Gary Merlino Construction Co. v. City of Seattle

741 P.2d 34, 108 Wash. 2d 597, 1987 Wash. LEXIS 1157
CourtWashington Supreme Court
DecidedAugust 6, 1987
Docket52566-8
StatusPublished
Cited by5 cases

This text of 741 P.2d 34 (Gary Merlino Construction Co. v. City of Seattle) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gary Merlino Construction Co. v. City of Seattle, 741 P.2d 34, 108 Wash. 2d 597, 1987 Wash. LEXIS 1157 (Wash. 1987).

Opinions

Dore, J.

Seattle's Women's and Minority Business Utilization Ordinance (hereinafter WMBE ordinance) is designed to offer to women and minorities the opportunity to improve their ability to participate in the construction [599]*599industry. Seattle Municipal Code (SMC) 20.46. Contractors are required to utilize women and minority subcontractors at certain specified percentages, with the purpose of giving these disadvantaged persons the needed experience to compete in this business. As the United States Department of Transportation stated in reference to highway construction:

many majority contractors owe their success to the experience gained as a subcontractor/protege. This concept offers tremendous potential to develop and expand the [minority] contracting opportunities in highway construction.

Report of Proceedings, vol. 2 (13.6), at 3.

The Seattle Board of Public Works found that appellant Gary Merlino Construction Company violated this act by underutilizing minority contractors, thereby denying them the beneficial experience which this act seeks to promote. Merlino appeals this finding of underutilization, as well as the Board's sanction that it be prohibited from bidding or working on city contracts for 1 year.

Facts

In early 1984, Merlino was the general contractor for a street improvement project for the City of Seattle. As part of its contractual and statutory obligations under the WMBE ordinance, Merlino was required to utilize women's business enterprises on 3 percent of the contract amount, and minority business enterprises on 15 percent of the contract amount. Section l.A of the WMBE bid specifications stated that "utilization [of Women and Minority enterprises] may be through contracting, subcontracting, joint ventures, procurement of supplies, materials or equipment

The Seattle Human Rights Department approved the use of subcontractor TNT Concrete, a minority owned business, as part of Merlino's construction bid. Nevertheless, while the project was underway, the Human Rights Department initiated an investigation of Merlino's compliance with WMBE commitments. This investigation focused [600]*600on the alleged underuse of TNT Concrete because Merlino loaned it employees and ordered and paid for the concrete which TNT Concrete was supposed to supply. On May 4, 1984, after the project had been completed, the Human Rights Department issued a "Determination of Cause to Believe Contractor Has Not Complied with WMBE Requirements." The Human Rights Department met with Merlino and TNT Concrete on May 18, but failed to resolve their differences.

On May 21, the Human Rights Department issued a "finding of non-compliance with WMBE Requirements." Merlino and TNT Concrete were advised that the Board of Public Works was going to consider the Human Rights Department's findings and decide what, if any, sanction was appropriate. Public hearings were conducted on June 8 and 15, 1984, and the Board unanimously decided that Merlino had underutilized TNT Concrete. The Board also decided to debar Merlino for 1 year.

Merlino promptly filed a writ of certiorari to the Superior Court asking for a review of the Board's proceedings and the 1-year debarment. On February 6, 1985, the trial court affirmed the Board's decision. Merlino appeals. Throughout these proceedings, the order of debarment has been stayed.

Sufficiency of Evidence

On appeal of a superior court order in a certiorari proceeding, this court makes a de novo review of the agency's record to determine whether the administrative decision was arbitrary and capricious or contrary to law. Thomsen v. King Cy., 39 Wn. App. 505, 694 P.2d 40 (1985). After a de novo review, we find that the Board did not err in determining that Merlino had violated the WMBE ordinance.

The crux of this case is whether or not TNT Concrete performed a commercially useful function, or was merely a prop for Merlino to do the work itself while appearing to comply with the WMBE ordinance. If TNT Concrete did not perform its subcontracted work, then it did not gain the [601]*601valuable experience which the WMBE ordinance was designed to promote.

Several facts were presented to the Board which convinced it, and us, that TNT Concrete did not perform a commercially useful function. The TNT Concrete subcontract required it to supply the concrete, as well as perform the paving work. TNT Concrete's credit rating was such, however, that it did not believe it could order enough concrete to complete the job. Rather than find a way for TNT Concrete to overcome this difficulty, with the obvious benefit to its credit rating, Merlino made arrangements for the acquisition of the concrete. Merlino paid the concrete suppliers except for one company, Salmon Bay Sand and Gravel, and issued them a joint check payable to both Salmon Bay and TNT Concrete.

The trial judge, in reviewing the record, made the following observation:

[I]t isn't simply [Merlino's] saying I'll take care of it, and it isn't (and/or) the making of the phone calls in the morning. It's the whole scenario. The testimony does not show, or fails to show that [TNT Concrete] made any of the arrangements for any aspects of the purchasing of the materials which were . . . inappropriately handled by Mr. Merlino.

Brief of Respondent, at 20. We concur. The evidence shows that TNT Concrete did not perform a commercially useful function and failed to gain the valuable experience or the improved credit rating which the WMBE ordinance was designed to provide. We believe the Board's determination was correct, and was not arbitrary and capricious.

Administrative Rulemaking

Seattle Municipal Code 20.46.060(A) provides that "the Director [of Public Works] shall ... (3) [a]dopt rules and regulations . . . establishing standards and procedures for effectively carrying out this chapter . . ."At the time that Merlino received the street improvement contract, no such rules had been promulgated. Merlino argues this failure to adopt rules voided any subsequent proceedings, as it had [602]*602no notice as to what conduct would be considered in violation of the WMBE ordinance. We disagree. The invitation Merlino received to bid on the street improvement contract specifically stated:

The Contractor may count toward its MBE or WBE set-aside only expenditures to MBEs and WBEs that perform commercially useful functions in the work of a contract. An MBE or WBE is considered to perform a commercially useful function when it is responsible for execution of a distinct element of the work of a contract and carrying out its responsibilities by actually performing, managing, and supervising the work involved.

(Some italics ours.) Report of Proceedings, vol. 3 (13.7), at 2(l)(D)(d)(l) (WMBE Bid Specifications). This bid provided ample notice to Merlino of which subcontracted work could be set aside, and Merlino cannot complain that it did not know that its conduct in relation to TNT Concrete would violate the WMBE ordinance requirements.

Due Process

Merlino makes a variety of due process challenges to the procedure the Board used at the WMBE noncompliance hearings.

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Related

Guard v. Jackson
132 Wash. 2d 660 (Washington Supreme Court, 1997)
Davidson v. Kitsap County
937 P.2d 1309 (Court of Appeals of Washington, 1997)
Gary Merlino Construction Co. v. City of Seattle
741 P.2d 34 (Washington Supreme Court, 1987)
McKenzie v. Pacific Gas & Electric Co.
200 Cal. App. 2d 731 (California Court of Appeal, 1962)

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Bluebook (online)
741 P.2d 34, 108 Wash. 2d 597, 1987 Wash. LEXIS 1157, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gary-merlino-construction-co-v-city-of-seattle-wash-1987.