Busacca v. Excavating, Bldg. Material Drivers Union

• Decision Date: 13 December 1996
• Docket Number: No. 1:95 CV 1690.,1:95 CV 1690.
• Citation: Busacca v. Excavating, Bldg. Material Drivers Union, 953 F.Supp. 867 (N.D. Ohio 1996)
• Parties: Salvatore I. BUSACCA, Plaintiff v. EXCAVATING, BUILDING MATERIAL AND CONSTRUCTION DRIVERS UNION LOCAL 436 WELFARE FUND BOARD OF TRUSTEES, Defendants.
• Court: U.S. District Court — Northern District of Ohio

953 F.Supp. 867

Salvatore I. BUSACCA, Plaintiff v. EXCAVATING, BUILDING MATERIAL AND CONSTRUCTION DRIVERS UNION LOCAL 436 WELFARE FUND BOARD OF TRUSTEES, Defendants.

No. 1:95 CV 1690.

United States District Court, N.D. Ohio, Eastern Division.

December 13, 1996.

Frank Consolo, Cleveland, Ohio, for plaintiff.

David A. Jesse, John M. Masters, Martha M. Young, and Joseph M. D'Angelo, Cleveland, Ohio, for defendants.

MEMORANDUM OF OPINION AND ORDER

NUGENT, District Judge.

This matter comes before the Court on the Motions of Defendants to Dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(1) (Document # 12) and For Summary Judgment pursuant to Fed.R.Civ. 56 (Document # 13). For the reasons stated below, Defendants' Motion to Dismiss (Document # 12) is DENIED and Defendants' Motion for Summary Judgment (Document # 13) is GRANTED.

PROCEDURAL HISTORY

Plaintiff, Salvatore I. Busacca, filed his Complaint on August 2, 1995, against Defendants Excavating, Building Material & Construction Drivers Union Local 436 Welfare Fund Board of Trustees ("Board of Trustees") seeking indemnity for legal expenses and an Order declaring that the Employee Retirement Income Security Act of 1974 ("ERISA") does not prohibit a Taft-Hartley employee benefit plan from indemnifying its employees. Defendants filed a Motion to Dismiss on the grounds that there is no actual controversy between the parties; Plaintiff lacks standing to bring this action under 29 U.S.C. § 1132; and the Court lacks subject matter jurisdiction over the entire Complaint. At the same time Defendants filed a Motion for Summary Judgment on the ground that no genuine issues of material fact exist, and the Board of Trustees is entitled to judgment as a matter of law. Plaintiff filed a Memorandum in Opposition to Defendants' Motion to Dismiss and/or for Summary Judgment. Defendants filed a Reply Brief and Plaintiff requested and received leave to file a Sur-Reply Brief in Opposition. Status conferences were held on June 3, 1996, July 30, 1996 and November 27, 1996, at which counsel for all parties were present and the pending dispositive motions were discussed. Both parties filed trial briefs and submitted a Joint Stipulation of Facts.

STATEMENT OF FACTS

The parties have stipulated the following facts:

Plaintiff is a former office employee of The Excavating, Building Material and Construction Drivers Union Local 436 Welfare Fund ("the Fund"), including the period of June, 1987 through August, 1987.¹ The Fund is a Taft-Hartley Employee Benefit Fund, organized pursuant to ERISA, 29 U.S.C. § 1002(2) and the laws of the State of Ohio.

The Fund was established through collective bargaining by certain employer associations and Local 436 of the International Brotherhood of Teamsters, Excavating, Building Material, Construction Drivers, Race Track Employees, Manufacturing, Processing, Assembling and Installers ("Local 436"). The Fund is governed by a nine member Board of Trustees, consisting of both Union and Management appointed Trustees. The Administration of the Fund is governed in part by an Amended, Restated and Codified Trust Agreement and By-Laws dated May 31, 1987 ("Trust Agreement"). The Board of Trustees exercises management and control over all the assets of the Fund and its administration.

During the period between June, 1987 and August, 1987 the Board of Trustees of the Fund consisted of Salvatore T. Busacca (the Plaintiff's father), the president of Local 436, and the chairman of the Board of Trustees of the Fund; Romeo Turchi; Gary M. Tiboni, the Secretary-Treasurer of Local 436, and a trustee of the Fund; and Michael Paventi, a Trustee and business agent for Local 436, and a Trustee for the Fund; and Management Trustees, Everret Bruder, Jerome Schleifer, David Marinelli, William Riley and William Miesz.

During his employment with the Fund, Plaintiff performed ministerial tasks such as preparing Fund checks to pay such items as utility bills, office supplies and legal services. Plaintiff's job duties for the Fund included designing and assisting computer programmers in programming layouts and debugging programs, preparing software layouts to report 1099's, W2P's and W2's for year-end tax reporting. Plaintiff was also responsible for preparing monthly delinquent listings for the Fund, including calculating interest along with penalty charges and converting these calculations to a billing each month. Plaintiff was further responsible for maintaining correspondence and reports of all audited companies and assisted in performing payroll compliance audits. During his employment, Plaintiff neither rendered nor provided any investment advice to the Board of Trustees regarding the Fund's assets nor had any authority or responsibility to give investment advice. Plaintiff did not sign checks and was not authorized to sign checks on behalf of the Fund. At no time during his employment was Plaintiff a Trustee of the Fund. Plaintiff was not a "fiduciary", a "participant" or a "beneficiary" or a "party in interest" of the Fund as defined in ERISA at the time he filed his Complaint in this action. While Plaintiff was an employee of the Fund, he was a "party in interest," as defined in ERISA.

Plaintiff's father and Deborah Hanson, a former office manager of the Fund, were indicted on April 15, 1986, in the United States District Court for the Northern District of Ohio, Case No. CR86-81. Among other charges, the indictment charged that Sam T. Busacca (Plaintiff's father) embezzled money from the Welfare Fund and Deborah Hanson participated with Sam T. Busacca in the embezzlement. Sam T. Busacca and Deborah Hanson were jointly tried and convicted on various counts. The trial opened May 6, 1987 and concluded with a guilty verdict on August 21, 1987.

After the indictments, Salvatore T. Busacca and Deborah Hanson requested the Fund to advance their legal expenses. During special meetings of the Board of Trustees of the Fund held on June 3, 1986, March 12, 1987, and May 31, 1987, the Board of Trustees of the Fund considered and ultimately passed a motion to advance legal fees for the defense of Sam T. Busacca and Deborah Hanson from the Fund. Before passing the motion, the Board of Trustees found that there were no reasonable grounds for the indictment of Sam T. Busacca or Deborah Hanson and that neither had breached a fiduciary responsibility. The advancement of legal fees to Sam T. Busacca and Deborah Hanson was further conditioned on an agreement by both to reimburse the Fund for such fees in the event that the criminal lawsuit was ultimately resolved with other than an acquittal or dismissal of charges.

On or about March 31, 1988, a civil action was filed by the United States Department of Labor ("DOL") against seven former Fund Trustees, two current Fund trustees and one former employee of the Fund (not Plaintiff) and one attorney retained to represent said former employee pursuant to the civil provisions of ERISA.

On or about April 5, 1988, the Fund filed a civil action against one former Fund Trustee, a former Fund employee (not Plaintiff) and against three lawyers and four law firms for violations of ERISA, breach of contract and legal malpractice.

On December 5, 1988, Plaintiff along with his father, Sam T. Busacca, chairman of the Board of Trustees, Pat Lanese, Office Manager of the Fund; Michael Paventi, Trustee of the Fund, and Gary M. Tiboni, Trustee of the Fund were indicted pursuant to 18 U.S.C. § 664; 18 U.S.C. § 1962(c) and (d); Case No. 88 CR 356.

The eight count indictment charged Plaintiff with violations of Title 18, U.S.C. §§ 664,2 and 1962(d) stemming from actions he took during the period from June of 1987 through August of 1987 as an office employee for the Fund. Plaintiff was charged with preparing six separate Fund checks in excess of $250,000 which were made payable to Sam T. Busacca. Criminal defendants Paventi, Lanese and Tiboni were charged with signing and issuing these six checks "without the prior authorization of Local 436 Welfare Fund Board of Trustees."

Plaintiff entered a plea of not guilty to each and every allegation charged in the indictment and retained a Cleveland trial attorney, Elmer Giuliani, Esq. to defend him. The trial in Case No. 88 CR 356 began on August 7, 1989; and on December 20, 1989, Busacca as well as defendants Tiboni and Paventi were found not guilty on all counts of the indictment. Salvatore T. Busacca was found guilty. Plaintiff paid Mr. Giuliani a retainer fee of $30,000 to defend him in the criminal case.

In early 1990, Plaintiff and other defendants who were acquitted of all criminal charges in Case No. 88 CR 356 requested reimbursement from the Fund for the legal fees they incurred in defending themselves. During a Board of Trustees meeting held on January 11, 1990, Trustee Chairman Gary M. Tiboni requested that the Fund reimburse himself, Michael Paventi and Plaintiff for the legal fees expended and incurred on their behalf in Case No. 88 CR 356. Plaintiff's bill from Mr. Giuliani was presented to the Board by Mr. Tiboni at this meeting.

At no time did the Fund specifically promise orally or in writing, to reimburse and/or indemnify Plaintiff for his legal fees while he was an employee of the Fund. Plaintiff does not possess, nor is he aware of, any resolutions or other commitment from the Board of Trustees specifically authorizing the Fund to reimburse him.

By letter dated April 4, 1990, the Department of Labor ("DOL") advised attorneys for the Fund of its position concerning reimbursement of the legal fees to the Trustees and Plaintiff. By letter dated July 16, 1990, the Fund Administrator, Gary A. Boncella, advised Busacca's attorney, Mr. Giuliani, that the Fund was still entertaining Busacca's request for reimbursement of his legal fees but that there was "no obligation on the Welfare Fund to make that reimbursement."

On or about January 3, 1991, Plaintiff filed a Complaint for Declaratory...