947 F. 2d 952 - United Union of Roofers Waterproofers Allied Trades Local No v. The American Insurance Company

Before FLETCHER and BEEZER, Circuit Judges, and FITZGERALD,* District Judge.

MEMORANDUM**

Plaintiff/appellant United Union of Roofers, Waterproofers, and Allied Trades, Local No. 40 ("the Union") appeals the district court's order dismissing its action for lack of standing. We affirm.

In June of 1986, Swinerton & Walberg Company ("Swinerton") entered into a public works contract with the state of California to construct prison facilities in Avenal, California. Swinerton subcontracted part of the work to A-Plus Roofing Company, Inc. ("A-Plus"). The Union provided A-Plus with labor for the project. In compliance with state law, Swinerton filed a payment bond with the state, guaranteeing that workers would be paid in full (up to the value of the bond) should Swinerton or a subcontractor fail to pay proper wages. Defendant American Insurance Company ("American") was surety for this payment bond.

The Union alleges that A-Plus paid less than the prevailing wages specified by the public works contract, and sought payment on the bond from American. The Union filed a diversity action on May 25, 1988 and a First Amended Complaint on December 22, 1988. In the First Amended Complaint, the Union sued to recover lost wages owed to its members and lost dues its members would have paid the Union if the members had been paid prevailing wages.

American filed a motion to dismiss, arguing (1) plaintiffs had no standing to sue; (2) plaintiffs failed to join a A-Plus as a necessary party under Fed.R.Civ.P. 19; and (3) plaintiffs failed to comply with the notice requirements of California Civil Code § 3091. The district court, relying on the decisions of Judges Henderson1, Jensen2 and Vukasin3 in nearly identical cases where the Union sued on A-Plus payment bonds, issued a brief order on May 4, 1989, which dismissed the plaintiffs with prejudice for lack of standing.

For the reasons stated in the related case of United Union of Roofers v. Insurance Corporation of America, 919 F.2d 1398 (9th Cir.1990), we affirm the district court's order dismissing the Union for lack of standing as regards the Union members' lost wages.

The Union also alleges direct harm to itself as an organization, because A-Plus's failure to pay prevailing wage rates caused to Union to "suffer[ ] loss of initiation fees, regular dues and working dues by virtue of its possession of valid dues check-off authorizations." First Amended Complaint p VII. While this is an injury that might allow to Union to state a claim against A-Plus, it is not a claim it may properly assert against the surety of the payment bond. The bond was issued pursuant to California Civil Code § 3248, which requires that payment bonds for public works projects must "inure to the benefit of any of the persons named in Section 3181." The bond itself states that it is activated by the failure to pay "any of the persons named in Civil Code Section 3181." Section 3181 refers to the persons identified in Section 3110 (laborers), Section 3111 (trust funds created by labor agreements), Section 3112 (claimants making site improvements) and Public Contract Code § 4107.7 (hazardous waste contractors). Because the Union does not fit any of these descriptions, it has no standing to sue the surety for its losses.

The Union may be able to state a claim against A-Plus for the lost dues. For it to proceed in diversity as it did her, however, would require both a showing that A-Plus is an out-of-state defendant, and that the amount of the lost dues satisfies the jurisdictional amount specified in 28 U.S.C. § 1332.

The district court did not reach the other issues raised by American in its motion to dismiss. Because we agree that Union must be dismissed for lack of standing, we do not address them either.

AFFIRMED.