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Nj Building Laborers Statewide Benefit Funds and Trustees Thereof v. Chanree Construction Co.

March 28, 2010


The opinion of the court was delivered by: Wolfson, United States District Judge:



Petitioners New Jersey Building Laborers' Statewide Benefits Funds (the "Funds") and Trustees Thereof (the "Trustees") (collectively, "Petitioners) initiated this action against general contractor Chanree Construction Company ("Chanree") to enforce a labor arbitration award obtained against Chanree under the terms of a collective bargaining agreement ("CBA") that required Chanree to assume liability for delinquent contributions owed to the Funds by a subcontractor employed by Chanree. Presently before the Court is Petitioners' petition to confirm the arbitration award, as well as Chanree's cross-motion to vacate the arbitration award. For the reasons set forth that below, the Court confirms the arbitration award in the amount of $220,887.58.


A. The Parties and Relevant Agreements

Petitioners are named beneficiaries in a CBA (the "Laborers' CBA") to which the New Jersey Building Laborers' District Council (the "Union"), Chanree and Palmer Construction ("Palmer") were signatories to at all times relevant to the instant action.*fn1 In its capacity as a general contractor, Chanree occasionally subcontracts work to Palmer. (See Monica Cert., Ex. D (hereinafter "Arbitration Award") at 6). As signatories to the Laborers' CBA, Chanree and Palmer agree to remit certain benefit contributions to the Funds on behalf of its employees. (See Monica Cert., Ex. A. (hereinafter "CBA") at Art. 14); see also Arbitration Award at 7). Furthermore, Chanree also agreed to assume liability for delinquent benefit contributions owed by its subcontractors:

If the Employer subcontracts any work covered by this Agreement to any subcontractor or other person, the Employer shall be liable for all contributions owing to the funds established or to be established hereunder in the event the subcontractor or person fails to pay contributions to the said funds for employees covered by this Agreement employed by the said subcontractor or person. (See CBA at Art. 16.10). The Laborers' CBA also requires Chanree, upon notice that a subcontractor it employs has failed to pay delinquent monies to the Funds, to withhold the delinquent amount and make such payments to the Funds:

In the event that an employer or subcontractor signatory to this Agreement is delinquent in the payment of employee fringe benefit contributions or deductions from wages, a general contractor[,] . . . upon written notification from the benefit funds[,] . . . shall, upon receipt of such notification, withhold the full amount of said delinquency from any further payment due the employer or subcontractor from the general contractor[,] . . . and make payment thereof in such amount as claimed to the funds. The employer or subcontractor, by execution of this Agreement, consents to and directs such withholding and payment to the [F]unds[.]" (See id. at Art. 16.20).

In order to compel disbursement of delinquent fringe benefit contributions from contractors and subcontractors, the Laborers' CBA specifically affords the Trustees with "such rights and duties as set forth in the Declaration of Trust of the Funds [the "Trust Agreement"] and any supplements or amendments thereto." (See CBA at Art. 15.50(a)). The Trust Agreement states that Petitioners are empowered to: take any action necessary or appropriate to enforce payment of the contributions, interest, damages, and expenses provided for herein, including, but not limited to, proceedings at law or in equity. The [Funds] and Trustees shall not be required to exhaust any grievance or arbitration procedure provided by a [CBA] or otherwise with respect to the enforcement of such Employer obligations, but rather shall have immediate access to the courts, as provided under applicable law, or to designate a permanent arbitrator to hear and determine collection disputes. (See Monica Cert., Ex. C at Art. 4, Sec. 5).

The Union and Chanree are also signatories to a Project Labor Agreement (the "PLA") for work performed on the New Jersey Chesterfield Elementary School project ("Chesterfield Project"). (See Arbitration Award at 1; see also Hocking Cert, Ex. B. (hereinafter "PLA") at Art 1.1). In its capacity as a general contractor, Chanree subcontracted work on the Chesterfield Project to Palmer. (See Arbitration Award. at 7). The PLA attached and incorporated the terms of the Laborers' CBA, and includes a provision that holds that, "[w]here a subject covered by the provisions, explicit or implicit, of [this PLA] is also covered by [the Laborers' CBA], the provisions of this [PLA] shall prevail." (See PLA at Art 2.4). The PLA includes a three-step arbitration procedure before the American Arbitration Association to settle non-strike disputes between signatory unions, employers, and employees. (See id. at Art. 9).

2. The Dispute and Arbitration

In May 2010, the Funds, having learned that Palmer had repeatedly violated the Laborers' CBA by failing to remit benefit fund contributions on behalf of its employees, provided Chanree with a Jobsite Delinquency Report. (See Arbitration Award at 7). According to Petitioners, the Jobsite Delinquency Report stated that, from July 7, 2009 to May 11, 2010, Palmer's delinquencies to the Funds for the Chesterfield Project, as well as other projects on which Chanree was the general contractor, totaled $316,039.51.*fn2 (See id.; see also Hocking Cert., Ex. E) Thereafter, the Trustees pursued collections of such an amount in owed contributions, and later sent notice of a forthcoming arbitration hearing to Chanree and Palmer. (See id.)

On May 25, 2010, the Funds, as well as Chanree and Palmer, both of which were represented by counsel, appeared for a hearing before arbitrator J.J. Pierson, Esq. ("Pierson" or the "Arbitrator").*fn3 (See id. at 8). Before the Arbitrator, the Funds alleged that Palmer violated the Laborers' CBA by failing to remit required contributions to the Funds on behalf of its employees for work performed in and after July 2009 in the amount of $316,039.51, and that Chanree, upon notice of Palmer's delinquency, had failed to remit the amounts due from Palmer. (See Arbitration Award at 7). In response, Chanree contested the arbitrability of the dispute, and described arbitration before Pierson as "a strained and self-serving interpretation of the PLA." (See id. at 2). Chanree argued that the Chesterfield Project is governed by the PLA, which contains a three-step arbitration process that supersedes the portions of the Laborers' CBA and Trust Agreement that permit the Funds to immediately address a delinquent fund dispute before a permanent arbitrator.*fn4 (See id.; PLA at Art. 9).

In reply, the Funds posited that, while the Union, as a signatory to the PLA, was limited to the grievance procedure of the PLA, the Funds was not. (See Arbitration Award at 3). Moreover, the Funds argued that it was a beneficiary under the Laborers' CBA of the "specific right to inform the [c]ontractor of the next higher contract level, provide notice of a delinquency claim of the Funds and inform the contractor to withhold from the subcontractor such disputed amount from the next advance until the dispute has been resolved."*fn5 (See id. at 3). Lastly, the Funds asserted that Pierson was the proper arbitrator under the controlling Laborers' CBA and Trust Agreement because the Laborers' CBA and the controlling Trust Agreement designate Pierson as the permanent alternate arbitrator for disputes arising out of the Laborers' CBA. (See id.) 3. The Arbitration Award

In the Arbitration Award dated May 30, 2010, Pierson addressed Chanree's argument regarding the impact of the PLA on his ability to arbitrate the dispute. The Arbitrator first evaluated two sections of the PLA, Article ...

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