The opinion of the court was delivered by: Skretny, District Judge.
Now before this Court are the plaintiffs' motion for partial
summary judgment and the defendants' cross-motion for summary
judgment, pursuant to Fed.R.Civ.P. 56.*fn1
Plaintiffs are the Board of Trustees of Local 41, International
Brotherhood of Electrical Workers ("Local 41"), Health Fund
("Health Fund"), Board of Trustees of Local 41, Annuity Fund
("Annuity Fund") and Board of Trustees of Local 41, Pension
Fund ("Pension Fund") (collectively referred to as "the
Funds"). The three named defendants in this lawsuit, Robert
Zacher, Robert Zacher Inc. and Robert Zacher Electric*fn2
all constitute a single electrical business founded and managed
by Robert Zacher and from time to time known by any of these
names. Therefore, this Court shall collectively refer to the
defendants as "Zacher."
This lawsuit involves provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et
seq., as amended by the Multiemployer Pension Plan Amendments
Act ("MPPAA"), Pub.L. 96-364 (1980). Plaintiffs also assert a
right to an equitable accounting under New York law. This Court
has jurisdiction of this lawsuit pursuant to 29 U.S.C. § 1132,
29 U.S.C. § 185 and principles of its pendent
jurisdiction.*fn3
In Count One of the Amended Complaint, the Funds allege that
Zacher has failed to make timely contributions to the Funds for
the period from January 1987 to January 1988 as required by the
collective bargaining and other agreements. The Funds seek
liquidated damages and interest stemming from Zacher's
delinquent payment of contributions. Thus, in their summary
judgment motion the Funds do not seek the underlying
contributions, for they have indisputably been paid; the Funds
only seek damages and interest for the delinquency.*fn4 In
Count Two of the Amended Complaint, the Funds allege that since
January 1988 Zacher has failed to submit monthly payroll
reports and contributions to the Funds, also as required by the
collective bargaining and other agreements. In their summary
judgment motion, the Funds seek an audit or an equitable
accounting under New York law to discover ". . . payroll and
wage information . . ." indicating the amount of allegedly
owing contributions from Zacher and a court order requiring
Zacher to file allegedly owing reports.
Cross-moving for summary judgment, with respect to Count One of
the Amended Complaint, Zacher argues that the Funds are not
entitled to either liquidated damages, because the liquidated
damages provision upon which the Funds rely is void as a
penalty, or interest, because the interest rate which the Funds
seek to impose is usurious. With respect to Count Two of the
Amended Complaint, Zacher argues that the Funds are not
entitled to either an audit, because they failed to give Zacher
proper contractual notice, or an accounting, as a matter of
law.
In support of their motion, the Funds submit the affidavit of
Gene Adams ("Adams"); the affidavit of Michael Franey
("Franey"); the supplemental affidavit of Michael Franey; the
affidavit of Daniel Erker ("Erker"); the affidavit of David
Roll ("Roll"); the affidavit of Craig Miller, Esq.; the
deposition transcript of Robert Zacher; statements of fact; and
a legal memorandum ("Funds memo.").
In support of its cross-motion, Zacher submits the affidavit of
James Schmit, Esq. with exhibits; the affidavit of Robert
Zacher with exhibits ("Zacher aff."); a Letter Brief dated
February 12, 1991 ("Letter Brief"); statements of fact; and a
legal memorandum ("Zacher memo.").
This Court has considered all these submissions and oral
argument held on February 4, 1991.
Conclusion: For the reasons set forth below, with respect to
Count One of the Amended Complaint this Court denies the Funds'
motion for summary judgment and also denies Zacher's
cross-motion for summary judgment. With respect to Count Two of
the Amended Complaint, this Court denies in part and grants in
part the Funds' motion for summary judgment. Also with respect
to Count Two, this Court denies in part and grants in part
Zacher's cross-motion for summary judgment.
The following material facts are not in dispute.
The International Brotherhood of Electrical Workers ("IBEW") is
an international labor organization representing electrical
workers through local union affiliates. (Adams, ¶ 3).
The National Electrical Contractor's Association ("NECA") is an
employer's association representing electrical contractors for
purposes of collective bargaining with locals
of the IBEW such as Local 41. (Adams, ¶ 6).
The Health Fund, Annuity Fund and Pension Fund were created in
the 1960's for the purpose of providing pension and welfare
benefits to union employees whose employers made contributions
to the Funds as provided under a collective bargaining
agreement between NECA and Local 41 known as the Inside
Wireman's Agreement ("Inside Agreement"), which is amended from
time to time. (Franey, ¶ 3). Health Fund is an employee benefit
plan within 29 U.S.C. § 1002(1). Annuity Fund and Pension Fund
are employee pension benefit plans within
29 U.S.C. § 1002(2)(A)(i) or (ii).
Each Fund was created pursuant to a separate Agreement and
Declaration Of Trust (collectively the "Declarations") and is
jointly administered by a Board of Trustees consisting of
representatives of Local 41 and employers appointed by
NECA.*fn5 Section 4 of each Declaration provides that
[e]ach Employer agrees that the Trustees shall have the right
to require such reports as they deem necessary or desirable for
the administration of the [relevant] Fund, and each Employer
shall promptly furnish to the Trustees, on demand, records of
Employees, names, social security numbers, hours worked by each
Employee, and such other information as the Trustees may
reasonably require in the administration of the Trust. For the
purposes of compliance with this section, each Employer agrees
to permit inspection of its payroll and wage records of the
Employees on whose behalf contributions to the [relevant] Fund
have or should be made upon receiving notice at reasonable
hours, by the Trustees or their designee.
(Franey, exhs. 2, 3, 4). Each of the Declarations defines
employer as
[a]ny person, association, firm, or corporation who or which,
as of the date of this Agreement or hereafter, has a collective
bargaining agreement with the union requiring periodic
contributions to the Trust Fund created by this Agreement and
Declaration of Trust.
(Franey, ¶ 9) (Not from original.)
On May 1, 1985, Local 41 and NECA entered into a Inside
Agreement in effect through April 30, 1988. This Inside
Agreement superseded a previous Inside Agreement.*fn6
The preface to the Inside Agreement states that the Inside
Agreement ". . . shall apply to all firms who sign a Letter of
Assent to be bound . . ." by its terms.
Section 4.02 of the Inside Agreement provides that employers
subject to the Inside Agreement shall make certain monthly
payments and reports to the Funds.
Specifically, § 4.02 provides that
The Employers agree to comply with all rules and regulations
for the operation and maintenance of these Funds adopted by
the Board of Trustees and will submit monthly payments and
reports to the Offices of the Health, Pension, Annuity and
Education Funds on forms furnished by the Funds. Failure by
the Employer to submit contributions when they are due will
result in the Employer being subject to a 10% penalty,
interest charge, attorney's fees and court costs.
Section 2.06 of the Inside Agreement defines an employer
covered under the Agreement as
. . any person, firm or corporation whose main business is
that of an electrical contractor, engaged as an Employer in
erecting, altering, installing, repairing, servicing or
maintaining electrical wiring, devices, appliances or
equipment, and also the purchasing of supplies and the selling
of manufactured parts and
products incorporated in such installations.
Local 41 and NECA entered into a separate collective bargaining
agreement known as the Residential Wireman's Agreement
("Residential Agreement") which went into effect April 1, 1984
and continued in effect from May 1 through April 30, year to
year, unless modified according to the procedure contained
therein. The preface to the Residential Agreement states that
it ". . . shall apply to all firms who sign a letter of assent
to be bound . . ." by its terms.
The Residential Agreement separately covers electrical work
performed
. . on all units built or remodelled for family residence
which are four stories and under, including basement [sic].
`Electrical Work' shall be defined as all wiring for heat,
power and lighting with a voltage of 480 volts or less.
Section 2.03B of the Residential Agreement defines an employer
covered under the Residential Agreement as
. . any person, firm or corporation whose main business is
that of an electrical contractor, engaged as an Employer in
residential electrical wiring, repairs or maintenance of new or
old buildings used as dwellings as defined in "TYPE OR [sic]
WORK COVERED BY THIS AGREEMENT.'
Under the Residential Agreement, there is no provision
regarding submission by employers of contributions or reports
to the Funds.
In late 1978, Robert Zacher began his own electrical business.
(Zacher, ¶ 6). On November 17, 1978, Robert Zacher and Gene
Adams, then Business Manager of Local 41, signed two documents
entitled Letters of Assent-A. Pursuant to one Letter of
Assent-A. Robert Zacher, Inc.". . . authorize[d] the New York
State Chapter N.E.C.A., Inc. Buffalo Div. as its collective
bargaining representative for all matters contained in or
pertaining to the current approved Inside labor agreement
between the Western New York State Chapter N.E.C.A. Inc.
Buffalo Division and Local Union 41, IBEW." (Adams, exh. A).
Pursuant to the other Letter of AssentA, dated November 17,
1978, Robert Zacher, Inc.". . . authorize[d] the New York
State Chapter N.E.C.A., Inc. Buffalo Div. as its collective
bargaining representative for all matters contained in or
pertaining to the current approved Residential labor agreement
between the Western New York State Chapter N.E.C.A. Inc.
Buffalo Division and Local Union 41, IBEW. (Adams, exh. A).
These Letters of Assent were approved by the IBEW's
international office on November 22, 1978.
Robert Zacher signed two additional Letters of Assent-A ". . .
authoriz[ing] . . ." NECA as a collective bargaining
representative ". . . for all matters contained in or
pertaining to the current approved Inside Wireman labor
agreement between the Western New York Chapter — N.E.C.A. of
Buffalo and Local 41 IBEW[,]" on behalf of Zacher Electric and
Zacher Electric, Co., on June 11, 1979 and August 15, 1979,
respectively. These Letters of Assent-A were also approved by
the IBEW's international office. (Adams, exhs. B & C).
Zacher has not tendered written notice of termination under the
Letters of Assent-A with respect to the Inside Agreement.
(Adams, ¶ 26). By letter dated November 27, 1989, Robert Zacher
noticed Local 41 that Robert Zacher, Inc. d/b/a Zacher Electric
and Zacher Electric Co. was terminating any authority granted
to NECA to collectively bargain for the Zacher entities under
the Residential Agreement. (Erker, ¶ 5 and exh. 1 thereto).
On September 24, 1981, the boards of trustees of the Funds
amended their respective Fund's plan to provide that
[i]n any action brought under ERISA or other applicable
statutes for the recovery of delinquent contributions, the
interest rate shall be an effective annual rate of
approximately twenty-four percent (24%) and the liquidated
damages shall be at ...