payments to the funds were to be made, or failure to reach an agreement to make payment to the funds (see Massachusetts Laborers Health & Welfare Fund v. Explosives Engineering, 136 F.R.D. 24 [D. Mass. 1991]).
As the District court of Massachusetts noted in Explosives Engineering, employee benefit plans are insulated from such defenses because they are not parties to the agreement between the union and the employer. This Court supports that premise, noting that the plaintiff Fund was not a party to the collective bargaining agreement between the Union and Hempstead China. Section 515, if it says nothing else, means that when the Trustees are not implicated in any alleged misconduct, the Trustees' suit cannot be thwarted by defenses not apparent from the face of the Agreement (see Bituminous Coal Operators' Association Inc. v. Connors, 276 U.S. App. D.C. 9, 867 F.2d 625, 634 [D.C. Cir. 1989]). In the instant case, there has been no allegation of any misconduct on the part of the Trustees, and there is no defense on the face of the collective bargaining agreement which goes to a reduction in benefit levels as a result of the abrupt and catastrophic departure of the major employer from the Fund.
The Court finds the defendant's reliance upon Challenger Caribbean Corp. v. Union General de Trabajadores de Puerto Rico, 903 F.2d 857 (1st Cir. 1990) and Milwaukee Co. v. Basin Produce Corp., 396 F. Supp. 528 (E.D. Wash. 1975) is misplaced. Challenge Caribbean involved an alleged condition precedent in a collective bargaining agreement with regard to production standards and the layoff of employees when a facility closed. The issue in Milwaukee Co. focused upon a purported condition precedent in a lease dealing with a landlord's duty to repair and the tenant's liability for damages. Neither of these cases deal with the unique circumstances of benefit funds under ERISA.
Further, the Court finds Scotto v. Brink's Inc., 962 F.2d 225 (2d Cir. 1992) and NLRB v. Amax Coal, 453 U.S. 322, 69 L. Ed. 2d 672, 101 S. Ct. 2789 (1981) to be clearly distinguishable. In Scotto, the Second Circuit determined that an employer was not required to make contributions to a health fund based on hours of vacation and sick time earned during the term of the collective bargaining agreement but not taken until after its expiration. In the instant case, the Fund is not seeking contributions for any period of time after the expiration of the collective bargaining agreement. In Amax Coal, the Supreme Court was dealing with the fiduciary duty of a plan trustee. Although the defendant employer in the instant case claims that the Court in Amax Coal was warning employee benefit funds that they had no authority to tamper with contribution rates set by the parties to the collective bargaining agreement, the Supreme Court was actually distinguishing collective bargaining representatives from benefit fend plan trustees. Specifically, the Supreme Court noted the following:
"The atmosphere in which employee benefit trust fund fiduciaries must operate, as mandated by § 302(c)(5) and ERISA, is wholly inconsistent with this process of compromise and economic pressure. . . . Indeed, the trustees have an obligation to enforce the terms of the collective bargaining agreement regarding employee fund contributions against the employer 'for the sole benefit of the beneficiaries of the fund'" ( NLRB v. Amax Coal Co., supra, at pp. 336, 337, quoting United States v. Carter, 353 U.S. 210, 220, 1 L. Ed. 2d 776, 77 S. Ct. 793 ).
The Court further finds it unnecessary to address the defendant's argument based upon Demisay v. Local 144 Nursing Home Pension Fund, 935 F.2d 528 (2d Cir. 1991), in which the Supreme Court granted certiorari (see 112 S. Ct. 2990, 120 L. Ed. 2d 867 ). In Demisay, the employer contributions had created fund reserves which represented future benefits for which the employees had foregone past wages. In Demisay and Local 50, Bakery and Confectionery Workers Union, AFL-CIO v. Local 3 Bakery and Confectionery Workers Union, AFL-CIO, 733 F.2d 229 (2d Cir. 1984), both of which are relied upon by the defendant, the employees withdrew from the initial fund and became participants in a different fund, at which point they laid claim to the reserves in the original fund. The Second Circuit in Demisay determined that the reserves should be transferred to the new fund. In the instant case, the monies at issue do not represent reserves to be paid out for future coverage, and there is no other union-employer fund to which the monies could have been transferred since the defendant's employees now have no union representation. Rather, the issue concerns delinquent contributions which were never made by Hempstead China during a 20-month period when the employees were participants in the Fund.
As the Seventh Circuit noted in Central States v. Gerber Truck Service, Inc., supra, 870 F.2d at p. 1149, the courts find that Section 515 places the pension fund in a better position, analogous to a holder in due course, "entitled to enforce the writing without regard to the understandings or defenses applicable to the original parties." Benson reinforced this proposition and remains the leading case in this Circuit on the issues relevant to the instant case. Accordingly, despite what may appear to be a "harsh result," the plaintiffs' motion for summary judgment is granted.
Consistent with Benson, the Court also finds that the Funds are entitled to recover interest, reasonable attorney's fees and costs incurred under 29 U.S.C. § 1132(g)(2).
Based upon the above findings and conclusions, the plaintiffs' motion for summary judgment pursuant to Fed. R. Civ. P. 56, granting mandatory relief under 29 U.S.C. § 1132 (g)(2) is granted. The plaintiffs are awarded partial summary judgment on the liability portion of this action, and the case is set down for a conference on November 4, 1992, at 9 a.m. in Courtroom "A" of the Uniondale Courthouse, to determine whether an assessment of damages is required.
As to attorney's fees, the attorneys for the plaintiffs are directed to serve and file an affidavit as to the services rendered on or before November 4, 1992. The attorneys for the defendant are directed to respond on or before November 13, 1992.
The defendant's motion for summary judgment dismissing the complaint is denied. The defendant's motion to amend its Answer to assert a counterclaim is also denied.
Dated: Uniondale, New York
October 22, 1992
ARTHUR D. SPATT
United States District Judge
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