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IN RE DIAMOND "D" CONSTR. CORP. v. FOR A JUDGMENT

May 31, 1998

In the Matter of the Application of DIAMOND "D" CONSTRUCTION CORP., Respondent-Petitioner, -vs- For a Judgment Staying the Arbitration Commenced by INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL UNIONS NO. 17, 17A, 17B, 17C, AND 17R; THOMAS G. HOPKINS, as President and Business Manager of the INTERNATIONAL UNION OF OPERATING ENGINEERS, Local Unions No. 17, 17A, 17B, 17C, and 17R; GERALD A. THOMPSON, As Treasurer and Business Representative of the INTERNATIONAL UNION OF OPERATING ENGINEERS, Local Unions No. 17, 17A, 17B, 17C, and 17R, Petitioner-Respondents.

JOHN T. CURTIN, United States District Judge.


The opinion of the court was delivered by: CURTIN

DECISION and ORDER

BACKGROUND

 Currently pending are the parties' cross-motions for summary judgment (Items 21 and 24). *fn1" Respondent-Petitioner Diamond "D" Construction Corp. ("Diamond 'D'") has moved for summary judgment, permanently staying the arbitration sought by Petitioner-Respondents International Union of Operating Engineers, AFL-CIO, Local Unions No. 17, 17A, 17B, 17C, and 17R; Thomas G. Hopkins, as President and Business Manager; and Gerald A. Thompson, as Treasurer and Business Representative (hereinafter referred to collectively as "Local 17"), and denying Local 17's counterclaim to compel arbitration. In the alternative, Diamond "D" seeks an order directing and declaring that the arbitration sought by Local 17 be limited to disputes or grievances arising during the time period of September 12, 1991, through September 16, 1991 (Item 21). Local 17 has moved for summary judgment granting Local 17's counterclaim to compel arbitration and dismissing Diamond "D"'s petition to stay arbitration (Item 24). The parties appeared for argument on these motions on January 16, 1998.

 Although the present action is relatively new, the parties have been litigating the underlying dispute in federal court since December 1991. Local 17 initially filed an action before the Honorable Richard J. Arcara to compel arbitration of Local 17's grievance that Diamond "D" had violated the collective bargaining agreement ("CBA") by using non-union workers, failing to use apprentices on backhoes, and failing to use operators on compressors and pumps (91-CV-844A(F)). Diamond "D" raised two affirmative defenses to Local 17's complaint in its answer, one substantive defense and one challenging the court's personal jurisdiction because of inadequate service of process. After over three and one-half years' litigation, Local 17 sought a voluntary dismissal of the action, without prejudice, pursuant to Fed.R.Civ.P. 41(a)(2), in order to allow it the opportunity to place the underlying dispute before a joint committee of labor and management pursuant to the terms of the CBA, thereby meeting the conditions precedent to a demand for arbitration. On July 12, 1995, Magistrate Judge Leslie G. Foschio granted Local 17's motion. Thereafter, Local 17 attempted to take the necessary steps to bring its grievance to arbitration. On October 16, 1995, Diamond "D" filed a petition in State Court to stay the arbitration. On October 30, 1995, Local 17 removed Diamond "D"'s petition to federal court. The removed action is the action presently before this court.

 Because many of the issues raised in the pending motions involve questions regarding the factual background of the dispute and the procedural background of the first action, it is necessary to conduct a detailed account of exactly what has happened since the dispute first arose.

 I. The Parties, the CBA, and the Underlying Dispute

 Diamond "D" is a highway and streets construction contractor located in Depew, New York. Local 17 represents some of Diamond "D"'s employees. Local 17 has been a party to a series of CBAs with the Labor Relations Division, Western New York Region, Associated General Contractors of America, New York Chapter, Inc. ("AGC") for a number of years (Item 21, Fitzgerald affidavit, P 3; Item 24, Pearce affidavit, P3). Although Diamond "D" is not a member of the AGC, Diamond "D" has been a signatory to the Local 17-AGC CBA at various times from the late 1970s through January 20, 1993, and has employed members of Local 17, as is often the custom of contractors that are not part of a contractors' association (Item 29, P 2; Item 31, p. 9; Item 35, p. 22).

 On or about July 28, 1991, Joseph DiPizio, President of Diamond "D", signed the 1990-93 Local 17-AGC CBA (Item 21, Fitzgerald affidavit, P 3; Item 29, P 3). *fn2" Article IV of the CBA, entitled "Grievance Procedure and Arbitration," set forth precisely how disputes involving all violations other than those concerning wages, hours, or fringe benefit contributions were to be handled. Article IV provided, in relevant part, as follows:

 
2. All grievances or disputes involving any controversy, dispute or misunderstanding arising as to the meaning, application or observation of any provisions of this Agreement shall be handled pursuant to the following procedure:
 
(a) The subject matter of the dispute shall be discussed and, if possible, resolved on the job site in a meeting of the Union Representative and the Employer's Superintendent within four (4) working days of the action complained of.
 
(b) If the matter is not satisfactorily resolved pursuant to 2(a), there shall be a meeting of the Union's Business Manager and the Associated General Contractors representative within six (6) working days of the action complained of.
 
(c) If the matter is still not satisfactorily resolved pursuant to 2(b), a committee of Union and Association representatives will hear the complaint in the presence of the Employer and the Union. (Non-LRD Employers will be charged a service fee of five hundred dollars ($ 500) to cover the cost of this meeting).
 
(d) Should the committee be unable to adjust the grievance satisfactorily pursuant to 2(c), then the matter may be submitted to arbitration upon request of the aggrieved party within two (2) weeks.
 
(e) The arbitrator will be selected from a panel of five (5) impartial arbitrators submitted by the New York State Mediation Board.
 
(f) The expenses and fees of the Arbitrator shall be borne equally by the Employer and the Union. The Arbitrator shall not have the power to add to, subtract from or modify the provisions of this agreement. No Employee shall have the right to institute any action, arbitration or proceeding under this agreement.
 
(g) In all cases, the status quo will be observed pending resolution of the dispute.

 (Item 21, Exhibit A; Item 24, Exhibit A).

 According to DiPizio, during the years prior to September 1991, various representatives of Local 17 visited Diamond "D" job sites at County Road 12, Como Park Boulevard, and William Street, including the day he signed the CBA, and they never offered any complaints or raised any disputes or grievances (Item 29, P 4). Diamond "D"'s operations at these sites could have been observed by any passerby, including representatives of Local 17, yet no complaints or grievances were ever brought to DiPizio's attention (Id.). Leo M. Hopkins, the son of Leo A. Hopkins, Local 17's Business Manager at the time DiPizio signed the CBA, is married to DiPizio's daughter and has worked for Diamond "D" for a number of years. DiPizio attests that throughout those years, Local 17 never offered any complaints or brought any disputes or grievances to his attention (Id., P 5).

 By letter dated September 16, 1991, Thomas G. Hopkins, President and Business representative of Local 17, advised DiPizio that Diamond "D" was in violation of the CBA by (1) using workers who are not members of Local 17 to operate machinery on its job sites, (2) failing to use apprentices on backhoes, and (3) having no operators on compressors and pumps (Item 21, Exhibit B; Item 24, Pearce affidavit, P 5). Hopkins requested a meeting with DiPizio to settle the grievance, and explained that if he failed to respond in an appropriate time frame, Hopkins would assume that Diamond "D" wished to proceed to step 2(c) of the CBA grievance procedure (Item 21, Exhibit B; Item 24, Pearce affidavit, P 5). The letter did not provide any information regarding the particular job sites at issue or the exact dates of the alleged violations. The letter was sent by certified mail, return receipt requested; however, it was returned to Local 17 marked "unclaimed" (Item 21, Exhibit B; Item 24, Pearce affidavit, P 5).

 At oral argument, Local 17's attorney, Mark G. Pearce, Esq., *fn3" stated that an affidavit supplied by Thomas Hopkins explains that upon learning that the CBA was not being complied with, he went to seek out DiPizio at the job site, attempted to contact him by telephone on several occasions, and only after these unsuccessful attempts at complying with paragraph 2(a) of the grievance procedure did he send the September 24, 1991, letter (Item 35, p. 24). Although the record does not contain an affidavit prepared by Thomas Hopkins, Hopkins prepared Local 17's answers and objections to Diamond "D"'s first set of interrogatories, and in these responses he makes the claims Pearce described (Item 32, Exhibit B, p. 4). In his memorandum of law submitted in response to Diamond "D"'s summary judgment motion and in support of Local 17's summary judgment motion, Pearce states that at some time "during the first two weeks of September 1991, commencing within four days of the action complained of, Thomas Hopkins attempted to contact Joseph DiPizio, representative of Diamond "D" by telephone calls that were unreturned and personal visits to DiPizio's known work site[,] without success." (Item 25, p. 3).

 Paragraph 2(b) of the grievance procedure requires a meeting of the union's business manager and the AGC representative within six working days of the action complained of. Such a meeting does not require any cooperation of the employer. Local 17 has never explained why it did not hold such a meeting.

 By letter dated October 24, 1991, hand-delivered on October 28, 1991, Local 17's counsel, Richard Lipsitz, advised Diamond "D" that pursuant to the CBA, Local 17 was giving notice of its intention to arbitrate the issues as specified in the September 16, 1991, letter, and that unless Diamond "D" applied to stay the arbitration within twenty days, Diamond "D" would thereafter be precluded from arguing that a valid agreement to arbitrate existed or had not been complied with and from asserting in court the bar of a limitation of time (Item 21, Exhibit C; Item 24, Pearce affidavit, P 6). According to Diamond "D", at the time this letter was sent, there had not been a meeting at the job site to discuss the alleged violations of the CBA, nor any other proceedings in accordance with the conditions precedent of the grievance procedure (Item 21, Fitzgerald affidavit, P 6). Diamond "D" did not respond to this letter, did not participate in any grievance arbitration procedure, and never applied to stay the arbitration. According to Local 17, Diamond "D" never expressly refused to arbitrate and never sought to stay arbitration of Local 17's grievance within the required twenty days (Item 24, Pearce affidavit, P 7).

 II. The First Action -- 91-CV-844A(F)

 On December 20, 1991, Local 17 filed an action in this court seeking to compel arbitration of the grievances set forth in the September 16, 1991, letter (Item 21, Exhibit D; Item 24, Pearce affidavit, P 8). *fn4" In its complaint, Local 17 recounted the history of the dispute and expressly alleged that Diamond "D" had refused to participate in the grievance and arbitration procedures outlined in Article IV of the CBA, although duly demanded by the Local 17. Local 17 alleged that this refusal constituted a breach of the CBA and caused prejudice to Local 17 (Item 21, Exhibit D, PP 14-16). Local 17 did not identify any job sites where the alleged violations occurred or specify the dates when the alleged violations occurred.

 On January 27, 1992, Diamond "D" answered Local 17's complaint. Although Diamond "D"'s answer was not filed with the court until September 28, 1992, Guy J. Agostinelli, Esq, Diamond "D"'s first attorney, certified that the answer was served upon Lipsitz on January 27, 1992 (91-CV-844A(F), Item 17, Certificate of Service). *fn5" On September 24, 1992, Agostinelli sent Magistrate Judge Foschio the original answer which Agostinelli said he had served on behalf of Diamond "D" on January 27 (Id.). Magistrate Judge Foschio approved the answer for filing nunc pro tunc January 27, 1992 (Id). According to the record in the first action, Local 17 never argued that it did not receive a timely response to its complaint. Thus, the court assumes that Local 17 received Diamond "D"'s answer on or about January 27, 1992.

 In its answer, Diamond "D" denied that Local 17 had complied with the procedures set forth in Article IV of the CBA and denied that Diamond "D" had refused to participate in the grievance and arbitration procedures (Item 21, Exhibit E, PP 10 and 14; Item 24, Pearce affidavit, P 9). More importantly, Diamond "D" raised two affirmative defenses in its answer: (1) the court lacks personal jurisdiction over defendant due to inadequate service of process, and (2) Local 17 had not complied with all of the conditions precedent to, and applicable procedures for, initiating a grievance or arbitration under the CBA (Item 21, Exhibit E, PP 15-16). As Local 17 notes, Diamond "D" did not expressly allege in its answer that Local 17 had failed to comply with Article IV, paragraphs 2(a) or 2(b) (See Item 24, Pearce affidavit, P 10).

 Local 17 immediately began discovery in order to determine whether its service on Diamond "D" was adequate. Local 17 first sought to take the deposition of DiPizio. That deposition was scheduled for March 24, 1992. On March 18, 1992, Agostinelli filed a motion to withdraw as attorney of record for Diamond "D" (91-CV-844A(F), Item 6) explaining that he wished to withdraw in part because of difficulties he was having communicating with his client (91-CV-844A(F), Item 7, P 6). Due to this motion, the DiPizio deposition was postponed. The court granted Agostinelli's motion on April 11, 1992, and gave Diamond "D" thirty days to obtain new counsel (91-CV-844A(F), Item 8). On May 7, 1992, Local 17 sent DiPizio a new deposition notice for May 26, 1992 (91-CV-844A(F), Item 9). Local 17 contends that the certified mailing was returned unclaimed after three ...


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