Title: AUDIT SERVICES INC v BRASEL S

State: montana

Issuer: Montana Supreme Court

Document:

No. 13767 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977 AUDIT SERVICES, INC., a Montana Corporation, Plaintiff and Appellant, BRASEL & SIMS CONSTRUCTION COMPANY, Defendant and Respondent. Appeal from: District Court of the Eiahth Judicial District, Honorable Joel G. Roth, District Judge presiding. Counsel of Record: For Appellant: Cure and Borer, Great Falls, M.ontana Maxon R . Davis argued, Great Falls, Montana For Respondent: Smith, Emmons, Baillie and Walsh, Great Falls, Montana Robert J. Emmons argued, Great Falls, Montana Vidakovich, Pappas and Hooper, Lander, Wyoming Submitted: December 6, 1977 M r . Justice Gene B. Daly delivered the Opinion of the Court: Audit Services, Inc., appeals from the order for summary judgment and final judgment entered i n favor of Brasel & Sims Construction Company by the District Court, Cascade County. Audit Services, Inc., (Audit Services) is a nonprofit Montana corporation created to a s s i s t various union t r u s t funds i n the collection of employer fringe benefit contributions. These trust funds were created pursuant t o the Labor Management Rela- tions Act, 29 U.S.C. §186(c)(5) and the Employee Retirement Income Security Act of 1974, 29 U.S.C. Q l O O l e t seq. Audit Services is suing i n its capacity as assignee of eight Montana employee benefit trust funds. These t r u s t funds provide health and welfare, pension, apprenticeship and vacation benefits t o Montana laborers, operating engineers and teamsters. The trusts are funded ,by employer contributions based on hours worked by union and nonunion employees within the particular crafts. Employer contribution rates for each of the t r u s t funds are de- termined by collective bargaining agreements negotiated between the unions and individual employers or between the unions and associations of employers. Brasel & Sims Construction Company (Brasel & Sims) is a Wyoming construction firm. During the period M a y 1972 through August 1974, Brasel 6 Sims was performing under a road construc- tion contract with the state of Montana, on a project located i n southeastern Montana, on the Northern Cheyenne Indian Keserva- tion. A t the time Brasel & Sims commenced doing business i n Montana it ratified the existing collective bargaining agreements with the Montana Laborers, Operating Engineers, and Teamster Unions, negotiated i n 1971 and effective from M a y 1, 1971 through April 30, 1974. O n M a y 8, 1972, Brasel & Sims executed an instrument assigning its bargaining rights to the Montana contractors' , Association for the purpose of negotiating and executing future collective bargaining labor agreements with the Montana Laborers, Operating Engineers, and Teamsters Unions. The instrument of assignment specifically provided: " * * * This authority * * * shall continue from year t o year unless notice of cancellation of t h i s authority is given to the Montana Contractors' Association a t least sixty (60) days prior to the expiration dates of each of the existing aforesaid labor agreements. Cancellation of t h i s authority shall not relieve any contractor of the legal respon- s i b i l i t i e s it may have accrued by virtue of the execution of any labor agreements on its behalf by t h i s Association. Contractor further understands that it can be released from the multi-employer bargaining unit of which it constitutes a part, and thereafter negotiate and execute individual labor agreements only with the consent of the labor unions involved. " The present controversy arose when Audit Services filed a complaint i n the District Court, Cascade County, on April 11, 1974, alleging Brasel & Sims had failed t o pay employer contri- butions due under certain collective bargaining agreements. Brasel & Sims filed an answer denying l i a b i l i t y . Plaintiff filed an amended complaint on September 26, 1974, incorporating those claims previously asserted, and prayed for judgment and an award of trust fund contributions i n the sum of $14,175.64 plus interest; liquidated damages i n the sum of $580.78 plus interest; interest i n the sum of $18.25; audit fees i n the sum of $799.12 plus interest; reasonable attorney fees i n the sum of $4,000; and costs of suit. Brasel & Sims filed an answer t o the amended complaint renewing its denial of liability. The parties commenced discovery and pretrial briefs were filed. O n November 10, 1976, Brasel & Sims filed a motion for summary judgment. A stipulation of facts for defendant's motion for summary judgment was executed by the parties. O n December 30, 1976, the District Court issued an order for summary judgment and final judgment, granting defendant's motion for summary judgment and dismissing p l a i n t i f f ' s complaint with prejudice. O n January 7, 1977, Audit Services filed a motion t o a l t e r judgment on the grounds: (1) The District Court's order granting defendant's motion for summary judgment was based on an affidavit which was never filed with the District Court; (2) newly discovered evidence; and, (3) insufficiency of the evidence. A different judge assumed jurisdiction of the matter for the purpose of hearing and ruling on Audit Services' motion t o a l t e r judgment. O n January 24, 1977, the court issued its order granting Audit Services' motion t o a l t e r judgment-. " * * * to the extent that the reference i n the order granting summary judgment referring to the affidavit * * * is stricken on the grounds that a t the time the order was made granting summary judgment, that the affidavit was not on f i l e a t that time." Except for the exclusion of the unfiled affidavit, which the court concluded was not the basis for granting the summary judgment, Audit Services' motion to a l t e r the judgment was denied. \ The principal issue on appeal is whether the District Court erred when it granted Brasel & Sims' motion for summary judgment. Rule 56(c), M.R.Civ.P., provides: " (c) * * * The judgment sought shall be rendered forthwith i f the pleadings, depositions, answers t o interrogatories, and admissions on f i l e , together with the affidavits, i f any, show that there is no genuine issue a s t o any material fact and that the moving party is entitled t o . a judgment as a matter of law * * *." For an extensive discussion of the principles of summary judgment under Rule 56(c), M.R.Civ.P., see Harland v. Anderson, (1976), 169 Mont. 447, 548 P.2d 613. Audit Services challenges the District Court's order granting Brasel & Sims' motion for summary judgment and final judgment on these grounds: (1) That genuine issues of fact remain t o be determined; (2) that matters accepted as undisputed fact remain merely allegations of the defendant; (3) that no basis has been put forth why the complaint should have been dismissed i n its entirety; and (4.) that the District Court misconstrued the law. Brasel & Sims, on the other hand,.contends summary judgment was properly granted i n its favor, since there were no genuine < issues of material fact and f t was entitled t o a judgment as a matter of law. Brasel & Sims argues: (1) Its notices to the unions effectively communicated Brasel & ~ i m s ' intent to with- draw from collective bargaining; (2) a t the time Brasel & Sims gave notice of i t s intent t o withdraw llunusual circumstances" existed which permitted unilateral withdrawal; and (3) the unions consented to Brasel & Sims' unilateral withdrawal. A l l parties agree federal labor law is controlling since a dispute involving a collective bargaining agreement f a l l s within the purview of Section 301 of the Taft-Hartley Act, 29 U.S.C. 5185. While the Taft-Hartley Act provides for concurrent jurisdiction i n s t a t e courts, i n D o w d Box Co. v. Courtney, (1962), 368 U.S. 502, 82 Sect. 519, 7 L ed 2d 483, the United States Supreme Court held that s t a t e courts must apply federal law i n the exercise of that jurisdiction. Teamsters Union v. Lucas Flour Co., (1962), 369 U.S. 95, 82 S.Ct. 571, 7 L ed 2d 593. See Lowe v. O'Conner, (1973), 163 Mont. 100, 515 P.2d 677. A t the outset, w e hold the District Court's order granting summary judgment and final judgment must be vacated as to those contributions sought for the period November 1, 1972 through April 30, 1974, involving approximately 409 112 working hours. During t h i s period of time, Brasel & Sims was bound by the 1971- 1974 collective bargaining agreement, effective from M a y 1, 1971 through April 30, 1974. Before this Court, i n its written briefs and oral argument, counsel for Brasel & Sims admitted l i a b i l i t y for these contributions. The remainder of the monetary relief sought by Audit Services is for contributions involving approximately 15,010 working hours performed a f t e r April 30, 1974, when the 1974-1977 collective bargaining agreement was i n effect. Sixty days prior to the expiration of the 1971-1974 collective bargaining agree- ment the unions gave timely notice of their intent to renegotiate the 1971-1974 agreement. Good faith bargaining between the unions and the Montana Contractors' Association commenced, but no new agreements were reached by M a y 1, 1974. A t that time members of the operating engineers s e t up a picket line and picketed Brasel & Sims' work s i t e . The laborers and teamsters refused t o cross the picket line, leaving Brasel & Sims with only nonunion employees. On M a y 3, 1974 and M a y 6, 1974 Brasel & Sims dispatched notices of termination to the Montana Operating Engineers, Laborers,and Teamster Unions. Although each of the memorandums is drafted i n a different form, they individually reiterate the phrase "As of t h i s date w e are terminating our agreement with * * *" the respective unions. T w o of the notices contain the phrase "Therefore, since the present contract expired on M a y 1, 1974, w e are exercising our right to terminate a t t h i s time." The third notice contains the phrase "We, therefore are terminating our agreement as of t h i s time." Neither a written notice similar to the type Brasel & Sims dispatched t o the unions nor any oral communication evidencing an intent t o withdraw from collective bargaining was given to the Montana Contractors ' Association. Meanwhile, the Montana Contractors' Association and the unions continued negotiations. N e w collective bargaining agreements were negotiated by the various unions and the Montana Contractors' Association on June 11, 1974. In its final executed form, the 1974-1977 collective bargaining agree- ment related back t o M a y 1, 1974, the termination date of the 1971-1974 collective bargaining agreement. In the mean- t i m e , Brasel & Sims had hired nonunion employees to complete its road construction project. It is the employer contribu- tions for the period M a y 1, 1974 through completion of Brasel & Sims' road construction project which Audit Services seeks, involving approximately 15,010 hours. The United States Court of Appeals, i n N.L.R.B. v. Beck Engraving Co., Inc.(3rd C i r . 1975), 522 F.2d 475, summarized federal law controlling an employer's attempted withdrawal from a multi-employer bargaining unit, a s announced i n Retail Associates, Inc., (1958), 120 NLRB No. 66, pp. 388-400: '"Trimmed t o its essentials, the Retail Associates rule may be briefly stated: prior to negotiations, either the union or an employer i n a multi-employer bargaining unit may unilaterally (i.e., without the consent of the other party) withdraw i f adequate written notice is given which evidences an unambiguous intent t o withdraw; during negotiations, withdrawal is permis- sible upon mutual consent or may occur unilaterally i n the event of unusual circumstances. The Courts of Appeals of several circuits have adopted and approved this formula. ' " 522 F . 2d 481, Brasel & Sims contends its withdrawal from Montana Con- tractors' Association during collective bargaining negotia- tions was effective under the "unusual circumstances" test discussed in N . L . R . B . v. Beck Engraving Co., Inc,, supra, However, such a conclusion must be premised on a finding that Brasel & Sims sufficiently communicated to the unions and to the multi-employer bargaining unit an intent to withdraw. Otherwise, an employer might choose to remain silent until new bargaining agreements are negotiated, evaluate the economic benefit or detriment associated with declaring withdrawal, and then contend unusual circumstances as a basis for releasing the employer from contributions based upon man hours worked after termination of the prior collective bargaining agreement. In the present fact situation, we fail to find Brasel & Sims communicated to either the unions or to the Montana Con- tractors' Association an unambiguous or unequivocal notice of intent to withdraw from the multi-employer bargaining unit. See N . L . R . B . v. Hi-Way Billboards, Inc., (6th Cir. 1973), 473 F . 2 d 649; N . L . R . B . v . John J. Corbett Press, Inc, (2nd Cir. 1968), 4 0 1 F.2d 673,675. The notices dispatched by Brasel and Sims were only sent to the unions, not to Montana Contractors' Association, Further, the notices only evidenced an intent to terminate agreements with the unions, i . e . the 1971-1974 collective bargaining agreements which expired on May 1, 1974. In no specific terms do the notices dispatched by Brasel & Sims communicate an intent to withdraw from the multi-employer bar- gaining unit. Nor is the unions' failure to respond to or protest such notices equivalent to acquiescence or consent to a purported withdrawal from the multi-employer bargaining unit. Such a finding of insufficient notice of withdrawal defeats Brasel & Sims' argument avoiding l i a b i l i t y for employer con- tributions under the 1974-1977 collective bargaining agreements. The District Court erred when it granted judgment for Brasel & Sims a s a matter of law. The order of the District Court granting Brasel & Sims' motion for summary judgment and final judgment i s reversed and the cause remanded t o the District Court for further proceedings consistent with t h i s Opinion. ~ u s t i c e i W e Concur: