Warzecha v. Nutmeg Companies, Inc., 3:97-CV-219 (GLG)

• Court: United States District Courts. 2nd Circuit. United States District Court (Connecticut)
• Citation: 48 F.Supp.2d 151
• Decision Date: 23 April 1999
• Docket Number: No. 3:97-CV-219 (GLG),3:97-CV-219 (GLG)
• Parties: David M. WARZECHA, Joseph J. Warzecha, Jr., and David A. Schleicher, Plaintiffs, v. The NUTMEG COMPANIES, INC., Diana Bugbee, Individually, as President and Owner of The Nutmeg Companies, Inc., and as Trustee of Nutmeg Mechanical, Inc. Employees' Retirement Plan, and Lisa Gawendo, Individually, as Treasurer, and as Trustee of Nutmeg Mechanical, Inc. Employees' Retirement Plan, Defendants.

48 F.Supp.2d 151 David M. WARZECHA, Joseph J. Warzecha, Jr., and David A. Schleicher, Plaintiffs,
v.
The NUTMEG COMPANIES, INC., Diana Bugbee, Individually, as President and Owner of The Nutmeg Companies, Inc., and as Trustee of Nutmeg Mechanical, Inc. Employees' Retirement Plan, and Lisa Gawendo, Individually, as Treasurer, and as Trustee of Nutmeg Mechanical, Inc. Employees' Retirement Plan, Defendants. No. 3:97-CV-219 (GLG) United States District Court, D. Connecticut. April 23, 1999.

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Joseph V. Meaney, Jr., Jane M. Colonno, Cranmore, Fitzgerald & Meaney, Hartford, CT, for plaintiffs.

Mark E. Block, O'Brien, Shafner, Stuart, Kelly & Morris, P.C., Norwich, CT, for defendants.

OPINION

GOETTEL, District Judge.

Pursuant to Federal Rule of Civil Procedure 56, the parties have cross-moved for summary judgment in this employment-related dispute. Plaintiffs, all former employees of the Nutmeg Companies, Inc. ("Nutmeg"), formerly known as Nutmeg Mechanical, Inc., challenge the manner in which defendants paid their wages, reimbursed them for work-related expenses, and made contributions to their pension plans. For the following reasons, plaintiffs' motion (doc. # 47) is DENIED, and defendants' motion (doc. # 80) is GRANTED IN PART and DENIED IN PART.

BACKGROUND

Defendant Nutmeg is a Connecticut corporation which does business as a general and mechanical contractor for private, federal, and state projects. At all times relevant to this action, Nutmeg was operated by four principals: Diana Bugbee, President; Lisa Gawendo, Treasurer; Jason Bugbee, and Evert Gawendo. In 1989, Nutmeg formed an employee pension benefit plan, called the Nutmeg Mechanical, Inc. Profit Sharing Plan (the "1989 Plan"), within the meaning of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. Nutmeg subsequently amended this plan, with an effective date of January 1, 1992 ("1992 Plan"), yet the parties dispute whether the negotiations for the amendment took place in 1992 or 1993. For purposes of this decision when generally referring to Nutmeg's employee pension benefit plan, we use the term "Nutmeg Plan." Since 1989, Diana Bugbee and Lisa Gawendo have been the trustees of the Nutmeg Plan. As part of her responsibilities, Diana Bugbee has calculated the amount of contributions to the Nutmeg Plan and the amount of benefits due to the plaintiffs on Davis-Bacon projects.

Each plaintiff was eligible to participate, and did enroll, in the Nutmeg Plan. Joseph J. Warzecha, Jr. worked at Nutmeg from December 1988 to December 1994, David J. Warzecha was employed at Nutmeg from August 1989 to January 1995, and David A. Schleicher worked there from July 1989 to September 1995. Each plaintiff

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was hired as an apprentice plumber and became fully licensed during his course of employment with Nutmeg. Also during their employment, each plaintiff served as foremen on various public sector projects.

The issues in this case relate to the wages and fringe benefits received by plaintiffs, and the contributions made by Nutmeg to plaintiffs' pension plans. Nutmeg paid its employees according to various schedules depending on whether the employee was working on a federal, state, or private sector project. Under the Davis-Bacon Act, 46 Stat. 1494 (1931) (codified as amended at 40 U.S.C. §§ 276a to 276a-5), employees on federal public works projects are required to be paid wages equal to the wages paid in the project's locale on similar, private construction jobs. 40 U.S.C. § 276a(a). These wages are known as "prevailing wages." The State of Connecticut has enacted a prevailing wage law similar to the Davis-Bacon Act. Conn.Gen.Stat. § 31-53.

The Davis-Bacon Act defines "prevailing wage" as:

(1) the basic hourly rate of pay; and

(2) the amount of —

(A) the rate of contribution irrevocably made by a contractor or subcontractor to a trustee or to a third person pursuant to a fund, plan, or program; and

(B) the rate of costs to the contractor or subcontractor which may be reasonably anticipated in providing benefits to laborers and mechanics pursuant to an enforceable [sic] commitment to carry out a financially responsible plan or program which was communicated in writing to the laborers and mechanics affected,

for medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, for unemployment benefits, life insurance, disability and sickness insurance, or accident insurance, for vacation and holiday pay, for defraying costs of apprenticeship or other similar programs, or for other bona fide fringe benefits, but only where the contractor or subcontractor is not required by other Federal, State, or local law to provide any of such benefits.

40 U.S.C. § 276a(b). Accordingly, the "prevailing wage" includes both a cash wage component and an amount for fringe benefits prevailing in the locality. An employer may satisfy its obligation to pay prevailing wages by making cash payments, contributing to an employee fringe benefit plan, incurring costs for fringe benefits, or a combination thereof. Id.;¹ 29 C.F.R. § 5.31 (1997). In no event, however, can "the aggregate of any such payments, contributions, and costs [be] less than the rate of pay described in paragraph (1) plus the amount referred to in paragraph (2)." 40 U.S.C. § 276a(b).

When plaintiffs served as foremen on public sector projects, they were paid wages above the prevailing wage rate ("foremen's wages"). These excess wages were negotiated between Nutmeg and the employee on a project-by-project basis, although defendants assert that occasionally Jason Bugbee or Evert Gawendo would set these amounts unilaterally. Defs.' Mem. in Supp. of Mot. for Summ. J'ment, at 4. Additionally, before plaintiffs became fully licensed plumbers, they worked as apprentices. Nutmeg participated in a statesponsored apprenticeship program which provides training for individuals seeking

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their plumbers' license. Apprentices in this program are paid a percentage of the prevailing wage rate depending on their level of experience. Conn.Gen.Stat. §§ 31-51a to 31-51e; Conn. Agencies Regs. § 31-51d-5 (1997).

For private sector projects, plaintiffs did not have written employment contracts. Rather, plaintiffs reached individual oral agreements with Nutmeg as to their hourly rates of pay on a project-by-project basis. Defendants refer to the rate of pay for these wages as the "shop rate."

In addition to their wages, plaintiffs were given a gasoline credit card for employment-related use. Plaintiffs' understanding was that Nutmeg would pay for any employment-related gasoline expenses. Yet, plaintiffs assert that these reimbursements were effectively paid for from amounts set aside as contributions to their pension plans. Indeed, Diana Bugbee has sworn that Nutmeg took a deduction from the fringe benefit component of plaintiffs' Davis-Bacon wages for a portion of the gasoline charged to the credit cards. Bugbee Aff. of 8/4/98 ¶ 4.

Plaintiffs do not dispute the amounts they received in their weekly paychecks. Rather, plaintiffs challenge defendants' manner of paying their foremen's wages, reimbursing them for the charges on the gasoline credit cards, and contributing to their pension plans. Specifically, plaintiffs allege that defendants took deductions from the fringe benefit portion of their Davis-Bacon wages in order to pay for the foremen's wages and gasoline reimbursements. By taking these amounts as deductions, plaintiffs argue that defendants not only never actually paid plaintiffs their promised additional compensation, but also that defendants effectively reduced the amount of contributions made to plaintiffs' pension plans.

Plaintiffs claim that Nutmeg never informed them of how it was making contributions to plaintiffs' pension plans until a meeting in October 1994.² Defendants, however, assert that plaintiffs became aware of the alleged problems with the pension plan contributions sometime in 1993 when the plaintiffs were comparing their pension plan balances with the balances of other lower-paid employees. Plaintiffs then filed their seven-count complaint on February 4, 1997.³

DISCUSSION

The parties have cross-moved for summary judgment. As defendants' motion raises procedural grounds for summary judgment, we consider their motion first.

I. SUMMARY JUDGMENT STANDARD

A court may grant summary judgment only if it determines that there is no genuine issue of material fact based on a review of the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits. Fed.R.Civ.P. 56(c). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). When ruling on a summary judgment motion, a court must construe

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the facts in a light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). If there is no genuine issue of material fact, the moving party is entitled to summary judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

II. STATUTE OF LIMITATIONS ON ERISA CLAIMS

Defendants contend that portions of plaintiffs' claims alleging ERISA violations are time-barred because they were brought more than six years from the accrual date. Defendants rely on 29 U.S.C. § 1113, entitled "Limitation of Actions," which sets forth a six-year statute of limitations for ERISA claims based on breach of fiduciary duty. In contrast, plaintiffs argue...