Vincent Trivelli
Stuart Calwell
The Law Offices of Stuart Calwell, PLLC
Charleston, West Virginia
Attorneys for the Appellant
Darrell V. McGraw, Jr.
Attorney General
Beth Ann Rauer
Assistant Attorney General
Charleston, West Virginia
Attorneys for the Appellees,
University of West Virginia Board
of Trustees and The University System
of West Virginia
Bruce Ray Walker
General Counsel
State College and University Systems
Charleston, West Virginia
Attorney for the Appellee,
West Virginia Higher Education Policy Commission
Stephen P. Goodwin
Carrie Goodwin Fenwick
Goodwin & Goodwin
Charleston, West Virginia
Attorneys for the Appellee,
West Virginia University
James A. Russell
Steptoe & Johnson
Morgantown, West Virginia
and
James R. Watson
Ancil G. Ramey
Kara L. Cunningham
Steptoe & Johnson
Charleston, West Virginia
Attorneys for the Appellee,
West Virginia University Foundation, Inc.
Charles M. Johnstone, II
Thaxton & Johnstone
Charleston, West Virginia
Attorney for the Appellees,
March-Westin Co., Inc.,
Paul A. Walker Architect, Inc., and
Evan Terry Associates, P.C.
Charles M. Surber, Jr.
David Allen Barnette
Christina T. Brumley
Jackson & Kelly
Charleston, West Virginia
and
Eric H. London
Jackson & Kelly
Morgantown, West Virginia
Attorneys for the Appellee,
Platinum Properties Limited Liability Company
and Petropolus and Associates, Inc.
H. F. Salsbery
Madonna C. Estep
Salsbery & Druckman
Charleston, West Virginia
Attorneys for
James A. Prete
JUSTICE ALBRIGHT delivered the Opinion of the Court.
JUSTICE MAYNARD concurs in part and dissents in part and reserves the right to file a separate opinion.
2. “Three factors to
be considered in deciding whether to address technically moot issues are as
follows: first, the court will determine whether sufficient collateral consequences
will result from determination of the questions presented so as to justify
relief; second, while technically moot in the immediate context, questions
of great public interest may nevertheless be addressed for the future guidance
of the bar and of the public; and third, issues which may be repeatedly presented
to the trial court, yet escape review at the appellate level because of their
fleeting and determinate nature, may appropriately be decided.” Syl.
Pt. 1, Israel by Israel v. West Virginia Secondary Schools Activities Com'n,182
W.Va. 454, 388 S.E.2d 480 (1989).
3. Under West Virginia Code
§ 21-5A-2 (1961) (Repl. Vol. 1996), the provisions concerning prevailing
wages can only be invoked when a construction project that constitutes a public improvement and which involves workers employed by
or on behalf of a public authority is involved.
4. The issue of whether
a “public improvement” is involved within the meaning of this state's
prevailing wage act, West Virginia Code § 21-5A-1 to -11 (Repl. Vol.
1996 & Supp. 2001), must be determined by examining: (1) whether a public
entity initiated the construction project; (2) the extent of control retained
by the public entity during the development and construction phases; (3) the
extent to which the project will be used for a public purpose; (4)whether
public funds are used either directly for the costs of construction or indirectly
by means of a lease arrangement which contemplates payments essentially covering
the amount of the construction; (5) whether the contract is written as a lease
solely to evade the requirements of the prevailing wage act; and (6) all other
relevant factors bearing on the ultimate issue of whether the project is indeed
a public project notwithstanding novel financing mechanisms.
5. The absence of a “public
authority” as signatory to a document examined in connection with the
issue of the applicability of this state's prevailing wage act, West Virginia
Code § 21-5A-1 to -11 (Repl. Vol. 1996 & Supp. 2001), does not in
itself defeat application of the act. Where sufficient facts are submitted
to demonstrate that the workers are involved in construction on behalf of
any public authority, the act may still apply. In determining the factual issue of whether the construction is on behalf of
the public authority, the trial court should consider whether a public entity
initiated the underlying project and all other relevant factors demonstrating
the uses for which the construction project is intended.
6. In those instances where
it is exceedingly clear that a public entity who qualifies as a “public
authority” under West Virginia Code § 21-5A-1(1) (1961) (Repl. Vol.
1996) is intimately involved with the construction at issue, a trial court
may be permitted to reach a conclusion that the wage act should apply notwithstanding
the absence of a public authority's actual signature on a subject contract
where it can be demonstrated that a contracting party is acting on behalf
of the public authority.
7. In determining whether
the State or its agencies is involved in a construction project sufficient
to invoke the competitive bidding protections of West Virginia Code §
5-22-1 (2000 & Supp. 2001), a trial court should examine: (1) whether
the State or its agency initiated the construction project; (2) the extent
of control retained by the State or its agency during the development and
construction phases; (3) the extent to which the project will be used for
a public purpose; (4) whether public funds are used either directly for the
costs of construction or indirectly by means of a lease arrangement which
contemplates payments essentially covering the amount of the construction;
and (5) all other relevant factors bearing on the issue of whether the construction is properly
viewed as government construction.
8. To determine whether
the State or its agencies is involved in a construction project sufficient
to invoke the provisions of West Virginia Code § 5G-1-3 (1994) (Repl.
Vol. 2000) governing the procurement of architectural and engineering services,
a trial court should examine: (1) whether the State or its agency initiated
the construction project; (2) the extent of control retained by the State
or its agency during the development and construction phases; (3) the extent
to which the project will be used for a public purpose; (4) whether public
funds are used either directly for the costs of construction or indirectly
by means of a lease arrangement which contemplates payments essentially covering
the amount of the construction; and (5) all other relevant factors bearing
on the issue of whether the construction is properly viewed as government
construction.
Albright, Justice:
The Affiliated Construction
Trades Foundation (“ACT”), a division of the West Virginia Building
and Construction Trades Council, AFL-CIO, appeals from the September 29, 2000,
order of the Circuit Court of Kanawha County, through which the lower court
denied ACT's motion to alter or amend the May 23, 2000, decision granting
summary judgment to the Appellees, inter alia, The West Virginia University
Foundation, Inc. (the “Foundation”).
(See footnote 1) ACT initiated the underlying
action to obtain a declaratory judgment requiring the Appellees to comply
with various state laws concerning the payment of prevailing wages to workmen
engaged in construction of public improvements,
(See footnote 2) competitive bidding,
(See footnote 3)
and the procurement of architectural and engineering services
(See footnote 4)
in connection with the building of an administrative office building
intended for the use of both West Virginia University and the Foundation.
Upon a complete review of the issues raised in conjunction with the record,
we affirm the decision of the circuit court. Notwithstanding the technical
mootness of the issues raised on appeal given the completion of the construction
project at issue, we address those issues, which remain in controversy, under established
principles allowing review where the issues are of great public interest.
In support of its petition, ACT alleged that beginning in 1996 WVU and the Foundation began preparations for and subsequently entered into various agreements concerning the design, construction, and lease/purchase of the Center. Among those documents submitted in support of its petition was a memorandum dated February 5, 1997, prepared by Susan L. McCollum, Senior Facilities Planner/Lease Manager, outlining the chronology of events pertaining to the purchase or replacement of the Center. Included in that chronology was an entry dated August 1996, stating: “[I]nvestigated potential process for third party construction and financing.” Additional documents attached to the petition include two memoranda prepared by Ms. McCollum dated January 17 and April 17, 1997, which detail the space requirements of current and potential occupants for the Center. When the Foundation issued a “Request for Proposals” dated June 20, 1997, pertaining to providing professional development services for the Center, the document indicated that “[t]he developer is expected to work with WVU and the WVU Foundation staff to develop and define facility layout and design.” A supplement to the “Request for Proposal” was issued on July 18, 1997, specifying that both the Foundation and WVU are seeking and will select an “experienced development firm/team” with the “ability to establish and implement a turn- key administrative office building development strategy.”
Of the “[n]early fifty
firms [that] expressed an interest in the Foundation's initial Request for Proposal,”
ten firms were jointly interviewed by the Foundation and WVU. As a result of
this interviewing and selection process, Platinum Properties Limited Liability
Company (“Platinum”) was selected to provide a package of development
services, including site evaluation and selection, site acquisition, engineering
and design, construction, and contract administration. A Pre-Construction Services
Agreement (“Pre-Construction Agreement”) detailing these obligations
was entered into between the Foundation and Platinum on March 19, 1998.
Pursuant to its obligations
under the Pre-Construction Services Agreement, Platinum selected and recommended
a site for the Center, which was subsequently approved by the Foundation.
On September 7, 1999, a second agreement, entitled the Turnkey Construction,
Site Development and Purchase Agreement (the “Turnkey Agreement”),
was entered into between the Foundation and Platinum. Pursuant to this agreement,
Platinum agreed to construct the Center from its own sources at its risk and
to sell the improved site to the Foundation upon completion of the Center.
The Turnkey Construction Agreement provides that WVU, as the Tenant, has approved
the initial plans and further provides that WVU must approve of any change,
amendment, refinement, or addition to the approved plans. The agreement further provides for a purchase price of $22,821,969.00
upon satisfaction of certain specified conditions.
(See footnote 9)
While a lease-purchase agreement
had not been entered into at the time of the filing of the petition, ACT produced
documentation demonstrating the intent that a thirty- year lease-purchase
contract would be signed by the State with the Foundation “for and on
behalf of West Virginia University, as Tenant, for the lower six floors”
of the seven-floor Center.
(See footnote 10) A draft lease-purchase agreement,
as well as additional documentation, indicated that at the conclusion of the
lease term, WVU was to take ownership of the facility. In actuality, however,
a lease, rather than a lease-purchase agreement was entered into, but not
until May 25, 2001, after the issuance of the circuit court's final ruling
in this case.
In response to ACT's petition
for declaratory judgment, the Foundation filed a motion to dismiss or in the
alternative, a motion for summary judgment. The remaining Appellees similarly
filed motions to dismiss.
(See footnote 11) At a hearing on January
26, 2000, the circuit court heard argument of counsel on the petition and the various motions
seeking dismissal or summary judgment. By order entered on May 23, 2000, the
circuit court granted summary judgment to Appellees. ACT sought to alter or
amend the summary judgment ruling by filing a Rule 59(e) motion,
(See footnote 12)
which the circuit court denied by order entered on September 29, 2000.
Through this appeal, ACT challenges the lower court's denial of the relief
it requested below.
In ruling on the applicability
of the prevailing wage statute to the construction of the Center, the circuit
court looked to the statutory definitions of the terms “public authority”
and “public improvement.” A “public authority” is defined
by West Virginia Code § 21-5A-1(1) (1961) (Repl. Vol. 1996) as:
any officer, board or commission
or other agency of the State of West Virginia, or any political subdivision
thereof, authorized by law to enter into a contract for the construction of
a public improvement, including any institution supported in whole or in part
by public funds of the State of West Virginia or its political subdivisions,
and this article shall apply to expenditures of such institutions made in
whole or in part from such public funds.
By definition, a “public improvement” includes “all buildings,
roads, highways, bridges, streets, alleys, sewers, ditches, sewage disposal
plants, waterworks, airports, and all other structures upon which construction
may be let to contract by the State of West Virginia or any political subdivision
thereof.” W.Va. Code § 21-5A-1(4) (1961) (Repl. Vol. 1996).
Based upon the definitions
of “public authority” and “public improvement,” the circuit
court read the policy language of West Virginia Code § 21-5A-2 to only
apply when a “public authority” is a party to the subject contract.
To bolster its conclusion, the lower court cited the legislative rule that
provides that fair minimum wage rates must be included in all contracts “to
which the State of West Virginia, or any political subdivision thereof, or
any authority created by the Legislature of the State of West Virginia, including
any officer, board or commission or agency of the State of West Virginia,
is a party.” 42 W.Va. C.S.R. § 7-1.1. In light of its conclusion
that the prevailing wage statute only applies when a “public authority”
is a contractual party, the circuit court proceeded to determine whether the
Foundation could qualify as a public entity.
Relying on this Court's decision in 4-H Road Community Association v. West Virginia University Foundation, Inc., 182 W.Va. 434, 388 S.E.2d 308 (1989), the circuit court concluded as a matter of law that:
The
West Virginia University Foundation was chartered as a charitable, educational,
not-for-profit corporation, by private individuals pursuant to the general corporate
laws of the State of West Virginia. Funds coming into the possession of the
Foundation, which may be used on behalf of the University, are maintained separately
from public funds budgeted for the University. Employees of the Foundation are
not public employees and do not participate in any public benefit plan. The
president of WVU is a member of the Board of Directors of the Foundation, but
by reason of the by-laws of the corporation and not by reason of any statute
or legislative rule. As such, the Foundation is neither a public authority nor
an institution supported in whole or in part by public funds of the State of
West Virginia pursuant to W.Va. Code § 21-5A-1[(1)] (citation omitted).
The circuit court also looked to 4-H Road to conclude that the “Foundation
does not become a 'public authority' solely because it constructs a building
for the benefit of West Virginia University.” As additional support for
its conclusion that the Foundation was not a “public authority,” the
lower court cited this Court's decision in Woodford v. Glenville State College
Housing Corp., 159 W.Va. 442, 225 S.E.2d 671 (1976), in which we determined
that the Foundation is not an instrumentality of the state. While recognizing
that neither 4-H Road nor Woodford were directly on point, the
circuit court drew guidance from those decisions based upon the fact that both
cases involved the construction of a building by a private, non- profit corporation
that was used for the institution's educational mission. And, in each of those
cases, the private corporation's status remained unaffected as a result of the
contractual arrangement.
After distinguishing the law
relied upon by ACT on either factual or statutory bases, the lower court ruled
that ACT's claim under the prevailing wage act failed due to the fact “that
no public entity is a party to the Turnkey Construction Agreement, or any other
contract for construction, architectural, or engineering services related to
the Office Building.” The circuit court further concluded that it was “not
persuaded that WVU's alleged use of the Foundation as a 'conduit' for the construction
and financing of the Office Building ha[d] transformed that project into a 'public
improvement,' as defined by statute.”
Based upon the Foundation's
failure to come within the intent of the statutes, the circuit court similarly
rejected ACT's claims for relief under the competitive bidding statute and the
statute pertaining to procurement of architect-engineer services. Citing the
fact that the bidding provisions of West Virginia Code § 5-22-1 (2000 &
Supp. 2001) only apply to the state and its subdivisions,” which are further
defined as “the state of West Virginia, every political subdivision thereof,
every administrative entity that includes such a subdivision, all municipalities
and all county boards of education,” the circuit court concluded that the
statute did not apply to contracts entered into by a private, not-for-profit
corporation, such as the Foundation. W.Va. Code § 5-22-1(a). In like fashion,
the lower court examined the applicability of West Virginia Code § 5G-1-2
(1990) (Repl. Vol. 2000) and concluded that the Foundation did not qualify as
an “agency,” which is defined as “all state departments, agencies,
authorities, quasi-public corporations and all political subdivisions, including cities, counties, boards of education and public
service districts” for purposes of invoking the provisions of that statute
concerning the procurement of certain architectural and engineering services.
W.Va. Code § 5G-1-2(a).
In granting summary judgment
to Appellees, the lower court ruled that the Foundation did not qualify as
an “agency, officer, board, commission, political subdivision, or other
administrative entity of the State of West Virginia, or a board of education,
service district, or other public authority which is subject to the provisions
of the prevailing wages statute, the statute requiring bidding on government
construction contracts or the statute relating to the procurement of architect
or engineer services.” The lower court also relied on the fact that “the
Pre-Construction Services Agreement and the Turnkey Construction Agreement
between the Foundation and Platinum are contracts between private parties,”and
therefore beyond the scope of the subject statutes. Finally, the circuit court
determined that “the development and construction of the Office Building
does not constitute a public project, undertaking, or improvement, nor is
it transformed into a public project, undertaking, or improvement solely by
virtue of WVU's participation in the planning process, anticipated lease of,
and/or option to purchase a portion of the completed facility.”
Conversely, the Foundation
(See footnote 13)
asserts that the lower court correctly applied the relevant statutes
in reaching its decision. The Foundation emphasizes that, contrary to the
“sinister” intent that ACT attempts to attribute to it, there was
“no evidence in the record before this Court from which . . . [to] conclude that the contracts which
are the subject of this proceeding were motivated by a desire to avoid the
prevailing wage and competitive bidding statutes.”
(See footnote 14) In addition to stressing
certain facts as indicative of contractual relationships outside the scope
of the statutes at issue, the Foundation argues that the issue is moot based
on the fact that the Center will have been completed prior to the date this
matter is submitted to this Court for decision. Before addressing the substance
of the issues on appeal, we first speak to the Foundation's allegation of
mootness.
Assuming, arguendo, that
we were to acknowledge any technical mootness to one or more of the issues
on appeal, the law still permits this Court to address this matter under accepted
principles of appellate review:
Three
factors to be considered in deciding whether to address technically moot issues
are as follows: first, the court will determine whether sufficient collateral
consequences will result from determination of the questions presented so
as to justify relief; second, while technically moot in the immediate context,
questions of great public interest may nevertheless be addressed for the future
guidance of the bar and of the public; and third, issues which may be repeatedly
presented to the trial court, yet escape review at the appellate level because
of their fleeting and determinate nature, may appropriately be decided.
Syl. Pt. 1, Israel by Israel v. West Virginia Secondary Schools Activities
Comm'n,182 W.Va. 454, 388 S.E.2d 480 (1989). Because we conclude that
there is an obligation imposed on this Court to address the issue of whether
state funds are being expended in accordance with the stated policy of the State to pay prevailing wages to the laborers employed
to construct projects furthering the public interest, we view such public
interest as the necessary authorization to consider any issue which may be
technically moot by either the lack of relief available or by virtue of any
decision reached by this Court that arguably extinguishes the controversy
between the parties. We reject the Foundation's argument that no “great
public interest” can exist sufficient to warrant application of the Israel
mootness standard due to the fact that there is presently only one other comparable
construction project underway. Id. Rather than focusing in such a narrow
fashion on the similarity of other construction projects, we agree with ACT
that the requisite public interest arises by virtue of the possible expenditure
of public funds in a manner inconsistent with the declared policy of this
State. Consequently, this Court rejects the Foundation's mootness argument,
convinced that the facts of this case compel further inquiry into the issue
of whether the method in which certain construction projects are financed
can serve as a barrier to application of laws promulgated for the protection
of this state's laborers.
In making its summary
judgment ruling, the lower court, consistent with established principles of
statutory interpretation, looked to the language of the statutes to resolve
the laborer-related issues of wages and bidding. See In re Greg H.,
208 W.Va. 756, 760, 542 S.E.2d 919, 923 (2000) (stating that “[i]n interpreting
a statute, the initial focus is, of course, upon the statutory language itself”); accord Maikotter
v. University of West Virginia Bd. of Trustees/West Virginia Univ., 206
W.Va. 691, 696, 527 S.E.2d 802, 807 (1999) (“In any search for the meaning
or proper applications of a statute, we first resort to the language itself.”).
While the statutory language is clearly the starting point of any issue of
statutory interpretation, the legislative intent underlying the statute is
the critical second step of any statutory analysis.
We note at the outset of
this discussion that the procurement of financing for the construction of
buildings associated with the educational missions of a public institution
often entails the use of creative financing and further, that the employment
of certain financial mechanisms necessary to effectuate the construction of
such improvements may require the involvement of third parties. Given this
recognition of the realities of modern-day financing, we find it incumbent
to look behind the surface of the facts relied upon by the circuit court.
We are certainly not the first court to analyze whether the provisions of
its respective wage act or competitive bidding laws are being circumvented,
(See footnote 17)
either through the use of a lease/purchase agreement rather than an outright purchase of a
building, or through the use of third-party construction combined with creative
financing.
In Mechanical Contractors
Association v. University of Cincinnati, 750 N.E.2d 1217 (Ohio Ct. App.
2001), the court examined whether competitive bidding statutes were applicable
despite the use of a leasing arrangement to acquire a conference center for
the university. While the university argued that the bidding laws which imposed
certain requirements on the property “owner” did not apply based
on its lack of ownership, the appellate court refused to “ignor[e]
the realities” of the situation. Id. at 1222. In determining the
pivotal issue of ownership, the Ohio Court rejected the university's position
that it was merely a lessee under the lease agreement. Instead, the court
found significant the fact that the university had purchased the property
with the intention of improving it with the conference center; the conference
center was constructed on public property; “ownership” of the property
automatically reverted to the university for a sum certain on a date certain;
and the fact that the “rent” payments calculated by the actual cost
of the project “until such time as the university has essentially paid
for the project itself” were used as the sum certain “cost”
for such reversion of ownership. Id. at 1223. Based on these facts,
the court found the actual owner of the property to be the university, and
thus the bidding statutes were determined to apply. Id. Given the absence
of a corresponding ownership focus within our prevailing wage and competitive
bidding statutes, we are more intrigued with the appellate court's agreement with the lower court that the bidding laws applied “notwithstanding
the method used to finance the conference center, 'as a consequence of [the
university's] intended use of the buildings[.]'” Id. Based on
the university's intended use of the conference center, the court had no difficulty
affirming the lower court's conclusion that the project was for a public improvement
within the meaning of Ohio's laws. Of perhaps even more importance for our
analytical purposes, however, was the Ohio Court's rejection of the university's
argument “that certain statutory obligations do not apply based solely
upon the fact that a private entity directly contracts for the project.”
Id. at 1224.
Another decision
from which we draw guidance is the City of Camdenton, a case in which
the Missouri Court of Appeals ruled that the prevailing wage rate was applicable
where the municipality sold property to a third party under an arrangement
requiring such third party to oversee the construction of a firehouse/police
station on the property and then grant the city a lease with an option to
purchase the improved property. 779 S.W.2d at 312. Given that the construction
project was clearly “for public use or benefit,” there was no question
that the firehouse/police station constituted a “public works” within
the Missouri statute. Id. at 316. The municipality advanced the same
argument that the Foundation advances here: The prevailing wage rate does
not apply since the construction workers are not employed pursuant to a contractual
arrangement between a public body and a general contractor. Id. In
addition, the city cited its option to terminate the lease/purchase agreement after one year. Id. at 317. In concluding that the prevailing
wage act “is not limited to a project on which the workmen are employed
directly by a public body,” the Missouri court stated:
To
hold that this carefully constructed legal facade insulates the construction
of the firehouse/police station from the Prevailing Wage Act would be to place
form over substance. The building was to be built according to the plans and
specifications of Camdenton. Camdenton retained the right to change those
plans and specifications. Camdenton was also granted the power to supervise
the construction. . . . Inherent in the design of the building and its location
is a compelling inference that it is to be used by Camdenton.
770 S.W.2d at 316 (emphasis supplied). Describing the arrangement employed
by the municipality as “'a financing device,'” the Missouri court
concluded that “the workmen on the project are in reality employed on
behalf of Camdenton.”
(See footnote 18) Id. at 316 -17. Observing
that “[a] city may not do indirectly that which it cannot do directly,”
the appellate court reasoned that were it “[t]o hold otherwise [it] would
[be] lend[ing] judicial approval to an easy method of nullifying the Act.”
Id. at 317.
In the recent decision
of Division of Labor Standards v. Friends of the Zoo, 38 S.W.3d 421
(Mo. 2001), the Missouri Supreme Court agreed with the position adopted by the intermediate appellate court in Camdenton that “[a] public
body constructing public works may not circumvent the prevailing wage law
by a 'carefully constructed legal facade.'” 38 S.W.3d at 423. At issue
in the Friends case was whether workers employed by the not- for-profit
Friends of the Zoo charitable organization to construct a reptile house for
the zoo were in fact “workers . . . employed on behalf of
a public body engaged in the construction of public works.” Id. at
422. Reversing the lower court's grant of summary judgment to the Friends,
the Missouri Supreme Court rejected the argument advanced by the Friends
that the prevailing wage laws could only apply if the private entity in charge
of the construction is an agent of the public body. Id. at 423. Viewing
this interpretation as too narrow, the appellate court concluded: “Where,
by all the facts and circumstances, a private entity and a public body create
a facade behind which the public body engages in public works, the workers
are employed on behalf of the city.” Id. at 424.
Several additional
decisions suggest factors that are relevant to resolving the underlying issue
of whether, despite the identity of the contracting parties or the nature
of the contract itself, the construction work is nonetheless subject to the
respective state's prevailing wage laws based on the realities of the situation.
In Hunter v. City of Bozeman, 700 P.2d 184 (Mont. 1985), the court
looked beyond the lease agreement governing a municipality's use of a vehicle
storage building, which was built pursuant to a separate construction contract
to which the city was not a party. Affirming the lower court's decision that the lease “was in fact a sale of the building to the City and
that this was in effect a public works project,” the court found determinative
the fact that the City obtained absolute ownership of the “'leased' building
for $10 and retain[ed] ownership of the land” as well as the inclusion
of a liquidated damages clause in the event the City failed to renew periodic
five-year renewal options during the twenty-year lease period. Id. at
187. In a case which examined as a matter of first instance whether the Oregon
prevailing wage laws applied to a build-to-suit lease, the court determined
that the critical factor was “who exercised the most control over the
project.” Columbia-Pacific Bldg. & Const. Trades Council v. Oregon
Comm'n on Pub. Broad., 794 P.2d 438, 442 (Oreg. 1990). Thus, in deciding
whether a state agency “'carried on'” construction, the appellate
court looked to the fact that the lessor retained control over financing and
construction decisions; the lease was for fair rental value with the option
to purchase at full market value; an escape clause left the lessor with all
of the risk; and the lower court's conclusion that “the contract was
not a subterfuge to avoid paying the prevailing wage.” Id. at
440. In rejecting the applicability of the Oregon prevailing wage act, the
court also found significant the fact that the lessor already owned the land
on which the building was constructed; the lessee was not given a reduced
purchase price or any other rights in the building under the lease; and the
lease agreement “allowed Grayco [lessor] to build what was primarily
an easily-rented office building on its own land.” Id. at 442.
After carefully and thoroughly
considering the cases cited by the parties, we reach the conclusion that the
question of whether our wage act applies in any given situation is not resolved
simply with reference to the signing parties on a particular contract. This
is because the real parties in interest may not be signatories to the contracts
governing the construction project. As discussed above, the practicalities of
modern-day financing may require certain third-party arrangements which tend
to shield, in some instances, the full extent of the involvement of the actual
party in interest. This necessitates that the examining court must look behind
the mere paperwork to examine a host of factors in determining the applicability
of the wage act in any given case. As a fundamental matter, we recognize that
under West Virginia Code § 21-5A-2, the provisions concerning prevailing
wages can only be invoked when a construction project that constitutes a public
improvement and which involves workers employed by or on behalf of a public
authority is involved.
In deciding below that a
public improvement was not involved based upon the use of the terms “let
to contract” contained in the definition of “public improvement,”
we believe the circuit court focused too narrowly on that part of the definition
meant to reference in an all-encompassing fashion “all other structures
upon which construction may be let to contract.” W.Va. Code § 21-5A-1(4).
The key to defining a “public improvement,” as recognized by an
opinion of this state's attorney general and numerous courts, is the interwoven
concepts of public use and public benefit. See W.Va. Att'y Gen. Op.,
No. 10 (Feb. 21, 1989); Camdenton, 779 S.W.2d at 316. The determination
of whether the construction at issue involves public use, and therefore constitutes
a public improvement, requires application of numerous factors. One such set
of factors previously identified by counsel for the U.S. Attorney General
(See footnote 19)
in analyzing the applicability of the federal prevailing wage act to
a lease includes the following considerations:
We believe that, in general,
the determination whether a lease- construction contract calls for construction
of a public building or public work likely will depend on the details of the
particular arrangement. These may include such factors as the length of the
lease, the extent of government involvement in the construction project, the
extent to which the construction will be used for private rather than public
purposes, the extent to which the costs of construction will be fully paid
for by the lease payments, and whether the contract is written as a lease
solely to evade the requirements of the Davis-Bacon act [federal prevailing
wage act]. . . . [T]he fact that a novel financing mechanism is employed should
not in itself defeat the reading of such a contract as being a contract for
construction of a public building or public work.
This list of factors, with
several modifications, can aid a lower court in its determination of whether
a “public improvement” is involved notwithstanding the outward appearances
of the contracts or leases at issue. Accordingly, we hold that the issue of whether a “public improvement” is involved within the meaning
of this state's prevailing wage act must be determined by examining: (1) whether
a public entity initiated the construction project; (2) the extent of control
retained by the public entity during the development and construction phases;
(3) the extent to which the project will be used for a public purpose; (4)
whether public funds are used either directly for the costs of construction
or indirectly by means of a lease arrangement which contemplates payments
essentially covering the amount of the construction; (5) whether the contract
is written as a lease solely to evade the requirements of the prevailing wage
act; and (6) all other relevant factors bearing on the ultimate issue of whether
the project is indeed a public project notwithstanding novel financing mechanisms.
While, for reasons stated
below, we do not set aside the circuit court's findings and conclusions, we
wish to comment briefly on the application of these factors to the case sub
judice for future guidance purposes only. Although several documents submitted
as attachments to ACT's petition suggest that WVU was intimately involved
in the planning stages of the Center, we have no evidentiary finding relative
to this issue. Because no evidence was adduced below
(See footnote 20) with regard to the actual
control assumed by WVU during the construction phase we cannot determine the
extent of control maintained by WVU throughout the construction phase of the process. ACT produced documentation
indicating that 89.5% of the Center was to be occupied by WVU and the remainder
by the Foundation. In this Court's opinion, the relatively minor use of the
Center by a private entity would not foreclose a determination that the use
of the Center was primarily public in nature. Although the Foundation stresses
the legal right, as required by West Virginia Code § 5A-3-40 (1994) (Repl.
Vol. 2000), of WVU to cancel the lease with thirty days notice, we do not
find the mere inclusion of such a cancellation clause to be conclusive on
the issue of whether a project can be viewed a “public improvement”
within the meaning of this state's wage laws. Similarly, we do not find determinative
on this issue the fact that the document ultimately executed was only a lease
and not a lease-purchase agreement. It is conceivable to this Court that there
is still an understanding between the Foundation and WVU governing the use
of the building at the conclusion of the lease period.
(See footnote 21) See Lycoming County
Nursing Home Ass'n, Inc., v. Commonwealth of Penn., 627 A.2d 238, 243
(Pa. Commonw. Ct. 1993) (reasoning that fact of construction commencement
pre-signing of lease agreement indicated Commissioners knew outcome of negotiations
would be favorable). In disregarding the applicability of the Dial decision, the circuit court overlooked
the fact that this Court acknowledged in that decision that a lease-purchase
agreement undertaken to provide space for government offices clearly served
a public purpose. See 198 W.Va. at 199, 479 S.E.2d at 709. In the same
fashion, we believe that the leasing device undertaken in this case could
be viewed as a creative mechanism of serving the needs of a public entity,
WVU, with regard to procuring necessary office space. In this Court's opinion,
it would be imprudent to overlook the fact that WVU, rather than the Foundation,
was the party who initiated efforts related to the Center's planning and construction.
WVU was clearly engaged in a long-term process of obtaining office space to
be used primarily by its employees.
In foreclosing application
of the wage act based upon the fact that WVU did not sign any of the documents
under consideration, the lower court has overlooked the insertion of statutory
language in West Virginia Code § 21-5A-2 that extends protection of the
act when the workers at issue are “employed . . . on behalf of any public
authority.” Id. Following the rationale employed by the court
in Camdenton, we determine that the absence of a “public authority”
as signatory to a document examined in connection with the issue of the applicability
of this state's prevailing wage act does not in itself defeat application
of the act. Where sufficient facts are submitted to demonstrate that the workers
are involved in construction on behalf of any “public authority,”
the act may still apply. In determining the factual issue of whether the construction
is “on behalf of” the “public authority,” the trial court
should consider whether a public entity initiated the underlying project and
all other relevant factors including whether public funding is involved and whether
the intended use is for a public purpose. To find otherwise, as the Court
observed in Camdenton, would amount to sanctioning a relatively easy
way to avoid invoking the provisions of the wage act. See 779 S.W.2d
at 317.
Implicit in our holding
regarding the factors to consider in evaluating whether a “public improvement”
exists for prevailing wage purposes is a recognition that the term “public
authority,” like the term “public improvement,” cannot be used
as a shield to prevent the wage act from operating when the public entity
for whom the construction is being performed is not a party to a contract.
It only stands to reason that if the wage act was intended to extend to those
workers who are doing work on behalf of a public authority, then the mere
lack of a signature by that public authority to a contract should not be permitted
to operate in such a fashion to circumvent the intent of this state to fairly
compensate those laborers. We acknowledge that the wage act, as currently
written, clearly hinges its operation on the existence of a contract having
been signed by a public authority. See W.Va. Code § 21-5A-6. Barring
statutory amendment to section six to include language indicating that an
entity acting on behalf of a “public authority” can sign a contract
which invokes the protections of the wage act, we feel compelled to read in
such language in the interest of upholding the laudatory policy advanced by
the wage act of establishing a floor for the workers engaged in construction
for the public's benefit. See W.Va. Code § 21-5A-2; see also
Banker v. Banker, 196 W.Va. 535, 543-44, 474 S.E.2d
465, 473-74 (1996) (noting that “in interpreting the terms of our . .
. statutes specifically, we, in the past, have taken care not to undermine
the statutes' fundamental goals” and that “we consistently have
turned back neat legal maneuvers attempted by litigants that were not in keeping
with overarching duties, responsibilities, and rights that the West Virginia
Legislature intended”); State v. Elder, 152 W.Va. 571, 575, 165
S.E.2d 108, 111 (1968) (“'This and other courts will always endeavor
to give effect to what they consider the Legislative intent; but, we do not
change plain and simple language employed in framing a statute unless there
is an impelling reason for so doing.'”) (quoting Baird-Gatzmer Corp.
v. Henry Clay Coal Mining, 131 W.Va. 793, [805,] 50 S.E.2d 673[, 680 (1948)]).
Accordingly, we conclude that in those instances where it is exceedingly clear
that a public entity who qualifies as a “public authority” under
West Virginia Code § 21-5A-1(1) is intimately involved with the construction
at issue, a trial court may be permitted to reach a conclusion that the wage
act should apply notwithstanding the absence of a public authority's actual
signature on a subject contract where it can be demonstrated that a contracting
party is acting on behalf of the public authority. The concepts previously
discussed with regard to determining the existence of a “public improvement,”
such as identifying who initiated the project; examining the degree of control
exercised by the public entity in the planning and development stages; and
looking to the nature of the use to which the project will be put, will similarly
be useful in deciding whether a third party is acting on behalf of a public
authority in entering into contracts involving public improvement-type projects. We find no compelling reason not to extend
the protections of the wage act in such instances where a public authority
is operating behind the scenes to accomplish purposes that qualify as public
in nature. Moreover, we feel constrained to interpret the wage act in this
fashion to prohibit the clear intent of the statute from being violated.
Based on this Court's recognition
that public funds are at issue when the state is obligated to make rental payments
pursuant to a lease agreement, we find a sufficient public interest at stake
to similarly require that a trial court examine certain factors to determine
the applicability of the competitive bidding statute. See Dial, 198 W.Va.
at 199- 200, 479 S.E.2d at 709-10. Since the competitive bidding statute applies
to the State, which necessarily includes state agencies, then the statute applies
to WVU based on its status as a state agency.
(See footnote 22) Thus, if WVU is determined
to be intimately involved in the construction process in the same fashion discussed
above with reference to the issue of prevailing wages, the use of a third-party
to contract for construction projects cannot insulate WVU from application of
the competitive bidding statute. In determining whether the State or its agencies
is involved in a construction project sufficient to invoke the competitive bidding
protections of West Virginia Code § 5-21-1, a trial court should examine:
(1) whether the State or its agency initiated the construction project; (2)
the extent of control retained by the State or its agency during the development
and construction phases; (3) the extent to which the project will be used for
a public purpose; (4) whether public funds are used either directly for the
costs of construction or indirectly by means of a lease arrangement which contemplates
payments essentially covering the amount of the construction; and (5) all other relevant factors bearing on the issue of whether the construction is properly
viewed as government construction.
Through this opinion, we
wish to emphasize that when a public entity such as the State, or its agencies,
initiates a construction project, which upon completion will serve the interests
of the State, its agencies, or the public in general, it is incumbent upon
the State and/or its agencies to require that the project complies with the
requirements of the competitive bidding statute. See W.Va. Code §
5-22-1. The State or its agencies cannot escape the requirements of the bidding
statute by involving a third-party for the purpose of general construction
responsibilities or for the purposes of obtaining the necessary funding.
Based upon the findings made by the lower court concerning the lack of any prevailing wage rate violations combined with the lack of any evidence indicating that the contracts at issue were undertaken to avoid application of the wage act, we have no basis from which to conclude that the lower court was in error in granting summary judgment to Appellees. Moreover, without significant factual development, our holdings in this case involving new points of law cannot be applied to this case. Given the manner in which this case reaches us with insufficient evidence of wage violations and a relatively undeveloped record, (See footnote 24) combined with the finished stage of the project, we deem it improper to remand this case for further development. Accordingly, the decision of the Circuit Court of Kanawha County is hereby affirmed.
Affirmed.
project, filed a memorandum in opposition to the Foundation's motion to dismiss.
W.Va. Code § 21-5A-6 (setting forth requirements concerning contracts between “public authority” and contracting party relative to prevailing wages).