| Matter of Matsos Contr. Corp. v New York State Dept. ofLabor |
| 2011 NY Slip Op 00125 [80 AD3d 924] |
| January 13, 2011 |
| Appellate Division, Third Department |
| In the Matter of Matsos Contracting Corporation,Petitioner, v New York State Department of Labor et al.,Respondents. |
—[*1] Eric T. Schneiderman, Attorney General, New York City (Karen Kithan Yau of counsel), forrespondents.
Kavanagh, J. Proceeding pursuant to CPLR article 78 (initiated in this Court pursuant toLabor Law § 220) to review a determination of respondent Commissioner of Labor which,among other things, found petitioner to be an alter ego of GBE Contracting Corporation.
After GBE Contracting Corporation entered into two public works contracts with the NewYork State Thruway Authority to clean and paint bridges located within the state, a complaintwas received by respondent Department of Labor (hereinafter respondent) that GBE had not, as itwas required, paid prevailing wages to its workers on these public works projects (seeLabor Law § 220 [3] [a]). As a result, payments due to GBE under a separate public workscontract were withheld pending a final determination regarding its failure to pay prevailing wages(see Labor Law § 220-b). When petitioner replaced GBE under this contract, it wasnotified by respondent that it would be subject to the same sanctions as GBE pursuant to LaborLaw § 220-b for the failure to pay prevailing wages, "unless satisfactory documentation isprovided . . . clearly establishing that [petitioner] is not, in fact, an alter ego of GBE. . . or a successor or substantially-owned affiliated entity."
In June 2007, respondent notified petitioner and GBE, as well as their individual [*2]corporate officers and shareholders, that it would conduct a hearingto determine, among other things, whether GBE had failed to pay prevailing wages on its publicworks contracts and whether petitioner was a "substantially-owned affiliated entity" of GBE(Labor Law § 220-b). Petitioner did not serve an answer contesting any of the allegationsset forth in the notice of hearing (see 12 NYCRR 701.4, 701.5) and, in particular, did notdeny that it was, in fact, the alter ego or substantially-owned affiliated entity of GBE. Instead, anattorney representing both GBE and petitioner notified respondent by letter that neither entitywould appear and that each would consent to respondent proceeding upon its default.[FN1]A hearing was conducted, after which the Hearing Officer concluded, among other things, thatGBE had deliberately failed to pay prevailing wages on these public works contracts[FN2]and that petitioner was its alter ego. Upon respondent Commissioner of Labor's adoption of theHearing Officer's report, petitioner commenced this CPLR article 78 proceeding claiming thatevidence admitted at the hearing had not been properly authenticated and that the determinationthat it was GBE's alter ego was not supported by substantial evidence.
The petition must be dismissed. The Hearing Officer's report, which was entitled "DefaultReport and Recommendation," expressly noted that its findings as they relate to petitioner werebased on petitioner's failure to appear and its decision not to challenge any of the allegationsmade by respondent, including that it was a "substantially-owned affiliated entity" of GBE. "It isa well-settled proposition of law in this [s]tate that default judgments are not appealable, and theproper remedy is an application to the rendering court to open the default. This is so because aparty is not aggrieved by a judgment entered upon his [or her] default. By analogy, a petitioner isnot aggrieved by an administrative determination made on [its] default and may not seek toreview such a determination" (Interboro Mgt. Co. v State Div. of Human Rights, 139AD2d 697, 698 [1988] [citations omitted]; see Matter of Yarbough v Franco, 95 NY2d342, 347 [2000]; see also CPLR 5511). Here, petitioner does not deny that it had noticethat it was charged with being GBE's alter ego and substantially-owned affiliated entity and thatit was well aware of the consequences that could result from the entry of such a finding.Moreover, petitioner does not dispute that its decision to default was purposeful and was madeafter it had a full and fair opportunity to confer with counsel. Having made a deliberate and whatappears to be a calculated decision not to contest any of the allegations made by respondent inthis proceeding, petitioner cannot now challenge the underlying administrative determinationentered as a result of that default and, as such, its petition challenging the determination must bedismissed.
Cardona, P.J., Spain, McCarthy and Egan Jr., JJ., concur. Adjudged that the petition isdismissed, without costs.
Footnote 1: Petitioner was granted severaladjournments of the hearing prior to forwarding this communication to respondent.
Footnote 2: Underpayments in the amount of$189,403.37 and $42,911.72 were found on the two Thruway contracts. In addition, GBE wasassessed a penalty in the amount of 25% the amount due, and both GBE and petitioner werebarred for five years from bidding on public works contracts.