United States District Court, E.D. New York
October 14, 2005.
STEPHEN FLANAGAN, as a Trustee of the GENERAL BUILDING LABORERS' LOCAL 66 PENSION FUND; STEPHEN FLANAGAN, as a Trustee of the GENERAL BUILDING LABORERS' LOCAL 66 WELFARE FUND; STEPHEN FLANAGAN, as a Trustee of the GENERAL BUILDING LABORERS' LOCAL 66 VACATION FUND; STEPHEN FLANAGAN, as a Trustee of the GENERAL BUILDING LABORERS' LOCAL 66 ANNUITY FUND; STEPHEN FLANAGAN, as a Trustee of the GENERAL BUILDING LABORERS' LOCAL 66 EMPLOYER COOPERATIVE AND EDUCATIONAL TRUST FUND; STEPHEN FLANAGAN, as a Trustee of the GENERAL BUILDING LABORERS' LOCAL 66 GREATER NY LABORERS' EMPLOYER COOPERATIVE AND EDUCATIONAL TRUST FUND; STEPHEN FLANAGAN, as a Trustee of the GENERAL BUILDING LABORERS' LOCAL 66 TRAINING PROGRAM; STEPHEN FLANAGAN, as a Trustee of the GENERAL BUILDING LABORERS' LOCAL 66 NY STATE HEALTH AND SAFETY FUND; STEPHEN FLANAGAN, as a Business Manager of GENERAL BUILDING LABORERS' LOCAL UNION NO. 66 of the LABORERS' INTERNATIONAL UNION OF NORTH AMERICA, AFL-CIO FUND; Plaintiff,
IDI CONSTRUCTION COMPANY, INC., a/k/a IDI CONSTRUCTION, INC., and JAMES STUMPF, Defendants.
The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF DECISION AND ORDER
Stephen Flanagan ("Flanagan" or the "plaintiff "), as a Trustee
of the General Building Laborers' Local 66 ("Local 66") Pension
Fund, the Local 66 Welfare Fund, the Local 66 Vacation Fund, the
Local 66 Annuity Fund, the Local 66 Laborers' Employer
Cooperative and Educational Trust Fund, the Local 66 Greater NY Laborers' Employer Cooperative and Educational Trust Fund, the
Local 66 New York State Health and Safety Fund (the "plaintiff
Funds"), and as Business Manager of General Building Laborers'
Local Union No. 66 of the Laborers' International Union of North
American, AFL-CIO brought this action against IDI Construction
Company, Inc. a/k/a IDI Construction, Inc. ("IDI" or the
"corporate defendant") and James Stumpf ("Stumpf" or the
"individual defendant") (collectively, the "defendants") pursuant
to 29 U.S.C. §§ 1132 and 1145 ("ERISA") alleging that the
defendants failed to make contributions to the plaintiff Funds as
required by a collective bargaining agreement signed the parties.
Presently before the court is a motion by the individual
defendant pursuant to Federal Rule of Civil Procedure 12(b)(6) to
dismiss the complaint for failure to state a claim upon which
relief can be granted.
The following facts are derived from the complaint, unless
otherwise noted, and are taken as true for the purposes of this
IDI is a New York corporation engaged in construction and
contracting. By letter of Marilyn Simon, Esq. of Marilyn Simon &
Associates, attorneys for IDI, dated March 21, 2005, the Court is
aware that IDI is currently in bankruptcy having filed a petition
for liquidation pursuant to chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the Southern District of
New York on December 15, 2004. The individual defendant is a
principle of IDI (i.e., "an officer and/or director and/or shareholder and/or agent" (Compl. ¶ 4)). The plaintiff is
the trustee of the eight employee benefit plans constituting the
plaintiff Funds. Local 66 is an unincorporated labor
organization. Local 66 and the defendants are parties to a
collective bargaining agreement that requires IDI to make to the
plaintiff Funds. Under the agreement, IDI is to contribute a
particular amount of money for each hour worked by IDI employees
who are Local 66 members participating in the plaintiff Funds.
The plaintiff commenced this action on December 13, 2004 alleging
that although IDI employed members of Local 66 that were
participating in the plaintiff Funds, it did not make the
contributions as required by the collective bargaining agreement.
A. Legal Standard
On a motion to dismiss for failure to state a claim pursuant to
Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court
should dismiss the complaint if it appears beyond doubt that the
plaintiff can prove no set of facts in support of her complaint
which would entitle her to relief. King v. Simpson,
189 F.3d 284, 286-87 (2d Cir. 1999); Bernheim v. Litt, 79 F.3d 318, 321
(2d Cir. 1996). The court must accept all well-pled factual
allegations in the complaint as true and draw all reasonable
inferences in favor of the plaintiff. Koppel v. 4987 Corp.,
167 F.3d 125, 130 (2d Cir. 1999); Jaghory v. N.Y. State Dep't of
Educ., 131 F.3d 326, 329 (2d Cir. 1997). The Court is not to decide whether the plaintiff will ultimately
prevail. Rather, the issue is whether the plaintiff's allegations
are sufficient so as to entitle her to offer evidence to support
her claims. Villager Pond, Inc. v. Town of Darien, 56 F.3d 375,
378 (2d Cir. 1995).
Every employer who is obligated to make contributions
to a mutiemployer plan under the terms of the plan or
under the terms of a collectively bargained agreement
shall, to the extent not inconsistent with law, make
such contributions in accordance with the terms and
conditions of such plan or such agreement.
29 U.S.C. § 1145. An "employer" is "any person acting directly as
an employer, or indirectly in the interest of an employer, in
relation to an employee benefit plan." 29 U.S.C. § 1002(5). An
individual can be an "employer" under this definition and for
purposes of ERISA. Sasso v. Cervoni, 985 F.2d 49
, 50 (2d Cir.
1993) (citing Massachusetts Laborers' Health & Welfare Fund v.
Starrett Paving Corp, 845 F.2d 23
, 25-26 (1st Cir. 1988)).
However, an individual is not "obligated to make contributions"
as required by section 1145 solely by virtue of her position
within a corporation. Sasso, 985 F.2d at 50. Courts typically
will not impose liability on an individual based on the ERISA
violations of a corporation absent fraud, see Leddy v.
Standard Drywall, Inc., 875 F.2d 383
, 388 (2d Cir. 1989), or the
individual's "knowing participation" in a breach of the corporation's fiduciary duty.
Lowen v. Tower Asset Mgmt., Inc., 829 F.2d 1209
, 1220 (2d Cir.
However, this type of malfeasance need not be shown when the
individual has an independent duty to make plan contributions.
For instance, an individual may, without regard to ERISA,
personally assume an obligation to make contributions to a plan
by signing the collective bargaining agreement that requires the
payments. See Cement & Concrete Workers District Council
Welfare Fund, Pension Fund, Legal Servs. Fund and Annuity Fund v.
Lollo, 35 F.3d 29, 37 (2d Cir. 1994). In Lollo, the Second
Circuit held an individual liable under ERISA because the
individual assumed the obligations of his corporation by becoming
a party to the agreement at issue. Id. By signing the
agreement, the individual became "contractually obligated, wholly
independently of ERISA, to make plan contributions." Id.
Here, the individual defendant argues that the plaintiff's
complaint fails to state a claim because the plaintiff does not
allege special circumstances, such as fraud or other wrongdoing,
that would support the imposition of individual liability.
However, as noted above, a plaintiff need not plead such
allegations if it is alleged that the individual was otherwise
obligated to make plan contributions. See Lollo,
35 F.3d at 37. In paragraph nine of its complaint, the plaintiff alleges
that both the corporate defendant and the individual defendant
were parties to the collective bargaining agreement. Assuming
this is true, as the Court must for the purpose of this motion,
the individual defendant thereby became "obligated to make
contributions" to the plan. 29 U.S.C. § 1145; see Lollo,
35 F.3d at 37. Therefore, the plaintiff has stated a claim under
ERISA. Accordingly, the defendants' motion to dismiss is denied.
C. As to the Plaintiff's Breach of Contract Claim
In paragraph twenty-nine of its complaint, the plaintiff
asserts common law breach of contract as its "ninth claim for
relief." The defendant's motion to dismiss does not specifically
address this claim. However, for the reasons set forth below, the
Court is without jurisdiction over this cause of action and
dismisses it sua sponte. See Fed.R.Civ.P. 12(h)(3)
("Whenever it appears by suggestion of the parties or otherwise
that the court lacks jurisdiction of the subject matter, the
court shall dismiss the action.").
"ERISA established a comprehensive federal statutory program
intended to control abuses associated with pension benefit
plans." Geller v. County Line Auto Sales, Inc., 86 F.3d 18, 22
(2d Cir. 1996). In order to achieve national uniformity in the
regulation of such plans, ERISA expressly preempts "any and all
State law insofar as they may now or hereafter relate to any
employee benefit plan" covered by the statute.
29 U.S.C. § 1144(a); see Cicio v. Does, 385 F.3d 156, 158 (2d Cir. 2004)
(common law actions that "relate to" employee benefit plans are
preempted by ERISA). A state-law claim that "duplicates, supplements, or supplants
the ERISA civil enforcement remedy conflicts with the clear
congressional intent to make the ERISA remedy exclusive and is
therefore preempted." Aetna Health Inc. v. Davila,
542 U.S. 200, 124 S. Ct. 2488, 2495, 159 L. Ed. 2d 312 (2004); see also
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143-45,
111 S. Ct. 478, 112 L. Ed. 2d 474 (1990). Furthermore, it is
well-settled that common-law contract claims relating to employee
benefits are generally preempted by ERISA. Devlin v. Transp.
Communs. Int'l Union, 173 F.3d 94, 101 (2d Cir. 1999). Here, the
basis for the plaintiff's claim of common-law breach of contract
is that the defendants failed to "check off" "Mason Tender Dues"
to be sent to the "Mason Tenders District Council" as required by
the terms of the collective bargaining agreement. Essentially,
this is a claim that the defendants failed to perform additional
duties under the same agreement that required them to make
contributions to the plaintiff Funds. Accordingly, the Court
finds that the claim for common law breach of contract "relates
to" the ERISA plan and is preempted by ERISA. Accordingly, the
plaintiff's claim for breach of contract is dismissed.
Based on the foregoing, it is hereby
ORDERED, that the motion by the defendant James Stumpf
pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss the complaint for
failure to state a claim upon which relief can be granted is
DENIED; and it is further ORDERED, that on motion by the Court the plaintiff's breach
of contract claim is DISMISSED; and it is further
ORDERED, that the defendant James Stumpf is to serve his
answer within 20 days of the date of this decision. This Order
does not effect the defendant IDI Construction Company, Inc.
a/k/a IDI Construction, Inc. pursuant to section 362 of the
Bankruptcy Code ("Automatic Stay").
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