Joyce v. Silveri Tile Co., L.C.

• Decision Date: 25 November 1998
• Docket Number: No. CA 97-1635.,CA 97-1635.
• Citation: 27 F.Supp.2d 251
• Parties: John T. JOYCE, et al., Plaintiffs, v. SILVERI TILE COMPANY, L.C., Defendant.
• Court: U.S. District Court — District of Columbia

27 F.Supp.2d 251

John T. JOYCE, et al., Plaintiffs, v. SILVERI TILE COMPANY, L.C., Defendant.

No. CA 97-1635.

United States District Court, District of Columbia.

November 25, 1998.

Ira R. Mitzner, Bridget O'Connor, Dickstein Shapiro Morin & Oshinsky LLP, Washington, DC, for Plaintiffs.

Arthur H. Blitz, Paley Rothman Goldstein Rosenberg & Cooper, Chtd., Bethesda, MD, for Defendant.

MEMORANDUM

JUNE L. GREEN, District Judge.

Before the Court are Plaintiff Trustees of the Bricklayers and Trowel Trades International Pension Fund's ("Fund") Motion for Summary Judgment, Defendant Silveri Tile Company, L.C.'s ("Silveri") Opposition thereto, and the Fund's Reply. For the

I. Background

This action involves a dispute over the collection of contributions to the Fund, a multi-employer benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"). Defendant is a small, closely held business, that installs ceramic tiles. The Fund seeks payment of $398,403.83, the total amount of delinquent contributions allegedly due from Silveri, pursuant to a collective bargaining agreement ("CBA"), for covered work performed from January 1992 through April 1998. The facts giving rise to this suit are set forth in detail below.

Silveri allegedly signed collective bargaining agreements ("Agreements") beginning in June 1985, and again in February 1997, with the Tile, Marble, Terrazzo Finishers and Shopmen International Union, Local Union No. 40 ("Local 40 Agreements") and in June 1988 with the International Union of Bricklayers and Allied Craftsmen, Local Union No. 32 ("Local 3 Agreement"). (See Plaintiffs' Memorandum of Points and Authorities In Support of Motion For Summary Judgment ("Supp.Mem.")). Pursuant to these Agreements, Silveri was obligated to file reports and make contributions to the Fund for covered employees. (Supp.Mem. at 1). Governed by ERISA, this Fund provides pension and other benefits to employees who work in the construction industry under contracts entered into between Bricklayer local unions and employers. Id. at 2. Included in these agreements are "rollover clauses" that provide for continuation of the Agreements until a written termination letter is received. Id. at 3.

Plaintiffs state that in late 1996, John Mason, a Business Manager for Local 32, became aware that Defendant was performing covered work in the Local 32 jurisdiction. Id. Mason so advised the Fund in early 1997, and as a result, Silveri's books and records were audited. Id. Finding no written notice of termination from Silveri, delinquent contributions were calculated for the months of January 1992 through April 1998 totaling $209,722.60. Id. at 4.

Defendant Silveri concedes that no union dues have been paid during the time in question, but argues that the Agreements entered into with the unions were Section 8(f) prehire agreements, that Defendant clearly and repeatedly repudiated by conduct several years earlier.¹ (Memorandum of Points and Authorities In Support of Opposition To Plaintiffs' Motion for Summary Judgment ("Opp.Mem.")). In addition, Defendant claims that the Agreement sued upon by the Fund terminated upon the dissolution of the local union in 1988, thereby extinguishing the rights of the Fund. Id. at 2. Finally, Defendant contends that a former company, Silveri Tile is now defunct and there can be no liability for delinquent contributions for Defendant Silveri Tile, L.C. because it is not an alter ego. Even if liability can be found, it argues the Fund has incorrectly calculated the delinquent contributions. Id.

II. Discussion

III. Summary Judgment

A motion for summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgement as a matter of law." Fed. R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court must view the material presented in the light most favorable to the nonmoving party, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and resolve all doubts as to facts or the existence of facts against the moving party. United States v. Diebold, 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962).

1. Contract Enforcement

The first issue is whether the Fund may enforce the contract between Local 40 and Silveri as written, regardless of any defenses Silveri may have against the union.

Silveri contends that the relevant Local 40 CBA terminated upon dissolution of that union in 1988, and that all obligations to Local 40 had been settled through 1992. Further, Defendant contends that in order to continue with this current suit, the Fund must demonstrate that the agreement can be enforced by another union, in this case, Local 44, then Local 32. Citing Sun Oil Co. of Pennsylvania, 228 NLRB 1063 (1977), Defendant notes that in order to do this, there must have been proper affiliation or merger, neither of which, Defendant contends, occurred here.

Federal labor policy, and relevant case law interpreting it, illustrate that a "pension or welfare fund is like a holder in due course in commercial law or like the receiver of a failed bank — entitled to enforce the writing without regard to the understandings or defenses applicable to the original parties." Central States, Southeast And Southwest Areas Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148, 1149 (7th Cir.1989). The Second Circuit has applied this reasoning in cases involving ERISA collection actions by ERISA funds, holding that no defenses going to the formation of the underlying CBA are available, and specifically, that an employer may not raise the defense of a union's abandonment of a collective bargaining agreement or that the union lacked majority status. Benson v. Brower's Moving & Storage, Inc., 907 F.2d 310 (2nd Cir.1990). The interest being protected in Benson was the benefit plan's ability to rely on the contribution promises of employers. Id. Thus, in a situation such as this, once an employer knowingly signs an agreement that requires him to contribute to an employee benefit plan, he may not escape his obligation by raising defenses that call into question the union's ability to enforce the contract as a whole. Id. at 314.

Benson is on point with regard to Silveri's contract defense. The termination of Local 40 in 1988, and the question of which union can now claim to be the successor of Local 40 is of no importance. Insofar as Congress "intended to insulate benefit plans from exactly these defenses in adding Section 515² to ERISA", the fact that the union is no longer in existence does not relieve Silveri from its obligation to pay into the Fund. Id. at 313.

Moreover, in a Fifth Circuit case, Louisiana Bricklayers & Trowel Trades Pension Fund & Welfare Fund v. Alfred Miller General Masonry Contracting Company, 157 F.3d 404, 1998 WL 677174 (5th Cir. La.), the Court of Appeals spoke directly to the issue of successor unions in ERISA actions. In Miller, the court held that the defense of lack of proper successorship was not available in a Section 515 action, as it was merely raising questions as to the enforceability of the underlying CBA. Id. The court reasoned that because status as a successor union involves complex labor law determinations that are better left to the National Labor Relations Board ("NLRB"), an employer must continue paying into the funds until questions concerning validity of the CBA are resolved by arbitration or the NLRB. Id.

Like Miller, Silveri may not raise the defense of proper successorship of Local 40 to Local 44, then Local 35.³ In addition, because the only fraud claimed by Silveri deals with the signature on the Local 32 agreement and not the underlying CBA with Local 40, Silveri has no valid defense to the enforceability of the underlying CBA.⁴ (Opp.Mem. at 21).

Here, Silveri's contract defenses fail as a matter of law. Neither the contention that the CBA with Local 40 was terminated upon dissolution of the union, nor the idea that proper successorship could not be claimed by another union will release Silveri from the obligation to pay the past due contributions owed to the plaintiff.

2. Repudiation of Section 8(f) Prehire Agreement

The Court is now faced with the question of whether the unilateral repudiation of Section 8(f) prehire agreements is available as a defense in an ERISA action to collect past due contributions.

Section 8(f) of the National Labor Relations Act, 29 U.S.C § 158(f), was adopted to create an exception in the construction industry to the general policy prohibiting binding CBA's between employers and employee bargaining units that have not received majority support. Thus, without first having established majority status, a union may enter into an agreement with an employer fixing the terms and conditions of employment for the workers hired by that signatory employer. See Jim McNeff, Inc. v. Todd, 461 U.S. 260, 103 S.Ct. 1753, 75 L.Ed.2d 830 (1983).

Silveri argues that it properly repudiated the Prehire Agreement prior to the union's attainment of majority support of the employer's employees, and, therefore, Silveri was no longer required to file reports and make contributions to the Fund. Citing McNeff at 260, 103 S.Ct. 1753. The Plaintiff, for its part, argues that Defendant may not unilaterally repudiate the 8(f) Prehire Agreement by either conduct, or otherwise.

At the center of this dispute is the proper interpretation of Section 8(f). Prior to 1987, the NLRB interpreted 8(f) to permit unilateral repudiation. See International Association of Bridge, Structural and Ornamental Iron v. NLRB, 843 F.2d 770, 774 (3rd Cir. 1988). This Circuit, as well as the Supreme Court, even recognized such an interpretation as reasonable and allowed decisions based on it to stand. See...