Audit Services Inc. v. Brasel S

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 . J u s t i c e Gene B. Daly delivered t h e Opinion of the Court:
Audit Services, I n c . , appeals from the order f o r summary
judgment and f i n a l judgment entered i n favor of Brasel & Sims
Construction Company by the D i s t r i c t Court, Cascade County.
Audit Services, I n c . , (Audit Services) i s a nonprofit
Montana corporation created t o a s s i s t various union t r u s t funds
i n t h e c o l l e c t i o n of employer f r i n g e b e n e f i t contributions. These
t r u s t funds were created pursuant t o the Labor Management Rela-
t i o n s Act, 29 U.S.C. §186(c)(5) and t h e Employee Retirement
Income Security Act of 1974, 29 U.S.C. Q l O O l e t seq. Audit
Services i s suing i n i t s capacity a s assignee of e i g h t Montana
employee b e n e f i t t r u s t funds. These t r u s t funds provide h e a l t h
and welfare, pension, apprenticeship and vacation b e n e f i t s t o
Montana l a b o r e r s , operating engineers and teamsters. The t r u s t s
a r e funded ,by employer contributions based on hours worked by
union and nonunion employees within t h e p a r t i c u l a r c r a f t s .
Employer contribution r a t e s f o r each of the t r u s t funds a r e de-
termined by c o l l e c t i v e bargaining agreements negotiated between
the unions and individual employers o r between the unions and
associations of employers.
Brasel & Sims Construction Company (Brasel & Sims) i s a
Wyoming construction firm. During the period May 1972 through
August 1974, Brasel 6 Sims was performing under a road construc-
t i o n c o n t r a c t with the s t a t e of Montana, on a p r o j e c t located
i n southeastern Montana, on the Northern Cheyenne Indian Keserva-
tion. A t the time Brasel & Sims commenced doing business i n
Montana i t r a t i f i e d t h e e x i s t i n g c o l l e c t i v e bargaining agreements
with t h e Montana Laborers, Operating Engineers, and Teamster
Unions, negotiated i n 1971 and e f f e c t i v e from M y 1, 1971
a
through April 30, 1974.
O M y 8 , 1972, Brasel & Sims executed an instrument
n a
assigning i t s bargaining r i g h t s t o the Montana c o n t r a c t o r s '
, Association f o r t h e purpose of negotiating and executing f u t u r e
c o l l e c t i v e bargaining labor agreements with t h e Montana Laborers,
Operating Engineers, and Teamsters Unions. The instrument of
assignment s p e c i f i c a l l y provided:
"
* * * This authority *** s h a l l continue from
year t o year unless n o t i c e of c a n c e l l a t i o n of t h i s
a u t h o r i t y i s given t o t h e Montana Contractors'
Association a t l e a s t s i x t y (60) days p r i o r t o t h e
e x p i r a t i o n d a t e s of each of the e x i s t i n g aforesaid
labor agreements. Cancellation of t h i s a u t h o r i t y
s h a l l not r e l i e v e any contractor of the l e g a l respon-
s i b i l i t i e s i t may have accrued by v i r t u e of the
execution of any labor agreements on i t s behalf by
t h i s Association. Contractor f u r t h e r understands
t h a t i t can be released from the multi-employer
bargaining u n i t of which i t c o n s t i t u t e s a p a r t , and
t h e r e a f t e r negotiate and execute individual labor
agreements only with t h e consent of the labor unions
involved. "
The present controversy arose when Audit Services f i l e d
a complaint i n the D i s t r i c t Court, Cascade County, on April 11,
1974, a l l e g i n g Brasel & Sims had f a i l e d t o pay employer c o n t r i -
butions due under c e r t a i n c o l l e c t i v e bargaining agreements.
Brasel & Sims f i l e d an answer denying l i a b i l i t y . Plaintiff
f i l e d an amended complaint on September 26, 1974, incorporating
those claims previously a s s e r t e d , and prayed f o r judgment and
an award of t r u s t fund contributions i n the sum of $14,175.64
plus i n t e r e s t ; liquidated damages i n the sum of $580.78 plus
i n t e r e s t ; i n t e r e s t i n t h e sum of $18.25; a u d i t fees i n t h e sum
of $799.12 plus i n t e r e s t ; reasonable attorney fees i n the sum
of $4,000; and c o s t s of s u i t . Brasel & Sims f i l e d an answer t o
t h e amended complaint renewing i t s d e n i a l of l i a b i l i t y . The
p a r t i e s commenced discovery and p r e t r i a l b r i e f s were f i l e d .
O November 10, 1976, Brasel & Sims f i l e d a motion f o r
n
summary judgment. A s t i p u l a t i o n of f a c t s f o r defendant's motion
f o r summary judgment was executed by t h e p a r t i e s . O December
n
30, 1976, the D i s t r i c t Court issued an order f o r summary
judgment and f i n a l judgment, granting defendant's motion f o r
summary judgment and dismissing p l a i n t i f f ' s complaint with
prejudice. O January 7 , 1977, Audit Services f i l e d a motion
n
t o a l t e r judgment on the grounds: (1) The D i s t r i c t Court's
order granting defendant's motion f o r summary judgment was based
on an a f f i d a v i t which was never f i l e d with the D i s t r i c t Court;
(2) newly discovered evidence; and, (3) insufficiency of the
evidence. A d i f f e r e n t judge assumed j u r i s d i c t i o n of the matter
f o r t h e purpose of hearing and ruling on Audit Services' motion
t o a l t e r judgment. O January 24, 1977, the court issued i t s
n
order granting Audit Services' motion t o a l t e r judgment-.
"*** t o t h e extent t h a t the reference i n the order
granting summary judgment r e f e r r i n g t o the a f f i d a v i t
*** i s s t r i c k e n on the grounds t h a t a t t h e time the
order was made granting summary judgment, t h a t t h e
a f f i d a v i t was not on f i l e a t t h a t time."
Except f o r the exclusion of the unfiled a f f i d a v i t , which the
court concluded was not the b a s i s f o r granting the summary
judgment, Audit Services' motion t o a l t e r the judgment was
denied.
\
The p r i n c i p a l i s s u e on appeal i s whether the D i s t r i c t
Court erred when it granted Brasel & Sims' motion f o r summary
judgment. Rule 56(c), M.R.Civ.P., provides:
" (c) *** The judgment sought s h a l l be rendered
forthwith i f t h e pleadings, depositions, answers
t o i n t e r r o g a t o r i e s , and admissions on f i l e , together
with t h e a f f i d a v i t s , i f any, show t h a t t h e r e i s
no genuine i s s u e a s t o any material f a c t and t h a t
t h e moving party i s e n t i t l e d t o . a judgment a s a
matter of law ** *."
For an extensive discussion of t h e p r i n c i p l e s 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 t h e D i s t r i c t Court's order granting
Brasel & Sims' motion f o r summary judgment and f i n a l judgment
on these grounds: (1) That genuine i s s u e s of f a c t remain t o be
determined; (2) t h a t matters accepted a s undisputed f a c t remain
merely a l l e g a t i o n s of the defendant; (3) t h a t no b a s i s has been
put f o r t h why the complaint should have been dismissed i n i t s
e n t i r e t y ; and (4.) t h a t the D i s t r i c t Court misconstrued the law.
Brasel & Sims, on the o t h e r hand,.contends summary judgment
<
was properly granted i n i t s favor, since t h e r e were no genuine
issues of material f a c t and f t was e n t i t l e d t o a judgment a s a
matter of law. Brasel & Sims argues: (1) I t s n o t i c e s t o the
unions e f f e c t i v e l y communicated Brasel & ~ i m s ' i n t e n t t o with-
draw from c o l l e c t i v e bargaining; (2) a t t h e time Brasel & Sims
gave n o t i c e of i t s i n t e n t t o withdraw llunusual circumstances"
e x i s t e d which permitted u n i l a t e r a l withdrawal; and (3) t h e
unions consented t o Brasel & Sims' u n i l a t e r a l withdrawal.
A l l p a r t i e s agree f e d e r a l labor law i s c o n t r o l l i n g s i n c e
a dispute involving a c o l l e c t i v e 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 f o r concurrent j u r i s d i c t i o n i n
s t a t e c o u r t s , i n Dowd Box Co. v. Courtney, (1962), 368 U.S. 502,
82 S e c t . 519, 7 L ed 2d 483, t h e United S t a t e s Supreme Court held
t h a t s t a t e c o u r t s must apply f e d e r a l law i n the exercise of t h a t
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 o u t s e t , we hold the D i s t r i c t Court's order granting
summary judgment and f i n a l judgment must be vacated a s t o those
contributions sought f o r 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 t h e 1971-
1974 c o l l e c t i v e bargaining agreement, e f f e c t i v e from May 1, 1971
through April 30, 1974. Before t h i s Court, i n i t s w r i t t e n b r i e f s
and o r a l argument, counsel f o r Brasel & Sims admitted l i a b i l i t y
f o r these contributions.
The remainder of the monetary r e l i e f sought by Audit
Services i s f o r contributions involving approximately 15,010
working hours performed a f t e r April 30, 1974, when the 1974-1977
c o l l e c t i v e bargaining agreement was i n e f f e c t . Sixty days p r i o r
t o the e x p i r a t i o n of the 1971-1974 c o l l e c t i v e bargaining agree-
ment t h e unions gave timely n o t i c e of t h e i r i n t e n t t o renegotiate
the 1971-1974 agreement. Good f a i t h bargaining between t h e unions
and t h e Montana Contractors' Association commenced, but no new
agreements were reached by M y 1, 1974.
a A t t h a t time members
of t h e operating engineers s e t up a picket l i n e and picketed
Brasel & Sims' work s i t e . The laborers and teamsters refused t o
cross t h e picket l i n e , leaving Brasel & Sims with only nonunion
employees.
O n May 3 , 1974 and M y 6 , 1974 Brasel & Sims dispatched
a
n o t i c e s of termination t o the Montana Operating Engineers,
Laborers,and Teamster Unions. Although each of the memorandums
i s d r a f t e d i n a d i f f e r e n t form, they individually r e i t e r a t e
the phrase " A s of t h i s d a t e we a r e terminating our agreement with * * *"
the respective unions. Two of the n o t i c e s contain the phrase
"Therefore, s i n c e the present contract expired on M y 1, 1974,
a
w a r e exercising our r i g h t t o terminate a t t h i s time."
e The
t h i r d n o t i c e contains t h e phrase "We, t h e r e f o r e a r e terminating
our agreement a s of t h i s time." Neither a w r i t t e n n o t i c e s i m i l a r
t o the type Brasel & Sims dispatched t o t h e unions nor any o r a l
communication evidencing an i n t e n t t o withdraw from c o l l e c t i v e
bargaining was given t o the Montana Contractors ' Association.
Meanwhile, the Montana Contractors' Association and
the unions continued negotiations. Nw c o l l e c t i v e bargaining
e
agreements were negotiated by t h e various unions and t h e
Montana Contractors' Association on June 11, 1974. In its
f i n a l executed form, t h e 1974-1977 c o l l e c t i v e bargaining agree-
ment r e l a t e d back t o May 1, 1974, the termination d a t e of
the 1971-1974 c o l l e c t i v e bargaining agreement. I n t h e mean-
t i m e , Brasel & Sims had h i r e d nonunion employees t o complete
i t s road construction p r o j e c t . It i s t h e employer contribu-
t i o n s f o r the period M y 1, 1974 through completion of Brasel
a
& Sims' road construction p r o j e c t which Audit Services seeks,
involving approximately 15,010 hours.
The United S t a t e s Court of Appeals, i n N.L.R.B. v. Beck
Engraving Co., Inc.(3rd C i r . 1975), 522 F.2d 475, summarized
f e d e r a l law c o n t r o l l i n g an employer's attempted withdrawal from
a multi-employer bargaining u n i t , a s announced i n R e t a i l
Associates, I n c . , (1958), 120 NLRB No. 66, pp. 388-400:
'"Trimmed t o i t s e s s e n t i a l s , the R e t a i l Associates
r u l e may be b r i e f l y s t a t e d : p r i o r t o negotiations,
e i t h e r the union o r an employer i n a multi-employer
bargaining u n i t may u n i l a t e r a l l y ( i . e . , without t h e
consent of the o t h e r party) withdraw i f adequate w r i t t e n
n o t i c e i s given which evidences an unambiguous i n t e n t
t o withdraw; during negotiations, withdrawal is permis-
s i b l e upon mutual consent o r may occur u n i l a t e r a l l y 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.2d
649; N.L.R.B. v. John J. Corbett Press, Inc, (2nd Cir. 1968),
401 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 n o t i c e s equivalent t o acquiescence o r consent t o a
purported withdrawal from the multi-employer bargaining u n i t .
Such a finding of i n s u f f i c i e n t n o t i c e of withdrawal d e f e a t s
Brasel & Sims' argument avoiding l i a b i l i t y f o r employer con-
t r i b u t i o n s under the 1974-1977 c o l l e c t i v e bargaining agreements.
The D i s t r i c t Court e r r e d when i t granted judgment f o r Brasel
& Sims a s a matter of law.
The order of the D i s t r i c t Court granting Brasel & Sims'
motion f o r summary judgment and f i n a l judgment i s reversed and
the cause remanded t o the D i s t r i c t Court f o r f u r t h e r proceedings
c o n s i s t e n t with t h i s Opinion.
i
~ ut isc e
W Concur:
e