United States District Court, S.D. Ohio, Eastern Division
CAROL A. WILSON, et al., Plaintiffs,
CHAGRIN VALLEY STEEL ERECTORS, INC., Defendant/Third-Party Plaintiff,
JUSTIN M. HELMICK, Third-Party Defendant.
Kimberly A. Jolson Magistrate Judge.
OPINION AND ORDER
A. SARGUS, JR. CHIEF UNTTED STATES DISTRICT JUDGE.
matter is before the Court on Plaintiffs' Partial Motion
to Dismiss Counts One and Two of Chagrin Valley's Second
Amended Counterclaim and Second Amended Third-Party Complaint
(Mot. to Dismiss, ECF No. 30), Defendant/Third-Party
Plaintiff Chagrin Valley Steel Erectors, Inc.'s
Memorandum in Opposition (Mem. Op., ECF No. 32), and
Plaintiffs' Reply (Pl. Reply., ECF No. 33). Also
before the Court is Plaintiffs' Motion for Summary
Judgment (Pl. Mot. S.J., ECF No. 35),
Defendant's Memorandum in Opposition (Mem. Op.,
ECF No. 58), and Plaintiffs' Reply (Pl. Reply,
ECF No. 66). Additionally, Defendant has filed a Motion for
Leave to File First Amended Answer to Assert Affirmative
Defense, Instanter (Mot. to Amend Answer, ECF No.
42), and in mm, Plaintiff filed a Response in Opposition
(Pl. Mem. Op., ECF No. 52), to which Defendant has
filed a Reply (Def. Reply, ECF No. 63). Finally,
Defendant/Third-Party Plaintiff Chagrin Valley has filed a
Motion for Summary Judgment (Def. Mot. S.J., ECF No.
59), to which Plaintiffs have filed an Opposition (Pl.
Opp., ECF No. 67) and Defendant/Third-Party Plaintiff
has filed a Reply (Def. Reply, ECF No. 68). These
motions are ripe for consideration.
A. Wilson, Administrator, and the Trustees of the Ohio
Operating Engineers Pension Fund, the Trustees of the Ohio
Operating Engineers Health and Welfare Fund, the Trustees of
the Ohio Operating Engineers Apprenticeship and Training
Fund, and the Trustees of the Ohio Operating Engineers
Education and Safety Fund ("Plaintiffs" or
"Funds") commenced this action to collect allegedly
delinquent contributions owed by Defendant Chagrin Valley
Steel Erectors, Inc., under the collective bargaining
agreements for the Funds, pursuant to Section 515 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), 29 U.S.C. § 1145. (Compl.,
ECF No. 1.) The Funds and their affiliated trusts are
"employee benefit plans" under ERISA. See
29 U.S.C. §§1002(3), 1132, and Carol A. Wilson and
the Trustees manage the Funds as fiduciaries. See 29
U.S.C. §1104. (Compl., ECF No. 1.)
Valley Steel Erectors, Inc. ("Defendant" or
"Chagrin Valley") is a signatory employer to
collective bargaining agreements between the Construction
Employers Association and the International Union of
Operating Engineers, Locals Nos. 18, 18A and 18B (the
"Union"). (Compl., ECF No. 1, at p. 2.)
Chagrin Valley executed an Interim Construction Employers
Association Agreement ("CEA Agreement") dated April
23, 2012; a Short Form Building Construction Agreement For
Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain and
Medina Counties In The State Of Ohio ("Short Form
Agreement") dated June 20, 2012; and a 2000 Hour
Addendum Agreement dated March 31, 2014. By the terms of
these Agreements Defendant also became a party to the
Agreement and Declaration of Trust (the "Health and
Welfare Trust Agreement") that established the Ohio
Operating Engineers Health and Welfare Plan, and became bound
by the terms and conditions set forth therein. These
agreements contain provisions whereby Defendant agreed to
make timely payments to the Health and Welfare Trustees for
each employee covered by the agreement. (Compl., ECF
No. 1, ¶6.)
undisputed that Chagrin Valley entered into three different
agreements with the Union (collectively, "the
Agreements"). On April 23, 2012, Chagrin Valley signed
the CEA Agreement for the period beginning May 1, 2012
through April 30, 2016. The Agreement specifically provides
the undersigned employer or its successor agree to sign and
be bound to the newly negotiated agreement and to pay without
exception all newly negotiated CEA increased wages, fringes
and other terms retroactive to May 1, 2012.
(Compl., ECF No. 1-1, Ex. A.)
20, 2012, Chagrin Valley signed the Short Form Agreement. The
Agreement specifically provides that
3. The Company is not represented by any employer bargaining
unit nor has any employer bargaining unit authority to act as
an agent for the Company; however, the Company agrees to
adopt and accept all the terms, wage rates and conditions of
the 2012- 2015 CEA Building Agreement (hereafter "The
Agreement") except as modified herein. The Company
further agrees to make contributions to the Health and
Welfare Fund, Pension Fund, Apprenticeship Fund, and Safety
Training and Educational Trust Fund as outlined in said CEA
(Compl., ECF No. 1-1, Ex. A.)
March 31, 2014, Chagrin Valley signed the International Union
of Operating Engineers 2000 Hour Addendum Agreement. The
Agreement specifically provides that
3. the employer will pay on behalf of the Principal Operating
Engineer a minimum of 2000 hours per signatory year into the
Ohio Operating Engineers' Health and Welfare Plan; 4. the
employer shall transmit all fringe benefit payments in
accordance with the terms and conditions of the collective
bargaining agreement and the payment protocols of the Fringe
Benefit Fund... .
(Compl., ECF No. 1-1, Ex. A.)
The Funds' Claims
Funds claim that, under the provisions of the agreements as
described in Paragraph 6 of the Complaint, Defendant became a
party to Agreements and Declarations of Trust, and is alleged
to have failed to make timely payments to: (Count I) the
Health and Welfare Trustees; (Count II) the Pension Trustees;
(Count III) the Apprenticeship and Training Trustees; and
(Count IV) the Education and Safety Trustees. (Id.,
at ¶¶7, 8, 13, 18, 23.) The allegations of failure
to make timely payments stem from the results of
Trustees' audits, alleged in the Complaint as follows:
8. The Trustees' Field Auditor audited Defendant's
payroll records on October 31, 2016. This audit disclosed
unpaid contributions for the period August 1, 2015 to October
1, 2016, owed to the Health and Welfare Trustees. Defendant
is delinquent in making contributions to the Health and
Welfare Trustees in the total amount of $31, 338.59.
13. The Trustees' audit disclosed unpaid contributions
owed for the period August 1, 2015 to October 1, 2016, to the
Pension Trustees. Defendant is delinquent in making
contributions to the Pension Trustees in the total amount of
18. The Trustees' audit disclosed unpaid contributions
for the period August 1, 2015 to October 1, 2016, owed to the
Apprenticeship and Training Trustees. Defendant is delinquent
in making contributions to the Apprenticeship and Training
Trustees in the total amount of $3, 132.78.
23. The Trustees' audit disclosed unpaid contributions
for the period August 1, 2015 to October 1, 2016, owed to the
Education and Safety Trustees. Defendant is delinquent in
making contributions to the Education and Safety Trustees in
the total amount of S3 75.96.
(Compl., ECF No. 1, ¶¶7, 8, 13, 18, 23.)
Plaintiff seeks judgment in the amount of $60, 661.00, plus
accumulated interest charges in the amount of $11, 154.47
calculated to August 9, 2017, plus $ 13.83 per day thereafter
and statutory interest in the amount of $11, 154.47
calculated to August 9, 2017, plus S 13.83 per day, with the
interest and statutory interest accruing daily until judgment
is paid. The Funds also seek injunctive relief.
(Compl., ECF No. 1.)
Chagrin Valley's Counterclaims
Valley filed a counterclaim against the Funds, and also added
an employee of the Funds, Justin Helmick ("Mr.
Helmick"), as a third-party defendant. (ECF Nos. 7, 18.)
Defendant's Second Amended Counterclaim and Second
Amended Third-Party Complaint (Def. Counterclaim,
ECF No. 29) assert four claims: (Count I) breach of contract
against the Funds; (Count II) declaratory judgment against
the Funds; (Count III) defamation claim against the Funds and
Mr. Helmick; and (Count IV) tortious interference with
business relations against the Funds and Mr. Helmick.
(Id.) The Funds have filed a partial motion to
dismiss Counts One and Two of Defendant's second amended
counterclaim and second amended third-party complaint.
(Mot. to Dismiss, ECF No. 30.) Chagrin Valley also
moved for leave to file a First Amended Answer to Assert
Additional Affirmative Defense, Instanter (ECF No. 42),
which is hereby granted. In that filing, Chagrin Valley provides
this factual background:
Since at least 2005, Chagrin Valley contributed fringe
benefits to the Funds pursuant certain International Union of
Operating Engineers, Union Nos. 18, 18 A, and 18B (the
"Union") collective bargaining agreements to which
Chagrin Valley agreed to participate. See
Declaration of John Ruple (the "Ruple Dec")
¶¶5, 9, 11. (ECF Nos. 37, 38 and 41 at its Exhibit
A.) In summary, Chagrin Valley routinely paid fringe benefits
to the Funds when its covered employees, including family
members (the "Family Members"), performed
"operator work" (e.g., operating a crane) and did
not pay fringe benefits when these employees performed
"shop work" (e.g., general business operations).
Ruple Dec. ¶¶5, 8, 12. Chagrin Valley's payroll
records, which it regularly submitted to the Funds, and which
the Funds routinely audited and approved, clearly evidenced
Chagrin Valley's fringe benefit contribution calculation
methods. Ruple Dec. ¶¶5-9, 12. The Union expressly
permitted these calculations, and the Funds agreed to and
accepted these calculations and contributions for over nine
years. Ruple Dec. ¶¶5, 6, 8, 9, 10, 12; see
also Exhibits B and C hereto.
Chagrin Valley continued to timely and fully make all fringe
benefit payments and contributions under the collective
bargaining agreements, including the most recent agreement of
2012 (the "2012 CBA") in the same manner it had
done for years - for the hours that the Family Members
performed "operator work" -- with the Funds'
and the Union's express knowledge and approval. Ruple
Dec. ¶12. Throughout 2012 and 2013, the Funds and the
Union continued to agree with and accept Chagrin fringe
benefit contribution calculation methods. Ruple Dec.
Then, in late 2014 / early 2015, the Union advised Chagrin
Valley that in direct contradiction of the parties'
approved practices for almost nine years, the Funds may start
expecting fringe benefits for all hours (operator hours and
shop hours) worked by Chagrin Valley employees, including the
Family Members. Ruple Dec. ¶14. Indeed, in May 2014, the
Funds audited Chagrin Valley's records, and in July 2014,
Chagrin Valley received written notice from the Funds that
their "recent audit findings" found Chagrin Valley
retroactively delinquent in its fringe benefit contributions
in the amount of $58, 233.23 for the period between February
2013 to May 2014. Ruple Dec. ¶15.
Throughout the following months, Chagrin Valley routinely
communicated with the Union to understand and resolve the
Funds' position, given the benefits now in question were
calculated and paid in same manner that Chagrin Valley had
paid for over nine years in accordance with the applicable
agreements, and with Funds' and the Union's full
knowledge and express consent. Ruple Dec. ¶¶16-17.
Meanwhile, desiring to maintain its excellent relationship
with the Union, in August 2014, ' Chagrin Valley advised
that going forward, Chagrin Valley would pay fringe benefits
for all hours (shop and operator) worked by Chagrin Valley
employees covered by the 2012 CBA. Ruple Dec. ¶18.
Chagrin Valley has, in fact, done so at all times since
August 2014. Ruple Dec. ¶18, 24.
(Id., at pp. 2-3.)
PARTIAL MOTION TO DISMISS
Motion to Dismiss Standard
Rule of Civil Procedure 12(b)(6) authorizes dismissal of a
complaint for "failure to state a claim upon which
relief can be granted." To survive a motion to dismiss
for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6), a complaint must contain sufficient
factual matter, accepted as true, to "state a claim for
relief that is plausible on its face." Bell Atlantic
Corp, v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167
L.Ed.2d 929 (2007); Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (clarifying the
plausibility standard articulated in Twombly).
"A claim has facial plausibility when the plaintiff
pleas factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged." Iqbal, 556 U.S. at 678.
The factual allegations of a pleading "must be enough to
raise a right to relief above the speculative level...."
Twombly, 550 U.S. at 555. "All of the
well-pleaded allegations of the complaint must be treated as
true, though we need not accept Plaintiffs legal conclusions
or draw unwarranted factual inferences." Thomas v.
Publishers Clearing House, Inc., 29 Fed.Appx. 319, 322
(6th Cir. 2002). The Court "need not, however, accept
conclusory allegations or conclusions of law dressed up as
facts." Erie Cnty., Ohio v. Morton Salt, Inc.,
702 F.3d 860, 867 (6th Cir. 2012). In ruling on a motion to
dismiss, the court may consider written instruments that are
exhibits to a pleading, as those are considered part of the
pleading for all purposes. Campbell v. Nationstar Mortg.,
No. 14-1751, 611 Fed.App'x 288, 291-92, 2015
WL2084023, at *3 (6th Cir. May 6, 2015) (citing Fed.R.Civ.P.
10(c)). A court may also consider "documents
incorporated into the complaint by reference, and matters of
which a court may take judicial notice." Id.
(citing Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179
The Funds' Partial Motion to Dismiss
move to dismiss Counts One and Two of the Second Amended
Counterclaim and Second Amended Third-Party Complaint against
the Funds for failure to state a claim upon which relief may
be granted. (Mot. to Dismiss, ECF No. 30, at p. 5.)
Plaintiffs assert that the breach of contract defense fails
because the Funds are not parties to the collective
bargaining agreements, but are "third-party
beneficiaries of these agreements." (Id., at p.
7.) Additionally, the Funds assert that any defenses are
preempted, because the Funds "initiated this litigation
to collect delinquent contributions owed by Chagrin Valley
under the collective bargaining agreements for the Funds
pursuant to section 515 of ERISA, 20 U.S.C. §
1145." (Id., at p. 3.)
One of the Second Amended Counterclaim and Second Amended
Third-Party Complaint is a breach of contract claim that
alleges that the Funds failed to satisfy their contractual
obligations under the Agreements by not properly calculating
their audit determinations of Chagrin Valley's payroll
records. The heart of the claim is Chagrin Valley's
assertion that the Funds "retroactively dishonor[ed]
policies and procedures it previously approved."
(Counterclaim, ECF No. 29, at ¶27.) Count Two
seeks declaratory judgment that, among other things, Chagrin
Valley is "not delinquent and is wholly current" in
all payments under the Agreements and therefore not liable to
the Funds "for any delinquent contributions, late fees
or penalties." (Counterclaim, ECF No. 29, at
Plaintiffs move to dismiss Count One, asserting that the
Funds are not a party to the Agreements, and "Chagrin
Valley has therefore failed to adequately plead the elements
of a breach of contract claim as a matter of law."
(Pl. Reply., ECF No. 33, at p. 3.) Under Ohio law.
"[t]o establish a breach of contract, a plaintiff must
show that a contract existed, the plaintiff performed, the
defendant breached, and the plaintiff suffered damages."
Pavlovich v. National City Bank, 435 F.3d 560, 565
(6th Cir. 2006), citing Wauseon Plaza Ltd. P'ship v.
Wauseon Hardware Co., 156 Ohio App.3d 575, 807 N.E.2d
953, 957 (Ohio App. 6 Dist.2004). Plaintiffs refer to the
three Agreements, which all set forth contractual obligations
solely between the Union and Chagrin Valley. (Id.,
citing ECF No. 26-1, Ex. A, pp. 1-3.) Insofar as Chagrin
Valley refers to a contractual duty owed under the
Agreements, "it is very clear that the Funds are not
parties to those agreements." (Id., at p. 4.)
Plaintiffs' assertion is well-taken.
Funds next assert that the express preemption provision of
ERISA, 29 U.S.C. § 1144(a) is broadly worded to ensure
that the federal administrative scheme of ERISA is not
affected by state laws or state causes of action. (Mot.
to Dismiss, ECF No. 30, at p. 5, citing Aetna
Health, Inc. v. Davila, 542 U.S. 200, 208 (2004).) This
provision states that "[t]he 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[.]" 29 U.S.C. §
Cromwell v. Equicor-Equitable, 944 F.2d 1272,
1275-76 (6th Cir. 1991), the Sixth Circuit explained that
"ERISA preempts state law and state law claims that
'relate to' any employee benefit plan as that term is
defined therein." 29 U.S.C. § 1144(a). Pilot
Life Insurance Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct.
1549, 95 L.Ed.2d 39 (1987). The phrase "relate to"
is given broad meaning such that a state law cause of action
is preempted if "it has connection with or reference to
that plan." Metropolitan Life Ins. Co. v.
Mass., 471 U.S. 724, 730, 732-33, 105 S.Ct. 2380,
2385-86, 85 L.Ed.2d 728 (1985); Shaw v. Delta Airlines,
Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490
(1983). These types of claims are preempted if they
"relate to" an ERISA plan whether or not they were
so designed or intended. Daniel v. Eaton Corp., 839
F.2d 263 (6th Cir.), cert, denied, 488 U.S. 826, 109
S.Ct. 76, 102 L.Ed.2d 52 (1988).
Valley counters that "Sixth Circuit case law simply does
not support the Trusts' position." (Mem.
Op., ECF No. 32, at p. 1.) Chagrin Valley cites to
Peters v. Lincoln Elec. Co.,285 F.3d 456, 469 (6th
Cir. 2002) for the proposition that preemption does not
preclude a claim where the claim is related only
"peripherally" to the ERISA plan. However, in that
case, the Court was referring, in dicta, to a claim
by a beneficiary which involved a simple ...