INTERN. BROTH. OF ELEC. WKRS., NO. 323 v. CORAL ELEC.

• Decision Date: 10 January 1984
• Docket Number: No. 82-8459-CIV-JAG.,82-8459-CIV-JAG.
• Citation: 576 F. Supp. 1128
• Parties: INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 323, a labor organization, Plaintiff, v. CORAL ELECTRIC CORPORATION, a Florida corporation, and Beach Electric Corporation, a Florida corporation, Defendants.
• Court: U.S. District Court — Southern District of Florida

576 F. Supp. 1128

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 323, a labor organization, Plaintiff, v. CORAL ELECTRIC CORPORATION, a Florida corporation, and Beach Electric Corporation, a Florida corporation, Defendants.

No. 82-8459-CIV-JAG.

United States District Court, S.D. Florida, N.D.

December 13, 1983.

On Motion for Reconsideration January 10, 1984.

COPYRIGHT MATERIAL OMITTED

Robert Sugarman, Kaplan, Sicking, Hessen, Sugarman, Rosenthal & DeCastro, Miami, Fla., for plaintiff.

Brown Boswell, Paul Platte, Mershon, Sawyer, Johnston, Dunwody & Cole, Miami, Fla., for defendants.

ORDER

GONZALEZ, District Judge.

THIS CAUSE has come before the Court upon the Plaintiff's motion for summary judgment. Section 301 of the Labor Management Relations Act, 29 U.S.C.A. § 185(a) (1978),¹ and the Federal Arbitration Act, 9 U.S.C.A. § 9 (1970),² confer jurisdiction upon the Court to entertain this matter. The Court has considered the pleadings and all other information presented, and concludes that the motion for summary judgment be denied. The Court does find, however, that there is no substantial controversy as to a number of issues presented in the Plaintiff's motion. These issues, and the underlying factual dispute, are discussed in the Court's decision below.

I. Background

In May 1980, Wayne Stewart approached George Hudspeth, Jr., the business manager of the International Brotherhood of Electrical Workers (IBEW),³ about starting a construction business and signing a prehire contract.⁴ This discussion proved fruitful and, according to records filed with the Secretary of State, Coral Electric Corporation was incorporated on June 5, 1980. Wayne Stewart's wife, Sally Stewart, signed the incorporation papers, which listed the new company's address as 2425 Circle Drive, West Palm Beach. The incorporation papers also listed attorney Michael Jackson as the legal representative of Coral Electric Corporation. On January 28, 1981, the IBEW and Coral Electric Corporation agreed upon and entered into a prehire agreement. Defendants' Supplemental Memorandum of Law and Affidavit in Opposition to Motion for Summary Judgment, Affidavit of Wayne Stewart ¶ 3 (filed Nov. 10, 1983).

Almost four months to the day after entering into the collective bargaining agreement, on May 26, 1983, records in the Secretary of State's office indicate that Wayne Stewart signed papers to incorporate another construction company, Beach Electric Corporation. As alleged in the pleadings submitted, there are several similarities between Coral Electric Corporation and Beach Electric Corporation. The address, legal counsel, and business practices both appear to be identical. Additionally, sometime shortly before March 3, 1982, Wayne Stewart filed an application for Certificates of Competency to qualify Coral Electric Corporation and Beach Electric Corporation for construction jobs; both companies operated under the same contractor's license number.

Pursuant to the terms of the prehire agreement,⁵ the IBEW filed a grievance against Coral Electric Corporation, charging that Coral Electric Corporation and Beach Electric Corporation constituted a single employer, and that Coral Electric Corporation had violated its agreement with the union by subcontracting out work to Beach Electric Corporation that was to be performed by union employees at Coral Electric Corporation.⁶

On March 1, 1982, the Joint Labor-Management Committee (Arbitration Committee, Committee, or Arbitrator) convened to resolve the grievance. After the IBEW had presented its case that day, Coral Electric Corporation requested, and was granted, additional time to prepare a defense. When the Committee reconvened on March 4, Coral Electric Corporation chose not to present any direct evidence or witnesses on its behalf. Based upon the evidence and testimony presented by the parties at the hearings, the Arbitrator found "that Coral Electric and Beach Electric constitute a single employer under the collective bargaining agreement, and that Coral Electric has violated the agreement by managing and/or owning Beach Electric for the purpose of performing non-union work within the Union's jurisdiction." Motion for Summary Judgment, Exhibit B "Decision and Award" at 2 (filed Aug. 29, 1983). The Committee also found that both employers were bound to all the terms and conditions of the prehire agreement. Accordingly, the Committee ordered Coral Electric Corporation and Beach Electric Corporation to pay all fringe benefits and wages due and owing under the collective bargaining agreement. To insure that the companies complied with the award, the Arbitration Committee also ordered an accounting.

On November 2, 1982, the defendants Coral Electric Corporation and Beach Electric Corporation received copies of the Committee's award, along with a complaint filed by the IBEW to confirm and enforce the Arbitration Committee's decision. On December 10, 1982, the defendants filed their answer along with affirmative defenses. After a considerable delay, the IBEW filed a motion for summary judgment, which has prompted the Court's review.

II. Statute of Limitations

The IBEW contends that federal and state statutes of limitation bar the defendants from raising defenses to the enforcement of the arbitration award. Under federal law, a party has ninety (90) days from entry of an arbitrator's decision to move to "vacate, modify, or correct" the order. 9 U.S.C.A. § 12 (1970).⁷ Florida law contains the same time requirements. Fla.Stat. § 682.13(2) (West Supp.1983).⁸ Plaintiff reasons that the Court must strike the employers' affirmative defenses because more than ninety days has elapsed since delivery of the Arbitrator's decision and the defendants still have not filed a motion to vacate the order.

The defendants counter that their affirmative defenses are tantamount to a motion to vacate and, because these pleadings were filed within ninety days after service of the Arbitrator's decision, they do not violate either federal or state time requirements. After considering the relevant law, the Court finds itself in substantial agreement with the defendants' position.

Admittedly, there is a large body of case law supporting the proposition that a motion to vacate an arbitration award cannot be entertained by a federal court once the statutory time limit has elapsed. See Teamsters Local 135 v. Jefferson Trucking, 628 F.2d 1023 (7th Cir.1980); Carpenters v. Meddles, 535 F.Supp. 775 (N.D.Cal. 1981); Auto Workers v. LaCross Cooler Co., 406 F.Supp. 1213 (W.Wis.1976). None of these cases address a situation where, as here, defenses to a motion to confirm were filed within the statutory period. The few decisions that are on point appear to treat affirmative defenses to an arbitration award as analogous to a motion to vacate provided they contain allegations which would sustain such a motion.

For example, in Kest v. Nathanson, 184 So.2d 690 (Fla. 4th DCA 1966), the parties had agreed to, and had engaged in, an arbitration proceeding. Nathanson, a contractor, refused to be bound by the arbitration award and instituted an action against the purchaser, Kest, for breach of contract within ninety days after delivery of the arbitrator's decision. The appellate court found that Nathanson's complaint and accompanying affidavit "contained statements which, if true, might be sufficient to deny confirmation of the arbitrator's award ...." Id. at 691. Therefore, the court ordered the trial court to consider Nathanson's complaint and affidavit as an application to vacate the arbitration award and to proceed to determine the substantive legal issues raised.

Decisions in both Haskell v. Forest Land and Timber Co. (FL & T), 408 So.2d 811 (Fla. 4th DCA 1982) and Lopez and Rogue Tile Co., Inc. v. Clearwater Development Corp., 291 So.2d 126 Fla. 2d DCA 1974) suggest a result similar to Kest. In Haskell, an arbitrator found that FL & T had damaged Haskell's property and compensation was due. Dissatisfied with the amount of damages awarded, FL & T filed a tort action against Haskell eight days later. Approximately three weeks after FL & T filed its complaint, Haskell answered asserting the arbitration as an affirmative defense. Some two years later, FL & T filed an amended complaint, alleging that the arbitrator showed "evident partiality" and asked that the award be vacated. The trial and appellate courts agreed that FL & T could not overturn the arbitration award with its tort action. The court of appeals noted that although FL & T had filed its complaint within ninety days of the arbitrator's decision, it could not substitute for a motion to vacate because it lacked sufficient allegations challenging the legality of the arbitration or the award. Haskell, 408 So.2d at 811-12.

Similarly, in Clearwater Development Corp., the losing party in an arbitration proceeding sought to circumvent the adverse ruling by filing a breach of contract action within ninety days of the arbitrator's decision. The court held that the contract action could not be construed as a motion to vacate under Fla.Stat. § 682.13 because the complaint made no mention of the arbitration award. Significantly, the Clearwater Development Corp. court alluded with favor to the complaint and affidavit in Kest as an example of timely filed pleadings that could substitute for a motion to vacate an arbitration award.

Upon review of the decisions in Kest, Haskell, and Clearwater Development Corp., the Court concludes that the defendants' affirmative defenses are not time barred because they were timely filed, and because they challenge the arbitration award on legal grounds. Specifically, the Court finds that affirmative defenses that challenge the authority of an arbitrator to entertain a grievance, and take exception to the arbitrator's legal conclusions, may substitute for a motion to vacate if filed within ninety days after delivery of the arbitrator's...