United States District Court, S.D. New York
MASON TENDERS DISTRICT COUNCIL OF GREATER NEW YORK, MASON TENDERS DISTRICT COUNCIL WELFARE FUND, PENSION FUND, ANNUTITY FUND, TRAINGING FUND, HEALTH AND SAFTEY FUND, and DOMINICK GIAMMONA, as FUNDS' CONTRIBUTIONS/DEFICIENCY MANAGER, Plaintiffs,
EXTERIOR WALL AND BUILDING CONSULTANTS, INC., CONSTRUCTION AND REALTY SERVICES GROUP INC., CONSTRUCTION REALTY SAFETY GROUP., INC., DOMANI CONSULTING, INC., and DOMANI INSPECTION SERVICES INC., Defendants.
MEMORANDUM AND ORDER
KEVIN CASTEL UNITED STATES DISTRICT JUDGE.
Mason Tenders District Council of Greater New York
(“The Union”), Mason Tenders District Council
Welfare Fund, Pension Fund, Annuity Fund, Training Fund,
Health and Safety Fund (“the Funds”), and
Dominick Giammona, as Funds' Contributions/Deficiency
Manager, brought claims against defendants Exterior Wall and
Building Consultants, Inc. (“Exterior Wall”),
Construction and Realty Services Group Inc., Construction
Realty Safety Group Inc., Domani Consulting, Inc., and Domani
Inspection Services, Inc., under the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C.
§§ 1132(a)(3) and 1145, and § 301 of the Labor
Management Relations Act of 1947 (the “LMRA”), 29
U.S.C. § 185. Defendants filed a counterclaim against
plaintiffs to recover payments allegedly mistakenly made by
Exterior Wall, an employer, to the Funds. Plaintiffs moved to
dismiss this counterclaim. For reasons to be explained, the
motion is granted.
complaint alleges that defendants violated one or more
collective bargaining agreements, the trust agreements of the
Funds, the LMRA, and ERISA. (Compl. at ¶ 2.)
Specifically, the complaint alleges that during the audit
period of April 1, 2011 through September 30, 2014, for
twenty-two employees of defendants working as Site Safety
Mangers and Fire Safety Managers within the jurisdiction of
the agreements, rather than contribute to the Funds for all
hours worked by these employees, defendants only reported and
contributed for sufficient hours to induce the Funds to
provide benefits to these employees. (Id. at
¶¶ 23-26, 29.) Plaintiffs allege that an audit
found that Exterior Wall underreported the number of hours
worked by these employees by 24, 384 hours, (id. at
¶ 28), and seeks delinquent fringe benefit
contributions, (id. at ¶ 60), unremitted dues
checkoffs and PAC contributions, (id. at ¶ 74),
attorney's fees, (id. at ¶ 79), and audit
costs (id. at ¶ 84).
counterclaim alleges that these Site Safety Mangers and Fire
Safety Managers (the “Managers”) were not
performing work covered by the collective bargaining
agreement, and that the contributions that defendants made to
the Funds were made in error. (Def.'s Counterclaim at
¶ 13.) Defendants seek the return of these funds.
further allege that a prior dispute over fringe benefit
contributions, dues checkoffs, and PAC contributions between
the parties with respect to the Managers arose after the
Funds conducted an October 2011 audit of Exterior Wall's
books and records for the period July 1, 2006, through March
29, 2011 (the “October 2011 Audit”).
(Id. at ¶¶ 8-9.)
appear to have then maintained the same position that they do
now: that the Managers “were not performing covered
work and that Exterior Wall made contributions for them
because of their continuing Union membership solely to ensure
that they could maintain their benefits.” (Id.
at ¶ 10.) Defendants allege that in May 2012
“Exterior Wall and the Funds came to an amicable
resolution regarding monies allegedly owed to the
Funds.” (Id.) However, Exterior Wall
maintained its position regarding its obligation to pay such
contributions and continued to make payments to the Funds for
the Managers in the same manner as before. (Id. at
allege that any amount for which they are liable to the Funds
for deficient contributions must be indemnified by the Union,
because the Union fraudulently misled them regarding the
contributions due under the contract. (Id. at ¶
19.) Specifically, defendants allege that they were misled
“into believing that [they] could make contributions to
the Funds solely for the purpose of enabling those Site
Safety Managers and Fire Safety Managers, who were also
members of the Union, to maintain benefits even though they
were not performing covered work.” (Id.)
Additionally, to the extent that they are liable to the
Union, defendants argue that the Funds must indemnify them
because “the Funds previously resolved a similar
dispute with Defendants by knowingly continuing to accept
remittance of contributions on behalf of the Managers despite
the fact that they do not perform covered work.”
(Id. at ¶ 20.)
12(b)(6) requires a pleading, on this motion a counterclaim,
to “contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). In assessing the
sufficiency of a pleading, a court must disregard legal
conclusions, which are not entitled to the presumption of
truth. Id. Instead, the Court must examine the
well-pleaded factual allegations and “determine whether
they plausibly give rise to an entitlement to relief.”
Id. at 679. “Dismissal is appropriate when
‘it is clear from the face of the [pleading], and
matters of which the court may take judicial notice, that the
[non-movant]'s claims are barred as a matter of
law.'” Parkcentral Global Hub Ltd. v. Porsche
Auto. Holdings SE, 763 F.3d 198, 208-09 (2d Cir. 2014)
(quoting Conopco, Inc. v. Roll Int'l, 231 F.3d
82, 86 (2d Cir. 2000)).
Return of the Alleged Overpayments.
the counterclaim seeks return of payments defendants made to
the Funds under Section 302 of the LMRA, such relief is not
available under that statute. See Xin Wei Lin v. Chinese
Staff & Workers' Ass'n, 527 F.App'x 83,
87 (2d Cir. 2013) (pursuant to 29 U.S.C. § 186(e),
federal courts lack jurisdiction to award money damages for
violations of §§ 186(a) and (b)) (summary order).
While defendants argue that this prohibition on money damages
does not extend to restitution, cases cited in the Xin
Wei Lin summary order explicitly hold that restitution
is also unavailable. See id. (citing McCaffrey
v. Rex Motor Transp., Inc., 672 F.2d 246, 250 (1st Cir.
1982) (“It is well settled in this Circuit that
district courts do not have jurisdiction under § 302(e)
to award damages or restitution.”)). ERISA is the
proper medium for the return of such funds.
Section 403(c) of ERISA, “the assets of a plan shall
never inure to the benefit of any employer, ” except
under specific, enumerated circumstances. 29 U.S.C. §
1103(c). One of these exceptions permits plan administrators
to return contributions to the employer “within 6
months after the plan administrator determines that the
contribution was made” by “a mistake of fact or
law.” 29 U.S.C. § 1103(c)(2)(A)(ii). Second
Circuit precedent emphasizes the “permissive”
nature of this statutory language. Dumac Forestry Servs.,
Inc. v. Int'l Bhd. of Elec. Workers, 814 F.2d 79, 82
(2d Cir. 1987). “[T]he ...