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March 24, 1996


The opinion of the court was delivered by: MCAVOY


 A. Summary Of Present Motion

 Plaintiff, the United States of America ("United States"), comes before this court seeking partial summary judgment against the defendants, Town of Bolton Landing ("Bolton Landing"), Green Island Associates ("GIA"), Norman Wolgin, Marian Wolgin, and Kennington Properties, Inc. ("Kennington") as to Count IV of the complaint, which complaint was filed on or about July 26, 1993. Count IV of the complaint seeks enforcement of a Wage Appeals Board ("WAB") decision upholding a finding that the defendants failed to pay prevailing wages, as mandated by the labor standards provisions of the Davis-Bacon Act, 40 U.S.C. §§ 276a et seq., and other federal laws and regulations, in the amount of $ 631,040.03, relating to a federally funded project to restore the Sagamore Hotel, located in Lake George, New York.

 The arguments of all parties have been set forth in excruciatingly verbose documents that the court must strain to refer to as "Briefs." The parties are admonished for the excessive length of the memoranda submitted to the court on this motion, *fn1" and strongly advised that any future submissions to this court must comply with Local Rule 7.1(c).

 The defendant Bolton Landing argues in opposition that (1) Bolton Landing is not bound by the decision of the WAB because Bolton Landing was not notified of the administrative proceedings prior to a June 14, 1990 decision; (2) the administrative decisions were arbitrary and capricious in that the decisions determining that the defendants were liable for wage shortfalls were based on insufficient factual evidence, and based on the "release" of the prime contractor from liability for the wage violations; and (3) the WAB lacks jurisdiction to impose a money penalty/damages against Bolton Landing, a municipality.

 The remaining defendants argue in opposition to the plaintiff's motion for partial summary judgment that (1) the noncompliance issue, the alleged failure to pay prevailing wages, should not have been submitted to administrative determination by the Department of Labor ("DOL") or the WAB; (2) the WAB administrative determination is not entitled to res judicata effect; and (3) the determination by the WAB was arbitrary and capricious.

 B. UDAG Grant Project

 On February 25, 1982, Bolton Landing, with the assistance of the defendant Wolgin and Uccellini Enterprises, Inc., a private consulting firm, submitted an application to the Department of Housing and Urban Development "HUD," seeking a federal Urban Development Action Grant ("UDAG") in the amount of $ 315,000.00 as part of an over $ 18 million project to acquire and renovate the Sagamore Hotel. Norman Wolgin had initiated the Town's involvement in the project, had hired Uccellini, and had remained closely involved.

 In June of 1982, Bolton Landing authorized an amendment to the application for federal funds to seek approximately $ 3.5 million. In February 1983, Bolton Landing submitted another UDAG application to HUD seeking over $ 6.5 million as part of a $ 30 million project.

 The UDAG application called for Bolton Landing to loan the funds to GIA, at a favorable interest rate. *fn2" GIA was to repay the loan over ten years, in accordance with the terms set forth. *fn3" The application also stated, in essence, that the project could not be performed without federal assistance. *fn4" Finally, the application set forth a number of assurances as mandated by 24 C.F.R. § 570.458. One subsection of 24 C.F.R. § 570.458, as incorporated into the application, states that the application must state that the applicant will "comply with ... the labor standards requirements as set forth in [24 C.F.R. § 570.603] *fn5" and HUD regulations issued to implement such requirements:"

 On May 4, 1983, HUD preliminarily approved the UDAG application, and authorized UDAG funds in the amount of $ 5,275,000. The grant agreement, which incorporated the grant application, *fn6" was forwarded to Bolton Landing on July 19, 1983. The grant agreement was signed by Frank Leonbruno, on behalf of Bolton Landing on November 18, 1983.

 On May 6, 1983, the defendant Norman Wolgin had closed on the purchase of the Sagamore Hotel.

 Uccellini, pursuant to its contract with Bolton Landing, requested a Davis-Bacon wage determination for the UDAG project from HUD on December 12, 1983. HUD then requested the wage determination from the Department of Labor on December 27, 1983. The requests indicated that construction would commence on the project on March 1, 1984. On February 10, 1984, the Labor Department issued Wage Determination 84-NY-8. On February 13, 1984, HUD forwarded the wage determination to Uccellini. On February 22, 1984, Uccellini objected to the Labor Department wage rates. The defendants initiated an administrative appeal process sometime after the wage determination was handed down.

 On February 28, 1984, Bolton Landing, GIA, and an investment group headed by the defendant Norman Wolgin executed a loan agreement, dated December 1, 1983. The loan agreement provided that Bolton Landing would loan $ 5,000,000 to GIA. By accepting those funds, GIA, the borrower, "assured the Lender" that GIA would perform its obligations "according to the terms of [the] Loan Agreement and the Grant Agreement between the Secretary [of HUD] and the Lender." On that same day, Bolton Landing entered into a financing agreement with the Bank of New York to loan monies to GIA for the project. The first UDAG funds were disbursed on May 14, 1984.

 On September 25, 1985, the Department of Labor issued a second wage determination, 85-NY-0324, covering the more expansive time period. Sometime in December of 1985, GIA sought reconsideration of 85-NY-0324 by the area administrator, Wage and Hour Division of the Dept. of Labor. On August 1, 1986, GIA received a denial ...

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