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, 1977Mr. Justice Gene B. Daly delivered the Opinion of the Court:
Audit Services, Inc., appeals from the order for summary judgment and finaljudgment entered in favor of Brasel & Sims Construction Company by the District Court, Cascade County. Audit Services, Inc., (Audit Services) 

### is a nonprofit Montana corporation created to assistvarious union trust funds in the collection of employer fringe benefit contributions. These trust funds were created pursuant to the Labor Management Relations Act, 29 U.S.C. §186(c)(5) and the Employee Retirement Income SecurityAct of 1974, 29 U.S.C. 

### QlOOlet seq. Audit Services 

### is suing in

### its capacity as assignee of eight Montana employee benefit trust funds. These trust funds provide health and welfare, pension, apprenticeship and vacation benefits to 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 trust funds are determined by collective bargaining agreements negotiated between the unions and individual employers orbetween the unions and associations of employers. Brasel & Sims Construction Company (Brasel & Sims) 

### is a Wyoming construction firm. During the period May 1972 through August 1974, Brasel 

### 6 Sims was performing under a road construction contractwith the state of Montana, on a project located in southeasternMontana, on the Northern Cheyenne Indian Keservation. Atthe time Brasel & Sims commenced doingbusiness in Montana it ratified the existing collective bargaining agreements with theMontana Laborers, Operating Engineers, and TeamsterUnions, negotiated in 1971and effective from May 

### 1, 1971 through April 30, 1974. On May 8, 1972, Brasel & Sims executed an instrument assigning 

### itsbargaining 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 specificallyprovided:
"

# *** This authority

# * ** shall continue from year toyear unless notice of cancellation of this authority 

### is given to theMontana Contractors' Association atleast sixty 

### (60) days prior to the expiration dates of each of the existing aforesaid labor agreements. Cancellation of this authority shallnot relieve any contractor of the legal responsibilities it may have accrued by virtue of the execution of any labor agreements on 

### itsbehalf by thisAssociation. 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 arosewhen Audit Services filed
a complaint inthe District Court, Cascade County, on April 

### 11, 1974, alleging Brasel & Sims had failed topay employer contributions due under certain collective bargaining agreements. Brasel & Sims filed an answer denying liability. Plaintiff filed an amended complaint on September 26, 1974, incorporating those claims previously asserted, and prayed forjudgment and
an award of trust fund contributions inthe sum of $14,175.64 plus interest; liquidated damages inthe sum of $580.78 plus interest; interest inthe sum of $18.25; audit fees in the sum of $799.12 plus interest; reasonable attorney fees inthe sum of $4,000; and costs of suit. Brasel & Sims filedan answer tothe amended complaint renewing 

### its denial of liability. The parties commenced discovery and pretrialbriefs were filed. On November 10, 1976, Brasel & Sims filed a motion for summaryjudgment. A stipulationof facts for defendant's motion for summaryjudgment was executed by the parties. On December 30, 1976, the District Court issued an order for summary judgment and finaljudgment, granting defendant's motion for summary judgment and dismissing plaintiff's complaint with prejudice. On January 

### 7, 1977, Audit Services filed a motion toalterjudgment on the grounds: 

### (1)The District Court's order granting defendant's motion for summary judgment was based
on an affidavit which was never filedwith the District Court; (2) newly discovered evidence; and, 

### (3) insufficiency of the evidence. A differentjudge assumedjurisdiction of the matter for the purpose of hearing and ruling on Audit Services' motion toalterjudgment. On January 24, 1977, the court issued 

### its order granting Audit Services' motion toalterjudgment-.

"

# **

# * to the extent that the reference in the order granting summary judgment referring to the affidavit 

# *** is stricken on the grounds that atthe time the orderwas made granting summary judgment, that the affidavitwas not on fileatthat 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 alter thejudgment was denied.

\ The principal issue on appeal 

### iswhether 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 shallbe rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, togetherwith the affidavits, if any, show that there 

### is no genuine issue astoany material fact and that the moving party 

### is entitled to.ajudgment as a matter of law

# *

# * *." For an extensive discussion of theprinciples of summary judgment under Rule 56(c), M.R.Civ.P., seeHarland v. Anderson, (1976), 169 Mont. 447, 548 P.2d 613. Audit Services challenges theDistrict Court's order granting Brasel & Sims' motion for summaryjudgment and finaljudgment


### on these grounds: (1) That genuine issues of fact remain tobe determined; 

### (2) that matters accepted asundisputed fact remain merely allegations of the defendant; (3) that no basis has been put forthwhy the complaint should have been dismissed in 

### its entirety; and (4.) that the District Court misconstrued the law. Brasel & Sims, 

### on the otherhand,.contends 

### summary judgment
was properly granted in 

### its favor, since there were no genuine < issues of material fact and ftwas entitled to a judgment as a matter of law. Brasel & Sims argues: (1) 

### Itsnotices to the unions effectively communicated Brasel 

### & ~ims' intent towithdraw from collective bargaining; (2) atthe time Brasel & Sims gave notice of its intent towithdraw llunusualcircumstances" existedwhich permitted unilateral withdrawal; and (3) the unions consented toBrasel & Sims' unilateral withdrawal. Allparties agree federal labor law 

### is controlling since


### a dispute involving 

### a collectivebargaining agreement fallswithin the purview of Section 301 of the Taft-Hartley Act, 29 U.S.C. 5185. While the Taft-Hartley Act provides for concurrent jurisdiction in statecourts, inDowd Box Co. v. Courtney, (1962), 368 U.S. 502, 82 Sect. 519, 

### 7 L ed 2d 483, the United States Supreme Court held that statecourts

### must apply federal law inthe exercise of that jurisdiction. Teamsters Union v. Lucas Flour Co., (1962), 369U.S. 95, 82 S.Ct. 571, 

### 7 L ed 2d 593. See Lowe v. O'Conner, (1973), 163Mont. 100, 515 P.2d 677. Atthe outset, we hold the District Court's order granting summary judgment and finaljudgment must be vacated as to those contributions sought for the period November 

### 1, 1972 through April 30, 1974, involving approximately 409 112working hours. During thisperiod of time, Brasel & Sims was bound by the 1971- 1974 collective bargaining agreement, effective fromMay 

### 1, 1971 through April 30, 1974. Before this Court, in 

### itswritten briefs and oral argument, counsel forBrasel & Sims admitted liability for these contributions. The remainder of the monetary relief sought by Audit Services 

### is for contributions involving approximately 15,010 working hours performed afterApril 30, 1974, when the 1974-1977 collective bargaining agreement was ineffect. Sixty days prior to the expirationof the 1971-1974 collectivebargaining agreement the unions gave timely notice of their intent to renegotiate the 1971-1974 agreement. Good faithbargaining between the unions and theMontana Contractors' Association commenced, but no new agreements were reached by May 

### 1, 1974. Atthat time members of the operating engineers setup 

### a picket line and picketed Brasel & Sims' work site. The laborers and teamsters refused to
cross the picket line, leaving Brasel & Sims with only nonunion employees. OnMay 3, 1974 and May 6, 1974Brasel & Sims dispatched notices of termination to the Montana Operating Engineers, Laborers,and Teamster Unions. Although each of the memorandums 

### is drafted in a different form, they individually reiterate the phrase "As of this datewe areterminating our agreement with

# ***"

### the respective unions. Two of the notices contain the phrase "Therefore, since the present contract expired on May 1, 1974,
we are exercising our right to terminate atthis time." The third notice contains the phrase "We, therefore are terminating
our agreement as of this time." Neither a written notice similar to the type Brasel & 

### Sims dispatched tothe unions nor any oral communication evidencing an intent towithdraw from collective bargaining was given to the Montana Contractors

## ' Association. Meanwhile, the Montana Contractors' Association and the unions continued negotiations. New collective bargaining agreements were negotiated by the various unions and the Montana Contractors' Association on June 11, 1974. In its 

### finalexecuted form, the 1974-1977 collectivebargaining agreement relatedback toMay 1, 1974, the termination date of the 1971-1974 collective bargaining agreement. Inthe meantime, Brasel & 

### Sims had hired nonunion employees to complete its 

### road construction project. It 

### is the employer contributions for the period May 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, inN.L.R.B. 

### v. Beck Engraving Co., Inc.(3rd Cir. 

### 1975), 522 F.2d 475, summarized federal law controlling an employer's attemptedwithdrawal from
a multi-employer bargaining unit, as announced inRetail Associates, Inc., (1958), 120

### NLRB No. 66, 

### pp. 388-400: '"Trimmed toits

### essentials, the RetailAssociates rulemay be briefly stated: prior tonegotiations, either the union or an employer ina multi-employer bargaining unit may unilaterally (i.e., without the consent of the other party) withdraw if adequate written notice 

### isgiven which evidences an unambiguous intent towithdraw; during negotiations, withdrawal is 

### permissibleupon mutual consent or may 

### occur unilaterally in

### the event of unusual circumstances. The Courts of Appeals of several circuitshave adopted and approved this formula.

## '" 522F.2d 

### 481, Brasel & 

### Sims contends itswithdrawal fromMontana Contractors' Associationduring collective bargaining negotiationswas effective under the "unusual circumstances" test discussed inN.L.R.B. v. Beck Engraving Co., Inc,, supra, However, sucha conclusionmust be premised on a finding that Brasel & 

### Sims sufficiently communicated to the unions and to the multi-employerbargaining unit an intent to withdraw. Otherwise,an employer might choose to remain silent until
newbargaining agreements are negotiated, evaluate the economic benefit or detriment associatedwith declaringwithdrawal, and then contend unusual circumstances as a basis for releasing the employer fromcontributionsbased 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 theMontana Contractors' Association an unambiguous or unequivocal notice of intent towithdraw from the multi-employer bargaining unit. SeeN.L.R.B. v. Hi-Way Billboards, Inc., (6th Cir. 1973), 473F.2d 649;N.L.R.B. v. John

### J. Corbett Press, Inc, (2nd Cir. 1968), 

### 401 F.2d 673,675. Thenotices dispatchedby Brasel and Sims
were only sent to the unions, not toMontana Contractors' Association, Further, the notices only evidenced an intent to terminate agreementswith the unions, i.e. the 1971-1974 collectivebargaining agreementswhich expired onMay 1,1974. Inno specific terms do the notices dispatchedby Brasel & 

### Sims communicatean intent towithdraw from the multi-employer bargaining unit. Nor is the unions' failure to respond to or protestsuch 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 liability for employer contributions under the 1974-1977 collectivebargaining agreements. The District Court erred when it granted judgment for Brasel & Sims as a matter of law. The order of the District Court grantingBrasel & Sims' motion for summaryjudgment and finaljudgment isreversed and the cause remanded to the District Court for further proceedings consistent with thisOpinion.

~us tice i
We Concur: