Trustees of So Cal v. Flores ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
TRUSTEES OF THE SOUTHERN 
CALIFORNIA IBEW-NECA PENSION
TRUST FUND, No. 06-55812
Plaintiff-Appellant,
v.  D.C. No.
CV-04-10011-FMC
HERMAN FLORES, d/b/a BHF OPINION
Electrical Contractors,
Defendant-Appellee.

Appeal from the United States District Court
for the Central District of California
Florence Marie Cooper, District Judge, Presiding
Argued and Submitted
February 5, 2008—Pasadena, California
Filed March 27, 2008
Before: Alfred T. Goodwin, Diarmuid F. O’Scannlain, and
William A. Fletcher, Circuit Judges.
Opinion by Judge Goodwin
3161
TRUSTEES v. FLORES 3163
COUNSEL
J. David Sackman, Reich, Adell, Crost & Cvitan, Los Ange-
les, California, for the plaintiff-appellant.
Marla B. Hendrickson, Tustin, California, for the defendant-
appellee.
OPINION
GOODWIN, Circuit Judge:
The Trustees of the Southern California IBEW-NECA Pen-
sion Trust Fund (“Trustees”) appeal the district court’s judg-
ment against them in their action to collect delinquent trust
fund contributions from employer Herman Flores. The Trust-
ees contend that the district court erred by holding that the
term “covered employees” in the relevant collective bargain-
ing agreements is ambiguous and by considering extrinsic evi-
dence of the parties’ oral representations. We hold that the
collective bargaining agreements require Flores to make bene-
fit contributions for all electrical workers engaged in project
work. For this reason, we reverse and remand for further pro-
ceedings.
BACKGROUND
In late August 2003, the Los Angeles Unified School Dis-
trict awarded a construction contract to general contractor
3164 TRUSTEES v. FLORES
DJM/Borbon for the Commonwealth Avenue and Hoover
Elementary School Safety and Technology Upgrades Project.
Flores, an individual doing business as BHF Electrical Con-
tractors (“BHF”), worked as an electrical subcontractor on the
project.
On October 1, 2003, Flores signed a Subscription Agree-
ment with Local Union 11 of the International Brotherhood of
Electrical Workers in which he agreed to make pension trust
fund contributions on behalf of his employees. In addition to
the Subscription Agreement, Flores’ obligation to make trust
fund contributions was regulated by a Project Stabilization
Agreement (“PSA”), the Local Union 11 Inside Wiremen’s
Agreement (“IWA”) and other trust agreements.
Flores began work on the project in October 2003. Sections
4.6 and 4.8 of the PSA obligated Flores to hire all project
workers, excluding his core employees, from the union’s
referral system, unless the referral system did not fulfill Flo-
res’ request within forty-eight hours. In October and Novem-
ber 2003, Flores made several calls to union officials,
requesting union workers. The union did not refer workers
until December 8, 2003. In the meantime, Flores used his own
workforce of nonunion employees for project work.
Flores made no contributions to the pension trust fund on
behalf of his employees before December 8, 2003. The Trust-
ees later conducted an audit of BHF by comparing the
employer’s monthly payroll reports with its certified payroll.
The audit discovered unpaid contributions for project work
performed before December 8, 2003, by electricians other
than Flores himself.
The Trustees filed this action against Flores in federal dis-
trict court to collect delinquent trust fund contributions under
section 301(a) of the Labor Management Relations Act, 29
U.S.C. § 185(a), and section 502(e)(1) of the Employee
TRUSTEES v. FLORES 3165
Retirement Income Security Act, 29 U.S.C. § 1132(e)(1). The
district court conducted a three-day bench trial.
On March 13, 2006, the district court entered judgment in
favor of Flores. The court held that the PSA is ambiguous
because “it never defines the term ‘covered workers’ and
never expressly requires contributions for nonunion workers.”
After considering parol evidence, the district court concluded
that “defendant’s Subscription Agreement was not in effect
and his obligations under the PSA did not arise until Decem-
ber 8, 2003.”
On May 10, 2006, the district court denied the Trustees’
motion to alter or amend the judgment. This appeal followed.
STANDARD OF REVIEW
We review the interpretation of contract provisions de
novo. Operating Eng’rs Pension Trusts v. B & E Backhoe,
Inc., 911 F.2d 1347, 1351 (9th Cir. 1990) (citing Kemmis v.
McGoldrick, 706 F.2d 993, 996 (9th Cir. 1983)).
DISCUSSION
The Trustees contend that the district court erred by hold-
ing that the term “covered employees” is ambiguous in the
PSA. They argue that the PSA’s language, structure, and pur-
pose unambiguously require Flores to pay benefit contribu-
tions for electrical workers engaged in project work, including
the nonunion workers he employed prior to December 8,
2003, and after accepting the contract. We agree.
[1] Written terms are ambiguous only if multiple reason-
able interpretations exist. 11 Samuel Williston & Richard A.
Lord, A Treatise on the Law of Contracts § 30:4 (4th ed.
1999). We interpret written terms in the context of the entire
agreement’s language, structure, and stated purpose. See
Huber, Hunt & Nichols, Inc. v. United Ass’n of Journeymen
3166 TRUSTEES v. FLORES
& Apprentices of the Plumbing & Pipefitting Indus., Local 38,
282 F.3d 746, 752 (9th Cir. 2002). Litigants cannot isolate
terms of a collective bargaining agreement in order to create
an ambiguity where none exists. See id. at 753-54.
[2] In this case, the collective bargaining agreements cover
both union and nonunion employees. Section 3.7 of the PSA
extends coverage to “construction craft employees” and pro-
vides a detailed list of excluded job classifications. For exam-
ple, the PSA does not apply to “office or clerical employees,
draftspersons, supervisors, timekeepers, messengers, guards,
inspectors, or any other employees above the classification of
general superintendent.” When a collective bargaining agree-
ment defines covered employees by job classification, it gen-
erally covers “all employees within those classifications,
regardless of union membership.” Teamster’s Local 348
Health & Welfare Fund v. Kohn Beverage Co., 749 F.2d 315,
318 (6th Cir. 1984).
[3] The recognition clauses in both the PSA and the IWA
also show that the agreements cover all electrical workers
engaged in project work, regardless of union status. “The
presence in the agreement of a recognition clause designating
the union as the exclusive bargaining agent for all employees
indicates that fringe benefit contributions are required for both
union and non-union members.” Id. (citing Audit Servs., Inc.
v. Rolfson, 641 F.2d 757, 761 (9th Cir. 1981); Manning v.
Wiscombe, 498 F.2d 1311, 1313 (10th Cir. 1974)).
Section 2.06(a) of the IWA states that “[t]he employer rec-
ognizes the Union as the sole and exclusive representative of
all its employees performing work within the jurisdiction of
the Union for the purpose of collective bargaining in respect
to rates of pay, wages, hours of employment and other condi-
tions of employment.” Similarly, section 4.1 of the PSA
broadly defines the relevant collective bargaining unit as “em-
ployees engaged in Project Work covered by this Agree-
ment.” The PSA defines “Project Work” as “work performed
TRUSTEES v. FLORES 3167
by a Contractor or Subcontractor pursuant to the terms of a
Construction Contract.” These terms yield only one reason-
able interpretation: the collective bargaining agreements cover
all of Flores’ electrical workers engaged in project work.
Flores nevertheless contends that the PSA’s benefits contri-
bution requirement did not take effect until the union pro-
cessed the relevant paperwork and supplied union workers on
December 8, 2003. He cites section 4.6 of the PSA, which
obligates employers to “hire all covered employees, excluding
core employees,” through the union referral system. He also
relies on section 4.8 of the PSA, which states:
In the event that any Union’s registration and referral
system does not fulfill the requirements for specific
classifications of covered employees requested by
any Contractor within forty-eight (48) hours (exclud-
ing Saturday, Sunday and holidays), that Contractor
may use employment sources other than Union reg-
istration and referral services and may employ appli-
cants from any other available source.
Flores argues that under these provisions his obligation to
make trust fund contributions was conditioned upon actual
referral of union workers.
[4] The agreements contain no such condition. Sections 4.6
and 4.8 of the PSA do not limit “covered employees” to those
supplied by the union. Rather, these provisions establish the
employer’s separate obligation to hire employees through the
union referral system unless that system does not supply
workers in a timely manner. Neither PSA section 4.11, which
requires employers to contribute benefits, nor the Subscription
Agreement conditions the employer’s obligation to make trust
fund contributions upon actual referral of union workers.
[5] Flores’ obligations under the PSA arose before his
employees started work on the covered project in October
3168 TRUSTEES v. FLORES
2003. Section 1.9 of the PSA unambiguously states: “By
accepting the award of a Construction Contract covered by
this Agreement, whether as a Contractor or Subcontractor, the
Contractor or Subcontractor agrees to be bound by each and
all of the provisions of this Agreement.” Flores also agreed to
be bound by these provisions when he signed the Subscription
Agreement for project work on October 1, 2003.
[6] The collective bargaining agreements unambiguously
required Flores to make benefit contributions for all electrical
workers engaged in project work, including the nonunion
workers he employed prior to December 8, 2003, but after
accepting the contract. The district court erred by considering
extrinsic evidence that contradicted these unambiguous terms.
See Pace v. Honolulu Disposal Serv., Inc., 227 F.3d 1150,
1157-58 (9th Cir. 2000) (noting that the parol evidence rule
bars admission of extrinsic evidence to contradict unambigu-
ous contract terms).
Finally, the Trustees contend that the district court erred by
failing to rule on their claim that Flores owes approximately
$893 in unpaid contributions for project work performed after
December 8, 2003, by employees other than ditch-diggers and
Flores himself. The district court made no findings or ruling
on this issue, and the parties have not adequately briefed the
question on appeal. We remand this issue to the district court
for further consideration.
REVERSED and REMANDED for further proceedings.
Appellant to recover costs.