Board of Trustees of Trucking Employees of North Jersey Welfare Fund, Incorporated - Pension Fund v. Centra
| Decision Date | 29 December 1992 |
| Docket Number | Nos. 92-5140,92-5116 and N,s. 92-5140 |
| Citation | 983 F.2d 495 |
| Parties | 16 Employee Benefits Cas. 1222 BOARD of TRUSTEES of TRUCKING EMPLOYEES of NORTH JERSEY WELFARE FUND, INC.--PENSION FUND v. CENTRA, a Delaware Corporation; General Highway Express, an Ohio Corporation; Central Transport, a Michigan Corporation; GLS Leasco, a Michigan Corporation; Central Cartage Co., a Michigan Corporation; C.T. Transport, Inc.; Port Side Transport, Inc.; McKinlay Transport, Ltd.; Crown Enterprises; Bancroft Trucking Co. Centra Inc; General Highway Express, Inc.; Central Transport, Inc.; GLS Leasco, Inc.; Central Cartage Co.; C.T. Transport, Inc., Port Side Transport, Inc.; McKinlay Transport, Ltd.; Crown Enterprises; and Bancroft Trucking Co., Appellants. o. 91-5959. |
| Court | U.S. Court of Appeals — Third Circuit |
Craig L. John, Mary E. Royce (argued), Joseph H. Hickey, Bloomfield Hills, MI, Patrick A. Moran, William G. Shanaberger, Patrick Moran & Associates, Southfield, MI, for appellants.
Elizabeth Roberto (argued), Eames, Wilcox, Mastej, Bryant, Swift & Riddell, Detroit, MI, James R. Zazzali, Zazzali, Zazzali, Fagella & Nowak, Newark, NJ, for appellee.
Before: COWEN, NYGAARD and SEITZ, Circuit Judges.
The Board of Trustees of Trucking Employees of North Jersey Welfare Fund, Inc.--Pension Fund ("the Fund") filed this suit pursuant to the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1381 et seq. ( provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq.), seeking to collect withdrawal liability from Centra, Inc. and several of its subsidiaries (collectively "Centra"). Centra's potential liability to the Fund arose from Centra's acquisition of Mason and Dixon Lines, Inc. ("Mason-Dixon"), a contributor to the Fund that later filed for bankruptcy and permanently withdrew from the Fund. Mason-Dixon and the Fund previously had signed a settlement agreement, approved by the bankruptcy court, under which the Fund received Mason-Dixon preferred stock in exchange for releasing Mason-Dixon and its successors from any further liability. Centra defended the collection action by arguing that it did not control Mason-Dixon at the time Mason-Dixon withdrew from the Fund and that the broad release clause in the settlement agreement immunized Centra from liability.
Subsequently, the Fund filed a motion with the bankruptcy court, seeking to vacate the order approving the settlement agreement on the grounds of misrepresentation, mistake and breach of the settlement agreement. The bankruptcy court refused to vacate its prior order and made findings that neither misrepresentations nor justifiable mistake induced the Fund to sign the agreement. The district court then entertained a summary judgment motion by the Fund on the issue of interim payments. The district court found that Centra controlled Mason-Dixon and ordered Centra to make interim payments to the Pension Fund pending final resolution, by an arbitrator, of the dispute concerning the enforceability of the settlement agreement. Centra appeals this ruling.
Because, on the date of Mason-Dixon's withdrawal from the Fund, Centra possessed the same degree of control over Mason-Dixon that an option contract confers, we agree with the district court that Centra was in common control with Mason-Dixon. Although the bankruptcy court reserved the ultimate issue of the propriety of the Fund's rescission of the settlement agreement, its specific findings that neither mistake nor misrepresentation caused the Fund to sign the settlement agreement bar relitigation of these issues. The remaining issue, whether the Fund could rescind the settlement agreement due to Mason-Dixon's breach, must be decided on remand in the district court because this issue does not fall within the exhaustive list of arbitrable issues outlined in MPPAA. Finally, MPPAA's "pay first, dispute later" policy requires Centra to make interim payments to the Fund pending final resolution of the dispute. Therefore, we will affirm in part and reverse in part the district court's ruling, and will remand for trial on the issue whether Mason-Dixon breached the settlement agreement, and if it did, whether the breach was sufficiently substantial to justify the Fund's rescission of the agreement.
The Pension Fund, a plan sponsor of a multiemployer fund as defined by 29 U.S.C. § 1301(a)(3) (1988), filed this action against Centra to collect withdrawal liability pursuant to MPPAA. Under MPPAA, when a contributing employer withdraws from participation in a fund, the employer is responsible for his pro rata share of the unfunded vested liability remaining in the fund at the time of withdrawal, subject to certain adjustments. See 29 U.S.C. § 1381(b) (1988). The Act provides a series of complicated formulas by which the amount of liability is to be calculated. See 29 U.S.C. § 1391 (1988 & Supp. I 1989). Not only contributing employers, but also any businesses "under common control" with that employer are liable to a fund when an employer withdraws. See 29 U.S.C. § 1301(b)(1). 1 Under a common control theory, the Fund sought collection from Centra of the allegedly unpaid withdrawal liability assessments of Mason-Dixon, a company acquired by Centra that later entered bankruptcy and permanently withdrew from the Fund.
Mason-Dixon, a trucking company, signed a collective bargaining agreement with its union, which obligated Mason-Dixon to contribute to the Pension Fund on behalf of its union employees. Mason-Dixon made regular payments to the Fund for several years. On March 29, 1984, because of severe financial difficulties, Mason-Dixon filed a Chapter 11 petition for reorganization in a North Carolina bankruptcy court. Mason-Dixon discontinued contributions to the Fund on April 9, 1984. 2 The Fund admits that it learned of the Mason-Dixon bankruptcy during the summer of 1984. Nevertheless, on July 10, 1985, a year after they initially became aware of the bankruptcy proceeding, the Fund sent a statutory Notice and Demand to Mason-Dixon, claiming $778,616 in withdrawal liability and demanding payment. Although MPPAA allows an employer sixty days to arbitrate any dispute concerning a determination under specified MPPAA sections or to challenge other aspects of the withdrawal liability assessment in court, see 29 U.S.C. § 1401(a)(1) (1988), Mason-Dixon never responded to the Notice and Demand letter.
At the same time it sent the Notice and Demand letter, the Fund also filed a proof of claim for withdrawal liability with the North Carolina bankruptcy court overseeing Mason-Dixon's reorganization. The proof of claim was filed long after the deadline set by the bankruptcy court. Eight months after the filing of the proof of claim, Mason-Dixon objected to the Fund's claim on the grounds that it was untimely, and the Fund failed to respond to this procedural objection. Pursuant to an Order of Confirmation dated March 29, 1986, the bankruptcy court disallowed the Fund's claim due to its belated filing and discharged Mason-Dixon's debts.
In 1988, approximately two years after the Fund's claim was dismissed, the Fund filed a motion with the bankruptcy court requesting reconsideration of its untimely claim because the Fund's law firm, Zazzali, Zazzali & Kroll, never received any notice of the hearing to dismiss the Fund's claim as time-barred. 3 During the pendency of that motion, the Fund and Mason-Dixon successfully negotiated a settlement agreement. The Fund received $545,031, seventy percent of the face value of its claim, to be paid in Mason-Dixon preferred stock. The stock was worth very little since it was redeemable only after twenty years, paid no interest, and provided its owner with no voting rights. The agreement provided that Mason-Dixon would issue this stock within ten days of the date of settlement. The agreement also contained a broad release clause, releasing Mason-Dixon and all of its successors in interest from all claims, including withdrawal liability claims. 4 The parties signed the settlement agreement on December 28, 1989 and the bankruptcy court approved it on January 5, 1990.
On November 29, 1983, unbeknownst to the Fund, Centra had executed a stock-purchase agreement with the shareholders of Mason-Dixon. The agreement gave Centra the exclusive right to purchase all of the outstanding shares of Mason-Dixon, contingent upon approval from the Interstate Commerce Commission ("ICC") and several state regulatory agencies. On January 4, 1984, the ICC granted Centra temporary authority to operate Mason-Dixon, and the ICC finally approved the stock acquisition on March 7, 1984. Because several state agencies regulating intrastate commerce did not announce their approval until after the ICC 5, the stock purchase agreement was not finalized until February of 1985.
The Fund alleges that at the time it negotiated the settlement agreement with Mason-Dixon, it was unaware of the existence of Centra or any other solvent party that was a potential source of payment. Although the settlement agreement contained signature lines only for the Fund and Mason-Dixon, the accompanying bankruptcy court order was signed by these parties as well as a Centra attorney. The Fund claims that it was unaware that a Centra representative signed the agreement.
After the agreement was signed and incorporated into a judgment by the bankruptcy court, the Fund inadvertently discovered that Centra previously had acquired Mason-Dixon. If Centra was under "common control" with Mason-Dixon at the time of Mason-Dixon's withdrawal from the Fund and possessed no other valid defenses, Centra would be jointly and severally liable for the withdrawal liability of Mason-Dixon. See 29 U.S.C. § 1301(b)(1). The Fund, therefore, investigated the timing of the transaction.
...
To continue reading
Request your trial
-
In re DuFrayne
... ... Amalgamated Insur. Fund (In re Garafano), 99 B.R. 624, 630-31 ... Board of Trustees of Trucking Employees Pension Fund v. Centra, 983 F.2d 495, 504 (3rd Cir.1992). Collateral ... ...
-
In re Congoleum Corp.
... ... New Jersey. Signed January 7, 2022 Hearing Date: November ... & Finger, P.A., One Rodney Street, 920 North King Street, Wilmington, DE 19801, Counsel for ... from the Century Agreement be incorporated into any future confirmation order. See ... Of Trustees of Trucking Employees of N.J. Welfare Fund, Pension Fund v. Centra , 983 F.2d 495, 504 (3d Cir ... ...
-
Doe v. Hesketh
... ... sentencing court ordered Mancuso to fully fund a trust for the benefit of Doe in the amount of ... Id. at 1179. The trustees of the parcel of land, on behalf of the first ... United States v. Jersey Shore State Bank , 781 F.2d 974, 977 (3d ... of Trs. of Trucking Emps. of N. Jersey Welfare Fund, Inc. v. Centra ... ...
-
Bd of Trustees, Trucking Employees v. Kero
... 377 F.3d 288 ... BOARD OF TRUSTEES OF TRUCKING EMPLOYEES OF NORTH JERSEY WELFARE FUND, INC-PENSION FUND ... KERO LEASING ... — Pension Fund v. Centra", 983 F.2d 495, 507 (3d Cir.1992) ... \xC2" ... trades or businesses (whether or not incorporated) which are under common control." 29 U.S.C. § ... ...