The opinion of the court was delivered by: TENNEY
In this dispute over contributions allegedly due a union benefit fund under the provisions of a collective bargaining agreement, the defendants move to vacate a default judgment and for partial summary judgment. The default is vacated, and summary judgment is granted to the defendants in part, to the plaintiffs in part, and denied in part.
The facts are uncontested. Plaintiffs are trustees of the New York District Council of Carpenters Benefit Funds ("Fund"). Defendant Carpet Linoleum Service, Inc. is a New Jersey corporation that provides and installs commercial carpeting. Defendants William Alexy and James McWilliam are president and secretary, respectively, of the corporation. Defendant Insurance Company of North America was guarantor of payment for contributions due from the corporation to the Fund.
While performing installation work in New York City from October 1975 through January 29, 1977, the corporation became a member of the Greater New York Resilient & Carpet Flooring Association ("Association"), a trade association that had previously entered into a collective bargaining agreement with the New York City District Council of Carpenters ("Union") covering employees engaged in installing carpeting in the New York City area. The corporation did not become a signatory to the agreement, but, as a member of the Association, adhered to its terms.
On January 29, 1977, Carpet Linoleum Service ceased work in New York City and laid off its local laborers. Since then, none of its employees has performed work within the jurisdiction of the collective bargaining agreement. On March 1, 1977, the corporation resigned from the Association. Eight days later, the guarantor cancelled its bond. On March 28, 1977, an agreement was reached between the Fund and the corporation settling a delinquency in making contributions during the period from October 1975 through January 29, 1977 and providing for a schedule of payments. At that time, the corporation notified the Fund that it had discontinued all work within the jurisdiction of the collective bargaining agreement.
During the second period in dispute, January 29, 1977 through December 31, 1977, Carpet Linoleum Service did not employ laborers within the jurisdiction of the collective bargaining agreement, but did subcontract local installation work to other employers. Defendants contend, and plaintiffs do not dispute, that the subcontractors were not signatories to a collective bargaining agreement with the Union and did not employ workers entitled to benefits from the Fund.
The amended complaint sets out five causes of action. The first asks for contributions due the Fund for the period prior to January 29, 1977. The corporation and its guarantor admit liability for these contributions. The second alleges a failure to pay contributions for the period February 5, 1977 through December 31, 1977 allegedly due under the subcontractors clause of the collective bargaining agreement.
The third and fourth causes of action allege liability of the officers of the corporation for its debts under section 198-c of the New York Labor Law. The fifth cause of action states a claim against the guarantor based on its bond. Jurisdiction is based on 29 U.S.C. § 185(a). Plaintiffs allege that jurisdiction for the state law claims against the individual defendants is based on the principle of pendent jurisdiction.
Under Federal Rule of Civil Procedure ("Rule") 60(b), a judgment may be vacated "upon such terms as are just . . . for . . . (6) any . . . reason justifying relief." The rule reflects the federal courts' preference for deciding cases on their merits. In this action, defendants stipulated to the service of an amended complaint, but mistakenly delayed service of an amended answer until they served and filed a motion to dismiss on May 2, 1979, one month late. This Court, unaware of the filed answer, signed a default judgment one day later. It is beyond question that defendants, who had timely responded to the original complaint and submitted to interrogatories, intended to defend the action. They raise colorable defenses, some of which challenge the subject matter jurisdiction of this Court. In these circumstances, justice requires relief from the judgment.
The Subcontractors Clause
Plaintiffs ask for payment of contributions to the Fund based on the hours worked by nonunion employees of the subcontractors from February through December 1977. During this period, no employees of Carpet Linoleum Service or the subcontractors were eligible for union benefits.
Defendants argue that enforcement of the subcontractors clause of the collective bargaining agreement, when the nonsignatory employer has withdrawn from the signatory association and has no employees who are eligible for union benefits would violate section 302(a)(1) of the Labor Management Relations Act of 1947 ("Taft Hartley Act"), 29 U.S.C. § 186(a)(1). The section provides:
(a) It shall be unlawful for any employer or association of employers . . . to pay, lend, or deliver, or agree to pay, lend, or deliver, any money or other thing of value
(1) to any representative of any of his employees who are employed in an industry ...