United States District Court, Southern District of New York
January 17, 2001
BUILDING SERVICE 32B-J PENSION FUND, ET AL., PLAINTIFFS,
VANDERVEER ESTATES HOLDING, LLC., DEFENDANT.
The opinion of the court was delivered by: Robert W. Sweet, U.S.D.J.
Plaintiff Building Service 32B-J Health, Pension and Annuity Funds (the
"Funds") have moved for reconsideration and reargument pursuant to Local
Rule 6.3, or to alter or amend this Court's November 21, 2000 opinion and
order, pursuant to Rules 52(b), 59(e) or 60(b), Fed.R.Civ.P., to the
extent that it held that defendant Vanderveer Estates Holding, LLC
("Vanderveer") was not liable for contributions to the Funds after April
20, 2000. Vanderveer opposes the motion.
Also pending are the Funds' motion to hold Vanderveer in contempt for
failing to file a $75,000 bond in compliance with this Court's October
5, 2000 opinion, and the parties' proposed judgments.
For the reasons set forth below, both the motion to reconsider and the
contempt motion are granted. Judgment shall issue in accordance with this
The Parties and Related Entities
Local 32B-J, Service Employees International Union, AFL-CIO ("Union")
is a labor organization that represents members employed in the building
service industry in metropolitan New York City.
The Funds are jointly administered, multi-employer, labor-management
trust Funds based in New York City. The Funds are employee benefit plans
that provide benefit coverage for participants employed by employers who
are parties to collective bargaining agreements with the Union. The
purpose of the Funds is to receive contributions from employers who are
parties to collective bargaining agreements with the Union, to invest and
maintain those monies, and to distribute pensions, health and insurance
benefits, and annuity payments to eligible employees.
The Realty Advisory Board on Labor Relations, Inc. ("RAB") is a
multi-employer organization which is a signatory to a series of
collective bargaining agreements ("CBA") with the Union covering
of apartment buildings in New York City.
Vanderveer is a for-profit domestic limited liability company based in
New York City that owns several buildings in Brooklyn and employs workers
covered by the RAB collective bargaining agreement.
The prior proceedings in this case are set forth in two opinions of
this Court, familiarity with which is assumed. See Building Service 32B-J
Health Fund v. Vanderveer Estates Holding, LLC, 121 F. Supp.2d 750
(S.D.N.Y. 2000); ("Vanderveer II"); Building Service 32B-J Health Fund
v. Vanderveer Estates Holding, LLC, 115 F. Supp.2d 459 (S.D.N.Y. 2000)
On November 20, 2000, one day before Vanderveer II was issued, the
Funds moved to hold Vanderveer in contempt of Vanderveer I, which,
although denying the Funds' motion for a preliminary injunction, had
ordered Vanderveer to file a $75,000 bond. 115 F. Supp.2d at 464.
Vanderveer filed the $75,000 bond on December 13, 2000, and filed its
opposition to the contempt motion three days later. The Funds filed a
reply on December 19, 2000, and the motion was deemed fully submitted on
December 27, 2000.
Meanwhile, the Court issued its opinion on the Funds' motion for
summary judgment in Vanderveer II, holding that although Vanderveer was
not a signatory to the 1997 RAB Agreement, it was an assignee of a
signatory, and was therefore bound to contribute to the Funds. Vanderveer
II, 121 F. Supp.2d at 756-57. Vanderveer was found liable for back
contributions plus interest from the date it purchased the covered
properties to April 20, 2000, when the collective bargaining contract to
which it was an assignee expired, in addition to statutory liquidated
damages, attorneys' fees and costs. Id., 121 F. Supp.2d at 758. The
parties were invited to submit documentation calculating these amounts in
support of their proposed judgments in accordance with the opinion, id.,
which they did, from December 7, 2000 through December 15, 2000.
However, the Court abstained from entering a judgment in accordance
with Vanderveer II because the Funds filed the instant motion on December
1, 2000, seeking reconsideration of one aspect of that opinion.
Specifically, the Funds take issue with the holding that Vanderveer was
not obligated to contribute to the Funds after April 20, 2000, when a new
agreement was entered (to which Vanderveer was neither a party nor an
assignee) that abrogated the prior contract. Vanderveer opposed the
motion in a December 26, 2000 filing, and the motion was deemed fully
submitted on December 27, 2000.
I. The Motion to Alter, Modify or Reconsider a Summary
Judgment Decision is Granted
A. Authority to Reconsider
This Court has the discretion to reconsider Vanderveer's obligation to
contribute after April 20, 2000 pursuant to Local Civil Rule 6.3, or to
alter or amend the prior opinion pursuant to Federal Rules of Civil
Procedure Rule 59(e), upon motion filed within ten days of the entry of
the opinion. Under either rule, the burden is on the moving party to
demonstrate that the Court overlooked controlling decisions or material
facts that were before the Court on the original motion and might
"materially have influenced its earlier decision." Anglo American Ins.
Co. v. Calfed, Inc., 940 F. Supp. 554, 557 (S.D.N.Y. 1996).
Local Rule 6.3 must be narrowly construed and strictly applied so as to
avoid duplicative rulings on previously considered issues, and may not be
employed as a substitute for appealing a final judgment. See Shamis v.
Ambassador Factors, 187 F.R.D. 148, 150 (S.D.N.Y. 1999). Therefore, a
party moving for reargument "may not advance new facts, issues or
arguments not previously presented to the court." Litton Indus., Inc. v.
Lehman Bros. Kuhn Loeb, Inc., 1989 WL 162315, at * 3 (S.D.N.Y. 1989).
Nor is Rule 59(e) a vehicle by which a party may introduce new facts or
arguments not previously raised. See Katz v. Berisford International
PLC, No. 96 CIV. 8695(JGK), 2000 WL 1760965, *5 (S.D.N.Y. Nov. 30,
2000). Alteration or amendment of a prior decision pursuant to Rule 59(e)
is appropriate "only where controlling law has changed, new evidence is
available, and/or clear error must be corrected or manifest injustice
prevented." Cavallo v. Utica-Watertown Health Ins. Co., 3 F. Supp.2d 223,
225 (N.D.N.Y. 1998).
If the Court proceeds to the merits of this motion to reconsider, it
must decide whether there is a genuine issue of material fact such that
neither party is entitled to summary judgment as a matter of law with
respect to contributions owed after April 20, 2000. See Rule 56(c),
B. Proffered Grounds for Reconsideration, Alteration Or Amendment
Vanderveer II held in relevant part that Vanderveer's obligation to
contribute pursuant to its status as an assignee of the 1997 Agreement
terminated on April 21, 2000, when the 2000 Agreement went into effect.
Although properly agreeing that Vanderveer is not bound by the 2000
Agreement,*fn1 the Funds assert that the 1997 Agreement remained in
effect pursuant to its "Evergreen Clause," which they argue compelled
Vanderveer to continue to make contributions notwithstanding the
execution of another agreement.
The relevant facts pertaining to this motion lie in Articles XVII and
XVIII of the 1997 RAB Agreement, which was submitted to the Court in
support of the summary judgment motion. Article XVII provided that the
1997 Agreement remained in effect until "a successor Agreement" was
executed. (Pltf. Mem. Ex. B (Pltf. Amd. Stmt.) ¶ 12.) However,
Article XVIII provided that:
Upon the expiration date of this agreement, the same
shall continue in full force and effect for an
extended period until a successor agreement has been
executed. During the extended period, all terms and
conditions shall be in effect and the parties shall
negotiate for a successor agreement retroactive to the
expiration date . . . In the event that the parties
are unable to agree upon the terms of a successor
agreement, either party upon ten (10) days' written
notice to the other party may cancel this agreement.
("The Evergreen Clause".) (Faul Summ. Judg. Aff. Ex. C at 89.)
The Funds contend that the Court (1) overlooked the 1997
Agreement's Evergreen Clause, which the Funds contend ensured that the
1997 Agreement remained in force until certain conditions precedent were
met, including (a) the signing of a "successor agreement;" or (b)
unsuccessful negotiation by the parties followed by ten days notice of
cancellation; and (2) erroneously equated a "successor" Agreement with a
contract that "superseded" the prior Agreement. The Funds argue that the
2000 Agreement did not function as a "successor" agreement terminating
the prior agreement with respect to Vanderveer because Vanderveer was not
a party thereto. Therefore, the Funds contend, the 1997 Agreement remains
in effect as to Vanderveer pursuant to the Evergreen Clause because, as
Vanderveer concedes, it did not file a cancellation notice.*fn2
In response, Vanderveer first argues that this is an improper new
argument premised upon facts previously submitted to the Court. On the
merits, Vanderveer contends that the 2000 Agreement (1) was a successor
agreement that terminated Vanderveer's obligations pursuant to Article
XVII of the 1997 Agreement; and that (2) even if the 2000 Agreement was
not a "successor" agreement, Vanderveer's obligation to contribute ended
when the 1997 Agreement expired on April 20, 1997, because the Evergreen
Clause applies only to "parties" to the 1997 Agreement, and not to
non-parties who are nonetheless bound to it, such as Vanderveer.
Although Vanderveer II took note of the fact that Vanderveer was not a
party to the 2000 Agreement, it failed to address the legal effect of that
fact on Vanderveer's obligations under the 1997 Agreement. In other
words, the prior opinion did not consider whether, with respect to
Vanderveer, the 2000 Agreement was a "successor" agreement that had the
effect of terminating obligations under the 1997 Agreement, in light of
the fact that Vanderveer was not a party to the new agreement.
Therefore, to avoid manifest injustice, the Court will address the merits
of the Funds' claim pursuant to Rule 59(e).
1. Termination of the 1997 Agreement
The 1997 Agreement provides that obligations thereunder may be
terminated in one of two ways: (1) by the execution of a "successor
agreement,"*fn3 Art. XVII; or (2) by sending ten days cancellation
notice after negotiations fail to produce a successor agreement, Art.
a. The 2000 Agreement Did Not Terminate Vanderveer's
Obligations Pursuant to the 1997 Agreement
Like any contract, a "successor agreement" does not bind entities who
are not signatory parties or assignees thereof. See, e.g., Abraham Zion
Corp. v. Lebow, 761 F.2d 93
, 103 (2d Cir. 1985) (finding a non-signatory
to a contract not bound by a contract where the party who signed the
contract was not the non-signatory's agent); Crabtree v. Tristar
Automotive Group, Inc., 776 F. Supp. 155
, 166 (S.D.N.Y. 1991) ("It is
hornbook law that a non-signatory to a contract cannot be named as a
defendant in a breach of contract action unless it has thereafter assumed
or been assigned the contract."). The parties agree that Vanderveer is
neither a party to nor an assignee of the 2000 Agreement, and is
therefore not bound to it.
Therefore, the first method of terminating Vanderveer's obligations to
contribute under the 1997 Agreement was not activated.
b. The Evergreen Clause Applies to Vanderveer, and Remains in Force
As the Funds note, the Evergreen Clause is a common and lawful
provision in collective bargaining agreements. Such provisions foster the
goals of the labor laws by preserving employee benefits after the
expiration of a collective bargaining agreement while facilitating good
faith negotiations toward a new agreement. See Laborers Health and
Welfare Trust Fund For Northern California v. Advanced
Lightweight Concrete Co., Inc., 434 U.S. 539, 544 n. 6,
108 S.Ct. 830, 833 n. 6, 98 L.Ed.2d 936 (1988) ("Freezing the
status quo ante after a collective agreement has expired promotes
industrial peace by fostering a non-coercive atmosphere that is
conducive to serious negotiations on a new contract. Thus, an
employer's failure to honor the terms and conditions of an expired
collective-bargaining agreement pending negotiations on a new
agreement constitutes bad faith bargaining in breach of sections
8(a)(1), 8(a)(5) and 8(d) of the National Labor Relations Act. . . .")
(citing NLRB v. Katz, 369 U.S. 736, 743 82 S.Ct. 1107, 1111,
8 L.Ed.2d 230 (1962)).
However, Vanderveer alleges that, as a non-party, it is not bound by
the Evergreen Clause, because that provision refers only to "parties."
This contention is false, both according to the language of the Evergreen
Clause, and under the Honorable Louis L. Stanton's prior ruling, Bevona
v. Vanderveer Estates Holding, LLC, No. 98 Civ. 8689 (S.D.N.Y. Feb. 11,
1999), aff'd, Bevona v. Vanderveer Estates Holding, LLC, Nos. 98 Civ.
9529 and 99 Civ. 7048 (2d Cir. April 12, 1999) (table).
First, the true "Evergreen Clause" is one sentence of Article XVIII
providing that the 1997 Agreement "shall remain in force and effect until
a successor agreement has been executed." (Faul Sum. Judg. Aff. Ex. C,
Art. XVIII at 89.) The fact that Vanderveer is not technically a "party"
to the Agreement has no bearing on the plain meaning of this contractual
provision. See Krumme v. Westpoint Stevens Inc., Nos. 99-9442, 99-9464,
2000 WL 1920451, *5 (2d Cir. Dec. 28, 2000) (recognizing that plain
meaning is appropriate construction of unambiguous contractual
language). Judge Stanton found in Bevona that when Vanderveer undertook
the acceptance and assignment from the former owner of the buildings
employing union employees, it became bound to the 1997 Agreement. As
such, the Evergreen Clause also binds Vanderveer. By implication,
Vanderveer must negotiate and execute a new agreement in order to
terminate its obligations under the 1997 Agreement pursuant to the
Evergreen Clause. As it has failed to do so, its contractual duty to
contribute to the Funds continues after April 20, 2000 unless it filed a
notice of cancellation.
Vanderveer contends that the later provisions requiring "the parties"
to negotiate a successor agreement and to provide written notice of
cancellation do not apply to it. As the parties recognize, neither the
1997 nor the 2000 Agreement was drafted in contemplation that entities
that were not members of the RAB, and not signing parties to the
Agreements, would nonetheless be bound to them under circumstances such
as those presented here. Because Vanderveer is bound to the Agreement, it
is reasonable to construe these provisions as applying to Vanderveer. To
hold otherwise would be to create an anomaly whereby Vanderveer might
have no mechanism by which to renegotiate the terms of the Agreement or
to terminate it if such negotiations were unsuccessful. Such a reading
would conflict with the National Labor Relations Act, which requires
employers to negotiate in good faith with representatives of its
employees. See 29 U.S.C. § 158(a)(5) ("It shall be an unfair labor
practice for an employer . . . to refuse to bargain collectively with the
representatives of his employees. . . ."); § 158(d) (describing
obligation to bargain collectively in good faith).
Thus, because Vanderveer has not executed a successor agreement,
Vanderveer's obligations to contribute pursuant to the 1997 Agreement
terminated only if it filed ten days cancellation notice after
unproductive negotiations on a new contract. There is no evidence in the
record of negotiations. However, the parties agree that Vanderveer has
not filed any cancellation notice. Therefore, at least one of the
conditions precedent to terminating Vanderveer's obligations under the
1997 Agreement has not been met. As a
result, Vanderveer remains bound after April 20, 2000 to contribute
to the Plaintiff Funds pursuant to the Evergreen Clause.
II. The Contempt Motion
Next, the Funds move to hold Vanderveer and its sole principal, Abraham
Weider ("Weider"), in contempt of this Court's October 5, 2000 order,
which required Vanderveer to post a $75,000 bond for court costs and the
costs of enforcing any eventual judgment against it. In addition to the
contempt finding, the Funds request that the bond be posted, that
Vanderveer be required to pay costs and attorneys' fees incurred on this
motion, a daily fine for each day bond was not posted, and that Weider be
taken into custody until the bond is posted.
Vanderveer argues that neither it nor Weider should be held in
contempt, because a $75,000 bond was filed on the return date for this
motion, December 13, 2000, and the Funds have suffered no prejudice.
In light of the fact that the bond has been filed, the remaining issues
to be resolved include only whether Weider and Vanderveer should be held
in contempt, and whether costs and attorneys' fees should be assessed.
The inherent power of the courts to enforce lawful orders by means of
civil contempt is based upon the highest authority. See Shillitani v.
United States, 384 U.S. 364, 370 (1996). Contempt is intended to serve
two purposes: to ensure a party's future compliance with court orders,
and to compensate victims of contempt for harms sustained as a result
thereof. See Weitzman v. Stern, 98 F.3d 717, 718 (2d Cir. 1996); King v.
Allied Vision, Ltd., 65 F.3d 1051, 1062 (2d Cir. 1995). "A party may be
held in contempt only if it is proven by clear and convincing evidence
that the party violated a clear and unambiguous order of the court." City
of New York v. Local 28, Sheet Metal Workers Int'l Ass'n, 170 F.3d 279,
282-83 (2d Cir. 1999).
The order of October 5, 2000 clearly required Vanderveer to post a
$75,000 bond, but set no deadline. As such, a finding of contempt is
appropriate if the Funds show by clear and convincing evidence that
Vanderveer did not diligently attempt to comply with the order in a
reasonably timely manner. See Weitzman, 98 F.3d at 718; King, 65 F.3d at
1058. The purpose of the bond was, as the prior order noted, to ensure
compliance with any eventual award assessed against the defendant. As the
bond was filed by the return date on the motion and before judgment was
issued, the two-month delay in filing the bond did not prejudice the
Funds's ability to collect any eventual award.
However, the Funds further argue that Vanderveer's willful failure to
post the bond in a timely manner harmed them by forcing them to incur
attorneys' fees to prosecute this motion. The Second Circuit has not yet
addressed the question whether attorneys' fees may be awarded absent a
finding of willful contempt. See Jaeger v. Massis, No. 00-7390, 2000 WL
1678778, *2 (2d Cir. Nov. 3, 2000) (table) ("Whether willfulness is
requisite for an award of attorneys' fees appears to be an open question
in this Circuit") (citing Weitzman, 98 F.3d 717, 719 n. 1).
This question does not affect the outcome of this motion, because the
Funds have set forth sufficient facts to show that Vanderveer's delay in
filing the bond was a willful violation of the October 5 order. The fact
that the bond was filed on the return date of the contempt motion
suggests more than coincidence, and strongly indicates that the motion
itself was the sole reason for compliance with the prior order.
Vanderveer argues that the filing of the bond was "frustrating," and was
delayed only as a result of the bondsman's lack of experience with this
particular form of bond and an initial error in drafting.
Yet Vanderveer did not obtain the initial, erroneous bond until
two days before the motion was due, on December 11, 2000. (Def.
Mem. Ex. A.) Considering these facts in the context of Vanderveer's
Sisyphean efforts to avoid paying debts owed to the Funds in this
and related litigation, Vanderveer's failure to comply with the
October 5, 2000 order until December 13, 2000 was a result of
willful contempt. The Funds shall be reimbursed for costs and
attorneys' fees associated with this motion. See New York State
Nat. Organization for Women v. Terry, 159 F.3d 86, 96 (2d
Cir. 1998) ("A finding that a contemnor's misconduct was willful strongly
supports granting attorney's fees and costs to the party prosecuting the
As Weider is not a named party in this action, his failure to take
action pursuant to the October 5, 2000 order, even if willful, was not in
violation of this Court's order, and the contempt motion is denied as to
For the foregoing reasons, the Funds' motion for a finding that
Vanderveer continues to be bound to the 1997 Agreement after April 20,
2000 is granted. In addition, Vanderveer is in contempt of this Court's
October 5, 2000 order and shall pay the Funds' costs and attorneys' fees
associated with prosecuting the contempt motion. Submit accounting of
fees on notice within twenty days of the filing of this opinion.
It is so ordered.