Schwanke, Schwanke & Associates v. Martin

609 N.E.2d 654, 241 Ill. App. 3d 738, 182 Ill. Dec. 120, 1 Wage & Hour Cas.2d (BNA) 412, 1992 Ill. App. LEXIS 1057
CourtAppellate Court of Illinois
DecidedJune 30, 1992
Docket1-91-0485
StatusPublished
Cited by28 cases

This text of 609 N.E.2d 654 (Schwanke, Schwanke & Associates v. Martin) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schwanke, Schwanke & Associates v. Martin, 609 N.E.2d 654, 241 Ill. App. 3d 738, 182 Ill. Dec. 120, 1 Wage & Hour Cas.2d (BNA) 412, 1992 Ill. App. LEXIS 1057 (Ill. Ct. App. 1992).

Opinion

JUSTICE McMORROW

delivered the opinion of the court:

Plaintiff filed suit for declaratory judgment seeking a determination that it was not in violation of the Illinois Prevailing Wage Act (Ill. Rev. Stat. 1987, ch. 48, pars. 39s — 1 through 39s — 12 (the Act)). The trial court ruled that plaintiff’s complaint was premature and dismissed it with prejudice. Plaintiff appeals from this order.

Section 1 of the Act declared that it is the policy of the State “that a wage of no less than the general prevailing hourly rate as paid for work of a similar character in the locality in which the work is performed, shall be paid to all laborers, workers and mechanics employed by or on behalf of any and all public bodies engaged in public works.” (Ill. Rev. Stat. 1987, ch. 48, par. 39s — 1.) Section 11a provided that contractors “found to have disregarded their obligations to employees under this Act after receipt of a complaint of violation and consideration of the complaint at a hearing before the Department” were to be placed on a list debarring them from bidding on or receiving any public work contracts for a period of two years. Contractors were to be given adequate notice of and an opportunity to appear at the hearing. Ill. Rev. Stat. 1987, ch. 48, par. 39s — 11a.

On December 28, 1989, plaintiff, Schwanke, Schwanke & Associates, filed a complaint in the circuit court of Cook County seeking a declaration that it is a partnership and was not in violation of the Act. Named as defendant was Gwen R. Martin, Director of the Department of Labor (the Department), which is the agency charged with administration and enforcement of the Act.

Plaintiff’s complaint alleged that it was organized as a partnership pursuant to the Uniform Partnership Act (Ill. Rev. Stat. 1987, ch. IO6V2, par. 1 et seq.), and that it is engaged in the business of maintaining, repairing and constructing fences and repairing damage to guardrails resulting from motorist accidents and other causes on Illinois roadways. Plaintiff alleged that on various occasions during the preceding 21/2 years, the Department had contended that it was in violation of the Act, and that on each occasion, plaintiff responded to the Department that since its laborers were partners, rather than employees, it was not in violation of the Act.

Attached to the complaint was a copy of a partnership agreement and a 1987 letter from the Department which stated the Department investigator’s belief that several persons named as partners in the agreement were actually employees to whom plaintiff was bound to pay no less than the prevailing wage for their work on public projects. Also attached was a November 1989 letter advising plaintiff of the Department’s intention to initiate a debarment hearing to resolve whether plaintiff was in violation of the Act. Plaintiff alleged, and it is not disputed, that a hearing had not been initiated on December 28, 1989, the date its complaint was filed. Plaintiff further alleged that the version of the Act then in effect did not allow for a contractor to initiate or request such a hearing. Plaintiff thus requested the court to declare that it is a partnership and, therefore, not in violation of the Act.

On January 1, 1990, an amended version of the Act became effective. Section 11, as amended, provides for initiation of an administrative hearing by the contractor rather than the Department. Failure to request a hearing within 10 working days after receipt of notice of two separate violations of the Act results in automatic and immediate placement on the debarment list. Ill. Rev. Stat. 1991, ch. 48, par. 39s — 11a.

On February 2, 1990, in lieu of an answer, the Department filed a motion to dismiss the complaint on the ground that plaintiff had failed to exhaust its administrative remedies prior to seeking declaratory relief in the circuit court. The Department argued that plaintiff was attempting to circumvent the administrative hearing procedures set out in section 11a and section 9, which incorporate the provisions of the Administrative Review Law (Ill. Rev. Stat. 1987, ch. 110, par. 3 — 101 et seq.), for challenging a determination that it had violated the Act.

On November 5, 1990, plaintiff moved for a preliminary injunction to enjoin the Department from placing it on the debarment list. Plaintiff based its request on its receipt of two violation notices sent by the Department in late October 1990, which were attached to the motion. The first notice identified the projects for which the violation notice was issued and advised plaintiff to comply with the requirements of the Act in the future. The second notice, sent the same day as the first, listed additional projects on which the Department determined plaintiff had violated the Act. The letter attached advised plaintiff of its right to request an administrative hearing within 10 business days, and that the failure to do so would result in plaintiff’s automatic and immediate placement on the two-year debarment list. Plaintiff argued that it was faced with the choice of being summarily debarred by failing to request a hearing, or participating in a hearing which, in light of the Department’s predetermination that it was not a partnership, would have the same outcome, i.e., debarment. Plaintiff maintained that unless the court issued a preliminary injunction it would suffer the irreparable harm of debarment which would, effectively, put it out of business, and that it had no adequate remedy at law.

In opposition to the preliminary injunction, the Department filed a memorandum in which it incorporated the bases for its motion to dismiss. The Department argued that plaintiff had not stated any ground for its belief that it was a “foregone conclusion” that the result of a hearing would be unfair debarment. The Department further argued that a belief that the outcome of an administrative hearing will be adverse is not adequate to avoid the exhaustion of remedies requirement.

Plaintiff then filed a response to the motion to dismiss. In it, plaintiff maintained that at the time it filed its complaint no administrative remedies were available to it because under the preamended version of the Act only the Department could initiate a hearing and that the Department had never done so. Plaintiff reiterated, however, that even assuming the availability of any remedies, it was relieved from pursuing them by the futility exception to the exhaustion of remedies doctrine.

In support of its positions, plaintiff attached three affidavits to its response, all of which were dated December 17, 1990. In the first, Dennis Schwanke stated that although the Department had repeatedly asserted that plaintiff was in violation of the Act, prior to October 1990, plaintiff had never received any notices of violations, nor, until December 1990, had plaintiff received notice that a hearing had been initiated by the Department. The affidavit of Scott Guido, then counsel for plaintiff, stated that Guido had attended meetings in July and August 1990 with Robert Barker, a labor facilitator of the Department, at which Barker stated that debarment proceedings had been initiated against plaintiff. In the third affidavit, Dennis Schwanke averred that the sum of approximately $2,000 for completed projects was owed to plaintiff for over 120 days, and that it was his belief that the delay in payment was due to the Department’s determination that plaintiff was in violation of the Act.

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Bluebook (online)
609 N.E.2d 654, 241 Ill. App. 3d 738, 182 Ill. Dec. 120, 1 Wage & Hour Cas.2d (BNA) 412, 1992 Ill. App. LEXIS 1057, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schwanke-schwanke-associates-v-martin-illappct-1992.