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GIGLIOTTI CORP. v. BUILDING & CONSTR. TRADES COUNC

March 29, 1984

GIGLIOTTI CORPORATION
v.
BUILDING AND CONSTRUCTION TRADES COUNCIL OF PHILADELPHIA AND VICINITY



The opinion of the court was delivered by: LORD, III

 Plaintiff is a general contractor. Defendant is a labor organization whose members comprise various trade unions in the Philadelphia area and its surroundings. Defendant has filed a demand for arbitration with the American Arbitration Association, based on a 1969 contract between defendant and Chris Gigliotti and Son, Inc., plaintiff's predecessor corporation. Plaintiff seeks a declaration that the contract is unenforceable as against plaintiff and a permanent injunction barring the arbitration.

 The parties have stipulated to the following facts: On March 19, 1969 Chris Gigliotti and Son, Inc. entered into a contract with the defendant. Among other provisions, that contract guaranteed that Chris Gigliotti and Son, Inc. would bargain only with a member union of the defendant council. It further guaranteed that Chris Gigliotti and Son, Inc. would require its subcontractors to enter into collective bargaining agreements only with member unions of the defendant. Furthermore, the contract stated that the agreement "shall remain in full force and effect until the day of March 19, 1970, and shall continue from year to year thereafter unless either party gives written notice to the other, ninety days prior to any annual termination date, of the desire to change any of the terms of this agreement." (Exhibit B to the stipulation). On April 19, 1974, Thomas Magrann, the business manager of the defendant, sent a letter to Chris Gigliotti and Son, Inc., along with a revised building trades agreement. The letter stated that the 1969 agreement was "for all intents and purposes . . . outmoded". (Exhibit C to the stipulation). That letter was received on or about April 24, 1974.

 On April 30, 1974, Chris Gigliotti and Son, Inc. merged into Verree-Welsh Homes, Inc. (Exhibit A to the stipulation). On the same day, the enterprise resulting from the merger was renamed Gigliotti Corporation. The ownership interests in Chris Gigliotti and Son, Inc., Verree-Welsh Homes, Inc. and Gigliotti Corporation during the relevant time periods were as follows: (1) On March 19, 1969, eighty-five percent of the outstanding shares of Verree-Welsh Homes, Inc. was owned by Chris Gigliotti. Fifteen percent of the outstanding shares of Verree-Welsh Homes, Inc. was owned by Frank J. Montamuro; (2) On March 19, 1969, eighty-five percent of the outstanding shares of Chris Gigliotti and Son, Inc. was owned by Chris Gigliotti. Fifteen percent of the outstanding shares was owned by Frank J. Montamuro; and (3) On May 1, 1974, ninety-five percent of the outstanding shares of Gigliotti Corporation was owned by Chris Gigliotti. Five percent of the outstanding shares of Gigliotti Corporation was owned by Frank J. Montamuro.

 From March 19, 1969 until the date of merger, April 30, 1974, Chris Gigliotti and Son, Inc. employed carpenters and laborers who were represented by member unions of the Building and Construction Trades Council. It did not employ any other individuals skilled in trades represented by member unions of the BCTC. From March 19, 1969 until the date of the merger, April 30, 1974, Verree-Welsh Homes, Inc. engaged solely in the purchase, development, and sale of real estate and at no time did it employ any construction workers.

 Neither Chris Gigliotti and Son, Inc. nor Gigliotti Corporation ever communicated any notice of termination to the BCTC in reference to the 1969 agreement. Furthermore, neither Chris Gigliotti and Son, Inc. nor Gigliotti Corporation ever responded to the 1974 letter from Thomas Magrann mentioned above.

 On May 1, 1975, the Home Builders Association, on behalf of Gigliotti Corporation, entered into a collective bargaining agreement with the Laborers District Council of the Metropolitan Area of Philadelphia and Vicinity. On May 1, 1978, the Home Builders Association, on behalf of Gigliotti Corporation, entered into a collective bargaining agreement with the Metropolitan District Council of the United Brotherhood of Carpenters and Joiners of America. (Exhibit E to the stipulation).

 The collective bargaining agreements between Gigliotti Corporation and the United Brotherhood of Carpenters and Joiners and the Laborers' District Council terminated in 1983. Since the termination of those agreements, Gigliotti Corporation has not entered into any collective bargaining agreements with any of the affiliated local unions of the BCTC. Furthermore, since the termination in 1983 of those agreements, Gigliotti Corporation has subcontracted work on occasion to subcontractors who are not signatory to collective bargaining agreements with affiliated local unions of the BCTC. On August 1, 1983, the BCTC made a demand for arbitration based on its 1969 agreement with Chris Gigliotti and Sons, Inc., contending that plaintiff should hire only members of unions affiliated with BCTC.

 Under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185(a), I have jurisdiction over this suit. Because the contract calls for arbitration, however, my role as a federal district judge is very limited. United Steelworkers v. American Manufacturing Company, 363 U.S. 564, 80 S. Ct. 1343, 4 L. Ed. 2d 1403 (1960). I must determine whether the dispute in question is arbitrable. Normally, my determination would be limited to "whether the party seeking arbitration is making a claim which on its face is governed by the contract." Id. at 568.

 In this case, however, there is an additional question: whether the contract is enforceable against Gigliotti Corporation. If Gigliotti is not bound by the contract, then it cannot be compelled to arbitrate a dispute pursuant to the arbitration clause of the contract. John Wiley and Sons, Inc. v. Livingston, 376 U.S. 543, 11 L. Ed. 2d 898, 84 S. Ct. 909 (1964).

 I. Arbitrability of the dispute

 The arbitration clause in the agreement states that "all disputes, grievances or complaints involving the interpretation or application of this Agreement" shall be arbitrated. Assuming that Gigliotti Corporation is a party to the contract, this broad clause clearly covers the dispute in question, i.e., whether or not the plaintiff is bound to hire carpenters and laborers who are members of the unions affiliated with the BCTC.

 II. Enforceability of the contract against plaintiff

 Plaintiff asserts, however, five reasons why the 1969 contract with BCTC is unenforceable against Gigliotti Corporation. First, Gigliotti Corporation claims that it is not bound by the contract because plaintiff is not a signatory to the contract. Second, plaintiff argues that before the merger, BCTC, through the 1974 Magrann letter, terminated the contract with Chris Gigliotti and Son, Inc. pursuant to the termination clause. Thirdly, plaintiff asserts that the Magrann letter repudiated the contract as a matter of law. Fourth, plaintiff argues that the contract automatically terminated as a matter of law when Gigliotti Corporation executed collective bargaining agreements in 1975 and ...


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