United States District Court

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OPERATING ENGINEERS' PENSION TRUST

FUND; GIL CROSTHWAITE AND RUSS

BURNS, as Trustees,

Plaintiffs,

v.

CLARK'S WELDING AND MACHINE, a

California partnership, aka 

CLARK'S WELDING, aka CLARK'S

WELDING AND MACHINING; SYLVESTER

HABERMAN, individually, and FRANZ

EDELMAYER, individually,

Defendants.

 

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Case No. 09-0044 SC

ORDER GRANTING IN

PART AND DENYING IN

PART PLAINTIFFS'

MOTION FOR SUMMARY

JUDGMENT

I. INTRODUCTION

This matter comes before the Court on the Motion for Summary

Judgment ("Motion") filed by Plaintiffs Operating Engineers'

Pension Trust Fund ("Operating Engineers"), Gil Crosthwaite

("Crosthwaite"), and Russ Burns ("Burns"), as Trustees

(collectively "Plaintiffs"). Docket No. 50. Defendants Clark's

Welding and Machine ("Clark's Welding"), Sylvester Haberman

("Haberman"), and Franz Edelmayer ("Edelmayer") (collectively

"Defendants") filed an Opposition, and Plaintiffs filed a Reply. 

Docket Nos. 77, 78. For the reasons stated herein, the Motion is

GRANTED IN PART and DENIED IN PART. 

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1

 Franz Edelmayer, Defendant in this lawsuit, filed a

Declaration in Support of Defendants' Opposition. Docket No. 77-5.

2

II. BACKGROUND

A. Procedural Background

On January 7, 2009, Plaintiffs filed their Complaint against

Defendants seeking payment of withdrawal liability in the sum of

$330,921. Docket No. 1 ("Compl.") ¶ 1. On May 8, 2009, the Court

denied Defendants' Motion to Dismiss. Docket No. 25. Defendants

filed their Answer on May 21, 2009. Docket No. 30 ("Answer"). 

On July 28, 2009, the Court granted in part and denied in part

Plaintiffs' Motion to Strike. Docket No. 43.

After the parties filed their summary judgment papers, the

Court granted Defendants' request for a Rule 56(f) continuance to

allow the parties to address the impact of the continued

deposition testimony of Tracy Mainguy ("Mainguy") on the issues

raised in Plaintiffs' Motion for Summary Judgment. Docket No. 105

("Order Requiring Supplemental Briefing"). On January 15, 2010,

Defendants submitted a Supplemental Brief. Docket No. 112

("Defs.' Supplemental Br."). On January 20, 2010, Plaintiffs

filed a response. Docket No. 113 ("Pls.' Supplemental Br."). 

B. Factual Background

The following facts are not in dispute. Edelmayer and

Haberman purchased Clark's Welding on or around 1975, subject to a

Shop Agreement with Operating Engineers. Edelmayer Decl. ¶ 2.1

Edelmayer and Haberman closed their business on or around July 31,

2003, and they sold their assets to a former employee, Robert Lee

Boyd. Id. ¶ 5.

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2 Richard Thurn ("Thurn"), an attorney and co-owner of Gray &

Thurn, Inc., filed a declaration in support of Defendants'

Opposition to Plaintiffs' Motion. Docket No. 77-6. 

3

On May 23, 2003, Ken Walters ("Walters"), and Don Doser

("Doser"), in their capacities as trustees for a number of pension

funds, including Operating Engineers, brought an action against

Defendants seeking to enforce Defendants' obligation to contribute

fringe benefits to the pension funds. Thurn Decl. Ex. A ("Walters

Compl.") at 2.2

 About nine months later, in February 2004, the

pension funds, Clark's Welding and Edeymayer filed a Stipulation

for Dismissal. See Thurn Decl. Ex. G ("Stipulation"). The

Stipulation notes that Clark's Welding was required to make

contributions to pension trust funds pursuant to a Collective

Bargaining Agreement ("CBA"). Stipulation ¶¶ 1-2. The plaintiffs

to the prior action also asserted they were entitled to liquidated

damages, interest, and attorney's fees. Id. ¶¶ 6, 9.

In the Stipulation, Clark's Welding agreed to pay $36,597.19

for delinquent principal contributions, and $20,500 for unpaid

contributions revealed by an audit. Stipulation ¶ 11. The

$36,597.10 was to be paid in a lump sum, and the $20,500 in

monthly payments. Id. ¶¶ 12-13. The pension trust funds waived

their asserted right to liquidated damages and interest, and each

side agreed to bear its own legal costs, unless there was a

default in payment. Id. ¶¶ 14, 16, 17. The final paragraph of

the Stipulation states:

This Agreement embodies the entire Agreement

between the parties hereto. All prior

understandings and agreements by and between the

parties hereto are merged into and superseded by

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this Agreement and no party released herein

shall be bound by or liable for any statement,

representation, promise, inducement or

understanding of any kind or nature not set

forth herein. This Agreement is the product of

negotiation and preparation by and amount [sic]

the parties hereto and their attorneys, if any.

Therefore, the parties acknowledge and agree

that this Agreement shall not be deemed to have

been prepared or drafted by one party or

another, and that it shall be construed

accordingly.

Id. ¶ 21.

On May 15, 2008, over four years after this Stipulation,

Shaamini A. Babu ("Babu"), an attorney for Operating Engineers,

sent Clark's Welding a letter stating that the pension fund had

assessed withdrawal liability of $330,921 against Clark's Welding

on December 10, 2007. Thurn Decl. Ex. H ("May 15, 2008 Letter")

at OE3PP000729. Defendants claim they did not receive the

December 10, 2007 notice because it was sent to Mr. Boyd at All

States W.E.S.T. Id. ¶ 17. On May 21, 2008, Babu sent Thurn, an

attorney for Clark's Welding, a copy of the December 10, 2007

notice of withdrawal liability. Id. Ex. I ("May 21, 2008

Letter"). 

On June 26, 2008, Plaintiffs sent Thurn another notice of

withdrawal liability. Id. Ex. J ("June 26, 2008 Notice"). It

states that the withdrawal liability of Clark's Welding is

$330,921. Id. at OE3PP000709. It states that Defendants had

ninety days from receipt of the letter to ask the Board of

Trustees to review the determination of withdrawal liability, and

that disputes should be resolved through arbitration. Id. at

OE3PP000710.

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Defendants did not seek review of the withdrawal liability

determination, and they did not initiate arbitration. Opp'n at 4;

Thurn Decl. ¶ 18. On January 7, 2009, Plaintiffs filed their

Complaint against Defendants seeking payment of withdrawal

liability in the sum of $330,921. Compl. ¶ 1. 

III. LEGAL STANDARD

Entry of summary judgment is proper "if the pleadings, the

discovery and disclosure materials on file, and any affidavits

show that there is no genuine issue as to any material fact and

that the movant is entitled to judgment as a matter of law." Fed.

R. Civ. P. 56(c). Summary judgment should be granted where the

evidence is such that it would require a directed verdict for the

moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251

(1986). Thus, "Rule 56(c) mandates the entry of summary judgment

. . . against a party who fails to make a showing sufficient to

establish the existence of an element essential to that party's

case, and on which that party will bear the burden of proof at

trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "The

evidence of the non-movant is to be believed, and all justifiable

inferences are to be drawn in his favor." Anderson, 477 U.S. at

255.

IV. DISCUSSION

A. Statutory Framework

Under the Employee Retirement Income Security Act ("ERISA"),

as amended by the Multiemployer Pension Plan Amendments Act

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("MPPAA"), an employer who withdraws from an underfunded pension

plan is required to pay "withdrawal liability," an amount equal to

that employer's pro rata share of the plan's unfunded vested

benefits, subject to certain adjustments. 29 U.S.C. §§ 1381,

1391. The MPPAA was enacted in 1980 based on Congressional and

agency findings that "ERISA did not adequately protect plans from

the adverse consequences that resulted when individual employers

terminate their participation in, or withdraw from, multiemployer

plans." Pension Benefit Guaranty Corporation v. R.A. Gray and

Co., 467 U.S. 717, 722 (1984). The amendments were designed to

reduce the incentive for employers to withdraw from multiemployer

plans and to lessen the impact and burdens on plans when employers

do withdraw. Id. at 724 n.3. An employer incurs withdrawal

liability when it effects a "complete withdrawal" from the plan,

which occurs when the employer "permanently ceases to have an

obligation to contribute under the plan" or "permanently ceases

all covered operations under the plan." 29 U.S.C. § 1383(a).

The Act does not call upon the employer to propose the amount

of withdrawal liability. Rather, it places the calculation burden

on the plan's trustees. The trustees must set an installment

schedule and demand payment "[a]s soon as practicable" after the

employer's withdrawal. Id. § 1399(b)(1). On receipt of the

trustees' schedule and payment demand, the employer may invoke a

dispute-resolution procedure that involves reconsideration by the

trustees and, ultimately, arbitration. Id. §§ 1399(b)(2),

1401(a)(1). "Any dispute between an employer and the plan sponsor

of a multiemployer plan concerning a determination made under

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3

 Michael Schumacher ("Schumacher"), the Executive VicePresident of Associated Third Party Administers, filed a

Declaration in Support of Plaintiffs' Motion for Summary Judgment. 

Docket No. 69. 

4 Shaamini A. Babu ("Babu"), an associate at Saltzman &

Johnson Law Corporation, filed a Declaration in Support of

Plaintiffs' Motion for Summary Judgment. Docket No. 51.

7

sections 1381 through 1399 of this title shall be resolved through

arbitration." Id. § 1401(a)(1). "If no arbitration proceeding

has been initiated . . . the amounts demanded by the plan sponsor

under section 1399(b)(1) of this title shall be due and owing on

the schedule set forth by the plan sponsor. The plan sponsor may

bring an action in a State or Federal court of competent

jurisdiction for collection." Id. § 1401(b)(1).

B. Evidentiary Objections

Defendants filed thirty-two evidentiary objections related to

Plaintiffs' Motion. Docket No. 77-7 ("Evidentiary Objections"). 

Defendants' first eight objections concern the Schumacher

Declaration.3 Id. at 2-6. Because the Court does not rely on the

statements in this declaration, it is not necessary for the Court

to rule on these objections. Even if the Court had sustained

these objections, it would not have affected how the Court rules

on this Motion.

Objections Nos. 9 to 21 concern statements in, and exhibits

attached to, the Babu Declaration.4 The Court SUSTAINS Objections

Nos. 12, 13 and 21 because of Plaintiffs' failure to disclose

their Delinquency Collections Procedures, which form the basis for

Plaintiffs' damages calculations. The Court addresses Plaintiffs'

claims for liquidated damages, interest, and attorney's fees and

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5

 Babu's Supplemental Declaration is Docket No. 82.

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costs in Part IV(K), infra. 

 With regard to Objection 18, Plaintiffs failed to include

the reporter's certification with its deposition extracts. See

Evidentiary Objections at 12; Babu Decl. Ex. I, J, K, L, M. 

However, Plaintiffs have provided the Court with a copy of the

reporter's certifications in a supplemental declaration, and Ms.

Babu declares she was present at the depositions.5 See

Supplemental Babu Decl. ¶ 3, Ex. Q. The Court finds that

Defendants were not prejudiced by the omission, and OVERRULES

Defendants' objection.

The Court has reviewed the other evidentiary objections and

finds that they are without merit. The Court OVERRULES Objection

Nos. 9 to 11, Objection Nos. 14 to 17, and Objection Nos. 19 and

20. The Court finds no basis to question the authenticity of the

documents at issue in these objections, which include the 2004

Stipulation. 

Objections 22 to 32 concern statements in Plaintiffs' Motion

and are therefore not proper subjects for evidentiary objections. 

As such, the Court will not rule on these objections. The Court

did not rely on any of these statements in deciding this Motion. 

Even if the Court had sustained Objections 22 to 32, it would not

have affected how the Court rules on this Motion. The Court

addresses the parties' contentions regarding what the admissible

evidence shows in the remainder of this Order. 

///

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C. Non-Parties

Plaintiffs suggest that non-parties to this action, Edelmayer

& Haberman, Inc. ("EHI"), Capital Cylinder Head Shop ("Capital")

and Precision Metal & Grinding ("Precision") are jointly and

severally liable for the withdrawal liability of Clark's Welding

under 29 U.S.C. § 1301(b), and they request that these non-parties

be named as judgment debtors. Mot. at 7. For purposes of ERISA

withdrawal liability, trades or businesses under common control

are to be treated as a single employer. 29 U.S.C.A. § 1301(b)(1).

However, controlled group members are jointly and severally liable

under ERISA only if they are parties to the action. Central

States, Southeast and Southwest Areas Pension Fund v. Mississippi

Warehouse Corp., 853 F. Supp. 1053, 1059 (N.D. Ill. 1994). Here,

EHI, Capital, and Precision are not parties to this action. See

Compl. ¶¶ 3-5. Therefore, the Court DENIES Plaintiffs' request to

name these non-parties as judgment debtors. 

D. Defense of Laches

Defendants' sixth affirmative defense states that Plaintiffs'

claim is barred by the equitable doctrine of laches. Answer at 6.

Plaintiffs contend Defendants are barred from raising the defense

of laches because they failed to initiate arbitration. Mot. at

17. The Court agrees with Plaintiffs. 

Under ERISA, as amended by the MPPAA, "[a]ny dispute between

an employer and the plan sponsor of a multiemployer plan

concerning a determination made under sections 1381 through 1399

of this title shall be resolved through arbitration." Id. 

§ 1401(a)(1). The defense of laches calls into question whether

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the trustees demanded payment "[a]s soon as practicable" after the

employer's withdrawal. See id. § 1399(b)(1). It raises a factual

issue that should have been submitted to an arbitrator. Here,

Defendants did not initiate arbitration, despite the fact that the

June 26, 2008 Notice informed Defendants of their right to seek

review of the withdrawal liability determination and to initiate

arbitration. See June 26, 2008 Notice at OE3PP000710. Hence,

Defendants are barred from pursuing the defense of laches in this

Court. 

The facts of this case are similar to the facts of Vaughn v.

Sexton, where the Court of Appeals for the Eighth Circuit

determined that the defense of laches was waived even though a

pension plan did not notify the employer of its withdrawal

liability assessment until almost four years after the liability

was triggered. 975 F.2d 498, 501-02 (8th Cir. 1992). Here, like

in Vaughn, Defendants' laches defense focuses on the delay in

notifying Defendants of their withdrawal liability. See Opp'n at

21 ("Despite their knowledge that Clark's closed, Plaintiffs did

not notify Defendants of their alleged withdrawal liability until

five years later."). Because Defendants failed to initiate

arbitration, the laches defense is waived. See also Giroux Bros.

Transp., Inc. v. New England Teamsters & Trucking Industry Pension

Fund, 73 F.3d 1, 3-4 (1st Cir. 1996) ("questions concerning the

timeliness of a plan sponsor's demand are governed exclusively by

§ 1399(b)(1)" and must be submitted to arbitration). 

 In arguing against waiver of this defense, Defendants rely

on In re Centric Corp., 901 F.2d 1514, 1518-19 (10th Cir. 1990). 

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Opp'n at 23. The Court of Appeals for the Tenth Circuit

determined that "[l]aches in the prosecution of an action to

collect the amount assessed" is not barred by a failure to

arbitrate in a situation where the trustees reopened a case that

had been stayed pending a bankruptcy proceeding, and where the

trustees failed to oppose an objection to their proof of claim in

the bankruptcy proceeding. Id. at 1518-19. In Vaughn, the Court

of Appeals for the Eighth Circuit distinguished In re Centric

Corp. by noting that the delay at issue in the Tenth Circuit case

was a delay in bringing suit, not a delay in providing notice of

withdrawal liability. Vaughn, 975 F.2d at 502. Here, like in

Vaughn, Defendants focus on a delay in providing notice of

withdrawal liability. Opp'n at 21. Therefore, the Court finds

that In re Centric Corp. is distinguishable. Defendants have

waived the defense of laches by failing to initiate arbitration.

E. Defense of Release/Settlement

Defendants' second affirmative defense is that "[e]ach and

every claim is barred by the parties' 2004 Stipulated

Release/Settlement." Answer at 5.

1. The Affirmative Defense of Release Was Not Waived

by Defendants' Failure to Initiate Arbitration

Plaintiffs' first argument is that Defendants waived their

right to argue that the 2004 Stipulation released them from a

claim for withdrawal liability because Defendants failed to

initiate arbitration. Mot. at 8. The Court disagrees. Disputes

that have to be arbitrated concern "the establishment, computation

and collection of withdrawal liability." Shelter Framing Corp. v.

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Pension Benefit Guar. Corp., 705 F.2d 1502, 1509 (9th Cir. 1983),

rev'd on other grounds, 467 U.S. 717 (1984). Defendants' argument

that the 2004 Stipulation released Defendants from an obligation

to pay withdrawal liability has nothing to do with the

establishment, computation, or collection of withdrawal liability. 

In Board of Trustees of Trucking Employees of North Jersey Welfare

Fund, Inc. v. Centra, the Third Circuit determined that the issue

of whether there had been a breach of a settlement agreement did

not fall into any of the categories that the MPPAA deems

arbitrable. 983 F.2d 495, 506-07 (3d Cir. 1992)("Centra"). 

Similarly, here, the question of whether the language in the 2004

Stipulation releases Defendants from a claim for withdrawal

liability is not a dispute that has to be submitted to an

arbitrator. Failure to arbitrate does not waive the defense of

release.

2. The Stipulation Does Not Release Defendants from

Withdrawal Liability 

Having determined that Defendants have not waived this

affirmative defense, the Court now considers whether Plaintiffs

should be granted summary judgment with respect to this defense.

Federal law governs the validity of and defenses to purported

releases of federal causes of action. Petro-Ventures, Inc. v.

Takessian, 967 F.2d 1337, 1340 (9th Cir. 1992). The federal law

in this area arises through the incorporation of "state rules of

decision," which "furnish an appropriate and convenient measure of

the governing federal law." Mardan Corp. v. C.G.C. Music, Ltd.,

804 F.2d 1454, 1458 (9th Cir. 1986); Lumpkin v. Envirodyne

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Industries, Inc., 933 F.2d 449, 458 (7th Cir. 1991)(relying on

state law to determine scope of release of ERISA claims); Central

States, Southeast and Southwest Areas Pension Fund v. Art Pape

Transfer, Inc., 881 F. Supp. 1168, 1172-73 (N.D. Ill.

1995)(relying on state law to interpret language of settlement

agreement in ERISA withdrawal liability action).

The interpretation of a release is governed by the same

principles applicable to any other contractual agreement. Marder

v. Lopez, 450 F.3d 445, 449 (9th Cir. 2006). Under California

law, a release is the abandonment, relinquishment or giving up of

a right or claim to the person against whom it might have been

demanded or enforced, and its effect is to extinguish the cause of

action. Id. The court must interpret the release so as to give

effect to the parties' mutual intent as it existed when they

contracted. See Cal. Civ. Code § 1636; Bank of the West v. Super.

Ct., 2 Cal. 4th 1254, 1264 (1992). 

When a dispute arises over the meaning of contract language,

the first question to be decided is whether the language is

reasonably susceptible to the interpretation urged by the party. 

People ex rel. Lockyer v. R.J. Reynolds Tobacco Co., 107 Cal. App.

4th 516, 524 (Ct. App. 2003). In interpreting an unambiguous

contractual provision, the court must give effect to the plain and

ordinary meaning of the language used by the parties. Coast Plaza

Doctors Hosp. v. Blue Cross of Cal., 83 Cal. App. 4th 677, 684

(Ct. App. 2000). Where contract language is clear and explicit

and does not lead to absurd results, the court ascertains intent

from the written terms and goes no further. Shaw v. Regents of

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University of Cal., 58 Cal. App. 4th 44, 53 (Ct. App. 1997). The

court's paramount consideration in construing a stipulation is the

parties' objective intent when they entered into it. People ex

rel. Lockyer, 107 Cal. App. 4th at 525. That intent is to be

inferred, if possible, solely from the written provisions of the

contract. Id.; see also 66 Am. Jur. 2d Release § 31 ("The scope

of a release is determined by the intention of the parties as

expressed through a release's terms considering all the facts and

circumstances. This rule stems from the proposition that a

release comes about from a meeting of the minds. The intention of

the parties is to be gathered from the language of the release

itself and this is particularly the case where the language of the

release is facially unambiguous.")

Here, the Court agrees with Plaintiffs that this Stipulation

is not reasonably susceptible to the interpretation that it

releases Defendants from withdrawal liability. The only place the

word "release" occurs in the Stipulation is in paragraph 21, where

it is mentioned in the context of an integration clause clarifying

that any other agreements or understandings of the parties are

superseded by this Stipulation. The only reasonable

interpretation of the phrase "no party released herein" is as a

reference to the fact that, earlier in the Stipulation, the

plaintiffs waived their right to seek liquidated damages and

interest from the defendants. See Stipulation ¶ 16. The words

"withdrawal liability" appear nowhere in the Stipulation, and it

is clear that the Stipulation focused on outstanding

contributions, not withdrawal liability. See id. ¶¶ 2, 3, 4, 6,

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6

 Although at an earlier stage of these proceedings, the Court

regarded the text of the Stipulation as somewhat ambiguous, see

Docket No. 25 ("Order Denying Defendants' Motion to Dismiss") at

11, further reflection upon the matter, including consideration of

the arguments in the parties' summary judgment papers, convinces

the Court that the Stipulation is not reasonably susceptible to the

interpretation advanced by Defendants. Oftentimes, the Court comes

to view matters in a clearer light after the parties have more

fully briefed the relevant issues. It is now clear to the Court

that there is no ambiguity in the Stipulation regarding this

question of whether it releases Defendants from a claim for

withdrawal liability. 

15

11, 13.

Under California's parol evidence rule, "[t]erms set forth in

a writing intended by the parties as a final expression of their

agreement with respect to such terms as are included therein may

not be contradicted by evidence of any prior agreement or of a

contemporaneous oral agreement." Cal. Code Civ. Proc. § 1856(a). 

The Stipulation could not be any clearer that it is an

integration. It states explicitly that:

This Agreement embodies the entire Agreement

between the parties hereto. All prior

understandings and agreements by and between the

parties hereto are merged into and superseded by

this Agreement and no party released herein

shall be bound by or liable for any statement,

representation, promise, inducement or

understanding of any kind or nature not set

forth herein. 

Stipulation ¶ 21. Based on the written provisions of this

Stipulation, the Court finds that the Stipulation is not

ambiguous, and that it does not release Defendants from a claim

for withdrawal liability.6

The Court is mindful that, under California law, even when a

contract appears to the court to be unambiguous, extrinsic

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evidence can be used "to prove a meaning to which the language of

the instrument is reasonably susceptible." Pacific Gas & Elec.

Co. v. G. W. Thomas Drayage & Rigging Co., 69 Cal. 2d 33, 37

(1968); see also Haggard v. Kimberly Quality Care, Inc., 39 Cal.

App. 4th 508, 519-20 (Ct. App. 1995). A court "provisionally

receives (without actually admitting) all credible evidence

concerning the parties' intentions to determine 'ambiguity,' i.e.,

whether the language is 'reasonably susceptible' to the

interpretation urged . . . ." Wolf v. Super. Ct., 114 Cal. App.

4th 1343, 1351 (Ct. App. 2004) (quoting Winet v. Price, 4 Cal.

App. 4th 1159, 1165 (Ct. App. 1992). A court's determination of

whether an ambiguity exists is a question of law.

Having reviewed the extrinsic evidence, the Court finds that

the Stipulation is not ambiguous. Thurn, who negotiated the

Stipulation on behalf of Clark's Welding, first became familiar

with withdrawal liability in 2008. Babu Decl. Ex. J ("Thurn

Dep.") at 19:4-19. Therefore, Thurn could not have intended to

release his clients from withdrawal liability when he negotiated

the 2004 Stipulation on behalf of Clark's Welding. In support of

a contrary reading of the Stipulation, Defendants point to Thurn's

letter to Mainguy, attorney for Operating Engineers, stating that

"[t]his proposal would settle all claims of our client through

July 31, 2003." Opp'n at 2; Thurn Decl Ex. B. But since there is

no question that Thurn was not familiar with withdrawal liability

at that time, he cannot have intended to release his clients from

such a claim.

According to Thurn, he informed Mainguy that any settlement

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the parties reached had to resolve all past, present, and future

obligations between Defendants and Operating Engineers. Thurn

Decl. ¶ 6. On this motion for summary judgment, the evidence of

the nonmoving party must be believed. See Anderson, 477 U.S. at

255. However, there is no language in the Stipulation stating

that it releases Defendants from all future obligations. Instead,

the Stipulation states that it "embodies the entire Agreement

between the parties" and that "[a]ll prior understandings and

agreements by and between the parties hereto are merged into and

superseded by this Agreement and no party released herein shall be

bound by or liable for any statement, representation, promise,

inducement or understanding of any kind or nature not set forth

herein." Stipulation ¶ 21. Since the Agreement is clearly

integrated, and since it nowhere states that Defendants are

released from future obligations or claims, any contrary

understanding on the part of Mr. Thurn is superseded by the text

of the Stipulation. 

Wayne MacBride, the collections manager for Operating

Engineers, testified that he understood the Stipulation to be

releasing Clark's Welding from the claim for liquidated damages,

interest, and audit shortages, and he did not intend for it to

release Clark's Welding from any future liability. Babu Decl. Ex.

K ("Wayne Dep.") at 103:2-24. Mainguy is the attorney who signed

the Stipulation on behalf of Operating Engineers. See Stipulation

at 8. Her recollection of the case is very poor. Ferrannini

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7 Cassandra M. Ferrannini ('Ferrannini"), a partner at Downey

Brand LLP, filed a declaration in support of Defendants'

Opposition. Docket No. 77-1. 

8

 Ferrannini filed a Supplemental Declaration in support of

Defendants' Opposition. Docket No. 112-1.

9 When ruling on a motion for summary judgment, the Court

must not weigh the evidence or make credibility determinations. 

Anderson, 477 U.S. at 255. California law is clear, however, that

receiving evidence to determine if an agreement contains a latent

ambiguity is a question of law for the court to decide. See Wolf

v. Super. Ct., 114 Cal. App. 4th at 1351. Even though Thurn

intended for the Stipulation to release Defendants from future

claims, the Stipulation does not say that, and it unambiguously

supersedes all prior understandings.

18

Decl. Ex. B ("Mainguy Dep.") at 10:9-13.7 However, at her

original deposition, she stated that the Stipulation settled what

the complaint was filed for and nothing more. Id. at 59:12-16,

75:15-16. The Complaint was filed to recover delinquent

contributions, not withdrawal liability. See Walters Compl. At

her second deposition, she reiterated that she would not have

entered into a global settlement, releasing Defendants from all

known and unknown claims. Ferrannini Supplemental Decl. Ex. A

("Second Mainguy Dep.") at 96:8-97:4.8

 

While the Court does not need to consider extrinsic evidence,

since the integrated agreement is clear on its face that it does

not release Defendants from withdrawal liability, having reviewed

the extrinsic evidence, the Court is still convinced that the

Stipulation is not reasonably susceptible to any other

interpretation. The Court GRANTS summary judgment in favor of

Plaintiffs with respect to Defendants' affirmative defense of

release.9

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F. Defense of Waiver

Defendants' seventh affirmative defense is that "[e]ach and

every claim is barred by the doctrine of waiver." Answer at 6. A

waiver is "the voluntary and intentional relinquishment of a known

right." Petro-Ventures, 967 F.2d at 1342. To be valid a waiver

must be a clear expression made with a full knowledge of the facts

and an intent to waive the right. Spellman v. Dixon, 256 Cal.

App. 2d 1, 5 (Ct. App. 1967). Doubtful cases will be decided

against the one who claims a waiver.

In the 2004 Stipulation, Plaintiffs waived the liquidated

damages and interest that Plaintiffs contended they were owed by

Defendants. Stipulation ¶ 16. The Stipulation does not waive

Plaintiffs' right to seek withdrawal liability. The Stipulation

contains no mention of withdrawal liability. See Stipulation. 

There is no evidence to support the contention that

Plaintiffs intended to waive their right to withdrawal liability. 

As noted earlier, Thurn, who negotiated the Stipulation on behalf

of Clark's Welding, first became familiar with withdrawal

liability in 2008. See Part IV(E)(2), supra. Thurn, therefore,

could not have discussed a waiver of withdrawal liability with

Plaintiffs' attorneys. One of the letters exchanged between

counsel for the parties prior to the Stipulation mentions

Plaintiffs' willingness to waive liquidated damages and interest. 

Thurn Decl. Ex. C ("October 15, 2003 Letter"). No letter mentions

a waiver of Plaintiffs' right to withdrawal liability. See Thurn

Decl. Ex. B ("Oct. 6, 2003 Letter"); October 15, 2003 Letter, Ex.

D ("December 18, 2003 Letter"); Ex. E ("January 13, 2004 Letter");

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Ex. F ("January 15, 2003 Letter"). There is no triable issue of

material fact related to the issue of whether Plaintiffs

intentionally relinquished a known right to withdrawal liability. 

Therefore the Court GRANTS Plaintiffs' motion for summary judgment 

with respect to Defendants' seventh affirmative defense of waiver.

G. Failure to Mitigate

Defendants' tenth affirmative defense is that "Plaintiffs

have failed to mitigate their alleged losses or damages, if any."

Answer at 6. The Court finds no evidence in the record to support

Defendants' contention that Plaintiffs failed to mitigate their

damages. See Iron Workers' Local No. 25 Pension Fund v. Klassic

Services, Inc., 913 F. Supp. 541, 546 (E.D. Mich. 1996)(finding no

duty to mitigate damages in ERISA action to collect delinquent

fringe benefits). The Court GRANTS Plaintiffs' motion for summary

judgment with respect to the affirmative defense of failure to

mitigate. 

H. Unclean Hands

Defendants' fifth affirmative defense states that "[e]ach and

every claim is barred by the doctrine of unclean hands." Answer

at 6. Defendants contend Plaintiffs had unclean hands because

they filed the present lawsuit even though the Stipulation

absolved Defendants of all obligations to Operating Engineers. 

Opp'n at 17. Having found, as a matter of law, that the

Stipulation does not release Defendants from withdrawal liability,

see Part IV(E)(2), supra, Defendants' allegation does not support

an unclean hands defense.

Defendants allege that Plaintiffs did not assess withdrawal

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liability in a timely manner. Opp'n at 17. This defense overlaps

with the defense of laches, which is waived due to the failure to

arbitrate. See Part IV(D), supra. Plaintiffs allege that

Defendants' conduct leading up to the execution of the Stipulation

deceived them into thinking it contained a general release. Opp'n

at 17-18. However, the text of the Stipulation contains nothing

resembling a general release, and it contains an explicit

integration clause superseding all prior understandings and

agreements. See Stipulation ¶ 21. 

Finally, Defendants contend that Plaintiffs' May 2008 and

June 2008 letters deceived them into thinking the time to request

arbitration had already expired. Opp'n at 18. However, the June

26, 2008 Letter clearly states that Defendants could seek review

"within 90 days after receipt of this letter," and it also

provides the time limits for requesting arbitration. June 26,

2008 Letter at OE3PP000710. The Court finds there is no triable

issue of material fact with respect to the affirmative defense of

unclean hands. The Court grants summary judgment in favor of

Plaintiffs regarding this affirmative defense. 

I. Estoppel

Defendants' fourth affirmative defense states that "[e]ach

and every claim is barred by the doctrine of estoppel." Answer at

6. The federal common law elements of equitable estoppel are: 

(1) the party to be estopped must know the facts; (2) he must

intend that his conduct shall be acted on or must so act that the

party asserting the estoppel has a right to believe it is so

intended; (3) the latter must be ignorant of the true facts; and

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(4) he must rely on the former's conduct to his injury. Greany v.

W. Farm Bureau Life Ins. Co., 973 F.2d 812, 821 (9th Cir. 1992). 

Defendants' estoppel defense is based on the allegation that

Defendants notified Plaintiffs they expected the Stipulation to

cover every obligation they had to Operating Engineers, and

Defendants allege Plaintiffs misrepresented and concealed their

true intentions from Defendants. Opp'n at 19. The Court is

obliged to rely on the parties' objective manifestation of intent

as memorialized in the text of the 2004 Stipulation, and the

Stipulation nowhere states that Defendants are released from all

obligations. See Part IV(E)(2), supra. Defendants also contend

Plaintiffs misrepresented that the time to seek arbitration had

expired, but as noted in the previous section, the June 26, 2008

letter indicates otherwise. See Part IV(H), supra. The Court

GRANTS summary judgment in favor of Plaintiffs regarding the

affirmative defense of estoppel.

J. Withdrawal Liability

"If no arbitration proceeding has been initiated . . . the

amounts demanded by the plan sponsor under section 1399(b)(1) of

this title shall be due and owing on the schedule set forth by the

plan sponsor. The plan sponsor may bring an action in a State or

Federal court of competent jurisdiction for collection." Id. 

§ 1401(b)(1). Having found that Defendants did not initiate

arbitration, and that there is no triable issue of material fact

concerning Defendants' affirmative defenses, the Court finds that

Plaintiffs are entitled to collect withdrawal liability of

$330,921. See Teamsters Pension Trust Fund-Bd. of Trustees of the

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W. Conference v. Allyn Transp. Co., 832 F.2d 502, 505-06 (9th Cir.

1987) (affirming district court's grant of summary judgment,

holding that employer's liability as calculated by fund was due

and owing because employer failed to initiate arbitration within

statutory period); Bd. of Trs. of the W. Conference of Teamsters

Pension Trust Fund v. Arizona-Pacific Tank Lines, No. 83-0317,

1983 U.S. Dist. LEXIS 12709, at *4-6 (N.D. Cal. Oct. 14, 1983)

(refusing to consider affirmative defense and granting plaintiff's

motion for summary judgment for withdrawal liability after

defendants' failure to arbitrate dispute). Congress intended that

disputes over withdrawal liability would be resolved quickly, and

established a procedural bar for employers who fail to arbitrate

disputes over withdrawal liability in a timely manner. See 29

U.S.C. § 1401(b)(1). 

While the assessment of withdrawal liability that results

from a failure to arbitrate produces a harsh result, the result is

largely "a self-inflicted wound." I.L.G.W.U. Nat'l Ret. Fund v.

W. Helena-Helena Sportswear, Inc., No. 96-1007, 1996 U.S. Dist.

LEXIS 20635 (S.D.N.Y. July 25, 1996); I.L.G.W.U. Nat'l Ret. Fund

v. Levy Bros. Frocks, 846 F.2d 879, 887 (2d Cir. 1988). The Court

finds that Clark's Welding is liable for withdrawal liability in

the amount of $330,921. 

K. Other Damages and Individual Liability

ERISA provides that "[i]n any action under this section to

compel an employer to pay withdrawal liability, any failure of the

employer to make any withdrawal liability payment within the time

prescribed shall be treated in the same manner as a delinquent

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contribution . . . ." 29 U.S.C.A. § 1451(b). The statute

concerning delinquent contributions requires the Court to award

Plaintiffs unpaid contributions, interest, liquidated damages up

to 20% of the amount of the liability, and reasonable attorney's

fees and costs. 29 U.S.C. § 1132(g)(2). "Under ERISA, the award

of attorney fees to a pension plan is mandatory in all actions to

collect delinquent contributions . . . . This mandatory attorney

fees provision applies in all actions to collect delinquent

contributions . . . including actions to collect unpaid employer

withdrawal liabilities." Trs. of Amalgamated Ins. Fund v. Geltman

Indus., Inc., 784 F.2d 926, 931-32 (9th Cir. 1986). 

The Court requires Plaintiffs to move the Court for an award

of interest, liquidated damages, and reasonable attorney's fees

and costs. The motion should also address the basis for entering

judgment against the individual Defendants, Haberman and

Edelmayer. Interest should be calculated based on the June 26,

2008 notice date, and the interest calculation should include an

amount due through the date of submission, and an amount to be

added each day thereafter until judgment is finally entered. 

Plaintiffs must also support their request for liquidated damages,

and reasonable attorney's fees and costs. The Court hereby

schedules an April 30, 2010 hearing on the motion for an award of

interest, liquidated damages, and reasonable attorney's fees and

costs. The motion, opposition, and reply should be filed in

accordance with this Court's local rules.

///

///

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V. CONCLUSION

For the reasons stated above, the Court GRANTS IN PART and

DENIES IN PART the Motion for Summary Judgment filed by Plaintiffs

Operating Engineers' Pension Trust Fund, Gil Crosthwaite, and Russ

Burns, as Trustees. The Court finds that Plaintiffs are entitled

to an award of $330,921 against Defendant Clark's Welding and

Machine. Plaintiffs must move the Court for an award of interest,

liquidated damages, and reasonable attorney's fees and costs, and

the motion should also explain how judgment can be entered against

Defendants Sylvester Haberman and Franz Edelmayer. The motion

will be heard on April 30, 2010. Once the Court has ruled on the

motion, the Court will enter a final judgment in this case.

IT IS SO ORDERED.

Dated: February 10, 2010

 

UNITED STATES DISTRICT JUDGE

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