ACCESS COMMUNICATION SERVICES, INC v. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION NO. 351

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ACCESS COMMUNICATION

SERVICES, INC.,

Plaintiff-Respondent,

v.

INTERNATIONAL BROTHERHOOD OF

ELECTRICAL WORKERS, LOCAL

UNION NO. 351,

Defendant-Appellant,

and

Nominal defendant against

whom no claim is made NEWFIELD

NATIONAL BANK,

Defendant.

______________________________________________________________

August 28, 2014

Submitted November 14, 2013 Decided

Before Judges Sapp-Peterson, Lihotz and Maven.

On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1059-10.

Oransky, Scaraggi, Borg & Abbamonte, P.C., attorneys for appellant (Andrew D. Borg, on the briefs).

Weir & Partners, LLP, attorneys for respondent (John C. Eastlack, Jr., on the brief).

PER CURIAM

Defendant, International Brotherhood of Electrical Workers, Local Union No. 351, (IBEW), appeals from the July 31, 2012 Law Division order entered following a bench trial before Judge David Morgan, awarding judgment in the amount of $4,993.73 in favor of IBEW, and against plaintiff Access Communications Services, Inc. (Access). The order also denied IBEW's demand for disbursement of the proceeds under a certain irrevocable standby letter of credit (LOC) issued by Newfield National Bank (Newfield), to guarantee Access's payment of contributions to union benefit funds. Lastly, the order dismissed the complaint filed by Access alleging common law fraud by IBEW.1 We affirm.

I.

Access is a telecommunications electrical contractor that employed union labor from IBEW to provide cabling and wiring services for construction projects in New Jersey. Access was a signatory to IBEW's Collective Bargaining Agreement (CBA), which required Access, among other things, to contribute a certain percentage of the union employees' wages to various employee benefit funds. As required by the CBA, Access secured an LOC in the amount of $35,000 from Newfield National Bank (Newfield) to satisfy any delinquencies in its fulfillment of the benefit obligations.

In July 2008, IBEW completed an audit of Access's payroll accounts, which examined the contributions Access made to the Benefit Funds for years 2005 to 2007. The audit concluded Access had underpaid its contributions to the benefit funds in the amount of $168,944.91. IBEW informed Access of the results and demanded payment in this amount, plus $9,471.07, the cost of the audit, for a total of $178,415.98.

Access challenged the accuracy of the audit and filed an appeal to the IBEW Trustees in accordance with the procedures set forth in the CBA. Because Access did not pay over the funds, IBEW made a demand on Newfield for payment of the $35,000 LOC.

On May 25, 2010, Access filed a Verified Complaint and Order to Show Cause2 alleging fraud in the preparation of the audit, as well as challenging the demand made by IBEW upon Newfield for payment on the LOC. Access sought damages and a temporary injunction enjoining the payment to IBEW of any proceeds of the LOC. IBEW filed an affidavit in opposition to the emergent application. On that same date, the court signed an order granting temporary restraints and ordered the filing of opposition pleadings. On June 14, 2010, IBEW filed an answer to the Order to Show Cause and a counterclaim against Access alleging because Access underpaid its obligations to the benefit funds, IBEW was entitled to the proceeds of the LOC, and Newfield had no basis to refuse to pay the monies to IBEW.

During a five-day bench trial, Judge Morgan heard testimony from several witnesses. Access presented its President Michael Vertolli, and Senior Accounting Administrator Anna Spatola. IBEW witnesses included William Hosey, IBEW's President; Terrence Mooney, CPA, the auditor; Traci Harvey, one of Mooney's employees; and Glenn Shaffer, IBEW's benefit funds administrator. IBEW's accountants testified at length as to the preparation of the Access payroll audit.

At the close of trial, the judge reviewed the testimonial evidence, and made factual findings, including credibility determinations. He extensively analyzed the parties' CBA, and closely reviewed the audit and each employees' payroll summary. The judge also performed his own detailed analysis of the audit and made findings of fact with respect to the IBEW workers employed by Access who should have been included in the audit, and the appropriate damages that could be claimed by IBEW. After reviewing schedule one of the audit, the judge noted five non-union workers among those who IBEW claimed it had not received payments. The judge determined IBEW was improperly "making a claim for wages paid to non-union workers for union work and also against" non-union subcontractors "that were performing . . . work within the ambit of the [CBA]."

The judge found IBEW could only recover damages for unpaid fringe benefits for the non-union personnel who worked in union positions. Concluding from the testimony that IBEW failed to prove that the five identified non-union workers performed union tasks, the judge excluded those individuals from the audit and recalculated the contributions made by Access. The judge computed the underpayment as $4,993.73 rather than $168,944.91. Thereafter, the judge dismissed Access's complaint with prejudice finding it had not proved the audit was fraudulently prepared. On IBEW's counterclaim, the judge awarded judgment in favor of IBEW and against Access in the amount of $4,993.73 plus prejudgment interest and costs, and denied IBEW's demand for release of the full $35,000 LOC, with prejudice. This appeal followed.

In this appeal, IBEW argues the trial court erred in not awarding it the entire $35,000 LOC once the judge found no fraud had been committed. IBEW also seeks, for the first time on appeal, an award of attorney's fees and other litigation expenses as the prevailing party, pursuant to N.J.S.A. 12A:5-111(e).

II.

Appellate review of the factual findings made by a trial judge in a non-jury trial is quite limited. Estate of Ostlund v. Ostlund, 391 N.J. Super. 390, 400 (App. Div. 2007). An appellate court will "not weigh the evidence, assess the credibility of witnesses, or make conclusions about the evidence." Mountain Hill, L.L.C. v. Twp. of Middletown, 399 N.J. Super. 486, 498 (App. Div. 2008), certif. denied, 199 N.J. 129 (2009). A trial judge's factual findings should not be disturbed unless they are "so wholly insupportable as to result in a denial of justice." Rova Farms Resort, supra, 65 N.J. at 483-84 (citation and internal quotation marks omitted). However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

Relying on the provisions of the New Jersey Uniform Commercial Code governing letters of credit, N.J.S.A 12A:5-101 to 118, IBEW argues the LOC exists separate and apart from any liability based on a breach of the CBA. IBEW urges even if Access breached the CBA by underpaying into the benefit funds, the judge's determination that IBEW did not commit fraud in preparing the audit entitled IBEW to the entire $35,000 LOC. IBEW maintains the court must order Newfield to honor its presentation of documents seeking distribution of the $35,000. We are unpersuaded by IBEW's arguments.

At the outset, we agree with Access that IBEW did not assert any claims against Newfield in its counterclaim.3 Nor did IBEW seek to join Newfield as a third-party defendant. See R. 4:8-1(a). Because of these failures, IBEW's attempt to obtain relief from Newfield is futile.

Even if IBEW had properly joined Newfield, IBEW failed to provide legal support for its claimed entitlement to collect one hundred percent of the LOC proceeds. A review of the LOC and the statute is determinative of the issue at hand.

The LOC provides IBEW would be able to draw from the $35,000 if it provided the following documents:

1. A draft at sight drawn on Newfield National Bank, duly endorsed on its reverse side thereof by the Beneficiary, specifically referencing this Letter of Credit Number.

2. The original Letter of Credit and any amendments attached thereto.

3. A dated statement issued on the letterhead of the Beneficiary and purportedly signed by an authorized representative stating: Access Communication Services[,] Inc[.] has failed to pay employee benefit contributions as required pursuant to that certain written Collective Bargaining Agreement between I.B.E.W. Local Union #351 and Access Communications Services[,] Inc[.] We therefore demand payment in the amount of $35,000.00 as same is due and owing.

Partial draws were permitted up to the aggregate amount of $35,000.

New Jersey's Uniform Commercial Code governs letters of credit. N.J.S.A. 12A:5-101 to -118. As stated therein, "[t]his chapter applies to letters of credit and to certain rights and obligations arising out of transactions involving letters of credit." N.J.S.A. 12A:5-103(a). Letters of credit serve as a "guarantee of performance of obligations." Lustrelon, Inc. v. Prutscher, 178 N.J. Super. 128, 139 (App. Div. 1981) (citing Ins. Co. of N. Am. v. Heritage Bank, N.A., 595 F.2d 171, 173 (3d Cir. 1979)). The "issuer must honor a draft or demand for payment which complies with the terms of the relevant credit[.]" Id. at 140.

The issuer's duty to honor a demand for payment is not without limitation. There may be circumstances when the issuer must not act perfunctorily to release the funds. See Ibid. (referencing N.J.S.A. 12A:5-109(2)(b), which states "[i]f an applicant claims that a required document is forged or materially fraudulent or that honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, a court of competent jurisdiction may temporarily or permanently enjoin the issuer from honoring a presentation.").

Here, IBEW presented Newfield with its audit in support of its demand for the funds. Thereafter, the court issued an order enjoining Newfield from releasing the fund upon Access's asserted claim of fraud. Although Judge Morgan ultimately found no fraud had been committed, he was not statutorily required to authorize the disbursement of the entire account. Rather, the judge recalculated the amount of damages to which IBEW was entitled and limited of IBEW's claim to $4,993.73.

The record contains sufficient evidence to support the judge's ruling denying IBEW all of the LOC proceeds. The current order under appeal states "[d]efendant's counterclaim as to relief over and above $4,993.73 is dismissed with prejudice" thereby limiting IBEW's right to the proceeds in the LOC to the amount entered as judgment. Next, IBEW itself recognized the limits of the LOC. In its brief, IBEW states the "LOC was obtained by Access to guarantee payment of contributions, which may become due to the . . . Funds." (emphasis added). Finally, a plain reading of the LOC belies IBEW's claim, wherein it states that "partial draws [are] permitted up to the aggregate amount of $35,000." This provision clearly and unequivocally anticipates demands for less than the total amount of the LOC, thereby disproving IBEW's contention that there is a requirement for Newfield to release all funds in the LOC.

Next, IBEW presumes that despite the judge's denial of its claim to the $35,000 under the LOC, it is the prevailing party in this action. Thus, IBEW contends it is entitled to, among other things, attorney's fees, "the cost for its expert witness and his audit of [Access]'s payroll records, along with the expense of the transcripts for this appeal" pursuant to N.J.S.A. 12A:5-111e. IBEW, however, did not raise this issue below. See Pressler & Verniero, Current N.J. Court Rules, comment 2 on R. 2:6-2 (2014) (citations omitted) ("Issues not raised below, even constitutional issues, will ordinarily not be considered on appeal unless they are jurisdictional in nature or substantially implicate public interest."). See also County of Essex v. First Union, 186 N.J. 46, 51 (2006); Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973). Because IBEW's claim for fees and litigation expenses is neither jurisdictional in nature, nor substantially implicates the public interest, we decline to consider it.

In sum, we find no support in either the LOC or the statute for IBEW's claim of entitlement to an unconditional right to all proceeds available in this LOC. Neither the LOC nor the statute require IBEW to receive more proceeds than which are due under the CBA. We, therefore, affirm the trial court order substantially for the reasons set forth by Judge Morgan in his cogent and comprehensive oral decision, rendered on July 30 and 31, 2012.

Lastly, for completeness, we note that IBEW has not challenged the dismissal of the remainder of its counterclaim in this appeal, therefore we consider that issue waived. See R. 2:6-2. Nor has IBEW challenged the trial court's analysis and calculation of Access's liability. As to the judge's assessment of liability, we conclude the court's factual findings are supported by the evidence and, thus, we will not disturb the result. Rova Farms Resort, supra, 65 N.J at 483-84. The remaining points raised and not specifically addressed in this opinion are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A) and (E).

Affirmed.

1 Access did not appeal the dismissal of its complaint.

2 On November 6, 2009, IBEW and its affiliated benefit funds filed suit against Access in federal court for unpaid contributions owed to the funds. The action was dismissed for lack of prosecution on April 30, 2010. On January 3, 2012, the court dismissed the reinstated complaint by consent of the parties to permit this action to proceed. Neither party has provided a copy of the federal complaint or the orders dismissing the federal case.

3 Plaintiff named Newfield as a nominal defendant "against whom no claim is made" in its Verified Complaint. While IBEW's answer and counterclaim use the same caption as that on plaintiff's complaint, IBEW does not assert any claims against Newfield. In addition, neither party raised this issue below. See Pressler & Verniero, Current N.J. Court Rules, comment 2 on R. 2:6-2 (2014).