Hetchkop v. Woodlawn at Grassmere, Inc.

• Citation: 116 F.3d 28
• Decision Date: 04 February 1997
• Docket Number: No. 369,D,369
• Parties: Bert HETCHKOP, in his fiduciary capacity as Director, and the New York City District Council of Carpenters Welfare Fund, Pension Fund, Vacation Fund, Annuity Fund, Apprenticeship, Journeyman Retraining, Educational and Industry Fund, and Supplemental Fund, Plaintiffs-Appellees, v. WOODLAWN AT GRASSMERE, INC., Defendant-Appellant. ocket 96-7221.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

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116 F.3d 28

Bert HETCHKOP, in his fiduciary capacity as Director, and the New York City District Council of Carpenters Welfare Fund, Pension Fund, Vacation Fund, Annuity Fund Apprenticeship, Journeyman Retraining, Educational and Industry Fund, and Supplemental Fund, Plaintiffs-Appellees, v. WOODLAWN AT GRASSMERE, INC., Defendant-Appellant.

No. 369, Docket 96-7221.

United States Court of Appeals Second Circuit.

Argued Oct. 29, 1996.

Decided Feb. 4, 1997.

Richard M. Betheil, New York City (Philip R. Hoffman, Tina C. Kremenezky, Pryor, Cashman, Sherman & Flynn, on the brief), for Plaintiffs-Appellees.

Robert M. Blakeman, Valley Stream, NY (Robert M. Blakeman & Associates, on the brief), for Defendant-Appellant.

Before: KEARSE, WALKER and JACOBS, Circuit Judges.

KEARSE, Circuit Judge:

Defendant Woodlawn At Grassmere, Inc. ("Woodlawn" or the "Company"), appeals from a judgment of the United States District Court for the Southern District of New York, Louis L. Stanton, Judge, ordering it to pay $135,421.59 to the plaintiff employee benefit funds (the "Funds") as contributions due under a collective bargaining agreement, plus $38,226.57 in attorneys' fees and disbursements. The district court granted partial summary judgment dismissing Woodlawn's defense of fraud in the execution of the agreement. On appeal, Woodlawn contends principally that it presented evidence sufficient to create triable issues of fact foreclosing the entry of summary judgment against it. We agree and therefore vacate the judgment and remand for trial.

I. BACKGROUND

Woodlawn is a construction company organized for the purpose of constructing 14 housing units in Staten Island, New York. The present suit was brought by the Funds pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1132(a)(3) and 1145 (1994), and the Labor Management Relations Act of 1947, 29 U.S.C. § 185 (1994), to recover contributions from Woodlawn due pursuant to a collective bargaining agreement between Woodlawn and the local carpenters union (the "Union"). The Funds alleged that the collective bargaining agreement was, in all pertinent respects, unlimited.

Woodlawn defended by asserting that it had reached agreement with the Union for only a limited obligation; that Woodlawn's chief officer Bruce DiGiovanni had been shown such a limited document, which he was about to sign; and that without Woodlawn's knowledge, the document purporting to impose an unlimited obligation had been fraudulently substituted for the limited agreement while one of the Union representatives deliberately distracted DiGiovanni. The events as described by DiGiovanni in his deposition and affidavit, taken in the light most favorable to Woodlawn as the party against whom summary judgment was granted, were as follows.

In November 1987, after finishing the foundations on five of its planned 14 units using predominantly nonunion workers, Woodlawn determined that it needed additional workers to complete the framing of forms for the pouring of the remaining nine concrete foundations. Accordingly, DiGiovanni contacted the Union to seek laborers for that limited task. DiGiovanni told Union representatives Harlow Haagensen and Stanley Solaas that DiGiovanni "would require only enough personnel to complete the carpentry work of framing the forms for the pouring of the nine remaining foundations and that the balance of my carpentry work such as framing, installation of windows, etc., would be predominately performed by a carpentry contractor and or other contractors." (Affidavit of Bruce DiGiovanni dated July 15, 1994 ("DiGiovanni Aff."), p 6.) In connection with DiGiovanni's request, Charles Riggio, an Employer Coordinator for the Funds, prepared a "Collective Bargaining Agreement Preparation Form" ("Prep Form") in accordance with Union procedures (Affidavit of Charles Riggio dated June 22, 1994 ("Riggio Aff."), p 8), which included the notation that the type of work the Union laborers were to perform for Woodlawn was "Foundations & Forms."

Haagensen told DiGiovanni that the parties would need to execute a formal collective bargaining agreement even though the job called only for completion of framing for the nine foundations; DiGiovanni agreed to execute such an agreement. On the following day, Haagensen drove DiGiovanni from Staten Island to Union headquarters in Manhattan to execute the labor agreement. There, DiGiovanni met with Solaas and reiterated that he wanted to hire Union laborers just to "complete the nine remaining foundations." (DiGiovanni Aff. p 8.) Solaas and Haagensen first showed DiGiovanni a standard Union contract that set forth the terms for employing Union laborers, which included the requirement that an employer hire only Union laborers to complete work covered under the agreement and that it contribute to Union fringe benefit funds for each hour of work performed under the agreement. Solaas assured DiGiovanni that the agreement would be modified to reflect that it was applicable solely to the construction of Woodlawn's nine foundation forms; Solaas then left the room, returned some five minutes later with a modified contract, and showed DiGiovanni the first page, on which had been inserted words to the effect of "For foundation forms only." (Id. p 9.) Solaas asked if the modified agreement was satisfactory, and DiGiovanni stated it was.

At that moment, Haagensen abruptly stood up and announced that he was leaving. DiGiovanni turned away from the agreement for approximately six or seven seconds to remind Haagensen that he had promised to drive DiGiovanni back to the Staten Island jobsite. When DiGiovanni turned back to the document, Solaas had opened it the last page and was indicating where DiGiovanni was to sign; DiGiovanni signed without reading or reinspecting any of the earlier pages. After DiGiovanni signed, Solaas immediately left the room with the signed document and shortly returned with an envelope into which he put the document and other materials, and handed the envelope to DiGiovanni.

The document DiGiovanni signed, however, did not bear a legend to the effect of "For foundation forms only," which DiGiovanni had seen on the document he had prepared to sign; nor did it contain any other language reflecting that Woodlawn's obligation was limited. Instead, it required Woodlawn to pay benefits for both union and nonunion workers performing carpentry work and to pay benefits with respect to any kind of carpentry work, not just that relating to the foundation forms. (See Riggio Aff. p 14.) DiGiovanni, having emphasized to the Union officials that he wanted only a limited contract, and having been shown by them a modified contract "For foundation forms only," believes that Solaas substituted the unlimited document while Haagensen intentionally distracted him. (DiGiovanni Aff. p 15, 19.)

DiGiovanni did not look at the document that had been placed in the envelope until the present dispute arose some months later. The dispute arose when, after Woodlawn had made contributions for the Union employees with respect to the framing of five foundations, the Union began to demand contributions for all carpentry work. DiGiovanni called Solaas to remind him that Woodlawn's contract was limited; Solaas's response was " 'I don't remember'." (Id. p 14.) After another Union representative came to the jobsite and demanded "a pay off of $5,000.00, to straighten out the situation," Woodlawn "threw the union off the job." (Id.)

The Funds brought the present lawsuit seeking to enforce the agreement as signed. Woodlawn contended that the agreement sued on was void because it had been procured by a fraudulent substitution of documents, i.e., by fraud in the execution. The Funds moved for summary judgment dismissing this affirmative defense, contending that DiGiovanni did not see or hear any substitution of documents and had no other witness to a substitution. They submitted an affidavit from Funds employee Riggio, who stated that the Union "would not" have entered into a limited agreement of the type DiGiovanni contends he negotiated with Solaas and Haagensen (Riggio Aff. p 17). Riggio did not remember the Woodlawn contract in particular, however (id. p 8), and he was not present at the signing (DiGiovanni Aff. p 17). The Funds did not submit an affidavit from either Solaas or Haagensen.

The district court, in a Memorandum and Order dated February 1, 1995, 1995 WL 43685 ("Opinion"), granted the Funds' motion to dismiss the fraud-in-the-execution defense, finding that Woodlawn had not shown that the agreement it believed it was signing was entirely different from the document it had signed. Noting that fraud in the execution is not a tenable defense unless one "party executes an agreement with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms," Opinion at 8 (internal quotation marks omitted), the district court found that DiGiovanni "had a reasonable opportunity to acquaint himself with the terms of the Agreement both before and after he signed it," id. at 9, and that "[t]he agreement to which DiGiovanni allegedly assented and the Agreement [he ultimately signed] were not 'entirely different,' " id. at 8.

Both were collective bargaining agreements. They contained identical provisions regarding payment of fringe benefits on behalf of employees, sub-contracting work to non-union companies, and maintaining union conditions when performing non-covered carpentry work, the provisions at issue in this action. Woodlawn has not shown how the "Foundation forms only" legend would have obviated all of those provisions.

Id. at 8-9 (footnote omitted). The court stated that DiGiovanni "received a copy of the Agreement ... at the time he signed the Agreement" and that "[h]e was not rushed to sign" it. Id. at 9. The court also stated that

DiGiovanni was not interested in dealing with paperwork or reviewing...