Opinion
05 Civ. 0694 (WHP).
May 17, 2005
Michael G. Dowd, Esq., New York, NY, Counsel for Plaintiff.
Gary Silverman, Esq., O'Dwyer Bernstien, LLP, New York, NY, Counsel for Defendants.
MEMORANDUM AND ORDER
On January 10, 2005, Tri-Built Construction, Inc. ("Tri-Built") filed a verified petition in New York State Supreme Court seeking to stay an arbitration demanded by Respondents. Respondents are benefit funds (collectively, the "Benefit Funds") of the local union affiliate of the United Brotherhood of Carpenters and Joiners of America ("UBCJA"). On January 12, 2005, the New York State Supreme Court granted Tri-Built's application for a temporary stay. On January 19, 2005, the Benefit Funds removed the proceeding to this Court. Tri-Built now moves to permanently stay the arbitration. The Benefit Funds move to compel arbitration, dismiss Tri-Built's petition and recover their attorneys' fees and costs. For the reasons that follow, Tri-Built's motion is denied, and the Benefit Funds' motions are granted in part.
Tri-Built also moved to remand this action to the state court and sought fees and costs. However, Tri-Built now concedes that federal jurisdiction exists pursuant to Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185. See Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 403 (1988);Vittoria Corp. v. New York Hotel Motel Trades Council, 30 F. Supp. 2d 431, 434 (S.D.N.Y. 1998) ("An action is deemed to `arise under' Section 301 if resolution of the claim requires the court to construe a provision of the collective bargaining agreement."). Accordingly, the Benefit Funds properly removed this action, and Tri-Built's motions to remand and for fees and costs are both denied.
BACKGROUND
At all relevant times, Tri-Built and UBCJA were parties to a collective bargaining agreement (the "UBCJA Agreement"). (Declaration of Gary Silverman, dated Mar. 18, 2005 ("Silverman Decl.") Ex. A.) The UBCJA Agreement obligated Tri-Built to comply with the grievance procedures set forth in a separate collective bargaining agreement peculiar to New York City area employers (the "Independent Agreement"). (Silverman Decl. Ex. A at 3.) Article XII of the Independent Agreement provides that the parties "shall first attempt to settle and adjust" contractual disputes privately and that "[a]ny grievance not resolved shall be submitted to arbitration." (Verified Petition, dated Jan. 10, 2005 ("Pet.") Ex. B at 26.) Moreover, Article XV permits either party to seek arbitration of a dispute "concerning any claim arising from payments to the Fund of principal and/or interest which is allegedly due." (Pet. Ex. B at 35.)
The UBCJA Agreement required Tri-Built to make fringe benefit payments to the Benefit Funds on behalf of Tri-Built's employees. (Silverman Decl. Ex. A at 1.) The Benefit Funds contend that Tri-Built failed to make certain of these payments. On December 22, 2004, the Benefit Funds served Tri-Built with a notice of their intention to arbitrate. (Pet. Ex. A.) Thereafter, Tri-Built initiated this proceeding to stay the arbitration.
DISCUSSION
Where, as here, a collective bargaining agreement contains an arbitration clause, disputes arising out of that agreement carry a "presumption of arbitrability." AT T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 650 (1986); New York Health Human Servs. Union, 1199/SEIU v. NYU Hosps. Ctr., 343 F.3d 117, 119 (2d Cir. 2003); see Emery Air Freight Corp. v. Local Union 295, 786 F.2d 93, 96-97 (2d Cir. 1986). Plainly, the Benefit Funds' claim that Tri-Built breached the UBCJA Agreement by failing to make fringe benefit payments is within the Independent Agreement's broad arbitration clauses and thus subject to arbitration. See United Steelworkers v. Warrior Gulf Navigation Co., 363 U.S. 574, 582-83 (1960) ("[A]n order to arbitrate [a] particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.");Mic-Ron, 908 F. Supp. at 213 (holding that benefit funds have standing to compel arbitration even though not a party to the collective bargaining agreement).
This presumption applies even though it is the Benefit Funds, and not the UBCJA or local district thereof, who is seeking to compel arbitration pursuant to the UBCJA and Independent Agreements. See Mic-Ron Gen. Contractrors, Inc. v. Trustees of the New York City Dist. Council of Carpenters Benefit Funds, 908 F. Supp. 208, 212-14 (S.D.N.Y. 1995).
Tri-Built contends that the Benefit Funds failed to first negotiate their claim as Article XII of the Independent Agreement requires, and that they are thereby precluded from seeking arbitration at this juncture. However, "it is the arbitrators' role to determine parties' compliance with the grievance and arbitration procedures established by a collective bargaining agreement." Lexington Children's Ctr. v. Dist. Council 1707, 04 Civ. 1532 (PKC), 2004 WL 540475, at *7 (S.D.N.Y. Mar. 17, 2004) (citing John Wiley Sons Inc. v. Livingston, 376 U.S. 543, 557 (1964); Stotter Div. of Graduate Plastics Co. v. Dist. 65, United Auto Workers, 991 F.2d 997, 1001 (2d Cir. 1993)). On a petition to stay arbitration, the issue of "whether [the] respondent is barred from arbitrating the grievance is a matter of procedural arbitrability for the arbitrator, and not the court, to decide."DeWitt Nursing Home v. Local 144, 96 Civ. 7898 (MBM), 1997 WL 166485, at *1 (S.D.N.Y. Apr. 9, 1997); see Lexington Children's Ctr., 2004 WL 540475, at *8 (holding that the arbitrator should decide whether the union presented a written grievance prior to commencing arbitration, as required by the collective bargaining agreement). Accordingly, this Court cannot stay arbitration merely because of the Benefit Funds' possible non-compliance with the Independent Agreement's grievance procedures. Rather, that issue must be resolved in arbitration.
Tri-Built also argues that the Benefit Funds waived their right to arbitrate by commencing a state court action against Patrick Noel McCaul and Dermott McGonnell, Tri-Built's President and Vice-President, respectively. (Affidavit of Patrick Noel McCaul, dated Jan. 11, 2005 ¶ 3.) In that action, the Benefit Funds allege that McCaul and McGonnell engaged in a fraudulent scheme through which Tri-Built avoided making the same payments at issue here. (Pet. Ex. C.) However, under New York law, a party does not waive its right to arbitrate by filing a lawsuit that is "separate and distinct" from the claim being arbitrated. Denihan v. Denihan, 34 N.Y.2d 307, 310 (1974); accord Sherrill v. Grayco Builders, Inc., 64 N.Y.2d 261, 273 (1985). Although the Benefit Funds seek to recover fringe benefit payments both in arbitration and in their state action, they are proceeding against different parties. Moreover, McCaul and McGonnell are not signatories to the UBCJA or Independent Agreements, and the state action against them alleges a scheme to defraud — a separate and distinct cause of action that will require proof of matters irrelevant to the breach of contract claim against Tri-Built. Thus, the Benefit Funds' state fraud action against McCaul and McGonnell does not constitute a waiver of their right to arbitrate their breach of contract claim against Tri-Built.
Lastly, this Court will not stay this action pending resolution of the state action under abstention principles. The strong federal policy in favor of arbitrating labor disputes dictates that those proceedings be allowed to go forward. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983) ("[T]he relevant federal law requires piecemeal resolution when necessary to give effect to an arbitration agreement."); see also Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218-24 (1985).
CONCLUSION
Accordingly, Tri-Built's petition to stay the arbitration is dismissed, and the Benefit Funds' motion to compel arbitration is granted. This Court does not find that an award of attorneys' fees is warranted and denies the Benefit Funds' motion in that regard. The Clerk of the Court is directed to mark this case closed.SO ORDERED.