Central Indiana Carpenters Welfare Fund v. Ellis

• Decision Date: 26 November 1980
• Docket Number: No. 2-780A210,2-780A210
• Citation: 412 N.E.2d 865
• Parties: CENTRAL INDIANA CARPENTERS WELFARE FUND, Appellant (Defendant Below), v. Nelson ELLIS, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 865

412 N.E.2d 865

CENTRAL INDIANA CARPENTERS WELFARE FUND, Appellant (Defendant Below), v. Nelson ELLIS, Appellee (Plaintiff Below).

No. 2-780A210.

Court of Appeals of Indiana, First District.

Nov. 26, 1980.

Lloyd L. DeWester, Jr., Indianapolis, for appellant.

Michael T. Conway, Indianapolis, for appellee.

RATLIFF, Judge.

STATEMENT OF THE CASE

Defendant-appellant Central Indiana Carpenters Welfare Fund (the fund) appeals from the judgment of the Marion Superior Court Room No. 5 in favor of plaintiff-appellee Nelson Ellis in his suit for reimbursement for medical expenses under the fund's benefit plan. We affirm.

STATEMENT OF THE FACTS

The evidence indicates that during the times pertinent to this case Ellis was a millwright and a member of Millwright Local 1003 in Marion County. As such, he and his eligible dependents were entitled under the Central Indiana Carpenters Welfare Fund Benefit Plan for certain sickness and medical expense benefits so long as he accumulated a certain number of hours of work over a given period of time. If he did not work the required number of hours, the plan provided that he could maintain his eligibility for a maximum of three consecutive three-month periods by making self-payments to the fund. Pursuant to these terms, Ellis made three consecutive self-payments and was thereby covered under the plan through April 1977. Ellis had received a booklet containing the terms of the plan. The plan booklet provided that it was the employee's responsibility to determine if it was necessary for him to make a self-payment.

Richard Stumph of Professional Administrators Limited, the eligibility administrator of the benefit plan, testified that in preparing a self-payment notice for a worker named E. Nelson, Stumph's office discovered that it did not have his address. Consequently, it contacted the Central Indiana Carpenters District Council, which provided an address to which Professional Administrators then sent the self-payment notice for the May through July quarter.

On about April 1, 1977, a fourth self-payment notice arrived through the mail at Ellis' home. Although the notice was sent to Ellis' home address, it was directed to "E NELSON" rather than to "N L ELLIS" as the previous three notices had been. Further, the notice bore a Social Security number different from that of Ellis.

David Blanford, Vice President of J. F. Malloy and Associates, Inc., the administrator of the benefit plan, testified that he had a conversation with Ellis in April 1977 concerning eligibility, although Ellis testified that he could not recall discussing his Ellis testified that on about April 18, 1977, his wife, Helen, wrote and sent a check to pay the bill. He did not see the notice himself. It was customary for Helen to pay their bills. Ellis said that by making the payment, he expected to be covered by the plan and he relied upon the coverage.

eligibility for benefits prior to July of that year. Blanford also said that his office first learned that Ellis had received Nelson's self-payment notice in April 1977. ¹

Blanford stated that his office received the check and self-payment notice and that because it relies upon the name on the self-payment notice, it credited $125 to E. Nelson's account. He further testified that there is no requirement that the payment be made by the worker himself.

Helen Ellis had been covered as an eligible dependent for hospital and medical benefits. She incurred medical expenses during the May through July quarter and died in July 1977. In early July, Ellis learned that the medical bills would not be paid by the plan. Ellis then contacted Blanford's office to complain about the lack of coverage. A representative of Professional Administrators Limited wrote to Ellis on July 8, 1977, telling him that he was mistakenly sent Nelson's self-payment notice and that he would be receiving a refund of his payment. On October 31, 1977, his refund check was sent.

On April 11, 1978, Ellis filed suit against the fund, alleging, among other things, that the fund breached its insurance contract to provide medical expense benefits. On December 4, 1979, after a trial to the Marion Superior Court, Room No. 5, the court entered judgment in favor of Ellis on Count I of his complaint and awarded him $4,928.10 in damages. ² The judgment was not accompanied by findings of fact. The fund timely filed its motion to correct errors, which was overruled on April 3, 1980.

STATEMENT OF THE ISSUES

The fund presents the following issues for our review:

(1) whether the trial court erred as a matter of law in its denial of the fund's motion to dismiss based upon Ellis' failure to exhaust his internal remedies prior to filing suit;

(2) whether the trial court erred as a matter of fact and law in finding for Ellis and against the fund on Count I of Ellis' complaint; and

(3) whether the trial court erred as a matter of fact and law in assessing $4,928.10 in damages against the fund on Count I.

ISSUE ONE

The fund argues that its motion to dismiss Ellis' complaint was erroneously overruled by the trial court. It points to Ind. Code 22-7-2-1 and argues that this provision requires a member of a labor organization to exhaust all remedies provided by his organization before bringing an action at law or in equity. Because the fund's benefit plan for union members provides a three-step appeal procedure, which Ellis apparently did not pursue, the fund reasons that Ellis' complaint should have been dismissed for failure to exhaust his union remedies and for lack of subject-matter jurisdiction of the trial court.

Ellis contends, among other things, that IC 22-7-2-1 does not encompass insurance contract disputes.

Indiana Code 22-7-2-1 provides as follows:

"22-7-2-1 Contracts; rights and privileges; enforcement "Sec. 1. Duly adopted constitutions, by-laws, and other laws of labor organizations, except when and to the extent that the provisions thereof may violate public policy, are hereby declared to be valid and enforceable contracts as between the members and officers of such labor organizations; and said contracts, and all rights and privileges extended thereby and therein contained, are hereby declared to be enforceable in the courts of this state, by actions at law or in equity, brought by any individual member or members of such labor organization. Provided, however, That such member or members of such labor organization shall exhaust all rights, privileges and remedies provided by the constitution, by-laws, or other laws of said labor organization, before bringing any such action at law or in equity." (Our emphasis.)

The effect of the first clause of IC 22-7-2-1 is to render "constitutions, by-laws, and other laws of labor organizations" enforceable contracts. The second clause provides that "said contracts" are enforceable in the courts of Indiana. The proviso limits the second clause to situations where the member of the labor organization has already exhausted all of his "rights, privileges and remedies provided by the constitution, by-laws, or other laws of said labor organization ...."

It is readily apparent that the contracts which are made enforceable, subject to the condition precedent that all remedies provided by the laws of the labor organization be exhausted, are those which have been declared to be contracts in the first clause. The term, "said contracts," refers to the constitution, by-laws, and other laws of the labor organization and not to all contracts between the labor organization's members and officers.

The fund was established by a trust agreement among the Central and Western Indiana District Council of Carpenters United Brotherhood of Carpenters and Joiners of America, A.F. of L.-C.I.O., Construction League of Indianapolis, Inc., Labor Relation Division, Indiana Highway Constructors, Inc., and the employer and employee trustees of the fund. The fund's benefit plan pertains to eligible employees and their eligible dependents. Assuming, for the sake of argument, that contractual rights are created by the trust agreement and by the benefit plan, we still have not been directed to any evidence that the trust or the benefit plan constitutes a constitution, by-law, or other law of the labor organization. As we have already stated, IC 22-7-2-1 does not apply to every contract between the labor organization's members and officers.

Accordingly, we are constrained to hold that the fund has failed to show that IC 22-7-2-1 is applicable to the case at bar, and we need not further consider the fund's exhaustion of remedies and subject-matter jurisdiction arguments.

ISSUE TWO

The fund contends that this was a case of mutual mistake relating to a fact material to the insurance contract and that, consequently, there was no meeting of the minds and no contract.

As this Court has often said, we will not weigh the evidence or judge the credibility of witnesses. Rather, we will consider only that evidence most favorable to the judgment and all reasonable inferences drawn from that evidence. If there is evidence of probative value to support the trial court's judgment, we must affirm. Census Federal Credit Union v. Wann, (1980) Ind.App., 403 N.E.2d 348. Further, Ind. Rules of Procedure, Trial Rule 52(A), prohibits us from setting aside the...