Greenblatt v. Delta Plumbing & Heating Corp.
Decision Date | 29 September 1993 |
Docket Number | No. 89 Civ. 7759 (RWS).,89 Civ. 7759 (RWS). |
Citation | 834 F. Supp. 86 |
Parties | William GREENBLATT and Peter N. Salzarulo, as Chairman and Co-Chairman, respectively and Trustees 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, in his capacity as President of Local Union No. 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO, Peter N. Salzarulo, Individually and Local Union No. 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO, Plaintiffs, v. DELTA PLUMBING & HEATING CORP. and New York Surety Company, Defendants. |
Court | U.S. District Court — Southern District of New York |
Kaming & Kaming, New York City (Joseph S. Kaming, Elizabeth C. Kaming, Sean O'Donnell, of counsel), for plaintiffs.
Hollander & Associates, P.C., New York City (Michael R. Strauss, of counsel), for defendant New York Sur. Co.
This action by Plaintiffs William Greenblatt and Peter N. Salzarulo as Chairman and Co-Chairman, respectively, and Trustees 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 ("the Board"), Peter N. Salzarulo, ("Salzarulo") in his capacity as President of Local Union No. 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO, Peter N. Salzarulo, individually, and Local Union No. 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO (the "Local") (collectively, the "Plaintiffs") against Defendant Delta Plumbing & Heating Corp. ("Delta") and Defendant New York Surety Company ("New York Surety") was tried to the Court on May 10, 1993. Upon the following findings and conclusions, judgment will be entered on the complaint.
This action was commenced on November 20, 1989 against Delta to enforce an obligation to the Board arising out of the Collective Bargaining Agreement ("CBA") between the Association of Contracting Plumbers of the City of New York, Inc. and the Local by the filing of a complaint. Service was made through the Secretary of State.
The Board previously filed actions against Delta in the Southern and Eastern Districts to enforce its rights on April 27, 1987, November 4, 1988, and November 20, 1989. Delta filed a petition in bankruptcy on March 21, 1991, and the action was stayed against it. New York Surety moved for summary judgment dismissing the complaint, which motion was denied on May 23, 1991, familiarity with which is assumed.
Following the trial on May 10, 1993, a briefing schedule was set, and final submissions were completed on July 7, 1993.
The Board is the agent of Local Union No. 2 under the CBA with respect to the collection and administration of the various benefits provided under the CBA. Delta is a plumbing contractor subject to the terms and provisions of the CBA which required the posting of a surety bond containing certain guarantees as a condition of supplying union labor to the contractors covered by the CBA.
The CBA provides, among other things, as follows:
Delta provided a bond to the Board as required by the CBA written by Continental Casualty Company ("Continental") in the amount of $80,000 which was effectively cancelled by Continental on or about June 14, 1989. Delta failed to furnish a union benefits bond for the period of June 14, 1989 through January 28, 1990.
By letter dated August 16, 1989, the Board sent a letter to Delta notifying it that it had no bond and that:
Failure to comply with the above bonding regulations makes your firm delinquent. Your jobs may be stopped, your bond will be doubled and, if you are a monthly contractor, you will have to pay weekly. When a contractor is determined to be delinquent, it will be a requirement that a contractor pay weekly — both wages and fringes — by check to the employees ...
The letter was re-sent on September 21, 1989 and denominated as a "Final Notice."
By letter dated October 11, 1989 the Board notified Delta that it was in breach of the Agreement and that Delta's "delinquent bond should be (double bond schedule) $65,000.00." By letter dated December 27, 1989, the Board again notified Delta that it had no bond and stated as follows:
The notice was repeated in substantially the same form by a letter to Delta dated January 23, 1990. Copies of the notices were sent by the Board to Salzarulo.
Delta was furnished with union labor during the period of June 14, 1989 through January 28, 1990, by which time Delta owed the Board the sum of $70,316.60.
During the period of July 1989 through June 1990, the only projects at which Delta utilized Local 2 union labor were the following:
It is the practice under the CBA for the contracting plumbers to file reports monthly and to make estimated payments of benefits which lag behind the actual liabilities incurred as established by the reports required under the CBA.
On January 29, 1990 a bond was executed and issued by New York Surety for the benefit of Delta as Principal and the Board as Obligee (the "Bond") on a form prepared by the Board.
Prior to the execution of the Bond, Valerie Sanborn, an account executive at the Halland Agency, the producing broker and agent of New York Surety, had discussions with Monika Scheutz, a bookkeeper for the Board, concerning the issuance of the Bond. During the course of those discussions, Ms. Scheutz never disclosed to Ms. Sanborn that: (a) there was a preexisting liability of Delta to the PIB in excess of $70,000.00 or (b) that the Board had commenced an action to recover those delinquencies. New York Surety was generally familiar with the practice of maintaining running balances between contractors and the Board. No credit investigation was conducted other than an inquiry to Delta's bank, which was answered satisfactorily. No litigation search was conducted by New York Surety.
The Bond, in the penal sum of $80,000.00 was executed and issued on January 29, 1990.
The Bond provides:
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...Clanton, 128 A.D.2d 963, 512 N.Y.S.2d 927 (N.Y. App. Div. 1987). But see: Second Circuit: Greenblatt v. Delta Plumbing & Heating Corp., 834 F. Supp. 86 (S.D.N.Y. 1993), vacated on other grounds 68 F.3d 561 (2d Cir. 1995) (where words of bond do not limit surety’s liability to future transac......
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