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Alaska Trowel Trades Pension Trust v. Rady Concrete Construction LLC

United States District Court, D. Alaska

November 2, 2016




         Order Before the Court are Plaintiffs' and Defendants' Cross-Motions for Summary Judgment, at Dockets 20 and 34, respectively. The motions are fully briefed, [1] and oral argument was held on August 11, 2016.[2]


         Plaintiffs Alaska Trowel Trades Pension Trust, Alaska Trowel Trades Apprenticeship & Training Funds, and Alaska Laborers-Construction Industry Health & Security Fund (collectively, the “Trust”) have brought this suit against Rady Concrete Construction, LLC (“Rady Concrete”) and its owner, Ronald Rady. Rady Concrete entered an agreement with a labor union. Pursuant to that agreement, Rady Concrete was obligated to make certain contributions to the Trust on behalf of its employees. The Trust brought this action against Rady Concrete under the Employee Retirement Income Security Act (ERISA) to recover required contributions that the Trust alleges were wrongfully withheld.[3]

         Many of the key facts in this case are not in dispute, but some are insufficiently developed at this juncture. Rady Concrete has done construction work primarily in the Fairbanks, Alaska region.[4] It is undisputed that in 2009, Rady Concrete entered into a “Compliance Agreement” with Operative Plasterers & Cement Masons International Association and its Affiliated Local Unions.[5] Pursuant to this agreement, Rady Concrete agreed to abide by a Collective Bargaining Agreement (CBA) that was incorporated by reference. Also not in dispute is that on the Compliance Agreement are handwritten the words “Single job agreement AHFC Fairbanks Site Improvements.”[6] The parties do dispute, however, the legal import of this handwriting.

         The parties agree that subsequent to the completion of the AHFC Fairbanks Site Improvements project, Rady Concrete continued to make some payments for fringe benefits as contemplated by the CBA, but ceased making those payments after December 2014.[7] And although it is undisputed that Mr. Rady himself, acting as CEO of Rady Concrete, signed some of the many remittance reports that accompanied these payments, it is also undisputed that he did not sign them all.[8] But the parties again dispute the legal consequences of these undisputed facts.

         Also uncontested is that, as a result of these payments, the Trust has provided certain benefits to Rady Concrete's employees, including to Mr. Rady himself.[9]


         I. Jurisdiction

         The Court has jurisdiction pursuant to 28 U.S.C. § 1331 because Plaintiffs' claims arise under ERISA, 29 U.S.C. §§ 1132, 1145.

         II. Standard for Summary Judgment

         Federal Rule of Civil Procedure 56(a) directs a court to “grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The burden of showing the absence of a genuine dispute of material fact lies with the moving party.[10] If the moving party meets this burden, the non-moving party must present specific factual evidence demonstrating the existence of a genuine issue of fact.[11] The non-moving party may not rely on mere allegations or denials.[12] Rather, that party must demonstrate that enough evidence supports the alleged factual dispute to require a finder of fact to make a determination at trial between the parties' differing versions of the truth.[13]

         When considering a motion for summary judgment, a court views the facts in the light most favorable to the non-moving party and draws “all justifiable inferences” in the non-moving party's favor.[14] When faced with cross-motions for summary judgment, a court “review[s] each separately, giving the non-movant for each motion the benefit of all reasonable inferences.”[15] To reach the level of a genuine dispute, the evidence must be such “that a reasonable jury could return a verdict for the non-moving party.”[16] If the evidence provided by the non-moving party is “merely colorable” or “not significantly probative, ” summary judgment is appropriate.[17]

         III. Liability

         The Trust maintains that Rady Concrete's liability is premised on either the original June 2009 Compliance Agreement, Rady Concrete's subsequent conduct, or on the remittance forms that accompanied subsequent payments to the Trust. Defendants respond that the Compliance Agreement is limited to a single job, and that, accordingly, Rady Concrete is entitled to recover all of the subsequent payments it made to the Trust that were not pursuant to that particular agreement. The Court will address each contention in turn.

         A. Compliance Agreement

         Plaintiffs argue in their motion for summary judgment that the June 1, 2009 Compliance Agreement was binding on Rady Concrete as to all future jobs, and that under that agreement Rady Concrete is obligated to make payments to the Trust for all subsequent projects. Rady Concrete counters that this was a “single-job agreement, ” limited to the single project completed in 2009, which cannot form the basis of liability for payments beyond that project. In their reply brief, Plaintiffs respond that there is a material dispute as to the scope of that agreement and therefore acknowledge that they are not entitled to summary judgment on these grounds.[18] However, the Court finds for the reasons below that as a matter of law the June 2009 Compliance Agreement was limited to a single job and cannot form the basis of liability for subsequent payments.

         “When reviewing an ERISA policy, ” courts are to “apply contract principles derived from state law . . . guided by the policies expressed in ERISA and other federal labor laws.”[19] Accordingly, the Court must “look to the agreement's language in context and construe each provision in a manner consistent with the whole such that none is rendered nugatory.”[20] The Court “will not artificially create ambiguity where none exists.”[21] And where there is no ambiguity in the text of the contract, there is no reason to consider extrinsic evidence, such as subsequent conduct.[22]

         According to Plaintiffs, the Compliance Agreement binds Rady Concrete in perpetuity because it states it “shall remain in full force and effect for the period of three years'” and shall, absent objection, “continue from year to year” thereafter.[23] And, Plaintiffs assert, Rady Concrete never took any action to terminate the contract. But the disputed issue is not the length of the agreement but rather its scope. As Defendants point out, the agreement specifies, in handwriting, that it is for a “Single job agreement AHFC FAIRBANKS SITE IMPROVEMENTS.” Thus, whatever the length of the agreement, Defendants assert, it was never intended to apply beyond work on that one specified project.

         Plaintiffs attempt to undermine this writing by referring to it as only a “hand written notation, ” which they note was “made in the space which is allocated in the Compliance Agreement solely for NAME of the contractor, ” and was “not made in the CBA to which Rady Concrete agreed to be bound.”[24] But in the Court's view, this misses the mark. First, any handwritten terms supersede typed terms.[25] And second, while the CBA details the employment terms to which Rady Concrete was bound, the Compliance Agreement expresses the conditions under which the CBA applies. If Defendants are correct in their interpretation of the Compliance Agreement, then Rady Concrete “agreed to be bound” by the CBA only with respect to the one project identified in the Compliance Agreement. Plaintiffs similarly argue that the written notation should have been added to Section 8 of the Compliance Agreement. But Section 8, as explained above, refers only to the length of the agreement, and not to the number of projects which it will govern.

         Although the “single job agreement” notation is not a model of clarity, neither is it ambiguous such that it cannot be enforced. It can have only one meaning: the obligations to which Rady Concrete was acceding were limited to the “single job” of the AHFC Fairbanks Site Improvements.[26] Plaintiffs essentially ask the Court to disregard this provision, but the Court must interpret the contract so that no provision “is rendered nugatory.”[27] That Rady Concrete never took any action to “terminate” the agreement is a red herring: the agreement which he never terminated only ever applied to the single job; it continued only for as long as that job continued.

         Plaintiffs no longer seek summary judgment on the basis of the Compliance Agreement; Plaintiffs now assert that “whether the contract was originally limited to one job” is “contested on the facts.”[28] Defendants maintain that they are entitled to summary judgment as to their non-liability under the Compliance Agreement.[29] Neither party disputes the text of the Compliance Agreement itself, and because this text unambiguously limits the agreement to a single job, summary judgment for Defendants on this issue is appropriate. Accordingly, the Court will deny Plaintiffs' motion for summary judgment with regard to the Compliance Agreement, and will grant Defendants' motion for summary judgment with regard to the Compliance Agreement. The Compliance Agreement cannot form the basis of any liability beyond the single “AHFC Fairbanks Site Improvements” job, as noted in that agreement.

         B. Acceptance by Conduct

         Plaintiffs contend that Rady Concrete's liability also arises from its course of conduct after completion of the AHFC Fairbanks project. The Ninth Circuit recognized the validity of such an argument in 1987, noting in a footnote that “an employer may be held to have [adopted a CBA] by embarking on a course of conduct evincing an intention to be bound.”[30] Whether a party's conduct “evinc[es] an intention to be bound” is necessarily a fact-intensive inquiry. The Ninth Circuit has discussed the type of conduct that satisfies this test in labor agreements in several cases. None is precisely on point, [31] but the pattern that emerges from these cases and cases from other circuits is enough to delineate some basic principles.

         In one case, the Ninth Circuit reversed a grant of summary judgment for the employer, concluding that where the employer had “voluntarily implemented the new terms” of the CBA, including implementing a wage increase, “a trier of fact could conclude” that the employer had adopted the agreement, even though it had not signed it.[32] In another case, the Ninth Circuit affirmed a grant of summary judgment for the employer, concluding that there was no intent to be bound when the employer had unequivocally repudiated a prior agreement, even though the employer continued to comply with that agreement while “retain[ing] the right to make changes that it deemed appropriate.”[33] In a third case, the Court of Appeals rejected an argument that a successor employer had adopted the arbitration terms in an expired CBA when the employer continued to “maint[ain]” the “terms and conditions of employment, including the settling of employee grievances short of arbitration.”[34] And in a fourth case, the Ninth Circuit held that summary judgment for the union was inappropriate because, although a successor employer had paid union wages, contributed to the trust and filed remittance reports, and requested employees from the union hall, the successor employer had also presented evidence that it contributed to the trust not pursuant to the CBA but pursuant to an independent legal obligation.[35]

         In Brown v. C. Volante Corp., the Second Circuit found an employer had evinced an intent to be bound by two unsigned CBAs. There, the underlying agreement had expired and the employer had not signed a renewal. But the employer continued to submit signed remittance reports and payments, cooperated with an audit, paid union wages to employees, and, in a letter to the trust after the dispute arose, acknowledged “responsibility to the funds.” The Second Circuit held that this was “sufficient, absent contrary evidence, to establish as a matter of law appellant's intent to adopt the two unsigned CBAs.”[36]

         In Robbins v. Lynch, the Seventh Circuit found that there was no genuine dispute of fact as to the employer's intent to be bound by an indisputably unsigned CBA when the employer had “paid the wages called for by [the CBA], made pension and welfare contributions per the agreement, negotiated and settled grievances under the terms of the agreement, and rendered to the local union the dues withheld from the pay of its members.” The employer had also sent a letter formally terminating the (unsigned) agreement, implicitly acknowledging its continued vitality.[37] The Seventh Circuit has continued to apply these factors in subsequent cases.[38]

         The Eleventh Circuit has looked to similar factors, finding an “intent to abide” by an industrywide CBA when the employer had “secured virtually all of its labor from the union hiring hall, ” paid its employees at the union scale, filed remittance reports and made payments to the trust, and cooperated in two audits by the trust.[39] And, more recently, the Fourth Circuit held that an employer was bound by a CBA when it had signed a separate “letter of assent” agreeing to make payments “as provided for by the [CBA] now existing and as hereafter” and then fully complied with the original CBA and the successor CBAs for thirteen years.[40]

         The Fifth Circuit reached a different conclusion in Firesheets v. A.G. Bldg. Specialists, Inc., where it found the employer had not evinced an intent to be bound and accordingly affirmed the grant of summary judgment for the employer. There, the employer had “continued to make contributions to the Trust Funds after the expiration date of the Agreement” and had “continued to file monthly contribution reports which included language stating that it was bound by provisions of the agreements.”[41] While these would support an inference of an intent to be bound, the Court found that other conduct undermined that inference: the employer had hired nonunion employees, set its own wages, did not give holiday pay to employees, and had “made Trust Fund contributions only for those employees who asked for contributions.”[42] This conduct was inconsistent with an intent to be bound, the Court concluded.[43]

         With these cases in mind, the Court turns to the facts at hand. Here, both sides agree that Rady Concrete did not fully adhere to the CBA: Rady Concrete made contributions only for certain jobs and only for some hours.[44] But the evidence also indicates that Rady Concrete adjusted these payments to conform to the current version of the CBA.[45] And the Trust performed an audit of Rady Concrete in May 2013.[46] Plaintiffs have ...

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