Audit Services, Inc. v. Systad

NO. 91-244

IN THE SUPREME COURT OF THE STATE OF MONTANA
1992

AUDIT SERVICES, INC.,
a Montana Corporation,
Plaintiff and Appellant,
-vs-
LLOYD SYSTAD,
Defendant, Respondent and Cross-Appellant.

APPEAL FROM: District Court of the Third Judicial District,
In and for the County of Deer Lodge,
The Honorable Ted L. Mizner, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Dennis Tighe; Cure, Borer & Davis, Great Falls,
Montana
For Respondent:
Greg Skakles; Johnson, Skakles & Kebe, Anaconda,
Montana

Submitted on Briefs: November 14, 1991
Decided: February 13, 1992

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Clerk
Justice Fred 3 . Weber delivered the Opinion of the Court.

The appellant, Audit Services, Inc. (Audit Services), assignee
of claims owed to the Montana Operating Engineers' Trust, brought

an action in the Third Judicial District, Deer Lodge County, for
contributions allegedly owed by respondent, Lloyd A.Systad (Systad)
to the Union's trust funds. The District Court found that Systad
had no obligation under the Special Union Agreement to contribute
to the trust. Audit Services appeals. Systad cross-appeals on the
District Court's order denying attorney's fees. We reverse and
remand.
We conclude the following issue is dispositive:
Did the District Court correctly conclude the labor agreement
was clear on its face and did not apply to the disputed workers?
Atlantic Richfield Co. (ARCO) contracted with Cleveland
Wrecking Company (Cleveland) to demolish buildings and structures
at the Anaconda smelter site. Systad, subcontracted with Cleveland
to cut salvaged metal from the demolition site into sizes suitable
for rail transport from the site.
In July 1983, Systad entered into a compliance agreement with
the Montana Operating Engineers, Local Union #400 which
incorporated by reference a Special Union Agreement signed by
Cleveland and the Union. The Special Union Agreement required
Systad to make contributions to the Operating Engineers' pension
and vacation trusts for employers covered under the collective
bargaining agreement.
Audit Services claims Systad failed to make $6992.81 in
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required contributions to the pension and vacation trusts on behalf
of three workers: Ron Surina, James Tuss, and John Sladich.
Systad claims Surina, Tuss, and Sladich were not covered by the
collective bargaining agreement: thus, he was not required to make
contributions on their behalf. The agreement provides:
This is an agreement covering the indicated unions and
employees engaged in the demolition and salvage at the
smelter in Anaconda, Montana and shall cover all
employees of the specific classifications listed and
shall be in effect for the term of the employer's work in
connection with the project. This aqreement does not
include or cover any other work. (Emphasis added.)
The classifications listed within the agreement are as follows:
Crane Oiler, Assistant to Engineer $ 9.58/hr.
Shovel Oiler, Assistant to Engineer 9.50/hr.
3 cy. & Under
Shovel Oiler, Assistant to Engineer 9.91/hr.
Over 3 cy.
Electric Overhead Crane Opr. 10.29/hr.
Crane Opr., Up to 80' Boom 10.37/hr.
Crane Opr., 81' - 130' Boom 10.52/hr.
Crane Opr., 131' - 150' Boom 10.57/hr.
Push Tractor, Dozer Opr. 10.21/hr.
Track Type Front End Loader Up to 5 cy. 10.2l/hr.
Track Type Front End Loader 5 cy. to 10 cy. 10.44/hr.
Oiler-Driver, Rubber Tired Cranes 9.58/hr.
Asst. to Eng.
Gradall Operator 10.21/hr.
Rubber Tired Front End Loader 1 cy. to 3 cy. 10.21/hr.
Rubber Tired Front End Loader 3 cy. to 5 cy. 10.33/hr.
Rubber Tired Front End Loader 5 cy. to 10 cy. 10.43/hr.
Shovels 1 cy. to 3 cy. 10.39/hr.
Shovels 3 cy. to 5 cy. 10.66/hr.
Shovels Over 5 cy. 10.79/hr.
A subsequent amendment modified the agreement to include the
classification of "mechanic on job" at $10.59 per hour and
operators of "dump trucks and similar equipment.I' No other
classifications were added to the agreement.
Testimony at trial established that Surina, a machinist,

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assisted Systad in the assembly of the shear machine. Once the
shear was operating he would remove broken parts from the shear
machine, take them to his shop for repair, and replace the parts
on-site. It also established that Tuss, a welder, welded the
foundation and footings for Systad during the shear machine's
original assembly. In addition, he repaired cracks in the footings
which occurred after the machine was operational. Finally, it
established that Sladich operated the shear machine for Systad.
The District Court found Tuss, Surina and Sladich were not
covered by the collective bargaining agreement. Thus, Systad had
no obligation to contribute to the trusts on their behalf. Audit
Services' appeals this judgment.

Did the District Court correctly conclude the labor agreement
was clear on its face and did not apply to the disputed workers?
The trial court found this Special Union Agreement was plain
and unambiguous. When interpreting contracts, it is a question of
law whether an ambiguity exist. Nordlund v. School District No. 14
(1987), 227 Mont. 402, 405, 738 P.2d 1299, 1301. Thus, in
reviewing the trial court's interpretation, we will determine if it
correctly interpreted the contract.
The District Court found the express language in the agreement
limited its application to the listed classifications and did not
include other work performed. we agree with the District Court.
The express language of the contract limits its application to work
listed in the classifications. "Where the language of a written

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contract is clear and unambiguous . . . the duty of the court is
simply to apply the language as written to the facts of the case
and decide the case accordingly." Nordlund, 227 Mont. at 404, 738
P.2d at 1301.

Audit Services contends that this is a "wall to wall"
agreement covering all of the demolition project. However, by
expanding the collective bargaining agreement to include unlisted
work classifications, this Court would be disregarding the express
language of the agreement. Where the agreement provides it "does
not include or cover any other work," we must apply the contract
language. Here we conclude the collective bargaining agreement
limits coverage to the listed work classifications.
Next, we examine whether the listed classifications are
ambiguous. "An ambiguity exists when a contract is subject to two
interpretations and parol testimony can be used to determine what
the parties intended." Monte Vista Co. v. Anaconda Co. (1988), 231
Mont. 522, 528-529, 755 P.2d 1358, 1362. Here, after reviewing the
contract and trial testimony, we conclude the classification
"mechanic on job" is subject to differing interpretations, and
creates an amibiguity in the contract. Here, the District Court
failed to address this ambiguity within its findings. Thus, we
reverse on this issue.
While the record indicates that the District Court admitted
parol evidence of industry custom regarding the classification of
"mechanic on job,1t it failed to address the ambiguity in its
findings.

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 We hold the District Court was incorrect in concluding the
labor agreement was clear on its face, and remand for findings on
whether the classification "mechanic on job" applies to work
performed by Sladich, Tuss, and Surina.
Reverse and remand for proceedings in accordance with this
opinion.

We Concur:
J u tice

Justices ,/

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 February 1% 1992

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:

Dennis Tighe
CURE, BORER & DAVIS
P.O. Box 2103
Great Falls. MT 59403

Greg Skakles
JOHNSON, SKAKLES & KEBE
P.O. Box 1413
Anaconda, MT 59711

ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA