Opinion
No. A03-718.
Filed February 17, 2004.
Appeal from the Itasca County District Court, File No. C302781.
Don L. Bye, Don L. Bye, P.A., (for appellant)
Steven C. Fecker, Jessica L. Durbin, Johnson, Killen Seiler, P.A., (for respondent)
Considered and decided by Stoneburner, Presiding Judge, Kalitowski, Judge, and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant District 318 Service Employees Association challenges summary judgment granted to respondent Independent School District No. 318, denying reformation of a collective-bargaining agreement and dismissing its complaint. Because there are no material questions of fact regarding whether appellant is entitled to reformation of the agreement, we affirm.
FACTS
District 318 Service Employees Association (Association) and Independent School District No. 318 (ISD) are parties to a collective-bargaining agreement (agreement) that caps ISD's contribution to Association's group health insurance at 85% of the prior year's premium.
The cap first appeared in the agreement negotiated in May 1994 covering 1993-95. The parties have entered into two subsequent agreements. The percentage of the cap was raised in the agreement covering 1995-98, and the current agreement for 1998-2001, which remains in effect until a new agreement is negotiated.
Association asserts that the cap was never the product of negotiations but was first inserted into the contract in 1994 after negotiations were complete on ISD's request with consent of Association officers. Association alleges that the cap consented to was 100% of the prior year's premium, consistent with the teachers' contract. In making this assertion, appellant relies primarily on deposition testimony of Myra Daley, who was vice president of the Association and was employed by ISD as a printing supervisor, composing and proofreading documents printed by ISD.
Daley became president of the Association in 1996.
Daley testified that when she typed the 1994 agreement, she used the teachers' contract as a guide but mistakenly used percentages for ISD's negotiated contribution to premiums for the cap, rather than the 100% cap contained in the teachers' contract. Association claims that this initial mistake was continued in the two subsequent agreements, with Daley continuing to unilaterally insert the percentage of negotiated premium contribution into the unnegotiated cap language.
Not until 1998 was there such an increase in the insurance premium that the meaning of the cap language became significant. In October 1998, the premium increased significantly, but ISD continued to pay 85% of the new premium, notwithstanding that this amount was more than 85% of the prior year's premium. In the summer of 1999, ISD noted that it had paid the prior year's premium contribution at a greater percentage than specified in the agreement and notified Association that it would, in the future, only be paying 85% of the prior year's premium as required by the agreement. In 1999, the premium again increased significantly, and ISD contributed 85% of the prior year's premium.
When ISD noted its intent to follow the agreement language, Association, for the first time, asserted that the percentages used in the caps beginning in the 1993-95 agreement were mistakes, incorrectly inserted into the contract by Daley who was, as ISD's print-shop supervisor, responsible for printing the contracts prior to ratification. Association asked ISD to consent to an amendment to the agreement to reflect what Association asserts was the intent of both parties in 1994, that the cap be 100% of the prior year's premium, consistent with the teachers' contract. ISD declined to amend the agreement, and Association brought this action.
ISD moved for summary judgment. Although contract reformation was not specifically requested in the complaint, by the time ISD moved for summary judgment, both parties and the court proceeded as if Association's claim were for reformation of the agreement. Association opposed summary judgment, arguing that material fact questions about the intent of the parties made summary judgment inappropriate. Association presented evidence that there is no similar cap in any other collective bargaining agreement with ISD and evidence that two ISD board members have stated that no union would negotiate such limiting language in an agreement.
The district court granted ISD's motion for summary judgment, concluding that by ratifying and approving the agreement negotiated in 1994 and the subsequent agreements, both parties demonstrated an intent to accept and be bound by the unambiguous language of the agreements and that no evidence supports Association's claim for reformation or rescission of the agreement currently in effect. This appeal followed.
Although the district court's judgment mentions rescission, Association did not plead or argue that the contract should be rescinded.
DECISION
On an appeal from summary judgment, this court asks two questions: "(1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
A motion for summary judgment is granted when the depositions, answers to interrogatories, admissions on file, and affidavits, if any, demonstrate that "there is no genuine issue of material fact and that either party is entitled to judgment as a matter of law." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Further, this court views the evidence in the light most favorable to the party against whom judgment was granted. Id.
No genuine issue of material fact exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." DLH Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (alteration in original) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)). "[T]he party resisting summary judgment must do more than rest on mere averments." Id. at 71. A genuine issue for trial must be established by substantial evidence. Id. at 69-70.
I. Reformation of contract due to mistake
A collective-bargaining agreement is governed by the same rules that apply to other types of contracts. Fredrich v. Indep. Sch. Dist. 720, 465 N.W.2d 692, 695 (Minn. App. 1991) (applying general principles of contract law to ascertain meaning of collective bargaining agreement). A court may consider extrinsic evidence to interpret a contract only if the contract is determined to be ambiguous. Id. But Association does not argue that the agreement is ambiguous or needs to be interpreted. Association argues that by mutual mistake, the unambiguous language of the agreement does not reflect the parties' actual agreement. The rule prohibiting the consideration of extrinsic evidence does not apply to a claim of mutual mistake. See Aronovitch v. Levy, 238 Minn. 237, 246, 56 N.W.2d 570, 576 (1953) (stating rule prohibiting admission of parol evidence to vary terms of written contract does not prevent proof of fraud or mistake); see also 3 Arthur L. Corbin, Corbin on Contracts § 580 (1960).
Association asserts that there is a material fact question about whether insertion of the cap percentages in amounts equal to the negotiated premium-contribution percentages was a scrivener's error, resulting in a mutual mistake that requires reformation of the collective-bargaining agreement.
A written instrument can be reformed by a court if the following elements are proved: (1) there was a valid agreement between the parties expressing their real intentions; (2) the written instrument failed to express the real intentions of the parties; and (3) this failure was due to a mutual mistake of the parties or a unilateral mistake accompanied by fraud or inequitable conduct by the other party.
Nichols v. Shelard Nat'l Bank, 294 N.W.2d 730, 734 (Minn. 1980). To demonstrate mutual mistake based on a scrivener's error, "`it is necessary that both parties agree as to the content of the document but that somehow through a scrivener's error the document does not reflect that agreement.'" Alpha Real Estate Co. of Rochester v. Delta Dental Plan of Minn., 664 N.W.2d 303, 314 (Minn. 2003) (quoting Nichols, 294 N.W.2d at 734).
Association argues that it has presented sufficient evidence of a valid agreement between the parties expressing their real intention that the cap on ISD's premium contribution was to have been 100% of the prior year's premium to avoid summary judgment. We disagree.
Association points to inconsistent testimony about how the cap came to be inserted into the 1993-95 contract. And Association argues that ISD's subsequent attempt to negotiate a return to a dollar figure to limit premium contributions demonstrates that ISD also believed the cap was 100% of the prior year's premium because the percentages used in each agreement had the same effect as a dollar limitation. Further, Association points to ISD's payment of premium contributions in 1998 without regard to the contract cap percentage as evidence that ISD believed the cap to be 100% of the prior year's premium.
But Daley's printing of the agreements was not the end of the contract process. The unambiguously worded agreements were all reviewed by Association officers, Association's lawyer, Association's members, and the ISD board. The agreements did not become effective until ratified and signed by both parties. As the district court concluded, "in ratifying and approving the contracts both parties were indicating their intent to accept and be bound by the agreements." We conclude that Association has failed to demonstrate a genuine issue of material fact as to the existence of a valid agreement between the parties to cap ISD's contribution at 100% of the prior year's premium.
And even if Association has presented evidence of such an agreement in 1994, Association has not satisfied the second or third elements of mutual mistake: that the current agreement does not express the true intentions of the parties and that this failure was due to a mutual mistake of the parties or a unilateral mistake accompanied by fraud or inequitable conduct by the other party.
All of Association's evidence about an agreement to a 100% cap relates to the 1993-95 agreement. But that agreement has been superseded twice. There is evidence in the form of a memo written by Daley that recommends changing the cap to a higher percentage, demonstrating that the cap was considered in the 1995-98 negotiations. And there is no evidence indicating that ISD agreed to a cap of 100% in the current contract.
Association argues that it "failed to notice" the cap until the summer of 1999 when ISD reported an overpayment. But even if it is true that Association did not notice the cap or did not understand what it meant, "[i]n the absence of fraud or misrepresentation, a person who signs a contract may not avoid it on the ground that he did not read it or thought its terms to be different." Gartner v. Eikill, 319 N.W.2d 397, 398 (Minn. 1982). The supreme court has stated that
had plaintiffs read the documents before they signed them, their mistake as to the contents would have been discovered before they suffered any harm. Were this court to allow reformation, it would not only destroy the defendant's right to rely on plaintiffs' written assent to the agreement, but would reward plaintiffs for their negligence.
Nichols, 294 N.W.2d at 734. "Absent ambiguity, fraud or misrepresentation, a mistake of one of the parties alone as to the subject matter of the contract is not a ground for reformation." Id.
II. Unfair labor practice
Association claims that ISD failed to bargain in good faith in violation of Minn. Stat. § 179A.13, subd. 2 (1992), by unilaterally changing the terms of the agreement. But as previously discussed, there is no evidence that ISD unilaterally changed an agreed-on term of the agreement.