Bricklayers, Masons and Plasterers Intern. Union of America, Local Union No. 15, Orlando, Fla. v. Stuart Plastering Co., Inc.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Citation512 F.2d 1017
Docket NumberNo. 74-2087,74-2087
Parties89 L.R.R.M. (BNA) 2389, 77 Lab.Cas. P 10,871 BRICKLAYERS, MASONS AND PLASTERERS INTERNATIONAL UNION OF AMERICA, LOCAL UNION NO. 15, ORLANDO, FLORIDA, et al., Plaintiffs-Appellants, v. STUART PLASTERING COMPANY, INC., et al., Defendants-Appellees.
Decision Date12 May 1975

Ronald G. Meyer, Richard H. Frank, Tampa, Fla., for plaintiffs-appellants.

Plasterwalls, Inc., pro se.

Appeal from the United States District Court for the Middle District of Florida.

Before BROWN, Chief Judge, and MURRAH * and WISDOM, Circuit Judges.

WISDOM, Circuit Judge:

Section 302 of the National Labor Relations Act, 29 U.S.C. § 151 et seq., prohibits payments by an employer to labor organizations or to their representatives. One exception, Section 302(c)(5), 29 U.S.C. § 186(c)(5), permits an employer or association of employers to make specified payments to certain "trust (funds) established by such representatives". Here, a collective bargaining agreement established a schedule of payments for participating employers to make health and welfare payments and pension payments to a union's health and welfare fund. A trust agreement for the proposed health and welfare fund was drafted and executed by two employers engaged in the plastering business in Orlando, Florida, but it was not executed by any of the defendant employers. A pension fund trust agreement was also drafted, but it was not executed by any employer who was allegedly a party to the collective bargaining agreement. The question this appeal presents is whether the schedule of payments set out in the collective bargaining agreement, by itself and the circumstances of this case, satisfies the requirements of Section 302(c)(5) and imposes on the employer an enforceable obligation to contribute the disputed health and welfare payments and pension payments. We hold that it does not.


The collective bargaining agreement at the heart of this dispute was signed by George Stuart, as representative of the Plasterers Association, and by Don Goad, as representative of Local 15, on December 15, 1968. The relevant section of that agreement is Article II, Section 4. This section sets forth a schedule of payments to be made by participating employers forhealth and welfare benefits and pension benefits, effective March 1, 1969, and continuing for the life of the contract, which expired on February 28, 1973. The agreement provides that "the following amounts (specified thereafter under the "health and welfare" benefits schedule and the "pension" benefits schedule) shall be paid into health and welfare fund". The agreement also provides that "(s)uch fund shall be designated by Local No. 15, Plasterers International Union of America, Orlando, Florida".

The collective bargaining agreement specifies that both types of payment be made to a single "health and welfare fund". That provision, as is evident, is in violation of Section 302(c)(5)(C), requiring that payments made by employers for use as pension benefits "be made to a separate trust, which provides that the funds held therein cannot be used for any purpose other than paying such pensions or annuities".

Under the collective bargaining agreement, the health and welfare fund, to which payments should be made by participating employers, "shall be designated by Local No. 15". Moreover, Section 302(c)(5) of the Act places the burden of going forward with the establishment of qualifying trust funds on the union representatives. Specifically, it provides an exception to the general prohibition of Section 302 for employer payments "paid to a trust fund established by such (union) representative, for the sole and exclusive benefit of the employees of such employer" (emphasis added). No trust agreement establishing a pension fund was executed by anyone, and the health and welfare trust agreement was not signed by any of the defendants. The union suggests, on an estoppel theory, that compliance with the strict requirements of Section 302(c)(5) is unnecessary because some contributions of health and welfare benefits and pension benefits were made. They contend that those contributions are sufficient proof of the existence of a trust fund to satisfy their obligation under the National Labor Relations Act.

The record demonstrates that Stuart made some payments, both for health and welfare benefits and for pension benefits, as set forth in the collective bargaining agreement schedule. Those payments were made to All State Administrators, Inc., a corporation organized by Stuart, Don Goad, the union representative, and David Foley, an insurance broker, for the purpose of administering these fringe benefit funds for their individual profit. All State Administrators was one of several corporations organized by Stuart and Goad, for their individual purposes, during the period that they were negotiating the collective bargaining agreement on behalf of their respective principals. Both Stuart and Goad later misused some of the fringe benefits money that the participating employers paid into All State. Stuart used part of the money to satisfy delinquent withholding taxes that were due from his plastering business. Goad used part of the money to finance his unsuccessful campaign for re-election as Business Manager of Local 15. The various infirmities and delinquencies connected with the administration of the fringe benefits money surfaced only after Goad's defeat in the re-election campaign, when Goad crossed the aisle to join Stuart on the management side, and a new union administration uncovered the previous irregularities.

Francis Snider, Goad's successor as Business Manager of Local 15, informed participating employers, on March 1, 1970, that they should make no further pension contributions to All State Administrators. He instructed them to make payments, instead, to an escrow account to be designated by the union. The reason for this change in method of operation, as stated in the letter, was that: "(i)mplementation of the pension program, consistent with federal law has not occurred. The required trust agreement has neither been drafted or approved. In addition, it appears that trustees who will serve in the administration of the pension fund have not yet been appointed." Snider did not give his reasons for believing that the pension fund was not lawfully organized after a year of its supposed operation, and he did not offer any legal authority for his instruction that the employers should make future payments to a union-designated escrow account. Without indicating any legal basis for a different approach to the health and welfare fund, he ordered the employers to continue making health and welfare payments to All State. By affidavit, Stuart testified that he paid pension fund contributions directly to his employees after March 1, 1970.

On September 25, 1970, Snider informed the participating employers, again cryptically, that the Local 15 membership had "voted down all fringe benefits at a special meeting" and that the employers, therefore, should withhold payments to both funds or, alternatively, make payments directly to their respective employees, until further notice by the union officials. By affidavit, Stuart set out the details of health and welfare payments, and alleged that he had attempted, in light of the confusion surrounding the propriety of payments to the fund, 1 to follow the wishes of his employees, who sometimes wished payments to be made directly to them and, at other times, to the fund. These facts indicate the uncertainties of administration that Congress intended to eradicate in the enactment of Section 302.

In the first round of this litigation, the alleged trustees of the union's health and welfare fund sought recovery of the money paid to All State Administrators and later misused by Goad and Stuart. See Snider v. All State Administrators, Inc., 5 Cir. 1973, 481 F.2d 387. The present suit, brought under Section 301, 2 29 U.S.C. § 185, to compel payments that Stuart allegedly owed and did not pay in due course, was initiated by Local 15 and the alleged trustees of the pension fund. The complaint was later amended to include the alleged trustees of the health and welfare fund. The union maintains that Stuart Plastering Co. and its alleged successors 3 failed to comply with their duty under the collective bargaining agreement to make specified payments into the union health and welfare fund and the pension fund. Stuart contends 4 that it had no obligation to make the disputed payments because the instruments relied on by the plaintiffs do not meet the necessary prerequisites for settling a qualifying Taft-Hartley Trust in accordance with Section 302(c)(5). 5 Stuart insists, therefore, that such payments would be unlawful under Section 302(a) 6 and would subject it to possible criminal liability under Section 302(d). 7

The district court granted Stuart's motion for summary judgment, stating: "(t)here is no genuine issue of fact as to the non-existence of a written agreement signed by any of the defendants conforming to the requirements of 29 U.S.C. § 186 which is an absolute prerequisite to any obligation on the part of the defendants ... to make payments to a pension and/or health and welfare fund represented by the plaintiffs." The appellants now contend that the district court improperly granted summary judgment for the defendants, because the writings in the record were sufficient to meet the requirements of Section 302 and thus imposed on Stuart an enforceable obligation to make such payments.


The district court granted the defendants' motion for summary judgment when it found, on the basis of the record before it, that there was "no genuine issue of fact as to the non-existence of a written agreement signed by any of the defendants conforming to the requirements of 29 U.S.C. § 186". The plaintiffs as well as the defendants, moved...

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