Lenon v. St. Paul Mercury Ins. Co.

• Decision Date: 18 February 1998
• Docket Number: No. 96-1549,No. 6,6,96-1549
• Citation: Lenon v. St. Paul Mercury Ins. Co., 136 F.3d 1365 (10th Cir. 1998)
• Parties: , 21 Employee Benefits Cas. 2601, 98 CJ C.A.R. 1123 Douglas LENON; Greg Polak; Louis J. Veltrie; William C. Peterson; and Luciano Busnardo, not in their individual capacities but in their capacities as Trustees of the Colorado Tile, Marble and Terrazzo Workers' Pension Trust Fund and Trustees of the LocalColorado Tile Layers, Marble Masons and Terrazzo Workers Vacation Fund; Walter Kardy; and Frank Stupar, not in their individual capacities, but in their capacities as Trustees of and as the Administrative Committee of the Bricklayers and Trowel Trades International Pension Fund and the Bricklayers and Allied Craftworkers International Health Fund; and the Colorado Tile, Marble and Terrazzo Contractors Association, a Colorado non-profit corporation, Plaintiffs-Appellees, v. ST. PAUL MERCURY INSURANCE COMPANY, a Minnesota corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1365

136 F.3d 1365

40 Fed.R.Serv.3d 152, 21 Employee Benefits Cas. 2601,

98 CJ C.A.R. 1123

Douglas LENON; Greg Polak; Louis J. Veltrie; William C Peterson; and Luciano Busnardo, not in their individual capacities but in their capacities as Trustees of the Colorado Tile, Marble and Terrazzo Workers' Pension Trust Fund and Trustees of the Local No. 6 Colorado Tile Layers Marble Masons and Terrazzo Workers Vacation Fund; Walter Kardy; and Frank Stupar, not in their individual capacities, but in their capacities as Trustees of and as the Administrative Committee of the Bricklayers and Trowel Trades International Pension Fund and the Bricklayers and Allied Craftworkers International Health Fund; and the Colorado Tile, Marble and Terrazzo Contractors Association a Colorado non-profit corporation, Plaintiffs-Appellees, v. ST. PAUL MERCURY INSURANCE COMPANY, a Minnesota corporation Defendant-Appellant.

No. 96-1549.

United States Court of Appeals, Tenth Circuit.

Feb. 18, 1998.

Timothy J. Parsons, David B. Seserman, and Dean C. Heizer of Gorsuch Kirgis, L.L.C., Denver, CO, for Plaintiffs-Appellees.

Laurence M. McHeffey and Frank C. Porada of McElroy, Deutsch & Mulvaney, Denver, CO, for Defendant-Appellant.

Before KELLY and HENRY, Circuit Judges, and DOWNES, ^* District Judge.

PER CURIAM.

Plaintiffs, the trustees of four union trust funds and the Colorado Tile, Marble and Terrazzo Contractors Association, brought this action against defendant St. Paul Mercury Insurance Company seeking to recover under a surety bond St. Paul had issued to Wilkinson & Company. Plaintiffs' claims are based on a judgment in their favor in a separate action they brought against Wilkinson (the Wilkinson action or case) seeking fringe benefit contributions and other damages under collective bargaining agreements applicable to Wilkinson's work at the Denver International Airport. The district court held that the surety bond St. Paul issued covered these damages and entered judgment in plaintiffs' favor. St. Paul appeals. ¹

In the meantime, Wilkinson appealed the judgment against it. We recently affirmed the district court's judgment against Wilkinson as it applied to the plaintiff trustees, but vacated the judgment and remanded the case as it applied to the Contractors Association. See Trustees of Colo. Tile, Marble & Terrazzo Workers Pension Fund v. Wilkinson & Co., Nos. 96-1205, 96-1431, 1998 WL 43172 (10th Cir.1998) (unpublished). Because we affirmed the judgment in favor of the plaintiff trustees, and because the resolution of this appeal does not turn on the Contractors Association's claims, we conclude it is appropriate to resolve this appeal now rather than wait for proceedings to conclude in the Wilkinson action.

On the merits, we reject St. Paul's argument that the district court lacked subject matter jurisdiction, but agree that the type of damages plaintiffs seek are not covered under the surety bond. We therefore reverse.

I. BACKGROUND

This case follows directly from plaintiffs' success on the claims they asserted in the Wilkinson action, which they filed in February 1994. That case essentially turned on whether Wilkinson, a New Jersey corporation, was required to use union labor on work it performed under subcontract at the Denver International Airport in Colorado. With one exception to be discussed later, plaintiffs are the same in both this case and the Wilkinson action. Plaintiff trustees are the named fiduciaries of four multiemployer welfare and pension benefit plans as defined by the Employee Retirement Income Security Act of 1974 ("ERISA"). They based their claims against Wilkinson on Section 515 of ERISA, 29 U.S.C. § 1145. Section 515 allows federal actions against employers for contributions allegedly due under the terms of multiemployer ERISA plans or collective bargaining agreements. Plaintiff Contractors Association is a Colorado nonprofit corporation that promotes the tile, marble and terrazzo trade in Colorado who also claimed it was due contributions under collective bargaining agreements.

The facts, briefly stated, were that Wilkinson was a signatory to a collective bargaining agreement between the Tile Contractors Association of Northern New Jersey, Inc., and Local No. 77 of New Jersey-Bricklayers and Allied Craftsmen (the "Local 77 CBA"). That agreement generally covered workers known as "helpers" or "finishers." That agreement also contained a "traveling contractors" clause requiring Wilkinson to comply with an affiliated local's collective bargaining agreement when Wilkinson performed work outside the territory covered by the Local 77 CBA and in an affiliated local's territory.

Plaintiffs claimed that the work Wilkinson performed on the airport project was the type of work covered by the Local 77 CBA, and that pursuant to the Local 77 CBA traveling contractors clause, Wilkinson was obligated to comply with the union affiliate's agreement covering the airport project site. The applicable local agreement was one involving Local Union No. 6 of Colorado, International Union of Bricklayers and Allied Craftsmen (the "Colorado CBA"). That agreement essentially required the use of union labor and also required employers to make contributions to plaintiffs based on the number of hours worked by covered workers. Wilkinson neither used union labor nor made the contributions. Plaintiffs contended that Wilkinson breached the Colorado CBA and sought, as damages, contributions, interest and liquidated damages under the Colorado CBA and various trust fund agreements incorporated into that agreement for all workers the agreement covered.

The district court agreed with plaintiffs that under the plain language of the Local 77 CBA, the airport project was the type of work covered by the agreement. The court also determined that the Colorado CBA controlled the amount of damages, and Wilkinson was therefore obligated to make contributions for all workers covered by that agreement. It therefore entered judgment in plaintiffs' favor in the amount of $197,098.76 plus attorney fees and costs.

In August 1994, prior to the district court's ruling in their favor in the Wilkinson case, plaintiffs brought this action alleging diversity jurisdiction under 28 U.S.C. § 1332 and seeking to recover the amounts they claimed Wilkinson owed them under the labor and material bond St. Paul issued to Wilkinson, pursuant to Colo.Rev.Stat. § 38-26-105(1), for the airport work. St. Paul moved to dismiss the complaint under Fed.R.Civ.P. 12(b)(6), but the district court denied the motion in October 1995 and on reconsideration, in March 1996. St. Paul filed its answer in April 1996. In September 1996, while plaintiffs' summary judgment motion was pending, St. Paul again moved to dismiss, this time on grounds of lack of complete diversity. St. Paul, a citizen of Minnesota for diversity purposes, raised two arguments for lack of diversity: (1) that the citizenship of an ERISA plan is based on the citizenship of plan participants, not the plan's trustees, and plaintiffs could not show they were diverse from St. Paul; and (2) even if the plans' citizenship were based on the citizenship of its trustees, there was not complete diversity because one of the trustees was a citizen of Minnesota. Plaintiffs responded by contending that the citizenship of the plans derived from the citizenship of the trustees and by moving to amend the complaint to delete the nondiverse trustee to maintain diversity.

Relying on Navarro Savings Association v. Lee, 446 U.S. 458, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980), the district court agreed with plaintiffs that the citizenship of the trustees was what mattered and granted their motion to amend the complaint. The court subsequently granted plaintiffs' motion for summary judgment regarding liability under the bond and awarded judgment in plaintiffs' favor for $260,139.12, the total amount of the judgment on the merits plus attorney fees and costs awarded to plaintiffs in the Wilkinson action and in this case. St. Paul filed a notice of appeal. After the parties had filed their briefs in this appeal, we issued our decision on appeal in the Wilkinson action, Nos. 96-1205, 94-1431, 1998 WL 43172, which affirmed the judgment in favor of the plaintiff trustees, but vacated the judgment and remanded the case for further proceedings as it applied to the Contractors Association.

On appeal, St. Paul raises three arguments: (1) the district court lacked subject matter jurisdiction because the parties were not completely diverse; (2) the type of claim plaintiffs asserted was not covered by the bond; and (3) ERISA preempts plaintiffs' claims.

II. DISCUSSION

A. Jurisdiction

St. Paul challenges both the basis on which the district court determined plaintiffs' citizenship for diversity purposes and the court's decision that the nondiverse trustee was not an indispensable party under Fed.R.Civ.P. 19 and could be dismissed to preserve diversity under Rule 21. The first issue goes to subject matter jurisdiction, and we review the district court's determination de novo. See FDIC v. Hulsey, 22 F.3d 1472, 1479 (10th Cir.1994). The other issues--whether a party is indispensable and whether a dispensable party may be dismissed to maintain diversity--depend on the district court's careful exercise of discretion, and we review the court's determinations on those issues for abuse of discretion. See Rishell v. Jane Phillips Episcopal Mem'l Med. Ctr., 94 F.3d 1407, 1410-11 (10th Cir.1996) (indispensability under Rule 19(b)), cert. denied, --- U.S. ----, 117 S.Ct. 1427, 137 L.Ed.2d 536 (1997); Jett v. Phillips & Assocs., 439 F.2d 987, 989 (10th Cir.1971) (dismissal under Rule 21).

St. Paul contends that ERISA plans are unincorporated associations rather than trusts. Because the citizenship of unincorporated associations is based on the citizenship of all association members, see, e.g., Tuck v. United Servs. Auto. Ass'n, 859 F.2d 842,...