Wilson v. A&K Rock Drilling, Inc.

• Decision Date: 05 June 2017
• Docket Number: Case No. 2:16-cv-739
• Parties: CAROL A. WILSON, et al. Plaintiffs, v. A&K ROCK DRILLING, INC., Defendant.
• Court: U.S. District Court — Southern District of Ohio

CAROL A. WILSON, et al. Plaintiffs, v. A&K ROCK DRILLING, INC., Defendant.

Case No. 2:16-cv-739

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

June 5, 2017

JUDGE ALGENON L. MARBLEY

Magistrate Judge Jolson

OPINION & ORDER

This matter comes before the Court on a motion to dismiss from Defendant A&K Rock Drilling, Inc. ("A&K"). (Doc. 15). A&K argues that the plaintiffs' claims—which seek overdue fringe benefit fund payments on behalf of A&K's covered employees—are: (1) barred by Ohio's eight-year statute of limitations; and (2) partially foreclosed by the plain language of the relevant Collective Bargaining and Trust Agreements as well as federal labor law. After careful consideration of the parties' briefing and applicable law, the Court disagrees and, for the reasons set forth below, DENIES A&K's motion to dismiss.

I. BACKGROUND¹

The plaintiffs—the Trustees and Administrator of the Ohio Operating Engineers Health and Welfare Plan, the Ohio Operating Engineers Pension Fund, the Ohio Operating Engineers Apprenticeship Fund, and the Ohio Operating Engineers Education and Safety Fund (the "Funds")—filed suit seeking delinquent employer contributions under the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 141 et seq., and the Employee Retirement Security Income Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132, 1145.

A&K Rock Drilling, Inc. is an Ohio corporation, with its principal place of business located in Danville, Ohio. At all relevant times, A&K was engaged in the contracting industry. In March 2002, A&K executed the first of three "Acceptances of Agreement" with the Ohio Contractors Association and an Acceptance of Agreement with the Associated General Contractors of Ohio Labor Relations Division ("Collective Bargaining Agreements" or "CBAs"). Gregory Klodt acted on behalf of A&K in executing these Collective Bargaining Agreements. The CBAs, which incorporated by reference four Trust Agreements, obligated A&K to contribute to the Funds' fringe benefit funds for all hours worked by A&K's employees.

On November 6, 2015, the Funds conducted an audit and concluded that A&K had failed to make required contributions for hours worked by Gregory Klodt, D.T. Colopy, and A.F. Hooper between January 2004 and March 2008. The Funds sent a letter to A&K requesting $39,061.18 for unpaid fringe benefit contributions and $17,086.62 for interest charges, amounting to a total demand of $56,147.80.

The Funds then filed this suit in July 2016, seeking delinquent contributions, interest, liquidated damages, fees, and costs under ERISA § 515. See 29 U.S.C. § 1145 ("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."). Last November, A&K filed a motion to dismiss all claims, arguing that they are barred under the relevant statute of limitations and fail to state a claim for which relief can be granted with respect to contributions on behalf of Gregory Klodt. (Doc. 15). The Funds timely filed a response in opposition (Doc. 17), to which A&K then replied. (Doc. 18). This matter is fully briefed and ripe for review.

II. STANDARD OF REVIEW

A&K moved to dismiss the complaint for failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests "whether a cognizable claim has been pleaded." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988). In making this determination, courts "construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff." Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). Thus, dismissal is appropriate only when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Guzman v. U.S. Dep't of Homeland Sec., 679 F.3d 425, 429 (6th Cir. 2012) (quotation omitted). If the allegations in a complaint "show that relief is barred by the applicable statute of limitations, [then] the complaint is subject to dismissal for failure to state a claim." Jones v. Bock, 549 U.S. 199, 920-21 (2007).

III. ANALYSIS

A&K argues for dismissal on two grounds: (1) the Funds' claims are barred by Ohio's eight-year statute of limitations; and (2) even if the Funds' claims are not time barred, A&K is not liable for payments on behalf of Gregory Klodt because he is a company owner and employer representative, not a covered employee. The Court will address each argument in turn.

A. The Funds' Claims Are Not Barred by the Statute of Limitations.

A&K first argues that this suit must be dismissed because all claims for delinquent contributions fall outside the applicable eight-year statute of limitations. The Court disagrees, however, because A&K ignores legislative pronouncements on whether to apply Ohio's former fifteen-year statute of limitations or Ohio's current eight-year statute of limitations. As explained, the longer limitation period applies to this action, thus saving the Funds' claims.

As the parties agree, ERISA does not provide a statute of limitations for delinquent contribution actions under Section 515. As such, courts must "apply the limitations period for the state cause of action that is most analogous to the ERISA claim at issue." Operating Eng'rs Local 324 Health Care Plan v. G&W Constr. Co., 783 F.3d 1045, 1054 (6th Cir. 2015). The Sixth Circuit holds that where there is a claim for delinquent contributions, courts must apply the "forum state's general limitations period for contract actions." Id. In Ohio, the current statute of limitations for breach of contract claims is eight years. Ohio Rev. Code § 2305.06; cf. Wilson v. Bridge Overlay Sys., 129 F. Supp. 3d 560, 581 (S.D. Ohio 2015) (mentioning Ohio's eight-year statute of limitations in ERISA collection action).

Ordinarily, the statute begins running at the time of the first alleged breach of contract. In other words, the statute begins running when the company first fails to make a required contribution or payment under the relevant agreement. See G&W Constr. Co., 783 F.3d at 1054 ("The Funds filed this action in February 2011 seeking unpaid contributions for the period 'from January 2007.' Because the suit was brought within the six-year statute of limitations for contract claims in Michigan, the defendants may not shorten the limitations period . . . ."); Wilson, 129 F. Supp. 3d at 581 (finding that where no fund contributions were ever made under the contract, the statute of limitations began running when the contract was executed).

In light of the foregoing, A&K argues that all claims are time barred because, as the Funds acknowledge, the delinquent payments began in January 2004, yet the Funds failed to file this suit until July 2016—well outside the eight-year limitations period. (Doc. 16, PageID 96 ("In the case sub judice, A&K is properly asserting that Plaintiffs' claims are time barred. . . . The initial Complaint was filed on July 28, 2016, 12 years and 6 months after the first alleged breach and 8 years and 4 months after the last alleged breach.")).

The Funds counter that Ohio's prior statute of limitations for breach of contract claims—which was fifteen years instead of eight—applies, thus saving their claims. The Funds also argue that, even if the newer eight-year limitation period applies, the federal "discovery rule" steps in to save their claims because the Funds did not discover the delinquent payments until the audit in 2015.

Before September 28, 2012, Ohio Rev. Code § 2305.06 "provided for a fifteen-year statute of limitation" for breach of contract claims. United States v. Edwards, No. 2:12-cv-1060, 2014 WL 3818565, at *6 (S.D. Ohio Aug. 4, 2014); see also Potts v. Unglaciated Indus., Inc., No. 15 MO 0003, 2016-Ohio-8559, at ¶ 96 (Ohio Ct. App. Dec. 30, 2016). A 2012 amendment to the statute shortened the limitations period to eight years for breach of contract actions based on a written agreement. Potts, 2016-Ohio-8559, at ¶ 96; Sub. S.B. 224, § 1, 129th Gen. Assem. (Ohio 2012) ("S.B. 224"). In shortening the limitations period, the Ohio General Assembly specified as follows in an "uncodified" portion of S.B. 224:

For causes of action that are governed by section 2305.06 of the Revised Code and accrued prior to the effective date of this act, the period of limitations shall be eight years from the effective date of this act or the expiration of the period of limitations in effect prior to the effective date of this act, whichever occurs first.

Potts, 2016-Ohio-8559, at ¶ 96 (emphasis added) (quoting S.B. 224, § 4, 129th Gen. Assem. (Ohio 2012)).

Under this framework, if the Funds' causes of action accrued when A&K first failed to make the required contributions in 2004 (i.e., if the causes accrued prior to the effective date of S.B. 224), then the previous fifteen-year limitation period applies, giving the Funds until 2019 to file suit. Id.; see also Edwards, 2014 WL 3818565, at *6 ("Thus, under the former version of § 2305.06, a fifteen-year limitations period applied to any claims that began to run from the last payments Edwards made to I.S.M.B.A. sometime in 1995).

A&K argues that the Funds' causes of action accrued in 2004 but appears to have overlooked the "uncodified law underlying the [2012] amendment to R.C. 23050.06" in filing its motion to dismiss. See Potts, 2016-Ohio-8559, at ¶ 96. In its Reply Brief, however, A&K argues that "[t]his Court is under no obligation to conform to the Ohio legislature's annotations as to the application of its amended law." (Doc. 18, PageID 281). But A&K cites no authority for the proposition that this Court can ignore the General Assembly's...