Int'l Union v. BVR Liquidating

• Decision Date: 13 August 1999
• Docket Number: DEFENDANTS-APPELLANTS,PLAINTIFFS-APPELLEES,No. 99-1024,99-1024
• Citation: 190 F.3d 768
• Parties: (6th Cir. 1999) INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, AND ITS LOCAL UNION NO. 540; RICHARD POLLARD; RONALD MANKE; THOMAS ELDON; ALLEN LAWRENCE,, v. BVR LIQUIDATING, INCORPORATED, FORMERLY KNOWN AS BEAVER PRECISION PRODUCTS, INC.; UNITRON, INC., Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 768

190 F.3d 768 (6th Cir. 1999)

INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, AND ITS LOCAL UNION NO. 540; RICHARD POLLARD; RONALD MANKE; THOMAS ELDON; ALLEN LAWRENCE, PLAINTIFFS-APPELLEES, v. BVR LIQUIDATING, INCORPORATED, FORMERLY KNOWN AS BEAVER PRECISION PRODUCTS, INC.; UNITRON, INC., DEFENDANTS-APPELLANTS.

No. 99-1024

U.S. Court of Appeals, Sixth Circuit

Argued: August 13, 1999

Decided: September 14, 1999

Appeal from the United States District Court for the Eastern District of Michigan at Ann Arbor. Nos. 97-60151; 97-60210--Barbara K. Hackett, District Judge.

Michael F. Saggau (argued and briefed), Detroit, MI, for Plaintiffs-Appellees.

Daniel G. Wyllie (briefed), Dykema Gossett PLLC, Detroit, MI; Robert J. Trizna (argued and briefed), Schuyler, Roche & Zwirner, Chicago, IL, for Defendants-Appellants.

Before: Merritt, Kennedy, and Daughtrey, Circuit Judges.

OPINION

Kennedy, Circuit Judge.

Plaintiffs, Local No. 540, et al., filed suit against defendants BVR Liquidating, Inc. and Unitron, Inc. to enforce the provisions of the collective bargaining agreements ("CBA").¹ This suit arose out of the defendants' closure of its Troy, Michigan production plant. Although the plaintiffs raised many claims in the district court, this appeal concerns only one of these claims. Plaintiffs contend that retirees' rights to health care² benefits provided for in the insurance agreements have vested and that the defendants have violated the terms of the agreements by terminating these benefits. Defendants argue that the retiree health care benefits provided for in the insurance agreements are limited in duration to the term of the CBA.³ Because defendants terminated the retiree health care benefits upon the expiration of the latest CBA, defendants state that they did not breach the terms of the agreement.

The district court found that the retirees' lifetime health care benefits had vested; thus, the plaintiffs were entitled to summary judgment on this issue. Defendants timely appealed.

Defendants raise one issue on their appeal of the district court's granting of summary judgment in favor of the plaintiffs: (1) whether the district court erred in finding that the plaintiffs were entitled to vested lifetime retiree health care benefits under the CBAs.

I. Facts

This appeal concerns the interpretation of the CBAs and accompanying insurance agreements governing the workplace relationships between the union and the company⁴ for the years between 1988 and 1997. Although there were three different CBAs in effect during this time-frame, both parties concede that the relevant provisions do not differ. Pursuant to these CBAs, the company and the union entered into separate insurance agreements that specified the insurance benefits provided to union members and retirees. The focus of this appeal is the health care benefits provisions of these insurance agreements.

Prior to 1988, the CBA provided lifetime health care benefits for individuals who retired between 1985 and 1988. In the negotiations for the 1988-1991 CBA, the parties made some significant changes to the insurance agreement by increasing the amount of paid-up life insurance by $1,000, by providing health care benefits for retirees' spouses and eligible dependents and by increasing coverage for all participants to include vision and hearing benefits. To effectuate these changes the parties redrafted the language of the benefits provision. As a result of this redrafting, the language, found in the 1985-1988 agreement, stating that the retirees' benefits continued until the date of death was not included in the paragraph providing for increased benefits for those who retired after July 1, 1988. The paragraph used the term "continued."⁵ It is this change that is central to this appeal.

On April 7, 1997 the company sold essentially all of its assets, closed the Troy plant and terminated all of its employees. The company also informed the employees who had retired after June 30, 1988 that they would no longer receive the health care benefits to which they had been entitled under the CBAs and the insurance agreements. Plaintiffs filed suit against the defendants to enforce the provisions of the CBAs.

Plaintiffs argued that they were entitled to lifetime health care benefits because the rights had vested prior to the expiration of the contract. Plaintiffs stated that Section 9C of the agreement was unambiguous and that the language supported their interpretation of the provision. Because the provision stated that benefits continue plaintiffs argued that the parties intended that the benefits vest. Although the plaintiffs contended that the language of the agreements was unambiguous, the plaintiffs also offered extrinsic evidence to support their interpretation of the contract that the health benefits continued during their retirement. The plaintiffs provided three affidavits of union members who attended the negotiation sessions where the CBAs and insurance agreements were drafted. These affidavits state that the elimination of lifetime retiree health care benefits was not a subject discussed at any of the sessions. The plaintiffs also provided the affidavits of ten retired employees of the company who retired after 1988 and who had spoken with company agents about the benefits they would receive upon retirement. These affidavits state that the company agents conveyed the information that retirees were entitled to lifetime health care benefits.⁶

Defendants also argued that the language of the insurance agreements was unambiguous. Defendants, however, focused on the language of Section 1A of the agreement. Section 1A states that benefits are provided for the term of the agreement unless otherwise provided. Because Section 9C provided no durational time-frame the company argued that it was permitted to terminate benefits at the expiration of the agreement.

The plaintiffs filed a motion for summary judgment on the issue of whether the retirees' health care benefits had vested. In response to this motion and the plaintiffs' supporting affidavits, the defendants included affidavits from two company agents who were members of the negotiating team. Only one of these individuals, however, attended the negotiating sessions with the union. Both affidavits state that the language of the agreements does not provide for lifetime health care benefits for retirees. In addition, both affidavits state that although the affiants cannot remember the conversations set forth in the plaintiffs' affidavits, they do not believe they made the statements attributed to them.

The district court ruled in favor of the plaintiffs and granted their motion for summary judgment. Although the district court believed that the express language of the agreement supported plaintiffs' argument that lifetime retiree health care benefits had vested, the court also found that the extrinsic evidence supported the plaintiffs' interpretation of the agreement. The court stated that the affidavits of the negotiators confirmed the parties' intent and that the affidavits offered by the defendants contained "irrelevant legal Conclusions." In addition, the court noted that the retirees' affidavits showed that the company had assured them that they would receive lifetime benefits and that the defendants offered no contradictory evidence. Defendants appealed.

II. Discussion

This court reviews a district court's entry of summary judgment de novo. See Sengpiel v. B. F. Goodrich Co., 156 F.3d 660, 664 (6th Cir. 1998). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Although defendants contend that summary judgment is appropriate only if the contract is unambiguous and clear, "the mere existence of a colorable factual dispute will not defeat a properly supported motion for summary judgment. A genuine dispute between the parties on an issue of material fact must exist to render summary judgment inappropriate." Hill v. White, No. 98-5860, 1999 U.S. App. LEXIS 18754, at *6 (6th Cir. Aug. 13, 1999) (citations omitted). The extrinsic evidence demonstrates that there is no genuine issue of material fact as to the parties' intent and the relevant provision becomes ambiguous only if read in conjunction with other provisions in the contract; thus, summary judgment is appropriate and the district court was correct in determining that the lifetime retiree health care benefits had vested.

This court in International Union v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983), provided a framework for interpreting the provisions of a CBA. The Yard-Man court noted that whether benefits survive the termination of a CBA depends on the intent of the parties. 716 F.2d at 1479. To discern the intent of the parties, a court should apply the basic rules of contract interpretation.

For example, the court should first look to the explicit language of the collective bargaining agreement for clear manifestations of intent.... The court should also interpret each provision in question as part of the integrated whole. If possible, each provision should be construed consistently with the entire document and the relative positions and purposes of the parties. Id. (citations omitted).

In addition, the "terms must be construed so as to render none nugatory and avoid illusory promises." Id. at 1480. Finally, a court should consider extrinsic evidence only when the terms of the contract are ambiguous. See id.

Applying these rules of contract interpretation, the Yard-Man court stated that "retiree benefits are in a sense 'status' benefits which, as such, carry with them an inference.... that the parties likely intended those benefits to...