CHICAGO TRUCK DRIVERS PEN. FUND v. Van Vorst Ind.

Decision Date24 July 1992
Docket NumberNo. 92 C 1810.,92 C 1810.
Citation800 F. Supp. 587
PartiesCHICAGO TRUCK DRIVERS, HELPERS AND WAREHOUSE WORKERS UNION (INDEPENDENT) PENSION FUND, a pension trust, and Paul L. Glover, John R. Johnson, John Broderick and William H. Carpenter, the present Trustees, Plaintiffs, v. VAN VORST INDUSTRIES, INC., Elgea I, Inc., Navco, and William M. Caldwell, III, individually, Defendants.
CourtU.S. District Court — Northern District of Illinois

David S. Allen, Joseph M. Burns, Jacobs, Burns, Sugarman & Orlove, Chicago, Ill., for plaintiffs.

Edward T. Joyce, Richard S. Reizen, and Deborah I. Prawiec, Joyce & Kubasiak, P.C., Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

PLUNKETT, District Judge.

Plaintiffs Chicago Truck Drivers, Helpers and Warehouse Workers Union (Independent) Pension Fund and Paul L. Glover, John R. Johnson, John Broderick and William H. Carpenter, Trustees (collectively, the "Fund"), have sued all the named Defendants under ERISA, as amended by the Multiemployer Pension Plan Amendments Act of 1980, for the withdrawal liability of U.S. Bedding, a bankrupt employer allegedly under common control with all the named Defendants. Defendants Navco and William M. Caldwell III ("Defendants")1 have moved to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on the grounds that the Fund's action, initiated more than eight years after U.S. Bedding's failure to pay pursuant to the Fund's demand, is barred by the six-year statute of limitations in 29 U.S.C. § 1451(f).

We have considered material beyond the Complaint submitted by Defendants, that is, the Fund's Proof of Claim in U.S. Bedding's bankruptcy, and so we convert Defendants' motion to one pursuant to Rule 56.2 The Fund was allowed a sur-response brief to respond to the additional materials. We find that the Fund sat on its rights to collect the unpaid withdrawal liability of U.S. Bedding, and we grant Defendants' motion to dismiss.

Background

The Fund is a multiemployer pension fund. U.S. Bedding, a contributing employer to the Fund, filed for Chapter 11 bankruptcy protection in late November 1983.3 In January 1984, the Fund apparently determined that U.S. Bedding had completely withdrawn within the meaning of 29 U.S.C. § 1383.4 As required by 29 U.S.C. § 1399(b)(1)(A), on June 19, 1984, the Fund sent U.S. Bedding a notice of withdrawal liability and demand for payment. U.S. Bedding's withdrawal liability amounted to $52,114.00, which the Fund set for payment in eight quarterly installments of $6,825.00 and a ninth installment of $2,316.00. The payments were scheduled to begin on July 1, 1984, and to end on July 1, 1986. Also on June 19, 1984, the Fund filed a Proof of Claim in U.S. Bedding's bankruptcy action for the entire amount of the withdrawal liability.

U.S. Bedding did not make the July 1, 1984, payment or any of the subsequent payments. The Fund took no action until August 28, 1990, when its attorneys sent a letter to U.S. Bedding's attorney requesting information on trades and businesses under common control with U.S. Bedding, as such entities would be jointly and severally liable for U.S. Bedding's unpaid withdrawal liability. U.S. Bedding did not respond.

Despite U.S. Bedding's silence, at an unknown (to us) date sometime after August 1990, the Fund determined that Van Vorst Industries, Inc., Elgea I, Inc., Navco and William M. Caldwell III were under common control with U.S. Bedding under the MPPAA and therefore liable for the withdrawal liability. In March 1992, the Fund filed this action to collect the entire amount of the unpaid withdrawal liability.

Discussion5

Congress enacted the Multiemployer Pension Plan Amendments Act of 1980 (the "MPPAA"), 29 U.S.C. § 1381 et seq., to protect the solvency of multiemployer pension funds. See Western Confer. of Teamsters Pension Trust Fund v. Thompson Bldg. Materials, Inc., 749 F.2d 1396, 1399 (9th Cir.1984), cert. denied, 471 U.S. 1054, 105 S.Ct. 2116, 85 L.Ed.2d 481 (1985). Among the other powers given to multiemployer pension funds, the MPPAA allows them to collect "withdrawal liability," which is an employer's allocation of the pension fund's vested but unpaid benefits liability, from employers who withdraw from the pension fund. 29 U.S.C. § 1381 (1992); see also Central States, Southeast & Southwest Pension Fund v. Lady Baltimore Foods, Inc., 960 F.2d 1339, 1340 (7th Cir.1992).

The MPPAA requires a pension fund to sent a notice and demand for payment for an employer's withdrawal liability "as soon as practicable" after the employer's complete withdrawal. 29 U.S.C. § 1399(b)(1) (1985). A withdrawn employer is liable for a maximum of twenty years of payments for the amount of its withdrawal liability. 29 U.S.C. § 1399(c)(1)(B) (1985). In the event that the employer fails to make any scheduled payment, it has sixty days to cure the nonpayment. 29 U.S.C. § 1399(c)(2) (1985). If the employer fails to do so, the pension fund may declare the employer in default, accelerate the payments and demand payment of the entire unpaid amount of the withdrawal liability. 29 U.S.C. § 1399(c)(5) (1985).

Once an employer receives a notice and demand for payment from a pension fund, the employer may dispute the amount of the withdrawal liability or assert defenses to its liability. 29 U.S.C. § 1399(b)(2)(A) (1985). Where a dispute exists, either party may initiate arbitration within specified time periods. 29 U.S.C. § 1401 (1985). If the employer fails to initiate arbitration, it waives both its right to dispute the amount of its liability and its right to assert defenses. 29 U.S.C. § 1401(b)(1) (1985). Thereafter, the pension fund may initiate an action in state or federal court to collect the unpaid withdrawal liability. 29 U.S.C. § 1451(c) (1985).

Where an employer is "under common control" with other trades or businesses, all such entities are treated as a single employer. 29 U.S.C. § 1301(b)(1) (1992). All trades or businesses under common control are jointly and severally liable for the unpaid withdrawal liabilities of the others. Central States, Southeast & Southwest Areas Pension Fund v. Chatham Properties, 929 F.2d 260, 264 (6th Cir. 1991); Western Confer. of Teamsters Pension Trust Fund v. H.F. Johnson, Inc., 830 F.2d 1009, 1013 (9th Cir.1987).

The MPPAA contains a statute of limitations, which requires that any action under it be brought at the latest within six years after the accrual of a cause of action. 29 U.S.C. § 1451(f) (1985).6 The statute of limitations provision does not establish when a "cause of action" accrues, however. The only circuit that has addressed the question has held that a pension fund's cause of action for unpaid withdrawal liability accrues on the date on which payment is not made pursuant to demand, rather than on the date on which the employer completely withdraws from the fund. Joyce v. Clyde Sandoz Masonry, 871 F.2d 1119, 1124 (D.C.Cir.), cert. denied, 493 U.S. 918, 110 S.Ct. 280, 107 L.Ed.2d 260 (1989).

In their motion to dismiss, Defendants contend that this action, filed in March 1992, is untimely under the six-year statute of limitations because the Fund's cause of action accrued when U.S. Bedding failed to make the July 1, 1984, payment. The Fund argues that Defendants are equitably estopped from asserting the statute of limitations defense due to U.S. Bedding's failure to respond to their attorney's August 28, 1990, letter regarding trades or businesses under common control. The Fund also asserts that the statute of limitations begins to run anew for each missed payment on the payment schedule. Based on these arguments, the Fund claims that the statute of limitations has run, if at all, only as to first two payments, and that at the least it may maintain this action against Defendants for the remaining seven payments.

This case presents two legal issues of first impression for this Court: first, whether the statute of limitations set out in 29 U.S.C. § 1451(f) accrues anew each time an individual payment under a payment schedule is missed; and second, whether the doctrine of equitable estoppel applies to § 1451(f). Resolution of the latter issue requires that we determine whether § 1451(f) is a jurisdictional or procedural statute of limitations.

We hold that under § 1451(f), the statute of limitations accrues for the entire unpaid withdrawal liability on the first date on which a payment is missed. We base this holding on § 1399(c)(5), the provision that allows a pension fund, upon nonpayment, to declare a default and accelerate the remaining payments as due and owing, because this section provides a reasonable mechanism for a pension fund to protect its rights. The Fund is correct that the language of § 1399(c)(5), that is, its use of "may" instead of "shall", indicates that the acceleration of payments is discretionary rather than mandatory. However, we conclude that a pension fund cannot use its own failure to declare a default and accelerate payment of the entire unpaid liability to extend its time for bringing suit under § 1451(f).

By its language, § 1399(c)(5) contemplates that a pension fund might desire another course of action than a collection suit, such as a negotiated settlement for part of the liability, an extended payment plan or even a decision not to pursue an insolvent employer where the cost of such efforts would outweigh the anticipated recovery. In such instances, a pension fund might very well desire not to declare a default and accelerate payments. We do not believe, however, that Congress used the discretionary language of § 1399(c)(5) in order to allow a pension fund to ignore an available opportunity to protect its rights and achieve prompt collection of unpaid withdrawal liability in favor of grossly belated collection efforts.

The Fund relies heavily on the fact that, in this case, it did not declare a default and accelerate the payments. The Fund at least implicitly acknowledges that had it done...

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