Greenblatt v. Delta Plumbing & Heating Corp.

Decision Date13 October 1995
Docket NumberAFL-CI,No. 2,P,D,1215,AFL-CIO,Nos. 1079,2,s. 1079
Citation68 F.3d 561
Parties150 L.R.R.M. (BNA) 2518, 19 Employee Benefits Cas. 2245, Pens. Plan Guide P 23915A William GREENBLATT, as Chairman and Trustee of the Joint Industry Board of the Plumbing Industry of the City of New York and Funds Administered by Joint Industry Board of the Plumbing Industry of the City of New York; Peter N. Salzarulo, Co-Chairman and Trustee of the Joint Industry Board of the Plumbing Industry of the City of New York and Funds Administered by Joint Industry Board of the Plumbing Industry of the City of New York; and in his capacity as President of Local Unionof the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada,; and Individually; Local Unionof the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada,, Plaintiffs-Appellees-Cross-Appellants, v. DELTA PLUMBING & HEATING CORP., Defendant, and New York Surety Co., Defendant-Appellant-Cross-Appellee. ockets 94-7826, 94-7866.
CourtU.S. Court of Appeals — Second Circuit

Joseph S. Kaming, Kaming & Kaming, New York City (Elizabeth C. Kaming and Sean O'Donnell, of counsel) for Plaintiffs-Appellees-Cross-Appellants.

Michael R. Strauss, Hollander & Associates, New York City (Lewis S. Calderon, of counsel) for Defendant-Appellant-Cross-Appellee New York Surety.

Before: WALKER, JACOBS, and CALABRESI, Circuit Judges.

WALKER, Circuit Judge:

Defendant New York Surety appeals from a judgment, following a bench trial, of the United States District Court for the Southern District of New York (Robert W. Sweet, District Judge ) awarding $50,638.86 plus interest and costs to plaintiffs. Greenblatt v. Delta Plumbing & Heating Corp., 849 F.Supp. 247, 251 (S.D.N.Y.1994); Greenblatt v. Delta Plumbing & Heating Corp., 834 F.Supp. 86, 93 (S.D.N.Y.1993). Because we hold that the district court lacked subject matter jurisdiction, we reverse the decision in which the district court ruled that it had such jurisdiction, Greenblatt v. Delta Plumbing & Heating Corp., 818 F.Supp. 623, 631 (S.D.N.Y.1993), vacate all other orders in the case, and dismiss the complaint.

BACKGROUND

Plaintiffs (collectively the "Plumbing Industry Board" or "Board") are guardians of employee benefit funds administered pursuant to a collective bargaining agreement between the Association of Contracting Plumbers of the City of New York, Inc. and Local Union Number 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada (the "Union"). On November 21, 1989, the Board filed a complaint against Delta Plumbing & Heating Corporation ("Delta"), one of the signatories to the collective bargaining agreement. The complaint alleged, among other claims, that Delta had failed to make timely fringe benefits payments to the Board in fulfillment of Delta's obligation under the agreement.

Under the collective bargaining agreement, Delta was obligated to furnish a surety bond in favor of the Board to guarantee Delta's obligation to make benefits payments. On January 29, 1990, the New York Surety Company ("New York Surety") issued such a bond on behalf of Delta. On May 9, 1990, the Board amended its complaint to name New York Surety as a defendant, alleging that it was entitled to recover on the bond because of Delta's default.

In March, 1991, Delta filed for bankruptcy, automatically staying actions against it pursuant to 11 U.S.C. Sec. 362 and leaving New York Surety as the sole defendant in this action. Greenblatt, 818 F.Supp. at 624. New York Surety moved under Federal Rule of Civil Procedure 12(b)(1) to dismiss the complaint on the ground that the district court lacked subject matter jurisdiction. The district court denied the motion. Id. at 631. After a trial, the district court awarded the Board judgment on the bond. Greenblatt, 834 F.Supp. at 93.

DISCUSSION

New York Surety raises a number of claims of error on appeal, and the Board cross-appeals from the district court's denial of costs, liquidated damages, and attorneys' fees under Sec. 502(g)(2) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1132(g)(2). 1 We address only New York Surety's contention that the district court lacked subject matter jurisdiction. Specifically, we consider whether the district court had jurisdiction by virtue of (1) Sec. 515 of ERISA, 29 U.S.C. Sec. 1145; (2) the presence of a federal question in the state law cause of action; (3) pre-emption of state law (a) by Sec. 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. Sec. 185, or (b) by Sec. 514(a) of ERISA, 29 U.S.C. Sec. 1144(a); or (4) the doctrine of pendent party jurisdiction. We hold that none of these bases provided subject matter jurisdiction over the Board's claim on the bond against New York Surety.

I. Jurisdiction under Section 515

The district court held that "subject matter jurisdiction is granted to this court by Section 515 of ERISA (29 U.S.C. Sec. 1145)." Greenblatt, 818 F.Supp. at 625. Section 515 provides:

Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

29 U.S.C. Sec. 1145.

In addressing the applicability of Sec. 515 to this action, the district court held that New York Surety fell within the definition of "employer" in Sec. 3 of ERISA as "any person acting ... indirectly in the interest of an employer[ ] in relation to an employee benefit plan," 29 U.S.C. Sec. 1002(5). Greenblatt, 818 F.Supp. at 627. The district court reasoned that

Delta bonded its pension obligations because the Agreement required it to take out a surety bond "to the benefit of the Joint Plumbing Industry Board." New York Surety thereby became a person acting indirectly in the interest of the employer since without the bond there would have been no agreement between Delta and Local Union No. 2.

Id. at 629. In the district court's view, the common benefit conferred by the surety arrangement on the employees and Delta did not alter the fact that New York Surety was acting indirectly in Delta's interest and thus was an ERISA employer. Id.

Because New York Surety was an employer under Sec. 3 of ERISA, the district court reasoned, it was subject to the strictures of Sec. 515. The district court held that it was "permissible" to construe Sec. 515 to cover a party acting in the interests of an employer if that party "promised to make contributions according to the 'terms' of the collective bargaining agreement," even if it was not a signatory to the agreement and did not assume all of an employer's contribution obligations. Id. at 628. Since this "permissible" construction did not conflict with Congress's broader purpose in enacting and amending Sec. 515, which was to "allow[ ] prompt and effective collection of unpaid benefits," id. at 627, the district court held that New York Surety was within the compass of Sec. 515. Id. at 628.

Even if we were to assume that Sec. 515 did apply to New York Surety (a proposition we reject later in this opinion), that fact alone would not confer subject matter jurisdiction. Section 515 does not by itself confer jurisdiction; it is simply a substantive requirement that an employer make contributions to a multiemployer ERISA plan as specified in the plan or collective bargaining agreement. See 29 U.S.C. Sec. 1145. Federal jurisdiction over ERISA is created by Sec. 502(f), 29 U.S.C. Sec. 1132(f). That section provides that federal district courts shall have jurisdiction of civil actions under Sec. 502(a), 29 U.S.C. Sec. 1132(a), to enforce the provisions of the statute dealing with protection of employee benefit rights, 29 U.S.C. Secs. 1001-1169. Id. Section 502(f) is absent from the district court's discussion of its jurisdiction.

"It is long settled law that a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987). " '[A] right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action.' " Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 10-11, 103 S.Ct. 2841, 2847, 77 L.Ed.2d 420 (1983) (quoting Gully v. First Nat'l Bank, 299 U.S. 109, 112, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936)). Under the well-pleaded complaint rule, Sec. 515 would provide jurisdiction only if the Board, as a fiduciary, brought a claim against New York Surety under Sec. 502(a)(3), 29 U.S.C. Sec. 1132(a)(3), to enforce the employer's obligations to make contributions under the terms of the ERISA plan or the collective bargaining agreement.

In this case, while the Board expressly pleaded such claims against Delta in the amended complaint (which were later severed from this action), it did not raise a claim under Sec. 502(a) for a violation of Sec. 515 against New York Surety. In fact, its claim against New York Surety did not mention Sec. 515 at all, nor did the Board seek leave to amend the complaint. The Board's only claim against New York Surety was an action on the bond, which, although not denominated specifically in the complaint as such, is purely a state law claim. Cf. Socony-Vacuum Oil Co. v. Continental Casualty Co., 219 F.2d 645, 647 (2d Cir.1955).

Indeed, the district court did not treat the Board's claim as one under federal law. See Greenblatt, 834 F.Supp. at 92. Although the district court noted that New York Surety was subject to the strictures of Sec. 515, 818 F.Supp. at 627-28,...

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