Lehto v. Underground Constr. Co.

• Decision Date: 20 May 1977
• Citation: 138 Cal.Rptr. 419,69 Cal.App.3d 933
• Court: California Court of Appeals Court of Appeals
• Parties: , 96 L.R.R.M. (BNA) 2337, 97 L.R.R.M. (BNA) 2111, 82 Lab.Cas. P 10,128 Rodney Allan LEHTO, Plaintiff and Appellant, v. UNDERGROUND CONSTRUCTION COMPANY et al., Defendants and Respondents. Civ. 39882.

Page 419

138 Cal.Rptr. 419

69 Cal.App.3d 933, 96 L.R.R.M. (BNA) 2337,

97 L.R.R.M. (BNA) 2111, 82 Lab.Cas. P 10,128

Rodney Allan LEHTO, Plaintiff and Appellant, v. UNDERGROUND CONSTRUCTION COMPANY et al., Defendants and Respondents.

Civ. 39882.

Court of Appeal, First District, Division 3, California.

May 20, 1977.

Hearing Denied July 14, 1977.

Henry S. H. Fong, Sacramento, for plaintiff-appellant.

Turner & Franzoia, Oakland, for defendants-respondents.

SCOTT, Associate Justice (Retired Judge of the Superior Court, assigned by the Chairman of the Judicial Council).

Rodney A. Lehto appeals from the dismissal of his complaint against his former employers, Underground Construction Company (hereafter Underground) and Piombo Construction Company (hereafter Piombo), after the sustaining of their demurrer, without leave to amend.

The principal issue raised is the applicability of the 100--day statute of limitations Code of Civil Procedure section 1288, ¹ to an action alleging a breach of duty of fair representation by a union in an arbitration proceeding involving the employer. We conclude that the statute of limitations applicable is Code of Civil Procedure section 337. ² Therefore, the court erred in sustaining respondents' demurrer. We have also concluded that the allegations in support of the cause of action for exemplary damages are inadequate. However, appellant should be given an opportunity to amend.

By the terms of his complaint, appellant Lehto sought to recover special and exemplary damages for fraud and breach of contract. The named defendants included appellant's employers, respondents Underground and Piombo; appellant's union, Laborers Local 961 of Laborers International Union of North America; Northern California District Council of Hod Carriers, Building & Construction Laborers; and attorney Victor Van Bourg. It was generally alleged that defendants had breached their duty of fair play and/or representation under two collective bargaining agreements, thereby depriving appellant of his rights under those agreements.

In his first cause of action, appellant alleges that he was hired as a driller by respondent Underground on April 17, 1973. The terms and conditions of appellant's employment were set by a collective bargaining agreement between the Northern California District of Hod Carriers, Building & Construction Laborers and Associated General Contractors of California, Inc. On July 23, 1973, Underground discharged appellant, citing unsatisfactory performance. Two days later, appellant filed a grievance with his union, Laborers Local 961, stating that he had been wrongfully discharged under the collective bargaining agreement and requesting reinstatement and back wages. An arbitration hearing was held on November 27, 1973, at which appellant was represented by the union's attorney, Victor Van Bourg. It was stipulated that appellant had not been discharged for just cause, and was entitled to reinstatement with back pay. Thus, the sole issue to be determined by the arbitrator was the amount of back pay. Appellant alleges that his attorney refused to present testimony establishing that he was entitled to back wages for 18 weeks, leading the arbitrator to believe that he was only entitled to two weeks' back pay totaling $1,098.72. Appellant further alleges that the union and his employer knew 'the true facts and they knowingly, falsely and maliciously conspired to suppress (the) testimony.' It is asserted that Van Bourg breached his duty of representing appellant fairly and in good faith.

Appellant's second cause of action alleges that on September 6, 1973, he filed a second grievance against Underground, asserting that it had violated the collective bargaining agreement by employing two men without written union referral. Under the agreement, Underground was required to pay back wages to the two top union men on the out-of-work list with the qualifications of the two men hired. Appellant was one of the two top men. An arbitration hearing was held on October 1, 1974. Appellant alleges that the hearing opened with a private conference between the arbitrator and attorneys, following which the hearing was adjourned without the taking of testimony and without any explanation to appellant. Appellant avers that he is ignorant of what transpired at the hearing, and that his requests for information have been ignored. On June 24, 1974, appellant filed a third grievance against Underground, stating that one of the men employed without union referral was still working despite the grievance filed. It is alleged that Larry Palmer, business manager of Laborers Local 961, wrongfully refused to process the third grievance. Appellant alleges that the actions of defendants regarding the second and third grievances constituted a wilful, knowing and malicious breach of the collective bargaining agreements and were taken 'as part of a conspiracy' to deprive appellant of his rights under those contracts.

The third cause of action involves two grievances arising out of appellant's employment with Piombo. On July 23, 1974, appellant was employed as a chuck tender by Piombo pursuant to the terms of a collective bargaining agreement. During the period August 1, 1974 to October 3, 1974, appellant orally reported some ten safety violations to his union. On October 3, 1974, Piombo discharged appellant, citing reduction in force as the reason. On October 8, 1974, appellant filed two grievances against Piombo. The first stated that Piombo had violated the collective bargaining contract, in that it had employed a non-Local 961 man as drill and powder man, and that if there was truly a reduction in force, that man should have been discharged instead of appellant. The second grievance involved appellant's request that back wages be paid to him as the top union man on the out-of-work list with the qualifications of the nonlocal union man. These grievances were adjudicated by a Board of Adjustment on November 7, 1974. The board ruled against appellant on the first grievance. The board ruled in appellant's favor on the second grievance, but made the award to Palmer and another employee. Appellant states that he had no opportunity to present testimony at the hearing, and that the board's rulings were incorrectly decided. Appellant alleges that 'defendants owed a duty of fair play and good faith . . . in processing and hearing his two grievances' against Piombo, and that defendants conspired to breach such duty.

By his fourth cause of action, appellant seeks declaratory relief to the effect that 'defendants have each breached their individual and collective duty of fair play and/or representation in violation of (the collective bargaining contracts); and conduct against plaintiff constitute a conscious conspiracy to deprive plaintiff of his contractual rights of grievance, reinstatement and back pay awards; defendants have been guilty of unconscionable oppression and malice against plaintiff thus entitling him to exemplary and punitive damages besides compensatory awards.' Special and exemplary damages are also sought.

Respondents contend that the arbitration awards are conclusive, and that appellant is precluded from maintaining the action by virtue of the limitations provision contained in the arbitration statute. (Code Civ.Proc., § 1288.) Respondents also argue that the complaint contains no specific allegations amounting to fraud on their part.

Arbitration is a voluntary procedure for settling disputes, leading to a final determination of the rights of the parties. The policy of the law is to favor arbitration, and every reasonable intendment is indulged to give effect to such proceedings. (6 Cal.Jur.3d, Arbitration & Award, § 1, pp. 6--8.) Once a valid award is made by the arbitrator, it is conclusive on matters of fact and law and all matters in the award are thereafter res judicata.

A limited form of judicial review of arbitration awards is provided by statute. (Code Civ.Proc., §§ 1285--1288.) However, every presumption favors the arbitrator's award, and the merits of the award, either on question of law or fact, are generally not subject to review. (Recommendation and Study Relating to Arbitration (Dec. 1960), 3 Cal.Law Revision Com.Rep. (1961) pp. G 25--27, G 53--54.) Section 1286.2 of the Code of Civil Procedure sets forth the grounds upon which a court may vacate an arbitration award:

(a) The award was procured by corruption, fraud or other undue means;

(b) There was corruption in any of the arbitrators (c) The rights of such party were substantially prejudiced by misconduct of a neutral arbitrator;

(d) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted; or

(e) The rights of such party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.

A petition to vacate or correct an award must be served and filed not later than 100 days after the date of the service of a signed copy of the award on the petitioner. The purpose of this limitation is to require that available grounds for modification or vacation be urged promptly to ensure finality. (Code Civ.Proc., § 1288; 3 Cal.Law Revision Com.Rep., Supra, at p. G 58.)

Respondents contend that the essence of appellant's complaint lies in his dissatisfaction with the results of the arbitration proceedings, and that his proper remedy was a petition for vacation or correction of the awards under Code of Civil Procedure sections 1286.2 and 1286.6. It is argued that inasmuch as the time limits for making such petition have long since expired, the arbitrators' decisions must be deemed final, and appellant is precluded from seeking...