Local No. 9 v. Chapman
| Decision Date | 26 April 1990 |
| Docket Number | No. 87-DC-1352,88-DC-1189.,87-DC-1352 |
| Citation | 744 F. Supp. 1008 |
| Parties | JOINT APPRENTICESHIP AND TRAINING COMMITTEE OF SHEET METAL WORKERS' INTERNATIONAL ASSOCIATION, LOCAL NO. 9, a Trust; William Stephens and Don Lawson, two of the present Trustees of the Joint Apprenticeship and Training Committee of Sheet Metal Workers' International Association, Local No. 9; National Training Fund for the Sheet Metal and Air Conditioning Industry, a Trust; and James E. Roth and Edward J. Carlough, two of the present Trustees of the National Training Fund, Plaintiffs, v. Glenn E. CHAPMAN, Peter V. Germann, William Craig Peterson, Jr., Kirk Harris, Edward Alan Thomas, David E. Boehm, James H. Lee, David J. Cuthbertson, Matthew J. Babcock and James R. Pech, Defendants. JOINT APPRENTICESHIP AND TRAINING COMMITTEE OF SHEET METAL WORKERS' INTERNATIONAL ASSOCIATION, LOCAL NO. 9, a Trust; William Stephens and Don Lawson, two of the present Trustees of the Joint Apprenticeship and Training Committee of Sheet Metal Workers' International Association, Local No. 9; National Training Fund for the Sheet Metal and Air Conditioning Industry, a Trust; and James E. Roth and Edward J. Carlough, two of the present Trustees of the National Training Fund, Plaintiffs, v. Donald M. FLANSBURG, Defendant. |
| Court | U.S. District Court — District of Colorado |
Dennis Valentine, Brauer, Buescher, Valentine, Goldhammer & Kelman, Denver, Colo., and William Klenert Ecklund, Felhaber, Larson, Fenlon & Vogt, Paulette Kane Flynn, St. Paul, Minn., for plaintiffs.
Robert R. Miller, Stettner, Miller and Cohn, Denver, Colo., for defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This matter came on for nonjury trial on December 6, 7, 8, 11, 12, 13 and 14, 1989. Plaintiffs bring this action against the defendants for alleged breach of contract.
In support of their claim, plaintiffs state that they are multi-employer apprenticeship training funds. As training funds, plaintiff Joint Apprenticeship and Training Committee of Sheet Metal Workers International Association, Local 9 (Local JATC) and plaintiff National Training Fund for the Sheet Metal and Air Conditioning Industry (NTF) (collectively, "the Trust Funds") established a scholarship loan training program (training program). The eleven defendants are all sheet metal workers who signed, collectively, twenty-seven agreements. Six of these agreements originated in September, 1981 and are referred to as Supplement to Apprenticeship Agreements (Supplement Agreements). Twenty-one of these agreements originated in September, 1984 and are referred to as Scholarship Loan Agreements (SLA). The Supplement Agreement and the SLA collectively are referred to as "the Agreements". Plaintiffs allege that as part of the training program, each defendant was required to sign either a Supplement Agreement or a SLA promising to repay stated training costs either by repayment in cash plus interest or by in-kind credit earned by working for an employer which was signatory to a collective bargaining agreement providing for payment of contributions by the employer to NTF and Local JATC. Plaintiffs allege that each of the defendants signed the Agreement(s), received training and are in breach of the Agreement(s) by either having failed to repay the stated training costs in cash, plus interest, or having sought or accepted employment with an employer in the sheet metal industry which was not signatory to a collective bargaining agreement providing for contributions to NTF and Local JATC. NTF and Local JATC seek judgment against each defendant for the alleged unpaid balance of the scholarship loans, interest, attorney fees, costs and the return of all training material prepared by NTF allegedly in the possession of the defendants.
In response to these allegations, defendants Glenn Chapman, Peter Germann, William Peterson, Jr., Kirk Harris, Edward Thomas, David Boehm, James Lee, David Cuthbertson, Matthew Babcock, James Pech and Donald Mark Flansburg deny both the validity and enforceability of the Agreements.
Specifically defendants assert that the Agreements were invalid under the Declarations of Trust1, the Apprenticeship Agreements2, and ERISA3. Additionally, the defendants contend that the Agreements were unenforceable for lack of consideration, duress and coercion. Alternatively, defendants assert that under the language of the Agreements, certain defendants did not commit any act which would constitute a breach of the terms of the Agreements.
The parties have stipulated to the following facts:
1. Matthew J. Babcock signed a SLA and Promissory Note on September 18, 1984 and on January 10, 1985. On January 25, 1988, Babcock went to work for Willner Industries at a time when Willner Industries was not making contributions, and Babcock knew Willner Industries was not making contributions, on Babcock's work to Local JATC and NTF.
2. David E. Boehm signed a SLA on September 8, 1986.
3. Glenn E. Chapman signed a SLA on September 8, 1986 and another SLA on January 12, 1987. On July 8, 1987 Chapman went to work for Concord Sheet Metal, an employer in the sheet metal industry which was not signatory to a collective bargaining agreement providing for contribution to Local JATC and NTF.
4. David J. Cuthbertson signed a Supplement Agreement on September 14, 1981, a SLA and a Promissory Note on September 11, 1984, a SLA on September 13, 1984 and a Promissory Note on September 20, 1984. Cuthbertson went to work in August, 1987 for Action Air, an employer in the sheet metal industry, at a time when Action Air was not making contributions, and Cuthbertson knew Action Air was not making contributions, on Cuthbertson's work to Local JATC and NTF.
5. Donald Mark Flansburg signed a SLA on September 10, 1984 and a Promissory Note on September 11, 1984. Flansburg went to work in May, 1988 for Pasterkamp Heating, an employer in the sheet metal industry, at a time when Pasterkamp was not making contributions, and Flansburg knew Pasterkamp was not making contributions, on Flansburg's work to Local JATC and NTF.
6. Peter v. Germann signed a Supplement Agreement on September 13, 1982, a SLA and Promissory Note on September 12, 1984 and a SLA on September 12, 1985.
7. Kirk Harris signed a Supplement Agreement on September 13, 1982, a SLA and Promissory Note on September 12, 1984, and two separate SLA's on September 12, 1985.
8. James H. Lee signed a Supplement Agreement on September 14, 1981, a SLA and Promissory Note on September 13, 1984 and a SLA and Promissory Note on January 15, 1984. Lee went to work on July 7, 1987 for Action Air, an employer in the sheet metal industry, at a time when Action Air was not making contributions, and Lee knew that Action Air was not making contributions, on Lee's work to Local JATC and NTF.
9. James R. Pech signed a SLA and a Promissory Note on January 8, 1986 and a SLA and Promissory Note on January 9, 1986.
10. William Craig Peterson, Jr. signed a Supplement Agreement on September 14, 1981, a SLA and Promissory Note on September 13, 1984, and a SLA and Promissory Note on September 11, 1984.
11. Edward Alan Thomas signed a Supplement Agreement on September 14, 1981, a SLA and a Promissory Note on September 13, 1984, and a SLA and Promissory Note on September 11, 1984. Thomas went to work for Climax Sheet Metal on July 10, 1987, at a time when Climax was not making contributions, and Thomas knew Climax was not making contributions, on Thomas' work to Local JATC and NTF.
The parties have submitted both pre- and post-trial briefs, and the matter is now ready for disposition on the merits. After considering the pleadings, testimony, exhibits admitted at trial, the briefs and arguments presented by counsel, applicable case law and statutory authority, and being fully advised in the premises, the Court enters the following findings of fact and conclusions of law pursuant to Rule 52(a) F.R.Cv.P.
1. Plaintiff Joint Apprenticeship and Training Committee of Sheet Metal Workers' Local Union No. 9 is a multi-employer apprenticeship training fund.
2. Plaintiff National Training Fund for the Sheet Metal Industry is a multi-employer apprenticeship training fund.
3. James E. Roth and Edward J. Carlough are current Trustees of the NTF and are fiduciaries. William Stephens and Don Lawson are current Trustees of Local JATC and are fiduciaries.
4. Defendants Glenn E. Chapman, Peter V. Germann, William Craig Peterson, Jr., Kirk Harris, Edward Alan Thomas, David
E. Boehm, James H. Lee, David J. Cuthbertson, Matthew J. Babcock, James R. Pech and Donald Mark Flansburg are participants and beneficiaries of the JATC and NTF.
5. The Court has jurisdiction over the subject matter arising under the provisions of ERISA.
6. Venue is proper within the District Court of Colorado in that this is the district where the training program was administered and where the alleged breach took place.
7. On July 6, 1962, Local Union 9 of the Sheet Metal Workers International (the Local Union) entered into an Agreement and Declaration of Trust (Local Trust Agreement) with the Denver based sheet metal contractors who were signatories to a collective bargaining agreement (Employers).
8. The purpose of the Local Trust Agreement was to provide financial aid for the training of apprentices and journeymen of the Local Union.
9. The Local Union and the Employers each have three representatives or Trustees on the Local JATC which administers the Local Trust Agreement.
10. The Local Trust Agreement provided for the creation of a trust fund to train apprentices and journeymen.
11. The Local Trust Agreement provides that funding of the Trust Fund would be by contributions from Employers, income and receipts derived from investments, and any other money or properties received and held by the Trustees.
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...10]. In analyzing the fiduciary duty issue, the district court relied upon Joint Apprenticeship & Training Comm. of the Sheet Metal Workers' Int'l Ass'n, Local No. 9 v. Chapman, 744 F.Supp. 1008 (D.Colo.1990). In Chapman, the court held that a similar apprentice repayment arrangement was un......
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...747 F.2d 304, 309 (5th Cir. 1984); Deak v. Masters, Mates & Pilots Pension Plan, 821 F.2d 572 (11th Cir. 1987); Local No. 9 v. Chapman, 744 F.Supp. 1008, 1019 (D.Colo. 1990); Freund v. Marshall & Ilsley Bank, 485 F.Supp. 629, 635 (W.D. Wis. 1979). See also, Scogland, "Fiduciary Duty: What D......