AUDIT SERVICES INC v BRASEL S

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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 Relat 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 determined 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 construct 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 Keservation. 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 respons 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 withdraw 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 5185. the purview of Section 301 of the Taft-Hartley Act, 29 U.S.C. 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 19711974 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 agreement 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. a O n May 3 , 1974 and M y 6 , 1974 Brasel & Sims dispatched 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 agreement 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 permiss 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 Contractors' Association during collective bargaining negotiations 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 Contractors' Association an unambiguous or unequivocal notice of intent to withdraw from the multi-employer bargaining unit. See N.L.R.B. 649; N.L.R.B. v. Hi-Way Billboards, Inc., (6th Cir. 1973), 473 F.2d 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 bargaining 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 cont 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. ~ ut isc e W Concur: e i

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