KLAUS v. CARPENTERS PENSION TRUST FOR SOUTHERN CALIFORNIA (1982)

Appellant, Eugene Klaus, appeals from an order sustaining respondent's demurrer without leave to amend to appellant's seventh amended complaint.¹  No judgment of dismissal was entered in this case.   Consequently, appellant has appealed from a nonappealable order.   However, for the reasons stated herein, we will deem the order sustaining respondents' demurrer to incorporate a judgment of dismissal.

Appellant was denied a substantial portion of his pension benefits because of a “break in employment” provision in the pension plan administered by respondent Carpenters Pension Trust for Southern California.   He alleged that he lacked notice of this provision, and therefore was unable to take action to avoid its consequences.

In its ruling the trial court found that the United Brotherhood of Carpenters and Joiners Union, under terms of the trust agreement, acted as appellant's agent in all dealings with the trust.   The court held that notice to an agent is imputed to his principal.

Appellant presents one issue on appeal:  Was notice of the break in employment provision to the union also notice to its members?   We hold that it was, and affirm the judgment of dismissal.

Facts

Appellant joined the United Brotherhood of Carpenters and Joiners of America (Union) in 1948 and remained a member until he retired in 1976.   In 1959, the Union entered into an agreement with the Home Builders Association and other employer associations which established the Carpenters Pension Trust for Southern California (Trust) and the pension plan which the Trust would administer.   The pertinent provisions of the pension plan are:  (1) In the establishment, maintenance and execution of the plan the Union was designated to act on behalf of the employees as their agent, (2) employees would receive credit for each year of work after the plan was initiated, provided they worked the prescribed minimum number of hours, and (3) members could also receive credit for years of service before the effective date of the plan.   In order to do so, a member would have to work a minimum number of hours per year between the years 1960 and 1962 for employers who were obligated to contribute to the trust on behalf of their employees.   This condition precedent to receiving credit for prior years of employment is referred to as the “break in employment” provision.

Appellant did not meet the requirements of the “break in employment” provision, and therefore he lost 111/212 years of credit which he would otherwise have been given.   He alleged that he did not know of this provision and consequently did not attempt to meet the requirements.   The gravamen of respondents' reply was that appellant had notice because the Union, acting as his agent, had collectively bargained for the provision.

Procedural History

 We have noted that no judgment of dismissal was entered in this case by the court below.   An order sustaining a demurrer is, of course, nonappealable.   However, we note a trend in recent cases for courts of review to remedy procedural irregularities when the trial court intended a final disposition of all causes of action.  (See Molien v. Kaiser Foundation Hospitals (1980) 27 Cal.3d 916, 921, 167 Cal.Rptr. 831, 616 P.2d 813.)   To prevent further delay and in the interest of justice, we will deem the order sustaining respondents' demurrer to incorporate a judgment of dismissal.

Discussion

 It is a basic maxim of agency law that an agent's knowledge is imputed to his principal.  “As against a principal, both principal and agent are deemed to have notice of whatever either has notice of․”  (Civ.Code § 2332.)  “An agent's knowledge of the content of a contract is imputed to his principal.”  (Columbia Pictures Corp. v. DeToth (1948) 87 Cal.App.2d 620, 630, 197 P.2d 580.)  “A person has notice of a fact if his agent has knowledge of the fact․”  (Rest.2d Agency, § 9(3).)

 The Carpenters Pension Trust was created pursuant to section 302, subdivision (c)(5) of the Labor Management Relations Act of 1947, as amended (29 U.S.C. § 186, subd. (c)(5).   Suits against such trusts may be brought in either federal or state courts.  (29 U.S.C. § 185.)   However, if state law conflicts with federal substantive law, “federal common law” must be followed.  (Textile Workers v. Lincoln Mills (1957) 353 U.S. 448, 456, 77 S.Ct. 912, 917, 1 L.Ed.2d 972.)   Appellant has referred us to four federal cases which, he contends, oblige pension plan trustees to give separate notice of break in employment provisions to employees.²  We have reviewed these cases and find no support for his contention.

Burroughs v. Bd. of Trustees of The Pension Trust Fund for Operating Engineers (9th Cir.1976) 542 F.2d 1128 is not apposite to the instant case.   First, Burroughs does not address the question of notification to an agent-union as constructive notice to a principal member.   Second, the actions of the Burroughs trustees were adjudged “fundamentally unfair” because the break in employment rule was applied retroactively and the employees had no opportunity to protect themselves from its consequences during the retroactive time period.   In the instant case, the break in employment provision pertained to years after the establishment of the pension plan.

Lee v. Nesbitt (9th Cir.1972) 453 F.2d 1309 held that the trustees of the National Maritime Union Pension Trust acted arbitrarily when they denied a pension to an employee who had already earned the minimum number of necessary credits before an involuntary break in service occurred.   The court in Wilson v. Board of Trustees, Etc., (9th Cir.1977) 564 F.2d 1299 denied plaintiff's request for disability benefits.   It held that Wilson's break in service was not involuntary, and refused to reform the structure of the trust plan.   In Knauss v. Gorman (3rd Cir.1978) 583 F.2d 82 the court remanded the case to allow further testimony about the actuarial necessity of the break in service clause, after indicating that under the facts of the particular case the denial of a pension gave rise to “apparently arbitrary distinctions.”   (Id. at p. 88.)   The issue of notice was not discussed in these latter three cases.

In the case at bench, the Carpenters Pension Trust agreement imposed no obligation upon the trustees to communicate with Klaus personally.   In Savoretti v. Hotel and Restaurant Employees and Bartenders International Union Pension Fund (1979) 470 F.Supp. 1286, the trustees were held to have no obligation to notify an employee of nonpayment of contributions by an employer, since no provision of the trust document obligated them to do so.   We know of no precedent to impose any notice requirement upon the trustees of the Carpenters Pension Trust beyond those contained in the trust instrument.

 We apply the basic rule that a principal is imputed to have notice of facts known to his agent.   The United Brotherhood of Carpenters and Joiners of America is conceded to have acted as Klaus' agent in all matters pertaining to the Carpenters Pension Trust.   Therefore, Klaus had notice of the break in employment provision or the trust agreement.

The judgment of the trial court, as incorporated in its order of dismissal, is affirmed.

FOOTNOTES

1.   The minute order of June 4, 1981, erroneously referred to the complaint as the “sixth amended complaint.”   The parties have treated the order as referring to the seventh amended complaint.   Since it is obvious that the order pertains to the seventh amended complaint, we will treat it as such.

2.   Burroughs v. Bd. of Trustees of the Pension Trust Fund for Operating Engineers (9th Cir.1976) 542 F.2d 1128;  Lee v. Nesbitt (9th Cir.1972) 453 F.2d 1309;  Wilson v. Board of Trustees, Etc., (9th Cir.1977) 564 F.2d 1299;  Knauss v. Gorman (3rd Cir.1978) 583 F.2d 82.

FEINERMAN, Presiding Justice.

STEPHENS, and HASTINGS, JJ., concur.