the union on the construction project. The prime contractor on the project was defendant Trataros, but it was not a party to the collective bargaining agreement.
As prime contractor, defendant Trataros was required under New York State Finance Law to supply a labor and material payment bond. Such bond had to guarantee "prompt payment of monies due to all persons furnishing labor or materials to the contractor or his subcontractor in the prosecution of the work provided for in such contract." New York State Finance Law § 137(1). Defendant Trataros posted such a bond, issued by defendant Seaboard. The New York City School Construction Authority was obligee. Defendant Trataros was the named principal on the bond.
On or about July 19, 1994, CBS, for reasons that are unknown, abandoned its work on the project and stopped making contributions to the plaintiff funds. Defendant Trataros stepped into the role of employer and hired union workers to continue working on the project. When union officials expressed concerns about contributions to the funds, defendant Trataros gave assurances that it would assume responsibility for the contributions.
Attached to plaintiffs' complaint is a letter dated June 2, 1994, in which defendant Trataros seeks to assure the plaintiff funds that the provisions of the subcontract agreement between defendant Trataros and CBS "provide for the issuance of two-party checks against funds accruing thereunder to discharge valid debts incurred during its performance."
Defendant Trataros made benefit contribution payments on at least six occasions from April 26, 1994 to July 26, 1994 (some even before CBS stopped making its contributions to the plaintiff funds). Defendant Trataros made no contributions to plaintiff funds after July 26, 1994, despite the fact that union workers continued to work on the project until September 14, 1994.
As a result, on April 12, 1995, plaintiffs brought this action. Defendant Trataros is named in Count II, defendant Seaboard is named in Count III, and defendant Costas Trataros is named in Counts VII, VIII and IX.
Count II alleges a violation of 29 U.S.C. § 1145 of the ERISA statute by defendant Trataros; it also alleges a breach of contract claim against defendant Trataros, based on a written guarantee of payment; and a breach of contract claim against defendant Trataros based on an oral promise of payment.
Count III alleges a claim against defendant Seaboard Surety based upon § 137 of the New York State Finance Law.
Count VII asserts a violation of 29 U.S.C. § 1145 of the ERISA statute by defendant Costas Trataros by alleging the federal common law claim of greater than 50% ownership of defendant Trataros.
Count VIII asserts a state law claim of piercing the corporate veil by alleging that Costas Trataros is the "alter ego" of defendant Trataros.
Count IX alleges that Costas Trataros as one of the ten largest shareholders in defendant Trataros is personally liable under New York's Business Corporation Law § 630; it further alleges that Costas Trataros violated New York's Debtor and Creditor Law § 274.
We conducted oral argument on March 15, 1996. Defendant Trataros' principal contention was that the ERISA claim alleged in Count II should be dismissed because it was not an employer as that term is defined in 29 U.S.C.A. § 1102(5). We rejected that argument and denied the motion to dismiss for the reasons stated on the record.
However, we granted, based on ERISA pre-emption, defendant Trataros' motion to dismiss all the state claims alleged against it in Count II, and we similarly granted defendant Costas Trataros' motion to dismiss all the claims alleged against him in Counts VII, VIII and IX.
Defendant Seaboard advanced two basic reasons for dismissing the count against it. It argued first that the New York State Finance Law claim was pre-empted by ERISA; and second that the claim was untimely. We rejected the second argument on the ground that it presented an issue of fact. We reserved decision as to the first, to which we now turn.
The standard for ERISA pre-emption is set forth at 29 U.S.C. § 1144 (a) and provides, in pertinent part, as follows:
Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter (iii) of this chapter shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan described in Section 1003 (a) of this title and not exempt under Section 1003 (b) of this title.
Plaintiffs seek recovery from defendant Seaboard based on the public improvement payment bond issued by defendant Seaboard and posted by defendant Trataros. Section 137(3) of the New York State Finance Law, which required that the bond be posted, provides, in pertinent part:
Every person who has furnished labor or material, to the contractor or to a subcontractor of the contractor, in the prosecution of the work provided for in the contract and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was performed or material was furnished by him for which the claim is made, shall have the right to sue on such payment bond in his own name.