Audit Services, Inc. v. Rolfson

• Decision Date: 13 April 1981
• Docket Number: No. 79-4004,79-4004
• Citation: 641 F.2d 757
• Parties: 107 L.R.R.M. (BNA) 2586, 91 Lab.Cas. P 12,692 AUDIT SERVICES, INC., Plaintiff-Appellee, v. Marselius ROLFSON d/b/a Rolfson Company and Marcus Rolfson d/b/a Rolfson Company, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 757

641 F.2d 757

107 L.R.R.M. (BNA) 2586, 91 Lab.Cas. P 12,692

AUDIT SERVICES, INC., Plaintiff-Appellee, v. Marselius ROLFSON d/b/a Rolfson Company and Marcus Rolfson d/b/a Rolfson Company, Defendants-Appellants.

No. 79-4004.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 6, 1980.

Decided April 6, 1981.

As Amended April 13, 1981.

C. B. McNeil, Turnage & McNeil, East Polson, Mont., for defendants-appellants.

Maxon R. Davis, Cure & Borer, Great Falls, Mont., for plaintiff-appellee.

Appeal from the United States District Court for the District of Montana.

Before VAN DUSEN, ^* ANDERSON and BOOCHEVER, Circuit Judges.

J. BLAINE ANDERSON, Circuit Judge:

The defendants appeal the judgment of the district court awarding plaintiff Audit Services, Inc., sums allegedly due to its assignors, certain union trust funds, as contributions for time worked by the defendants' nonunion employees. We affirm in part and reverse in part.

I. BACKGROUND

Marselius and Marcus Rolfson, father and son, respectively, are now engaged in separate business ventures in Polson, Montana. For many years, Marselius operated a construction and lumber business as a sole proprietorship known as Rolfson Company. Marcus joined Rolfson Company sometime around 1970 and quickly assumed an ever-widening range of supervisory authority over the company's operations. Late in 1975, Marselius decided to retire from the construction business. Marcus, in effect, took the business over and formed a new entity, Rolfson Construction, a Montana corporation. Rolfson Construction has remained physically close to Rolfson Company. Rolfson Construction maintains its office at the Rolfson Company lumber yard, and uses Rolfson Company's bookkeeper. Rolfson Construction's shop is located across the street from the lumber yard in a building owned by Marcus. Rolfson Construction uses much of the same equipment as was used by Rolfson Company, and has employed many carpenters who formerly worked for Rolfson Company under substantially similar terms of employment.

In 1972, 1973, and 1975, Rolfson Company entered into a series of collective bargaining agreements with the Carpenters District Council of Northwestern Montana. Under the terms of each agreement, Rolfson Company was obligated to contribute a specified amount of money for each hour worked by its employees to the Montana State Carpenters Health and Welfare Trust and to the Washington-Idaho-Montana Carpenters Employers Retirement Fund. While contributions to the funds were made on behalf of union members, neither Rolfson Company nor Rolfson Construction ever made any contributions on behalf of nonunion employees. Nonunion employees instead have received cash payments equivalent to the amounts which would have been contributed had they been members of the union. Even though Rolfson Construction never signed any of the agreements, it continued to pay contributions on behalf of union employees, and to make direct payments to nonunion employees. Rolfson Construction also continued to submit monthly remittance reports to the trusts.

Sometime in 1976, the Montana Carpenters Trust requested an audit of the Rolfsons' payroll records. The Rolfsons initially refused access to the records. According to Audit Services, the trustees were informed for the first time at a meeting with the Rolfsons to discuss access to the records that Marcus had formed Rolfson Construction and that Rolfson Construction was employing the carpenters covered by the agreements. When an audit was finally conducted in 1977, the trustees discovered that the Rolfsons had not made any contributions to the funds on behalf of nonunion employees. The trustees of the funds at some unspecified time assigned their claims to the unpaid contributions to Audit Services for collection.

Audit Services brought an action under the Employee-Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132, and § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, to recover the unpaid contributions. Following a bench trial, the district court found each of the defendants liable for portions of the total unpaid contributions. The court assessed the liability of Marselius and Rolfson Company at $10,949.13, and the liability of Marcus and Rolfson Construction at $15,594.26. The court found that the language of the agreements clearly called for the payment of contributions on behalf of nonunion members, and rejected parol evidence to the contrary. The court further found that Rolfson Construction was a successor to Rolfson Company liable under the agreements, and that Rolfson Construction was a "mere shell" which could not shield Marcus from personal liability. All defendants appeal.

II. ISSUES ON APPEAL

Essentially, the parties have raised and briefed four issues on appeal:

(1) Whether the collective bargaining agreements required the payment of trust fund contributions on behalf of nonunion carpenters;

(2) Whether certain equitable defenses may be asserted in this action;

(3) Whether Rolfson Construction is liable under the collective bargaining agreements as a successor to Rolfson Company;

(4) Whether the court properly disregarded the corporate form of Rolfson Construction in holding Marcus Rolfson personally liable.

III. DISCUSSION

Though none of the parties raised the issue in their respective briefs, we requested that they address at oral argument the issue whether the district court had jurisdiction pursuant to § 301 of the Labor Management Relations Act of 1947. § 301(a) reads:

"Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties."

29 U.S.C. § 185(a).

Audit Services is not a "labor organization." It is irrelevant, however, whether the plaintiff in a § 301 action is a labor organization. The Supreme Court has interpreted § 301 to require only that the object of the suit be the enforcement of rights guaranteed by an agreement between an employer and a labor organization, and not strictly that the suit itself be between a labor union and an employer. See Smith v. Evening News Association, 371 U.S. 195, 200, 83 S.Ct. 267, 270, 9 L.Ed.2d 246 (1962); see also Rehmar v. Smith, 555 F.2d 1362 (9th Cir. 1976); Alvares v. Erickson, 514 F.2d 156 (9th Cir.), cert. denied, 423 U.S. 874, 96 S.Ct. 143, 46 L.Ed.2d 106 (1975). It is not disputed that Audit Services holds by assignment the right to fund contributions created by the collective bargaining agreements at issue here. This being a suit brought to enforce provisions of those agreements, the district court had jurisdiction.

A. Interpretation of the collective bargaining agreements.

Each of the defendants argues that the collective bargaining agreements were ambiguous on the issue whether payments were required on behalf of nonunion employees, and that the district court should have accepted their offer of certain parol evidence which allegedly would have tended to establish that union representatives had orally assured Marselius that the trust fund contributions were applicable only to union employees.

We agree with the district court that the agreements unambiguously call for payments to be made on behalf of all employees, nonunion as well as union members. In Article III, Section One of the 1972 agreement, the employer acknowledges that the union is the exclusive bargaining representative for "all employees" covered by the agreement. In Article XII, Section Two, the agreement states that:

"The undersigned Employer further agrees that upon execution of this agreement, the Employer will remit twenty-five (.25cents) cents per hour for each compensated hour worked by each employee covered by this Agreement into the Montana State Carpenters Health and Welfare Trust and thirty-five (.35cents) cents per hour for each compensated hour worked by each employee covered by this Agreement into the Washington-Idaho-Montana Carpenters Employer (sic) Retirement Trust." (Emphasis added)

Article XII, Section One provides that the Employer is made a party to the trust agreements. All of the language quoted or referred to above is carried forward in substantially similar terms to the 1973 and 1975 agreements.

In the Revised and Restated Trust Agreement of the Montana State Carpenters Health and Welfare Trust (as amended to July 16, 1976), Article I, Section Five defines the term "employee" to mean any employee of an employer who performs work covered by a collective bargaining agreement "... whether such Employee is Union, Non-Union, permanent or temporary." The Amended Trust Agreement of the Washington-Idaho-Montana Carpenters Employers Retirement Trust Fund (as amended to January 1, 1976) defines "employee" in a similar fashion, specifically noting that contributions are required for each employee whether the employee is "... union or non-union, permanent or temporary, part-time or full-time."

The clarity of this language leaves no doubt as to the Rolfsons' obligations to contribute. The language of the agreements standing alone strongly supports the inference that non-union carpenters are covered and the language of the trust agreements to which the employer was made a party explicitly confirms the point. Our interpretation is consistent with results reached by other courts construing similar, but sometimes less explicit, language in bargaining and trust fund agreements. See, e. g., Carpenters & Millwrights v. Gardineer, 573 F.2d 1172 (10th Cir. 1978); Manning v. Wiscombe, 498 F.2d 1311 (10th Cir. 1974); Markt v. Ro-Mart, Inc., 471 F.Supp. 1292 (N.D.Calif.1979).

Because the documentary evidence was clear and unambiguous, the district...