Carpenters Amended and Restated Health Ben. Fund v. Holleman Const. Co. Inc.
| Decision Date | 28 January 1985 |
| Docket Number | No. 83-1905,83-1905 |
| Citation | 751 F.2d 763 |
| Parties | 118 L.R.R.M. (BNA) 2710, 102 Lab.Cas. P 11,352, 6 Employee Benefits Ca 1145 The CARPENTERS AMENDED AND RESTATED HEALTH BENEFIT FUND, and its Trustees; The North Texas Carpenters Apprentice and Training Fund, and its Trustees; The North Texas Carpenters Amended and Restated Pension Trust, and its Trustees, Plaintiffs-Appellants, v. HOLLEMAN CONSTRUCTION COMPANY, INC., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Matthews, Allen, Carlton & Stein, Kenneth R. Stein, Dallas, Tex., for plaintiffs-appellants.
Canterbury, Stuber, Elder & Gooch, Charles W. Stuber, Frederic Gover, Dallas, Tex., for defendant-appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before CLARK, Chief Judge, GOLDBERG and RUBIN, Circuit Judges.
This case is a reminder that the toughest nuts to crack are not always the largest. Although we do not perceive any jurisprudential forest lurking behind this case, it nonetheless presents several knotty questions of contract interpretation. Indeed, the one thing clear about the contract in question is its ambiguity. Because the interpretation of an ambiguous contract is a question of fact, we defer to the interpretation of the district court and consequently affirm.
On May 25, 1973, the North Texas Contractors Association ("NTCA") and the Carpenters District Council of North Central Texas ("Union") 1 executed a master collective bargaining agreement. This agreement required member contractors of the NTCA to file reports and make health and welfare benefit contributions on behalf of their employees to the appellant trust funds ("Trust Funds"). 2 The agreement had an expiration date of April 30, 1975, but provided that after that date, the agreement would continue in full force and effect "from year to year" unless either party gave ninety-days notice of termination.
Asa Holleman began doing business as the Holleman Construction Company in 1972. Because Mr. Holleman was not a member of the NTCA, he was not initially bound by the terms of the 1973 master agreement. He became bound by the 1973 master agreement when, on November 13, 1973, he executed a one-page short-form agreement with the Union, which adopted the 1973 master agreement by reference. Like the master agreement, the short-form agreement provided that if notice of termination was not given, the agreement would remain in force "from year to year" and would be subject "to the terms and agreements as negotiated with the [NTCA]."
In January 1975, pursuant to the termination provision of the 1973 master agreement, the NTCA gave notice of termination to the Union. As a result, the 1973 master agreement terminated on April 30, 1975. A new master agreement was not executed until July 30, 1975, leaving a three-month gap during which no master agreement was in force.
Although neither party to the 1973 short-form agreement ever gave notice of termination, on April 21, 1975, the Union and the Holleman Construction Company executed a new short-form agreement. This agreement did not make any reference to the 1973 short-form agreement, nor did it contain a termination or expiration provision. 3 It merely provided that the parties would continue to recognize the 1973 master agreement until a new master agreement was negotiated, at which time the new master agreement would take effect. (The 1975 short-form agreement also set forth an interim wage scale, but provided that the wage scale of the new master agreement would be applied retroactively.)
On July 30, 1975, a new master collective bargaining agreement was executed between the NTCA and the Union. This agreement continued in force until April 30, 1978, when it was replaced by yet another master agreement, which remained in effect at the time of trial.
Under the terms of both the 1973 and the 1975 short-form agreements, the Holleman Construction Company was obligated to file reports and make health and welfare benefit contributions to the Trust Funds on behalf of its carpenters. Holleman Construction Company made these contributions through August 1978, when it was replaced as a business entity by the Holleman Construction Company, Inc. ("Corporation"). The Corporation continued to make contributions on behalf of some, but apparently not all, of its employees through April 30, 1982. At that time, it ceased making any contribution payments to the Trust Funds, and refused to allow audits as required by the 1978 master agreement. The Trust Funds then brought the present suit.
The Trust Funds seek to recover health and welfare benefit contributions that they claim the Corporation owed under the 1978 master agreement. The Trust Funds claim that the Corporation is bound by this agreement as a result of (1) the 1973 short-form agreement and (2) the Corporation's course of conduct in continuing to make benefit payments from 1978 to 1982. The Corporation claims that it is not bound by the 1978 agreement, and that its payments to the Trust Funds after 1978 were voluntary. 4
At the heart of this case is a difficult question of contract interpretation, relating to the 1973 short-form agreement. According to the Trust Funds, this agreement was open-ended and adopted by reference not only the 1973 master agreement but future master agreements as well. They argue that because neither party ever gave notice of termination, the 1973 short-form agreement was still in effect in 1978 and subjected the Holleman Construction Company (and the Corporation, as Holleman's successor or alter ego) to the 1978 master agreement. The Corporation argues, in response, that the 1973 short-form agreement was tied to the existence of the 1973 master agreement, and terminated when the 1973 master agreement terminated. 5
In rendering judgment for the Corporation, the district court stated two grounds of decision. First, it agreed with the Corporation that the 1973 short-form agreement terminated on April 30, 1975, when the 1973 master agreement terminated. Second, it held as a matter of law that the 1973 and 1975 short-form agreements were inconsistent, and that therefore the 1975 agreement had the effect of rescinding the 1973 agreement. 6 We affirm the district court's opinion on the basis of the first of these holdings, namely, that the termination of the 1973 master agreement also terminated the 1973 short-form agreement. Consequently, we do not reach the second holding, that the 1975 short-form agreement rescinded the 1973 short-form agreement.
Ambiguity is the mother of interpretation. The less determinate meaning the drafter infuses into a document, the more different meanings the interpreter can take out. Only when a contract is clear on its face--only when it speaks for itself--is interpretation unnecessary.
Ordinarily, courts attempt to resolve ambiguities in a contract by looking to the contract itself, on the theory that the parties' words best represent their intentions. Ambiguous terms are interpreted in light of other terms in the contract, and inconsistencies are resolved through standard rules of interpretation--for example, that specific terms control over general terms, or that separately negotiated terms control over standardized terms. As long as the contract as a whole is coherent, ambiguities can be resolved as a matter of law, without looking beyond the four corners of the document. In such cases, a reviewing court is not bound by the clearly erroneous standard of review. Since no issues of fact are involved, the reviewing court is as competent as the trial court to interpret the contract. Paragon Resources v. National Fuel Gas Distribution, 695 F.2d 991, 995 (5th Cir.1983); Illinois Central R.R. v. Gulf, Mobile & Ohio R.R., 308 F.2d 374, 375 (5th Cir.1962).
In some cases, however, even by looking at the entire document, ambiguities cannot be resolved--the document as a whole is ambiguous. To resolve these ambiguities, a court can no longer rely solely on the language of the contract to determine the parties' intent, and must look to extrinsic or parol evidence. Consequently, in these cases, questions of contract interpretation are questions of fact, see West v. Smith, 101 U.S. 263, 270, 11 Otto 263, 270, 25 L.Ed. 809, 812 (1879); Paragon Resources supra, 695 F.2d at 995; In re Stratford of Texas, Inc., 635 F.2d 365, 368 (5th Cir.1981), and the clearly erroneous standard of review applies. Fed.R.Civ.P. 52(a). 7
These principles apply to labor contracts as well as to non-labor contracts. See Laborers Health & Welfare Trust Fund v. Kaufman & Broad, 707 F.2d 412, 418 (9th Cir.1983). Although labor agreements are not rigidly governed "by the same common-law principles which control private contracts," Transportation-Communication Employees Union v. Union Pacific R.R., 385 U.S. 157, 160, 87 S.Ct. 369, 371, 17 L.Ed.2d 264 (1966); see also NLRB v. L.B. Priester & Son, 669 F.2d 355, 364 (5th Cir.1982), the division of labor between district and appellate courts remains the same in interpreting labor and non-labor contracts. Consequently, in order to determine the appropriate standard of review in the present case, we must determine whether the 1973 short-form agreement is ambiguous. This preliminary question of whether an ambiguity exists is a question of law, which we, as a court of review, must answer ourselves. Paragon Resources, supra, 695 F.2d at 995; Fujimoto v. Rio Grande Pickle Co., 414 F.2d 648, 654 (5th Cir.1969). We therefore turn to the 1973 short-form agreement to determine (1) whether it is ambiguous, and (2) whether, given the appropriate standard of review, the district court's interpretation should be upheld.
The 1973 short-form agreement contained the following termination provision:
In the event that either party...
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