Hynes v. Clarke
| Decision Date | 28 January 1997 |
| Citation | 297 N.J.Super. 44,687 A.2d 771 |
| Parties | Leslie A. HYNES, John F. Daly, Thomas J. King, Philip A. Centineo, Roy Olsen, Michael E. Hegarty, William T. Mullen, John P. Neidhardt, James J. Kearny, James E. Wade, William A. Kolfenbach, Trustees of the District Council Ironworkers Pension, Welfare, Annuity, Vacation, Training Program Trust and Industry Advancement Funds of Northern New Jersey, Plaintiffs-Respondents, v. George R. CLARKE, Daniel N. Herres, Jr., William J. LaRusso, John D. Steinmetz, Walter F. Steinmetz and Gregory P. Templin, Defendants-Appellants. |
| Court | New Jersey Superior Court — Appellate Division |
Craner, Nelson, Satkin & Scheer, Scotch Plains, for defendants-appellants (John A. Craner, on the brief).
Jardine & Pagano, Springfield, for plaintiffs-respondents (Joseph R. Pagano, on the brief).
Before SHEBELL, BAIME and PAUL G. LEVY, JJ.
The opinion of the court was delivered by
SHEBELL, P.J.A.D.
Rise Steel, Inc. ("Rise Steel") instituted suit in the Chancery Division, Middlesex County, on June 6, 1995, to vacate an arbitration award issued against it on May 21, 1995. It named as defendants the District Council of Ironworkers Welfare, Pension Vacation, Annuity, Training Program, and Industry Advancement Funds ("Funds"), the arbitrator, the Funds' attorney, all the employees of Rise Steel, including the six defendants in the present action, George R. Clarke, Daniel N. Herres, Jr., William J. LaRusso, John D. Steinmetz, Walter F. Steinmetz and Gregory P. Templin. 1
On June 23, 1995, while the Middlesex County action was pending, the Funds requested arbitration against the six employees of Rise Steel, seeking to hold them each personally liable for a portion of the monies owed by Rise Steel on a theory of conspiracy between Rise Steel and defendants to divert monies that otherwise would have gone to the Funds. On December 9, 1995, the arbitrator entered an award against defendants holding them liable for the following amounts: George R. Clarke owed $6,290.36; Daniel N. Herres, Jr. $10,013.00; William J. LaRusso $5,010.29; John D. Steinmetz $11,442.29; Walter F. Steinmetz $1,924.11; and Gregory P. Templin $5,152.07. These awards totaled $39,832.12. The total award against Rise Steel in the initial arbitration proceeding was $157,936.12.
On March 21, 1996, the present appellants filed an answer and cross-claim in the litigation in Middlesex County brought by Rise Steel. Appellants sought to vacate the arbitration award noting among other things that they were never Union members and that the arbitrator lacked jurisdiction. The Funds, on March 15, 1996, had instituted this action by way of a Verified Complaint and Order to Show Cause in the Law Division, Essex County, seeking to confirm their arbitration award against the six appellants. The Case Information Statement, which accompanied the Verified Complaint, and the certification required by R. 4:5-1(b), failed to mention the pending action in Middlesex County.
Appellants moved to dismiss the Essex County suit or, alternatively, to transfer the matter to Middlesex County and to consolidate it with the case pending there, relying upon R. 4:30A and R. 4:29-1. They also moved, pursuant to R. 1:10-3, for an award of counsel fees for the failure of the Funds' counsel to comply with R. 4:5-1(b), or in the event the complaint was not dismissed or the case transferred, they requested an opportunity to defend on the merits based on the lack of jurisdiction of the arbitrator. The judge rendered a written opinion on April 19, 1996. He denied appellants' motion, refused leave to defend on the merits, and entered final judgment against appellants. This appeal followed and we reverse.
Plaintiffs in this action are the trustees of funds established under collective bargaining contracts to provide fringe benefits to ironworkers. The collective bargaining agreements were entered into by five ironworker local unions that bargain under the trade name of The District Council of Ironworkers of Northern New Jersey ("District Council"). Although employed by Rise Steel as ironworkers, defendants are not and have never been members of any of the five local unions. 2 Rise Steel was a party to one such Collective Bargaining Agreement ("Agreement") with the District Council. Under Article XII of the Agreement, the employer, in addition to paying the wages of the Agreement, was also required to pay to the Funds a specified amount of money for each hour worked by a covered ironworker in the employ of a particular employer. The Agreement set forth a method of contribution that required the employer to buy a stamp from the Funds which was equivalent to the amount of money required under the Agreement for each hour of employment covered by the fringe benefit Funds, and to submit reports to the Trustees of the Funds.
Section 12.4, subsection A of the Agreement, in pertinent part, declared:
(6) that the Trustees of either or all of the aforenamed Trusts or Funds may maintain an action in their name as an entity, or in their names as Trustees of their respective Trust, in any Court and in any jurisdiction, or before an arbitrator as hereafter provided to claim, recover and collect any amount or amounts due from any Employer for contributions or sums due to their respective Trust or Fund ....
(7) The Trustees of any Fund or an alleged delinquent Employer may request arbitration of any alleged delinquencies or breach of agreement regarding Fund contributions and arbitration must be heard within thirty (30) days after such request. The Trustees may join an individual ironworker as a party to any such arbitration proceeding relating to an alleged delinquency or a breach of agreement regarding Fund contributions in which such ironworkers may be involved. Each ironworker subject to this Agreement does hereby, through his duly recognized representative, consent to such joinder and to the issuance of an award binding upon him in connection therewith ...
[Emphasis added.]
During an audit of employers to insure compliance with the Agreement, the Trustees of the Funds uncovered delinquencies and alleged that Rise Steel, instead of paying the contributions to the Funds, paid those contributions to its employees, the defendants-appellants in this action. Appellants deny that they in any way received contributions the employer owed to the Trustees. They contend they were only paid by Rise Steel for services actually performed by them, with appropriate deductions, and that they also performed work in capacities other than as ironworkers.
The arbitrator, in rendering an award against the six workers, stated:
On May 21, 1995, pursuant to ... Article 12.4(A)(7) of the [Collective Bargaining] Agreement, an arbitration award was issued by this Arbitrator in the matter between the Claimant Fund Trustees and Rise [Steel, Inc.], finding that Rise had employed ironworkers for periods of time between 1990 and 1994, but failed to prepurchase a single stamp for all Funds for each hour equivalent of gross wages paid and was delinquent in contributing those monies to the funds. The amount of the delinquency was determined to be $102,941.63, as established through an audit performed by Joseph Stern, C.P.A., auditor for the Funds. Despite notice of the claim and an opportunity to be heard, Rise did not appear at a scheduled arbitration hearing to defend its position or contest the amounts due and owing. As a result, an arbitration award was issued therein, and together with interest and contractual obligations, it was ordered that Rise was obligated to the Funds in the amount of $157,936.12.
On June 23, 1995, Joseph R. Pagano, Esq., Counsel to the Funds, forwarded to this Arbitrator a request for a hearing, pursuant to Article 12.4(A)(7) to determine if individual ironworkers were liable for the hourly contributions to the Funds when, as alleged by the funds, Rise compensated the individual workers directly but did not withhold nor pay contributions contractually due the funds.
* * * * * * The Funds relied on an audit of the payroll records and certain books of Rise. In addition, Mr. Stern testified that, after his review of the payroll records, he prepared individualized itemized accountings of the date of payments (by payroll or other company check), under reported hours of work, amounts of cash (check) payments (in lieu of monies to be paid to the Funds) and total amounts alleged due from each individual.
In a footnote to the award, the arbitrator stated:
[I] did not find the Individual Ironworkers incredible in their testimony or denials of wrongdoing. They believed their acceptance of money, in the form received from Rise, did not violate the Agreement nor deprive the Funds of contributions due and owing. Moreover, they did not believe that their actions were wrong. The repeated defense of the Individual Ironworkers was that they "did not receive stamp money (fringe benefit contributions) for the hours worked as an Ironworker ... or performing Ironworker duties."
In ruling on appellants' motion against Rise Steel, the judge in the action in Essex County entered judgment against the six after he concluded that the two arbitration claims "are separate and distinct causes of action." The judge found the entire controversy doctrine to be inapplicable. He also refused to consolidate and transfer the case to Middlesex County after inexplicably concluding that the two cases did not "involve common questions of law or fact arising out of the same transaction or series of transactions as contemplated by R. 4:38-1."
N.J.S.A. 2A:24-8 states that a court shall vacate an award in the following cases:
a. Where the award was procured by corruption, fraud or undue means;
b. Where there was either evident partiality or corruption in the arbitrators, or any thereof;
c. Where the arbitrators were guilty of misconduct in refusing to postpone the...
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