Unpublished Disposition, 861 F.2d 268 (9th Cir. 1982)

Operating Engineers Pension Trust, et al. (Trust) appeals from the district court's judgment that Thomas G. Daniel was not bound by agreements between his company and Operating Engineers Union, Local 12 that, by their terms, obliged him to make pension fund contributions for his employees.

Daniel, the owner and principal operator of Consolidated Concrete Pumping, Inc., worked for several contractors who were signatories to a Master Labor Agreement with Operating Engineers Union, Local 12. Robert Mathews, a representative of Local 12, informed Daniel that he could not work for his signatory customers unless he joined the union. When Daniel stated that he could not sign his company up with the union because he "couldn't afford to pay the rates, the benefits, and the scale that [the union] wanted," Reporter's Transcript (RT) at 174, Mathews suggested that Daniel join the union as an owner-operator and then work as an employee for the general contractors. RT at 176. Daniel agreed.

On October 19, 1982, Daniel met with Elbert Thomas, a representative of Local 12 and told Thomas that he wanted to join Local 12 as an owner-operator. RT at 183. Thomas presented Daniel with a set of documents, four of which signed Daniel up as a union member and two of which bound his company under the San Diego Master Labor Agreement (MLA) between Local 12 and the Associated General Contractors of America, San Diego Chapter, Inc. The two latter agreements, a short form agreement between Consolidated Concrete Pumping, Inc. and Operating Engineers Union, Local 12, and an Acknowledgment and Acceptance of Trust Agreement, obliged Daniel to make contributions to the Trust based on the number of employees working for Consolidated Concrete Pumping, Inc.

After this meeting, Daniel resumed his operations as Consolidated Concrete Pumping; he never made any contributions to the union's trust funds. In 1984, Local 12 conducted an audit of Consolidated Concrete Pumping's books and discovered Daniel owed over $120,000 in delinquent employee contributions. Plaintiff's Exhibit 13.

When Daniel refused to pay, the Trust brought suit pursuant to section 502(e) (1) of the Employee's Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(e) (1) (1982) and section 301(a) of the Labor-Management Relations Act of 1947, 29 U.S.C. § 185(a) (1982). The Trust also sought damages for breach of the subcontracting clause, audit costs, 10% liquidated damages for late payment, and reasonable costs and fees, all totaling $145,886.33. Plaintiff's Exhibit 13.

After trial, the district court found that Daniel signed the short form agreement without reading it, Finding of Fact (FF) # 11, Excerpts of Record (ER) at 28, and that he "did not think or understand that the signing of the short form agreement bound him under the MLA." FF # 13, ER at 29. Further, the court found that Daniel "reasonably and justifiably believed that the various documents signed by him involved only an application for union membership as an owner/operator." FF # 12, ER at 29. Accordingly, the court held that Consolidated Concrete Pumping was not bound by the short-form agreement and had no obligation to make pension fund contributions for its employees under the MLA. The court found it unnecessary to consider Daniel's alternate claim that he effectively repudiated the agreement under section 8(f) of the National Labor Relations Act, 29 U.S.C. § 158(f) (1982). Conclusion of Law # 4, ER at 30. The court also awarded attorney's fees and costs to Daniel pursuant to 29 U.S.C. § 1132(g) (2) (1982).

In most cases, a party who signs a contract is bound by its terms, even if he is ignorant of its contents. Operating Eng'rs Pension Trust v. Cecil Backhoe Serv., Inc., 795 F.2d 1501, 1505 (9th Cir. 1986); Operating Eng'rs Pension Trust v. Gilliam, 737 F.2d 1501, 1504 (9th Cir. 1984). We have held, however, that this general rule "is qualified by the principle that he who signs a document reasonably believing it is something quite different than it is cannot be bound to the terms of the document." Gilliam, 737 F.2d at 1504. See also McNally Pittsburg, Inc. v. Int'l Ass'n of Bridge, Structural & Ornamental Iron Workers, 812 F.2d 615, 621 (10th Cir. 1987); 1 Williston on Contracts Sec. 95A (3d ed. 1957) ("If without negligence on his part, a signer attaches his signature to a paper assuming it to be a paper of a different character, the paper is void.").

The question of whether a signer's beliefs are reasonable is essentially a question of negligence: on the undisputed facts, was the signer negligent in signing the document without reading it? United States v. McConney, 728 F.2d 1195, 1204 (9th Cir.) (en banc), cert. denied, 469 U.S. 824 (1984). The district court's determination of this issue "is reviewed by the same standard as are findings of fact," Eichelberger v. NLRB, 765 F.2d 851, 856 (9th Cir. 1985). Therefore, we can overturn the court's findings only if they are clearly erroneous, McConney, 728 F.2d at 1204, that is, if "on the entire evidence [we are] left with the definite and firm conviction that a mistake has been committed." Sutton v. Atlantic Richfield Co., 646 F.2d 407, 412 (9th Cir. 1981) (citations omitted).

Here, the record supports the district court's finding that Daniel signed the documents obliging him to make pension payments "reasonably believing they were something quite different than what they in fact were." RT at 322. At the meeting with Thomas, Daniel stated his intent to join the union as an owner-operator. RT at 183. Daniel did not read the documents completely before he signed them, id. at 240, 259, and did not receive copies of the agreements at the time he signed. Id. at 190-92, 260-61. The district court further noted that the order and manner in which Thomas presented the documents to Daniel supported his claim that he reasonably believed he was only joining the union as an individual. Id. at 321. For example Thomas used "X" marks to indicate only the places where Daniel was to sign, id. at 183, and filled out parts of the agreements for Daniel, id. at 189.

Operating Eng'rs Pension Trust v. Gilliam, 737 F.2d 1501 (9th Cir. 1984), presented similar facts. In that case, Gilliam told a union representative that he wanted to join the union as an owner-operator. The union representative "produced a number of standard forms that he said were signed by owner-operators," id. at 1504, without explaining that the forms included a short-form agreement and an acknowledgment of trust agreement which obligated Gilliam to make trust fund contributions. The representative filled out the forms for Gilliam, who then signed the documents without reading them. Gilliam was not given copies of the agreements at the time. Relying on this evidence, we affirmed the district court's finding that Gilliam did not know what he was signing. Id. at 1505.

Daniel has a somewhat weaker case: Thomas did not deliberately and affirmatively mislead him as to the nature of the documents as the union representative misled Gilliam. However, given the substantial similarity between the evidence supporting the district court's finding in this case and the evidence in Gilliam, we cannot hold the district court's finding to be clearly erroneous. Therefore, we affirm the district court's conclusion that Daniel was not bound by the terms of the short form agreement, and thus not obligated to make payments to the Trust.

AFFIRMED.