Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-14-03954/USCOURTS-ca6-14-03954-0/pdf.json

Parties Involved:
Raymond Orrand
Appellee
Scassa Asphalt, Inc.
Appellant
Trustees of the Ohio Operating Engineers Health & Welfare Plan, Ohio Operating Engineers Pension Fund, Ohio Operating Engineers Apprenticeship Fund, Ohio Operating Engineers Education & Safety Fund
Appellee

Document Text:

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RECOMMENDED FOR FULL-TEXT PUBLICATION 

Pursuant to Sixth Circuit I.O.P. 32.1(b) 

File Name: 15a0156p.06 

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT 

_________________ 

RAYMOND ORRAND, Administrator of the Ohio 

Operating Engineers Health & Welfare Plan, Ohio 

Operating Engineers Pension Fund, Ohio Operating 

Engineers Apprenticeship Fund, Ohio Operating 

Engineers Education & Safety Fund; TRUSTEES OF 

THE OHIO OPERATING ENGINEERS HEALTH &

WELFARE PLAN, OHIO OPERATING ENGINEERS 

PENSION FUND, OHIO OPERATING ENGINEERS 

APPRENTICESHIP FUND, OHIO OPERATING 

ENGINEERS EDUCATION & SAFETY FUND, 

Plaintiffs-Appellees, 

v. 

SCASSA ASPHALT, INC., 

Defendant-Appellant. 

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No. 14-3954 

Appeal from the United States District Court 

for the Southern District of Ohio at Columbus. 

No. 2:12-cv-01131—Edmund A. Sargus, Jr., Chief District Judge. 

Argued: April 22, 2015 

Decided and Filed: July 21, 2015 

Before: SILER, MOORE, and STRANCH, Circuit Judges. 

_________________ 

COUNSEL 

ARGUED: Faith R. Dylewski, LAW OFFICES OF ROBERT E. SOLES, JR. CO., LPA, North 

Canton, Ohio, for Appellant. Daniel J. Clark, VORYS, SATER, SEYMOUR AND PEASE, 

LLP, Columbus, Ohio, for Appellees. ON BRIEF: Robert E. Soles, Jr., LAW OFFICES OF 

ROBERT E. SOLES, JR. CO., LPA, North Canton, Ohio, for Appellant. Daniel J. Clark, James 

W. Pauley III, VORYS, SATER, SEYMOUR AND PEASE, LLP, Columbus, Ohio, for 

Appellees. 

>

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_________________ 

OPINION

_________________ 

JANE B. STRANCH, Circuit Judge. Raymond Orrand, Administrator, and the Trustees 

of the Ohio Operating Engineers Health & Welfare Plan, Pension Fund, Apprenticeship Fund, 

and Education & Safety Fund (“the Funds”), filed suit against Scassa Asphalt, Inc., to collect 

delinquent fringe benefit contributions owed to the Funds. The Funds are jointly-administered, 

multi-employer fringe benefit programs established for the benefit of employees of construction 

contractors who perform work under a collective bargaining agreement (CBA) known as the 

Ohio Highway Heavy Agreement between the International Union of Operating Engineers, Local 

18 and Its Branches, AFL-CIO (the Union) and the Labor Relations Division of the Ohio 

Contractors Association. The Funds are third-party beneficiaries of the CBA. 

The district court granted summary judgment in favor of the Funds, requiring Scassa 

Asphalt to pay $141,356.18 in delinquent benefit contributions plus interest, statutory interest, 

and costs. For the reasons explained below, we AFFIRM. 

I. BACKGROUND

 Scassa Asphalt is an Ohio company engaged in performing asphalt work primarily for 

small municipalities. Nicholas “Nick” Scassa, the company’s President, and his brother, Ettore 

Scassa, handled most of the work with the help of a few laborers. 

 Scassa Asphalt alleges that, in February 2009, it experienced work interference from the 

local laborers’ union. Mike Kramer, who served as the local representative for Operating 

Engineers Local 18, approached Nick Scassa and represented to him that, if Scassa Asphalt 

joined Local 18, the company would no longer experience problems with the laborers’ union. 

 On February 6, 2009, Nick Scassa, on behalf of Scassa Asphalt, executed a one-page 

document entitled, “AGREEMENT Highway Heavy Construction” (hereafter “short-form 

Agreement”). R. 23-3, Page ID 94. In the short-form Agreement, Scassa Asphalt affirmed that 

it was “not a member of any multi-employer bargaining group [that] has a labor agreement with 

the Union,” and that it “recognize[d] the Union as the exclusive bargaining agent of all its 

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employees engaged to work within the trade jurisdiction of the Operating Engineers in Highway 

Heavy Construction for the Company.” Id. The short-form Agreement further provided that 

Scassa Asphalt “is not represented by any employer bargaining unit nor has any employer 

bargaining unit authority to act as an agent for the Company; however, the Company agrees to 

adopt and accept all the terms, wage rates and conditions of the 2007–2010 Ohio Highway 

Heavy Agreement . . ., except as modified herein.” Id. Scassa Asphalt “further agree[d] to make 

contributions to the Health and Welfare Fund, Pension Fund, Apprenticeship Fund and Safety 

Training and Educational Trust Fund as outlined in said Ohio Highway Heavy Agreement.” Id. 

The short-form Agreement provided that “[a] copy of the 2007-2010 Ohio Highway Heavy 

Agreement is attached hereto and made a part hereof except as modified herein.” Id. Scassa 

Asphalt “voluntarily recognize[d] the Union as the majority representative of its employees 

performing Operating Engineer work covered by the” Ohio Highway Heavy Agreement and 

agreed “that the Union has demonstrated that it is the majority representative of such employees 

in an appropriate collective bargaining unit.” Id. The short-form Agreement was “effective as of 

the date set forth and shall remain in full force and effect unless modified by mutual agreement 

of the parties until expressly terminated by notice in writing from one party to the other party at 

least sixty (60) days prior to its anniversary date.” Id.

As required by Article V, Paragraph 41 of the CBA, Scassa Asphalt obtained an 

insurance payment bond in the amount of $50,000 payable to the Ohio Operating Engineers 

Fringe Benefit Programs as a guarantee that the fringe benefit contributions would be paid in the 

event of Scassa Asphalt’s delinquency. Nick Scassa attests that he retained copies of the shortform Agreement and the one-page insurance bond and understood these two pages “to be the 

whole of the Agreement between the parties.” R. 34, Page ID 249. Scassa also attests that it was 

represented to him that the fringe benefits were for his personal benefit as the principal operating 

engineer of Scassa Asphalt. Accordingly, Scassa prepared a 2000 Hour Commitment Letter, 

which was dated February 7, 2009, but signed and notarized on February 13, 2009, committing 

Scassa Asphalt to contribute 2000 hours annually to fund health and welfare benefits and pension 

benefits “on behalf [of] the principal operating engineer.” R. 34, Page ID 250, 254. 

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Scassa Asphalt alleges that in mid-February 2009, shortly after the documents were 

signed, members of the laborers’ union appeared at Scassa Asphalt’s job site in Massillon, Ohio 

and one member physically assaulted its subcontractor. Nick Scassa reported the incident to 

Mike Kramer of the Union and asked for assistance in dealing with the laborer’s union. Scassa 

alleges that Kramer declined to intervene, so he told Kramer that Scassa Asphalt had no desire to 

remain in the Union and verbally terminated its relationship with the Union. 

There were no further communications between Scassa Asphalt and the Union until 

February 15, 2010, when the Union notified the company by letter that the CBA would expire by 

its terms on April 30, 2010. The notice letter, signed by the Union’s President, advised Scassa 

Asphalt of the Union’s “desire to modify, amend, and/or negotiate a new agreement” and “to 

open negotiations for a new agreement covering wages, hours and conditions of employment.” 

R. 34, Page ID 255. Although the letter requested an acknowledgement and response, Nick 

Scassa did not reply on behalf of Scassa Asphalt. Scassa states he believed that the Union had 

already canceled Scassa Asphalt’s short-form Agreement after he informed Kramer verbally in 

mid-February 2009 that Scassa Asphalt was withdrawing from the Union. Scassa alleges that his 

company took no action in response to the Union’s February 15, 2010 letter because the CBA 

was set to expire on April 30, 2010, and his company did not wish to negotiate a new contract 

with the Union. 

Scassa Asphalt represents that its business slowed significantly by 2010, and by 2012 the 

company had ceased all operations and was insolvent. Other than the Union’s February 15, 2010 

notice letter, Scassa Asphalt did not receive any other communications until the Funds served the 

complaint and a request for audit in December 2012. 

On October 24, 2013, the Funds performed an audit of Scassa Asphalt’s payroll records 

for the period February 1, 2009 to October 1, 2013. During the audit period, Nick Scassa did not 

actually work 2000 or more hours per year. The audit findings included the unpaid hours 

actually worked by three operators who were employed by Scassa Asphalt, plus the 2000 hours 

per year that Scassa Asphalt was required to pay for Nick Scassa under the 2000 Hour 

Commitment Letter. The audit determined that there were 11,472.5 unpaid hours for all 

operators, including Nick Scassa, during the audit period, resulting in benefit contribution 

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delinquencies of $76,450.89 to the Health & Welfare Plan, $58,064.84 to the Pension Fund, 

$6,381.55 to the Apprenticeship Fund, and $458.90 to the Education & Safety Fund. The Funds 

sought a total of $141,356.18 in unpaid benefit contributions, accumulated interest of $61,061.08 

calculated to November 15, 2013, plus $69.71 per day thereafter, additional statutory interest in a 

like amount, and costs. 

The Funds’ auditor subsequently prepared a separate assessment that included only the 

unpaid hours that all operators, including Nick Scassa, actually worked for Scassa Asphalt 

during the audit period. In this assessment, unpaid hours were included for the months of 

February through December 2009, February through May and July through December 2010, and 

January through May 2011. The total of 5,240 unpaid hours resulted in benefit contribution 

delinquencies of $34,744.41 to the Health & Welfare Plan, $23,968.01 to the Pension Fund, 

$2,750.81 to the Apprenticeship Fund, and $209.60 the Education & Safety Fund. The total 

amount owed under this assessment was $61,672.83 in delinquent contributions plus interest and 

costs. 

To recover the unpaid contributions, Orrand and the Funds filed suit against Scassa 

Asphalt under the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a), and the 

Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1132(a)(3) & 1145. The 

district court granted summary judgment in favor of Orrand and the Funds, enforcing both the 

short-form Agreement and the 2000 Hour Commitment Letter. The court awarded the Funds 

$141,356.18 in unpaid contributions for the period February 1, 2009 to October 1, 2013, under 

29 U.S.C. § 1132(g)(2)(A); $61,061.08 in interest calculated to November 15, 2013, plus $69.71 

per day thereafter, under 29 U.S.C. § 1132(g)(2)(B); $61,061.08 in statutory interest calculated 

to November 15, 2013, plus $69.71 per day thereafter, under 29 U.S.C. § 1132(g)(2)(C); and 

$350.00 in court costs under 29 U.S.C. § 1132(g)(2)(D). Scassa Asphalt filed a timely notice of 

appeal, conferring appellate jurisdiction on this court under 28 U.S.C. § 1291. 

II. STANDARDS OF REVIEW

A grant of summary judgment is reviewed de novo, and we will affirm the district court if 

the evidence, taken in the light most favorable to the non-moving party, demonstrates that there 

are no genuine issues of material fact for trial and the moving party is entitled to judgment as a 

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matter of law. Cent. States, Se. & Sw. Areas Pension Fund v. Gen. Materials, Inc., 535 F.3d 506, 

508 (6th Cir. 2008). The district court’s interpretation of the contractual agreements between the 

parties is also reviewed de novo. Cent. States, Se. & Sw. Areas Pension Fund v. Behnke, Inc., 

883 F.2d 454, 458 (6th Cir. 1989). 

III. ANALYSIS

Scassa Asphalt denies liability for any unpaid benefit contributions to the Funds, 

presenting four issues for our consideration. First, the company raises a termination defense 

against the Funds, arguing that the Union’s February 15, 2010 letter notifying Scassa Asphalt of 

the CBA’s April 30, 2010 expiration date effectively terminated the short-form Agreement 

binding Scassa Asphalt to the provisions of the CBA. Second, the company contends that the 

2000 Hour Commitment Letter is unenforceable for lack of consideration but, even if it is 

enforceable, the letter contained no termination provisions, thereby permitting Nick Scassa to 

terminate the letter through verbal communication to Mike Kramer in mid-February 2009 that 

Scassa Asphalt withdrew from the Union. Third, the company argues that the public policy 

reasons for insulating employee fringe benefit contracts from standard contract defenses should 

not apply where a small family business executed the agreements to benefit only the company’s 

principal. Finally, the company disputes the audit findings. It argues that the auditor, who 

assumed that the 2000 Hour Commitment Letter was in effect, improperly added fictitious 

unpaid hours to reach 2000 hours per year for Nick Scassa. The auditor then carried forward this 

fictitious calculation to October 1, 2013, after Scassa Asphalt had ceased operations in 2012. 

Each of these arguments will be addressed following a brief overview of the applicable law. 

A. Governing law under ERISA and the LMRA

We recently explained in Operating Engineers Local 324 Health Care Plan v. G & W 

Construction Company, 783 F.3d 1045, 1050-51 (6th Cir. 2015), that both ERISA and the 

LMRA require parties to enter into written agreements governing the creation and management 

of multi-employer fringe benefit funds. It is one of “ERISA’s core functional requirements” that 

each “employee benefit plan shall be established and maintained pursuant to a written 

instrument.” Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995) (quoting 29 U.S.C. 

' 1102(a)(1)). Every employee benefit plan must “specify the basis on which payments are 

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made to and from the plan,” 29 U.S.C.§ 1102(b)(4), and “[t]he plan administrator is obliged to 

act ‘in accordance with the documents and instruments governing the plan insofar as such 

documents and instruments are consistent with’” ERISA provisions. Kennedy v. Plan Adm’r for 

DuPont Sav. & Inv. Plan, 555 U.S. 285, 300 (2009) (quoting 29 U.S.C. § 1104(a)(1)(D)). 

This “reliance on the face of written plan documents” serves the purpose of “enabling 

beneficiaries to learn their rights and obligations at any time.” Curtiss-Wright Corp., 514 U.S. at 

83. It also lends certainty and predictability to employee benefit plans, serving the interests of 

both employers and their employees. Sprague v. Gen. Motors Corp., 133 F.3d 388, 402 (6th Cir. 

1998) (en banc). 

For benefit plans established through collective bargaining, the writing requirement is 

further reinforced by Section 302 of the LMRA, 29 U.S.C.§ 186(a), which bars an employer 

from contributing to benefit trusts designated by employee representatives unless the payments 

are “made in accordance with a written agreement with the employer.” Behnke, Inc., 883 F.2d at 

459 (citing 29 U.S.C. § 186(c)(5)(B)). The general prohibition on contributing funds to 

employee representatives without written agreements seeks to prevent misappropriation and 

dissipation of monies that are owed to the employees. Id. “Collective bargaining agreements 

that establish ERISA plans are interpreted by use of ordinary contract principles to the extent 

those principles are not inconsistent with federal labor policy.” Operating Eng’rs Local 324 

Health Care Plan, 783 F.3d at 1051 (citing M & G Polymers USA, LLC v. Tackett, 135 S. Ct. 

926, 933 (2015)). Where a contract is in writing and its terms are clear and unambiguous, we 

ascertain the contract’s meaning in accordance with the contract’s plainly expressed intent. Id.

A third governing statute is § 515 of ERISA, which protects and streamlines the process 

for collecting delinquent contributions to ERISA plans from employers by limiting “unrelated” 

and “extraneous” defenses. Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 88 & n.12 (1982). 

Section 515 provides: 

Every employer who is obligated to make contributions to a multiemployer plan 

under the terms of the plan or under the terms of a collectively bargained 

agreement shall, to the extent not inconsistent with law, make such contributions 

in accordance with the terms and conditions of such plan or such agreement. 

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29 U.S.C. § 1145. Because “multiemployer plans are entitled to rely on the literal terms of 

written commitments between the plan, the employer, and the union, the actual intent of and 

understandings between the contracting parties are immaterial.” Bakery & Confectionery Union 

& Indus. Int’l Health Benefits & Pension Funds v. New Bakery Co. of Ohio, 133 F.3d 955, 959 

(6th Cir. 1998). 

Congress adopted § 515 because “simple collection actions brought by plan trustees ha[d] 

been converted into lengthy, costly and complex litigation concerning claims and defenses 

unrelated to the employer’s promise and the plans’ entitlement to the contributions, and steps 

[were required] to simplify delinquency collection.” Kaiser Steel Corp., 455 U.S. at 87 (internal 

quotation marks omitted). The en banc Seventh Circuit articulated this congressional concern: 

[Multi-employer p]lans rely on documents to determine the income they can 

expect to receive, which governs their determination of levels of benefits. . . . 

Once they promise a level of benefits to employees, they must pay even if the 

contributions they expected to receive do not materialize . . . . Costs of tracking 

down reneging employers and litigating also come out of money available to pay 

benefits. The more complex the litigation, the more the plan must spend. 

Litigation involving conversations between employers and local union officials—

conversations to which plans are not privy—may be especially costly, and hold 

out especially great prospects of coming away empty-handed. 

Cent. States, Se. & Sw. Areas Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d 1148, 1151 

(7th Cir. 1989) (en banc). Thus, employers’ written promises are enforceable if they are not 

inconsistent with law. Id. at 1153. “If the employer simply points to a defect in [contract] 

formationCsuch as fraud in the inducement, oral promises to disregard the text, or the lack of 

majority support for the union and the consequent ineffectiveness of the pact under labor lawCit 

must still keep its promise to the pension plans. . . . Anything less may well saddle the plans with 

unfunded obligations.” Id.

While § 515 arose from congressional concern about subjecting benefit funds to timeconsuming and expensive litigation that is not related to the employers’ promises to pay, the 

legislative sponsors of § 515 were particularly concerned about employer defenses based on 

alleged union conduct. As this court observed in Behnke, Inc., Congress added § 515 to ERISA 

to “free[] pension and welfare funds from defenses that pertain to the unions’ conduct,” 883 F.2d 

at 460 (quoting Robbins v. Lynch, 836 F.2d 330, 333 (7th Cir. 1988)), and therefore “[a] claim 

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that the union has promised not to collect a payment called for by the agreement is not a good 

answer to the trustees’ suit.” Id. (quoting Robbins, 836 F.2d at 334). There is a narrow 

exception to this rule for conduct that could support a claim for fraud in the execution of the 

contract because an employee benefit fund is not permitted to enforce a nonexistent contractual 

obligation. Gerber Truck Serv., Inc., 870 F.2d at 1151. Fraud in the execution renders an 

agreement void ab initio, Elec. Workers Local 58 Pension Trust Fund v. Gary’s Elec. Serv. Co., 

227 F.3d 646, 656–57 (6th Cir. 2000), and precludes the employee benefit fund from collecting. 

By contrast, fraud in the inducement makes a transaction merely voidable, Sw. Adm’rs, Inc. v. 

Rozay’s Transfer, 791 F.2d 769, 774 (9th Cir. 1986), and “cannot cut off the fund’s claims.” 

Behnke, Inc., 883 F.2d at 460. If no claim of fraud in the execution is raised, then the words, 

conduct, action, and inaction of the union are simply not relevant to a § 515 collection action that 

is based on the literal and unambiguous terms of an existing ERISA plan document or collective 

bargaining agreement. New Bakery Co. of Ohio, 133 F.3d at 959 (observing that the fund is 

entitled to enforce the writing without regard to the understandings or defenses of the original 

parties, similar to a holder in due course in commercial law). 

These principles bring the merits of the legal issues presented in this appeal more sharply 

into focus. Before each issue is addressed, however, we note that Scassa Asphalt’s appellate 

briefs refer repeatedly to “the Union” and do not draw the necessary distinction between the 

Union and the Funds. The CBA—the 2007-2010 Ohio Highway Heavy Agreement—was 

negotiated by the Union and the Labor Relations Division of the Ohio Contractors Association. 

By signing the short-form Agreement with the Union, Scassa Asphalt bound itself to abide by all 

of the provisions of the CBA, including the specific agreement to pay timely benefit 

contributions to the Funds, which stand as third-party beneficiaries under the CBA. See Behnke, 

Inc., 883 F.2d at 460. As the governing law makes clear, the Funds are entitled to enforce the 

CBA and Scassa Asphalt’s written short-form Agreement binding it to the CBA without having 

to defend against oral conversations that occurred between Nick Scassa and Mark Kramer of the 

Union. Because Congress chose to give the Funds “the upper hand” in § 515 collection 

litigation, see Plumbers & Pipefitters Local Union No. 572 Health & Welfare Fund v. A & H 

Mech. Contractors, Inc., 100 F. App’x 396, 401 (6th Cir. 2004), Scassa Asphalt seeks to avoid 

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liability for delinquency by arguing that it did not have an existing contract with the Union 

obligating it to make benefit contributions to the Funds. 

B. Scassa Asphalt’s termination defense

The company contends that the Union’s February 10, 2010 letter notifying it that the 

CBA was set to expire in April had the effect of terminating the short-form Agreement that 

bound the company to the requirements of the CBA. Because the short-form Agreement was 

terminated, the company argues, it had no obligation to pay benefit contributions and the Funds 

are barred from bringing this collection action. 

Our unpublished cases have permitted a limited examination of certain termination 

defenses, “at least where it is evident upon ‘a cursory review of the parties’ actions’ that the 

contract has been terminated.” Laborers Pension Trust Fund-Detroit & Vicinity v. Interior 

Exterior Specialists Constr. Grp., Inc., 394 F. App’x 285, 290 (6th Cir. 2010) (per curiam); 

Plumbers & Pipefitters Local Union No. 572 Health & Welfare Fund, 100 F. App’x at 403. This 

position is consistent with published decisions in several other circuits permitting a termination 

defense. See e.g., DeVito v. Hempstead China Shop, Inc., 38 F.3d 651, 653–54 (2d Cir. 1994); 

Teamsters Indus. Employees Welfare Fund v. Rolls-Royce Motor Cars, Inc., 989 F.2d 132, 138 

(3d Cir. 1993); Bakery & Confectionary Union & Industry Int’l Pension Fund v. Ralph’s 

Grocery Co., 118 F.3d 1018, 1022 (4th Cir. 1997); La. Bricklayers & Trowel Trades Pension 

Fund & Welfare Fund v. Alfred Miller Gen. Masonry Contracting Co., 157 F.3d 404, 409 n.12 

(5th Cir. 1998). But see Twin City Pipe Trades Serv. Ass’n, Inc. v. Frank O’Laughlin Plumbing 

& Heating Co., 759 F.3d 881, 885 (8th Cir. 2014) (avoiding recognition of a termination 

defense, but finding that facts would not support such a defense in any event). Cf. Carpenters 

Health & Welfare Trust Fund v. Bla-Delco Constr., Inc., 8 F.3d 1365, 1369 (9th Cir. 1993) 

(holding that, because the CBA was not “void,” but merely “voidable,” the employer’s purported 

termination of the CBA was not a legitimate defense to a trust fund collection action). 

In both Laborers Pension Trust Fund-Detroit and Plumbers & Pipefitters Local Union 

No. 572, our court allowed employers to assert termination defenses, provided the inquiries were 

“superficial.” 394 F. App’x at 290; 100 F. App’x at 403. This approach “sensibly balances the 

competing interests in avoiding complex litigation that starves a fund’s necessary contributions 

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and ensuring that the employer has a legitimate contractual obligation to make employee 

contributions.” Plumbers & Pipefitters Local Union No. 572, 100 F. App’x at 403. The limited 

inquiry must confirm that the employer unequivocally communicated its intent to withdraw from 

the CBA. Laborers Pension Trust Fund-Detroit, 394 F. App’x at 290. “A notice to terminate 

must be clear and explicit. . . . A notice of modification is not a notice of termination and does 

not affect termination of the contract.” Chattanooga Mailers’ Union, Local No. 92 v. 

Chattanooga News-Free Press Co., 524 F.2d 1305, 1312 (6th Cir. 1975) (internal quotation 

marks omitted), overruling on other grounds recognized by Bacashihua v. U.S. Postal Serv., 

859 F.2d 402, 404 (6th Cir. 1988). In addition, whether a contract continues in force during 

contract negotiations “depends on the consequence intended by the parties when they exchanged 

notices of their desire to amend the contract.” Id. at 1311. 

In this case, the district court reasoned that the Union’s February 10, 2010 notice letter to 

Scassa Asphalt was a notice of contract modification, not a notice of termination, because the 

Union expressly stated its “desire to modify, amend, and/or negotiate a new agreement” and “to 

open negotiations for a new agreement covering wages, hours and conditions of employment.” 

R. 36, Page ID 269. The language of the Union’s letter also indicated a desire on the part of the 

Union to continue the relationship between the parties, not to terminate it. Id. at 270. Even 

construing all reasonable factual inferences in favor of Scassa Asphalt, the district court 

concluded that the February 10, 2010 letter “cannot be construed as a termination under the 

terms of the contract.” Id. Moreover, even though the CBA was set to expire on April 30, 2010, 

“the short-form agreement that Scassa signed, by its very terms, never expires except upon 

written termination.” Id. n.7. 

In accordance with our precedent, the district court reasonably construed the February 10, 

2010 letter as a request to modify the short-form Agreement and CBA and not as a request to 

terminate those agreements. Scassa Asphalt did not reply to the letter or at any other time 

provide clear and explicit written notice to the Union that Scassa Asphalt wished to withdraw 

from, and terminate, the short-form Agreement binding it to the CBA. Scassa Asphalt assumed 

that its short-form Agreement was terminated by Nick Scassa’s verbal communication to Mike 

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Kramer in February 2009, and that the CBA expired by its terms, effective April 30, 2010. 

Neither of these assumptions was correct under the signed agreements or governing law. 

 As the district court accurately observed, moreover, both the short-form Agreement 

Scassa Asphalt signed and the CBA contained legally valid “evergreen” clauses. See Trustees of 

the B.A.C. Local 32 Ins. Fund v. Fantin Enters., Inc., 163 F.3d 965, 968 (6th Cir. 1998). “When 

a contract is renewed via the operation of an evergreen clause, all of the attendant contractual 

obligations naturally continue for the period of renewal.” Id. at 968–69. The short-form 

Agreement between Scassa Asphalt and the Union provided: 

This Agreement shall be effective as of the date set forth and shall remain 

in full force and effect unless modified by mutual agreement of the parties until 

expressly terminated by notice in writing from one party to the other party at least 

sixty (60) days prior to its anniversary date. 

R. 23-3, Page ID 94. Article XI of the CBA read: 

THIS AGREEMENT shall be effective as of May 1, 2007 and shall 

continue in force and effect through April 30, 2010 and thereafter, from year to 

year until terminated at the option of either party, after sixty (60) days notice in 

writing to the other party. 

R. 24-1 Page ID 151. Under these evergreen clauses, both contracts remained in force because 

neither the Union nor Scassa Asphalt gave timely written notice to the other party of an intent to 

terminate. 

Scassa Asphalt cites three cases that do not advance its arguments. The company first 

relies on Laborers Pension Trust Fund-Detroit, where the employer clearly notified the union in 

writing that the contract between the employer and the union would not be renewed unless it was 

renegotiated to the employer’s satisfaction. 394 F. App’x at 291. In that situation, this court 

held that the employer successfully terminated its obligations under the CBA. Id. at 292. By 

contrast, Scassa Asphalt did not send any writing to the Union expressing its intent to withdraw 

from or terminate the short-form Agreement binding it to the CBA. 

The company’s reliance on Trustees of the B.A.C. Local 32 Ins. Fund v. Norwest Tile Co., 

No. 04-2436, 2005 WL 3440431 (6th Cir. Dec. 14, 2005), is similarly misplaced. In that case, 

the employer sent an unambiguous letter to the union withdrawing from the CBA and stating that 

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the employer would not be bound by a new agreement, although it desired to negotiate a new 

individual agreement with the union. Id. at *4. Scassa Asphalt did not submit any similar 

written withdrawal letter to the Union. 

The company also relies on Kaufman & Broad Home Sys., Inc. v. Int’l Bhd. of Firemen 

and Oilers, AFL-CIO, 607 F.2d 1104, 1109 (5th Cir. 1979), which held that a duration clause in 

a CBA should be construed so that the union’s notice to modify prevented automatic extension 

of the CBA. That case was not a § 515 collection action, and the language of the CBA’s 

duration clause was different from the wording of the duration clause in this CBA. Because that 

case turned on interpretation of the specific contract language, it affords little assistance in this 

case. Here, the district court reasonably construed the Union’s February 10, 2010 letter as a 

notice to modify, which does not constitute notice of termination under our law. See 

Chattanooga Mailers’ Union, Local No. 92, 524 F.2d at 1312; Int’l Union of Operating Eng’rs, 

Local No. 181 v. Dahlem Constr. Co., 193 F.2d 470, 475 (6th Cir. 1951). 

Scassa Asphalt’s remaining arguments regarding the termination defense are unavailing. 

The company contends that “the Union” waited nearly four years to assert that the contracts 

remained in force and, during that four-year period, the company did not receive “from the 

Union” a request for payment of delinquent contributions or a request for audit. We construe 

these arguments as directed to the Funds, not the Union, but we reiterate that the Funds may 

enforce the written agreements because they are not required to defend against conduct of the 

contracting parties that is extraneous to the terms of the written agreements. See Behnke, Inc., 

883 F.2d at 459; New Bakery Co. of Ohio, 133 F.3d at 959. Finally, Scassa Asphalt did not 

develop legal arguments in support of a laches defense against the Funds and will not be 

permitted to do so for the first time in this appeal. See Scottsdale Ins. Co. v. Flowers, 513 F.3d 

546, 552–54 (6th Cir. 2008). 

C. The 2000 Hour Commitment Letter

 Scassa Asphalt next argues that the 2000 Hour Commitment Letter promising to pay 

benefits for Nick Scassa as the principal operating engineer was executed several days after the 

short-form Agreement, and the letter lacked consideration. The company contends that, because 

no contract was ever reached between the parties requiring Scassa Asphalt to contribute 2000 

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hours annually for Nick Scassa, it cannot be held liable for those hours. Furthermore, even if the 

2000 Hour Commitment Letter formed a contract, the company argues, the letter did not include 

limitations or instructions governing the manner of termination. Therefore, in the absence of any 

termination provisions, Scassa Asphalt concludes that the verbal communication to Mike Kramer 

terminating the company’s relationship with the Union in mid-February 2009 effectively 

rescinded and terminated the 2000 Hour Commitment Letter. The company also points out that 

the 2000 Hour Commitment Letter pertained only to Nick Scassa, no other employees would 

have benefited from the letter, and there is no evidence that the Funds paid any pension or health 

and welfare benefits for Nick Scassa. As such, Scassa Asphalt contends that the Funds have 

suffered no damages. 

 We uphold the district court’s ruling that ERISA § 515 preempts the contract defense of 

lack of consideration. See Behnke, Inc., 883 F.2d at 460–61; Gerber Truck Serv., Inc., 870 F.2d 

at 1154. The 2000 Hour Commitment Letter was executed in connection with the short-form 

Agreement and the CBA to which Scassa Asphalt agreed to be bound. Both the short-form 

Agreement and the CBA required Scassa Asphalt to give notice of termination in writing, which 

the company failed to do. Thus, the 2000 Hour Commitment Letter remained in force. Finally, 

the short-form Agreement required Scassa Asphalt to “make contributions . . . as outlined” in the 

CBA, R. 23-3, Page ID 94, and the CBA mandated payment of benefit contributions “for all 

hours paid to each employee by the Employer,” R. 24-1, Page ID 143 (emphasis added). Even 

though Scassa Asphalt agreed to contribute 2000 hours annually for the principal operating 

engineer, the short-form Agreement and the CBA required benefit contributions on behalf of all 

employees of the company. Finally, the Funds must pay out benefits “even if the contributions 

they expected to receive do not materialize,” Gerber Truck Serv., Inc., 870 F.2d at 1151, so there 

is no merit to the argument that the Fund has suffered no damages as a result of Scassa Asphalt’s 

failure to pay as promised. 

D. Public policy concerns

Scassa Asphalt next argues that the public policy reasons for insulating § 515 collection 

actions from standard contract defenses should not apply in the case of a small family business 

where the only benefits to be paid are for the principal of the company. Because this argument 

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was not raised below, we are not required to entertain it for the first time on appeal. Scottsdale 

Ins. Co., 513 F.3d at 552. In any event, Scassa Asphalt is mistaken that only Nick Scassa, the 

principal operating engineer, stood to benefit from the contractual relationship with the Union. 

The CBA and the short-form Agreement required benefit contributions on behalf of all Scassa 

Asphalt employees. Moreover, the company has not pointed to any statute or case that carves 

out an exception relieving it from § 515 collection litigation. The size of the company is not 

relevant because the burdens on the Funds are the same. “Funds must assume that all 

participants in a plan are following the stated terms; no other approach permits accurate actuarial 

computations and proper decisions about which claims to pay.” Behnke, Inc., 883 F.2d at 460 

(quoting Robbins, 836 F.2d at 333–34). 

E. Audit findings

 The final dispute about the audit findings largely turns on the second issue previously 

discussed: whether the 2000 Hour Commitment Letter is unenforceable due to lack of 

consideration. Scassa Asphalt posits that the 2000 Hour Commitment Letter is unenforceable; 

therefore, it can be held liable, at most, only for the hours Nick Scassa actually worked. 

Because we uphold the district court’s conclusion that the 2000 Hour Commitment Letter 

is enforceable, we necessarily affirm the court’s decision to establish the amount of contributions 

owed by reference to the audit that included 2000 hours annually for Nick Scassa. Although 

Scassa Asphalt objects to the time period for which unpaid contributions have been calculated, 

the company did not provide written notice to the Union or the Funds at any time that the 

company intended to terminate the short-form Agreement binding it to the CBA. Under the valid 

evergreen clauses, the contracts remained in force. See Trustees of the B.A.C. Local 32 Ins. 

Fund, 163 F.3d at 968–69. 

IV. CONCLUSION

 Accordingly, we AFFIRM the judgment of the district court. 

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