Local Union 30, United Union v. D.A. Nolt, Inc.

• Decision Date: 29 July 2008
• Docket Number: Civil Action No. 01-5344.
• Citation: 625 F.Supp.2d 223
• Parties: LOCAL UNION 30, UNITED UNION OF ROOFERS, WATERPROOFERS AND ALLIED WORKERS, et al., Plaintiffs/Counterclaim Defendants, v. D.A. NOLT, INC., Defendant/Third Party Plaintiff, v. Roofing Contractors Association, Third Party Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

625 F.Supp.2d 223

LOCAL UNION 30, UNITED UNION OF ROOFERS, WATERPROOFERS AND ALLIED WORKERS, et al., Plaintiffs/Counterclaim Defendants, v. D.A. NOLT, INC., Defendant/Third Party Plaintiff, v. Roofing Contractors Association, Third Party Defendant.

Civil Action No. 01-5344.

United States District Court, E.D. Pennsylvania.

July 29, 2008.

COPYRIGHT MATERIAL OMITTED

Jennifer B. Liebman, Philip Andrew Lozano, Jennifer L. Hope, Richard B. Sigmond, Jennings Sigmond, Philadelphia, PA, for Plaintiffs/Counterclaim Defendants.

George E. Pallas, Jonathan Landesman, Mark J. Leavy, Cohen, Seglias, Pallas, Greenhall & Furman PC, Philadelphia, PA, for Defendant/Third Party Plaintiff.

Marvin Weinberg, Fox Rothschild LLP, Philadelphia, PA, Seth A. Niederman, Fox Rothschild LLP, Wilmington, DE, for Plaintiffs/Counterclaim Defendants, Third Party Defendant.

MEMORANDUM

ROBERT F. KELLY, Senior District Judge.

Presently before the Court are three Motions for Summary Judgment. For the reasons set forth below, the Motion of Local Union 30, United Union of Roofers, Waterproofers and Allied Workers, et al. ("Local 30") and the Motion of Roofing Contractors Association ("RCA") are granted. The Motion of D.A. Nolt ("Nolt") is denied.

I. FACTS

Nolt is a corporation that performs commercial roofing work. Local 30 is a labor union. RCA is a multi-employer association of commercial roofing contractors that exists primarily to conduct negotiations for collective bargaining agreements with the Union on behalf of its members. Richard Harvey ("Harvey") is the Executive Director of the RCA. Since 1993, the RCA has entered into numerous collective bargaining agreements with the Union. This is possible because the RCA is authorized by its members to negotiate with Local 30 on their behalf. Nolt joined the RCA in June 1999. At that time, Nolt signed a Bargaining Agent Authorization ("BAA"), which authorized the RCA to serve as Nolt's bargaining agent with Local 30. Under the terms of the 1999 BAA, Nolt could withdraw from the RCA, but had to do so at least ninety days before the expiration of the existing agreement. Traditionally, the Union and the RCA begin negotiations at a point close in time to the expiration of the contract that is in place at that time. Contracts have historically expired at the end of April or May. The process involves the Union and the RCA first reaching an agreement, after which copies of the agreement are distributed to members of the RCA for their approval.

In June 2000, ten months before the then-current 1997-2001 agreement was due to expire, the Union initiated negotiations with the RCA concerning the terms of the subsequent agreement. All parties agree that the negotiations took place much earlier than they had previously taken place in the past. Present for the negotiations were the RCA's Board of Directors, Local 30's Vice-President Thomas Pedrick, and Local 30's Business Manager Michael McCann. Aside from its Board of Directors, the RCA did not inform its members that it had started negotiating with the Union.¹ Harvey testified in his deposition that the Union had asked him to keep the negotiations confidential because it did not want the terms of the new agreement to be made known to Union employees. (Nolt Mot. Summ. J. Ex. 3, Harvey Dep. 29: 7-20.) In an effort to keep the employees from learning of the new agreement, the RCA and Local 30 agreed not to reveal the fact that they had started negotiations. (Id. at 36: 12-24.)

Local 30 and the RCA reached a tentative agreement in early July. On July 5, 2000, Harvey faxed a Ballot and Memorandum of the agreement to the RCA's Board of Directors for approval. Following approval by the RCA's Board of Directors, Harvey then faxed the Ballot and Memorandum, accompanied by an explanatory cover letter, to the remaining members of the RCA, including Nolt. The cover letter instructed the employers to vote on the proposed collective bargaining agreement within two days. (Local 30's Mot. Summ. J., Ex. 5.) The Ballot presented the following three options: (1) accept the agreement; (2) reject the agreement; or (3) choose to withdraw from the RCA. (Id.) With respect to the option to withdraw, the cover letter contained the following instructions:

Please use the attached ballot form to record your firm's vote to accept or reject the terms of this tentative agreement. Members who wish to exercise their right to withdraw their bargaining agent authorization from the Association for the collective bargaining agreement that will become effective May 1, 2001 must do so at this time and should not vote to accept or reject the tentative agreement, but rather should use the ballot form to provide written notice to the Association of their decision to resign from Association membership. Please note that should your firm decide to exercise its right to withdraw from the Association at this time, the company will continue to be bound by the current labor agreement which expires at midnight on April 30, 2001.

(Id.) Nolt testified in his deposition that he was confused by this instruction because the following provision, which is the language used in the BAA, also appeared on the same page of the cover letter:

This authorization may only be revoked by written notice from the undersigned to the Association not less than ninety (90) days prior to the expiration of the current labor agreement between the Association and the Union. Upon the giving of such notice to the Association, this authorization will terminate for all purposes.

(Id.) Nevertheless, the RCA's members, Nolt included, voted unanimously to accept the terms of the proposed agreement, and Local 30 approved the contract a short time later.

On January 30, 2001, after voting to accept the agreement in July, Nolt sent a letter to the RCA stating that he was exercising his right to withdraw from the RCA. Since this had been the procedure for withdrawal under the terms of the 1999 BAA, Nolt asserted that this was proper notice of withdrawal. Consequently, he believed that he was not bound by the new 2001-2009 agreement. On May 2, 2001, Local 30 filed an unfair labor charge against Nolt before the National Labor Relations Board ("NLRB"), seeking to enforce the terms of the 2001-2009 collective bargaining agreement. On October 22, 2001, Local 30 also filed a Complaint in this Court under the ERISA statute seeking contributions due under the terms of the 2001-2009 agreement. On December 13, 2001, Nolt filed an Answer to the Local's Complaint, and additionally, filed a Counterclaim against Local 30 and a Third-Party Complaint against the RCA, alleging claims for fraud against both parties.

On January 23, 2002, a hearing was held before an ALJ on the unfair labor charges that Local 30 had filed before the NLRB. The ALJ found for Nolt and determined that Nolt was not bound by the terms of the 2001-2009 agreement. Local 30 appealed the ALJ's decision to the NLRB. On December 15, 2003, a three-member panel of the NLRB overturned the ALJ's decision and found that Nolt was bound to the terms of the 2001-2009 collective bargaining agreement. Nolt appealed the Board's decision to the United States Court of Appeals for the Third Circuit. On May 4, 2005, the Third Circuit overturned the Board's decision and issued an opinion in favor of Nolt, finding that Nolt was not bound by the terms of the agreement. The Third Circuit decision disposed of the ERISA claims asserted in the Union's original Complaint against Nolt. As such, the only remaining causes of action are Nolt's Counterclaim against Local 30 and the Third-Party Complaint against the RCA.

Nolt filed a Motion for Summary Judgment on both claims. Local 30 and the RCA have filed Motions for Summary Judgment on their respective claims. In its Motion, Nolt argues that Local 30 and the RCA committed fraud as a matter of law. It asserts that the decision of the Third Circuit establishes all of the facts necessary to its fraud claim under a theory of res judicata. Nolt seeks damages for attorney's fees and costs in the amount of $198,004.36. Both the RCA and Local 30 contend that summary judgment should be granted in their favor because Nolt has failed to establish the elements of common law fraud under Pennsylvania law. The Court addresses each of the parties' Motions below.

II. STANDARD OF REVIEW

"Summary judgment is appropriate when, after considering the evidence in the light most favorable to the nonmoving party, no genuine issue of material fact remains in dispute and `the moving party is entitled to judgment as a matter of law.'" Fed.R.Civ.P. 56(c); Hines v. Consol. Rail Corp., 926 F.2d 262, 267 (3d Cir.1991) (citations omitted). The inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party carries the initial burden of demonstrating the absence of any genuine issues of material fact. Big Apple BMW, Inc. v. BMW of N. Am. Inc., 974 F.2d 1358, 1362 (3d Cir.1992). "A fact is material if it could affect the outcome of the suit after applying the substantive law. Further, a dispute over a material fact must be `genuine,' i.e., the evidence must be such `that a reasonable jury could return a verdict in favor of the non-moving party.'" Compton v. Nat'l League of Prof'l Baseball Clubs, 995 F.Supp. 554, 561 n. 14 (E.D.Pa.1998), aff'd, 172 F.3d 40 (3d Cir.1998) (citations omitted).

Once the moving party has produced evidence in support of summary judgment, the non-moving party must go beyond the allegations set forth in its pleadings and counter with evidence that demonstrates that there is a genuine issue of fact requiring a trial. See Big Apple BMW, 974 F.2d at 1362-63. Summary judgment must be granted "against a party who fails to make a showing...