proper hourly rate. Employees should not be
penalized for the employer's failure to properly maintain the
required records. Anderson v. Mount Clemens Pottery Co., 328 U.S.
684, 687 (19[46]); Shultz v. Hinojosa, 432 F.2d 259 (5th Cir.
1970). Respondent also appears to believe that the test for
correctness of classification is dependent upon the skill or
experience of the employee performing the work. It is well
established that such test for correctness of classification is
actual work performed not the degree of skill or experience
possessed by the employee. FSG Contracting Co., supra; Titan
Atlantic Construction Co., 78 DB-125 (1978).
The evidence presented by the government gains credibility by
a showing that the compliance officers as well as the respondent's
employees, principally, Ms. Meadows and Ms. Sheree Werner were
scrupulous and diligent in their efforts to determine the workers'
wages consistent with the actual work performed as is demonstrated
by the relevant evidence. Mr. Groves who performed both
maintenance and project work at different times was determined to
be due back wages only for the project work not for the maintenance
work. Respondent's contention that as the projects progressed
there was an increasing need for maintenance work is contrary to
common sense in this context and equally contrary to the relevant
credible evidence of record. [6]
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[7] Independent Contractors - Estoppel
Respondent's contention by his attorney that the contracting
agency approved the use of independent contractors is without
meaning in the context of the Davis[-]Bacon Act and applicable
regulations which provide, in relevant part, that every person paid
by a contractor or a subcontractor in any manner for his labor in
the construction, prosecution, completion, or repair of the
building or work financed in whole or in part by loans, grants or
guarantees from the United States is "employed" and receiving wages
regardless of any contractual basis alleged to exist between them
(29 C.F.R. [sec] 5.2(i)).
29 C.F.R. [sec] 5.5(a)(1) provides in relevant part that all
mechanics and laborers employed or working upon the site of a work
such as that herein will be compensated weekly at a computed wage
rate not less than that contained in the applicable wage
determination regardless of any contractual relationship which may
be alleged to exist between the contractor and such laborers and
mechanics. The mere approval of independent contractors to work on
the site does not constitute approval of the payment of less than
the minimum wage imposed under the Davis[-]Bacon and related Acts
for mechanics and laborers. The indicia which would determine
whether or not a person employed was an independent contractor need
not be reviewed since employment of any workman on the projects at
lower than the wage rates required by law, would be contrary to the
law whether or not they were independent contractors, within the
legal meaning of that term. The language of the Act as amended in
1935, (49 Stat. 1012), is clear and unambiguous. It manifests the
intent of Congress to prevent circumvention of the law by creation
of a contractual arrangement which would rebound to the detriment
of the employee. (S. Rep. No. 1155, 74th Cong., 1st Sess., p. 3;
H. Rep. No. 1756, 74th Cong., 1st Sess., p. 3).
Even in an appropriate case, which this is not, since the
respondent does not contend that HUD approved the hiring of
independent contractors at wages lower than those imposed by
Davis[-]Bacon and related labor standards, the doctrine of estoppel
may not be invoked against the government where it would result in
defeating the effective operation of policies embodied in
legislation designed to protect the public. McComb v. Home Makers
Handicraft Cooperative, 176 F.2d 633 (4th Cir. 1949) cert. den. 338
U.S. 900. The Davis[-]Bacon Act is not an Act for the benefit of
employers but for the benefit of their employees. Bushman
Construction Co., v. U.S. (1958), 164 F.2d 239; U.S. v. Binghamton
Construction Co., 74 S. Ct. 438, 347 U.S. 171 (1954), rehearing
denied, 74 S. Ct. 625, 347 U.S. 940. It is likewise well
established that an employee cannot waive or bargain away the
payment of wages and rights secured to him by law. Brooklyn
Savings Bank v. O'Neil, 324 U.S. 697, 702, 65 S. Ct. 895, 900
(1945), although the evidence shows (Resp. D) and Clements does not [7]
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[8] deny that he obtained such written waiver under threat of
discharge.
Partial Payment, Whether Compromise and Settlement
The respondent voluntarily made partial payment on the
assessed underpaid wages on September 4, 1980 (Resp. Exs. B, C) and
specifically stated that failure to pay the full amount was due
solely to economic inability, f[o]stering the Department of Labor's
belief that their assessment was undisputed, until July 8, 1981.
This is abundantly clear from the correspondence which passed
between Clements and the Department of Labor between September 4,
1980 and March 4, 1982. (Resp. Exs. B, C, E, F, G submitted in
support of Motion for Summary Judgment). Clements testified in
this regard that such payment ($44,720.60) was made from his own
personal funds (Tr. 206), and later stated that they were the funds
of Thomas J. Clements, Inc. which were intended as a good faith
gesture "to pay off the prevailing wage they [DOL] had found we
owed and [he] hoped it would satisfy the entire debt." (Tr. 212).
To maintain, as does counsel for the respondents' that there was an
accord and satisfaction or more accurately a compromise and
settlement of a dispute that had not yet arisen, and did not arise
until approximately ten months after the voluntary release of the
partial payment by Clements is untenable. As late as June 15, 1981
the Assistant Administrator of the Department of Labor wrote to
Clements specifically stating the government's understanding that
Mr. Clements was not disputing the amount of back wages and
requested remittance of the balance. The credible evidence in this
case establishes beyond doubt that there was not a compromise and
settlement in September, 1980, nor any basis therefore.
Applicability of the Equitable Doctrine of Laches
Counsel for the respondent also claims that the instant legal
action is barred by application of the Equitable Doctrine of
Laches. It is well established that the Equitable Doctrine of
Laches will rarely be invoked to bar an action at law where the
applicable statute of limitations has not run. Counsel's argument
is premised on his misconception that the statute of limitations
applicable herein commenced to run in May 1979, or thereabouts,
when the wage underpayments occurred. The Department of Labor
apprised Clements of the underpaid wages but since the respondent
manifested no intention to dispute the government's back wage
assessment until July 8, 1981, the government had no reasonable
basis to proceed at law. It is equally well established that
acknowledgement, a new promise or part payment made, either before
or after the statute of limitations has run revives the cause of
action. Gee v. CBS, Inc., 471 F.2d 600, aff'd 612 F.2d 572 (1979);
U.S. v. Glenn Falls Insurance Co., 546 F.2d 643 (S.D.N.Y., 1982).
Partial payment made by Clements on September 4, 1980 was
voluntarily made and was not accompanied by any correspondence or
indication that Clements did not intend at some future time to [8]
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[9] satisfy the total amount of the outstanding demand.
Accordingly, such statement commenced the running of the statute of
limitation, under the Portal[-]to[-]Portal Act, anew. The order of
reference was filed and service was made on the respondent by mail
on April 28, 1982 well within the statutory limitations.
None of the facts or circumstances in this case warrant
application of the Equitable Doctrine of Laches. The government
was led to believe whether intentionally or unintentionally by the
respondent that the respondent intended to pay the full amount of
the back wage assessment and did so believe until July 8, 1981,
long after completion and final payment had been made on both
projects.
Even if that were not the case, the defense of laches may
generally not be invoked against the government when it acts to
enforce a public right or protect a public interest. Citizens and
Land Owners v. Miles City/New Underwood Power Line v. Secretary,
U.S. Department of Energy, 683 F.2d 1171 (8th Cir. 1982). Laches
requires more than delay, it requires a lack of diligence on the
part of the plaintiff and a showing of prejudice on the part of the
defendant. City of Davis v. Coleman, 521 F.2d 661 (9th Cir.
1975). Notwithstanding counsel's assertion that respondent was
severely prejudiced by a delay which he characterizes as
unreasonable, there is no evidence to sustain that contention. The
relevant evidence was preserved in records made at the time of the
occurrence to a great extent and otherwise by reconstruction, which
would not have been necessary had the respondent kept complete
records as required by applicable law. The witnesses who appeared
at hearing manifested no significant loss of memory with regard to
these events and one or more remembered well the respondent's
attempts to circumvent their rights under the applicable law. That
testimony is credible, and is in fact, supported by documentary
evidence. The nature of the evidence in this case precludes the
application of any equitable doctrine in favor of the respondent.
Clements['] operations throughout, in one guise or another, were
designed to circumvent laws intended to protect the workers
employed on government projects.
Liability
Counsel for the respondent argues that Thomas J. Clements,
Inc., a corporation and the "principal contractor" is alone liable
for any back wage deficit under applicable laws, that no liability
can be found against the owners and essentially that there is an
insufficiency of documentary evidence relevant to the contractual
relationships of the respondents to support any other conclusion.
I do not concur, at least, not in this context. Clement's
testimony in conjunction with the applicable provisions of law [9]
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[10] governing limited partnerships, which are creatures of
statute, and not at all obscure, in their effects, and the
application of another equitable doctrine are, I believe,
sufficient to impose liability on the owners, to the extent allowed
by law and on Thomas J. Clements personally, as general partner in
both limited partnerships, who was personally served in this
matter. There is at least no doubt that personal liability may be
imposed in appropriate case against the general partner in a
limited partnership. United States v. Haddon Haciendas Co., 541
F.2d 777 (9th Cir. 1976).
Concept Interior Designs was the prime "contractor" and
Clements was clearly not his subcontractor.
Thomas J. Clements, Inc. is and was at all relevant times a
property management firm, according to Clement's testimony which is
consistent with that firm's letterhead; not a building contractor.
Thomas J. Clements as general partner in both limited
partnerships was authorized under the contract with HUD (G-5) to
perform work on the project as an owner. He may well hold a
contractor's license in his own name. Clement's testimony that
there was a kind of retention policy between the owners of the
projects and HUD (Tr. 202, 203; Resp. Ex. C) and that such monies
were used in fact to assure payment of the prevailing wage rates
(Tr. 204; Resp. Ex. C) and evidence that he released such funds for
the purpose shows that Thomas J. Clements['] work on the project
was performed in exercise of the owners right to do so and on no
other basis. Thomas J. Clements, Inc. was not an owner and could
not have exercised that contractual right or released money
withheld from the owners, notwithstanding the fact that the
corporate presence, Thomas J. Clements, Inc. was much in evidence
on both projects. It will be noticed, however, that on the
authorization to release funds, signed by Clements, he is not
designated "Pres. Thomas J. Clements," but rather "company
official" which is a totally meaningless title. Only a general
partner in the limited partnership had the power to act on behalf
of the owners. Respondent's contention to the contrary only
indicates the unity of interest existing between Thomas J. Clements
and Thomas J. Clements, Inc.
Thomas J. Clements, as general partner in both limited
partnerships is an owner of both projects and may not deny his
liability, which is unlimited as is that of Barbara McNece, who was
not however served in this action and accordingly may not be found
personally liable. In California, a partnership may be sued in its
own name but a judgment is binding on the partners only if
specifically named in the complaint and personally served. Fazzi
v. Peters, 68 Cal. 2d 596, 440 P.2d 242 (1968). [10]
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[11] Under California law, general partners are general agents of
limited partners for the general purpose of conducting business
subject only to the statutory exemption of limited partners from
direct obligations to creditors beyond their stated financial
commitment. West's Ann. Cal. Corp. Code, [secs] 15501, 15507,
15509, 15517 (3, 4); Donboy, Limited v. U.S., 301 F.2d 200 (9th
Cir. 1962). A limited partnership is a creature of statute, whose
protections and privileges are available only upon compliance with
the statutory requirements. Essentially, the Act limits liability
of the special or limited partners to the extent of their
commitment, insulating them from liability on obligations to third
parties and creditors. They share in the profits and an interest
in the assets of the business; the conduct of the business is in
the hands of the general partners alone, whose liability with
regard to such operation is unlimited as to partnership and
personal assets. U.S. v. Haddon Haciendas Co.. 541 F.2d 777 (9th
Cir. 1976).
Clements may be regarded as functioning in a dual capacity; as
owner, when he executed contracts and hired employees to work on
the projects and as Thomas J. Clement's Inc., property manager when
he collected rents and hired and paid personnel who were actually
hired to perform and did perform maintenance work, i.e. non-project
work. These separate roles are not clearly distinguishable in the
functional and practical sense; nor were the funds belonging to
each entity maintained separately. The evidence shows that
persons, who actually worked on the construction and rehabilitation
projects and who were characterized as "maintenance people" and
"independent contractors" were paid with funds received from rental
of some of the apartments, which was ownership income and FHA
contract funds. (Tr. 197, 198). The overall record indicates
that the funds of Thomas J. Clements, Inc. were simply FHA funds
and rental income funds which were filtered through the Thomas J.
Clements, Inc. payroll account. Clements, testified that the
monies placed in escrow and subsequently released to the Department
of Labor in September, 1980, were his personal funds and
subsequently that they were the funds of Thomas J. Clements, Inc.
All in all there is no showing that Thomas J. Clements, Inc.,
is anything more than the alter ego of Thomas J. Clements. There
is a distinct unity of interest and every indication that Thomas
J. Clements, Inc., has no assets, apart from those of Thomas J.
Clements. In the State of California as in every other state the
Courts will pierce the corporation veil where failure to do so will
produce an unjust result. Associated Vendor, Inc. v. Oakland Meal
Co., 210 Cal. App. 2d 825, 26 Cal. Rptr 806 (1962); H.A.S. Loan
Service v. McColgan, 2 N.C. 2d 518, 133 P.2d 39 (1943); Swanson v.
Levy, 500 F.2d 859 (9th Cir. 1975); First Commonwealth Company,
Inc., a corporation, et al., defendants, 409 F.Supp. 1396 (8th Cir.
1973). [11]
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[12] Thomas J. Clements and Thomas J. Clements, Inc. share the same
name. The corporation has one officer, Thomas J. Clements and one
shareholder, Thomas J. Clements. It apparently has no capital or
other assets apart from those of Thomas J. Clements, and performed
property management services of limited extent only for the limited
partnerships in which Thomas J. Clements was a general partner.
FHA funds advanced to the limited partnerships for project work
were placed in the payroll account of Thomas J. Clements, Inc. and
used to pay employees working on government funded projects, who
were hired by Thomas J. Clements, as owner and representative of
the limited partnerships.
The unity of interest and ownership in the instant case are manifest
and extensive to a degree that Thomas J. Clements is not distinguishable
from Thomas J. Clements, Inc., save in the nominal sense. Their assets
and interests are so com[m]ingled that Clements does not ordinarily
distinguish between the corporate entity which bears his name and
himself, as his testimony shows. The corporate entity in this instance
is a mere label which counsel for the respondent seeks to interpose as a
shield to protect the respondent from the personal liability which flows
from his ownership interests in the two FHA projects, with the intent of
frustrating the intent of the applicable legislation to the detriment of
the mechanics and laborers, such legislation was designed to protect.
That inequitable result will not be countenanced under applicable law.
Associated Vendor Inc. v. Oakland Meal Co., supra.
However, even if there were any indication of the existence
a separate corporate entity, it would be without material effect
the instant case since a preponderance of the credible evidence
compels the conclusion, that Thomas J. Clement's function as
contractor on both projects stemmed solely and directly from his
ownership interest, as a contractual right attributable thereto.
Accordingly, I find that the limited partnerships, Little Oak
Investors and Park Village Investors are liable to the extent
allowed by law and that Thomas J. Clements is personally liable as
general partner in each of the aforesaid limited partnerships, for
the wage underpayment, as determined by the Department of Labor.
I conclude that:
1. This matter is properly before me under [t]he
provisions of 29 C.F.R. [sec] 5.11(b).
2. The work performed on Projects Nos.
136-35541-PM-EC-L8 and 136-35560-PM-EC,
construction projects is subject to payment of the
prevailing wage rates of the Davis[-]Bacon Act, 40
U.S.C. [sec] 276(a), the labor standards requirements
of 12 U.S.C. [sec] 1715(c) and 42 U.S.C. [sec] 1437 and
the regulations promulgated thereunder. [12]
~13
[13] 3. The persons identified in Exhibit G-4 are laborers
and mechanics who were employed by Thomas J.
Clements, owner, contractor and who performed
construction and rehabilitation work on the Little
Oak Project in Sacramento, California (HUD Project
No. 136-35541-PM-EC-L8) and are accordingly
entitled to be paid at least, at the applicable
hourly wage rate as set forth in Exhibit G-1.
4. The persons identified in Exhibit G-9 are laborers
and mechanics who were employed by Thomas J.
Clements, owner, contractor and who performed
construction and rehabilitation work on the Park
Village Project in Stockton, California (HUD
Project No. 136-35560-PM-EC) and are accordingly
entitled to be paid, at least, at the applicable
hourly wage rate as set forth in Exhibit G-6.
5. Respondents failed to compensate identified
persons employed on the Little Oak Project at the
required wage rate resulting in a current
underpayment of back wages in the amount of
$36,046.94, which is due the identified
employees. /FN1/, /FN3/
6. Respondents failed to compensate identified
persons employed on the Park Village Project at
the required wage rate resulting in a current
underpayment of back wages in the amount of
$125,138.06, which is due the identified
employees. /FN2/, /FN3/
7. Thomas J. Clements, owner/contractor and general
partner in Little Oak Investors and Park Village
Investors, both limited partnerships, having
exercised the contractual rights of the owners on
both projects, on behalf of such limited [13]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Exhibit G-4 shows total unpaid wages due Little Oak employees
to be $50,471.66, on 4/6/81.
/FN2/ Exhibit G-9 shows total unpaid wages due Park Village
employees to be $155,433.94, on 6/24/80.
/FN3/ It is assumed that a prorate[d] reduction in thos[e] amounts
by $14,424.72 and $30,295.88 respectively, was made by the
Department of Labor when Respondent made partial payment of
$44,720.60. [13]
~14
[14] partnership and having by failure to comply with
applicable Labor standards, incurred back wage
underpayments, which he has not fully satis[fi]ed is
liable as a general partner and having been
personally served in this matter is personally
liable for the total amount of the existing back
wage underpayment, to the extent that such
obligation is not satisfied out of reachable
partnership assets.
8. Little Oak Investors, a limited partnership is
liable, to the extent allowed by law, for back
wage underpayments in the amount of $36,046.94.
9. Park Village Investors, a limited partnership is
liable, to the extent allowed by law, for back
wage underpayments in the amount of $125,138.06.
Wherefore, it is Ordered that Thomas J. Clements, on behalf of
the Little Oak Investors, the Park Village Investors and himself
pay to the Employment Standards Administration, U.S. Department of
Labor the sum of $205,905.60 for distribution to identified
employees according to their entitlement. Any of said amounts not
distributed to said employees or their legal representative, within
three years from the date of receipt thereof by the Employment
Standards Administration, U.S. Department of Labor, because of
inability to do so, shall be covered into the Treasury of the
United States as miscellaneous receipts.
Dated this 14th day of June, 1984 at San Francisco,
California.
VIVIAN SCHRETER MURRAY
Administrative Law Judge
VSM:brt [14]
