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BOARD OF TRUSTEES v. UDOVCH

September 5, 1991

BOARD OF TRUSTEES, et al., Plaintiffs,
v.
JOSEPH UDOVCH, et al., Defendants


Wayne D. Brazil, United States Magistrate.


The opinion of the court was delivered by: BRAZIL

WAYNE D. BRAZIL, UNITED STATES MAGISTRATE

 INTRODUCTION

 Plaintiffs are the boards of trustees of fringe benefit trust funds for the Sheet Metal Workers Local Union No. 104 (Trust Funds). Defendant employers Udovch, doing business as Oceanside Sheet Metal, are bound by a collective bargaining and various trust agreements to make timely contributions to plaintiff trust funds for sheet metal work performed by Oceanside employees.

 On September 1, 1989, plaintiffs brought this action in federal court alleging that defendant employers failed to make contributions to the Trust Funds in accordance with their obligations under the agreements, in violation of the section 515 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1145, and § 301 of the Labor Management Relations Act, 29 U.S.C. § 185. Plaintiffs alleged that defendant paid some contributions late and failed altogether to pay other contributions due under the agreements. In addition to the delinquent contributions, plaintiffs sought liquidated damages under both the collective bargaining agreements and § 502 of ERISA, as amended by the Multiemployer Pension Plan Amendments Act (MPPAA), 29 U.S.C. § 1132(g)(2).

 On March 12, 1990 the parties consented to the jurisdiction of this court for final disposition of the matter. On April 10, 1991 plaintiffs moved for summary judgment on the grounds that there were no triable issues of fact or disputes of law. On July 17, 1991, this court held a hearing on plaintiffs' motion and the parties' submissions. After identifying a number of issues ripe for settlement, the court ordered the parties to pursue further settlement possibilities before taking the motion for summary judgment under submission.

 After discussing settlement further, the parties informed the court that they had resolved all factual issues and asked the court to rule on the question of defendant's liability for liquidated damages under ERISA and/or the applicable trust agreements. We now so rule.

 FACTS

 Defendant Oceanside Sheet Metal entered a collective bargaining agreement with Sheet Metal Workers International Association, Local Union No. 104 for a three year period beginning July 1, 1986. Oceanside entered a similar three-year agreement with substantially identical fringe benefit contribution provisions beginning July 1, 1989. Both contracts incorporate various trust agreements governing employer contributions to the fringe benefit trust funds managed by plaintiffs. The collective bargaining agreements require Oceanside to make contributions to the trust funds, at rates provided in the trust agreements, by the 20th day of each month for wages earned the previous month.

 The collective bargaining and trust agreements also provide for liquidated damages in the event that defendant does not pay contributions according to schedule. The Agreement and Declaration of Trust for the Pension Trust provides that liquidated damages equal to $ 20 per delinquency or ten percent (10%) of the delinquent amount become due at the end of the month in which a delinquency occurs. The Health & Welfare and the other trust agreements contain the same provisions.

 In the event of multiple delinquencies, an amendment to the Pension and to the Health & Welfare trust agreements permits the trustees to increase liquidated damages to the highest rate permitted under 29 U.S.C. § 1132(g)(2)(C)(ii). Under collection procedures adopted by the trustees pursuant to the amendment, an initial delinquency is referred to a collection attorney on the 20th day of Month 2 (the month following the month in which the contributions are due). Upon the referral of the account to an attorney, liquidated damages become 20% -- the highest rate permitted under § 1132(g)(2)(C)(ii) -- for all outstanding delinquencies and for any contributions which later become delinquent before the account is made current. Liquidated damages for the other trusts remain at 10% in the event of multiple delinquencies.

 In addition to liquidated damages, the trust agreements provide for recovery of reasonable attorneys' fees, interest, audit fees, court costs, and other reasonable expenses in the event the trust institutes legal proceedings to collect delinquent contributions or other sums owed.

 Plaintiffs' original suit sought to collect two categories of damages. First, plaintiffs sought the principal amounts, plus interest, of allegedly unpaid contributions categorized as "Shortages," "The Audit," and "Unreported Months." Second, plaintiffs sought to collect liquidated damages both for the allegedly unpaid contributions and for other contributions which had been paid late.

 The parties have since agreed to a settlement of their disputes relating to the principal amounts and interest due as shortages, under the audit, or as unreported months. Moreover, defendants concede that plaintiffs are entitled to liquidated damages at the statutory rate (which is 20% in this setting) with respect to contributions that were both delinquent and unpaid at the time plaintiffs filed this lawsuit. Thus the only issues remaining relate to defendants' alleged liability for liquidated damages with respect to other contributions that were not timely made.

 DISCUSSION

 I. Summary Judgment Standard

 A court may grant summary judgment under Federal Rule of Civil Procedure 56(c) when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. After plaintiffs moved this court for summary judgment, the parties entered settlement negotiations that have eliminated from this litigation all factual disputes as to the principal amounts of the monthly contributions that were due under the applicable trust agreements. For reasons we set forth in greater detail in subsequent sections, we have concluded that there remain no material factual issues as to which genuine disputes exist. Thus, the only material issues that remain are legal: whether, as a matter of statutory construction or contract interpretation, plaintiffs are entitled to liquidated damages for certain delinquent contributions, and, if so, at what rate.

 II. Claims for Liquidated Damages

 Sections 1145 and 1132 of 29 U.S.C. are the statutory sources of employers' duties to make timely contributions to fringe benefit trust funds regulated by ERISA. Section 1145 provides:

 When a benefit plan wins a judgment in an action to enforce § 1145, § 1132(g)(2) provides that ...


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