874 F.2d 912 (2nd Cir. 1989), 729, Diduck v. Kaszycki & Sons Contractors, Inc.

Docket Nº:729, Docket 88-7882.
Citation:874 F.2d 912
Party Name:10 Employee Benefits Ca 2673 Harry J. DIDUCK, individually and as a participant in the Local 94 Insurance Trust Fund and the Local 95 Pension Fund, and on behalf of all other persons who are, will be, or have at any time since January 1980 been participants in the Funds, similarly situated, Plaintiffs-Appellants, v. KASZYCKI & SONS CONTRACTORS, INC
Case Date:May 10, 1989
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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874 F.2d 912 (2nd Cir. 1989)

10 Employee Benefits Ca 2673

Harry J. DIDUCK, individually and as a participant in the

Local 94 Insurance Trust Fund and the Local 95 Pension Fund,

and on behalf of all other persons who are, will be, or have

at any time since January 1980 been participants in the

Funds, similarly situated, Plaintiffs-Appellants,

v.

KASZYCKI & SONS CONTRACTORS, INC.; William Kaszycki; John

Senyshyn; Trump-Equitable Fifth Avenue Company; Donald J.

Trump; Donald J. Trump d/b/a the Trump Organization; the

Equitable Life Assurance Society of the United States; and

the Trustees of the House Wreckers Union Local 95 Insurance

Trust Fund and of the House Wreckers Union Local 95 Pension

Fund, Defendants-Appellees.

No. 729, Docket 88-7882.

United States Court of Appeals, Second Circuit

May 10, 1989

Argued Jan. 30, 1989.

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Wendy E. Sloan, Burton H. Hall, New York City (Hall & Sloan, New York City, on the brief), for plaintiffs-appellees Harry J. Diduck.

Robert Wang, New York City (Hendler, Murray & Mait, New York City, on the brief), for defendant-appellee John Senyshyn.

Arthur N. Lambert, Kenneth L. Aron, New York City (Lambert & Weiss, New York City, on the brief), for defendants-appellees Trustees.

Milton S. Gould, Fran M. Jacobs, New York City (Shea & Gould, New York City, on the brief), for defendants-appellees Trump.

Before VAN GRAAFEILAND and CARDAMONE, Circuit Judges, and SWEET, District Judge. [*]

SWEET, District Judge:

Plaintiff Harry J. Diduck ("Diduck") has appealed from summary judgment dismissing his complaint against several parties that he alleges are liable for contributions an insolvent demolition contractor failed to make to pension and insurance funds of which Diduck is a beneficiary. In dismissing Diduck's complaint, the Honorable Charles E. Stewart held that Diduck lacked standing to sue derivatively on behalf of the pension and insurance funds because the trustees of those funds had not breached a fiduciary duty, that Diduck could not maintain an action under the Racketeer Influenced and Corrupt Organizations law (RICO) because no criminal enterprise existed, and that the statute of limitations under the Employee Retirement Income Security Act (ERISA) barred his claims. Having dismissed the federal claims, Judge Stewart also held that he lacked jurisdiction to consider the pendent state claims. For the reasons set forth below, we reverse and remand.

The Facts

In 1979, the Trump Organization, Inc. (the "Trump Organization") and the Equitable Life Assurance Company ("Equitable") created a joint venture--called the Trump-Equitable Fifth Avenue Company ("Trump-Equitable")--(collectively, with Donald J. Trump ("Trump"), the "Trump defendants") to demolish the old Bonwit Teller building on Fifth Avenue and construct the building now known as Trump Tower (the "Trump Tower Project"). To perform the demolition, Trump-Equitable hired William Kaszycki ("Kaszycki") and his company, Kaszycki and Sons Contractors, Inc. (the "Kaszycki Corporation"), (collectively, the "Kaszycki defendants") pursuant to a written agreement signed January 30, 1980 (the "demolition agreement").

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The demolition agreement obligated Trump-Equitable to pay the Kaszycki Corporation $775,000 and made the Kaszycki Corporation responsible for providing labor, equipment, and supplies.

The Trump Tower Project was the Kaszycki Corporation's first and only complete building demolition. Previously, Kaszycki--through a company called "Interstate Window Cleaning"--had engaged primarily in window cleaning, although he had performed some interior demolition work. Kaszycki testified at his deposition that the only reason he formed "Kaszycki and Sons Contractors, Inc." was because "It didn't sound good for a window cleaning company to do demolition work."

To obtain workers for the Trump Tower Project, Kaszycki entered into a collective bargaining agreement on behalf of the Kaszycki Corporation with Housing Wreckers' Union Local 95 ("the Union") for the period from January 1, 1980 through June 30, 1981. Kaszycki's signature on the collective bargaining agreement is undated. None of the Trump defendants signed this agreement.

The Kaszycki Corporation began the Trump Tower Project in January 1980 and continued the work until August 1980. During this period, the Kaszycki Corporation employed both Union and non-union workers. The non-union workers consisted primarily of some 200 Polish aliens--sometimes referred to as the "Polish Brigade"--whom the company paid less than Union workers. The Polish workers performed much of the demolition work.

The collective bargaining agreement obligated the Kaszycki Corporation to contribute eight percent of total wages to the Union's Insurance Trust Funds and ten percent to its Pension Funds (the "Funds") on behalf of both Union and non-union workers. To calculate the contributions to the Funds, the collective bargaining agreement provided for the Union's shop steward and the Kaszycki Corporation to file weekly reports listing the workers on the job, the number of hours they worked, and their wages. Despite this requirement, the shop steward and employer reports for the Trump Tower Project listed the Union workers, but not the Polish workers.

Defendant John Senyshyn ("Senyshyn"), the Union's president and a Trustee of the Funds, served as the Union's shop steward on the Trump Tower Project for three weeks, beginning March 25, 1980. He filed his first shop steward report for the week ending March 26, 1980 and thereafter filed two other shop steward reports. After that, another Union member, John Osijuk ("Osijuk"), became shop steward and filed the weekly shop steward reports. Although Senyshyn ceased acting as shop steward in mid-April, the weekly shop steward and payroll reports listed Senyshyn as receiving wages for working at the Trump Tower Project until at least August 12, 1980.

During the Trump Tower Project, the Kaszycki Corporation became financially insolvent and failed to pay the workers' wages and to contribute to the Funds. In early June 1980, the Union notified Trump-Equitable of the Kaszycki Corporation's failure to pay wages and Fund contributions.

In response, Thomas Macari ("Macari"), a vice president with the Trump Organization, sent the Kaszycki Corporation a letter on June 6, 1980 notifying it of the Union's concerns and stating:

I urge you to take immediate action to correct this problem. Any delay in this job could mean hundreds of thousands of dollars in the cost of this building for which we will hold you responsible.

Despite Macari's letter, the Kaszycki Corporation's failure to contribute to the Funds persisted.

When the Funds' Trustees (the "Trustees") realized that the Kaszycki Corporation was failing to pay its contributions to the Funds, they voted in their June 16, 1980 meeting to impose work stoppages. To prevent work stoppages and the delays they would have caused, Trump-Equitable made a number of payments to the Funds during June and July. Along with the checks, Trump-Equitable sent the Funds receipts stating that it was making the payments "On behalf of Kaszycki & Sons

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Contractors, Inc." The Funds treated the checks as payments from the Kaszycki Corporation--not from Trump-Equitable--in its records. Macari informed the Kaszycki Corporation about these payments and advised the company that Trump-Equitable would hold it responsible for them.

Because the employer and shop steward reports omitted the Polish workers' wages, the Trustees threatened work stoppages to obtain--and Trump-Equitable paid--Fund contributions only on behalf of the Union members.

At his deposition, Kaszycki testified that, about midway through the Trump Tower Project:

I lost the control of paying. Trump Organization, they pay to everybody. They gave me no money and they were making the payroll.

This involved paying for supplies and equipment, as well as for labor. Some of the Polish workers testified that Macari gave them job instructions. The record also contains evidence that Macari fired some of the Kaszycki Corporation's workers in late June 1980.

The demolition agreement obligated Trump-Equitable to make progress payments periodically to the Kaszycki Corporation. When the Kaszycki Corporation's financial problems became apparent, Trump-Equitable opened a joint checking account with the company and deposited the progress payments into that account, allegedly to prevent the company from diverting the progress payments from the Trump Tower Project to other purposes. Checks could be drawn on the account only with signatures from representatives of both the Kaszycki Corporation and Trump-Equitable. Kaszycki testified that Macari would present a check to him each week for his signature. The check then was cashed and used to pay the costs associated with the Trump Tower Project, including wages for Union and non-union workers and fund contributions for Union workers.

By the time the Trump Tower Project was complete, Trump-Equitable had paid $425,740 in expenses that the Kaszycki Corporation should have paid, in addition to the $742,000 it paid directly to the Kaszycki Corporation under the demolition agreement. Trump-Equitable never sued the Kaszycki Corporation to recover the money it had contributed to the Funds. At his deposition, Trump stated that such a lawsuit "would not have been fruitful."

As of December 8, 1980, the delinquencies to the Funds for the Union workers on the Trump Tower Project were satisfied. However, neither the Kaszycki Corporation nor Trump-Equitable contributed to the Funds on behalf of the Polish workers.

Diduck, the plaintiff in this action, is a member of the Union. Although he did not work on the Trump Tower Project, he had some suspicions about what was occurring there. In June 1980, Diduck ran unsuccessfully for...

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