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TRUSTEES AMERICAN FED. MUSICIANS v. STEVEN SCOTT

March 22, 1999

TRUSTEES OF THE AMERICAN FEDERATION OF MUSICIANS AND EMPLOYERS' PENSION FUND, PLAINTIFFS,
v.
STEVEN SCOTT ENTERPRISES, INC., DEFENDANTS.



The opinion of the court was delivered by: Motley, District Judge.

  OPINION

Plaintiffs bring this suit seeking an audit of Steven Scott Enterprises, Inc.'s ("Steven Scott") payroll records from 1992 to 1994 to assess whether Steven Scott has made full and fair contributions to the Pension Fund. In lieu of an answer, Steven Scott has brought this motion to dismiss or, in the alternative, a motion for summary judgment claiming that plaintiffs are bound by fifteen Settlement Agreements that represent a full and final settlement of all monetary claims against Steven Scott for the years that plaintiffs seek to audit. For the reasons discussed below, the court grants Steven Scott's motion and dismisses plaintiffs' complaint.

I. FACTUAL BACKGROUND

Plaintiffs, the Trustees of the American Federation of Musicians and Employers' Pension Fund (the "Pension Fund"), bring this suit under the Employee Retirement Income Security Act of 1974 ("ERISA"),29 U.S.C. § 1001 et seq., and Section 301 of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185. There are four key players in this dispute: the Pension Fund, Local 802, Steven Scott, and William Moriarity ("Moriarity"). The Pension Fund is an employee benefit and multi-employer pension plan, as defined under ERISA, that is maintained for the purpose of providing retirement and related benefits to eligible participants and their beneficiaries. See Compl. ¶¶ 4,5. Steven Scott is a company that employs musicians to perform for its clients at various engagements, typically single engagements such as weddings or bar mitzvahs. See Def.'s 56.1 Stm't ¶ 2. Steven Scott has been a signatory to various collective bargaining agreements with Local 802, the local union for musicians in New York City. Under these collective bargaining agreements, Steven Scott is required to make certain contributions to the Pension Fund at specified rates. See id. ¶ 4. Moriarity has been the President of Local 802 and a Trustee of the Pension Fund since January 1, 1993. See Pls.' Resp. to Def.'s 56.1 Stm't ("Pls.' Resp.") ¶ 6.

Plaintiffs allege that they are entitled to enforce their right to conduct an audit of Steven Scott's records under Article 9, Section 8 of the Agreement and Declaration of Trust of the American Federation of Musicians and Employers' Pension Fund ("Trust Agreement"), the collective bargaining agreement that requires an employer to make contributions on behalf of its covered employees. See Compl. ¶ 10; Ex. D to Kilkelly Decl. Supp. Pls.' Resp. Def.'s Mot. Dismiss ("Kilkelly Decl.") at 54-56. Plaintiffs seek this injunctive relief pursuant to Sections 502(a)(3) and 515 of ERISA, 29 U.S.C. § 1132(a)(3) and 1145, and Section 301(a) of the LMRA, 29 U.S.C. § 185(a). See Compl. ¶¶ 22, 24.

At the core of Steven Scott's motion for summary judgment are fifteen settlement agreements that defendant entered into with Moriarity, Local 802 President and Pension Fund Trustee, over the course of a three year period, from 1993 to 1996. See Ex A-O to Breitkopf Aff. Supp. Def.'s Mot. Dismiss ("Breitkopf Aff."). The substance of each agreement includes the following terms: (1) that Steven Scott agrees to pay a certain sum of money to the Pension Fund for certain employees, see, e.g., Ex. O to Breitkopf Aff. ¶ 4; (2) that the agreement is in full settlement of all monetary claims against Steven Scott through a specified date, see, e.g., id. ¶ 6; (3) that the agreement binds Local 802, the Pension Fund, and Steven Scott, see, e.g., id. ¶ 7; and (4) that each party, including Moriarity, "acknowledges, represents, and warrants that they are authorized to enter into, execute, deliver, perform, and implement the agreement" Id. ¶ 9. In addition, each agreement contains a ratification clause that provides:

  [Local 802] and the [Pension Fund] agree to accept
  the aforesaid payment by [Steven Scott] in full
  satisfaction of all pension benefit contributions due
  the [Pension Fund] on behalf of the aforesaid
  individuals for the period ending [on a specified
  date]. Negotiation of check for pension benefit
  contributions shall be deemed ratification of this
  Agreement.

Id. ¶ 5.

Each agreement is signed by two parties: Joseph Mileti, an officer and duly authorized agent for Steven Scott, and Moriarity. Moriarity's signature block appears as follows:

  ASSOCIATED MUSICIANS OF GREATER NEW YORK, LOCAL 802,
  A.F. of M
  By _____________________
    William Moriarity
    An Officer and Duly
    Authorized Agent

See, e.g., id. at 3.

Steven Scott tendered each of the fifteen settlement checks, accompanied by a three-page settlement agreement and a list of employee names and contribution amounts, to Local 802, who then forwarded the agreements and checks to the Pension Fund. See Tr. at 23.*fn1 The checks were processed by Pension Fund clerical workers who were in charge of processing all contributions to the Pension Fund from various employers. See Moriarity Aff. Supp. Pls.' Resp. Def.'s Mot. Dismiss at 9. Employers making contributions to the Pension Fund on behalf of Local 802 members routinely sent their checks and employee lists (also called remittance forms) to Local 802, who then forwarded the information and money to the Pension Fund. See id.

The procedure for handling checks and remittance forms is as follows: (1) Pension Fund clerical workers review the checks to determine whether the signature on the check matches a signatory employer; (2) then they deposit the checks in a bank; and (3) they forward the accompanying remittance forms to an outside agency for data processing. See id. After data entry is completed, the forms are returned to the Pension Fund for filing. See Kilkelly Decl. ¶ 3.

Eight of the settlement checks and seven of the fifteen settlement agreements were found in plaintiffs' files. See id. ¶ 4. Although the settlement checks bear no special legend on the face of the check stating that the checks are in full satisfaction of any disputed or owing debt, each check was accompanied by a settlement agreement, which unequivocally stated that the check was in full settlement of all obligations owed by Steven Scott through a specified date. See, e.g., Ex. O to Breitkopf Aff. ¶ 6. The Pension Fund admitted that it received a settlement agreement along with each of the fifteen checks. See Tr. at 23. It is also undisputed that all fifteen settlement checks were cashed by the Pension Fund. See Def.'s 56.1 Stm't ¶ 17; Pls.' Resp. ¶ 17.

As a Pension Fund Trustee and Local 802 President, Moriarity was authorized to collect Pension Fund contributions from employers. See Pls.' Resp. ¶ 11. However, Moriarity was not authorized to unilaterally enter into settlement agreements that were in full satisfaction of any owing debts to the Pension Fund. See id. ¶ 20. Under the terms of the Trust Agreement that governs the Pension Fund, only the Board of Trustees of the Pension Fund has the authority to enter into such agreements or delegate such authority to two or more Trustees, with equal representation from both the Union and the Employer. See id. ¶¶ 20, 21. However, the Pension Fund acknowledges that Steven Scott was not mailed a copy of the Trust Agreement until June 1995, see Kilkelly Decl. ¶ 7, and thus could not have known of the Board's exclusive authority to enter into such agreements ...


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