Central States, Southeast and Southwest Areas Pension Fund v. Navco

Decision Date20 September 1993
Docket NumberNos. 92-1968,92-2295 and 92-2923,s. 92-1968
Citation3 F.3d 167
Parties, 17 Employee Benefits Ca 1409 CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, et al., Plaintiffs-Appellants, v. NAVCO and William L. Caldwell, III, Defendants-Appellees. CHICAGO TRUCK DRIVERS, HELPERS AND WAREHOUSE WORKERS UNION (INDEPENDENT) PENSION FUND, et al., Plaintiffs-Appellants, v. NAVCO and William L. Caldwell, III, Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

Terence G. Craig (argued), Central States, Southeast & Southwest Area Pension Fund, Law Dept., Rosemont, IL, David A. Sawyer, Russell N. Luplow, and David Machnacki, Russell N. Luplow, P.C., Bloomfield Hills, MI, and Joseph M. Burns, and David S. Allen (argued), Jacobs, Burns, Sugarman & Orlove, Chicago, IL, for plaintiffs-appellants.

Edward T. Joyce, Paul A. Castiglione, Richard S. Reizen (argued) and Deborah I. Prawiec, Kubasiak, Cremieux & Fylstra, Chicago, IL, for defendants-appellees.

Before BAUER, Chief Judge, and COFFEY and EASTERBROOK, Circuit Judges.

EASTERBROOK, Circuit Judge.

During the fall of 1983 United States Bedding Company and The Englander Company filed petitions in bankruptcy. Both firms had been making contributions to multiemployer pension plans; they completely withdrew from these plans in January 1984. The Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) permits an underfunded multiemployer pension plan to pursue a withdrawing employer for a portion of the plan's deficit. 29 U.S.C. Sec. 1381. The plans assessed withdrawal liability aggregating $672,000. Despite some success in marshaling assets in bankruptcy, In re United States Bedding Co., 52 B.R. 875 (Bankr.C.D.Cal.1985), the employers have not satisfied any portion of their withdrawal liability.

The MPPAA provides that all members of a group under "common control" are liable for each other's withdrawal liability. 29 U.S.C. Sec. 1301(b)(1). Both of the withdrawing firms were part of a corporate group under the umbrella of Van Vorst Industries, Incorporated. Van Vorst itself was a dry well, as were other corporate members of its family. The two pension funds believe that Navco, a partnership, also belonged to the Van Vorst group. Both funds filed suit against Navco and William L. Caldwell, its general partner (collectively Navco). Navco has invoked the statute of limitations in 29 U.S.C. Sec. 1451(f):

An action under this section may not be brought after the later of--

(1) 6 years after the date on which the cause of action arose, or (2) 3 years after the earliest date on which the plaintiff acquired or should have acquired actual knowledge of the existence of such cause of action; except that in the case of fraud or concealment, such action may be brought not later than 6 years after the date of discovery of the existence of such cause of action.

Van Vorst and its affiliates withdrew early in 1984, yet one fund did not commence suit until 1991, and the other waited until 1992. Both suits came substantially more than six years after the withdrawals.

The suit by the Central States, Southeast and Southwest Areas Pension Fund (the Teamsters Fund) was assigned to Judge Grady. The pertinent dates are these. The employers finally withdrew by January 1984. On November 3, 1983, and again on March 14, 1984, the Teamsters Fund sent letters demanding that the employers identify other members of their corporate groups. See 29 U.S.C. Sec. 1399(a). No replies were forthcoming. On April 6, 1984, the Teamsters Fund sent a formal notice of withdrawal liability and a demand for payment. The employers were supposed to pay immediately but had 60 days to "cure" any nonpayment. 29 U.S.C. Sec. 1399(c)(2). That time expired on June 5, 1984. The Teamsters Fund filed its suit against Navco and Caldwell on May 1, 1991. Caldwell had been listed in the bankruptcy schedules as an equity investor in the employers. The Teamsters Fund claims that it did not discover Navco's existence until sometime during 1990; the Fund does not explain how Navco came to its attention. Judge Grady granted summary judgment for the defendants. He held that the suit is untimely under Sec. 1451(f) because the claim accrued on June 5, 1984, when payment became delinquent, rather than when the Teamsters Fund discovered Navco's existence.

The suit by the Chicago Truck Drivers, Helpers and Warehouse Workers Union (Independent) Pension Fund (the Independent Fund) was assigned to Judge Plunkett. The sequence is slightly different. The Independent Fund sent the employers a notice and demand on June 19, 1984, specifying a schedule of payments. The first payment was due on July 1, 1984, and additional payments were to be made each quarter through July 1, 1986. Not a cent was remitted in 1984 or at any later time. On August 28, 1990, the Independent Fund sent a letter to an attorney who had filed an appearance for U.S. Bedding in the bankruptcy action, asking for copies of the schedules filed in that case, a list of all equity investors in the firm, and "any information which indicates that these equity security holders owned any other corporation, partnership or sole proprietorship." No reply was forthcoming. The Independent Fund filed suit on March 13, 1992. It has not explained when or how it learned of Navco's existence. Like Judge Grady, Judge Plunkett granted summary judgment for the defendants. 800 F.Supp. 587 (N.D.Ill.1992). Judge Plunkett concluded that the claim accrued on July 1, 1984, when the first payment was due, rather than quarterly as additional payments came due. The Independent Fund argued (as the Teamsters Fund had not) that the employers' failure to provide information about the control group tolled the statute of limitations. Judge Plunkett rejected this argument because, he held, the time limit established in Sec. 1451(f) is a "jurisdictional" bar that may not be extended.

We have consolidated the pension plans' appeals from these decisions. Although we expressed concern at oral argument about appellate jurisdiction in the Independent Fund's case, study of the record has dispelled our worries. All claims against the four original defendants (Van Vorst and Elgea I, Inc., in addition to Navco and Caldwell) have been wrapped up (Van Vorst for lack of service, Elgea by default judgment), making the disposition final and appealable under 28 U.S.C. Sec. 1291. By and large, we treat the appeals as if there were only one employer and one fund making a single argument. We consider all of the arguments both funds present; details about which pension plan presented which argument are unimportant.

Both district judges concluded that the "cause of action arose" for purposes of Sec. 1451(f) when the employers' debts to the pension plan became overdue, see Joyce v. Clyde Sandoz Masonry, 871 F.2d 1119, 1124 (D.C.Cir.1989), rather than when they discovered the identity of persons who might be required to satisfy those debts. As soon as the 60-day grace period provided by Sec. 1399(c)(2) expired, the funds could have commenced suit. They had been injured. That is the standard definition of the "accrual" of a claim.

Section 1451(f)(2) states a "discovery" rule, and a claim accrues under a discovery rule when the victim knows of his injury. The time begins even though the victim does not know that the injury is actionable. E.g., United States v. Kubrick, 444 U.S. 111, 119-22, 100 S.Ct. 352, 358-60, 62 L.Ed.2d 259 (1979); McCool v. Strata Oil Co., 972 F.2d 1452, 1465 (7th Cir.1992); Cada v. Baxter Healthcare Corp., 920 F.2d 446, 450 (7th Cir.1990). If a claim accrues even though the victim does not know that he has a legal entitlement to recover, the fact that the victim does not know who would be the right defendant cannot matter. Consider negligent medical treatment, the subject of Kubrick. The Court held that the patient's claim accrued when he learned that he had been injured by a drug administered to him, even though he did not know that the use of this drug was negligent. Under the circumstances, the victim's observation that he did not know which physician had prescribed or administered the drug could not have mattered. Or consider an accident in a state that permits actions directly against an insurer. Driver D runs down pedestrian P, who believes D destitute. Does P 's neglect to learn the identity of D 's insurer extend indefinitely the time to commence an action against that insurer? Finally consider what is perhaps the closest analogy: a shell corporation C, operated by shareholder S without observing the corporate forms, defrauds victim V. Correctly believing that C is insolvent, V does not explore the possibility of piercing the corporate veil. Does V 's neglect extend the time to make a claim against S ? We could not find any case so holding. Plenty of cases reject contentions that particular claims do not accrue until the victim finds out who can be obliged to pay. E.g., Lundblad v. Celeste, 874 F.2d 1097, 1104 (6th Cir.1989), modified on other grounds, 924 F.2d 627 (1991) (in banc); Dyniewicz v. United States, 742 F.2d 484, 486 (9th Cir.1984); McDaniel v. Johns-Manville Sales Corp., 542 F.Supp. 716, 718 (N.D.Ill.1982). Only one case, Fitzgerald v. Seamans, 553 F.2d 220, 229 (D.C.Cir.1977), looks in the opposite direction, and that opinion relies on the doctrine of equitable tolling, a subject distinct from the time the claim accrues. We discuss equitable tolling below.

Six years from the time of the injury, which Sec. 1451(f)(1) affords as the minimum in every case, is generous. Congress appreciated that it might be difficult to ascertain the existence of a claim and track down persons liable under the Employee Retirement Income Security Act, a complex statute. (The MPPAA is an amendment to ERISA; Sec. 1451 applies to all of ERISA.) Pension funds and other persons...

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