Laborers Local 938 Joint Health & Welfare Trust Fund v. B.R. Starnes Co.

827 F.2d 1454
CourtCourt of Appeals for the Eleventh Circuit
DecidedSeptember 21, 1987
DocketNos. 86-5379, 86-5458
StatusPublished
Cited by29 cases

This text of 827 F.2d 1454 (Laborers Local 938 Joint Health & Welfare Trust Fund v. B.R. Starnes Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Laborers Local 938 Joint Health & Welfare Trust Fund v. B.R. Starnes Co., 827 F.2d 1454 (11th Cir. 1987).

Opinion

PER CURIAM:

In the first of these consolidated cases, No. 86-5379, the primary issue presented is whether subcontractors and their sureties who are not signatories to a collective bargaining agreement are employers under § 502 of the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(3) (1974). This issue, as well as the alternative arguments for jurisdiction asserted by plaintiffs, were recently resolved by this court in Xaros v. U.S. Fidelity and Guaranty Co., 820 F.2d 1176 (11th Cir.1987). Xaros is controlling, therefore we affirm the district court’s finding of lack of subject matter jurisdiction.

The facts are straightforward. R.N. Hicks Construction Company entered into a collective bargaining agreement with the Southeast Florida Laborers’ District Council under which it was obligated to make contributions to the Laborers Trust Funds (employee benefit plans). Hicks contracted with several construction companies — Darin & Armstrong (D & A), Trapanese Construction and Properties of Hamilton (Trapanese), and Arvida Corporation (Arvida) — to perform construction work at various sites. United States Fidelity and Guaranty wrote payment or performance bonds on D & A’s jobs.1 None of the construction companies or sureties was [1456]*1456a signatory to the collective bargaining agreement.2

After auditing Hicks’ payroll records the Laborers Trust Funds determined that Hicks owed $249,525.55 of fringe benefit contributions to the Funds. The Trust Funds were unable to recover the contributions from Hicks because of a stay resulting from Hicks’ filing of Chapter 11 bankruptcy. The Trust Funds sued the contractors and sureties alleging that these non-signatories to the collective bargaining agreement fell within the definition of an employer under ERISA, 29 U.S.C. § 1002(5), and thus were obligated for the alleged delinquent contributions of Hicks as an employer under ERISA, 29 U.S.C. § 1145. The Trust Funds asserted jurisdiction under 28 U.S.C. § 1332, 29 U.S.C. § 1132(a)(3) and pendent jurisdiction.

The district court, sua sponte, entered an order dismissing all pendent state claims. It subsequently held that contractors and sureties who are non-signatories to a collective bargaining agreement do not fall within the definition of an employer under § 1002(5). The court therefore ruled that it did not have independent subject matter jurisdiction over defendants under 29 U.S.C. §§ 185, 1132, and 1145, and granted the motions of Trapanese, Starnes and Arvida to dismiss the complaint and the motion of D & A and USF & G for summary judgment, 658 F.Supp. 305.

On appeal, the Trust Funds challenge the district court’s dismissal for lack of federal subject matter jurisdiction on three grounds. In the consolidated case, No. 86-5458, defendant Trapanese asserts that the district court erred in denying it attorneys’ fees and costs. We affirm the district court on all issues raised.

I. Subject Matter Jurisdiction

In Xaros v. U.S. Fidelity and Guaranty Co., 820 F.2d 1176, 1179 (11th Cir.1987)3 we held that:

[N]onsignator subcontractors and sureties are not employers as defined in section 1002(5) of ERISA and as incorporated into section 1145 of the Act, thereby precluding federal subject matter jurisdiction over claims against these nonsignatories for a signatory’s failure to make contributions to employee benefit plans. To hold otherwise would constitute an unwarranted departure from the language of, and intent underlying, sections 1002(5) and 1145.

We rejected the argument that § 1002(5)’s phrase “Any person acting indirectly as an employer, or indirectly in the interests of an employer, in relation to an employee benefit plan” must be read to include persons other than signatory employers who act indirectly in the interests of the employer and the plan.

[1457]*1457The phrase, “in the interests of the employer” is the operative one here. The surety does not act indirectly in the interests of the employer, but rather acts directly in the interests of employees damaged by the employer’s failure to pay.

Id. at 1180. The defendant contractors and sureties in this case were not signatories to the collective bargaining agreement between the Trust Funds and Hicks and therefore are not “employers” under ERISA. The district court was correct in finding that it did not have jurisdiction under 29 U.S.C. §§ 1002(5) and 1145.

The Trust Funds submit that § 301 of the LMRA provides an alternate basis for jurisdiction. We rejected this argument in Xaros. Section 301 empowers federal courts to examine and adjudicate violations “of contracts between an employer and a labor organization representing employees in industry affecting commerce.” A critical feature of § 301 jurisdiction precludes the Trust Funds from relying upon it, however: “a Section 301 suit may be brought for violation of a labor contract only against those who are parties to the contract in issue.” Id. at 1181 (citing Carpenters Local Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 501 (5th Cir.1982)). None of the defendant contractors or sureties in the present case is party to the collective bargaining agreement at issue and none has any rights under it. “Rather, their rights are statutory in origin. A cause of action against them does not arise under the agreement but is merely related to it, and therefore the court does not have jurisdiction of these claims under section 301.” Xaros, slip op. at 1181. Any liability on the part of defendants would be pursuant to state law in an action to recover upon the payment and performance bonds posted pursuant to state law.

Finally, the Trust Funds contend that the diversity statute, 28 U.S.C. § 1332, can provide federal jurisdiction. They do not contend that diversity currently exists but rather that diversity jurisdiction exists with respect to the foreign corporations and that this court should use its power under 28 U.S.C. § 1653

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Bluebook (online)
827 F.2d 1454, Counsel Stack Legal Research, https://law.counselstack.com/opinion/laborers-local-938-joint-health-welfare-trust-fund-v-br-starnes-co-ca11-1987.