IBEW v. Trig Elec. Const. Co.

• Decision Date: 16 November 2000
• Docket Number: No. 68504-5.,68504-5.
• Citation: 142 Wash.2d 431,13 P.3d 622,142 Wn.2d 431
• Court: Washington Supreme Court
• Parties: INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 46, Appellants, v. TRIG ELECTRIC CONSTRUCTION CO., a Washington corporation, Lydig Construction, Inc., Fidelity and Deposit Company of Maryland, and Department of General Administration, Respondents.

13 P.3d 622

142 Wn.2d 431

142 Wash.2d 431

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 46, Appellants, v. TRIG ELECTRIC CONSTRUCTION CO., a Washington corporation, Lydig Construction, Inc., Fidelity and Deposit Company of Maryland, and Department of General Administration, Respondents.

No. 68504-5.

Supreme Court of Washington, En Banc.

Argued June 20, 2000.

Decided November 16, 2000.

Marston & Associates, Terry Ray Marston, II, Redmond, Amicus Curiae on Behalf of Associated General Contractors of Washington.

Melvin Randall Kang, Amicus Curiae on Behalf of Northwest Ironworkers Trust Funds.

Donaldson, Kiel & McKenzie, Michael Howard Korpi, Seattle, for Appellant.

Ferring, Nelson, Michael H. Ferring, Davis, Wright, Tremaine, John Hitchcock Parnass, Seattle, Christine Gregoire, Attorney General, Spencer Walter Daniels, Asst., Olympia, for Respondent.

SANDERS, J.

We here review an order of the King County Superior Court granting the motion of Lydig Construction Company and the Fidelity and Deposit Company of Maryland to dismiss the complaint of the International Brotherhood of Electrical Workers on summary judgment. Finding no issue of material fact and holding Lydig and Fidelity are entitled to judgment as a matter of law, we affirm the trial court's dismissal of appellant's claim on federal preemption grounds.

FACTS

Background

Appellant is Local Union No. 46 of the International Brotherhood of Electrical Workers (IBEW). Respondents are Lydig Construction, Inc. (Lydig), Fidelity and Deposit Company of Maryland (Fidelity), and Washington State Department of General Administration (GA). Trig Electrical Construction Co. (Trig) was Lydig's subcontractor. IBEW seeks to foreclose Lydig's general contractor's bond posted by Fidelity.

Lydig is a general construction contractor and has been doing business for over 40 years. It has been responsible for several notable building projects at leading educational institutions in this state. At issue here is Lydig's contract to build the State Archives Project at Bellevue Community College. Trig subcontracted with Lydig to perform the project's electrical work.

As required by RCW 39.08, Lydig acquired a surety bond from Fidelity to protect all workers, mechanics, subcontractors, and materialmen supplying material and performing labor on the project. Pursuant to RCW 60.28, the college withheld a portion of the contract price as a retainage trust fund.

A collective bargaining agreement between IBEW and Trig required Trig to contribute a portion of its workers' wages to benefit trust fund plans falling under the ambit of the federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461. Trig became delinquent on these contributions for the months of December 1997 and January 1998.

On March 24, 1998, IBEW filed a lien notice asserting a claim against Lydig's bond and retainage trust fund for Trig's unpaid employee benefit contributions. On July 22, 1998, IBEW filed an amended lien notice identical to the previous notice except for the amount of interest and attorney fees claimed.

Procedural History

IBEW filed its lien foreclosure action against Lydig on October 27, 1998, for the required but unpaid contributions to the employee benefit funds. On July 9, 1999, Lydig and Fidelity moved for summary judgment arguing IBEW had no standing to foreclose on the lien and that ERISA preempted the action in any event. On August 6, 1999, the trial court granted defendants' motion for summary judgment and dismissed IBEWs complaint on the grounds that the lien notices were deficient and IBEW lacked standing to sue on behalf of Trig employees. IBEW timely filed a notice of appeal to the Supreme Court and we accepted review of this direct appeal.

ISSUE¹

The dispositive issue before the court is whether ERISA preempts IBEWs lien foreclosure action under Puget Sound Elec. Workers Health & Welfare Trust Fund v. Merit Co., 123 Wash.2d 565, 870 P.2d 960 (1994), and if so, should we overrule Merit?

DISCUSSION

Standard of Review on Summary Judgment

It is well settled that we review the record on summary judgment de novo, engaging in the same inquiry as the trial court. Benjamin v. Wash. State Bar Ass'n, 138 Wash.2d 506, 515, 980 P.2d 742 (1999). Because our review is de novo, we are free to premise our holding affirming summary judgment on an issue not decided by the trial court. See Redding v. Va. Mason Med. Ctr., 75 Wash.App. 424, 426, 878 P.2d 483 (1994)

(an appellate court may affirm a trial court's disposition of a summary judgment motion on any basis supported by the record); see also LaMon v. Butler, 112 Wash.2d 193, 200-01, 770 P.2d 1027 (1989). Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Clements v. Travelers Indem. Co., 121 Wash.2d 243, 249, 850 P.2d 1298 (1993); CR 56(c).

There are no disputed material facts in this case. Rather we must determine a pure question of law: whether ERISA preempts IBEWs lien foreclosure action, which question turns on the continued validity of Merit. As counsel for Appellant conceded at oral argument, we must overrule Merit for IBEW to prevail.

The Continuing Validity of Merit

In a factually similar matter, this court six years ago unanimously held Washington's public works lien statutes, RCW 39.08 and RCW 60.28, which provide a mechanism for collection of a defaulting subcontractor's obligations from the general contractor, are preempted by ERISA. Merit, 123 Wash.2d 565, 870 P.2d 960.

RCW 39.08 requires the execution and delivery of a performance bond with respect to public works construction projects:

Whenever any ... body acting for the state or any county or municipality or any public body shall contract with any person or corporation to do any work for the ... municipality, or other public body, city, town, or district, such ... body shall require the person or persons with whom such contract is made to make, execute, and deliver to such . . body a good and sufficient bond, with a surety company as surety, conditioned that such person or persons shall faithfully perform all the provisions of such contract and pay all laborers, mechanics, and subcontractors and materialmen, and all persons who supply such person or persons, or subcontractors, with provisions and supplies for the carrying on of such work, which bond in cases of cities and towns shall be filed with the clerk or comptroller thereof, and any person or persons performing such services or furnishing material to any subcontractor shall have the same right under the provisions of such bond as if such work, services or material was furnished to the original contractor....

RCW 39.08.010. Relating thereto, RCW 60.28 requires the public body reserve a retainage fund from the money otherwise due the general contractor:

Contracts for public improvements or work, other than for professional services, by the state, or any county, city, town, district, board, or other public body, herein referred to as "public body," shall provide, and there shall be reserved by the public body from the moneys earned by the contractor on estimates during the progress of the improvement or work, a sum not to exceed five percent, said sum to be retained by the state, county, city, town, district, board, or other public body, as a trust fund for the protection and payment of any person or persons, mechanic, subcontractor or materialman who shall perform any labor upon such contract or the doing of said work, and all persons who shall supply such person or persons or subcontractors with provisions and supplies for the carrying on of such work.... Every person performing labor or furnishing supplies toward the completion of said improvement or work shall have a lien upon said moneys so reserved:....

RCW 60.28.010(1).

Section 514(a) of ERISA states with respect to state laws:

Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.

29 U.S.C. § 1144(a)(1994). Furthermore, "[t]he term `State law" includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." 29 U.S.C. § 1144(c)(1).

In Merit, a group of benefit trust funds sued, as does IBEW herein, under RCW 39.08 and RCW 60.28 to foreclose on a lien against a general contractor's bond for unpaid benefit plan contributions owed to employees by an insolvent subcontractor. Merit, 123 Wash.2d at 567-68, 870 P.2d 960. We held the lien foreclosure actions were preempted by ERISA. Id. at 573, 870 P.2d 960.

To determine whether the public works lien statutes "relate to" ERISA for the purposes of 29 U.S.C. § 1144(a), we looked to the test of Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). Under Shaw, a statute may "relate to" ERISA "if it has a connection with or reference to such a plan." Shaw, 463 U.S. at 97, 103 S.Ct. 2890.

We believed the Washington public works lien statutes "connect with" and therefore "relate to" ERISA because they

create an entirely separate cause of action against the general contractors who otherwise have no contractual obligation to the plans. Furthermore, they provide a mechanism for funding employee benefit plans not available under the provisions of ERISA.

Merit, 123 Wash.2d at 572, 870 P.2d 960. Therefore the "enforcement and collection mechanisms [of the lien statutes] must yield to the extent they supplement those provided by ERISA." Id. at 573, 870 P.2d 960.

The civil enforcement mechanisms of ERISA are set forth at 29 U.S.C. § 1132 (1994) and specifically empower a participant, beneficiary, or fiduciary of a benefit plan to...