In the Matter of M.G.M. Insulation, Inc., et al., Appellants,v.Colleen C. Gardner,, Respondent.BriefN.Y.January 2, 2013To be Argued by: ANTHONY J. ADAMS, JR. Case No. 510657 (Time Requested: 20 Minutes) Court of Appeals of the State of New York In the Matter of M.G.M. INSULATION, INC., JOSEPH O. WESLEY, KENNEDY MECHANICAL PLUMBING AND HEATING, INC., DIANE SHUTTER, LEHMANN CONSTRUCTION CONSULTANT, INC., FINGER LAKES SERVICE GROUP, INC., KENNETH R. HATHAWAY, RMS CONTRACTORS, LLC, BALTZ CONCRETE CONSTRUCTION, INC., THOMAS F. BALTZ, GOFORTH ELECTRIC, INC., LAWRENCE C. GOFORTH, J&S PROTECTION SYSTEMS, INC., DAVID JENNINGS, FINGER LAKES PAINTING AND WALLCOVERING, LLC, RICHARD MILHAM, CUTAIA TILE, INC., ANGELO CUTAIA, ARK GLASS AND GLAZING CORP., RICHARD W. KOZYRA, W.R. DRAKE & SONS, INC., WILLIAMS R. DRAKE, McCLAIN ASSOCIATES, INC., NICK McCLAIN, RAYDO, INC., RAYMOND L. DOYLE, BILLONE MECHANICAL CONTRACTORS, INC., THOMAS J. BILLONE, PROVVIDENZA CONTRACTING, INC., VINCENT PROVVIDENZA, JR., R-J TAYLOR GENERAL CONTRACTORS, INC., and JAMES D. TAYLOR, Petitioners-Appellants, – against – COLLEEN C. GARDNER as Commissioner of Labor, State of New York, Respondent-Respondent. REPLY BRIEF FOR PETITIONERS-APPELLANTS June 29, 2012 GATES & ADAMS, P.C. Anthony J. Adams, Jr., Esq. Attorneys for Petitioners-Appellants 28 East Main Street, Suite 600 Rochester, New York 14614 Tel.: (585) 232-6900 Fax: (585) 232-8463 -i- TABLE OF CONTENTS Table of Authorities...........................................ii Argument........................................................1 POINT I: NEITHER FIRE CORPORATIONS GENERALLY NOR THE BATH VOLUNTEER FIRE DEPARTMENT, INC. IN PARTICULAR ARE AS “PUBLIC” AS THE COMMISSIONER CLAIMS............2 POINT II: THE APPELLATE DIVISION IMPROPERLY CONFIRMED ON A GROUND NOT RELIED UPON BY THE COMMISSIONER.......6 POINT III: THE ALTERNATIVE GROUND ADVANCED BY THE APPELLATE DIVISION -- AND NOW THE COMMISSIONER -- WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE IN ANY EVENT....8 POINT IV: RESPONDENT’S ARGUMENT THAT BVFD’S SERVICE AGREEMENT WITH THE VILLAGE IS A CONTRACT “WHICH MAY INVOLVE THE EMPLOYMENT OF LABORERS” UNDER §220 WAS EXPRESSLY WAIVED, AND IS WITHOUT MERIT IN ANY EVENT..13 Conclusion.....................................................19 Appendix.......................................................20 -ii- TABLE OF AUTHORITIES Cases 300 Gramatan Ave. Assoc. v. State Div. of Human Rights, 45 NY2d 176, 180 (1978)................................................................................................... 11 Adler v. Deegan, 251 N.Y. 467, 476 (1929) ...................................................... 2 Bridgestone/Firestone, Inc. v. Hartnett, 175 AD2d 495 (3d Dept. 1991)....................................................................................................................................... 17 Circus Disco Ltd. v. New York State Liquor Authority, 51 NY2d 24, 32 (1980) ..................................................................................................................... 7 Matter of 60 Mkt. St. Assoc. v. Hartnett, 153 AD2d 205 (3d Dept. 1990) ........................................................................................................................ 14 Matter of Barry v. O’Connell, 303 N.Y. 46, 52-53 (1951)..................... 7 Matter of Erie County Indus. Dev. Agency v. Roberts, 94 AD2d 532, aff’d, 63 NY2d 810 (1984)........................................................................... 17 Matter of Gray v. Adduci, 73 NY2d 741, 742 (1988) ................................. 11 Matter of Hoch v. New York State Dept. of Health, 1 AD3d 994, 995 (4th Dept. 2003)................................................................................................... 12 Matter of Montauk Improvement v. Broccacino, 41 NY2d 913 (1977) ...................................................................................................................................... 6 Matter of National Basketball Assn. v. New York State Div. of Human Rights, 115 AD2d 365, 368, aff’d 68 NY2d 644 (1986) .......... 12 Matter of National R.R. Passenger Corp. v. Hartnett, 169 AD2d 127 (3d Dept. 1991) ..................................................................................................... 14 Matter of New York Charter School Assn. v. Smith, 15 NY3d 403 (2010) .................................................................................................................................... 14 -iii- Matter of New York Charter School Assn. v. Smith, 61 Ad3d 1091, aff'd 15 NY3d 402, supra, ........................................................................ 16 Matter of Picone v. Commissioner of Licenses, 241 N.Y. 157, 162. ........................................................................................................................................... 7 Matter of Pyramid Co., of Onondaga v. New York State Dept. of Labor, 223 AD2d (3d Dept. 1996) ........................................................................ 12 Matter of Ridge, Inc. v. New York State Liq. Auth., 257 AD2d 625 (2d Dept. 1999) ..................................................................................................... 12 Matter of Seitelman v. Lavine, 36 NY2d 165, 170 (1975) ....................... 6 Matter of Veronica C. v. Carrion, 55 AD3d 411, 412 (1st Dept. 2008)....................................................................................................................................... 12 Securities Comm. v. Chenery Corp., 332 US 194, 196 (1947) ................ 6 Telaro v. Telaro, 25 NY2d 433, 439 (1969) .................................................... 14 Varsity Transit, Inc. v. Saporita, 71 AD2d 643, 644, aff’d 48 NY2d 767 (1979)................................................................................................................. 2 Statutes Education Law §2851[2][j]........................................................................................... 15 Education Law §2852[5] .................................................................................................. 14 Labor Law §220 ....................................................................................................................... 1 Labor Law §220(2) ................................................................................................................ 6 Not-For-Profit Corporation Law §1402 .................................................................. 1 N-PCL §103(c) ......................................................................................................................... 3 N-PCL §202................................................................................................................................. 3 N-PCL §1402(b) ....................................................................................................................... 2 -iv- N-PCL §1411 .............................................................................................................................. 4 Village Law §12-1200......................................................................................................... 4 Village Law §4-412 ........................................................................................................... 13 Village Law §4-412(6) ...................................................................................................... 4 Other Authorities New York State Constitution Article I, §17 .................................................... 1 -1- ARGUMENT The Commissioner substantially side-steps Appellants’ chief argument, i.e., that nothing in the Labor Law authorizes her to extend prevailing wage requirements to construction projects that are not performed pursuant to a contract “to which the state or a public benefit corporation or a municipal corporation or a commission appointed pursuant to law is a party.” Instead, she argues that fire corporations (defined in Not-For-Profit Corporation Law §1402) should be on the list of entities subject to Labor Law §220, and that she should be permitted to add them, either as a group or one at a time, by administrative fiat. But she offers no statutory predicate for such authority. The Commissioner’s main contention -- that “section 220 must be construed with the liberality needed to carry out its beneficent purposes” -- was anticipated and addressed in Appellant’s main brief. Those arguments will not be repeated here, except to emphasize that there is nothing to construe as far as the relevant portion of Labor Law §220 is concerned. The entities whose contracts are covered are listed in the statute, and not-for-profit corporations are not among them. There is a suggestion in Respondent’s brief that §220 should be expansively interpreted because it implements Article I, §17 of the State Constitution. However, the mere fact that the obligation to pay prevailing wages for “public work” was incorporated into the State Constitution in 1938 does not change the applicable rules of statutory construction. In any event, by 1938 the words “public work” had already become a term of art -2- carefully and restrictively defined by prior Legislatures between 1897 and 1935 to include only construction work for which the State, a public benefit corporation, a municipal corporation or a commission appointed pursuant to law had contracted. Cf., Adler v. Deegan, 251 N.Y. 467, 476 (1929). Accordingly, this Court has confirmed that Article I, §17 “extends the protection of section 220 of the Labor Law to contractors and subcontractors engaged in “public works” but was not intended to broaden the definition of ‘public work’.” Varsity Transit, Inc. v. Saporita, 71 AD2d 643, 644, aff’d 48 NY2d 767 (1979) [emphasis added]. Even if the Commissioner’s response to this appeal is somewhat oblique there are contentions in her brief that warrant a reply. POINT I NEITHER FIRE CORPORATIONS GENERALLY NOR THE BATH VOLUNTEER FIRE DEPARTMENT, INC. IN PARTICULAR ARE AS “PUBLIC” AS THE COMMISSIONER CLAIMS The Commissioner admits, as she must, that the Bath Volunteer Fire Department, Inc. (“BVFD”) is a fire corporation as defined by the Not-For-Profit Corporation Law, and is not one of the public entities specified in Labor Law §220. She argues though that “on the facts of this case and more generally under the governing statutes, the BVFD is properly deemed to be a part of the Village.” Respondent’s brief, p. 30. Even if the Commissioner had the authority to make such a judgment -- and she does not -- she overstates her case. N-PCL §1402(b) says: “A fire corporation is a Type B corporation under this chapter.” As such it enjoys all the -3- general and special powers endowed upon such corporations by N- PCL §202, including the power to acquire, own and use real or personal property (subd. 4), to make contracts, give guaranties, incur liabilities and borrow money at such rates as it may determine (subd. 9), to elect or appoint officers, employees and other agents and to define their duties (subd. 12) and to adopt and enforce its own by-laws (subd 13). The record in this case reflects that BVFD had adopted extensive by-laws by which it governed its own affairs. R 374-392. That fire corporations are “under the control of the city, village, fire district or town authorities having, by law, control over the prevention or extinguishment of fires” does not diminish the powers otherwise granted to such corporations. N- PCL §103(c). While N-PCL §1402 says that municipal authorities “may” adopt rules and regulations governing fire corporations there is no suggestion in this record that the Village of Bath ever did so. To the contrary, as far as this record shows the Village has never adopted any such rules or regulations “governing” the BVFD. Nor is there any evidence in the record to show any significant exercise of control over the BVFD by the Village of Bath or any other local municipality. To the contrary, the only witness who testified before the Commissioner’s hearing officer said that BVFD elected its own officers (R 109), managed its own funds through its treasurer (R -4- 113-115) 1 , does its own fundraising (R 113, 144-145) and purchases much of its own equipment (R 137). As a legal matter, fire corporations generally, and BVFD in particular, are not municipal corporations, even if they rely substantially on local municipal funding and are subject to municipal regulation. Even the Commissioner, in her determination below, says only that fire corporations are “functionally equivalent” to a municipal department. But she might well say the same of a charter school; or of a local development corporation, municipally formed and financed under N- PCL §1411 to encourage economic development; or of a local utility, with which the Village contracts for services (pursuant to Village Law §12-1200) and to which a Village grants special franchises under Village Law §4-412(6); or even of a private waste hauler that picks up and disposes of trash under municipal contract and municipal regulation. And if the Commissioner may extend Labor Law §220 to the building projects of those she deems “functionally equivalent” to a municipal department then may she not also do so as to those she deems “functionally equivalent” to a department of the State, or of a public benefit corporation, or of a commission appointed pursuant to Law? If the Commissioner has such authority then Labor Law §220’s requirements may be extended to any entity that is publicly regulated and relies substantially on revenues from government 1 Respondent suggests at page 13 of her brief that the Village of Bath paid many of BVFD’s expenses. However, those payments were overwhelmingly charged by voucher against the lump sum amount annually paid to BVFD by contract for fire fighting services, per Village Law §4-412(9). R115-116, 135-141, 227-230. -5- contracts. But that is not what §220 or any other provision of the Labor Law says. -6- POINT II THE APPELLATE DIVISION IMPROPERLY CONFIRMED ON A GROUND NOT RELIED UPON BY THE COMMISSIONER As Respondent admits at page 2 of her brief she found Labor Law §220 applicable to the BVFD project on the ground “that fire corporations are the functional equivalent of municipal departments, and their facility projects are public works.” She also admits that the Appellate Division confirmed her determination “on the narrower ground that, on this record, substantial evidence established that the BVFD was operating as a department of the Village [of Bath], and, thus, could be deemed a municipal corporation within the meaning of Labor Law §220(2), despite its incorporation as a private entity.” The Appellate Division was without authority to confirm the Commissioner on this alternative ground. “A reviewing court, in dealing with a determination which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis.” Matter of Montauk Improvement v. Broccacino, 41 NY2d 913 (1977) [quoting Securities Comm. v. Chenery Corp., 332 US 194, 196 (1947), internal brackets omitted.] More specifically, when an administrative agency makes a determination based on an incorrect application of law the Appellate Division may not rescue that determination on a ground that the agency did not invoke. Matter -7- of Seitelman v. Lavine, 36 NY2d 165, 170 (1975); Matter of Barry v. O’Connell, 303 N.Y. 46, 52-53 (1951). In Matter of Barry, supra, the State Liquor Authority denied a liquor license to an applicant on the ground that “there is no need for a package store at the location applied for.” The statutory standard, however, was whether the proposed license served the “public convenience and advantage,” not whether it fulfilled a public “need.” After reciting the above quotation from Securities Comm. v. Chenery Corp, supra, this Court said (303 NY, supra, at 52-53): True it is that, as a reviewing court, we owe deference to the Authority -- an administrative board -- in the exercise of its discretion within the law. That discretion, however, cannot be invoked outside the law. It is for the courts, not for administrative boards, to determine what action is within, or without the law. Upon that subject this Court, in consideration of a similar problem, has said per POUND J.: “Laws are made by the law-making power and not by administrative officers acting solely on their own ideas of sound public policy, however, excellent such ideas may be.” (Matter of Picone v. Commissioner of Licenses, 241 N.Y. 157, 162.) The Appellate Division must judge an administrative agency’s action “solely by the grounds invoked by the [agency].” Circus Disco Ltd. v. New York State Liquor Authority, 51 NY2d 24, 32 (1980). Since the Commissioner admits her determination was made as a matter of law based upon the statutes governing fire corporations generally, the Appellate Division plainly erred in confirming the determination as to BVFD only, and “under the particular facts of this case.” R 1099. -8- POINT III THE ALTERNATIVE GROUND ADVANCED BY THE APPELLATE DIVISION -- AND NOW THE COMMISSIONER -- WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE IN ANY EVENT The Appellate Division fastened upon a statement attributed to Fire Chief Conrad in an unsigned, unauthenticated “meeting minutes” document dated December 12, 2005, coupled with an inaccurate paraphrasing of his testimony, to conclude that “BVFD had assumed ownership of the fire station” to enable the Village to evade §220’s prevailing wage requirements. R 1100. But BVFD did not “assume ownership” of anything. To the contrary it was uncontroverted that BVFD, not the Village, decided to build a new firehouse in the first place (R 119-120); that BVFD and not the Village then commissioned and paid for a facility feasibility study(R 120-121, 333 et seq); that BVFD, not the Village, located and purchased three privately owned lots from property owners Teresa Draper, Walter and Kathleen Hackett and Gene and Patricia Simpson (R 122-123, 393- 439), and then later retained, and paid, John F. Leyden, Esq. to represent it in closing on those lots (R 130); that BVFD, not the Village, applied for and received a construction loan from the United State Department of Agriculture (R 124-125, 1027); that BVFD, not the Village, arranged to borrow interim financing from Chemung Canal Trust Company (R 126-128, 1029-1051); that BVFD, not the Village, hired Hunt Engineers, Architects and Land Surveyors to design the firehouse (R 146-147, 486-515, 1089); that BVFD, not the Village, contracted with R.J. Taylor, Inc. to build the firehouse (R 150-151, 519-532); that BVFD, not the Village, retained its “fire service lawyer” to advise it when the -9- prevailing wage controversy arose (R 152); and that BVFD, not the Village, agreed, on the advice of its counsel, to indemnify its contractors against prevailing wage liability (R 151-155). Without doubt the Village Trustees were interested in and supportive of BVFD’s efforts to finance and build a new firehouse. Why wouldn’t they be? The Village of Bath has a population of less than 6,000 people located in a town of only 12,000 and a county of less than 100,000. It also appears from the unsigned and unauthenticated meeting minutes put into the record by Respondent that the Village Trustees occasionally considered becoming more involved in the project, but they never did so. For example, one of the entries in the minutes dated June 21, 2004 was “an authorization” to allow BVFD to acquire the property on Morris Street “by eminent domain.” R 629-630. But as already noted, BVFD acquired the land for its firehouse by negotiated purchases from private land owners. Minutes dated September 20, 2004 include a resolution by the Village to guaranty the construction loan for the project (R 639) but it is undisputed that no such guaranty was ever given. Minutes dated January 12, 2005 include a resolution to take over BVFD’s loan and purchase contracts for the firehouse project (R 641-643) but then minutes dated January 18, 2005 -- six days later -- contain an entry rescinding that resolution (R 644-645) 2 . 2 This discussion, according to Chief Conrad, was in connection with proposed requirements of a loan with a local bank that was never pursued. R 129-130. -10- The sole “evidence” specifically cited by the Appellate Division is taken from a one-page document purporting to be “official minutes” of a “special meeting” of the Board of Trustees dated December 12, 2005. R 685. It is unsigned and was not authenticated by any witness at the hearing in this case. It purports to quote Fire Chief Mark Conrad as stating “that the reason it was done that way [i.e., the project was being developed under BVFD’s ownership] was to secure lower labor rates but at the 80% mark of completion the Fire Dept. would turn it over to the Village.” The document then purports to quote Mayor Wallace as stating that “the Village would then own the station and the debt.” In the first place, neither Mayor Wallace, nor Shirley Sowersby (the document’s purported author) nor any other person purportedly present at the meeting was called to testify by the Department of Labor to authenticate either the minutes or the statements they purport to record. In the second place, there is nothing anywhere else in the extensive record that corroborates a plan to “turn over” the firehouse property to the Village upon its completion. Chief Conrad was the only witness to testify, and when asked if he recalled making the statements attributed to him in the “official minutes” he said he did not. He then further explained as follows: I recall talking about the reason we were owning the station, because we could significantly lower the labor rates to lower the cost, which would make our project affordable. As far as turning it over to the Village, no, I don’t recall stating that at -11- the Village meeting or at any other meeting. [R 216-217.] A few questions later when asked if he knew why the Village Trustees believed it necessary for them to authorize BVFD to advertise for bids Chief Conrad responded: Not that I know of. Although it was hard to make the Trustees understand the Fire Department buying the station. They made offers and stuff. They were used to treating it like a fire truck, which it wasn’t. At this point we had no legal representation, just the Fire Department, and what we could read on our own. [R 217-218.] The Appellate Division’s footnote no. 3 also attributes to Chief Conrad an admission that the “legal paperwork” concerning project ownership was changed to avoid prevailing wage requirements. R 1100. In fact, though, none of the deeds, purchase contracts or loan agreements were ever changed. Rather, the only changes made were in the forms used for BVFD’s annual service agreement with the Village, and the Village’s service agreement with the Town. R 573-598. A comparison of those new forms with their predecessors (R 538-572, 599-600) confirms that no changes of substance were made. Substantial evidence “means such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact.” 300 Gramatan Ave. Assoc. v. State Div. of Human Rights, 45 NY2d 176, 180 (1978). It “does not rise from bare surmise, conjecture, speculation or rumor.” Id. Hearsay evidence may alone constitute substantial evidence, but only if it is sufficiently relevant and probative. Matter of Gray v. Adduci, -12- 73 NY2d 741, 742 (1988); Matter of Hoch v. New York State Dept. of Health, 1 AD3d 994, 995 (4th Dept. 2003). Under the circumstances of this case, the random references drawn from unsigned and uncorroborated meetings minutes are not substantial evidence, particularly to the extent that they were “seriously controverted” by Chief Conrad’s sworn testimony and were otherwise uncorroborated. Matter of National Basketball Assn. v. New York State Div. of Human Rights, 115 AD2d 365, 368, aff’d 68 NY2d 644 (1986); Matter of Veronica C. v. Carrion, 55 AD3d 411, 412 (1st Dept. 2008); Matter of Hoch v. New York State Dept. of Health, supra, at 995; Matter of Ridge, Inc. v. New York State Liq. Auth., 257 AD2d 625 (2d Dept. 1999). Perhaps, the Appellate Division suspected that, in this case, BVFD was acting in place of, on behalf of and for the benefit of the Village of Bath. If in fact it was, such conduct was specifically made subject to Labor Law §220 by legislative amendment in 2006, after BVFD’s contract with R.J. Taylor was executed. This only confirms that “loopholes” in the operation of Labor Law §220, if they are perceived, are to be closed by the Legislature rather than by the Commissioner or the courts. E.g., Matter of Pyramid Co., of Onondaga v. New York State Dept. of Labor, 223 AD2d (3d Dept. 1996). -13- POINT IV RESPONDENT’S ARGUMENT THAT BVFD’S SERVICE AGREEMENT WITH THE VILLAGE IS A CONTRACT “WHICH MAY INVOLVE THE EMPLOYMENT OF LABORERS” UNDER §220 WAS EXPRESSLY WAIVED, AND IS WITHOUT MERIT IN ANY EVENT Point I(D) of Respondent’s brief advances an argument that the Commissioner conceded and withdrew in the Court below. The argument is that even if BVFD is not an entity whose contracts are subject to Labor Law §220, its agreement to provide fire services to the Village (pursuant to Village Law §4-412) is a contract that “involve[s] the employment of laborers, workers or mechanics” such as to trigger §220’s prevailing wage requirements. Admittedly, the Commissioner made an alternative finding in her administrative determination that BVFD’s service contract with the Village was itself a contract that triggered prevailing wage obligations. However, she expressly waived reliance on that ground in her brief to the Appellate Division. Page 18 of that brief is appended hereto. Footnote 17 thereof reads in relevant part as follows: The Hearing Officer also concluded that even if the VFD was not within the first prong of the Erie test as a covered agency party to a contract involving employment of laborers, service contracts between local governments and the VFD satisfied this prong of the test because a firehouse would be needed to provide the service. In light of the Charter Schools affirmance, this alternative reasoning is not relied on in this Brief. This Court may generally entertain any argument raised before an original tribunal, even if not made in the Appellate Division. Matter of Seitelman v. Lavine, supra. But there are exceptions to this rule, including concessions made by counsel. -14- See Telaro v. Telaro, 25 NY2d 433, 439 (1969). Here, the “service agreement” argument did not merely go unbriefed below; it was expressly conceded “[in] light of the Charter Schools affirmance.” Having been specifically conceded in this fashion the issue should not be permitted to be resurrected now. In any event, the Commissioner correctly concluded that Matter of New York Charter School Assn. v. Smith, 15 NY3d 403 (2010), disposes of any argument that BVFD’s service agreements with the Village were sufficient to require that prevailing wages be paid for the BVFD firehouse project. There the Commissioner argued that a charter agreement -- allowing an applicant to organize and operate a charter school, and specifying its commitments with regard thereto (Education Law §2852[5]) -- could be considered a contract “that may involve the employment of laborers, workers or mechanics.” The Commissioner emphasized that such agreements were required to include “information about the facilities” to be used by the charter school. This Court responded (15 NY3d, supra, at 409): The Commissioner’s first argument is easily disposed of. Labor Law § 220(2), by its terms, requires that the contract be particular to the “work contemplated” by the parties. In other words, construction or renovation work must be involved. (see e.g. Matter of 60 Mkt. St. Assoc. v. Hartnett, 153 AD2d 205 [3d Dept. 1990] [lease agreement between county and limited partnership providing financing for the construction project]; Matter of National R.R. Passenger Corp. v. Hartnett, 169 AD2d 127 [3d Dept. 1991] [financing and implementation agreements for construction[). . . . Although the charter agreement must contain certain information, such as the location of the proposed charter school(see Education Law -15- §2851[2][j]), it is not a contract for public work involving the hiring of laborers, workers or mechanics within the meaning of section 220. [Emphasis added.] BVFD’s Service Agreements with the Village of Bath clearly contemplate only firefighting and related emergency services 3 and this was so both before and after the prevailing wage issue arose in this case. Thus, the 2004 “Fire Contract” (R 599-600) required BVFD to: . . . be subject to call for attendance upon any fire occurring in such Village of Bath and when notified by alarm or telephone from any person such department shall respond and attend upon the fire without delay with one or more companies and with suitable ladders, pumping and hose apparatus of the party of the second part. Upon arriving at the scene of the fire, the fireman of the party of the second part attending shall proceed diligently and in every way reasonably suggested to the extinguishment of the fire and the saving of life and property [in] connection therewith. By September 25, 2006 (after the Department of Labor had become involved) the service agreement (R 593-598) was a few pages longer but the subject remained exclusively the provision of fire fighting and emergency services. Thus ¶1 obligated BVFD to “be subject to call for attendance upon any fire occurring in the Village, or render services in case of accidents, calamities or other emergencies in connection with which the services of the Fire Department may be required in the Village.” Paragraphs 2 and 3 required BVFD to keep its equipment in good repair, to keep its personnel in a state of readiness and to maintain insurance 3 Such fire protection contracts are expressly provided for in Village Law §4-412(9). -16- on its “fire apparatus, equipment and appliances.” The agreement for 1997 (R 587-592) is virtually identical. None of these agreements say anything about construction, or even about the facilities where BVFD’s equipment is to be maintained. In short, there is nothing in any of these contracts that even remotely suggests the construction of a public work, or the employment of laborers, workers or mechanics. There is nothing in them that is “particular to” the construction of a firehouse. The only “work contemplated” is the provision of fire fighting and other emergency services. Under the test set forth in the Charter Schools case, supra, this contract language is dispositive. The fact that the Village may have been aware of BVFD’s plan to build a new firehouse, and was able to pay some of the increased cost of fire fighting and other emergency services that resulted from that plan, does not make its fire protection service contracts into contracts for construction. Nor is the fact that a fire corporation, like a charter school, requires a facility from which to operate (which it might lease, purchase or build) enough to trigger the statute. Matter of New York Charter School Assn. v. Smith, 15 NY3d, supra, at 411. If it were, then any corporation that derives substantial revenue from government contracts would find its own private construction projects subject to the Prevailing Wage Law. Even for charter agreements, in which facility requirements must be identified, “[such] provision is tangential to its overall purpose.’ Matter of New -17- York State Charter School Assn. v. Smith, 61 AD3d 1091, 1044- 1095, aff’d 15 NY3d 403, supra. The contracts involved in the cases upon which Respondent relies only emphasize Appellants’ point, for in all of them the plain purpose of the public entity’s contract was to facilitate construction of a new building or other work. 4 Thus in National Railroad Passenger Association v. Hartnett, 169 AD2d 127, supra, the State contracted with National Railroad Passenger Corporation (Amtrak), to pay 40% of Amtrak’s costs to construct a new railroad line. In 60 Market Street Assocs. v. Hartnett, 153 AD2d 205, 206, aff’d, 76 NY2d 993 (1990), Dutchess County contracted with a private developer to lease a new building to be constructed for occupancy by the County’s Department of Social Services. Bridgestone/Firestone, Inc. v. Hartnett, 175 AD2d 495 (3d Dept. 1991), involved a warranty agreement by the subcontractor who had built the roof on a State Armory building under a contract with the New York State Office of General Services. Finally, Matter of Erie County Indus. Dev. Agency v. Roberts, 94 AD2d 532, aff’d, 63 NY2d 810 (1984), involved a contract whereby the Erie County Industrial Development Agency agreed to provide financing to a private developer for the expressed purpose of building a new printing and binding plant. Obviously, the primary purpose of each contract discussed above was construction or repair of a building or other work. In stark contrast, the only purpose of BVFD’s service contracts with 4 Although all four of the cases to be discussed were found to involve contracts “which may involve the employment of laborers, workers or mechanics,” only one was held to involve a “public work” subject to Labor Law §220. -18- the Village was the provision of fire protection and related emergency services. Therefore they are not contracts “that may involve the employment of laborers, workers or mechanics” as far as Labor Law §220 is concerned. That being the case, the use to which BVFD, or any other fire corporation, puts the proceeds of such a contract is, frankly, none of the Commissioner’s business. -19- CONCLUSION BVFD’s firehouse project was not subject to Labor Law §220 because there was no qualifying “public” contract. This Court’s Charter Schools decision is dispositive, and the Commissioner’s refusal to admit that is troubling to contractors who need clarity concerning the rules of the game when preparing lump sum bid proposals. Moreover, the Legislature has shown itself able and willing to amend the reach of the statute when circumstances so require. Appellants respectfully submit that the judgment of the Court below should be reversed and that the Commissioner’s Determination should be annulled. Dated: June 29, 2012 Respectfully submitted, ______________________________ Anthony J. Adams, Jr., Esq. GATES & ADAMS, P.C. Attorneys for Petitioners-Appellants 28 East Main Street, Suite 600 Rochester, New York 14614 Telephone: (585) 232-6900 -20- APPENDIX Case No. No. 5106575 To be Argued by: Seth Kupferberg Time requested: 15 minutes ~upreme ~ourt of tbe tate of jfieltl ~ork ~ppellate ]!libi9'ion - 'CEbirb lllepartment In the Matter OfMGM INSULATION, INC., JOSEPH O. WESLEY, KENNEDY MECHANICAL PLUMBING AND HEATING, INC., DIANE SHUTTER, LEHMAN CONSTRUCTION CONSULTANT, INC., FINGER LAKES SERVICE GROUP, INC., KENNETH R. HATHAWAY, RMS CONTRACTORS, LLC, BALTZ CONCRETE CONSTRUCTION, INC., THOMAS F. BALTZ, GOFORTH ELECTRIC, INC., LAWRENCE C. GOFORTH, J&S PROTECTION SYSTEMS, INC., DAVID JENNINGS< FINGER LAKES PAINTING AND WALLCOVERING, LLC, RICHARD MILHAM, CUTAIA TITLE, INC., ANGELO CUTAIA, ARK GLASS AND GLAXING CORP.,'RICHARD W. KOZYRA, W.R. DRAKE & SONS, INC., WILLIAMS R. DRAKE, McCLAIN ASSOCIATES, INC., NICI{McCLAIN, RAYDO, INC., RAYMOND L. DOYLE, BILLONE MECHANICAL CONTRACTORS, INC., THOMAS J. BILLONE, PROVVIDENZA CONTRACTING, INC., VINCENT PROVVIDENZA, JR., R-J TAYLOR GENERAL CONTRACTORS, INC. and JAMES D.TAYLOR, Petitioners, -against- COLLEEN C. GARDNER as Commissioner of Labor, State of New York, Respondent. BRIEF FOR RESPONDENT ANDREW D. BING Deputy Solicitor General SETH KUPFERBERG Assistant Attorney General Of Counsel ERIC T. SCHNEIDERMAN Attorney General of the State of New Yorh Attorney for Respondent 120 Broadway, 25th Floor New York, New York 10271 (212) 416-8856 Dated: May 2, 2011 the Village and Town, further supporting the finding that the first pr·ong of the Erie test was met. (R46)17 With regard to the second prong of the Erie test, the Hearing Officer found that the construction of the new firehouse was a public work because it was designed to further the public function of providIng fire protection services. (R46-47) Consequently, the Hearing Officer determined that· the firehouse project satisfied both prongs of the Erie test and prevailing wage law applied. (R47) The Commissioner adopted the Hearing Officer's determi~ation. (R26-27) ARGUMENT POINT I A ttSUBSTANTIAL EVIDENCE" STANDARD GOVERNS REVIEW OF THIS DETERMINATION BASED ON EVIDENCE AT A § 220 HEARING Labor Law"§ 220 implements New York State's Itorganiclt prevailing wage protection, which is included in our Constitution. Cayuga-Onondaga Counties BOCES v. Sweeney, 89 N.Y.2d 395, 401-2 (1996) (citing N.Y. Constitution Art. 1 § 17). It applies if two conditions are met: (1) a "public agency must be a party to a contract involving the employment of laborers;" (2) "the contract must concern a 17 The Hearing Officer found that his conclusion was not inconsistent with this Court's decision (later affirmed by the Court of Appeals) in N.Y. Charter Schools Ass'n v. Smith, 61 A.D.3d 1091 (3d Dep't 2009), afI'd, 15 N.Y.3d 403 (2010). (R45-46) The Hearing Officer also concluded that even if the VFD was not within the first prong of the Erie test as a covered agency party to a contract involving employment of laborers, service contracts between local governments and the VFD satisfied this p~ong oithe test because a fir~house would be needed to provide the service. In light of the Charter Schools affirmance, this altel'native l'easoning is not relied on in this Brief. 18