Appeal of the City of Manchester , 144 N.H. 386 ( 1999 )

BROCK, C.J.

The petitioner, the City of Manchester, appeals the decision of the New Hampshire Public Employee Labor Relations Board (board) holding that a grievance filed against it by the respondent, the Manchester Police Patrolman’s Association, was arbitrable. We reverse.

The board made the following findings of fact. The petitioner is a public employer within the meaning of RSA 273-A:l, X (1987). The respondent is the duly certified bargaining unit for police officers employed by the petitioner. The petitioner and the respondent are parties to a collective bargaining agreement (CBA) for the period beginning July 1, 1991, and ending June 30, 1994. Article 30 of the CBA allowed the parties to expressly change or terminate the terms of the agreement. Neither party exercised this option.

In May 1996, the Manchester Police Commission revised the Manchester Police Department’s standard operating procedure regarding discipline. Prior to this change, a police officer facing discipline had the opportunity to be heard before a disciplinary hearing board. The revision replaced that hearing with a hearing before the chief of police. On June 5, 1996, the respondent filed a grievance with the petitioner claiming that the revision was a unilateral change that eliminated prior rights of its members. One month later, the respondent filed a demand for arbitration with the American Arbitration Association. The petitioner, in turn, filed an unfair labor practice complaint with the board alleging that the respondent violated RSA 273-A:5, 11(f) and (g) (1987) by filing a demand for arbitration contrary to the express provisions of the CBA.

The issue before the board was whether the respondent’s grievance was arbitrable. As a preliminary matter, the board found that, although expired, the CBA’s provisions remained effective under the principle of maintaining the status quo. See Appeal of Milton School Dist., 137 N.H. 240, 247, 625 A.2d 1056, 1061 (1993). The board found that Article 7 of the CBA allows grievance of a dispute arising out of the application or interpretation of the CBA under express provisions of the CBA and provides for final and binding arbitration. Without addressing the merits of the dispute, the board determined that the arbitration clause was “susceptible of a reading that would cover the dispute and that there has not been a showing, sufficient to satisfy the ‘positive assurance’ standard, that the parties intended to exclude change in the trial board procedure of the discipline process from arbitration.” Holding that the respondent had raised a colorable issue of contract interpretation, the board dismissed the petitioner’s unfair labor practice complaint. The board denied the petitioner’s motion for rehearing, see RSA 541:3 (1997) , and this appeal followed.

We will not overturn the board’s order unless it is erroneous as a matter of law, or by a clear preponderance of the evidence, the order is unjust or unreasonable. RSA 541:13 (1997); see Appeal of Londonderry School Dist., 142 N.H. 677, 680, 707 A.2d 137, 139 (1998) . The determination of whether the parties’ dispute is arbitrable is guided by the following four principles:

(1) arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit . . . ; (2) unless the parties clearly state otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator; (3) a court should not rule on the merits of the parties’ underlying claims when deciding whether they agreed to arbitrate; and (4) under the “positive assurance” standard, when a CBA contains an arbitration clause, a presumption of arbitrability exists, and in the absence of any express provision excluding a particular grievance from arbitration, . . . only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail ....

Appeal of AFSCME Local 3657, 141 N.H. 291, 293, 681 A.2d 100, 102 (1996) (quotation and brackets omitted).

“We examine first the relevant language of the CBA.” Appeal of Westmoreland School Bd., 132 N.H. 103, 106, 564 A.2d 419, 421 (1989). Article 4 of the CBA, entitled “Prior Benefits and Preservation of Rights,” provides:

The Commission agrees that conditions of employment and working conditions previously established as policy of the Commission shall be not less than those now in effect and will remain in effect unless specifically modified by this Agreement. Nothing in this Article will limit the rights of the Commission to revise the Rules and Regulations, policies and/or working conditions to improve the efficiency of the Department, provided, however, any such change or revision shall not be subject to the grievance procedure.

Article 7 defines a grievance as “a claim or dispute arising out of the application or interpretation of this Agreement, under express provisions of the Agreement,” and provides for final and binding arbitration.

“Although the primary function of the board and this court is simply to determine whether or not [the respondent] has raised a colorable issue of contract interpretation, without deciding it on the merits, the issue in this ease requires an interpretation of the CBA to determine whether the [petitioner and the respondent] have agreed to arbitrate a particular matter.” Appeal of Town of Bedford, 142 N.H 637, 639, 706 A.2d 680, 682 (1998) (quotation and citation omitted). “Interpretation of a contract, including whether a contract term or clause is ambiguous, is ultimately a question of law for this court to decide.” Merrimack School Dist., v. Nat’l School Bus Serv., 140 N.H. 9, 11, 661 A.2d 1197, 1198 (1995) (quotation and brackets omitted). “A clause is ambiguous when the contracting parties reasonably differ as to its meaning.” Id. (quotation omitted).

The petitioner argues that Article 4 is an express provision excluding the respondent’s grievance from arbitration. The petitioner interprets the first sentence of Article 4 as establishing a general rule that preserves existing rights and benefits to the respondent’s members. The second sentence of Article 4, as interpreted by the petitioner, is an express exception to the general rule. This exception excludes from the grievance procedure those changes made to the rules, regulations, policies, and/or working conditions that improve the efficiency of the department. The petitioner contends that the change to the grievance proceedings is such a permissible change.

The respondent, however, argues that the use of the term “provided, however” contained in the second sentence of Article 4 creates a condition precedent. See J. CALAMARI & J. PERILLO, CONTRACTS § 11-9, at 448 (3d ed. 1987). The respondent, therefore, interprets Article 4 to allow unilateral changes by the commission only if the changes do not eliminate prior rights or benefits of its members. The respondent argues that a hearing before a disciplinary hearing board constituted a prior right and, therefore, it is entitled to arbitration under the grievance provision of the CBA.

“[Conditions precedent are not favored, and we will not so construe such conditions unless required by the plain language of the agreement.” Holden Eng’g and, Surveying v. Pembroke Rd. Realty Trust, 137 N.H. 393, 396, 628 A.2d 260, 262 (1993). The respondent’s interpretation overlooks a requirement of conditions precedent that an act or event is contingent upon performance or occurrence of another act or event. See CALAMARI & PERILLO, supra § 11-5, at 439. The plain language of Article 4 forecloses the respondent’s argument that unilateral changes by the commission are allowed only if the changes do not eliminate prior rights or benefits. We interpret “provided, however” as only adding emphasis to the fact that the changes to the rules and regulations which improve the efficiency of the department are not subject to the grievance procedure. Accordingly, we hold that Article 4 of the CBA is an express provision excluding the petitioner’s changes in the discipline proceedings from arbitration.

The respondent’s remaining arguments rely on the premise that the second sentence of Article 4 was not an express provision excluding arbitration. Because we hold otherwise, we need not address the respondent’s remaining arguments.

Reversed.

BRODERICK, j., did not sit; HORTON, j., dissented; the others concurred.