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Trustees of the Michiana Area Electrical Workers Health and Welfare Fund v. TBG Unlimited Inc.

United States District Court, N.D. Indiana

September 28, 2017




         This matter is before the Court on the Motions for Summary Judgment [ECF Nos. 35, 37] filed by the Plaintiffs, Trustees of the Michiana Area Electrical Works Health and Welfare Fund, Trustees of the Michiana Area Electrical Workers Pension Fund, and the Michiana Area Workers Money Purchase Plan (the “Trustees” and the “Funds”), and the Defendants, TGB Unlimited (“TGB”) d/b/a S /T Bancroft Electric (“Bancroft Electric”) and West Bend Mutual Insurance Company (“West Bend”). The Plaintiffs are seeking unpaid contributions by TGB to the Funds, under the Employment Retirement Income Security Act (ERISA), as well as a judgment against West Bend as a surety of Bancroft Electric's contractor's bond. Both Motions were filed on January 27, 2017. This matter is now fully briefed and ripe for ruling.


         The Plaintiffs are Trustees of the Funds. They filed this lawsuit against the Defendants under section 502(a)(3), (e)(1), and (f) of ERISA, 29 U.S.C. §§ 1132(a)(3), (e)(1) and (f), seeking unpaid fund contributions from TGB. In 2007, TGB entered into a business relationship with the Funds and the International Brotherhood of Electrical Workers Local 153 (“Local 153”), in which TGB would use Local 153 labor and in return, among other obligations, pay contributions to the Funds. Local 153 and the Funds maintained their relationship until 2015, after a series of events involving former Local 153 members Doug and Cody Curl resigning their union membership for another union. The Curls resigned their memberships in October and December 2014. They continued to work for TGB, but TGB stopped paying contributions on their behalf. And during this time, TGB continued to employ a Local 153 member and continued to pay contributions for him.

         In March 2015, the Trustees sent a letter to TGB through the Northern Indiana Chapter of the National Electrical Contractors Association (“N.E.C.A.”), a not-for-profit association representing electrical contractors in labor issues, extending a grace period for late payment of contributions. (Grace period letter, ECF No. 36-18.) On March 20, 2015, Local 153 filed a grievance relating to TGB's failure to pay contributions. TGB countered by filing an NLRB RM petition on March 25, 2015. (NLRB RM 1, ECF No. 36-25.) In the petition, TGB asserted that Local 153 was a recognized bargaining agent, and that “United Construction Workers Local 10, CLA” claimed recognition. Id. Thereafter, Local 153 disclaimed interest in representing TGB employees in an April 2, 2015 letter, which ended the grievance and RM petition. Upon the termination of the contractual relationship, Local 153 requested that the auditor for the Fund's third-party administrator, TIC International Corporation (“TIC”), conduct an exit audit. TIC calculated contributions on behalf of the Curls from October 2014 through the effective date of Local 153's letter disclaiming interest in 2015. Bancroft disputed the audit results, claiming that the Curl's resignation from Local 153 relieved TGB of the obligation to pay contributions.

         The following summarizes the relevant agreements between the parties, the accounting of the liability, damages alleged, and liability over a contractor's bond.

         A. The Agreements

         Local 153 and TGB first entered into a contractual relationship in 2007. Among other documents, the parties entered into an Assent of Participation Agreement. The Assent of Participation Agreement is signed by the employer and designates the Funds to accept contributions on behalf of Local 153 employees. Under the Assent of Participation Agreement, the employer's obligation to pay contributions continues unless each of the Funds' board of trustees receives notice of termination of the Assent of Participation Agreement or until a related Collective Bargaining Agreement (“CBA”) is nullified between the employer and Local 153.

         There are two CBAs of significance in this matter. The first had an effective date of June 6, 2011, and expired on June 3, 2012. (2011-12 CBA, ECF No. 36-23, ) The second had an effective date of March 1, 2012, and expired on May 31, 2015. (2012-15 CBA, ECF No. 36-24.) The validity of this last CBA is disputed here because neither party has produced a signed copy.

         TGB also entered into various trust agreements with the Funds: The Agreement and Declaration of Trust for the Michiana Area Electrical Workers Health & Welfare Fund [ECF No. 36-20], the Agreement and Declaration of Trust for the Annuity Fund/Money Purchase Plan [ECF No. 36-21], and the Declaration of Trust of the Michiana Area Electrical Workers Pension Fund [ECF No. 36-22] (the “Trust Agreements”). The Trust Agreements are the governing documents for the administration of the Funds.

         Lastly, the parties also signed the Collection Policy of the Michiana Area Electrical Workers Health & Welfare, Pension and Annuity Benefit Funds (the “Collection Policy”) [ECF No. 11]. The Collection Policy was created by all three of the Funds, and provides, among other things, an audit procedure and billing procedure.

         B. Collection of Payments and Payroll Audit

         Collections for the Funds are carried out by the N.E.C.A. As part of its collection process, the N.E.C.A accepts employer payroll reports of hours worked by employees. The employer payroll reports provided to the N.E.C.A office reflect Fund contributions required to be made under the Local 153 Inside Agreement, a subsection of the CBA.[1] TGB paid some contributions owed under the 2012-15 CBA for January, February, March, and the beginning of April 2015, as well as for 2013 and 2014. It paid all contributions required for 2012. TGB also made payments under the 2011-2012 CBA for the first two months of 2012.

         Local 153 sent a disclaimer of interest letter dated April 2, 2015, to end TGB's obligation to pay contributions to the Funds. Mike Compton, Chief Officer of Local 153, also contacted TIC, informing it of the union's disclaimer of interest and requesting it perform an exit audit.

         TIC, in turn, conducted an audit (the “Audit Report”) [ECF No. 36-18]. When TIC reviewed the payroll records at TGB's place of business for the audit period of 2014-2015, it noted that all of the work that the employer recorded was for work under the Inside Agreement of the CBA. TIC's audit results are reflected in a revised billing letter with attached discrepancy information and audit report for the period of January 2014 through April 2015. TIC identified differences in amounts paid and amounts owed in the report. It noted that starting in October and December of 2014, two employees that Bancroft had previously paid contributions for under the CBA (Doug and Cody Curl) had continued to work for the contractor, but no contributions were paid in that period. Even though employees may drop their affiliation and, thus, no longer must pay union dues, the employer is still required to pay the contributions under the terms of the 2012-15 CBA.

         Upon receipt of the audit, Ty Bancroft disputed the results and asked whether TIC followed the standard audit process. (Steven Homer Dep. 41, ECF No. 36-4.)

         C. ...

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