York, Wilson entered into three agreements with plaintiff whereby Plaintiff, as surety, became contractually obligated to pay for "labor and materials" incurred in connection with the construction of the public improvements [in the event of a default by Wilson]. Am. Complaint PP 9, 10.
Subsequently, Wilson defaulted on each of these State projects and failed to meet its required payments under its collective bargaining obligation to Local 105 in connection with each of the projects for which these bonds had been provided. Am. Complaint P 11; Nicholson Aff. P 6. Between March 31, 1992 and April 10, 1992, Defendants submitted claims to Plaintiff, for payment in the amount of $ 71,888.69, contending that the labor and material bonds required Plaintiff to pay for, inter alia, wages and fringe benefits owing to the union member employees. Id. P 13-17. Plaintiff contends that it has honored all claims for direct wages which are "just and verifiable." Am. Complaint P 12. However, it refuses to pay for any claims made by Defendants based on fringe benefit payments allegedly owed by Wilson. Defendants had not, as of the date of this motion, initiated any state court action regarding their claims.
On May 22, 1992, Plaintiff flied the instant action, seeking a declaratory judgment that the bonds required by N.Y. STATE FIN. LAW § 137 (1) are preempted by ERISA and that Plaintiff is under no obligation to pay for any fringe benefits to Defendants under its agreement with Wilson. On July 10, 1992, Defendants filed the present notion asserting that, pursuant to Fed.P.Civ.P. 12 (b)(1), the court lacks subject matter jurisdiction over Plaintiff's action and that Plaintiff lacks standing to bring its suit under ERISA.
The question presented by the present motion is whether the court has subject matter jurisdiction over a declaratory judgment action brought by a plaintiff-surety who alleges that, were Defendants to initiate a suit against Plaintiff in state court, Defendants' action would be preempted by ERISA. At the time that this motion was heard by the court, this issue appeared to be one of first impression in this circuit. However, since the court heard oral argument in this case, the Second Circuit decided Albradco, Inc. v. Bevona, 982 F.2d 82 (2d Cir. 1992), heavily relied upon by Defendants and directly on point with the present case. The court finds Albradco to be dispositive in this case.
Like the present case, the Albradco case involved a dispute over payments due union employees after their employer was unable to satisfy its debts. In Albradco, shareholders of a bankrupt corporation ("Bradley") brought a declaratory judgment action in federal court after Bradley defaulted on its obligations to certain of its union employees, and the union sued Bradley's shareholders in state court. The union had brought its action pursuant to N.Y.B.C.L. § 630, "which provides that the ten largest shareholders of close corporations 'shall jointly and severally be personally liable for all debts, wages, or salaries due and owing' to employees." Albradco, 982 F.2d at 84 (citing N.Y.B.C.L. § 630 (a)). Moreover, "this [(§ 630 (a))] includes 'employer contributions . . . of insurance or welfare benefits [and] employer contributions to pension or annuity funds.'" Id. at 84. As in the present case, the Albradco plaintiffs sought a determination that claims for benefit payments made pursuant to a New York statute were preempted by ERISA.
The Second Circuit, summarizing the district court's holding in Albradco, stated that
although the ERISA preemption claim might have merit if appellants had pursued a different procedural course, such as removal for jurisdictional purposes, the existence of an ERISA preemption defense is not enough to convert an action into a federal question declaratory judgment action. In a declaratory judgment action, there will be federal jurisdiction only if there is preemption by ERISA and the declaratory judgment plaintiff has a right of action within the scope of the civil enforcement provisions of ERISA § 502 (a) [ 29 U.S.C. § 1132 (a)].