North Marion School District 15 Ex Rel. Trejo v. Acstar Insurance

DURHAM, J.,

specially concurring.

I concur in the majority’s conclusion that defendant Acstar Insurance Co. (Acstar), a surety, is not liable for penalty wages under ORS 652.150 in an action to secure relief under a construction bond under ORS 279.526 (1999).1 I also concur, although for a different reason, with the majority’s refusal to allow plaintiffs to recover liquidated damages from defendant Acstar under ORS 279.526.

ORS 279.526 provides, in part:

“(1) A person claiming to have supplied labor or materials for the prosecution of the work provided for in the contract, including any person having direct contractual relationship with the contractor furnishing the bond or direct contractual relationship with any subcontractor, or an assignee of such person, or a person claiming moneys due the State Accident Insurance Fund Corporation, the State Department of Employment Trust Fund or the Department of Revenue in connection with the performance of the contract, has a right of action on the contractor’s bond, cashier’s check or certified check as provided for in ORS 279.029 only if:
“(a) The person or the assignee of the person has not been paid in full; and
“(b) The person gives written notice of claim, as prescribed in ORS 279.528, to the contractor and the state agency, if the contract is with a state agency, or the clerk or auditor of the public body that let the contract if the public body is other than a state agency.”

*327Paragraphs (l)(a) and (b) of that statute establish separate preconditions for the right of action on a contractor’s bond described in subsection (1). The majority decides that plaintiffs action fails under paragraph (l)(a), because plaintiffs are not persons who have “not been paid in full.” According to the majority, the statutory phrase “paid in full” imposes no obligation to pay wages on time; it requires only the payment of the correct amount of wage (here, the prevailing wage) regardless of the lateness of that wage payment. The dissent challenges that opinion, asserting that the phrase “paid in full” incorporates a duty to pay the required wage on the payday established under ORS 652.120(1).

In my view, plaintiff’s action under ORS 279.525(1) fails because plaintiffs failed to satisfy the notice of claim requirement in paragraph (l)(b). That provision requires plaintiffs to give a written notice “as prescribed in ORS 279.528, to the contractor * * ORS 279.528(3) provides:

“The notice shall be in writing substantially as follows:

“To (here insert the name of the contractor and the name of the state agency or public body):
“Notice hereby is given that the undersigned (here insert the name of the claimant) has a claim for (here insert a brief description of the labor or materials performed or furnished and the person by whom performed or furnished; if the claim is for other than labor or materials, insert a brief description of the claim) in the sum of (here insert the amount) dollars against the bond taken from (here insert the name of the principal and, if known, the surety or sureties upon the bond) for the work of (here insert a brief description of the work concerning which the bond was taken). Such material or labor was supplied to (here insert the name of the contractor or subcontractor).
“_(here to be signed)”

The trial court found the following pertinent facts, which are not disputed, regarding plaintiffs’ notices:

“The employees filed notices of claim on May 8, 2000. The notices did not contain information required by ORS 279.528, nor were they in substantial compliance with the statute. They did not provide the payroll period, the hours *328worked, the pay rates, the total amount due, or the contract on which the work was performed. Acstar Insurance Company received its first notice of bond claim by certified mail from plaintiffs’ counsel on or about May 15, 2000. The following day, on May 16, 2000, defendants made an appearance through counsel and by letter requested the information lacking in the notices. Plaintiffs’ counsel declined to provide the requested information, asserting that the sureties were responsible for ascertaining the amount due each of the employees.”

The statute requires substantial compliance with the notice requirements. School Dist. No. 1 v. Rushlight & Co., 232 Or 341, 375 P2d 411 (1962). The trial court’s findings confirm that plaintiffs’ notices did not meet that standard. For example, plaintiffs did not comply substantially with the duty to give notice of the amount of the claim merely by disclosing other information that would allow the surety, after conducting its own investigation, to discover the amount of the claim. A notice with a deficiency of that magnitude cannot fulfill the public notification function that the legislature intended. For that reason, the majority’s decision to affirm the trial court’s judgment is correct.

Because plaintiffs’ noncompliance with ORS 279.526(1)(b) is determinative, I do not decide this case, as the majority does, under ORS 279.525(1)(a). However, I shall explain briefly the reason why the dissent has the better of the argument about the scope of the action that ORS 279.526(1) embodies.

Under ORS 279.526(l)(a), plaintiffs may bring an action against a surety if they have “not been paid in full[.]” The phrase, “paid in full,” lies at the heart of this case.

The majority focuses on numerous references in other statutes to the amount of the required payment, i.e., the prevailing wage. Certainly, a tender of a paycheck in an amount less than the prevailing wage would violate the legal duty to pay the prevailing wage in full.

What the majority ignores is that the key phrase “paid in full” has two substantive components: “paid” and “in full.” By focusing on the second of those components, the majority fails to investigate the meaning of the first.

*329What did the legislature mean when it required in ORS 279.526(l)(a) that a plaintiff be a person who has not been “paid”? The statute incorporates no specialized definition of the term “paid,” but, in construing that term, we must consult the statutory context, i.e., other related statutes that help to explain the legislative intent in using the term “paid.”

ORS 652.120(1) provides:

“Every employer shall establish and maintain a regular payday, at which date all employees shall be paid the wages due and owing to them.”

(Emphasis added.) That statute applies to every employer and all employees, including those working under a public works contract. By requiring every employer to establish a regular payday and requiring payment of all owed wages on that date, the statute creates a deadline, known to all parties, that clearly identifies whether an employer has fulfilled the duty to pay its employees. In common parlance, we can say that employees have “not been paid” if, at the end of the established payday, the employer has failed to tender the compensation due and owing.

ORS 652.120(1) is helpful context regarding the meaning of the term “paid” in ORS 279.526(l)(a). A claim that a person has “not been paid” refers to the employer’s failure to tender compensation due and owing by the payday deadline established under ORS 652.120(1). A tender of compensation many days or weeks after the payday deadline is a late payment, but not one that complies with the policy regarding timely payment that the legislature has created in ORS 652.120(1). It was that policy that the legislature had in mind when it authorized employees to bring a claim against a surety if they had not been paid in full. ORS 652.120(1) makes clear the legislature’s intent in using the term “paid” in ORS 279.526(l)(a).

The majority refuses to consider ORS 652.120(1) as helpful context in the construction of ORS 279.526(l)(a). That is an error. By focusing heavily on the meaning of the phrase “in full,” the majority concludes that no action lies here because employees received their correct compensation *330eventually, although several weeks after the designated payday. The majority fails to recognize that, at the end of the designated payday, the employees had “not been paid,” under ORS 279.526(l)(a), in any amount, let alone “in full.”

The Bureau of Labor and Industries has submitted an amicus curiae brief explaining the serious administrative problems and inconsistencies that will arise for the Bureau if this court were to accept the interpretation of ORS 279.526(l)(a) that defendant Acstar urges. The majority has agreed with Acstar and has rejected the arguments of the Bureau. It now appears that the Bureau’s administrative difficulties will persist until the legislature revisits this topic.

For the reasons explained above, I specially concur in the majority’s result.

Like the majority, I refer to the 1999 versions of the pertinent statutes in OKS chapter 279.