French v. Construction Laborers Pension Trust

• Decision Date: 14 January 1975
• Citation: 118 Cal.Rptr. 731,44 Cal.App.3d 479
• Court: California Court of Appeals Court of Appeals
• Parties: Edward W. FRENCH et al., Petitioners and Appellants, v. CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN CALIFORNIA et al., Respondents. Civ. 43323.

Page 731

118 Cal.Rptr. 731

44 Cal.App.3d 479

Edward W. FRENCH et al., Petitioners and Appellants, v. CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN CALIFORNIA et al., Respondents.

Civ. 43323.

Court of Appeal, Second District, Division 5, California.

Jan. 14, 1975.

Rehearing Denied Feb. 11, 1975.

Lewis E. Taliaferro and Lawrence H. Eisenberg, Sherman Oaks, for petitioners and appellants.

Latham & Watkins, John S. Welch, Joseph A. Wheelock, Jr., William J. Meeske, and James Wolf, Los Angeles, for respondents.

LORING, ^* Associate Justice (Assigned).

Edward W. French (French), Rudolf Maier (Maier), and Webster Alvin Tavenner (Tavenner), (collectively petitioners) filed in the superior court a petition for writ of mandate against Construction Laborers Pension Trust for Southern California (Trust), Fund Administrative Associates, Inc., a corporation (Administrator), and sixteen individuals ¹ (Trustees), who

were trustees of a pension trust, to compel continued payment of pensions to which petitioners were allegedly entitled under a pension fund plan entitled 'Construction Laborers Pension Trust for Southern California' (contract), an alleged copy of which was attached to the petition as Exhibit A. The court issued an alternative writ. All of the respondents (Trust, Administrator, and Trustees) answered. After trial the court made findings in favor of respondents and against all petitioners, discharged the alternative writ and entered judgment in favor of all respondents and against all petitioners with costs. Petitioners appeal from the judgment.

CONTENTIONS

Stated generally, ² appellants contend that the court erred:

I In failing to hold that respondents' right to rescind was barred by the Statute of Limitations.

II In finding that no contract had ever been entered into because of a mutual mistake of fact.

III In finding that there was only an attempted offer and an attempted acceptance and therefore no contract.

IV In failing to give effect to individual applications by petitioners.

V In failing to find, as a matter of law, that respondents had waived their right to rescind.

VI In concluding that petitioners were guilty of unclean hands.

VII Because findings were inadequate, inconsistent, and defective.

VIII In compelling Esther Tavenner to testify against her husband.

FACTS

Appellants concede that (except for a few instances of alleged admitted perjury) there is no dispute on the facts. ³ In its findings the court found that Maier was president, member of the board of directors, and fifty percent stockholder of M & M House Moving Co., Inc. (M & M) which was organized in 1955. M & M was a specialty contractor engaged in the business of moving houses. On October 9, 1967, Maier sold his stock to French. Tavenner was treasurer, member of the board of directors, and fifty percent stockholder of M & M until June 14, 1971, when he sold his interest to Roy Kechter (not a party to this action). French was superintendent of M & M until June 14, 1967, when he purchased Maier's fifty percent stock interest. Prior to September 3, 1963, M & M was a member of Associated General Contractors of California, Inc. (AGC), a trade association for general and specialty contractors. During its membership in AGC, M & M was a party to a collective bargaining agreement with Housemovers Local Union No. 923, and therefore was required to, and did make contributions on behalf of its 'jobsite employees' (union members) to a pension fund created by written agreement (Exhibit A to petition) under which Trust owned the trust assets which were administered by Trustees who employed Administrator, as agent, to actively manage the trust assets. The pension trust was established October 16, 1962, under the provisions of the Taft-Hartley Act, 29 U.S.C. § 186. Under the terms of the collective bargaining agreement M & M was obligated to, and did continue to make pension contributions on behalf of its jobsite employees after M & M resigned from AGC.

M & M rejoined AGC in November, 1971. In 1966 (at a time when M & M was not a member of AGC) the trust was amended to provide expanded coverage and to permit employers who were members of the contractor associations who were signatories to the trust ⁴ to cover their office, sales, administrative, executive, supervisory, and other 'nonjobsite employees' by inclusion in the pension trust. In February, 1967, Administrator gave written [44 Cal.App.3d 484] notice (including copies of the amended trust agreements) to contractor associations (who were signatories to the trust) of such amendment, and that they were eligible to apply for membership under the expanded benefits. Such notice and amendments also went to M & M by reason of the fact that its name still appeared on Trust's records since M & M was making contributions to the pension fund on behalf of its jobsite employees notwithstanding the fact that it was no longer a member of AGC and M & M was therefore not entitled to provide such expanded benefits to its non-jobsite employees. M & M knew it was not eligible for such expanded benefits. On or about March 20, 1967, M & M applied in writing for participation in the non-jobsite program for the benefit of French, Maier, Tavenner, and William A. Leicht (not a party to these proceedings). Leicht was a certified public accountant and was not an employee of M & M but an independent contractor. The application contained a false statement that M & M was a member of AGC. It was signed by Maier at the direction of Tavenner and French. Maier had no reasonable basis for making such statement but did not wilfully or intentionally misrepresent. The Administrator had been instructed not to attempt to verify the accuracy of application statements. He did check and found that M & M was current on its contributions to the pension fund on behalf of the jobsite employees. In the mistaken belief that M & M was a member of AGC, Administrator notified M & M that its application had been accepted effective April 1, 1967. Such application would not have been accepted or such notice given if Administrator had known that M & M was not a member of AGC. M & M contributed $8,355.85 to the pension fund on behalf of its non-jobsite employees, Maier, Tavenner, and French, and as soon as they were eligible to do so they retired and collectively received $44,518.50, in benefits from the pension fund. In August, 1971, respondents became aware for the first time that M & M had not been a member of AGC at the time it had been accepted in the pension plan as amended to include non-jobsite employees. On April 27, 1972, after Trustees considered the problem at several meetings (some of which were attended by petitioners), Administrator notified petitioners that their pensions were suspended, and on May 15, 1972, Trustees notified petitioners that the agreement accepting them into the plan was rescinded, offered to return all contributions received, and demanded return of pension benefits paid.

The court made additional findings that in August, 1967, M & M made contributions to the amended pension plan for the period 1962 to 1967, on behalf of a Buford Mitchell, a former partner of Maier's who was not and never had been an employee of M & M, and that M & M did not make contributions on behalf of Hester French (wife of French), and Esther Tavenner (wife of Tavenner), who were, in fact, employees of M & M. (The reason for such failure is immaterial but apparently it was because M & M knew they would not be employed the 15-year minimum period required to qualify for pension benefits.) At the direction of petitioners, Esther Tavenner filed written monthly statements during the period April, 1967 to March 1971, for M & M listing the M & M employees on whose behalf contributions were made (which included petitioners, Mitchell and Leicht) representing under penalty of perjury that each had been paid for 160

hours of work during the month and that there were no other employees on whose behalf M & M was required to make contributions. Maier applied for pension benefits in October, 1967, but was advised he was ineligible because he had not worked 15 years as required by the plan. Maier returned to M & M but received no compensation or salary and reapplied for pension in February, 1970.

DISCUSSION

Respondents' right to rescind by notice without judicial proceedings is not barred by the statute of limitations. Statutes of limitation act as a bar to actions or proceedings in courts. (31 Cal.Jur.2d, Limitation of Actions, § 9, pp. 436--437.) In Stiles v. Bodkin, 43 Cal.App.2d 839, at page 844, 111 P.2d 675, at pages 678--679, the court said:

'Plaintiff suggests that defendants' rights are barred by laches and the statute of limitations. A similar contention was held to be without merit in J. B. Colt Co. v. Freitas, 76 Cal.App. 278, 244 P. 916, 919, where the court said:

'Where fraud is relied upon as a defense merely, 'neither the limitation of the statute nor the doctrine of laches will operate to bar the defense of the invalidity of the agreement upon the ground of fraud, for so long as the plaintiff is permitted to come into court seeking to enforce the agreement, the defendant may allege and prove fraud as a defense. In short, it is not incumbent upon one who has thus been defrauded to go into court and ask relief, but he may abide his time, and when enforcement is sought against him excuse himself from performance by proof of the fraud'. Estate of Cover, 188 Cal. 133, 140, 204 P. 583, 587. 'Where no affirmative relief is sought, it is not necessary for him to have exercised an existing right to rescind.' 12 Cal.Jur. 786; Simon Newman Co. v. Lassing, 141 Cal. 174, 74 P. 761. 'There are three methods by which in cases like the present, a party defrauded may obtain relief: (1) Cancellation or rescission,' etc.; '. . . (2) Affirmative relief by an action to recover . . . compensation for the injury sustained by the fraud; . . . (3)...