Carpenters Amended and Restated Health Benefit Fund v. John W. Ryan Const. Co., Inc.

• Decision Date: 12 August 1985
• Docket Number: No. 84-5001,84-5001
• Citation: 767 F.2d 1170
• Parties: The CARPENTERS AMENDED AND RESTATED HEALTH BENEFIT FUND, and its Trustees, et al., Plaintiffs-Appellees Cross Appellants, v. JOHN W. RYAN CONSTRUCTION CO., INC., Defendant-Appellant Cross Appellee. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1170

767 F.2d 1170

54 USLW 2118

The CARPENTERS AMENDED AND RESTATED HEALTH BENEFIT FUND, and its Trustees, et al., Plaintiffs-Appellees Cross Appellants, v. JOHN W. RYAN CONSTRUCTION CO., INC., Defendant-Appellant Cross Appellee.

No. 84-5001

Summary Calendar.

United States Court of Appeals Fifth Circuit.

Aug. 12, 1985.

Paxton & Barriball, John J. Barriball, Orsen E. Paxton, III, Arlington, Tex., for defendant-appellant cross appellee.

Matthews, Allen & Russell, Jerry Leroy Carlton, Dallas, Tex., for plaintiffs-appellees cross appellants.

Appeals from the United States District Court for the Northern District of Texas.

Before RUBIN, RANDALL, and TATE, Circuit Judges.

TATE, Circuit Judge:

The principal issue of this appeal is whether an employer, sued by employee benefit plans for delinquent contributions, may avoid liability for statutory interest and attorney's fees by paying the delinquent contributions after suit is brought but before judgment. We affirm the determination of the district court that the delinquent employer remains liable for interest and attorney's fees sought by the suit to enforce also the obligation for delinquent contributions, despite the employer's payment of the delinquent amounts before judgment.

I.

The Employee Retirement Income Security Act of 1974 ("ERISA"), as further amended and strengthened by the Multi-employer Pension Plan Amendment Act of 1980, both codified at 29 U.S.C. Secs. 1001 et seq., provides for federal regulation of employee welfare and benefit pension plans. These statutes also provide jurisdiction in the federal district court to enforce rights and liabilities under the statutes, as well as to enforce rights under the contractual terms of a plan. 29 U.S.C. Sec. 1132.

The defendant employer ("Ryan") executed a written agreement by which it agreed to make contributions, for the benefit of its employees, to several multiemployer benefit plans ("the Plans"). Alleging that Ryan failed and refused to make monthly contributions and reports as required by the terms of the agreement, the Plans and their trustees brought this suit, demanding, inter alia, judgment against Ryan for the unpaid contributions, for interest, and for reasonable attorney's fees.

After suit was brought, Ryan paid approximately $50,000 of unpaid contributions for the previous eight months, and it resumed payment of monthly contributions (although in most months it was from 10 to 90 days delinquent in doing so). The defendant Ryan resisted, however, the demand for interest and attorney's fees, alleging that its payment of the delinquent contributions prior to judgment prevented--under the statutory terms--the imposition upon it of liability for interest and attorney's fees.

The district court rejected this contention and entered judgment against the defendant employer Ryan and in favor of the Plans for interest upon the delinquent installments and for the Plan's attorney's fees in the trial court resulting from the litigation. The sole issue raised by Ryan's appeal is whether, under the terms of the statute, Ryan could be liable for collection of attorney's fees and for interest on the delinquent contributions when it had paid the delinquent contributions before judgment was entered (albeit, after suit was brought to enforce payment of the delinquent contributions). For reasons to be stated, we affirm the district court's rejection of this contention. ¹

II.

To understand Ryan's contention, as well as its fallacy, a resume of relevant statutory history is necessary.

The 1980 amendments to ERISA were prompted by a number of Congressional concerns, which included the need "to alleviate certain problems which tend to discourage the maintenance of" ERISA plans. 29 U.S.C. Sec. 1001a(c). To that end, Section 306 of the Multiemployer Pension Plan Amendments Act of 1980, Pub.L. 96-364, 94 Stat. 1208, codified within 29 U.S.C. Secs. 1001 et seq., contained new provisions that authorized remedies to recover from employers who were delinquent in making contributions in accordance with the terms of multiemployer benefit plans. These provisions of Section 306 were codified as 29 U.S.C. Sec. 1145 (requiring an employer by statute to make contributions according to the terms of a plan) ² and as 29 U.S.C. Sec. 1132(g)(2) (which provided for mandatory assessment of interest, penalty (an amount equal to the interest), and reasonable attorney's fees), when an action is filed to enforce the employer's obligation to make payments in accordance with the terms of the plan. ³

The legislative history, including House and Senate committee reports and an explanation by House sponsor in floor debate, has been succinctly summarized in Central States Southeast and Southwest Area Pension Fund v. Alco Express Company, 522 F.Supp. 919, 925-28 (E.D.Mich.1981). Without reiteration of this detailed summary, it is sufficient to note that the House version provided for discretionary assessment of liquidated damages and attorney's fees in delinquent-employer suits, while the Senate version (which was adopted in the final enactment of Section 306) provided for mandatory assessment. The Senate report, in explaining its version, pointed out the serious problem created by the "[f]ailure of employers to make promised contribution in a timely fashion [, which] imposes a variety of costs on plans," and it concludes: "The intent of this section is to promote the prompt payment of contributions and assist plans in recovering the costs incurred in connection with delinquencies." Central States, supra, 522 F.Supp. at 927, 928 (quoting Staff of Senate Comm. on Labor and Human Resources, 96th Cong.2d Sess., S.1076, The Multiemployer Pension Plan Amendments of 1980: Summary and Analysis of Considerations (Comm. Print 1980) at 43-44.

III.

In arguing that nevertheless under present facts double-interest and attorney's fees cannot be assessed against it, the defendant employer Ryan points out that the statutory language of 29 U.S.C. Sec. 1132(g)(2) (quoted in full in note 3, supra ) provides that such mandatory penalties must be assessed only in delinquent-employer suits "in which a judgment in favor of the plan is awarded." (Emphasis added.) Pointing out that it had paid the delinquent contributions prior to judgment, Ryan argues that under the plain terms of the statute it cannot be assessed with attorney's fees and penalty double-interest.

In the present instance, the action by the plaintiff Plans sought monied judgment not only for the unpaid contribution owed by Ryan, but also for interest and statutory penalty (equal to the interest) for their untimely payment in accordance with the terms of the plans--as well as for attorney's fees for collection, as authorized both by the plans themselves and by the statute. By amended complaint, the Plans also sought a judgment decreeing that they were entitled to receive the contributions on a timely basis.

In our view, not only the demands for unpaid contributions but also the demands for ancillary relief (interest, penalty, attorney's fee; decree of entitlement to receive contributions on a timely basis) are included (when coupled with a demand for unpaid contributions) within the Congressionally-intended "action ... to enforce section 1145 [i.e., the employer's obligation to make "contributions in accordance with the terms and conditions of such plan"]" that, upon successful judgment, mandatorily entitles the plaintiff to statutory relief of attorney's fees and penalties under Sec. 1132(g)(2). Here, although the final judgment did not include an award for the unpaid contributions themselves (because they had been paid by the employer after suit but prior to judgment), it did grant judgment in favor of the Plans for unpaid interest ($4,672.95) on the delinquent contributions, for the statutory ("double-interest") penalty ($4,672.95), and for award attorney's fees incurred in the district court ($3,000; conceded to be reasonable)--all or any of which the defendant Ryan had refused to pay or tender prior to judgment, even though the Plans' complaint had prayed for same and even though, at the time the complaint was filed, the delinquent employer was assessable with such if the Plans' suit proceeded to "judgment in favor of the plan," Sec. 1132(g)(2). In affording such relief, the final judgment also decreed that the "defendant is obligated to pay contributions to plaintiffs on a timely basis."

We thus find this final judgment to be "a judgment in favor of the plan" in an "action to ... enforce section 1145," within the meaning of Sec. 1132(g)(2). The circumstance that the defendant complied with part of the demand sought by this suit against an admittedly delinquent employer under Sec. 1145 did not moot the plaintiff Plans' remaining demands against the delinquent employer, who resisted liability for them in the trial court prior to judgment. The judgment in this suit against a delinquent employer to enforce his obligations under Sec. 1145 to make payments in accordance with the terms of the employee benefit is no less a "judgment in favor of the plan" under Sec. 1132(g)(2) than would have been one that decreed not only this relief but also--had the employer not paid his delinquent contributions after suit was filed--the delinquent contributions, which were also demanded by the action.

The Seventh Circuit indicated the same view, although by way of dicta (since the appeal was dismissed for lack of an appealable final judgment). In Gilles v. Burton Construction Company, 736 F.2d 1142, 1146 n. 6 (7th Cir.1984), that court stated:

After suit is filed, we doubt that employers who are delinquent in their contributions can avoid the mandatory relief provisions of section 1132(g)(2) through the device of offering to pay only the overdue contributions. A settlement will require the agreement of the parties on the entire case--not merely part of the case.

Similarly, in the only other...