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International Union of Operating Engineers v. Centor Contractors Inc.

decided: September 22, 1987.

INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 150, AFL-CIO, PLAINTIFF-APPELLEE,
v.
CENTOR CONTRACTORS, INC., JOHN SANICKI AND CRAIG SCHMIDT D/B/A SOIL CONTRACTORS, AN ILLINOIS PARTNERSHIP, DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 85-C-3633, Paul E. Plunkett, Judge.

Flaum and Ripple, Circuit Judges, and Eschbach, Senior Circuit Judge.

Author: Eschbach

ESCHBACH, Senior Circuit Judge.

Appellants Centor Contractors, Inc. ("Centor"), and John Sanicki and Craig Schmidt, its two former shareholders, appeal from a summary judgment of the district court enforcing an arbitration award under a collective bargaining agreement with the plaintiff, International Union of Operating Engineers, Local 150, AFL-CIO ("the Union"). The district court held that the defendants' defenses to the award were in the nature of grounds to vacate the award and, as such, were untimely asserted. Additionally, the district court held that Soil Contractors, an Illinois partnership, was liable on the award as either the successor or the alter ego of Centor. Because Soil Contractors is not a corporation and because the individual defendants were its only partners at the relevant time, the liability of the partnership was a liability of the partners by operation of law. For the reasons stated herein, we affirm.

I

The individual defendants were the only two share-holders of Centor, which was an employer under a collective bargaining agreement with the union. In January of 1985, Centor lost a grievance in arbitration before a "Joint Grievance Committee" made up of labor and management representatives from the soil contracting industry (although there were no representatives from Centor). The award was finalized on February 27, 1985, after Centor failed to appear at a subsequent hearing at which the committee indicated it would receive any additional evidence Centor had to submit. An additional grievance was also considered at this time and resolved in favor of the Union.

In March of 1985, the defendants dissolved the employer corporation and operated as a partnership to finish up the work of the corporation and pay off its creditors. Noticeably absent from the latter category, as far as the defendants were concerned, was the plaintiff Union. In a letter to their customers, the defendants attributed the dissolution to "labor difficulties" and said that they would not be operating "under the name" of the dissolved company until those problems were resolved. Both the corporation, and the partnership which succeeded it were essentially bookkeeping operations which handled the payroll and other office work of what had previously been two competing excavation companies of the individual defendants, which joined forces when the corporation was formed. Neither Centor nor the partnership owned any equipment, although all employees were paid by them.

On April 15, 1985, when Centor refused to comply with a demand that it abide by the arbitration award, the Union filed this suit in the district court under section 301 of the Labor Management Relations Act, 29 U.S.C. ยง 185, to enforce the award. The defendant Centor did not answer the complaint until July 11, 1985, and stated that the award was invalid because the Joint Grievance Committee refused to allow it to be represented by counsel at the January grievance hearing (Individual defendant Sanicki appeared at that hearing with his attorney. The attorney was allowed to attend, but not to address the committee.). In September, the plaintiff moved to amend to add the individual defendants as parties. In addition to contesting the validity of the award, the individual defendants contended they could not be held liable on the award because the partnership was not a successor to Centor. The district court granted the Union's motion for summary judgment against all defendants.

II

The district court held that: (1) the challenges to the validity of the award advanced by the defendants were barred because they were not made within 90 days of the award as required by Plumbers Pension Fund, Local 130 v. Domas Mechanical Contractors, Inc., 778 F.2d 1266 (7th Cir. 1985); and (2) the partnership was a successor to Centor, so that the individual defendants could be held liable on the arbitration award. We find both of the district court's conclusions unexceptionable and fully supported by the uncontradicted facts presented to it.

A

We first consider the timeliness issue. It is well settled, in this circuit at least, that failure to challenge an arbitration award within the applicable limitations period renders the award final. Thus, those challenges in the nature of grounds to vacate the award may not be asserted as defenses to a subsequent enforcement action. Domas, 778 F.2d at 1268; Chauffeurs, Teamsters, Warehousemen and Helpers, Local Union No. 135 v. Jefferson Trucking Co., 628 F.2d 1023, 1025 (7th Cir. 1980), cert. denied, 449 U.S. 1125, 101 S. Ct. 942, 67 L. Ed. 2d 111 (1981). We have little difficulty classing the challenge made by the appellants, that the award was invalid because their counsel was not given an opportunity to conduct the arbitration, as one which, if valid at all, could have been asserted in an action to vacate the award. In Domas, for example, we declined to consider arguments that an award was "arbitrary and capricious" and that it contravened statutory provisions contained in the Employees Retirement Income Security Act of 1974 ("ERISA") (codified at scattered sections of 29 U.S.C.). Like the challenges in Domas, appellants' challenges are to the basic underlying validity of the award. The relief they sought by way of defense was to nullify the award. Under our cases, the only avenue available for such relief is a timely suit to vacate.

On appeal, the defendants attempt to tie their substantive challenge to the arbitration award (i.e., that the company was precluded from being represented by counsel) with an attempt to avoid the 90-day rule of Domas.*fn1 They argue that since the "right" to be represented by counsel is in the same Illinois Statute from which the Domas court borrowed the time limitation, it necessarily qualifies that time limitation. Appellant's contention is wide of the mark.

The fact that the 90-day limit was borrowed from a state statute that provides for a right to counsel is irrelevant. As the Domas decision itself indicates, the limitation period only is borrowed, as a matter of federal law. we noted that language in the Illinois Albitration Act excluding collective bargaining agreements did not preclude our borrowing of the 90-day period to apply to federal causes of action under section 301. We noted that our task was "to select the most analogous state statute of limitations, and the Illinois legislature's apparent intent to preserve pre-Act federal timeliness provisions and grounds for vacating does not affect our conclusion that the Illinois 90-day limitation period is closely analogous to the situation here." 778 F.2d at 1269 n.1. The Supreme Court has recently confirmed that, once an analogous period of limitation is selected, reference to the statute from which it was borrowed is at an end. See West v. Conrail, Inc., 481 ...


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