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Deed for Parcel at Ford Ord Mandates Prevailing Wage

A developer building a housing development on the site of the closed Fort Ord Army post in Monterey County was required to pay prevailing wages to construction workers, a state appellate court has ruled.

The California Court of Appeal, Sixth District, held that deeds for property acquired from the City of Marina Redevelopment Agency required the purchaser/developer to pay prevailing wages to construction workers, because the deeds incorporated a master resolution that explicitly mandates payment of prevailing wages. 

In addition, the appellate court ruled that the plaintiffs who filed the lawsuit were entitled to $73,167.50 in attorney's fees.

Developer Cypress Marina Heights LP (CMH) acquired 248 acres of Fort Ord land from the Marina's Redevelopment Agency (MRDA) at fair market value more than $10 million for the development of the 1,050-unit Marina Heights project. The redevelopment agency had acquired the land from the Fort Ord Reuse Authority (FORA) for $1 per parcel. Covenants in the FORA/MRDA deeds required payment of the prevailing wage for Monterey County to workers on all "first generation construction" relating to development of the land, regardless of whether the projects were considered "public works" under the Labor Code. The Department of Industrial Relations sets prevailing wage rates for different regions of the state based largely on union-level wages in large cities. The prevailing wage requirement typically applies only to public works projects and private development projects that receive a public subsidy.

Cypress Marina Heights refused to commit to pay the prevailing wage to workers on the Marina Heights project and claimed that its purchase agreement with MRDA did not require payment of the prevailing wage. Two labor unions, a mechanical contractors association and two Marina residents filed suit against CMH, MRDA and other entities that had acquired Fort Ord property. In a motion for summary adjudication against only CMH, the trial court found that CMH was required to pay the prevailing wage. The court also awarded plaintiffs their attorney's fees under Code of Civil Procedure 1021.5.  

The unanimous, three-judge court of appeal panel affirmed the judgment by reasoning that the master resolution, approved in 1997 and included in the transfer of land, obligated MRDA to require CMH to pay the prevailing wage. The 2001 implementation agreement between FORA and the city mandated that any transfer of property acquired from FORA by MRDA must be done in compliance with the master resolution and must incorporate specific deed covenants.

Besides explicitly stating that the covenants would run with the land in perpetuity, the deeds also stated:  "Grantee covenants for itself, its successors, and assigns and every successor in interest to the Property, or any part thereof, that Grantee and such successors and assigns shall comply with all provisions of the Implementation Agreement as if the Grantee were the referenced Jurisdiction under the Implementation Agreement and specifically agrees to comply with the Deed Restrictions and Covenants set forth in Exhibit F of the Implementation Agreement as if such Deed Restrictions and Covenants were separately recorded prior to the recordation of this Deed." 

The court ruled "this language indisputably binds MRDA's successors in interest;" therefore, CMH was required to pay prevailing wages.

After affirming the trial court's ruling, the appellate court addressed the attorney's fees. The trial court had granted two summary adjudication motions: one against CMH and one against East Garrison Partners I, another Fort Ord developer. Finding that CMH was less culpable than East Garrison Partners, the trial court required CMH to pay 35% of the total attorney's fees amount and Garrison 65% . 

On appeal, CMH argued that the award of attorney's fees was improper because the case did not enforce an important right affecting the public interest, as required under Code of Civil Procedure 1021.5. CHM also argued that, even if an award of attorney's fees was proper, the amount was too great.

On the first issue, the appellate court said that, in determining the importance of the particular vindicated right, courts should realistically assess the significance of that right in relation to the achievement of fundamental legislative goals. In this case, the plaintiffs' enforcement of prevailing wage requirements did vindicate a public interest and revitalized a local economy, resulting in benefits to 900 construction workers. After determining that attorney's fees were appropriate, the court reasoned that the amount of the fee award was reasonable, given that only 35% of the requested amount was awarded against CMH.

The Case:

Monterey/Santa Cruz County Bldg. & Constr. Trades Council v. Cypress Marina Heights LP , No. H034143, 2011 DJDAR 1324. Filed January 10, 2011. Ordered published January 24, 2011.

The Lawyers:

For the Trades Council: John Jacobs Davis Jr., Davis Cowell & Bowe, (415) 597-7200.

For Cypress Marina Heights: Patrick Edward Breen, Allen, Matkins, (213) 622-5555.