NO. 89-140 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

JOHN C. HUGHES, as administrative 

manager of the Western Conference of 

Teamsters pension Trust Fund, 

plaintiff and Appellant, 

-vsJIM BLANKENSHIP, d/b/a BLANKENSHIP 

CONSTRUCTION, f/k/a BLANKENSHIP PAVING, 

Defendant and Respondent. 

APPEAL FROM: ~istrict Court of the Second ~udicial ~istrict, 

In and for the County of Silver Bow, 

The Honorable Mark ~ullivan, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Michael C. coil, Bozeman, Montana 

For Respondent: 

John F. Lynch, Great Falls, Montana 

Filed: 

submitted on ~riefs: Sept. 21, 1989 

Decided: November 7, 1989 
Justice John Conway Harrison delivered the Opinion of the 

Court. 

The plaintiff, John Hughes, in his capacity as 

administrator of the Western Conference of Teamsters' Pension 

Fund, initiated this suit to recover $45,427.39 owed by the 

defendant Jim Blankenship as a union contractor for unpaid 

contributions to the Pension Fund (Fund), plus damages and 

interest. Blankenship defends on the grounds that the 

collective bargaining agreement he entered with the Teamsters 

Union was to be applicable only to employees working on 

non-residential patching and paving jobs and that the 

collective bargaining agreement actually entered was entered 

into by mistake. The Union is not a party to this lawsuit. 

Following a non-jury trial, the District Court entered 

judgment in favor of Blankenship, ordering the Fund to do an 

accounting of Blankenship's contributions and to return all 

funds paid by Blankenship to his employees. From this 

decision the Fund now appeals. We reverse and remand. 

The issues presented by the appellant are: 

1. Is the District Court's judgment consistent with 

the governing principles of federal labor law by which this 

case is controlled? 

2. Was the contract between the parties ratified by 

the respondent's actions such that he is not entitled to 

rescission? 

3. Does the par01 evidence rule bar admission of 

certain evidence herein, and if barred, does the remaining 

evidence support the District Court's conclusions? 

4. Can the District Court sua sponte order relief not 

requested by either party? 
5. Is the appellant entitled to gather financial data 

from the respondent for the period of 1986 to 1988 for the 

purposes of an additional audit? 

Since 1972 the respondent, Jim Blankenship, has owned 

and operated Blankenship Construction, formerly known as 

Blankenship Paving, in Butte, Montana. Pickets went -up at 

the sites where Blankenship's company was working in 1976. 

Following negotiations with union representative Jim Roberts, 

on July 8, 1976, Blankenship became signatory to the Highway 

and Heavy Construction Labor Contract then in force. As part 

of that document Rlankenship was also required to sign a 

collective bargaining compliance agreement. Subsequent 

compliance agreements were signed on November 9, 1977 and 

July 31, 1981. In accordance with the original contract and 

the compliance agreements, Blankenship also signed 

employer - union pension certification documents, by which he 

agreed to be bound by the declaration of trust and pension 

plan of the Fund. 

The Fund, in accordance with the terms of the contract, 

conducted an audit. Through the audit the Fund discovered 

that Rlankenship was in arrears on his pension contributions. 

When the Fund demanded back payment Blankenship 

refused, citing an agreement which he and Jim Roberts made at 

the time Blankenship entered into the Highway and Heavy 

Construction Labor Contract. The gist of the side agreement 

was that employees working on residential and small, 

commercial-type paving jobs would not be subject to the 

Highway and Heavy Construction Labor Contract. Blankenship 

believed these terms were written as part of the contract. 

At trial Blankenship testified that he only signed the 

contracts because union representative Roberts had assured 

him that he had no obligation under the union contract to 

make contributions to the pension tr.ust fund for employees 
working on small commercial or residential paving iobs. An 

earlier audit performed by a Montana Teamsters Health and 

Welfare Trust Fund auditor gave credence to the agreement 

between Blankenship and Roberts, excluding Blankenship 

Construction employees engaged in residential, small 

com~ercial, and shop work from the coverage of the collective 

bargaining agreement. Only after his deposition in July of 

1988, did Blankenship realize the agreement between himself 

and Roberts was oral rather than written. 

Following a bench trial the District Court concluded 

that the contract between the parties should be rescinded 

because the mutual mistake of fact concerning the side 

agreement between union representative Roberts and 

Blankenship was so substantial and fundamental as to defeat 

the object of the parties. The court, in its findings of 

fact and conclusions of law, ruled that Roberts as an 

experienced union contract negotiator had either knowingly or 

negligently misrepresented the conditions under which a 

compliance agreement or a collective bargaining agreement 

could legally be executed. The District Court found that 

Roberts, in his deposition, admitted he made the 

representation to Blankenship that only employees working on 

"heavy" construction were subject to the contract and that 

the representation was not set forth in the standard form 

compliance agreement in contravention to federal labor law. 

Because both parties shared the misconception that there 

could be oral modification of the collective bargaining 

agreement as to when and where it applied, the District Court 

ruled the material mistake of fact mandated rescission of the 

July 8, 1976 compliance agreement and all subsequent 

compliance agreements, the collective bargaining agreements, 

and the trust agreements. The District Court further ordered 

an accounting of all contributions paid to the Fund by 
Blankenship on behalf of his employees and that the Fund 

return such contributions directly to those employees. 

Because we find that the parol evidence rule prohibits 

the introduction of evidence regarding any oral modification 

of the labor contract, we will only specifically address 

appellant's third issue. All remaining issues will only be 

dealt with tangentially, as they relate to the parol evidence 

rule in labor contracts. 

Appellant brought this case to force the respondent to 

make contributions to the Fund in accordance with the labor 

contract and compliance agreements between respondent and the 

union. As such, the Labor Management Relations Act (LMRA) , 

Section 302, 29 U.S.C. 55 185 et seq., applies. 

This Court has often noted that State courts possess 

concurrent jurisdiction with Federal courts but must apply 

Federal substantive law where suit has been initiated under 

the LMRA to enforce a contract between a labor organization 

and an employer. Audit Services, Inc. v. Clark Brothers 

Contractors (1982), 198 Mont. 274, 645 P.2d 953; Audit 

Services, Inc. v. Harvey Bros. Construction (1983), 204 Mont. 

484, 665 P.2d 792; and Audit Services, Inc. v. Houseman 

(1987), 227 Mont. 57, 737 P.2d 71. 

At trial appellant objected to the introduction of 

evidence of an oral modification to the collective bargaining 

agreement, namely the oral side agreement between Blankenship 

and Roberts exempting certain employees from coverage under 

the contract. The court heard testimony from both 

Blankenship and Roberts concerning the oral modifications. 

Appellant argues that by admitting such evidence the District 

Court violated the parol evidence rule. We agree. 

As noted above, the State court must apply Federal law 

in labor contract disputes. In a leading case, the Ninth 

Circuit Court interpreted Federal statute 29 U.S.C. 
§ 185(c) (5) to mean that written trust fund contribution 

obli.gations cannot be modified orally. Waggoner v. Dallaire 

(9th Cir. 1981), 649 F.2d 1362, 1366. Citing Waggoner, this 

Court has previously held that par01 evidence of oral 

modi.fications to contracts subject to the LMRA is 

inadmissible. Audit Services, Inc. v. Houseman, 737 P.2d at. 

72; Audit Services, Inc. v. Harvey Rros. Construction, 665 

P.211 at 796. We so hold once again and reverse and remand 

for a hearing consistent with this opinion.