Carpenters Southern California Administrative Corp. v. El Capitan Development Co.

811 P.2d 296, 53 Cal. 3d 1041, 282 Cal. Rptr. 277, 91 Daily Journal DAR 7481, 91 Cal. Daily Op. Serv. 4756, 13 Employee Benefits Cas. (BNA) 2593, 1991 Cal. LEXIS 2621
CourtCalifornia Supreme Court
DecidedJune 20, 1991
DocketS000772
StatusPublished
Cited by35 cases

This text of 811 P.2d 296 (Carpenters Southern California Administrative Corp. v. El Capitan Development Co.) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Carpenters Southern California Administrative Corp. v. El Capitan Development Co., 811 P.2d 296, 53 Cal. 3d 1041, 282 Cal. Rptr. 277, 91 Daily Journal DAR 7481, 91 Cal. Daily Op. Serv. 4756, 13 Employee Benefits Cas. (BNA) 2593, 1991 Cal. LEXIS 2621 (Cal. 1991).

Opinions

Opinion

PANELLI, J.

—The issue presented is whether Civil Code section 3111,1 which creates liens on real property in favor of trust funds established pursuant to collective bargaining agreements, is preempted by the Employee Retirement Income Security Act of 1974 (ERISA). (29 U.S.C. § 1001 et seq.) We conclude that ERISA does preempt section 3111.

Facts

Carpenters Southern California Administrative Corporation (CSCAC) is the administrator and the assignee of rights of various multiemployer trust funds established under collective bargaining agreements, including the Carpenters’ Trust Funds. The Carpenters’ Trust Funds are employee pension benefit plans or employee welfare benefit plans within the meaning of ERISA. (See 29 U.S.C. § 1002(1), (2)(A), & (21)(A).) CSCAC is a “fiduciary” as defined in ERISA. (29 U.S.C. § 1002(21)(A).)

Collective bargaining agreements often require employers to make contributions to trust funds for the benefit of covered employees. In the present case, the covered employees are members of unions affiliated with the United Brotherhood of Carpenters and Joiners of America (Unions). CSCAC, due to its fiduciary relationship with the Unions and in its role as administrator of the trust, has a duty to collect contributions from employers who fail to make the required payments to the trust.

El Capitan Development Company (El Capitan) developed a condominium project on its property in Bakersfield. The general contractor was Grupe [1046]*1046Construction (Grupe). Grupe subcontracted with Pacific Southwest Framing for part of the framing work. In its complaint, CSCAC alleges that John Hall Enterprises (John K[all), with which CSCAC made a collective bargaining agreement, and Pacific Southwest Framing are a single entity. John Hall failed to make fringe benefit contributions to the trust funds in excess of $121,000.

Pursuant to section 3111, CSCAC recorded trust fund liens against El Capitan’s real property in order to collect the delinquent contributions to the trust funds. CSCAC later sued El Capitan in Kern County Superior Court to foreclose the liens. CSCAC alleged that, because John Hall and Pacific Southwest Framing are a single entity, Pacific Southwest Framing was bound by CSCAC’s agreement with John Hall and was therefore obligated to make the contributions to the trust.2 CSCAC further alleged that because the unpaid contributions were due on account of work performed on El Capitan’s property, section 3111 created liens on that property.

El Capitan, which has not signed a collective bargaining agreement with CSCAC, demurred to CSCAC’s complaint, arguing that ERISA preempted section 3111. (See 29 U.S.C. § 1144.) The trial court granted El Capitan’s demurrer with leave to amend. When CSCAC declined to amend, the court entered a judgment of dismissal.

The Court of Appeal reversed the judgment. We granted El Capitan’s petition for review and retransferred the matter to the Court of Appeal for reconsideration in light of Pilot Life Ins. Co. v. Dedeaux (1987) 481 U.S. 41 [95 L.Ed.2d 39, 107 S.Ct. 1549] (hereafter Pilot Life). On remand, the Court of Appeal concluded that ERISA preempted section 3111 and affirmed the judgment of dismissal. We affirm.

Discussion

Introduction

Section 3111 creates liens on real property in favor of trust funds established pursuant to collective bargaining agreements in amounts equal to the fringe benefit contributions which are due under those collective bargaining agreements. Under section 3111, if an employer fails to make contributions, the trust fund can record a lien on the property where the work was performed and foreclose the lien to compel payment of the debt.

[1047]*1047ERISA is a comprehensive federal statutory scheme designed to promote the interests of employees and their beneficiaries in employee benefit plans. (Shaw v. Delta Airlines, Inc. (1983) 463 U.S. 85, 90 [77 L.Ed.2d 490, 497, 103 S.Ct. 2890].) “[ERISA] imposes participation, funding, and vesting requirements on pension plans. ... As part of this closely integrated regulatory system Congress included various safeguards to preclude abuse and ‘to completely secure the rights and expectations brought into being by this landmark reform legislation.’ S. Rep. No. 93-127, p. 36 (1973). Prominent among these safeguards [is] ... § 514(a), 29 U.S.C. § 1144, ERISA’s broad pre-emption provision . . . .” (Ingersoll-Rand Co. v. McClendon (1990) 498 U.S. _, _ [112 L.Ed.2d 474, 482-483, 111 S.Ct. 478, 482] (hereafter Ingersoll-Rand).)

We must decide whether ERISA’s broad preemption provision encompasses section 3111. We conclude that it does. “ ‘[T]he question whether a certain state action is pre-empted by federal law is one of congressional intent. “The purpose of Congress is the ultimate touchstone.” ’ [Citations.] To discern Congress’ intent we examine the explicit statutory language and the structure and purpose of the statute. [Citations.] . . . [ft] Where, as here, Congress has expressly included a broadly worded pre-emption provision in a comprehensive statute such as ERISA, our task of discerning Congressional intent is considerably simplified.” (Ingersoll-Rand, supra, 498 U.S. at p._ [112 L.Ed.2d at p. 483, 111 S.Ct. at p. 482].)

Section 514(a) of ERISA expressly preempts “any and all state laws insofar as they may now or hereafter relate to any employee benefit plan . . . .” (29 U.S.C. § 1144(a), italics added.) Section 514(c) of ERISA defines the terms used in section 514(a): “(1) The term ‘State Law’ includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State. . . . flj] (2) The term ‘State’ includes a State, any political subdivisions thereof, or any agency or instrumentality of either, which purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans covered by this subchapter.” (29 U.S.C. § 1144(c).)

CSCAC argues that ERISA preempts only those state laws that regulate the terms and conditions of ERISA plans. This argument derives from the phrase “purports to regulate,” which appears in the definition of “State” in section 514(c)(2) of ERISA. (29 U.S.C. § 1144(c)(2).) The case law, however, does not support CSCAC’s argument. All that is necessary to invoke ERISA’s statutory preemption provision is that the state law in question “relate to” an ERISA plan. As will be shown, section 3111 “relates to” such [1048]

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811 P.2d 296, 53 Cal. 3d 1041, 282 Cal. Rptr. 277, 91 Daily Journal DAR 7481, 91 Cal. Daily Op. Serv. 4756, 13 Employee Benefits Cas. (BNA) 2593, 1991 Cal. LEXIS 2621, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carpenters-southern-california-administrative-corp-v-el-capitan-cal-1991.