Central States, Southeast and Southwest Areas Pension Fund v. Wintz Properties, Inc., 98-1008

• Decision Date: 08 September 1998
• Docket Number: No. 98-1008,98-1008
• Citation: 155 F.3d 868
• Parties: 22 Employee Benefits Cas. 1880 CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and Howard McDougal, trustee, Plaintiffs-Appellees, v. WINTZ PROPERTIES, INC., a Minnesota corporation, Defendant-Appellant, and George L. Wintz, individually and as president of Wintz Properties, Incorporated, Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 868

155 F.3d 868

22 Employee Benefits Cas. 1880

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, and Howard McDougal, trustee, Plaintiffs-Appellees, v. WINTZ PROPERTIES, INC., a Minnesota corporation, Defendant-Appellant, and George L. Wintz, individually and as president of Wintz

Properties, Incorporated, Appellant.

No. 98-1008.

United States Court of Appeals, Seventh Circuit.

Argued June 2, 1998.

Decided Sept. 8, 1998.

Robert A. Coco, James P. Condon, John J. Franczyk, Jr. (argued), Central States SE & SW Areas Health, Welfare & Pension Funds, Rosemont, IL; Thomas M. Weithers, Central States Law Department, Des Plaines, IL, for Plaintiffs-Appellees.

Ronald J. Kramer (argued), William J. Factor (argued), Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, for Defendant-Appellant & Appellant.

Before FLAUM, MANION, and DIANE P. WOOD, Circuit Judges.

MANION, Circuit Judge.

Wintz Properties, a business belonging to a multiemployer pension fund under ERISA, withdrew from the Central States, Southeast and Southwest Areas Pension Fund, but failed to pay the accompanying withdrawal liability required by the statute. That prompted the Fund to sue Wintz in federal court over the nonpayment; the district court ordered Wintz to pay. Still Wintz failed to make payment, choosing instead to pay other creditors. The continued non-payment prompted the district court to issue a contempt judgment of close to $1 million against Wintz (the company) and George Wintz (its president) personally, an order that both have appealed. We ordered the parties to brief the issue of this court's jurisdiction over what at first glance appears to be a nonfinal order to make interim payments to the Fund. After reviewing the parties' arguments and the full record, we have determined that we have jurisdiction over Wintz's appeal and affirm the district court's contempt order.

I.

Wintz Properties became a defendant in this case after one of George Wintz's other companies (Wintz Freightways, Inc.) went out of business and stopped contributing to Central States' multiemployer pension trust fund. The Fund determined that the defunct company had effected a complete withdrawal from the trust, a determination that imposes "withdrawal liability" on the withdrawing company. Because Wintz Freightways obviously couldn't pay the Fund, the Fund followed the money over to Wintz Properties (and still other companies owned by Wintz that the parties and the district court refer to as the "Wintz Controlled Group"). ¹

The Fund's determination that Wintz Freightways withdrew from the Fund was significant under ERISA ² because while an employer may withdraw from a fund, it pays a penalty if it does. The penalty is called "withdrawal liability"; it means the employer is liable to the plan for unfunded, vested pension benefits as determined by the Fund's trustee. See 29 U.S.C. §§ 1381-83. The employer may contest the amount demanded by the trustee, but only through mandatory arbitration procedures. 29 U.S.C. § 1401. In the meantime, while arbitration is pending, the employer has no choice under the law but to keep to its schedule of installment payments. See Chicago Truck Drivers, Helpers & Warehouse Union Pension Fund v. Century Motor Freight, Inc., 125 F.3d 526, 534 (7th Cir.1997). If the arbitrator ultimately sides with the employer that it owes no withdrawal liability, then whatever has been paid is refunded.

In this case the Fund's trustee determined that under ERISA (which sets out formulas for these things), Wintz's withdrawal liability amounted to $2,958,136.71, payable to the Fund. Wintz did not pay that amount, nor make any installment payments toward the figure, prompting the Fund to file suit in district court; shortly afterward, the Fund filed a motion for a preliminary injunction ordering Wintz to pay. Wintz's initial theory seemed to be that it did not owe withdrawal liability because it had not withdrawn from the Fund in the first place. But instead of simply defending the Fund's suit on that basis at arbitration, Wintz filed counterclaims against the Fund, charging it with making an unlawful assessment under ERISA, violating a duty of good faith and fair dealing under the statute, as well as a duty to investigate whether a withdrawal actually had occurred. (Some of these may not be counterclaims so much as "defense[s] masquerading as ... positive claim[s] for relief." Automatic Liquid Packaging, Inc. v. Dominik, 852 F.2d 1036, 1038 (7th Cir.1988).)

After holding hearings on the Fund's motion for a preliminary injunction, the court granted the motion under the heading "Order to Compel Payments." While on appeal Wintz argues that the order was too ambiguous to be enforceable, it is hard to imagine how it could be any more clear:

The Defendants ... are jointly and severally ordered to (a) pay all past due payments as set forth in the schedule of payments attached to the Pension Fund's June 17, 1996 Notice and Demand for payment of withdrawal liability on or before June 30, 1997, and (b) pay all future interim withdrawal liability payments on a timely basis or post a bond (as set forth in ERISA and the regulations promulgated thereunder) to guarantee such payments.

Still Wintz did not pay--not after the Fund's notice and demand for payment, not after receiving service of the Fund's suit, not after being ordered to pay by the district court. Only now the reason for Wintz's nonpayment shifted. In more hearings before the district court on the Fund's motion to show cause why Wintz should not be held in contempt for failing to pay, Wintz argued that it did not pay because financially the company was crippled. That strategy might have worked except for two circumstances: Wintz himself invoked the Fifth Amendment rather than testifying about the company's condition and why it did not comply with the court's order (invoking the Fifth Amendment in a civil context invites an inference that the witness' testimony would be adverse to his interests, see Baxter v. Palmigiano, 425 U.S. 308, 318, 96 S.Ct. 1551, 47 L.Ed.2d 810 (1976)), and discovery in the case revealed that Wintz was still somewhat liquid. In fact, the company was paying other creditors instead of the Fund, and George Wintz himself seemed able to pay some of his personal creditors (such as credit card companies).

After discovering that Wintz was paying other creditors but not the Fund, the court held Wintz (the company) and George Wintz (personally) in contempt for disobeying its previous order compelling payment, and entered a contempt judgment against both Wintz and its president (jointly and severally) in the amount of $978,041.42. The bulk of this sanction ($959,698.31) reflected the amount Wintz had paid other creditors instead of the Fund since the court issued its order compelling payments. The remainder consisted of attorneys' fees and costs incurred in preparing and prosecuting the contempt petition. Wintz appeals the entire contempt sanction; it claims the sanction was an improper means of enforcing the district court's previous order compelling Wintz to pay the Fund.

II.

Wintz's principal argument is that it should not have been sanctioned and held in contempt for failing to pay the interim withdrawal liability installment payments that ERISA requires and that the district court's order commands. Wintz challenges only the court's enforcement of the order to pay the withdrawal liability through a contempt sanction; it does not challenge the order itself (as we have noted, ERISA unequivocally establishes a "pay now, arbitrate later" scheme). Before we consider Wintz's arguments attacking the contempt sanction, we must determine whether we have jurisdiction over it. "Whether a judgment of civil contempt is appealable at the time entered, rather than later, at the windup of the entire case in the court of first instance, depends on the appealability of the underlying order, the order the judgment of civil contempt is intended to coerce the contemnor to obey." In re Rimsat, Ltd., 98 F.3d 956, 963 (7th Cir.1996); see also Cleveland Hair Clinic, Inc. v. Puig, 106 F.3d 165, 167 (7th Cir.1997) ("An adjudication of civil contempt used to enforce a judicial order is not appealable if the underlying order is itself not appealable."). We asked the parties to discuss our jurisdiction in their briefs, and each side has responded that we have jurisdiction over the contempt finding, but for different reasons. Wintz argues that we have jurisdiction because the underlying order was appealable as a final decision under 28 U.S.C. § 1291. The Fund tells us that we have jurisdiction because the underlying order is a preliminary injunction appealable under § 1292(a)(1). We consider each possibility because a third exists which would divest us of jurisdiction and require dismissal of Wintz's appeal--namely, that the underlying district court order is neither a "final decision" nor an injunction, but rather is an order partly but not wholly adjudicating the Fund's complaint (much like an order awarding partial summary judgment).

We first tackle Wintz's theory that the contempt finding is appealable because the order it disobeyed (the order compelling payments) is a final decision that disposed of the underlying litigation initiated by the Fund. This is a rather surprising position given Wintz's concession that at the time it filed this appeal its own counterclaims against the Fund remained. Only "final decisions" are appealable under § 1291, and the presence of the counterclaims made the court's order compelling payment decidedly nonfinal. See Alonzi v. Budget Construction Co., 55 F.3d 331, 333 (7th Cir.1995). Nor were the counterclaims dismissed by implication when the court ordered Wintz to pay, because it is possible for the Fund to violate the technical provisions of ERISA even though it is correct that an employer owes it money. The only way the court's order could have...