Illinois Conf. of Teamsters v. Steve Gilbert Trucking, 92-3267.
| Decision Date | 20 May 1994 |
| Docket Number | No. 92-3267.,92-3267. |
| Citation | 853 F. Supp. 1091 |
| Court | U.S. District Court — Central District of Illinois |
| Parties | ILLINOIS CONFERENCE OF TEAMSTERS & EMPLOYERS WELFARE FUND, Plaintiff, v. STEVE GILBERT TRUCKING, Defendant. |
Thomas H. Wilson, Michael A. Myers, Springfield, IL, for plaintiff.
Gordon W. Gates, James R. Potter, Springfield, IL, Stuart I. Cohen, Jeffrey Alan Ryva, Peoria, IL, for defendant.
Plaintiff has asked for summary judgment and moves to strike certain portions of Steve Gilbert's affidavit.
Plaintiff has brought this Employee Retirement Income Security Act (ERISA) claim against Steve Gilbert Trucking, seeking to collect delinquent contributions owed to the fund. Gilbert claims that he is not liable for any contributions to Plaintiff, and even if he is liable, he is not liable for the amount claimed by Plaintiff.
Gilbert is the owner of a small trucking company. Until March 1990, he had operated as a non-union company. In March of 1990, he signed the Articles of Construction Agreement between the Associated General Contractors of Illinois and the Illinois Conference of Teamsters. Gilbert claims that the purpose of signing this agreement was to allow him to participate in a major federally funded interstate project that was to be conducted near Champaign, Illinois. According to Gilbert, the local teamsters union, Local 26, used this project as a tool to persuade all non-union trucking companies in the area to sign up with the union.
To help induce Gilbert to sign on with the union, the business agent for Local 26, Michael Carr, allegedly told Gilbert that the union would not organize his shop or appoint a union steward. Gilbert also alleges that Mr. Carr never informed him of any obligation to make health or pension fund contributions. According to Gilbert, this was an important point since he did not feel that many of his workers, who were part-time employees, would ever vest in the fund. Based on these representations, or lack thereof, Gilbert signed the Articles of Construction Agreement Booklet (Agreement Booklet) without reading it or having a lawyer read it.
Unbeknownst to Gilbert, the Agreement Booklet contained the following paragraph:
The employer agrees to contribute to the Illinois Conference of Teamsters and Employers Welfare Fund, effective May 1, 1989, the rate of $2.10; effective May 1, 1990, the rate of $2.30; and effective May 1, 1991, the rate of $2.50, for each hour worked by each employee covered by this agreement.
He also signed a Participation Agreement with the fund which bound him to the terms of the Welfare Fund Declaration of Trust.
Gilbert made one contribution payment to the fund for work conducted by two of his employees in July 1990. After that payment, however, no further contributions were ever paid. The union did not organize Gilbert's shop and did not appoint a union steward. Gilbert did receive five letters from the fund advising him of his failure to make contributions. He claims that since it was his understanding that his workers were not covered by the fund, he did not feel that he owed any contributions.
In August of 1992 the fund informed Gilbert that it was going to conduct an audit of his books to determine if Defendant had made all required contributions. The fund had authority to conduct the audit under the Agreement Booklet and ERISA. Sometime after receiving notice of the audit, Gilbert renewed his contract with the union by again signing the Agreement Booklet.
Gilbert refused to allow the audit and this lawsuit was filed. He subsequently allowed the audit which was conducted by Michael Cairns, an auditor employed by the fund. The only employment records kept by Gilbert and given to Mr. Cairns were payroll ledger sheets. These sheets listed the employee's name, job title, and gross pay. To determine the contributions due, Mr. Cairns took the employees who were designated as drivers, divided their gross pay by the union hourly rate of pay set out in the Agreement Booklet to determine the number of hours worked, and then multiplied by the contribution amount. Using this method, Mr. Cairns found Steve Gilbert Trucking to owe $189,740.42.
Plaintiff has moved for summary judgment claiming that under the Agreement Booklet which Defendant signed he is liable for these contributions. Gilbert has attempted to raise the defense of fraud in the inducement. Furthermore, Gilbert argues that even if he is liable for the contributions the method of calculating the contributions due is inappropriate since some of his drivers worked on a commission basis, he did not pay the union hourly rate, and some drivers received bonuses which were included in the gross pay amount.
Under Fed.R.Civ.P. 56(c), summary judgment shall be granted if the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Black v. Henry Pratt Co., 778 F.2d 1278, 1281 (7th Cir.1985). The moving party has the burden of providing proper documentary evidence to show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists when "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Unquestionably, in determining whether a genuine issue of material facts exists, the evidence is to be taken in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Once the moving party has met its burden, the opposing party must come forward with specific evidence, not mere allegations or denials of the pleadings, which demonstrates that there is a genuine issue for trial. Howland v. Kilquist, 833 F.2d 639 (7th Cir.1987). "A scintilla of evidence in support of the non-movant's position is insufficient to successfully oppose summary judgment; `there must be evidence on which the jury could reasonably find for the nonmoving party.'" Brownell v. Figel, 950 F.2d 1285 (7th Cir. 1991) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2511-12, 91 L.Ed.2d 202 (1986)).
After the motion for summary judgment and Defendant's response had been filed, Plaintiff filed a motion to strike portions of Defendant's affidavit in support of his memorandum in opposition to summary judgment. Plaintiff seeks to strike paragraph 3 of Defendant's affidavit which alleges facts to support his claim of fraud in the inducement of the contract. Plaintiff argues that Defendant cannot rely on the affirmative defense of fraud in the inducement because he has failed to assert this affirmative defense in his answer as required by Fed. R.Civ.P. 8(c). Since Defendant cannot rely on the affirmative defense of fraud, Plaintiff argues, under Rule 56(e) this portion of Defendant's affidavit should be struck. Defendant argues in his response to the motion to strike that he is attempting to amend his answer to include the affirmative defense of fraud. Furthermore, Defendant argues that at this stage of the case the absence of pleading the affirmative defense is irrelevant.
After the filing of the motion to strike and Defendant's response, United States Magistrate Judge Charles H. Evans denied Defendant's motion to amend his Complaint. Defendant, therefore, has not averred fraud as an affirmative defense as required by Rule 8(c). Failure to plead an affirmative defense as required by Rule 8(c) results in waiver of that defense. Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 235 (7th Cir.1991). Accordingly, Defendant has waived the defense of fraud and paragraph 3 of the affidavit will be struck.
Without the affirmative defense of fraud, Defendant has no legitimate ground to deny liability. Contrary to Defendant's assertion, failure to plead the affirmative defense of fraud is relevant at this stage of the case. As cited above, a genuine issue of material fact exists when "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 477 U.S. at 249, 106 S.Ct. at 2510. Since Defendant waived the defense of fraud, any evidence attempting to be introduced at trial to support such a defense would be excluded as irrelevant. As no evidence to support the defense of fraud would be admissable, a jury could never return a verdict for Defendant based on that defense.
Alternatively, even if Defendant could assert fraud as an affirmative defense, under the law of the Seventh Circuit fraud in the inducement is not a defense to an ERISA § 515, 29 U.S.C. § 1145, action. Central States, S.E. & S.W. v. Gerber Truck, 870 F.2d 1148 (7th Cir.1989) (en banc). In Gerber, the court stated:
if the employer simply points to a defect in the contract's formation-such as fraud in the inducement, oral promises to disregard the text, or the lack of majority support for the union and the consequent ineffectiveness of the pact under labor law-it must still keep its promise to the pension plans.
Id. at 1153. Accordingly, there is no genuine issue as to any material fact and Plaintiff is entitled to a judgment as a matter of law as to liability.
Having determined that Plaintiff is entitled to summary judgment on the issue of liability, there remains the issue of damages. As mentioned above, Defendant hotly disputes the method of calculating the delinquent contributions used by the fund auditor Mr. Cairns. Mr. Cairns started with the gross pay of each covered employee, divided that amount by the union hourly wage rate as set out in the Agreement Booklet, and then multiplied by the applicable contribution rate which was also set out in the Agreement...
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ILLINOIS CONF. OF TEAMSTERS v. GILBERT TRUCKING
...This case is revisited. Defendant has asked the Court to alter or amend its Opinion of May 20, 1994, Illinois Conf. of Teamsters v. Steve Gilbert Trucking, 853 F.Supp. 1091 (C.D.Ill.1994), granting summary judgment in favor of The facts were set forth there and will not be repeated here. Pr......