MICHAEL D. COVINGTON v. PIPE FITTERS' LOCAL 502 TRAINING AND EDUCATION FUND; PIPE FITTERS' LOCAL 522 TRAINING AND EDUCATION FUND; PLUMBERS AND PIPEFITTERS' LOCAL 502 JOINT EDUCATION AND TRAINING FUND
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RENDERED: JULY 1, 2005; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2004-CA-002434-MR
MICHAEL D. COVINGTON
APPELLANT
v.
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE STEPHEN P. RYAN, JUDGE
ACTION NO. 04-CI-006882
PIPE FITTERS’ LOCAL 502 TRAINING
AND EDUCATION FUND; PIPE FITTERS’
LOCAL 522 TRAINING AND EDUCATION
FUND; PLUMBERS AND PIPEFITTERS’
LOCAL 502 JOINT EDUCATION AND
TRAINING FUND
APPELLEES
OPINION
AFFIRMING
** ** ** ** ** ** ** **
BEFORE: BARBER AND JOHNSON, JUDGES; MILLER, SENIOR JUDGE.1
MILLER, JUDGE:
Michael D. Covington appeals from an Opinion
and Order of the Jefferson Circuit Court dismissing his claims
for breach of contract and wrongful termination without
1
Senior Judge John D. Miller sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110.(5)(b) of the Kentucky Constitution and
KRS 21.580.
prejudice and referring the case to arbitration pursuant to the
appellant’s January 30, 2003, employment contract with Pipe
Fitters’ Local 522 Joint Educational and Training Fund (522
Fund).2
Because the arbitration clause contained in the contract
is a valid and enforceable contract term, we affirm.
On January 30, 2003, Covington entered into an
employment contract with 522 Fund under which, among other
things, Covington was named as Director of Training of the
organization.
Paragraph 8 of the contract provides that
“[s]hould a disagreement between the two parties not come to
resolve, then the matter in controversy shall be arbitrated in
accordance with the rules and procedures of the Industrial
Relations Council for the Plumbing and Pipefitting Industry.
All the decisions of the Council shall be final and binding upon
both parties.”
On November 24, 2003, an Order of Consolidation was
executed under which Pipefitters' Local Union 522 (Local 522)3
and Plumbers Union Local 107 (Local 107) would be consolidated
into one local labor union named Plumbers and Pipefitters Local
Union 502 (Local 502). The Order of Consolidation contained the
following provision:
“All contractual obligations of Locals 107
2
In his notice of appeal, Covington names as an appellee Pipe Fitters’ Local
522 Training and Education Fund. However, it appears that the proper name
for that Fund is Plumbers and Pipe Fitters’ Local 522 Joint Training and
Education Fund.
3
It appears that 522 Fund was the apprenticeship affiliate of Local 522.
2
and 522, including collective bargaining agreements, shall be
assumed and carried out by new Local 502.”
In July 2004, 522 Fund issued a letter to Covington
which stated, in relevant part, as follows:
Due to last year’s merger of Pipefitters’
Local 522 and Plumbers Local 107, the
Apprenticeship Funds associated with both
unions are to be combined effective August
1, 2004. Accordingly, each employee’s term
of employment with the Pipefitters’ Local
522 Joint Education and Training Fund
terminates as of July 31, 2004. We ask that
you submit a new application for employment
to the newly established Training Fund.
According to Covington, on July 26, 2004, he was
offered a position with the newly merged fund, Plumbers and
Pipefitters’ Local 502 Joint Education and Training Fund (Fund
502),4 but that the offer was at a substantially lower salary,
did not include the provisioning of a company car as did the
prior position, and did not include an employment contract.
On July 30, 2004, counsel for Covington sent a letter
to counsel for Local 502.
It appears that counsel for Local 502
had previously, prior to their dissolution, represented Local
522 and 522 Fund; it further appears that he represents 502
Fund.
The letter stated, in relevant part, as follows:
This letter is a follow-up to our telephone
conversation of July 29, 2004. I have
enclosed a copy of the Agreement between the
Pipe Fitters Local 522 Joint Educational and
4
It appears that 502 Fund is the apprenticeship affiliate for Local 502.
3
Training Fund and Michael D. Covington
entered into between the parties on January
30, 2003. I believe that the action taken
by the Trustees of the Educational and
Training Fund violate the agreement between
the parties. Specifically, the trustees
have unilaterally and without consultation
altered the terms of Mike’s compensation in
a manner that is inconsistent with the
agreement.
Pursuant to the provisions of paragraph 8 of
the agreement, it appears that this
agreement is not going to be resolved. Mike
requests arbitration in accordance with the
terms of the agreement.
Unless we hear from you or the Trustees that
they are willing to continue to abide by the
terms of this agreement, Mike is unwilling
to accept the changes he has been told will
take effect on Monday, August 2, 2004. I
would, therefore, respectfully request that
any change to the agreement be deferred
until such time as an agreement between the
parties has been reached or the matter has
been resolved through the arbitration
process specified in paragraph 8 of the
agreement.
We appreciate your prompt attention to this
matter as tie is of the essence.
By letter dated August 3, 2004, counsel for Local 502
responded as follows:
“I am in receipt of your letter of July
30, 2004, concerning Mike Covington.
As there is no
Pipefitters’ 522 Training and Education Fund in existence, there
is no entity with which to dispute an issue.”
On August 13, 2004, Covington filed a complaint in
Jefferson Circuit Court naming, as amended, 502 Fund and 522
4
Fund as defendants.
The complaint alleged wrongful termination
and breach of contract.
In its answer, 502 Fund purported to
respond by “special appearance” and denied that Covington’s
employment contract survived the dissolution of 522 Fund.
502
Fund also denied the conduct alleged by Covington in support of
his claim for wrongful termination.
In the alternative, 502
Fund alleged that Covington’s complaint was improper pursuant to
the employment contract’s arbitration clause.
On October 27, 2004, the circuit court entered an
order dismissing Covington’s complaint without prejudice.
The
circuit court determined that the matter should be referred to
arbitration based upon the arbitration clause contained in
paragraph 8 of the employment contract.
This appeal followed.
On appeal, Covington argues that the circuit court
erred in dismissing his complaint.
In support of his position,
Covington raises two arguments.
First, Covington argues that pursuant to Kentucky
Revised Statute (KRS) 417.050, the arbitration clause contained
in his employment contract is not enforceable.
KRS 417.050
provides as follows:
A written agreement to submit any existing
controversy to arbitration or a provision in
written contract to submit to arbitration
any controversy thereafter arising between
the parties is valid, enforceable and
irrevocable, save upon such grounds as exist
5
at law for the revocation of any contract.
This chapter does not apply to:
(1) Arbitration agreements between
employers and employees or between their
respective representatives; and
(2) Insurance contracts. Nothing in this
subsection shall be deemed to invalidate or
render unenforceable contractual arbitration
provisions between two (2) or more insurers,
including reinsurers.
"The construction and application of statutes is a
matter of law and may be reviewed de novo."
Bob Hook Chevrolet
Isuzu, Inc. v. Transp. Cabinet, 983 S.W.2d 488, 490 (Ky. 1998).
"The essence of statutory construction is to ascertain and give
effect to the intent of the legislature."
S.W.3d 146, 151 (Ky. 2000).
Hale v. Combs, 30
To ascertain the intent of the
legislature, courts should view the statute as a whole,
considering not only its language but also its spirit.
Hubb Coal Corp., 934 S.W.2d 250, 252 (Ky. 1996).
Combs v.
However, the
language in the statute bears the greatest importance, and a
statute may not be interpreted in a manner that conflicts with
the stated language.
Hoy v. Kentucky Industrial Revitalization
Auth., 907 S.W.2d 766, 768 (Ky. 1995), citing Layne v. Newberg,
841 S.W.2d 181, 183 (Ky. 1992).
Accordingly, a court may not
insert language to arrive at a meaning different from that
created by the stated language in a statute.
Beckham v. Bd. of
Educ. of Jefferson County, 873 S.W.2d 575, 577 (Ky. 1994).
6
Moreover, Kentucky statutes must be given a liberal
construction, and the language used must be given its ordinary
meaning except when the language used has a special meaning in
the law; in such a case, the technical meaning is appropriate.
KRS 446.080(1) and (4); Peter Garrett Gunsmith, Inc. v. City of
Dayton, 98 S.W.3d 517, 520 (Ky.App. 2002)
While KRS 417.050, by its plain language, excludes
employment contracts from coverage under KRS Chapter 417, we do
not construe the statute as prohibiting, invalidating, or
otherwise vitiating the enforceability of arbitration clauses
contained in employment contracts.
The statute does not so
state, nor do we believe that it was the intent of the
legislature to implement such a policy upon its enactment of KRS
417.050.
By our interpretation, the language of the statute
does nothing more that exclude arbitration clauses contained in
employment contracts from the broad procedural rules contained
in KRS Chapter 417 applicable to arbitration clauses in other
contexts.
This is distinguishable from barring employment
contracts from containing a valid and enforceable arbitration
clause.
We believe that the federal courts have properly
interpreted Kentucky law in holding that arbitration clauses in
employment contracts are enforceable.
See, e.g. Shadeh v.
Circuit City Stores, Inc., 334 F.Supp.2d 938 (W.D.Ky. 2004)
7
(Under Kentucky law, agreement to arbitrate as condition of
employment is enforceable if supported by sufficient
consideration and a mutuality of obligation, and where employee
has sufficient time to read and understand the obligations of
the arbitration agreement and procedures).5
We accordingly
reject Covington’s contention that employment contract
arbitration agreements are unenforceable under KRS 417.050.
Covington also argues that the trial court erred in
dismissing his complaint on the basis that the defendants waived
their right to enforcement of the arbitration clause contained
in the employment clause when counsel for the defendants, in his
letter dated August 3, 2004, denied his request for arbitration.
Waiver is among those grounds on the basis of which a
court may refuse to enforce an arbitration agreement.
St.
Mary's Medical Center of Evansville, Inc., v. Disco Aluminum
Products Company, Inc., 969 F.2d 585 (7th Cir. 1992).
Waiver is
commonly defined as
a voluntary and intentional surrender or
relinquishment of a known right, or an
election to forego an advantage which the
party at his option might have demanded or
insisted upon.
Greathouse v. Shreve, Ky., 891 S.W.2d 387, 390 (1995) (quoting
Barker v. Stearns Coal & Lumber Co., 291 Ky. 184, 163 S.W.2d
466, 470 (1942)).
5
Covington does not allege that the arbitration clause at issue was not
supported by sufficient consideration and a mutuality of obligation; that he
had insufficient time to read and understand the clause; or that the clause
was otherwise unconscionable.
8
A waiver may be either express or implied, although
waiver will not be inferred lightly.
Valley Construction
Company, Inc. v. Perry Host Management Company, Inc., 796 S.W.2d
365 (Ky. App.1990)
In his August 3, 2004, letter to Covington, counsel
for the defendants stated “[a]s there is no Pipefitters’ 522
Training and Education Fund in existence, there is no entity
with which to dispute an issue.”
We do not interpret the August
3, 2004, letter as a voluntary and intentional surrender of
Fund 502’s rights under the arbitration clause.
The letter,
rather, asserted the legal position that there was no obligation
to arbitrate on the basis that Fund 522 had ceased to exist.
This was the assertion of a legal position, not a relinquishment
of a right to arbitrate in the event this legal position was
incorrect and there was a valid arbitration clause.
The letter
does not rise to the level of an intentional and voluntary
relinquishment of a known right.
Accordingly, we reject the
appellant’s position that the defendants had waived their right
to arbitration under paragraph 8 of the employment contract.
For the foregoing reasons the judgment of the
Jefferson Circuit Court is affirmed.
ALL CONCUR.
9
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Thomas E. Clay
Garry R. Adams
Louisville, Kentucky
John Frith Stewart
Dennis F. Janes
Louisville, Kentucky
10
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