West Coast Stationary Engineers Welfare Fund v. City of Kennewick

• Decision Date: 07 January 1985
• Docket Number: No. 12262-2-I,12262-2-I
• Citation: 694 P.2d 1101,39 Wn.App. 466
• Parties: WEST COAST STATIONARY ENGINEERS WELFARE FUND, Appellant, v. CITY OF KENNEWICK, Respondent.
• Court: Washington Court of Appeals

Page 466

39 Wn.App. 466

694 P.2d 1101

WEST COAST STATIONARY ENGINEERS WELFARE FUND, Appellant, v. CITY OF KENNEWICK, Respondent.

No. 12262-2-I.

Court of Appeals of Washington Division 1.

Jan. 7, 1985.

Burns & Meyer, Jack R. Burns, Bellevue, for appellant.

William Cameron, Kennewick, for respondent.

COLEMAN, Judge.

West Coast Stationary Engineers Welfare Fund ("Fund") appeals from an order granting summary judgment to the City of Kennewick ("City"), dismissing the Fund's complaint against the City. The Fund sought reimbursement for payment of increased insurance premiums for employee dental benefits. The trial court held that the participation agreement entered into by the City and the International Union of Operating Engineers, Local 280 ("Union") controls their dispute over the increased premiums. The Fund contended and continues to argue, that the collective bargaining agreement ("CBA") between the City and the Union governs the dispute because the CBA obligates the City to maintain the employee dental benefits provided for in the CBA, while the participation agreement merely determines the initial contributions the City was required to make to the Fund. The Fund also argues that the trial court's award of attorney's fees to the City was improper. We affirm, and grant attorney's fees to the City on appeal.

The City and the Union entered into a CBA effective January 1, 1981, until and including December 31, 1983. The City and the Union later signed a "renewal participation agreement" which was accepted by the trustees of the Fund in May, 1981. The participation agreement states that the City and the Union acknowledge that they are parties to the CBA, and that the CBA requires the City's participation in the Fund. The participation agreement further provides that the City and the Union accept the trust agreement establishing the Fund, and agree to be bound by the acts of the trustees under the trust agreement. In the participation agreement, the City contracted to make monthly contributions of $21.80 for the term of the CBA. The participation agreement does not indicate the purpose of these contributions, but monthly billings establish, and the parties do not dispute, that the payments were for dental insurance.

At the August 11, 1981 meeting of the Fund trustees, a consultant advised the board that the Fund's insurance company, United Benefit, had requested a 26.9 percent over-all rate increase in premiums to maintain existing medical, vision, and dental coverages provided by the Fund. The trustees voted to accept the increase in order to renew the insurance contract, and to pass the increase on to participating employers. Between September 1, 1981 and July, 1982, the Fund and the City exchanged correspondence arguing over the increase in dental premiums. On August 6, 1982, the Fund filed its complaint in this action, seeking to compel the City to pay the increased premiums. Both parties moved for summary judgment, and on September 13, 1982, the trial court granted summary judgment on behalf of the City. The City's request for attorney's fees was set forth in a cost bill which it filed on September 16, 1982. The Fund responded on September 26, 1982 with a motion to retax costs. The Fund argued that the City was not entitled to attorney's fees, asserting several theories. The court denied the motion to retax. Both the contract interpretation issues and questions relating to attorney's fees are before this court on appeal.

ISSUES

1. Does the CBA and the participation agreement in which the City accepts the terms of the trust agreement give the trustees of the Fund the authority to increase the premiums for dental benefits and to pass that increase on to the City?

2. Was an award of attorney's fees properly included in the cost bill approved by the trial court?

As described above, the Fund believes that this dispute is controlled by the CBA. According to the Fund, section 8 of the CBA, which provides that there shall be no decrease in medical benefits for the life of the agreement, constitutes a maintenance of benefits provision. Thus, section 8 requires the City to pay any increased premiums in dental insurance for its employees. The City, however, argues that the CBA does not so provide, and that the provisions controlling the premium rates are contained in the participation agreement which sets forth the detailed basis upon which the payments are to be made.

In reviewing an order for summary judgment, an appellate court engages in the same inquiry as the trial court. The court must consider the evidence and all reasonable inferences from the facts in the light most favorable to the nonmoving party, in this instance, the Fund. To grant the motion, this court must find that there is no genuine issue as to any material fact. Zehring v. Bellevue, 99 Wash.2d 488, 493, 663 P.2d 823 (1983); Rockey v. W. Conference of Teamsters Pension Trust, 23 Wash.App. 248, 256, 595 P.2d 557, rev. denied, 92 Wash.2d 1023 (1979). Upon review we conclude that there are no genuine issues of material fact, and that the trial court correctly granted the City's motion for summary judgment.

Our Supreme Court has held that federal law governs the administration of a trust fund organized under the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 186(c)(5), "even though the initial validity of the collective bargaining agreement was determined by state law. Trust Fund Servs. v. Heyman, 88 Wash.2d 698, 565 P.2d 805 [cert denied, 434 U.S. 987, 98 S.Ct. 618, 54 L.Ed.2d 483 (1977) ]." Culinary Workers & Bartenders Union, Local 596, Health and Welfare Trust v. Gateway Cafe, Inc., 95 Wash.2d 791, 795, 630 P.2d 1348, 642 P.2d 403 (1981), cert. denied, 459 U.S. 839, 103 S.Ct. 87, 74 L.Ed.2d 81 (1982). The Fund correctly claims that state courts must follow federal law, as fashioned by federal courts, to effectuate the statutory policy of enforcing collective bargaining agreements. Trust Fund Servs. v. Heyman, supra 88 Wash.2d at 704, 565 P.2d 805; W. Wash. Cement Masons Health & Sec. Trust Funds v. Hillis Homes, Inc., 26 Wash.App. 224, 230, 612 P.2d 436, rev. denied, 94 Wash.2d 1014 (1980). Furthermore, the LMRA, 29 U.S.C. § 186(c)(5)(B), allows the Fund to accept payments from employers for the benefit of the employees, their families and dependents, when the "detailed basis on which such payments are to be made is specified in a written agreement with the employer, and employees and employers are equally represented in the administration of such fund." The detailed basis upon which such payments are to be made may be specified in the CBA itself; however, when the language in the CBA is not sufficient to set forth the "detailed basis," a separate agreement is required. In the present case, the CBA did not specify a contribution rate or schedule for payments. Thus, the CBA did not satisfy the provisions of 29 U.S.C. § 186(c)(5)(B). Consequently, the City and the Union entered into a participation agreement as they were required to do to comply with the LMRA.

In order to determine the substance of the entire agreement reached by the parties to this appeal, we must examine both the CBA and the participation agreement. Courts presume that parties to an agreement have read all parts of the entire contract and intend what is stated in its objective terms.

As we read the cases which have developed the federal law with respect to the enforcement of written collective bargaining agreements, they impose a duty upon the parties to such agreements to read and understand them.

Restaurant Employees, Bartenders & Hotel Service Employees Welfare Fund v. Rhodes, 90 Wash.2d

162, 169, 580 P.2d 611 (1978); Barclay v. Spokane, 83 Wash.2d 698, 700, 521 P.2d 937 (1974) ("we are controlled by the objective manifestation of intent as expressed in the writing").

Here, the critical provisions of the CBA state:

Section 7. The City shall make available medical and hospital, life and dental insurance for its employees and shall pay the total premiums for such insurance to and including an amount for dependents through the term of this Contract.

Section 8. The City agrees that there shall be no decrease in medical benefits for the life of this Agreement.

By its plain language, the CBA obligates the City to make available medical and hospital, life and dental insurance for its employees, and to pay the appropriate premiums. Similarly, the City agrees in unambiguous language that there shall be no decrease in medical benefits for the life of the CBA. However, it is equally clear that the CBA distinguishes between medical and hospital benefits, and life and dental insurance. To the extent that section 8 is a maintenance of benefits provision, it applies only to medical benefits defined by section 7 as a special category. Thus, in order to sustain the Fund's position, we would have to find language in the participation agreement supporting the Fund's theory that the City must maintain dental benefits during the life of the CBA. The participation agreement is totally devoid of such language. The contribution formula is set forth under the "Basis of Participation" section, subdivision 2 which provides "Contributions to Commence Effective January 1, 1981 Rate Per Employee, Per Month $21.80 ". In the same section, subdivision 4, which provides for contribution rate changes during bargaining agreement, is not completed. As in the CBA, the language in the participation agreement is clear and unambiguous. The contribution formula is set at the rate of $21.80 per employee, per month. The parties never agreed to changes in the contribution rate during the life of the agreement. Absent a manifestation of intent to change the contribution rate, and given the plain language contained in the CBA, the Fund cannot prevail on its claim.

Federal courts have examined the question of the authority of trustees of employee benefit funds to increase contribution...