B. Equitable Accounting
As noted above, the Funds alternatively seek an equitable
accounting of ". . . all books and records relative to the
employees covered by the collective bargaining agreement . . ."
to determine the amount of owing delinquent payments. (Amended
Complaint, ¶ 18(B)).
Zacher opposes an equitable accounting on two primary grounds.
First, Zacher argues that the Funds are not entitled to an
equitable accounting since no fiduciary relationship exists
between it and the Funds, and the remedy of an equitable
accounting is unavailable absent this heightened relationship.
Second, Zacher argues that even if a fiduciary relationship
exists between it and the Funds, the Funds are not entitled to
an equitable accounting because the Funds cannot establish any
right, at least at this stage in the litigation, to an
accounting under any of the agreements at issue in this case.
In this regard, Zacher argues that since discontinuing payments
to the Funds, none of the work performed by Zacher employees is
covered under the Inside Agreement either because it is work
covered under the Residential Agreement, and therefore not
subject to the contribution and reporting requirements, or work
beyond the scope of the Inside or Residential Agreements.
(Zacher, ¶¶ 19-20). Therefore, Zacher argues it has no
obligation to make contributions and reports to the Funds.
The Funds contend that by virtue of New York Lien Law Article
3-A, § 70, a trust by operation of law is imposed over monies
which Zacher, as a contractor, received ". . . in connection
with a contract for the improvement of real property or public
improvement. . . ." (Funds memo., p. 19). The Funds argue that
Zacher's "contracting" business involves improvement to real
property and pursuant to § 70 Zacher is a trustee of these
monies. Next, pursuant to Lien Law § 71(2)(d), which provides
that trust assets are held for and shall be applied toward
payment of ". . . any benefits or wage supplements . . . to the
extent that the trustee, as employer, is obligated to pay or
provide such benefits . . . by any agreement to which he is a
party[,]" the Funds assert that the Inside Agreement obligates
Zacher to make contributions to the Funds ". . . to be paid out
of contract funds received from [Zacher's] customers." (Funds
memo., p. 20). Therefore the Funds argue that monies which
Zacher received from its customers is impressed with a trust by
operation of law under Lien Law §§ 70 & 71. Although the Funds
do not cite or otherwise discuss this provision, Lien Law § 77
is the enforcement provision with respect to a trust created
under the Lien Law. Under Lien Law § 77(3)(a)(iii), an action
may be maintained for the "[d]etermination of the existence and
amount of any trust asset or any trust claim. . . ."
Additionally, pursuant to Lien Law § 77(3)(a)(i), the holder of
a trust claim may seek relief to ". . . compel an interim or
final accounting by the trustee. . . ." The Funds cite no
authority in support of their claim to an equitable accounting
under the Lien Law and Zacher nowhere addresses the Funds' Lien
In Sorge v. DeLillo Construction Co., Inc., 228 N.Y.S.2d 153
(Sup.Ct.Nassau County 1962), the only case this Court can
locate on point, the New York Supreme Court held that certain
union welfare funds ("welfare funds") were entitled to an
equitable accounting under the Lien Law. In that case, the
welfare funds were among the claimants to funds held by a
contractor. The welfare funds claimed that certain collective
bargaining agreements required the contractor to remit to them
five percent of its total payroll. The Court found the welfare
funds to be beneficiaries of a trust impressed by operation of
Lien Law § 70 over funds received by the contractor in
connection with a contract for public improvement. Moreover,
under § 71(2)(d), the Court found that as ". . . benefits
. . ." which the collective bargaining agreement obligated the
contractor to pay, the amounts sought by the welfare funds were
impressed with the trust.
To the extent that the Funds now seek payment of unpaid
contributions pursuant to the Lien Law, this Court denies the
Funds such relief. This Court cannot
order Zacher to pay monies to the Funds representing unpaid
contributions pursuant to the Lien Law provisions discussed
above because a question of fact exists as to whether, pursuant
to § 71(2)(d), Zacher has improved real property incurring the
expenditure of "payment of any benefits or wage supplements . . .
by any agreement to which [Zacher] is a party." Zacher
contends that the Inside Agreement does not cover work
performed by Zacher's employees since January 1988, the time
Zacher ceased payment to the Funds, either because such work
has been covered under the Residential Agreement,*fn10 and
therefore not subject to the contribution and reporting
requirements, or work beyond the scope of the Inside and
Residential Agreements. (Zacher, ¶¶ 19-20).
However, Lien Law § 77(3)(a)(iii) authorizes an action for the
"[d]etermination of the existence and amount of any trust asset
or any trust claim. . . ." This Court finds such relief to be
appropriate in this case — Zacher should produce books and
records relative to work performed by its employees under the
Inside Agreement since January 1988, if indeed any such work
has been performed, so that it can be determined whether Zacher
owes contributions and reports to the Funds since January 1988,
the time from which the Funds allege such submissions to be
owing. So as to minimize the burden of such a production,
Zacher should produce such documents during reasonable business
hours for the Funds' inspection at Zacher's place of business.
Until the Funds can demonstrate their right to receive reports,
this Court will not order Zacher to file reports representing
time periods after January 1988.
Therefore, this Court grants the Funds' motion for summary
judgment motion with respect to Zacher's liability to submit to
an accounting according to the terms outlined above and denies
Zacher's cross-motion for summary judgment on that issue.
For the reasons set forth above, this Court denies the Funds'
motion for summary judgment and Zacher's cross-motion for
summary judgment with respect to Zacher's payment of interest
and liquidated damages for delinquent contributions to the
Funds, Count One of the Amended and grants Zacher's
cross-motion for summary judgment with respect to Zacher's
liability to submit to an audit pursuant to the Declarations.
Finally, this Court grants the Funds' motion for summary
judgment and denies Zacher's cross-motion for summary judgment
with respect to Zacher's liability to submit to an accounting
pursuant to the New York Lien Law, in accordance with the terms
IT HEREBY IS ORDERED, that with respect to Count One of the
Amended Complaint, this Court DENIES the plaintiffs' motion for
summary judgment and DENIES the defendants' cross-motion for
FURTHER, that with respect to Count Two of the Amended
Complaint, this Court DENIES IN PART and GRANTS IN PART the
plaintiffs' motion for summary judgment as follows: this Court
denies the plaintiffs' motion insofar as plaintiffs seek an
audit pursuant to contract; this Court grants the plaintiffs'
motion insofar as plaintiffs seek an accounting pursuant to New
York law. Also with respect to Count Two of the Amended
Complaint, this Court DENIES IN PART and GRANTS IN PART the
defendants' motion for summary judgment as follows: this Court
grants the defendants' motion insofar as it opposes an audit
pursuant to contract; this Court denies the defendants' motion
insofar as defendants oppose an accounting pursuant to New York
FURTHER, that this Court shall hold a status conference in the
above captioned case on September 24, 1991 at Part IV,
Mahoney Building, 65 Court Street, Buffalo, New York at 11:00,
a.m. Counsel for the parties should be prepared to discuss a