Carpenters Health and Welfare Trust Fund for California v. Tri Capital Corp.
| Decision Date | 03 June 1994 |
| Docket Number | No. 92-15112,92-15112 |
| Citation | 25 F.3d 849 |
| Parties | , 18 Employee Benefits Cas. 1838 CARPENTERS HEALTH AND WELFARE TRUST FUND FOR CALIFORNIA; Carpenters Pension Trust Fund for Northern California; Carpenters Vacation and Holiday Trust Fund for Northern California; Carpenters Apprenticeship and Training Trust Fund for Northern California; Carpenters Annuity Trust Fund for Northern California, Plaintiffs-Appellants, v. TRI CAPITAL CORP., Mark Diversified, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Christian L. Raisner, Van Bourg, Weinberg, Roger & Rosenfeld, San Francisco, CA, for plaintiffs-appellants.
James M. Nelson, Diepenbrock, Wulff, Plant & Hannegan, Sacramento, CA, for defendants-appellees.
Appeal from the United States District Court for the Eastern District of California.
Before FERGUSON, CANBY and BRUNETTI, Circuit Judges.
Opinion by Judge BRUNETTI; Dissent by Judge FERGUSON.
Appellants, ERISA benefit plans for members of the carpenters' union, are owed money by a subcontractor for work performed on a building improvement project. They brought suit in state court against the construction lender for the project to recover the money under California's "bonded stop notice" remedy. The construction lender and the general contractor on the project, both of which are appellees, removed to federal court and moved to dismiss for failure to state a claim. After the motion was granted, appellants filed a first amended complaint alleging additional federal and state law claims. Appellees again moved to dismiss for failure to state a claim, and the district court again granted the motion. Appellants appeal the dismissal, and we affirm.
Appellants (hereafter referred to as the "Trust Funds") are five multiemployer employee benefit plans under the Employee Retirement Income Security Act of 1974 ("ERISA"), as defined in 29 U.S.C. Sec. 1002(37). In May 1972, Rodney Stark, doing business as Stark Construction, entered into a collective bargaining agreement with the United Brotherhood of Carpenters and Joiners of America. The agreement provided that Stark would pay to the Trust Funds fringe benefit contribution at specified rates for each hour of covered carpentry work used by him. In July and August 1989, Stark employed carpenters to perform improvements on a private property in Stockton, California known as O'Connor Woods. Stark had been engaged by Mark Diversified, Inc. ("Mark"), the general contractor on the project. The carpenters expended 8,416 hours of covered carpentry work, generating $66,107.68 in fringe benefit contributions. However, Stark failed to pay this amount.
The Trust Funds wanted their money. Stark, however, had filed for Chapter 7 bankruptcy protection. Therefore, the Trust Funds went after Mark and Tri Capital Corporation ("Tri Capital"), the construction lender on the project. The Trust Funds first served a "bonded stop notice" on Tri Capital, pursuant to Cal.Civ.Code Sec. 3159. Under California law, upon receipt of such notice Tri Capital was obliged to withhold from the sums due to Stark enough money to satisfy the Trust Funds' claims. Cal.Civ.Code Sec. 3162 (West Supp.1993). Tri Capital refused to comply.
The Trust Funds then brought an action in California state court against Tri Capital and Doe Defendants 1-80 to enforce the stop notice, pursuant to Cal.Civ.Code Sec. 3172. Tri Capital and Mark, which had concluded that it must be one of the Doe Defendants, removed the action to the federal district court. Tri Capital and Mark argued that the California stop notice remedy was preempted by ERISA and by the National Labor Relations Act. The Trust Funds moved to remand to state court and defendants moved to dismiss on the ground of ERISA preemption. On April 19, 1991, the district court denied the Trust Funds' motion and granted appellees' motion to dismiss, with 30 days to amend.
The Trust Funds then filed an amended complaint on May 17, 1991. Their first claim, enforcement of the stop notice under California law, is identical to the cause of action pleaded in the original complaint. Their second and third claims allege that they are third-party beneficiaries to an agreement between Mark and Stark whereby Mark agreed to pay the fringe benefits by "joint check." The second claim is based on remedies for breach of fiduciary duty provided by ERISA and by the Labor Management Relations Act ("LMRA"); the third claim is based on a California state law providing for actions by a third-party beneficiary to enforce a contract made explicitly for its benefit. All three claims seek recovery of the same $66,107.68 that Stark allegedly failed to pay to the Trust Funds.
Appellees again filed a Fed.R.Civ.P. 12(b)(6) motion to dismiss the amended complaint for failure to state a claim. On January 6, 1992, the district court entered a final order granting their motion and dismissing the complaint without leave to amend. The Trust Funds appeal from this judgment and also appeal the district court's assertion of federal jurisdiction upon removal of the original complaint. Both parties seek attorneys' fees on appeal.
We review de novo a district court's Fed.R.Civ.P. 12(b)(6) dismissal for failure to state a claim. Kruso v. International Tel. & Tel.Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, 496 U.S. 937, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). A complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Love v. United States, 915 F.2d 1242, 1245 (9th Cir.1989) (quotation omitted).
On appeal, the Trust Funds renew their contention that the district court erred in denying their motion to remand. "Where a motion to remand is denied, the propriety of removal is reviewable [ (i) ] on appeal from the final judgment or [ (ii) ] by interlocutory appeal if the refusal to remand is certified." Sheeran v. General Elec. Co., 593 F.2d 93, 97 (9th Cir.), cert. denied, 444 U.S. 868, 100 S.Ct. 143, 62 L.Ed.2d 93 (1979). However, the Trust Funds took neither of these courses of action; instead, they amended their complaint to include claims based on federal law and refiled in federal district court.
We have held that:
when there is no appeal of a denial of a remand motion and the case is tried on the merits, the issue on appeal is whether the federal court would have had jurisdiction had the case been filed in federal court in the posture it had at the time of the entry of the final judgment.
Lewis v. Time, Inc., 710 F.2d 549, 552 (9th Cir.1983). Because a Rule 12(b)(6) dismissal is a judgment on the merits, Federated Dept. Stores, Inc. v. Moitie, 452 U.S. 394, 399 n. 3, 101 S.Ct. 2424, 2428 n. 3, 69 L.Ed.2d 103 (1981), we must determine whether the district court would have had jurisdiction given the posture of the case at the time the judgment was entered. At that time, the Trust Funds' second cause of action alleged breach of the collective bargaining agreement and sought redress under ERISA Sec. 502(a)(2). Federal district courts have exclusive jurisdiction over such actions. 29 U.S.C. Sec. 1132(e)(1) (1988); Pension Trust Fund v. Triple A Mach. Shop, Inc., 942 F.2d 1457, 1461 (9th Cir.1991). Therefore, the district court at a minimum could have asserted jurisdiction over the stop notice cause of action as a pendent state claim, because the two claims "derive from a common nucleus of operative fact." United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138 16 L.Ed.2d 218 (1966); see 28 U.S.C. Sec. 1367(a) (Supp. IV 1991) (supplemental jurisdiction). We hold that the district court had jurisdiction over the Trust Funds' first amended complaint.
The district court held that the Trust Funds' state law stop notice claim "relate[d] to" an employee benefit plan and that therefore ERISA completely preempted the claim. The district court dismissed the claim on Rule 12(b)(6) grounds in both the original complaint and the first amended complaint.
We agree with the district court that the California stop notice remedy is preempted by ERISA. ERISA's preemption clause provides that
Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.
29 U.S.C. Sec. 1144(a) (1988) (emphasis added). 1 The Supreme Court has recognized that ERISA preemption is "conspicuous for its breadth" and that its "deliberately expansive language was designed to establish pension plan regulation as exclusively a federal concern." Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111 S.Ct. 478, 482, 112 L.Ed.2d 474 (1990) (quotations omitted). "ERISA Sec. 514(a) pre-empts 'any and all State laws insofar as they may now or hereafter relate to any employee benefit plan' covered by the statute." Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 829, 108 S.Ct. 2182, 2185, 100 L.Ed.2d 836 (1988) (quoting 29 U.S.C. Sec. 1144(a)) (emphasis added).
Although we have never decided the precise question of whether the California stop notice remedy is preempted by ERISA, 2 we have read the ERISA preemption clause very broadly. Our most recent decision addressing the issue is Trustees of the Elec. Workers Health & Welfare Trust v. Marjo Corp., 988 F.2d 865 (9th Cir.1993). In Marjo, the trustees of various ERISA employee benefit plans were owed money by an electrical subcontractor that had filed for Chapter 11 bankruptcy protection. Id. at 866. The trustees sought to obtain the unpaid...
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