Curren v. Freitag
| Decision Date | 10 June 1977 |
| Docket Number | No. 76-0061.,76-0061. |
| Citation | 432 F. Supp. 668 |
| Parties | Richard D. CURREN, Warren E. Eddy, W. P. Mantz, and Dempsey Keene v. Wilbur FREITAG, Herschel Ward, Roland Bruning, Carl Moore, Clifford Rygh, Gregory Hasty, Ramon Wierman, Thomas Crabtree, Robert Neff, Kenneth Price, Charles E. Moore, Hugh B. Arnold, and Central Laborers Pension Fund. |
| Court | U.S. District Court — Southern District of Illinois |
Gerald Tockman, St. Louis, Mo., Edward Casey, Springfield, Ill., Jay G. Swardenski, Peoria, Ill., for plaintiffs.
Kevin M. Forde, William J. Harte, Chicago, Ill., Robert E. Gillespie, Springfield, Ill., Larry J. Flynn, Jacksonville, Ill., Robert G. Heckenkamp, Springfield, Ill., for defendants.
This case involves various charges and countercharges between two factions on the Central Laborers Pension Fund hereinafter Fund Board of Trustees. The Fund is a trust established in accordance with the provisions of 29 U.S.C. § 186(c)(5) which, inter alia, requires equal representation by employers and employees in the administration of the Fund. The Fund and its employees are subject to the provisions of the Employee Retirement Income Security Act of 1974 hereinafter ERISA 29 U.S.C. §§ 1001 et seq.
Plaintiffs, the trustees appointed by the employers, filed this action on May 18, 1976, alleging numerous defects in the structure and operation of the Fund and seeking to hold trustees representing the employees personally liable under ERISA provisions. The complaint survived defendants' motion to dismiss for failure to state a claim on which relief can be granted. Defendants however have filed a two count counterclaim also based on alleged violations of ERISA. The matter is now before me on plaintiffs' motion to dismiss Counts I and II of the counterclaim and on defendants' motion for summary judgment on Count I as well as other motions requiring little discussion and dealt with at the end of this opinion.
Count I of the counterclaim purports to state a claim against plaintiff Curren individually alleging that Curren has violated 29 U.S.C. §§ 1106(b)(2) and (3), ERISA § 406(b)(2) and (3), in that plaintiff Curren is actively representing certain contractors who are resisting audits ordered by the Fund and refusing to pay amounts determined owing by these contractors to the pension fund. Count II alleges that all the plaintiff trustees have violated 29 U.S.C. § 1106(b)(2) through the prosecution of this lawsuit, since it allegedly is for the benefit of the employer contractors and not for the benefit of the Fund.
Central Laborers Pension Fund is a trust administering more than the $20,000,000 in assets with its principal office in Jacksonville, Illinois. The Fund was established by a trust agreement which required sixteen trustees, eight appointed by the employees' union (Laborers Local Union No. 253) and eight from the employer associations (four appointed by Associated General Contractors of Illinois and four appointed by Morgan County Contractors Association) in accord with 29 U.S.C. § 186(c)(5)(B). Plaintiffs Curren, Eddy, Mantz and Keene were appointed by Associated General Contractors of Illinois (AGCI). Plaintiff Curren is employed by AGCI as Director of Labor Relations. Defendants Freitag, Ward, Bruning, Moore, Rygh, Hasty, Wierman, Dickman and Holland are trustees appointed by Local No. 253, while defendants Crabtree, Neff, Price and Moore were appointed by the Morgan County Contractors Association.
Defendants filed a motion for summary judgment on Count I of the counterclaim pursuant to Federal Rule of Civil Procedure 56 contending that the pleadings, documents and deposition of plaintiff Curren establish that there are no genuine issues of material fact and that counterplaintiffs are entitled to judgment as a matter of law. Also pending concerning Count I of the counterclaim is plaintiff's motion to dismiss pursuant to F.R.Civ.P. 12(b) for failure to state a claim upon which relief can be granted. Since I have examined matters outside the pleadings, specifically Curren's deposition, these motions will be treated as cross motions for summary judgment under F.R.Civ.P. 56 as provided in F.R.Civ.P. 12(b).
The contention in the counterclaim is that plaintiff Curren, in violation of 29 U.S.C. §§ 1106(b)(2) and (3), is actively representing certain contractors in resisting audit and collection efforts of the Fund and receiving a fee therefor. The statute, dealing with prohibited transactions under ERISA, provides that:
More specifically, in counterplaintiffs' motion for summary judgment it is contended that contrary to Curren's duty as a trustee of the Fund to take such action as necessary to insure that employers contribute to the Fund that which they are contractually obligated to contribute, counterdefendant Curren actively represented two employers, Coggeshall Construction Company and Burlington Road Builders, in resisting audit and collection procedures brought on behalf of the Fund. Both companies are being sued by the plaintiffs in this Court for allegedly delinquent payments to the Fund. Curren counseled both companies to resist Fund audits and refuse payments since, in his opinion, the audits and subsequent lawsuits were not properly authorized, but were brought merely to apply pressure during labor negotiations pending between Coggeshall and the laborers union. Curren also suggested specific legal counsel to both Coggeshall and Burlington, and held meetings concerning their defense in his office.
Further, it is alleged and counterdefendant Curren states in his deposition that he issued a "bulletin" to all AGCI members advising them that Fund auditors were not properly authorized and asking to be contacted by any members of AGCI who had any questions.
This conduct was but a portion of a continuing conflict between Curren and the defendant Arnold, a Chicago attorney, who had allegedly been improperly hired by the Fund to pursue collection efforts against individual contractors. It certainly appears that the prime motivating factor in counterdefendant Curren's actions was the belief, as plaintiffs have alleged in their complaint, that not only was Arnold using the Fund and its audit procedures to apply pressure on individual contractors for his own purposes, but that Arnold had not properly been authorized to act on behalf of the Fund at all.
Throughout the conduct complained of, Curren acted not only as a trustee for the Fund but pursuant to his duties as Director for Labor Relations for AGCI. Those duties as described in his deposition, consisted of negotiating and administering collective bargaining agreements on behalf of AGCI and its collective and individual members.
Counterplaintiff would have me believe that the actions of Curren on behalf of AGCI were "at total war" with his obligations as a trustee for the Fund, and that the state of the law is such that Curren could not perform both as trustee and as Labor Relations Director for AGCI. Admittedly, there may be an inherent conflict between the ERISA fiduciary duty and prohibited transaction provisions 29 U.S.C. §§ 1104 and 1106 and the provisions of the Labor Management Relations Act requiring equal representation by labor and management in the control of employee trust funds 29 U.S.C. § 186(c)(5). However, this conflict is lessened by the language in 29 U.S.C. § 1108(c)(3) which provides:
Given this statutory provision, it is not per se improper for Curren to act both as trustee and as Labor Relations Director for AGCI. Thus, the portion of the counterclaim based on 29 U.S.C. § 1106(b)(3) is unfounded since it is established by the depositions and memoranda filed that Curren received no "consideration for his personal account" other than his AGCI salary. Due to the language of 29 U.S.C. § 1108(c)(3) quoted above, I believe as a matter of law that Curren's AGCI salary cannot form the basis of a complaint under § 1106(...
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