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INTERNATIONAL UNION OF BRICKLAYERS v. GALLANTE

January 30, 1996

INTERNATIONAL UNION OF BRICKLAYERS AND ALLIED CRAFTSMEN, INTERNATIONAL UNION OF BRICKLAYERS AND ALLIED CRAFTSMEN LOCAL NO. 5, EMIL A. PARIETTI, JR., RICHARD O'BEIRNE, GEORGE FRANK, JOHN PARIETTI, MANUEL VALENTE and PHILIP MOSCA, as Trustees of the Hudson Valley District Council Bricklayers and Allied Craftsmen Joint Benefit Funds, Plaintiffs, against ANDREW GALLANTE, SR., MICHAEL CAVALLARO, SALVATORE MAURO AND RODERICK CIFFERI, III, Individually and as Fiduciaries of the Hudson Valley District Council Bricklayers and Allied Craftsmen Joint Benefit Funds and HUDSON VALLEY DISTRICT COUNCIL BRICKLAYERS AND ALLIED CRAFTSMEN JOINT BENEFIT FUNDS, Defendants.


The opinion of the court was delivered by: CONNER

 CONNER, Senior D.J.:

 This action arises out of the turmoil that has troubled the administration of the Hudson Valley District Council Bricklayers and Allied Craftsmen Joint Benefit Funds ("HVDC Funds"). Plaintiffs have moved for summary judgment on eight of their twelve claims for relief. Defendants have moved for summary judgment on one of their ten counterclaims. For the reasons set forth below, plaintiffs' motion is granted in part and denied in part, and defendants' motion is denied.

 BACKGROUND

 The pertinent factual background of this action is complex and must be described at some length. The facts set forth here are undisputed, unless otherwise indicated.

 The HVDC Funds are multi-employer, labor-management trust funds subject to regulation under the Labor Management Relations Act and the Employee Retirement Income Security Act ("ERISA"). The HVDC Funds are governed by the trust agreements, as restated and amended, that established the employee benefit funds of the now-defunct Local 44. *fn2" Those trust agreements provide for a four-member Board of Trustees, composed of two trustees appointed by the union and two trustees elected by the employers. See Exhibits 8, at 8; Exhibit 17, at 8; Exhibit 21, at 8; Exhibit 26, at 7 (all attached to Gallante Aff.). The parties agree that the documents effecting the fund mergers do not address the post-merger composition of the Board of Trustees of the HVDC Funds. See, e.g., Exhibit K, attached to Plaintiffs' Rule 3(g) Statement, dated Sept. 22, 1995. As of early February 1991, the union-designated trustees of the HVDC Funds were defendant Andrew T. Gallante, Sr. ("Gallante Sr.") and defendant Michael Cavallaro, while the employer-designated trustees were defendant Roderick W. Ciferri, III, and defendant R. Salvatore Mauro.

 The minutes of the February 13, 1991, meeting of the HVDC Funds' Board of Trustees indicate that two new employer-designated trustees were to serve on the Board: plaintiff George A. Frank and plaintiff Richard O'Beirne. See Exhibit D, attached to Plaintiff's Sept. 22 Rule 3(g) Statement. The minutes of the May 28, 1991, trustees' meeting reflect that Aldo Zavattoni and Andrew T. Gallante, Jr. ("Gallante Jr.") would be serving as union-designated trustees. See Exhibit E, attached to Plaintiff's Sept. 22 Rule 3(g) Statement. For over two years, these four individuals acted as trustees without objection from anyone.

 In 1993, Gallante Sr. decided to retire from his position as trustee of the HVDC Funds. From 1968 to 1993, Gallante Sr. was the full-time business manager of Local 44 and then of the HVDC, as well as a trustee of the Local 44 Funds and then of the HVDC Funds. Gallante Sr. had therefore been deeply involved in the day-to-day administration of the HVDC Funds. On June 29, 1993, the Board of Trustees approved a contract under which the HVDC Funds would pay Gallante Sr. a salary of $ 1,080.00/week plus expenses from July 1, 1993, to December 31, 1996. In return, Gallante Sr. would provide consulting services on an as-needed basis. See Exhibit C, attached to Plaintiffs' Sept. 22 Rule 3(g) Statement. Gallante Sr. resigned from the Board of Trustees on June 30, 1993.

 On September 20, 1993, Emil A. Parietti, Jr., formerly an officer of Local 29 and a trustee of the Local 29 Funds, was elected Secretary-Treasurer of the HVDC to replace Gallante Sr.

 On September 21, 1993, which was more than two years after the purported appointment of O'Beirne, Frank, Zavattoni and Gallante Jr., the minutes of the Board of Trustees' meeting indicate that the Board discussed amending the HVDC Funds' trust agreements to increase the number of trustees to eight. The HVDC Funds' counsel was directed to prepare a draft amendment for consideration by the Board. See Exhibits F, G, attached to Plaintiffs' Sept. 22 Rule 3(g) Statement.

 On January 7, 1994, Parietti attempted to use his authority as Secretary-Treasurer of the HVDC to appoint himself as a union-designated trustee in place of Cavallaro. Certain defendants disputed the legality of Parietti's action.

 The minutes of the January 11, 1994, meeting of the Board of Trustees report that the proposed amendment to expand the Board of Trustees was tabled. See Exhibit 32, attached to Gallante Aff. The Board never executed a formal amendment to the trust agreements. On March 16, 1994, counsel for the HVDC Funds sent a letter to the eight men who had been acting as trustees informing them that because no formal action had ever been taken to expand the Board, Zavattoni, Frank, O'Beirne and Gallante Jr. were not trustees. See Exhibit J, attached to Plaintiffs' Sept. 22 Rule 3(g) Statement.

 On March 31, 1994, the Executive Board of the International Union issued an order dissolving the HVDC and revoking the charters of Locals 22, 27, 29, 44, 48 and 55. In its place, the International Union created Local 5, whose territory encompassed the various jurisdictions of the dissolved locals. The International Union appointed Parietti to serve as President of Local 5. The International Union granted Parietti "the authority to make all necessary appointments . . . including the appointment of trustees to all trust funds in which members of Local 5 participate." See Exhibit A, attached to Affidavit of Emil A. Parietti, Jr., dated April 18, 1995. The parties agree that Local 5 is the successor to the HVDC. Collective bargaining agreements signed by the HVDC continued in force after the creation of Local 5. As those agreements expire, they are replaced by agreements between employers and Local 5. *fn3"

 Pursuant to the collective bargaining agreements signed by various employers and the HVDC, the HVDC Joint Benefit Administration Fund Account was designated as the collection agent for dues check-off payments deducted by employers from the paychecks of members of Locals 22, 27, 44, 48 and 55. Local 29's collective bargaining agreements contained a similar provision. Local 5 is the successor to those arrangements. Plaintiffs allege that since April 1994, the HVDC Funds have withheld dues check-off monies from Local 5. Although the HVDC Funds have apparently paid $ 141,136.73 directly to the International Union, plaintiffs allege that they are owed approximately $ 123,000 in additional dues check-off payments for 1994, as well as all dues check-off payments for 1995.

 On April 26, 1994, plaintiffs Local 5, Philip Mosca *fn4" and Emil Parietti filed suit against the HVDC Funds, Cavallaro, Mauro, Ciferri and Gallante Sr. The pleadings have been amended twice to assert additional claims and to add plaintiffs O'Beirne, Frank, John Parietti, Manuel Valente, *fn5" and the International Union. Plaintiffs have asserted twelve claims. Those claims for which they currently seek summary judgment may be sorted into three groups: claims relating to the composition of the Board of Trustees of the HVDC Funds, claims concerning Gallante Sr.'s consulting contract and claims relating to the dues check-off payments. Defendants seek summary judgment on their counterclaim against Local 5 for recovery of the allegedly delinquent benefit contributions for the Pariettis.

 DISCUSSION

 Summary judgment should be granted when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The Supreme Court has explained that "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). No genuine issue for trial exists unless there is sufficient evidence favoring the nonmoving party for a reasonable jury to return a verdict for that party. See id., at 248-49.

 Moving for summary judgment entails some risk for the moving party:

 
A motion for summary judgment searches the record, and it is well settled that if such a search reveals that there are no genuine issues of material fact, but that the law is on the side of the non-moving party, then "summary judgment may be rendered in favor of the opposing party even though he has made no formal cross-motion under Rule 56."

 Montgomery v. Scott, 802 F. Supp. 930, 935 (W.D.N.Y. 1992) (quoting 10A Charles A. Wright & Arthur M. Miller, Federal Practice and Procedure ยง 2720, at 29-30 (2d ed. 1983)). The Second Circuit has recently held that a district court need not give notice of its intention to enter summary judgment against the moving party, so long as the facts before the court are fully developed and the moving party suffers no procedural prejudice. See Coach Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 167 (2d Cir. 1991). The threat of procedural ...


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