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Division of Labor Standards Enforcement v. Davis Moreno Construction

March 16, 2011

DIVISION OF LABOR STANDARDS ENFORCEMENT, PLAINTIFF AND RESPONDENT,
v.
DAVIS MORENO CONSTRUCTION, INC., ET AL., DEFENDANTS AND APPELLANTS.



Super. Ct. No. VCU231688 APPEAL from a judgment of the Superior Court of Tulare County. Paul Anthony Vortmann, Judge.

The opinion of the court was delivered by: Franson, J.

CERTIFIED FOR PUBLICATION

OPINION

Appellants Ayodeji A. Ogundare, individually and doing business as Pacific Engineering Company (Pacific) and Davis Moreno Construction, Inc. (Davis) each moved to vacate a judgment entered against them pursuant to Labor Code section 1742.*fn1 Pacific contended that the judgment against it was not authorized by section 1742, subdivision (d) because it was filed in the wrong county and was therefore void. Davis raised the same contention, and further argued that the judgment against it had been obtained by means of extrinsic fraud. The superior court, relying on Pressler v. Donald L. Bren Co. (1982) 32 Cal.3d 831 (Pressler) and Maynard v. Brandon (2005) 36 Cal.4th 364 (Maynard), concluded it did not have jurisdiction to grant relief, and denied both motions. Appellants now renew these same contentions on their appeals to this court. As we shall explain, we disagree with Pacific's contentions, but agree with Davis that the superior court had jurisdiction to entertain Davis' motion on its merits. We reverse the order of the trial court denying Davis' motion, but affirm as to Pacific.

Section 1742 describes a procedure under which the state can obtain a judgment against a contractor or subcontractor for violations of the state's prevailing wage law. In part "I" of our decision, we hold that a court is not without power to determine whether a judgment obtained by the state utilizing the section 1742 procedure was the product of extrinsic fraud.

Subdivision (d) of section 1742 provides that a judgment obtained pursuant to that section is appropriately entered in "any county in which the affected contractor or subcontractor has property or has or had a place of business." In part "II" of our decision, we hold that "any county in which the affected contractor or subcontractor ... has or had a place of business" includes any county in which the affected contractor or subcontractor performed its work on the public works project on which the violations occurred.

FACTS

Pacific is in the construction business. In December 2008, Pacific was a subcontractor for Davis on a construction project for the Exeter Union Elementary School District in Tulare County (the School District). Davis was the general contractor. On December 3, 2008, the Labor Commissioner of the State of California, acting through the Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE), served Pacific and Davis with a "Civil Wage and Penalty Assessment" (the assessment). Under the heading "Notice of Right to Obtain Review - Formal Hearing," the assessment expressly informed its recipients that "[i]n accordance with Labor Code section 1742, an affected contractor or subcontractor may obtain review of this Civil Wage and Penalty Assessment by transmitting a written request to the office of the Labor Commissioner ... within 60 days after service of the assessment." The assessment provided the address where any such request for review should be sent, and further stated: "Failure by a contractor or subcontractor to submit a timely Request for Review will result in a final order which shall be binding on the contractor and subcontractor ...." The assessment also informed its recipients: "In accordance with Labor Code section 1742 [subdivision] (d), a certified copy of a final order may be filed by the Labor Commissioner in the office of the clerk of the superior court in any county in which the affected contractor or subcontractor has property or has or had a place of business. The clerk, immediately upon the filing, shall enter judgment for the State against the person assessed in the amount shown on the certified order."

Pacific did not submit a Request for Review to the Labor Commissioner. Nor did Davis. On February 5, 2009, the Labor Commissioner certified the final order of assessment and, on February 11, 2009, the Tulare County Superior Court entered judgment against Pacific and Davis jointly and severally for $185,590.83, plus an additional $12,000.00 in penalties against Pacific only.

In August of 2009, Pacific filed a motion to set aside the judgment against it under Code of Civil Procedure section 473, subdivision (b), based on mistake, inadvertence and/or excusable neglect. The motion included a declaration from Mr. Ogundare stating he had received several wage and penalty assessments pertaining to several different projects and that he "inadvertently did not provide [his] attorney with the documents related to the Exeter job in a timely manner." On September 1, 2009, the court (per the Honorable Patrick J. O'Hara) denied the motion as untimely, concluding that the six-month window for seeking relief under Code of Civil Procedure section 473, subdivision (b) does not excuse a party from other, shorter, statutory deadlines, including section 1742, subdivision (c). Citing Maynard, supra, 36 Cal.4th 364 and Pressler, supra, 32 Cal.3d 831, the court stated "[t]his court is without jurisdiction to provide any relief ...." In October of 2009, Pacific filed a second motion to set aside the judgment, this time under Code of Civil Procedure section 473, subdivision (d). Pacific argued that the Tulare County Superior Court did not have jurisdiction to enter the judgment because it was entered in the wrong county under section 1742, subdivision (d), and the judgment was therefore void.

Also in October 2009, Davis filed a motion to set aside the February 5, 2009, final order of assessment and the February 11, 2009, judgment entered in Tulare County Superior Court, and to order that Defendant Davis Moreno be granted a review hearing of the assessment. Davis raised the same jurisdictional argument made by Pacific under section 1742, subdivision (d) and further contended its failure to submit a request for review to the Labor Commissioner was a direct result of representations by a Deputy Labor Commissioner that Davis need not do so.

The court heard both motions and on November 25, 2009, issued its order denying both motions as untimely. The court's ruling cited Pressler, supra, 32 Cal.3d 831 and Maynard, supra, 36 Cal.4th 364 and stated that "the court [cannot] overcome its initial conclusion that it does not have jurisdiction" to grant relief. The court also concluded that the judgment was not void under section 1742, subdivision (d), because it was entered in a county where both defendants had an interest in the construction monies retained by the school district, which the trial court impliedly found to qualify as a "property" under section 1742, subdivision (d).

DISCUSSION

I. THE TRIAL COURT SHOULD HAVE DETERMINED WHETHER THE FINAL ASSESSMENT ORDER AND JUDGMENT AGAINST DAVIS WAS OBTAINED BY EXTRINSIC FRAUD

Davis's primary contention is that the final order of assessment and judgment against it were obtained by extrinsic fraud, and that the superior court had the power to determine whether the final order of assessment and judgment was so obtained. Davis presented the declaration of its operations manager Steven Abston. Abston declared that he received the assessment dated December 3, 2008, that it "related to the alleged failure by Pacific Engineering to pay certain wages and other items to its employees," and that "[t]he employees who are the subject of the Civil Wage and Penalty Assessment were not employees of Defendant Davis Moreno." He further stated that he spoke with Sherry Gentry of the DLSE on December 9, 2008. "When I spoke to her, it appeared that the assessment was indicating that the employees had been paid essentially nothing by Pacific Engineering for any of their work. She told me that she knew that the numbers indicated in the Civil Wage and Penalty Assessment were grossly inflated as they were based on each employee being paid nothing by Pacific Engineering for any of their work. She also told me that she knew that the employees had been paid, but that the DLSE was attempting to motivate Pacific Engineering to provide the recordkeeping documents that it requires. She further told me that, after receiving those records, DLSE intended to revise the numbers. She instructed me to do nothing further until further notice from the DLSE and to disregard the instructions in the Civil Wage and Penalty Assessment other than to simply discontinue paying Pacific Engineering.... [¶] ... I subsequently talked to Ms. Gentry again on December 11, 2008 and informed her that Ayo Ogundare [from Pacific] would be contacting her for a meeting. She indicated that she had already talked with Mr. Ogundare and that a meeting had been set up and she hoped that the issue would be resolved shortly. [¶] Based upon the statements by Sherry Gentry of the DLSE, neither I nor Davis Moreno took any action, concerning the Civil Wage and Penalty Assessment, including seeking any review. Had I known that the DLSE intended to take action against defendant Davis Moreno other than asking it to hold any monies that were due to Pacific Engineering, I would have caused Defendant Davis Moreno to seek a timely review of the Civil Wage and Penalty Assessment."

Abston further declared he did not become aware of the February 11, 2009, judgment until August 4, 2009, when he "was provided with a copy" of it. He stated that it was a representative of ...


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