Greenblatt v. Delta Plumbing & Heating Corp.

Decision Date07 April 1994
Docket NumberNo. 89 Civ. 7759 (RWS).,89 Civ. 7759 (RWS).
Citation849 F. Supp. 247
PartiesWilliam GREENBLATT and Peter N. Salzarulo, as Chairman and Co-Chairman, respectively and Trustees of the Joint Industry Board of the Plumbing Industry of the City of New York and Funds Administered by Joint Industry Board of the Plumbing Industry of the City of New York, Peter N. Salzarulo, in his capacity as President of Local Union No. 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO, Peter N. Salzarulo, Individually and Local Union No. 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO, Plaintiffs, v. DELTA PLUMBING & HEATING CORP. and New York Surety Company, Defendants.
CourtU.S. District Court — Southern District of New York

Kaming & Kaming, New York City, for plaintiffs (Joseph S. Kaming, Elizabeth C. Kaming, and Sean O'Donnell, of counsel).

Hollander & Associates, P.C., New York City, for defendant New York Sur. Co. (Michael R. Strauss, of counsel).

OPINION

SWEET, District Judge.

Plaintiffs William Greenblatt and Peter N. Salzarulo as Chairman and Co-Chairman, respectively, and Trustees of the Joint Industry Board of the Plumbing Industry of the City of New York and Funds Administered by Joint Industry Board of the Plumbing Industry of the City of New York ("the Board"), Peter N. Salzarulo, in his capacity as President of Local Union No. 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO, Peter N. Salzarulo, individually, and Local Union No. 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO (collectively, the "Plaintiffs"), have submitted a proposed judgment purportedly in conformance with this Court's opinion of September 29, 1993, reported at 834 F.Supp. 86 (S.D.N.Y. 1993) (the "September 29 Opinion"). Defendant New York Surety Company ("New York Surety") objects to certain portions of the Plaintiffs' proposed judgment, and has submitted a proposed counter-judgment.

Prior Proceedings

The parties, facts, and prior proceedings in this matter were discussed at length in prior opinions of this Court, familiarity with which is assumed. See, e.g., Greenblatt v. Delta Plumbing & Heating Corp., 834 F.Supp. 86 (S.D.N.Y.1993); Greenblatt v. Delta Plumbing & Heating Corp., 818 F.Supp. 623 (S.D.N.Y.1993). They will be described below only to the extent necessary for the resolution of this motion.

The Plaintiffs, who include guardians of various Employee Retirement Income Security Act of 1974 (ERISA) funds, brought suit in this Court against Delta Plumbing and Heating Corporation ("Delta") on November 30, 1989, and added the New York Surety as a named defendant in May 1990. Delta sought protection from its creditors by filing a voluntary petition in bankruptcy in March 1991, automatically staying the action against it pursuant to 11 U.S.C. § 362, leaving New York Surety as the sole defendant.

New York Surety's motion to dismiss the complaint was denied on April 9, 1993. Greenblatt v. Delta Plumbing & Heating Corp., 818 F.Supp. 623 (S.D.N.Y.1993). In the April 9 Opinion, the Court determined that New York Surety was subject to the jurisdiction of the Court under ERISA, 29 U.S.C. § 1145 ("Section 1145").

The September 29, 1993 Opinion, issued after trial, concluded that "judgment will be entered awarding to the Board the sum of $50,636.86 plus costs." Greenblatt v. Delta Plumbing & Heating Corp., 834 F.Supp. 86, 93 (S.D.N.Y.1993). Argument on the present matter was heard on January 5, 1994, and was considered fully submitted as of that date.

Facts

The Plaintiff's proposal provides for judgment in the principal amount of $50,638.86 as and for past benefit contributions for the period through to June 30, 1990, interest at 18% according to the CBA from March 5, 1990, liquidated damages in the amount of $33,421.65, disbursements of this action in the amount of $807.00, attorneys' costs in the amount of $73,963.25, and accounting costs in the amount of $3,650.00, amounting in total to $195,902.41.

The CBA provides, among other things, as follows:

16. FRINGE BENEFITS PAID TO PLUMBING INDUSTRY BOARD: The
Employer must pay the aforementioned Fringe Benefits, Supplemental Benefits and Contributions, Holiday Fund Benefits and Security Benefits to the Plumbing Industry Board as administrative and/or collection agency of the various trust funds herein mentioned.
* * * * * *
18. FRINGE BENEFITS, FAILURE TO PAY: In the event an Employer shall default in payment of fringe benefits provided for by the terms of this Agreement, it shall be considered the same as failure to pay wages, and all Employees shall not be permitted to work for any Employer who is delinquent in the payment of fringe benefits.
* * * * * *
20. FRINGE BENEFITS, CONSEQUENCES BECAUSE OF FAILURE TO PAY: The failure of an Employer to pay all Fringe Benefits and Supplemental Benefits and Contributions shall have the same consequences as the failure of an Employer to pay the wages of Journeymen, Apprentices and Worker Trainees or to afford them the conditions of employment stipulated in this Agreement, and in addition, such Employer shall be liable for the payment of such Fringe Benefits with interest of 18% per annum plus liquidated damages of 20% of the amount owing and all costs including, but not limited to, reasonable audit and accounting expenses, witness costs, and attorney fees and court costs.
* * * * * *
22. SURETY BOND TO GUARANTY PAYMENT OF FRINGE BENEFITS: Each Employer shall furnish a bond of an agreed form by a Surety Company approved by the New York State Insurance Department to the benefit of the Joint Plumbing Industry Board to guaranty the payment of the Fringe Benefits herein mentioned, Security Benefits and any and all other benefits and contributions. The amount of the bond shall be in conformity with the action taken by the Joint Finance Committee of the Joint Plumbing Industry Board.

On January 29, 1990 a bond was executed and issued by New York Surety for the benefit of Delta as Principal and the Board as Obligee (the "Bond") on a form prepared by the Board in the penal sum of $80,000.00.

The Bond provides for:

(1) an amount equal to all required fringe benefits under the Collective Bargaining Agreement on all classifications of employees covered thereunder who are employed by the Principal; ... which amounts shall be due to the Obligee during the term of said Agreement, or written modification, renewal or extensions, or on such other dates or at such other times as may hereafter be agreed upon in writing between the Principal and the Obligee....
Discussion

The Plaintiffs argue that they are entitled to interest at 18%, liquidated damages, and costs including attorneys' fees for a number of reasons. First, they argue that ¶ 20 of the CBA, which prescribes the consequences to an employer ensuing from a failure to pay fringe benefits, is applicable to New York Surety.

In addition, the Plaintiffs argue that they are entitled to these costs pursuant to ERISA, 29 U.S.C. § 1132(g)(2) ("Section 1132(g)"), which provides:

"In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce ERISA Section 1145 in which a judgment in favor of the plan is awarded, the court shall award the plan
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A),
(D) reasonable attorneys' fees and costs of the action, to be paid by the defendant, and (E) such other legal or equitable relief as the court deems appropriate.
For purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26...."

The Plaintiffs argue that, since the Court has previously found that New York Surety was an employer pursuant to 29 U.S.C. §§ 1002(5) and 1145 for purposes of jurisdiction, Greenblatt v. Delta Plumbing & Heating Corp., 818 F.Supp. 623, 625-29 (S.D.N.Y. 1993), New York Surety should also be subject to the punitive provisions of the Bond and of Section 1132(g)(2).

In the September 29 Opinion, the Court determined liability against New York Surety based on the face of the Bond. Citing Crisafulli Brothers, Inc. v. Clanton, 128 A.D.2d 963, 512 N.Y.S.2d 927, 928 (1987), the Court stated that:

It is an established rule of law that the language of guaranty must be given its ordinary meaning. It is equally accepted law that the liability of a guarantor cannot be extended in the application of a guarantee beyond the clear agreement of the parties.

Greenblatt, 834 F.Supp. at 92.

As further determined by the Court, "the Bond is unambiguous, covering: an amount equal to all required fringe benefits." Id. at 91. Under the Bond, New York Surety's liability is limited to the fringe benefits set forth in the bond, which does not cover each item of damage recoverable from Delta under the CBA. The bond does not express the clear intent of the parties that, in addition to the fringe benefits listed in the CBA, New York Surety should be liable for all penalties assessable against Delta for a failure to pay fringe benefits. See Davis Acoustical Corp. v. Hanover Ins. Co., 22 A.D.2d 843, 254 N.Y.S.2d 14, 16 (3d Dept.1964) ("A surety's liability is to be strictly limited by the scope and meaning of its agreement.... Absent more specific language, a surety should not be obligated to pay such extraneous charges...

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7 cases
  • Greenblatt v. Delta Plumbing & Heating Corp.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • October 13, 1995
    ...New York (Robert W. Sweet, District Judge ) awarding $50,638.86 plus interest and costs to plaintiffs. Greenblatt v. Delta Plumbing & Heating Corp., 849 F.Supp. 247, 251 (S.D.N.Y.1994); Greenblatt v. Delta Plumbing & Heating Corp., 834 F.Supp. 86, 93 (S.D.N.Y.1993). Because we hold that the......
  • Morin v. Empiyah & Co., LLC
    • United States
    • U.S. District Court — Southern District of New York
    • September 28, 2005
    ...and that sureties are typically not liable for contractual penalties. (Def. Mem. of Law at 4) (citing Greenblatt v. Delta Plumbing & Heating Corp., 849 F.Supp. 247, 250-51 (S.D.N.Y.1994)). The Court is aware of no cases, and the parties have cited none, addressing the issue of whether strik......
  • Morse/Diesel, Inc. v. Trinity Industries, Inc.
    • United States
    • U.S. District Court — Southern District of New York
    • December 21, 1994
    ...to pay completion costs upon receiving such notice and were unjustified in failing to do so. Similarly, in Greenblatt v. Delta Plumbing & Heating Corp., 849 F.Supp. 247 (S.D.N.Y.1994), a surety was held to have been in default on a bond guaranteeing benefit contributions owed by its princip......
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    • United States
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    • April 7, 1994
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