AUDIT SERVICES INC v ANDERSON
Annotate this Case
Download PDF
NO. 83-534 I N THE SUPREME COURT OF THE STATE OF MONTANA 1984 AUDIT S E R V I C E S , corp. , a Montana INC., P l a i n t i f f and A p p e l l a n t , WAYNE ANDERSOiJ d/b/a ELECTRIC, WAYNE ' S D e f e n d a n t and R e s p o n d e n t . APPEAL FROM: D i s t r i c t C o u r t of t h e E i g h t h J u d i c i a l D i s t r i c t , I n and f o r t h e C o u n t y of C a s c a d e , T h e H o n o r a b l e J o h n P.1. M c C a r v e l , J u d g e p r e s i d i n g . COUNSEL OF RECORD: For Appellant: C u r e , B o r e r & D a v i s ; Maxon R. Davis, Great Falls, Montana F o r Respondent: Howard F. Strause, G r e a t F a l l s , Montana S u b m i t t e d on B r i e f s : Decided: i t f l. Filed: " f 5UQ4 March 23, - 1984 July 2 3 , 1984 Justice L. C. Gulbrandson delivered the Opinion of the Court. 1 . This case comes on appeal froin a September 22, 1983, order of Cascade the District County, Court, granting Eighth Judicial District, the respondent, Wayne Anderson, summary judgment against the appellant, Audit Services, Inc. We reverse and remand. On September 1, 1977, Wayne Anderson, a Great Falls electrical contractor doing business as Wayne's Electric, signed two agreements with Local 122 of the International Brotherhood of Electrical Workers (IBEW). The first agreement, a "letter of assent," bound Anderson to the terms of current and successive collective bargaining agreements negotiated between Local 1 2 2 and the Montana Chapter National Electric Contractors Association, Great Falls Division (NECA). NECA was designated collective bargaining representative. as Anderson's The second document signed by Anderson was a participating agreement for the IBEW-NECA Health and Accident Trust. was also signed by the IBEW and NECA. The trust agreement According to the trust agreement, Anderson was to make health and welfare contributions to the trust at a collective bargaining agreements. rate set forth in the Six trustees were to he appointed to administer the funds paid into the trust. The trustees, who are the assignors of Audit Services, Inc. in this action, did not sign and were not a party to either the collective bargaining agreements or the trust agreement. In July, 1981, a representative of the trust examined Anderson's payroll records and determined that Anderson had not made full and proper contributions to the trust. When Anderson refused to pay the amounts allegedly due, t r u s t ' s c l a i m was a s s i g n e d t o A u d i t S e r v i c e s , I n c . purpose of collection. a c t i o n on J u n e 2 2 , Audit 1982. Services, A follow-up Inc. complaint combining the two for the filed this a u d i t was c o n d u c t e d and a d d i t i o n a l sums were f o u n d t o b e owed amended the the trust. a u d i t s was An filed by Audit Services, Inc. Meanwhile, on December 11, 1 9 8 1 , IBEW L o c a l 1 2 2 f i l e d a l a w s u i t a g a i n s t Anderson i n F e d e r a l D i s t r i c t C o u r t . l a w s u i t was b a s e d upon S e c t i o n 3 0 1 o f Relations Act violations of 29 (LMRA), the same U.S.C. t h e Labor-Management Sec. collective The 185, and bargaining alleged agreements b e t w e e n L o c a l 1 2 2 and NECA t o which A n d e r s o n was bound by v i r u t e o f h i s e x e c u t i o n of t h e " l e t t e r of a s s e n t . " of the union's provisions effect, of complaint the a l l e g e d a brea.ch o f collective t h e union claimed bargaining hiring hall agreements. c o l l e c t i v e bargaining agreements Count I s t a t e d t h a t r e q u i r e d Anderson c o n t r i b u t e t o t h e t r u s t a s w e l l a s make p a y m e n t s o f fringe benefits. had been alleged to other T h u s , a s s e t f o r t h i n C o u n t I , p e r s o n s who denied hiring In t h a t Anderson had f a i l e d t o h i r e p e r s o n s r e f e r r e d from t h e u n i o n h a l l . the Count I employment hall by violations Anderson had because lost of his compensation, i n c l u d i n g t r u s t c o n t r i b u t i o n s , t o which t h e y would h a v e b e e n e n t i t l e d pursuant t o t h e c o l l e c t i v e bargaining agreements. Count I1 of Anderson v i o l a t e d the the union's complaint alleged collective bargaining that agreements b e c a u s e h e f a i l e d t o r e q u i r e p e r s o n s who h e d i d h i r e t o j o i n t h e union. The r e l i e f which t h e u n i o n s o u g h t was t h a t A n d e r s o n p a y t h e wages of p e r s o n s who were n o t , h u t s h o u l d h a v e b e e n , h i r e d t h r o u g h t h e u n i o n r e f e r r a l mechanism. Paragraph 2 of t h e p r a y e r a l s o a s k e d t h a t Anderson b e r e q u i r e d necessary fringe benefits t o pay t h e i n c l u d i n g h e a l t h and w e l f a r e contributions to the trust. On J a n u a r y 2 4 , 1 9 8 3 , t h e u n i o n a n d A n d e r s o n s t i p u l a t e d t o a d i s m i s s a l w i t h p r e j u d i c e of t h e F e d e r a l D i s t r i c t C o u r t complaint. An order to that effect was entered the following day. I n t h e meantime, A u d i t S e r v i c e s , I n c . , the trust's collection claim action Court summary Court with lawsuit proceeded After f o r summary j u d g m e n t , q r a n t e d Anderson dismissal Anderson, in s t a t e court. made c r o s s - m o t i o n s The D i s t r i c t against judgment accepted prejudice stood as of res on with its the parties had the District Court September Anderson's the a s assignee of argument union's judicata, 22, that Federal barring 1983. the District the trust c l a i m s t h a t were b e i n g l i t i g a t e d i n S t a t e c o u r t . From t h e o r d e r of t h e D i s t r i c t C o u r t , A u d i t S e r v i c e s , Inc. appeals prejudice raising of the one union's issue: did lawsuit the dismissal with a g a i n s t Anderson for v i o l a t i o n of t h e i r c o l l e c t i v e bargaining agreements s e r v e a s res judicata fund to for collect t h e c l a i m s of the c o n t r i b u t i o n s based t r u s t e e s of upon the t r u s t h o u r s worked by Anderson's employees? We note jurisdiction first with that federal state courts courts in have trust concurrent fund c o l l e c t i o n c a s e s and f e d e r a l s u b s t a n t i v e law p r o v i d e s t h e b a s i s f o r o u r decisions. Audit C o n s t r u c t i o n Co. Services, (Mont. Inc. 1 9 8 3 ) , 665 P.2d v. Harvey 792, 40 Bros. St.Rep. Lowe e t 1019; P.2d 677. a1. Where effectuate O'Conner (1973), compatible with law may b e r e s o r t e d best & v. federal labor 100, federal policy. 515 state law, to find a rule t o in order L i n c o l n M i l l s ( 1 9 5 7 ) , 3 5 3 U.S. 1 6 3 Xont. that w i l l T e x t i l e Workers Union v. 448, 77 S.Ct. 9 1 2 , 1 L.Ed.2d 972. The d o c t r i n e o f r e s j u d i c a t a p r o v i d e s t h a t t h e p a r t i e s to an action in which a judgment on the merits has been rendered, o r t h e i r p r i v i e s , are b a r r e d from r e l i t i g a t i n g t h e same cause of action a in second E l e c t r i c Inc. v. Levine (2d Cir. Court 376, i n Smith v. 472 P.2d before of 1 9 7 7 ) , 5 5 4 F.2d County of stated four res that judicata can of 1227. This c r i t e r i a m u s t be met be sustained: p a r t i e s o r t h e i r p r i v i e s m u s t b e t h e same; matter Expert ( 1 9 7 0 ) , 1 5 5 pllont. Musselshell 878, a plea proceeding. t h e a c t i o n m u s t b e t h e same; (1) t h e (2) the subject ( 3 ) t h e i s s u e s must be t h e s a m e a n d r e l a t e t o t h e s a m e s u b j e c t m a t t e r ; and (4) t h e c a p a c i t i e s o f t h e p e r s o n s m u s t b e t h e same i n r e f e r e n c e t o t h e s u b j e c t matter a n d t o t h e i s s u e s b e t w e e n them. I n g r a n t i n g A n d e r s o n ' s m o t i o n f o r summary j u d g m e n t o n the basis of res j u d i c a t a , Audit Services Inc.'s union i n S t . Co. (E.D. t h e District Court 1967), that s i t u a t i o n was a n a l a g o u s t o t h a t o f t h e L o u i s T y p o g r a p h i c a l U n i o n No. Mo. stated 277 F.Supp. 276. S v. In The H e r a l d the St. Louis Typographical c a s e , c e r t a i n u n i o n m e m b e r s s u e d t h e e m p l o y e r individually for benefits bargaining agreement. lost suit, that benefits. the a l l e g e d l y due under a c o l l e c t i v e After union the sued individual union members the e m p l o y e r for t h e same In deciding t h a t the union's res j u d i c a t a , c a s e was b a r r e d b y t h e -. L o u i s T y p o g r a p h i c a l c o u r t s a i d : St ". . . t h e u n i o n h a s no b e n e f i c i a l interest i n any p o s s i b l e recovery. A l t h o u g h i t s r i g h t t o s u e i s g r a n t e d by t h e f e d e r a l law, it prosecutes t h e present s u i t solely a s the agent or r e p r e s e n t a t i v e of t h o s e who would r e c e i v e t h e p r o c e e d s o f any r e c o v e y . " S t . Louis T y p o g r a h i c a l , s u p r a , p . 282. The S t . Louis Typographical c o u r t went on t o s a y t h a t res j u d i c a t a a p p l i e d b e c a u s e t h e p l a i n t i f f ' s i n t h e two a c t i o n s were i n " p r i v i t y . " The S t . L o u i s T y p o g r a p h i c a l c o u r t s a i d " p r i v i t y " designates a person so i d e n t i f i e d i n i n t e r e s t with a party to precisely former the litigation same matter involved." F.Supp at legal 284. right in respect he to S t . Louis Typographical, represents the subject supra, Thus, the District Court in that res judicata barred Audit a c t i o n concluded Inc.'s ". . . that a c t i o n because Audit S e r v i c e s Inc. the 277 present Services was b r i n g i n g t h e s u i t s o l e l y a s t h e r e p r e s e n t a t i v e o f t h e u n i o n members. However, i n t h e i n s t a n t c a s e , A u d i t S e r v i c e s , I n c . was n o t r e p r e s e n t i n g p r e c i s e l y t h e same l e g a l r i g h t i n r e s p e c t to the subject matter involved a s i n the union's D i s t r i c t C o u r t s u i t a g a i n s t Anderson. Federal The u n i o n ' s F e d e r a l D i s t r i c t Court a c t i o n concerned Anderson's a l l e g e d breach of the "hiring hall" and "union c o l l e c t i v e bargaining agreements. security" of the of his W h i l e m e n t i o n was made o f h e a l t h and w e l f a r e t r u s t c o n t r i b u t i o n s , context clauses i t was w i t h i n the c o m p e n s a t i o n t h a t was l o s t t o t h o s e u n i o n members n o t h i r e d d u e t o A n d e r s o n ' s b r e a c h of the "hiring h a l l " c l a u s e of t h e c o l l e c t i v e b a r g a i n i n g a g r e e m e n t s . By Audit contrast, Services, t h e c l a i m s of Inc. were for the trustees contributions a c t u a l h o u r s worked by A n d e r s o n ' s e m p l o y e e s . both Audit S e r v i c e s , Inc. assigned based to upon The f a c t t h a t and t h e u n i o n s o u g h t e n f o r c e m e n t of certain agreement provisions does the of not satisfy same the collective "identity bargaining of issues" r e q u i r e m e n t n e c e s s a r y f o r t h e d o c t r i n e o f res j u d i c a t a . As s t a t e d by t h e c o u r t i n A m e r i c a n B r o a d c a s t i n g C o m p a n i e s , I n c . v . Muhammad A l i (S.D.N.Y. 1 9 7 7 ) , 434 F. Supp. 1 1 0 8 : "The l i m i t a t i o n o f t h e d o c t r i n e t o t h e is highly 'same cause of action' significant. Where two d i s t i n c t c a u s e s o f a c t i o n e x i s t , t h e y may be s u e d on separately notwithstanding t h e f a c t t h a t t h e y a r i s e f r o m t h e same g e n e r a l c o u r s e o f e v e n t s , K e r n e l K u t t e r , I n c . v. F a w c e t t Publications, Inc., 284 F.2d 6 7 5 , 676 ( 7 t h C i r . 1 9 6 0 ) ; B a n k e r s T r u s t Co. v . P a c i f i c E m p l o y e r s I n s u r a n c e Go., 282 F.2d 1 0 6 , 111 ( 9 t h C i r . 1 9 6 0 ) , c e r t . d e n i e d , 8 2 2 , 82 S . C t , 4 1 , 7 L.Ed.2d 27 368 U . S . ( 1 9 6 1 ) , t h a t a n e l e m e n t o f damages i s common t o b o t h s u i t s , H e r e n d e e n v . Champion I n t e r n a t i o n a l C o r p . , 525 F. 2d 130, 134 (2d C i r . 1 9 7 5 ) . , o r both might h a v e b e e n a s s e r t e d a t t h e same t i m e , Herendeen, s u p r a , a t 1 3 5 ; S e c o r v. S t u r g i s , 16 N.Y. 5 4 8 , 554 ( 1 8 5 8 ) ( ' I t makes no d i f f e r e n c e t h a t t h e c a u s e s o f a c t i o n might be u n i t e d i n a s i n g l e s u i t . ' Id.)" Moreover, we reject the District Court's conclusion that res judicata a p p l i e s t o t h e p r e s e n t case because t h e trustees union functions and the have significant are developed distance has "privies." under federal been the As trustees1 labor recognized law, between a the t r u s t e e s o f a j o i n t l y a d m i n i s t e r e d b e n e f i t t r u s t f u n d and a union which i s a co-sponsor the Employee U.S.C. Retirement S e c t i o n 1103, of t h e t r u s t . Income By S e c t i o n 403 o f Security Act the trustees, rather (ERISA), than 29 the union, t h e p a r t i c i p a t i n g employers o r any t h i r d p a r t i e s , a r e g i v e n t h e e x c l u s i v e a u t h o r i t y t o manage a n d c o n t r o l t h e a s s e t s o f the plan. The 1 9 8 1 ) , 649 F.2d court i n Waggoner v. Dallaire (9th Cir. 1362, s a i d : "The d i s t r i c t court's conclusion hinges upon t h e l e g a l f i n d i n g t h a t L o c a l 1 2 and Fortsen acted a s the Trustees' agents. T h i s may h a v e been a p r o p e r c o n c l u s i o n it is under C a l i f o r n i a agency law: i n c o r r e c t under f e d e r a l law. A s a matter its of federal law, a union and r e p r e s e n t a t i v e s a r e n o t a g e n t s of a t r u s t fund c r e a t e d by a c o l l e c t i v e b a r g a i n i n g 2greement. T r u s t a u t h o r i t i t e s s e t up p u r s u a n t t o s e c t i o n 302 o f t h e LMRA h a v e l o n g been h e l d t o c o n s t i t u t e a d i s t i n c t and i n d e p e n d e n t e n t i t y s e p a r a t e from t h e union t h a t n e g o t i a t e s t h e c o l l e c t i v e a bargaining agreement establishing trust. See Lewis v. B e n e d i c t C o a l C o r p . , 489, 3 6 1 U.S. 459, 465-71, 80 S . C t . 493-496, 4 L.Ed.2d 442 ( 1 9 6 0 ) . These trust authorities by law have no a u t h o r i t y t o d i r e c t u n i o n a c t i v i t i e s and unions a r e involved with the t r u s t a u t h o r i t i t e s o n l y t o t h e e x t e n t of s e l e c t i n g h a l f of t h e t r u s t e e s . Section 3 0 2 ( c ) ( 5 ) o f t h e LMRA, 29 U.S.C. Section 1 8 6 ( c ) ( 5 ) . Moreover, a l l f u n d s i n t r u s t must be u s e d ' f o r t h e s o l e and e x c l u s i v e Id. 'Thus, t h e b e n e f i t of e m p l o y e e s . ' f u n d i s no way a n a s s e t o r p r o p e r t y of the union.' Lewis v. B e n e d i c t C o a l C o r p . , 3 6 1 U.S. a t 465, 80 S.Ct. a t 493." The t r u s t e e s h a v e l e g a l d u t i e s i n d e p e n d e n t o f b o t h t h e union and employer in administering v. Amax C o a l Co. ( 1 9 8 1 ) , 453 U.S. N.L.R.B. S.Ct. the 2789, trustees of 69 L.Ed.2d those 672. duties A either union by the trust fund. 3 2 2 , 333-334, cannot action or relieve 101 the non-action. T h i s i s t h e f e d e r a l l a b o r p o l i c y w i t h i n which t h i s C o u r t i s t o a p p l y t h e d o c t r i n e of r e s j u d i c a t a . We reverse the decision of the District Court and remand t h e c a u s e f o r f u r t h e r p r o c e e d i n g s i n a c c o r d a n c e w i t h t h i s opinion. Justice / .'' We c o n c u r : @ d d , C h i e f Justice
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
