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Wilson v. Chagrin Valley Steel Erectors, Inc.

United States District Court, S.D. Ohio, Eastern Division

March 27, 2018

CAROL A. WILSON, et al., Plaintiffs,
v.
CHAGRIN VALLEY STEEL ERECTORS, INC., Defendant/Third-Party Plaintiff,
v.
JUSTIN M. HELMICK, Third-Party Defendant.

          Kimberly A. Jolson Magistrate Judge.

          OPINION AND ORDER

          EDMUND A. SARGUS, JR. CHIEF UNTTED STATES DISTRICT JUDGE.

         This 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.

         I. BACKGROUND

         Carol 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.)

         Chagrin 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.)

         A. The Agreements

         It is 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 that

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.)

         On June 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 Building Agreement.

(Compl., ECF No. 1-1, Ex. A.)

         On 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.)

         B. The Funds' Claims

         The 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:

Count I:
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.
Count II:
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 $25, 062.00.
Count III:
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.
Count IV:
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.)

         C. Chagrin Valley's Counterclaims

         Chagrin 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[1]: (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.[2] 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. ¶12.
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.)

         II. PARTIAL MOTION TO DISMISS

         A. Motion to Dismiss Standard

         Federal 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 (2007)).

         B. The Funds' Partial Motion to Dismiss

         Plaintiffs 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.)

         Count 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 ¶33.)

         First, 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.

         The 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. § 1144(a).

         In 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).

         Chagrin 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 ...


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