606 F.2d 684 (6th Cir. 1979), 78-3246, Service, Hosp., Nursing Home and Public Employees Union Local 47 v. Cleveland Tower Hotel, Inc.

Docket Nº:78-3246.
Citation:606 F.2d 684
Party Name:SERVICE, HOSPITAL, NURSING HOME AND PUBLIC EMPLOYEES UNION LOCAL 47, et al., Plaintiffs-Appellants, v. CLEVELAND TOWER HOTEL, INC., et al., Defendants-Appellees.
Case Date:September 26, 1979
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 684

606 F.2d 684 (6th Cir. 1979)


LOCAL 47, et al., Plaintiffs-Appellants,


CLEVELAND TOWER HOTEL, INC., et al., Defendants-Appellees.

No. 78-3246.

United States Court of Appeals, Sixth Circuit

September 26, 1979

        Argued June 22, 1979.

        Melvin S. Schwarzwald, Mark A. Rock, Gaines, Stern, Schwarzwald & Robiner Co., L. P. A., Cleveland, Ohio, for Local Nos. 47 and 1.

        Douglas J. Paul, Gerald B. Chattman, Chattman, Moss, Chattman, Garfield & Friedlander, Cleveland, Ohio, for Local No. 10.

        William I. Fadel, Cleveland, Ohio, for Locals 589, 589A and 589B.

        Edward J. Simerka, Gregory Szuter, Schwartz, Einhart & Simerka, Cleveland, Ohio, for Stouffer Corp. and SPS Mgt. Corp.

        Howard W. Broadbent, Carney & Broadbent, Cleveland, Ohio, for Samuel H. Miller.

        Before EDWARDS, Chief Circuit Judge and CELEBREZZE and LIVELY, Circuit Judges.

        CELEBREZZE, Circuit Judge.

        This case is before the court on appeal from a judgment entered by the district court for the defendants-appellees in a suit brought pursuant to § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, seeking enforcement of four collective bargaining agreements. The principal issues on appeal are whether the current owners and operators of Stouffer's Inn on the Square, Cleveland, Ohio are successor employers to the employees of the previous owner of the hotel for purposes of federal labor law and whether the current owners are bound by the terms of collective bargaining agreements entered into by the previous owner and the plaintiff-appellant unions. For the reasons stated below, we affirm.

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        In the fall of 1976 International Telephone and Telegraph Corporation filed a foreclosure action against Cleveland Tower Hotel, Inc. 1 On November 24, 1976 the state court appointed Arthur B. Modell receiver for the hotel. The court ordered Modell to take charge of hotel operations and requested that he keep the hotel operating during his receivership.

        After his appointment the receiver contacted a number of major national hotel owners and operators in an effort to secure a buyer for the hotel. In early 1977 the receiver realized he could not sell the hotel to any single purchaser and he conceived of the idea of bringing together a group of civic-minded Cleveland investors to purchase the hotel at a mortgage foreclosure sale. When it became clear to Modell that he was going to be successful in bringing investors together and that he would be deeply involved in the investor group he resigned as receiver. On March 8, 1977 the state court accepted Modell's resignation and appointed Samuel H. Miller in his stead, giving the new receiver the same responsibilities as his predecessor.

        On March 31, 1977 the STS Corporation was formed for the purpose of acquiring the fee title and equity of redemption to the Sheraton-Cleveland from Cleveland Tower Hotel, Inc. On April 8, 1977, the STS Corporation purchased all of the interests of Cleveland Tower Hotel, Inc. and of Thomas R. Lloyd, Cleveland Tower's sole shareholder.

        On May 10, 1977, the investor group 2 formed a limited partnership called the Public Square Hotel Company, Ltd. The partnership has as its general partner the Public Square Hotel Company, Inc. The Stouffer Corporation became interested in managing the hotel and agreed to join the limited partnership if it were awarded the management contract. 3 Also occurring on May 10 the investor group and ITT consummated an agreement whereby ITT would sell its first mortgage to the investor group for $2,800,000 and the investor group would acquire all of ITT's right in the foreclosure action. The partnership subsequently purchased other outstanding claims against the hotel from other secured creditors. 4

        On May 19, 1977 the partnership filed a motion to have itself substituted for ITT in the foreclosure proceeding and began to press for foreclosure. The foreclosure sale took place on August 8, 1977 and the partnership represented by Modell placed the only bid. The sale was confirmed by the state court on August 31, 1977 and on September 7, 1977, the sheriff's deed was delivered to the partnership. The receiver closed the hotel on August 1, 1977 due to his inability to secure further financial support for the Sheraton-Cleveland Hotel.

        During the term of the receivership the receivers signed collective bargaining agreements with the appellant unions on behalf of the previous owner. The receivers noted on these agreements that they were signing the agreements as receiver only and that the contracts were limited to the term of the receivership. On August 9, 1977 the plaintiff-appellants filed the instant complaint in the district court. The complaint sought a declaration from the district court that the terms of the labor agreements entered into on behalf of the previous owner were binding upon the purchasing partnership and an order requiring

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specific performance of the agreements by the defendants. On January 4, 1978 the district court entered judgment for the defendants.


        Appellants' primary contention on appeal is that while the hotel was in receivership the investor group actually moved into control of the hotel property and became involved in the day-to-day operations of the hotel. Appellants argue that by becoming involved in the daily operations of the hotel during the receivership the current owners impliedly assumed the obligations of the collective bargaining agreements in existence. We disagree.

        The judgment of the district court was based on two separate findings. The district court found that the defendants and the individuals represented by plaintiff unions never established an employer-employee relationship within the meaning of § 301 of the LMRA and therefore plaintiffs failed to state a cause...

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