Farley v. Zapata Coal Corp.
Farley v. Zapata Coal Corp.
Opinion of the Court
This appeal presents three issues which are here for the first time: (1) does a mechanic’s lien for the value of work and labor performed include vacation and sick pay; (2) may a lien for liquidated damages, which arises upon a contractor’s default in payment of wages, be enforced in a mechanics’ lien proceeding against the corporation employing the contractor; and (3) are attorney fees recoverable in a suit to enforce mechanics’ liens. The first issue deals solely with the interpretation of our mechanics’ lien statutes, specifically W.Va. Code § 38-2-31 (1966). The latter two issues involve the interrelationship of those statutes with the Wage Payment and Collection Act. W.Va. Code § 21-5-1 et seq. (1978 Replacement Vol.).
The twenty-two appellants are former employees of M & T Coal Corporation, a corporation which operated a strip
On March 18,1977, M & T ceased operations and its owner disappeared. At that time, M & T’s employees were owed four weeks’ wages. In addition, most of them were also owed accrued vacation pay and compensation for unused paid sick days pursuant to the terms of the 1974 Bituminous Coal Wage Agreement. Several of the nonunion management employees were also owed vacation pay by virtue of their individual employment contracts.
At the time of its collapse, M & T Coal Corporation had no tangible assets. Its equipment was either leased, or subject to purchase money security interests, and its bank account was empty.
In June 1977, within the statutory period of ninety days after performing their last work, the appellants filed mechanics’ liens against both M & T Coal Corporation and Zapata Coal Corporation. They claimed actual wages for the four weeks they were not paid, accrued vacation and sick pay, and liquidated damages under W.Va. Code § 21-5-4 (1978 Replacement Vol.). On August 26,1977, an action was brought in the Circuit Court of Logan County to enforce the liens, at which time the appellants also requested, pursuant to W.Va. Code § 21-5-12 (1978 Replacement Vol.), an award of attorney fees and costs expended in enforcing their liens.
M & T Coal Corporation did not file an answer or otherwise appear in the action. Since there were no assets of M & T available against which the appellants’ liens could be enforced, no further action was taken against M & T in the circuit court. Zapata Coal Corporation did file an answer and the action proceeded solely against it. The
Zapata conceded that the appellants were entitled to enforce their liens for the four weeks of regular wages due at the time M & T’s operations ceased, and the court ruled that the liens could be enforced against Zapata for those amounts. However, Zapata denied liability for vacation pay, compensation for unused sick leave days and other fringe benefits, liquidated damages, and attorney fees. With respect to these amounts, the court ruled: (1) that the appellants could not enforce their mechanics’ liens against Zapata for accrued vacation pay, compensation for unused sick leave days or any other fringe benefits; (2) that the appellants’ liens for liquidated damages under W.Va. Code § 21-5-4 could not be enforced against Zapata; and (3) that the appellants were not entitled to an award of attorney fees, pursuant to W.Va. Code § 21-5-12. The appellants contend these three rulings were erroneous.
I
The mechanics’ lien statute involved in this appeal provides that every laborer who performs any work for an incorporated company “shall have a lien for the value of such work or labor upon all real estate and personal property of such company.” W.Va. Code § 38-2-31. The court below was of the opinion that this language encompassed only the hourly rate of wages and nothing more. We disagree.
The purpose of our mechanics’ lien statutes is to protect the workman who, by the fruits of his labor, benefits another. The statutes act as an aid in the prompt collection of all compensation due the worker. They are remedial in nature, and are to be liberally construed in order that they serve the purpose for which they were enacted. Carolina Lumber Co. v. Cunningham, 156 W.Va. 272, 192 S.E.2d 722 (1972). We have in the past enforced a mechanic’s lien which
We find our holdings in State ex rel. Davis v. Iman Mining Co., supra, and Eastern Gas & Fuel Associates v. Hatcher, supra, to be consistent with the decisions of numerous other courts which have also held fringe benefits such as vacation pay to constitute compensation for work performed in various factual contexts. See Hartman v. Freedman, 197 Colo. 275, 591, P.2d 1318 (1979); People v. Bishopp, 56 Cal. App.3d Supp. 8, 128 Cal. Rptr. 923 (1976); Jones v. District Parking Management, 268 A.2d 860 (D.C. App. 1970); Nitzen v. Oregon State Motor Association, 248 Or. 133, 432 P.2d 512 (1967); Moore v. State Unemployment Compensation Commission, 167 A.2d 76 (Del. 1961); Carter v. Board of Review, 323 P.2d 362 (Okla. 1958); Textile Workers Union v. Williamsport Textile Corp., 136 F. Supp. 407 (M.D. Pa. 1955); Ericson v. General Motors Corp., 177 Kan. 90, 276 P.2d 376 (1954); Calvine Cotton Mills, Inc. v. Textile Workers Union, 238 N.C. 719, 79 S.E.2d 181 (1953); Textile Workers Union v. Paris Fabric Mills, 18 N.J. Super. 421, 87 A.2d 458, aff'd, 22 N.J. Super. 381, 92 A.2d 40 (1952).
Fringe benefits, including vacation pay, are also deemed wages by regulations promulgated by the West Virginia Commissioner of Labor pursuant to the Wage Payment and Collection Act, W.Va. Code § 21-5-1 et seq.,
Vacation pay and other similar benefits are not gratuities which employers benevolently bestow upon their employees. Rather they are integral components of a compensation package bargained for and agreed upon by the parties. One expects that both employers and employees strive for a fair exchange in the employment market place. A factor the employee undoubtedly considers when gauging the fairness of an employment offer is the value of benefits the employer offers in addition to take home pay. Conversely, the employer also takes into account the cost of fringe benefits when determining the salary or hourly wage rate it will offer its prospective employees. Obviously if fringe benefits such as vacation and sick pay were absent from the compensation package, wages would be higher.
Consequently, in light of the policy of our mechanics’ lien statutes and the considerations discussed above, we construe “value of such work or labor”, as contained in W.Va. Code § 38-2-31, to mean all compensation contracted to be paid by the employer for the employee’s services regardless of the nature of such compensation. It was therefore error for the court below to rule that the appellants could not enforce mechanics’ liens for accrued vacation pay, compensation for unused sick leave days or any other fringe benefits.
II
The appellants’ claim for liquidated damages is based upon the West Virginia Wage Payment and Collection Act. W.Va. Code § 21-5-1 et seq. Under the provisions of the act, when an employee is laid off for any reason the employer must pay the employee, no later than the next regular
The appellants argue that the reference to “lien” rights in the above quoted language includes the right to enforce a lien against a corporation by employees of a contractor pursuant to W.Va. Code § 38-2-31. The circuit court declined to accept this view. Instead it ruled that the Wage Payment and Collection Act deals exclusively with employee-employer relations, and that since no contract of employment existed between the appellants and Zapata, the appellants could not enforce their lien for liquidated damages against the corporation. We find this conclusion too constrained in light of the plain language of W.Va. Code § 21-5-4(e) and our principles of statutory construction.
The plain language of W.Va. Code § 21-5-4(e) explicitly provides that an employee shall have a lien and all other rights and remedies for the enforcement of his claim for liquidated damages equal to thirty days’ pay, as he would have been entitled to had he actually rendered service therefor in the manner as last employed. It is undisputed that if the appellants had actually performed labor for Zapata’s contractor, M & T, during the thirty days for which they claim liquidated damages, they could enforce a lien for their unpaid services against Zapata pursuant to W.Va. Code § 38-2-31. The effect of W.Va. Code § 21-5-4(e) is to create by operation of law a fictitious additional thirty days of employment, and to grant the employee the same remedies and procedures for enforcing his lien for compensation for that fictitious thirty days that he would have had for the value of work actually performed.
It is well established in West Virginia that when two statutes relate to the same general subject and the two statutes are not in conflict, they are to be read in pari
The appellee contends that W.Va. Code § 21-5-7 (1978 Replacement Vol.) relieves Zapata of any liability for liquidated damages. This section of the Wage Payment and Collection Act provides:
Whenever any person shall contract with another for the performance of any work which the prime contracting person has undertaken to perform for another, the prime contractor shall become civilly liable to employees engaged in the performance of work under such contract for the payment of wages, exclusive of liquidated damages. ... (Emphasis added).
W.Va. Code § 21-5-7.
Even assuming that the appellee is a prime contractor within the meaning of the statute, its reliance on this section is misplaced because the appellants have not sought to subject Zapata to civil liability for unpaid wages in the suit envisioned by W.Va. Code § 21-5-7. Rather, the appellants’ course of action has been to seek enforcement of their liens under W.Va. Code § 38-2-31. The suit contemplated by W.Va. Code § 21-5-7 may be brought only after the employees “have exhausted all feasible remedies contained in [article 5].” W.Va. Code § 21-5-7. One of these
Ill
In the proceeding below the appellants requested an award of attorney fees pursuant to W.Va. Code § 21-5-12. The trial court denied this request because it was of the opinion that Chapter 21, article 5 of the Code dealt exclusively with employer-employee relations, and therefore a claim under Chapter 21, article 5 could not be enforced against a third party corporation such as Zapata in a proceeding brought pursuant to W.Va. Code § 28-2-31 to enforce mechanics’ liens.
West Virginia Code § 21-5-12 provides:
(a). Any person whose wages have not been paid in accord with this article... may bring any legal action necessary to collect a claim under this article.
(b). The court in any action brought under this article may, in the event that any judgment is awarded to the plaintiff or plaintiffs, assess costs of the action, including reasonable attorney fees against the defendant.
It is undisputed that the appellants have claims under Chapter 21, article 5 for wages and liquidated damages. The procedural means chosen by the appellants to enforce their claims was to proceed against the corporation who had hired their contractor under W.Va. Code § 38-2-31, the applicable mechanics’ lien statute. We have already held that this was a proper course since W.Va. Code § 38-2-31 is properly used in aid of the enforcement of a claim under Chapter 21, article 5. It follows then, that the action brought by the appellants is an action under Chapter 21,
The statute provides that the court “may” assess costs of the action, including reasonable attorney fees against the defendant. We feel that costs, including attorney fees, should be awarded to prevailing plaintiffs as a matter of course in the absence of special circumstances which would render such an award unjust. Both the Wage Payment and Collection Act and our mechanics’ lien statutes are designed to protect the laborer and act as an aid in the collection of compensation wrongfully withheld. Working people should not have to resort to lawsuits to collect wages they have earned. When, however, resort to such action is necessary, the Legislature has said that they are entitled to be made whole by the payment of wages, liquidated damages, and costs, including attorney fees. If the laborer were required to pay attorney fees out of an award intended to compensate him for services performed, the policy of these statutes would be frustrated. The issue, therefore, is not whether working people who assert their legal rights under W.Va. Code Chapter 21, article 5 are entitled to attorney fees, but what a reasonable attorney fee would be under the facts and circumstances of the particular case. Consequently, we hold that an employee who succeeds in enforcing a claim under W.Va. Code Chapter 21, article 5 should ordinarily recover costs, including reasonable attorney fees unless special circumstances would render such an award unjust. Because no such circumstances appear on the record before us, on remand the court below should award costs, including reasonable attorney fees, to the appellants.
In determining the reasonableness of the attorney fee award, the court should consider the factors set out in Disciplinary Rule 2-106 of our Code of Professional Responsibility. These factors include: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the employment will preclude other employment by the
For the foregoing reasons, the decision of the Circuit Court of Logan County is reversed, except insofar that it permits the appellants to enforce their liens for regular wages, and remanded for proceedings consistent with this opinion.
Reversed in part; remanded.
The Court in State ex rel. Davis v. Iman Mining Co., supra, apparently took for granted that vacation pay is a part of the value for which a mechanic’s lien may be enforced, and hence did not directly address the issue.
See W.Va. Wage Payment and Collection Regs. 100-14,-23 (1976).
The Bankruptcy Reform Act of 1978 resolved this issue by extending priority to “wages, salaries, or commissions, including vacation, severance, and sick leave pay.” 11 U.S.C.A. § 507 (a) (3) (1979).
Dissenting Opinion
dissenting:
The majority ignores both the facts and the law in its result-oriented holding that liens may be enforced against Zapata Coal Corporation [Zapata] for liquidated damages and attorney fees because Zapata’s general contractor, M & T Corporation [M & T], failed to pay wages to its (M & T’s) employees as required under law. I take no issue with that portion of the opinion which concludes that Zapata is liable to M & T’s employees under our mechanic lien statute, W. Va. Code, 38-2-31, for the four weeks’ wages due as well as all accrued vacation and other fringe benefits contracted for between M & T and its employees. However, I am in deep disagreement with the majority’s holding that our wage payment statute, W. Va. Code, 21-5-4(e) (imposing penalties for nonpayment of wages), can be read into the mechanic lien statute, W. Va. Code, 38-2-31 (enforcement of liens by unpaid workmen).
The majority manages this absurd result by holding that both statutes relate to “employee liens to secure compensation,” (Slip Opinion, p. 10), and thus should be read inpari
On the other hand, W. Va. Code, 21-5-4(e), which provides for liquidated damages where an employer fails to pay wages due his employees, is strictly limited to the employer-employee relationship.
The purpose of W. Va. Code, 21-5-4(e), is to punish an employer who fails to pay wages to his employees. There is some rationality to this punishment since it will encourage employers to pay their employees in a timely fashion. Moreover, the employer is in direct control of the condition that may give rise to the penalty. Such is not the case with a third party such as Zapata, which has no control over the prompt payment by M & T of its employees who are the plaintiffs in this suit. It is simply incredible to me that Zapata, who is not the employer, can be made responsible.
Other courts have strictly limited the application of penalty provisions of wage collection statutes similar to our own. In Johnson v. Banner Corporation, 308 So.2d 534 (La. App. 1975), the Louisiana court refused to allow
“The jurisprudence has interpreted these statutes as being penal in nature and therefore they must be strictly construed, [citations omitted]. Because these statutes are strictly construed the definition ‘anyone employing laborers ...’ cannot be interpreted to apply to Banner.” 308 So.2d at 536.
See also Fern v. Latour Creek R. Co., 29 Idaho 521, 160 P. 941 (1916); Milner v. Sheely, 57 Nev. 174, 69 P.2d 771 (1937), modifying, 57 Nev. 159, 60 P.2d 604 (1936); Eldorado-Rand Mining Co. v. Thompson, 57 Nev. 407, 65 P.2d 878 (1937).
As a final flourish, the majority seizes upon W. Va. Code, 21-5-12(b), of our Wage Payment and Collection Statute, which provides that “[t]he court in any action brought under this article may, [if] judgment is awarded to the plaintiff... assess. . .reasonable attorney fees against the defendant,” (emphasis added), and holds Zapata liable for attorney fees. The majority ignores the fact that proceedings under Chapter 21, Article 5, are confined to the employer-employee relationship and Zapata was not in that relationship with the plaintiffs. Moreover, the majority, in the early portions of its opinion, held that the plaintiffs’ case was brough under the mechanic lien statute, W. Va. Code, 38-2-31; now, it concludes “that the action brough by the appellants is an action under Chapter 21, article 5 ....” (Slip Opinion, p. 11)
The Legislature may be slightly astounded by the way in which the majority has legislated new meaning into W. Va. Code, 25-5-1, et seq. Despite the plain language of this statute confining its ambit to the employer-employee relationship, the maj ority has now opened it so wide that anyone may be sued if he has any connection with the wage earner’s employer. One might expect the Legislature to correct the majority’s mistake but I suspect that no matter
W. Va. Code, 38-2-31, provides:
“Every workman, laborer or other person who shall do or perform any work or labor, for an incorporated company doing business in this State, by virtue of a contract either directly with such incorporated company or with its general contractor, or with any subcontractor, shall have a lien for the value of such work or labor upon all real estate and personal property of such company; and, to the extent and value of one month’s such work or labor, said lien shall have priority over any lien created by deed or otherwise on such real estate or personal property subsequent to the time when such work or labor was performed: Provided, however, that there shall be no priority of lien as against conditional sales of, or reservation of title to, machinery sold to such company; nor shall there be priority of lien as between the parties claiming under the provisions of this section.”
W. Va. Code, 21-5-4(e), provides:
“If a person, firm or corporation fails to pay an employee wages as required under this section, such person, firm or corporation shall, in addition to the amount due, be liable to the employee for liquidated damages in the amount of wages at his regular rate for each day the employer is in default until he is paid in full, without rendering any service therefor: Provided, however, that he shall cease to draw such wages thirty days after such default. Every employee shall have such lien and all other rights and remedies for the protection and enforcement of such salary or wages, as he would have been entitled to had he rendered service therefor in the manner as last employed; except that, for the purpose of such liquidated damages, such failures shall not be deemed to continue*642 after the date of the filing of a petition in bankruptcy with respect to the employer if he is adjudicated bankrupt upon such petition.”
Of course, if it could be shown that Zapata actually controlled M & T, or that M & T was a subsidiary of Zapata, then liability might be found based on the fact that Zapata was the “real” employer. However, no such contention is made here.
Reference
- Full Case Name
- Clyde P. Farley, Et Al. v. Zapata Coal Corporation, Etc., Et Al.
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- 53 cases
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- Published