International Union of Operating Engineers-Employers Const. Industry Pension, Welfare and Training Trust Funds v. Karr

• Decision Date: 04 June 1993
• Docket Number: ENGINEERS-EMPLOYERS,No. 91-35846,91-35846
• Citation: 994 F.2d 1426
• Parties: , 125 Lab.Cas. P 10,751, 16 Employee Benefits Cas. 2505, Pens. Plan Guide P 23880L INTERNATIONAL UNION OF OPERATINGCONSTRUCTION INDUSTRY PENSION, WELFARE AND TRAINING TRUST FUNDS, Plaintiff-Appellant, v. Richard D. KARR, d/b/a/ Alaska Unlimited Company, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1426

994 F.2d 1426

61 USLW 2774, 125 Lab.Cas. P 10,751,

16 Employee Benefits Cas. 2505,

Pens. Plan Guide P 23880L

INTERNATIONAL UNION OF OPERATING ENGINEERS-EMPLOYERS

CONSTRUCTION INDUSTRY PENSION, WELFARE AND TRAINING TRUST FUNDS, Plaintiff-Appellant, v. Richard D. KARR, d/b/a/ Alaska Unlimited Company, Defendant-Appellee.

No. 91-35846.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 5, 1993.

Decided June 4, 1993.

Kim Williams, Davies, Roberts & Reid, Seattle, WA, for plaintiff-appellant.

C. Craig Holley, Barokas & Martin, Seattle, WA, for defendant-appellee.

Appeal from the United States District Court for the Western District of Washington.

Before: WRIGHT, ALARCON and BEEZER, Circuit Judges.

ALARCON, Circuit Judge:

International Union of Operating Engineers-Employers Construction Industry Pension, Welfare and Training Trust Funds ("Trusts") appeal from the order granting summary judgment in favor of Richard D. Karr, doing business as Alaska Unlimited Company ("AUC"). The Trusts seek reversal of the order dismissing their claims on two grounds. First, the Trusts contend that the doctrine of res judicata is inapplicable to this action, because a claim to recover accurate payments is separate and distinct from a claim to collect delinquent payments for the same time period. Second, the Trusts argue that it would be inequitable to bar an action by an employee benefit trust fund to recover accurate contributions from an employer. The Trusts argue that as a separate entity from both the union and the employer, they had no knowledge of the inaccurate payments at the time they brought the earlier claims for delinquent contributions. We affirm because we conclude that the Trusts' action is barred by the doctrine of res judicata.

I. PERTINENT FACTS AND PROCEDURAL HISTORY

The Trusts are unincorporated associations operating as employee benefit trust funds From January 1, 1986, through December 31, 1988, AUC and Locals 302 and 612 of the International Union of Operating Engineers ("Union") were parties to a collective bargaining agreement and several Trust Agreements established under ERISA. The Trust Agreements required AUC to file timely reports and to make monthly contributions to each of the Trusts for the benefit of eligible employees. The Trust Agreements granted the Trusts the right to recover liquidated damages, interest, and attorneys' fees incurred in collecting any unpaid contributions from participating employers. They further permitted the Trusts to audit the payroll records of a participating employer "on demand." Under the terms of the Trust Agreements, the employer was required to assume the costs of an audit if it revealed that he or she had failed to comply with the terms of the collective bargaining agreement.

                under section 302 of the Labor Management Relations Act, 29 U.S.C. §§ 141-187 and the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461.   The Trusts were created to provide retirement, medical, and training benefits to eligible employees.   Richard D. Karr operates a construction company in Fairbanks, Alaska, and does business as AUC
                

On May 29, 1986, the Trusts filed an action against Karr under section 502(e)(1) and (f) of ERISA, 29 U.S.C. § 1132(e)(1) and (f), and section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, to collect delinquent contributions for the periods May 1, 1985 through September 30, 1985, and November 1, 1985, through May 31, 1986. The Trusts also sought liquidated damages, interest and costs. While that action was pending, the Trusts filed a motion to compel an audit of AUC's payroll records. On June 28, 1988, the district court entered an order granting the Trusts' motion. The Trusts subsequently entered into a settlement agreement with AUC without conducting an audit. In the settlement agreement, AUC agreed to pay the Trusts $51,596.86 in exchange for the dismissal of the action with prejudice. The settlement agreement did not contain a reservation of the right to bring an action for any additional payments disclosed by an audit to be due as a result of the employer's inaccurate payments for the same time period. On August 9, 1988, the district court entered an order dismissing the action with prejudice.

In October, 1987 and again in September, 1988, the Trusts requested Karr to submit to an audit of AUC's payroll records. Karr refused to comply with the first request due to the ongoing litigation in the first action. Karr also refused to comply with the September, 1988 request because the Trusts failed to notify him of their intent to audit, as required in the Trust Agreements.

On March 21, 1989, the Trusts filed a second action against Karr to collect delinquent contributions for July through October, 1988, and to recover liquidated damages, interest, attorneys' fees, and costs. Notwithstanding Karr's refusals to comply with the Trusts' prior requests for an audit, the Trusts did not include a claim in this action to compel an audit of AUC's payroll records.

The parties settled the second action on June 28, 1989. Karr agreed to pay $15,000 to the Trusts in three monthly installments. The Trusts did not reserve the right in the settlement agreement to collect sums that might later be found to be due and owing under the Trust Agreements for the same time period. Karr subsequently made the three installment payments contemplated under the settlement agreement. On July 21, 1989, the district court entered an order dismissing the second action with prejudice.

In 1990, the Trusts attempted to audit AUC for the period January, 1986, through December, 1988. Karr refused to provide the Trusts with complete payroll records with which to conduct the audit. On August 24, 1990, the Trusts filed the present claims to compel an audit of AUC for the period January 1, 1986, through March 21, 1989, and to collect any funds found to be due and owing under the Trust Agreements.

The district court granted summary judgment in favor of Karr. The court determined that the present claim for accurate contributions was barred because it arose out of the same transaction as the first two actions for delinquent payments.

II. RES JUDICATA

The Trusts contend that the district court erred in holding their action barred by the doctrine of res judicata. The Trusts argue that the present action to compel an audit and to recover funds found by the audit to be owed under the Trust Agreement, is separate and distinct from the prior actions to collect delinquent contribution payments owed under the Trust Agreement for the same time periods. We review an order granting summary judgment de novo. Clark v. Bear Stearns & Co., 966 F.2d 1318, 1320 (9th Cir.1992). We review de novo the district court's determination that an action is barred by the doctrine of res judicata. Id.

The doctrine of res judicata bars "all grounds for recovery which could have been asserted, whether they were or not, in a prior suit between the same parties ... on the same cause of action, if the prior suit concluded in a final judgment on the merits." Ross v. Int'l Bhd. of Elec. Workers, 634 F.2d 453, 457 (9th Cir.1980).

The Trusts' request to compel an audit of AUC's payroll records for January 1, 1986 through April 12, 1988, was presented to the district court in the first action. As previously noted, the Trusts filed an action against AUC to recover delinquent payments on May 29, 1986. While that action was pending, the Trusts filed a motion on April 12, 1988 to compel an audit of AUC. The district court granted the motion. After the parties entered into a settlement agreement, the district court dismissed the entire action with prejudice. The dismissal of the action with prejudice constitutes a final judgment on the merits, and prevents the Trusts from reasserting the same claim in a subsequent action against AUC. See Lawrence v. Steinford Holding B.V. (In re Dominelli), 820 F.2d 313, 316-17 (9th Cir.1987) (dismissal of action with prejudice pursuant to a settlement agreement constitutes a final judgment on merits and precludes parties from reasserting the same claim in a subsequent action). Thus, we hold that the Trusts' claim to recover accurate payments for the periods January 1, 1986 through April 12, 1988, the filing date of the Trusts' motion to compel an audit, is barred by the doctrine of res judicata.

The Trusts' second action, filed on March 21, 1989, did not include a claim to compel an audit. We must decide whether the Trusts' present claim to compel an audit for the period April 13, 1988, through March 21, 1989 could have and should have been brought in the Trusts' second action to recover delinquent payments. In determining whether successive claims constitute the same cause of action, we consider

(1) whether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of the second action; (2) whether substantially the same evidence is presented in the two actions; (3) whether the two suits involve infringement of the same right; and (4) whether the two suits arise out of the same transactional nucleus of facts.

Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 570, 74 L.Ed.2d 932 (1982). "The last of these criteria is the most important." Id. at 1202 (footnote omitted).

"Whether two events are part of the same transaction or series depends on whether they are related to the same set of facts and whether they could conveniently be tried together." Western Sys., Inc. v. Ulloa, 958 F.2d 864, 871 (9th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 970, 122 L.Ed.2d 125 (1993). We are persuaded that the Trusts' claim for accurate payments arises out of the same transactional nucleus of facts as the prior actions for delinquent payments. The Trusts' second action was premised on AUC's alleged breach of the same Trust Agreements...