National Electrical Industry Fund v. Bethlehem Steel Corp.

Rodowsky, J., delivered the opinion of the Court. These eight consolidated cases are brought under the mechanics’ liens law by a labor union and by various funds to which employer remittances are required to be made under a collective bargaining agreement. Standing of the plaintiffs is the principal issue. We shall hold that each plaintiffs petition sufficiently reflects its standing to sue to withstand demurrer.

During 1981-1982 the appellee, Bethlehem Steel Corporation (Bethlehem), had a coke oven battery and other facilities constructed on its property at Sparrows Point, Maryland. Bethlehem’s general contractor subcontracted with Mid-States Electric, Inc. (Mid-States) for electrical work. Mid-States had bound itself to comply with the collective bargaining agreement entered into between the Baltimore division of the Maryland chapter (NECA Local) of the National Electrical Contractors Association, Inc. (NECA) and Local Union No. 24 (the Union) of the International Brotherhood of Electrical Workers (IBEW). In addition to paying its electrical workers the hourly rates established in the Union contract, Mid-States agreed, on a monthly reporting and remitting basis, to: 1.

Contribute an amount equal to 3% of its gross labor payroll to the National Employees Benefit Board (Benefit Fund), established under a national agreement between NECA and IBEW; 2. Contribute to the Maryland Electrical Industry Health & Welfare Fund (Welfare Fund) $.90 for each hour worked by a covered employee; 3. Contribute to the Maryland Electrical Industry Pension Fund (Pension Fund) $.70 ($.80 after September 30, 1981) for each hour worked by a covered employee; ⁵⁴⁴ 4. Contribute to the Maryland Electrical Industry Severance & Annuity Fund (Severance Fund) $.60 ($.70 after September 30, 1981) for each hour worked by a covered employee; 5.

Contribute .5% of its gross labor payroll to the NECA Local and Union Joint Apprenticeship and Training Trust Fund (JATC Fund); 6. Deduct $.60 per hour from the net wages of each covered employee and pay over those deductions to the Union Vacation and Holiday Fund (Vacation Fund); 7. Deduct working dues from the pay of each IBEW member, based on signed authorizations, and pay over such deductions to the Union; and 8. Contribute 1% of the productive labor payroll (with certain exclusions) to the National Electrical Industry Fund (Industry Fund).

We shall refer to the Benefit, Welfare, Pension, Severance, Vacation and JATC Funds collectively as the "Trusts,” and to the Union, the Trusts and the Industry Fund collectively as the "Appellants.” For each of the months of August, September and October, 1981 Mid-States made a consolidated report to the Appellants of the amounts to be remitted by it for the eight purposes listed above, but Mid-States did not remit the amounts due. On December 7, 1981 each Appellant gave notice; to Bethlehem of intent to claim a lien under the Mechanics’ Liens Law, Md. Code (1974, 1981 Repl. Vol.), §§ 9-101 through 9-113. of the Real Property Article (the Act). On April 16, 1982 each Appellant filed a petition to establish and enforce a mechanics’ lien on the portion of Bethlehem’s property where Mid-States had been working.

Bethlehem filed demurrers which the trial court sustained with prohibition of further amendment. That court reasoned that the Appellants were "not within those contemplated in [the Act] to bring a mechanic’s lien action.” We issued the writ of certiorari on our own motion prior to consideration of the appeals by the Court of Special Appeals. ⁵⁴⁵ Section 9-102 (a) of the Act provides in relevant part that "[e]very building erected ... is subject to establishment of a lien in accordance with this subtitle for the payment of all debts, without regard to the amount, contracted for work done for or about the building... .” The scheme of the Act distinguishes between a "contractor” and a "subcontractor.” The contractor "has a contract with an owner,” § 9-101 (c), while "subcontractor,” under § 9-101 (f), "means a person who has a contract with anyone except the owner or his agent.” The extremely broad definition of "subcontractor” is narrowed by § 9-101 (b) which defines "contract” as "an agreement of any kind or nature, express or implied, for doing work or furnishing material, or both, for or about a building as may give rise to a lien under this subtitle.” (1) Appellants’ primary position is that they are subcontractors and that the collective bargaining agreement is a contract "for doing work.” However, for purposes of imposing mechanics’ liens under the Act, contracts of subcontractors must be for doing work "for or about a building ... .” The collective bargaining agreement does not satisfy that element of the test. The Union contract does not address the project at Bethlehem which is the subject of the claimed liens. 1 Indeed, that contract does not relate to work to be done on any specific building. Nor does the Union, which is the only Appellant that is a party to the collective bargaining agreement, undertake to perform any work itself for or about any building.

There is no allegation of any contract to which any of the Trusts or the Industry Fund are parties for the performance of work about any building. The Union contract simply sets forth the terms and conditions of employment for ⁵⁴⁶ electrical workers, in the metropolitan Baltimore area and in portions of the Eastern Shore, by employers who have accepted NECA Local as their collective bargaining representative. Appellants’ theory that the collective bargaining agreement is a contract for doing work for or about Bethlehem’s project is similar to the contention which this Court rejected in Giles v. First National Realty, 238 Md. 203 , 208 A.2d 582 (1965). There the lien claimant had leased equipment to a subcontractor who was responsible for grading a construction site.

Employees of the subcontractor actually operated the equipment. We said (id. at 207, 208 A.2d at 584 ): [T]he lessor was not entitled to a lien either on the theory that the supplying of the equipment on a rental basis constituted "work done” or on the theory that.the charges for the use of the equipment constituted a debt "contracted for work done.” This is so because the lessor had done no work, for or about the premises. In order for it to come within the plain meaning and obvious purpose of the statute it was necessary for it to have actually participated in the performance of the work done, and this necessitated something more than taking the equipment to the site of the job, keeping it in running order while it was there, and removing it when the grading was completed. There is, however, another aspect to the relationships between employer, union and bargaining unit employees.

There are individual contracts of hire between Mid-States and electrical workers it employed. In J.I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 334-36 , 64 S. Ct. 576, 579 , 88 L. Ed. 762, 766 (1944) the Supreme Court articulated the two concepts. Contract in labor law is a term the implications of which must be determined from the connection in which it appears. Collective bargaining between employer and the representatives of a unit, usually ⁵⁴⁷ a union, results in an accord as to terms which will govern hiring and work and pay in that unit.

The result is not, however, a contract of employment except in rare cases; no one has a job by reason of it and no obligation to any individual ordinarily comes into existence from it alone. The negotiations between union and management result in what often has been called a trade agreement, rather than in a contract of employment. Without pushing the analogy too far, the agreement may be likened to the tariffs established by a carrier, to standard provisions prescribed by supervising authorities for insurance policies, or to utility schedules of rates and rules for service, which do not of themselves establish any relationships but which do govern the terms of the shipper or insurer or customer relationship whenever and with whomever it may be established.... After the collective trade agreement is made, the individuals who shall benefit by it are identified by individual hirings.

The employer, except as restricted by the collective agreement itself and except that he must engage in no unfair labor practice or discrimination, is free to select those he will employ or discharge. But the terms of the employment already have been traded out. There is little left to individual agreement except the act of hiring. This hiring may be by writing or by word of mouth or may be implied from conduct.

In the sense of contracts of hiring, individual contracts between the employer and employee are not forbidden, but indeed are necessitated by the collective bargaining procedure. Although the collective bargaining agreement is not a contract for work at Bethlehem, employees of Mid-States were directed, as part of their individual contracts, to perform their work for Mid-States at Bethlehem. Accordingly, each electrical worker employed by Mid-States at ⁵⁴⁸ Bethlehem was a subcontractor as defined in the Act, because each had a contract with someone, other than the owner, for doing work for or about the "building.” In Diener v. Cubbage, 259 Md. 555 , 270 A.2d 471 (1970), we held that a predecessor to the Act, i.e., Md. Code (1957, 1968 Repl. Vol.), Art. 63, § 1 et seq., included individuals who rendered labor only.

The same is true of the present statute. (2) The foregoing analysis sets the framework for consideration of the standing issue. We shall separately treat the standing of the Trusts, of the Union, and of the Industry Fund. A considerable body of authority in analogous situations supports the standing of Trustees of fringe benefit trusts to claim on behalf of those who actually rendered the labor. 2 The leading case arose under the Miller Act, 49 Stat. 793 (codified as amended at 40 U.S.C. §§ 270a-270d (1976)).

That statute in part provided that "[e]very person who has furnished labor or material in the prosecution of the work provided for in [the construction] contract, in respect of which a payment bond is furnished under this Act... shall have the right to sue on such payment bond ... for the sum or sums justly due him ....” Trustees of a health and welfare fund for construction workers established under a collective bargaining agreement sued under the Miller Act for the amount of contributions that the employer had not paid. United States v. Carter, 353 U.S. 210 , 77 S. Ct. 793 , 1 L. Ed. 2d 776 (1957) held that the trustees had standing to sue on the following rationale. If the assignee of an employee can sue on the bond, the trustees of the employees’ fund should be able to do so. Whether the trustees of the fund are, in a technical sense, assignees of the employees’ ⁵⁴⁹ rights to the contributions need not be decided.

Suffice it to say that the trustees’ relationship to the employees, as established by the master labor agreements and the trust agreement, is closely analogous to that of an assignment. The master labor agreements not only created Carter’s obligation to make the specified contributions, but simultaneously created the right of the trustees to collect those contributions on behalf of the employees. The trust agreement gave the trustees the exclusive right to enforce payment. The trustees stand in the shoes of the employees and are entitled to enforce their rights.

Moreover, the trustees of the fund have an even better right to sue on the bond than does the usual assignee since they are not seeking to recover on their own account. The trustees are claiming recovery for the sole benefit of the beneficiaries of the fund, and those beneficiaries are the very ones who have performed the labor. The contributions are the means by which the fund is maintained for the benefit of the employees and of other construction workers. For purposes of the Miller Act, these contributions are in substance as much "justly due” to the employees who have earned them as are the wages payable directly to them in cash. [Id. at 219-20, 77 S. Ct. at 798 , 1 L. Ed. 2d at 784 .] It has been held that health & welfare, pension and vacation savings trusts could recover "on behalf of employees” under a statutory bond protecting " 'any person furnishing labor ... used in the direct performance of a construction contract.’ ” United States Fidelity & Guaranty Co. v. Arizona State Carpenters Health and Welfare Trust Fund, 120 Ariz. 79, 80, 81 , 584 P.2d 60, 61, 62 (Ariz.

Ct. App. 1978). Where the condition of a statutory bond was the prompt payment of all debts incurred, including those for labor, by the principal or any subcontractor in the prosecution of a public works contract, the trustees of union pension and ⁵⁵⁰ apprenticeship funds were said to "stand in the shoes of the employees.” Trustees, Florida West