98 Civ. 6286 (SHS)
82 F. Supp. 2d 175; 2000 U.S. Dist. LEXIS 664; 24 E.B.C. 2268
COUNSEL:
For
MASON TENDERS DISTRICT COUNCIL WELFARE FUND, PENSION FUND,
ANNUITY FUND, ASBESTOS TRAINING PROGRAM FUND, JOHN J. VIRGA, ANTHONY SILVERI,
plaintiffs: Lawrence A. Kravitz, Gorlick, Kravitz & Listhaus, P.C., New
York, NY.
For ABATEMENT INTERNATIONAL/ADVATEX ASSOCIATES, INC.,
defendant: Michael F. Fitzgerald, New York, NY.
JUDGES: Sidney H. Stein, U.S.D.J.
OPINIONBY: Sidney H. Stein
OPINION:
[*176] SIDNEY H. STEIN, U.S. District Judge.
The issue
for determination is whether a general contractor can be held liable to a union
and its multiemployer pension and welfare funds for payments due from a
subcontractor. For the reasons set forth below, the answer in the context of the
facts here is affirmative. Plaintiffs -- several pension and welfare funds of
the
Mason Tenders Union -- claim that the defendant general
contractor is liable for these delinquent payments pursuant to an industry wide
collective bargaining agreement with the union. All parties have cross-moved for
summary judgment pursuant to Fed. R. Civ. P. 56. For the following reasons, the
general [**2] contractor's motion for summary judgment is denied and
plaintiffs' motion for summary judgment is granted as to liability but denied as
to damages.
I. Background. Defendant
Abatement International/Advatex Associates, Inc. ("Abatement") is a general
contractor which, through its industry wide representative, Environmental
Contractors Association, Inc., entered into a collective bargaining agreement
("Abatement CBA") with the relevant union,
Mason Tenders
District Council of Greater New York ("
Mason Tenders" or the
"Union"). Pursuant to Article II § 2 of the Abatement CBA, Abatement agreed not
to utilize a subcontractor unless the subcontractor "agrees to be bound by the
terms of this agreement and/or has an Agreement with the Union having
jurisdiction over such work. . . ." Abatement further specifically agreed that
it would "be responsible for the payment of wages, fringe benefits fund
contributions, and working dues check-offs by such subcontractor."
During the period of the Abatement CBA, Abatement entered into
subcontracting agreements with nonparty Diamond Construction & Maintenance,
Inc. Diamond was a signatory to a separate collective bargaining agreement
("Diamond [**3] CBA") with the Union. The Diamond CBA obligated
Diamond to make contributions to plaintiffs
Mason Tenders
District Council Welfare Fund, Pension Fund, Annuity Fund, and Asbestos Training
Program Fund (collectively "the Funds") and to contribute dues check-offs to the
Union. The Funds are all multiemployer, labor-management trust funds established
and maintained pursuant to collectively bargained [*177] agreements
and thus qualify as "multi-employer plans" as defined by ERISA,
29
U.S.C. § 1002(37). Despite its contractual obligations, Diamond failed to
make the full contributions to the employee pension fund, pay union dues
check-offs or maintain documents recording the work performed by members of the
Union.
On April 7, 1997, various parties - including several of the same
parties to this action -- sued Diamond and its affiliates. A judgment on consent
was subsequently entered against the defendants to that litigation ordering
delinquent payments and interest in the amount of $ 812,598.51 to the various
funds bringing suit and $ 56,906.35 to the Union for dues check-offs.
Diamond's obligations remain unpaid and plaintiffs have brought this
action to collect from [**4] Abatement the outstanding amounts, plus
interest and fees.
II. Discussion.
A. Summary Judgment Standard 
A court may grant summary judgment "only when the moving party
demonstrates that 'there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.'"
Allen
v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995) (quoting Fed. R. Civ. P. 56(c)).
The Court must "view the evidence in the light most favorable to
the non-moving party and draw all reasonable inferences in its favor, and may
grant summary judgment only when 'no reasonable trier of fact could find in
favor of the nonmoving party.'"
Allen,
64 F.3d at 79 (quoting
Lund's,
Inc. v. Chemical Bank, 870 F.2d 840, 844 (2d Cir. 1989)) (citations
omitted).
B. Liability Plaintiffs claim that
Abatement owes them the unpaid benefit contributions and unpaid dues checkoffs
pursuant to both ERISA and the contract entered into by Abatement.
1. Benefit Contributions. ERISA § 503(f),
29
U.S.C. § 1132(f), grants this Court jurisdiction over any action by a plan's
fiduciaries to enforce ERISA [**5] obligations, including the
obligation established by ERISA § 515, which provides that:
"Every employer who is obligated to make contributions to a
multiemployer plan under the terms of the plan or under the terms of a
collectively bargained agreement shall, to the extent not inconsistent with
law, make such contributions in accordance with the terms and conditions of
such plan or such agreement."
ERISA § 515, 29
U.S.C. § 1145.
ERISA defines an employer as "any person acting
directly as an employer, or indirectly in the interest of an employer, in
relation to an employee benefit plan; and includes a group or association of
employers acting for an employer in such capacity."
29
U.S.C. § 1002(5). This action arises from the collectively bargained
agreement signed between Abatement's representative and the
Mason
Tenders Union. In other words, Abatement is being sued as an employer
signatory to a collective bargaining agreement which allegedly obligates it to
contribute to various employee benefit plans.
Despite this clear
statutory language, Abatement contends that it does not qualify as an "employer"
for the purpose of these [**6] payments because, as general
contractor, Abatement was not the employer of the subcontractor's employees.
Abatement points to several cases to support its position. In none of those
cases, however, had the general contractor agreed in a collective bargaining
agreement -- as Abatement has here -- to "be responsible for the payment of
wages, fringe benefits fund contributions, and working dues check-offs by [its]
subcontractor[s]." For example, in
Carpenters
Health & Welfare Trust Fund v. Tri Capital Corp., 25 F.3d 849 (9th Cir.
1994), on which Abatement relies, the general contractor was not sued
[*178] as a signatory to a collective bargaining agreement; it was
obligated to make payments based solely upon its contract with the
subcontractor, not upon a collective bargaining agreement with the union. See
id.
at 856. The court concluded that such a claim was an action based upon state
third-party beneficiary law and not ERISA.
This Circuit has similarly
found that a third party surety is not an ERISA employer where it has not signed
a collective bargaining agreement. In Greenblatt v. Delta Plumbing & Heating
Corp., guardians of employee benefit funds [**7] sought payment from
an employer's surety.
68
F.3d 561 (2d Cir. 1995). Holding that the surety was not an ERISA employer,
the court explained "we are confronted only with a contractual relationship
separate from the collective bargaining agreement by which the surety guaranteed
payment of a certain sum if the contractor defaulted on its obligations."
Id.
at 575-76. This Circuit applies this analysis to nonsignatory
general contractors as well. In
Bleiler
v. Cristwood Constr., Inc., 72 F.3d 13 (2d Cir. 1995), a union trustee
sought to collect unpaid fund contributions incurred by a subcontractor from a
general contractor and a surety. The general contractor's obligation was based
upon a contract with the subcontractor. See
id.
at 15. The court concluded that "contractors who are not signatories to
collective agreements, but who assume financial guarantees of contribution
payments, do not qualify as ERISA employers." Id.
Unlike those cases,
this action does not involve an attempt to impute liability to a nonsignatory
contractor. Abatement's obligation to contribute to the benefit funds is
established pursuant to the [**8] collectively bargained agreement
with
Mason Tenders. At least one circuit has found ERISA § 515
liability where a contractor agreed to assume a subcontractor's obligations in
its collective bargaining agreement. See
Laborers'
Pension Fund v. Concrete Structures of the Midwest, Inc., 999 F.2d 1209, 1211
(7th Cir. 1993). The Court must now turn to the question of whether
the Abatement CBA obligates Abatement to pay the fund contributions. On this
point, the agreement is clear:
"Any Employer who subcontracts any such work shall be responsible
for the payment of wages, fringe benefits fund contributions, and working dues
check-offs by such subcontractor." n1 Abatement is liable to
Mason
Tenders for the delinquent payments.
- - - - - - - - - -
- - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n1 Even if
this Court were to find that Abatement were not an ERISA employer, this
provision of the Abatement CBA would require payment as a matter of contract
law. Section 301 of the LMRA,
29
U.S.C. § 185(a), provides subject matter jurisdiction to federal courts for
suits for violation of contracts between an employer and a labor organization.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
- - - - - - - [**9]
2. Dues Check-offs
As a matter of contract law, Abatement is liable for the payment of dues
check-offs as well. As noted above, the CBA obligates Abatement to pay the union
dues check-offs owed by its subcontractor. As already noted, Article II Section
2 of the Abatement CBA provides that "any employer who subcontracts any such
work shall be responsible for the payment of wages, fringe benefits fund
contributions, and working dues check-offs by such subcontractor."
C. Defenses Abatement offers two defenses to
its liability under the CBA it signed. First, it contends that plaintiffs'
earlier suit against Diamond for the delinquent payments and the dues check-offs
precludes this action. Second, it argues that the doctrine of equitable estoppel
bars this action on the theory that plaintiffs' failure to include Abatement in
the earlier suit unfairly prejudiced its interests.
Neither of these
defenses has merit.
[*179]
1. Res Judicata
The party that asserts res judicata preclusion bears the burden of
proving its claim. See
Computer
Associates Int'l, Inc v. Altai, Inc., 126 F.3d 365, 369 (2d Cir. 1997),
cert. denied,
523
U.S. 1106, 140 L. Ed. 2d 814, 118 S. Ct. 1676 (1998). [**10]
Specifically, it must prove that four conditions are met in order to bar a later
action: 1) the earlier action terminated with a final decision on the merits; 2)
the parties are identical; 3) the prior court was competent; and 4) the two
causes of action are the same. See
Corbett
v. MacDonald Moving Services, Inc., 124 F.3d 82, 87-88 (2d Cir. 1997).
Res judicata does not preclude this suit if the prior action did
not concern the same cause of action. Identity of the cause of action is not
subject to any automatic test. Instead, the district court must examine whether
"the same transaction, evidence, and factual issues" are at stake in the current
action as in the prior one.
Corbett,
124 F.3d at 89. The Second Circuit has adopted a standard in which
"the fact that both suits involved essentially the same course of
wrongful conduct is not decisive; nor is it dispositive that the two proceedings
involved the same parties, similar or overlapping facts, and similar legal
issues."
S.E.C.
v. First Jersey Sec., Inc., 101 F.3d 1450, 1463 (2d Cir. 1996) (internal
citations and quotation marks omitted). Instead, the two claims must typically
[**11] involve such similar transactions that "the same evidence is
needed to support both claims, and . . . the facts essential to the second were
present in the first."
Id.
at 1464 (internal citations and quotation marks omitted); see also
Computer
Associates Int'l, Inc., 126 F.3d at 369; Interoceanica
Corp. v. Sound Pilots, Inc., 107 F.3d 86, 91 (2d Cir. 1997).
Plaintiffs' alleged injury in this action is breach of the Abatement
CBA, while the earlier injury involved a breach of a wholly separate contract,
namely the separate CBA that Diamond entered into. Accordingly, the present suit
concerns whether Abatement contracted to be financially responsible for dues
check-offs and fund payments for subcontractor employees. That obligation is
independent of Diamond's obligation and would stand even if Diamond had never
signed a collective bargaining agreement with the Union. Although the two suits
involve similar and overlapping facts, they assert separate causes of action.
See, e.g.,
Usina
Costa Pinto S.A. Acucar E Alcool v. Louis Dreyfus Sugar Co., Inc., 933 F. Supp.
1170, 1177 (S.D.N.Y. 1996) (allowing a fraud claim which [**12]
arose from dealings between sugar distributers after those parties had
arbitrated their contract claims regarding the same dealings). Res judicata
therefore does not bar this claim.
2. Equitable
Estoppel The doctrine of equitable estoppel permits a court to estop a party
from enforcing its rights against another where enforcement would result in
fraud or injustice. See
Ionosphere
Clubs, Inc. v. Insurance Co. of the State of Penn., 85 F.3d 992, 999 (2d Cir.
1996). It is imposed where "the person against whom enforcement is sought
and who, in justifiable reliance upon the opposing party's words or conduct, has
been misled into acting upon the belief that such enforcement would not be
sought."
Readco,
Inc. v. Marine Midland Bank, 81 F.3d 295, 301 (2d Cir. 1996).
Abatement contends that plaintiffs' failure to include it as a party in
the earlier action against Diamond has prejudiced its interests and that
plaintiffs should be estopped from asserting a claim in this case. Its claims of
prejudice, however, do not bear scrutiny. To the extent that Abatement believes
it is precluded from rebutting any evidence of damages asserted by plaintiffs,
it [**13] is wrong. The prior action against Diamond does not
inhibit Abatement from challenging any evidence presented at the damages inquest
ordered by this Court.
Abatement also claims it is prejudiced because it
lost the opportunity to assert [*180] any counter or cross claims in
the prior action. Defendant never explains, however, why it would be unable to
assert such claims in the present action or in a separate action against Diamond
altogether.
Finally, defendant claims that there are benefits to
defending the action on the merits in a single unitary suit, including the
opportunity to secure the production of documents and testimony in support of
its position from non-party Diamond. The Federal Rules of Civil Procedure,
however, authorize discovery from non-parties as well as parties.
In
sum, Abatement has not established how its failure to be named as a party in the
prior action against Diamond has prejudiced it, and its claim that plaintiffs
should be equitably estopped from pursuing this action is not meritorious.
D. Damages As noted above, plaintiffs seek
summary judgment on the issue of damages as well as on liability; Abatement
claims that, at a minimum, a hearing is necessary [**14] to
establish the amount of damages. In light of issues of fact raised in the
supporting affidavits concerning the reliability of the underlying project log
books, remittance reports and shop steward reports, an inquest shall take place
to determine the proper amount of damages.
III.
Conclusion. For the foregoing reasons, defendant's motion for
summary judgment is denied and plaintiffs' motion for summary judgement is
granted as to liability and denied as to damages. An inquest shall take place to
determine the proper amount of damages.
Dated: New York, New York
January 21, 2000
Sidney H. Stein, U.S.D.J.
Civil
Procedure : Summary Judgment or Summary Adjudication : Summary Judgment
Standard 
