Firemen's Insurance v. Local No. 105 of the United Ass'n of Journeymen & Apprentices of the Plumbing & Pipefitting Industry

825 F. Supp. 10, 1993 U.S. Dist. LEXIS 13463, 1993 WL 233538
CourtDistrict Court, N.D. New York
DecidedJune 22, 1993
DocketNo. 92-CV-0668 FJS
StatusPublished
Cited by1 cases

This text of 825 F. Supp. 10 (Firemen's Insurance v. Local No. 105 of the United Ass'n of Journeymen & Apprentices of the Plumbing & Pipefitting Industry) is published on Counsel Stack Legal Research, covering District Court, N.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Firemen's Insurance v. Local No. 105 of the United Ass'n of Journeymen & Apprentices of the Plumbing & Pipefitting Industry, 825 F. Supp. 10, 1993 U.S. Dist. LEXIS 13463, 1993 WL 233538 (N.D.N.Y. 1993).

Opinion

MEMORANDUM-DECISION AND ORDER

SCULLIN, District Judge:

INTRODUCTION

Firemen’s Insurance Company (“Plaintiff’) filed the instant declaratory judgment action in federal .court on May 22, 1992. Plaintiff seeks a declaration that it is not required- to make payments to certain of the defendants under N.Y. State Fin. Law § 137,1 alleging that such a requirement is preempted by the Employment Retirement Income Security Act of 1974 (“ERISA”).

This action is presently before the court on Defendants’2 motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R.Civ.P. 12(b)(1). The court heard oral argument on September 25, 1992 in Albany, New York.

BACKGROUND

This lawsuit involves the relationship among three parties; an employer, a surety and a labor union. The employer, M. Wilson Control Services, Inc. (“Wilson”), a New York corporation, is a plumbing and pipefit-ting contractor, which entered into several contracts with the State of New York for construction of certain public improvements. In performing the construction contracts, Wilson used members of Local 105, one of the defendants in this declaratory judgment action, and was a signatory to its collective bargaining agreement. Nicholson Aff. ¶¶ 4-6. Under the agreement, Wilson was obligated to pay Local 105 members the appropriate wage rate and make contributions on behalf of its employees to- the Plumbers and Pipefitters National Pension Fund (“Pension Fund”). Id ¶ 3.

The surety, Plaintiff in this declaratory judgment action, contends upon information and belief that the Pension Fund is a duly organized and existing pension trust which is affiliated with Local 105; into which employers having contractual arrangements with Local 105 pay pension contributions. Upon information and belief, Plaintiff also contends that the Wages, Industry, Welfare, Pension, Educational- and Annuity Funds of Local 105 (“Benefit Funds”) are funds or trusts affiliated with Local 105, into which employers who have contractual arrangements with Local 105 pay fringe benefit contributions. Am. Complaint ¶ 5. As such, Plaintiff contends that Defendants fall under the purview of ERISA.

Pursuant to N.Y. State Fin. Law § 137, Wilson as the contractor was required to obtain a surety bond to secure payments due to all persons supplying labor and materials to it in connection with the public construe-, tion projects. Accordingly, in connection with its contracts with the State of New [12]*12York, Wilson entered into three agreements with Plaintiff whereby Plaintiff, as surety, became contractually obligated to pay for “labor and materials” incurred in connection with the construction of the public improvements [in the event of a default by Wilson], Am. Complaint ¶¶ 9, 10.

Subsequently, Wilson defaulted on each of these State projects and failed to meet its required payments under its collective bargaining obligation to Local 105 in connection with each of the projects for which these bonds had been provided. Am. Complaint ¶ 11; Nicholson Aff. ¶ 6. Between March 31, 1992 and April 10, 1992, Defendants submitted claims to Plaintiff, for payment in the amount of $71,888.69, contending that the labor and material bonds required Plaintiff to pay for, inter alia, wages and fringe benefits owing to the union member employees. Id. ¶ 13-17. Plaintiff contends that it has honored all claims for direct wages which are “just and verifiable.” . Am. Complaint ¶ 12. However, it refuses to pay for any claims made by Defendants based on fringe benefit payments allegedly owed by Wilson. Defendants had not, as of the date of this motion, initiated any state court action regarding their claims.

On May 22, 1992, Plaintiff filed the instant action, seeking a declaratory judgment that the bonds required by N.Y. State Fin. Law § 137(1) are preempted by ERISA and that Plaintiff is under no obligation to pay for any fringe benefits to Defendants under its agreement with Wilson. On July 10, 1992, Defendants, filed the present motion asserting that, pursuapt to- Fed.R.Civ.P. 12(b)(1), the court lacks subject matter jurisdiction over Plaintiffs action-and that Plaintiff lacks standing to bring its suit under ERISA.

DISCUSSION

The question presented by the present motion is whether the court has subject matter jurisdiction over a declaratory judgment action brought by a plaintiff-surety who alleges that, were Defendants to initiate a suit against Plaintiff in state court, Defendants’ action would be preempted by ERISA. At the time that this motion was heard by the court, this issue appeared to be one of first impression in.this circuit. However, since the court heard oral argument in this case, the Second Circuit decided Albradco, Inc. v. Bevona, 982 F.2d 82 (2d Cir.1992), heavily relied upon by Defendants and directly on point with the present case. The court finds Albradco to be dispositive in this case.

Like the present case, the Albradco case involved a dispute over payments due union employees after their employer rwas unable to satisfy its debts. In Albradco, shareholders of a bankrupt corporation (“Bradley”) brought a declaratory judgment action in federal court after Bradley defaulted on its obligations to certain of its union employees, and the union sued Bradley’s shareholders in state court. The union had brought its action pursuant to N.Y.B.C.L. § 630, “which provides that the ten largest shareholders of close corporations ‘shall jointly and severally be personally liable for all debts, wages, or salaries due and owing’ to employees.” Albradco, 982 F.2d at 84 (citing N.Y.B.C.L. § 630(a)).. Moreover, “[t]his [ (§ 630(a)) ] includes ‘employer contributions ... of insurance or welfare benefits [and] employer contributions to pension or annuity funds.’ ” Id. at 84. As in the present case, the Albradco plaintiffs sought a determination that claims for benefit payments made pursuant to a New York statute were preempted by ERISA.

The Second Circuit, summarizing the district court’s holding in Albradco, stated that

although the ERISA preemption claim might have merit if appellants had pursued a different procedural course, such as removal for jurisdictional purposes, the existence of an ERISA preemption defense is not enough to convert an action into a federal question declaratory judgment action. In a declaratory judgment action, there will be federal jurisdiction only if there is preemption by ERISA and the declaratory judgment plaintiff has a right of action within the scope of the civil enforcement provisions of ERISA § 502(a) [29 U.S.C. § 1132(a)].

Id. (emphasis in original). The Albradco plaintiffs argued on appeal that the district court’s requirement that the declaratory judgment plaintiff have a right of action un[13]*13der ERISA § 502(a) (“§ 502”) “misconstrues applicable Supreme Court and Second Circuit authority.” Id. at 84. However, the Second Circuit found this argument to be meritless, as

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825 F. Supp. 10, 1993 U.S. Dist. LEXIS 13463, 1993 WL 233538, Counsel Stack Legal Research, https://law.counselstack.com/opinion/firemens-insurance-v-local-no-105-of-the-united-assn-of-journeymen-nynd-1993.