F I L E D

United States Court of Appeals

Tenth Circuit

FEB 18 1998

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

DOUGLAS LENON; GREG POLAK;

LOUIS J. VELTRIE; WILLIAM C.

PETERSON; and LUCIANO

BUSNARDO, not in their individual

capacities but in their capacities as

Trustees of the Colorado Tile, Marble

and Terrazzo Workers’ Pension Trust

Fund and Trustees of the Local No. 6

Colorado Tile Layers, Marble Masons

and Terrazzo Workers Vacation

Fund; WALTER KARDY; and

FRANK STUPAR, not in their

individual capacities, but in their

capacities as Trustees of and as the

Administrative Committee of the

Bricklayers and Trowel Trades

International Pension Fund and the

Bricklayers and Allied Craftworkers

International Health Fund; and the

COLORADO TILE, MARBLE and

TERRAZZO CONTRACTORS

ASSOCIATION, a Colorado nonprofit corporation, 

Plaintiffs-Appellees, 

v.

ST. PAUL MERCURY INSURANCE

COMPANY, a Minnesota

corporation, 

Defendant-Appellant.

No. 96-1549
* The Honorable William F. Downes, District Judge, United States

District Court for the District of Wyoming, sitting by designation.

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APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

(D.C. No. 94-Z-2032)

Submitted on the briefs:

Timothy J. Parsons, David B. Seserman, and Dean C. Heizer of Gorsuch Kirgis,

L.L.C., Denver, Colorado, for Plaintiffs-Appellees.

Laurence M. McHeffey and Frank C. Porada of McElroy, Deutsch & Mulvaney,

Denver, Colorado, for Defendant-Appellant.

Before KELLY and HENRY, Circuit Judges, and DOWNES,* District Judge.

PER CURIAM

Plaintiffs, the trustees of four union trust funds and the Colorado Tile,

Marble and Terrazzo Contractors Association, brought this action against

defendant St. Paul Mercury Insurance Company seeking to recover under a surety

bond St. Paul had issued to Wilkinson & Company. Plaintiffs’ claims are based

on a judgment in their favor in a separate action they brought against Wilkinson

(the Wilkinson action or case) seeking fringe benefit contributions and other

damages under collective bargaining agreements applicable to Wilkinson’s work
1 After examining the briefs and appellate record, this panel has

determined unanimously that oral argument would not materially assist the

determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The

case is therefore ordered submitted without oral argument.

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at the Denver International Airport. The district court held that the surety bond

St. Paul issued covered these damages and entered judgment in plaintiffs’ favor. 

St. Paul appeals.1

In the meantime, Wilkinson appealed the judgment against it. We recently

affirmed the district court’s judgment against Wilkinson as it applied to the

plaintiff trustees, but vacated the judgment and remanded the case as it applied to

the Contractors Association. See Trustees of Colo. Tile, Marble & Terrazzo

Workers Pension Fund v. Wilkinson & Co., Nos. 96-1205, 96-1431 (10th Cir.

February 3, 1998) (unpublished). Because we affirmed the judgment in favor of

the plaintiff trustees, and because the resolution of this appeal does not turn on

the Contractors Association’s claims, we conclude it is appropriate to resolve this

appeal now rather than wait for proceedings to conclude in the Wilkinson action. 

On the merits, we reject St. Paul’s argument that the district court lacked

subject matter jurisdiction, but agree that the type of damages plaintiffs seek are

not covered under the surety bond. We therefore reverse.
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I. BACKGROUND

This case follows directly from plaintiffs’ success on the claims they

asserted in the Wilkinson action, which they filed in February 1994. That case

essentially turned on whether Wilkinson, a New Jersey corporation, was required

to use union labor on work it performed under subcontract at the Denver

International Airport in Colorado. With one exception to be discussed later, 

plaintiffs are the same in both this case and the Wilkinson action. Plaintiff

trustees are the named fiduciaries of four multiemployer welfare and pension

benefit plans as defined by the Employee Retirement Income Security Act of 1974

(“ERISA”). They based their claims against Wilkinson on Section 515 of ERISA,

29 U.S.C. § 1145. Section 515 allows federal actions against employers for

contributions allegedly due under the terms of multiemployer ERISA plans or

collective bargaining agreements. Plaintiff Contractors Association is a Colorado

nonprofit corporation that promotes the tile, marble and terrazzo trade in

Colorado who also claimed it was due contributions under collective bargaining

agreements. 

The facts, briefly stated, were that Wilkinson was a signatory to a

collective bargaining agreement between the Tile Contractors Association of

Northern New Jersey, Inc., and Local No. 77 of New Jersey-Bricklayers and

Allied Craftsmen (the “Local 77 CBA”). That agreement generally covered
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workers known as “helpers” or “finishers.” That agreement also contained a

“traveling contractors” clause requiring Wilkinson to comply with an affiliated

local’s collective bargaining agreement when Wilkinson performed work outside

the territory covered by the Local 77 CBA and in an affiliated local’s territory. 

Plaintiffs claimed that the work Wilkinson performed on the airport project

was the type of work covered by the Local 77 CBA, and that pursuant to the Local

77 CBA traveling contractors clause, Wilkinson was obligated to comply with the

union affiliate’s agreement covering the airport project site. The applicable local

agreement was one involving Local Union No. 6 of Colorado, International Union

of Bricklayers and Allied Craftsmen (the “Colorado CBA”). That agreement

essentially required the use of union labor and also required employers to make

contributions to plaintiffs based on the number of hours worked by covered

workers. Wilkinson neither used union labor nor made the contributions. 

Plaintiffs contended that Wilkinson breached the Colorado CBA and sought, as

damages, contributions, interest and liquidated damages under the Colorado CBA

and various trust fund agreements incorporated into that agreement for all workers

the agreement covered.

The district court agreed with plaintiffs that under the plain language of the

Local 77 CBA, the airport project was the type of work covered by the agreement. 

The court also determined that the Colorado CBA controlled the amount of
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damages, and Wilkinson was therefore obligated to make contributions for all

workers covered by that agreement. It therefore entered judgment in plaintiffs’

favor in the amount of $197,098.76 plus attorney fees and costs. 

In August 1994, prior to the district court’s ruling in their favor in the

Wilkinson case, plaintiffs brought this action alleging diversity jurisdiction under

28 U.S.C. § 1332 and seeking to recover the amounts they claimed Wilkinson

owed them under the labor and material bond St. Paul issued to Wilkinson,

pursuant to Colo. Rev. Stat. § 38-26-105(1), for the airport work. St. Paul moved

to dismiss the complaint under Fed. R. Civ. P. 12(b)(6), but the district court

denied the motion in October 1995 and on reconsideration, in March 1996. St.

Paul filed its answer in April 1996. In September 1996, while plaintiffs’

summary judgment motion was pending, St. Paul again moved to dismiss, this

time on grounds of lack of complete diversity. St. Paul, a citizen of Minnesota

for diversity purposes, raised two arguments for lack of diversity: (1) that the

citizenship of an ERISA plan is based on the citizenship of plan participants, not

the plan’s trustees, and plaintiffs could not show they were diverse from St. Paul;

and (2) even if the plans’ citizenship were based on the citizenship of its trustees,

there was not complete diversity because one of the trustees was a citizen of

Minnesota. Plaintiffs responded by contending that the citizenship of the plans
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derived from the citizenship of the trustees and by moving to amend the complaint

to delete the nondiverse trustee to maintain diversity. 

Relying on Navarro Savings Association v. Lee, 446 U.S. 458 (1980), the

district court agreed with plaintiffs that the citizenship of the trustees was what

mattered and granted their motion to amend the complaint. The court

subsequently granted plaintiffs’ motion for summary judgment regarding liability

under the bond and awarded judgment in plaintiffs’ favor for $260,139.12, the

total amount of the judgment on the merits plus attorney fees and costs awarded

to plaintiffs in the Wilkinson action and in this case. St. Paul filed a notice of

appeal. After the parties had filed their briefs in this appeal, we issued our

decision on appeal in the Wilkinson action, Nos. 96-1205, 94-1431, which

affirmed the judgment in favor of the plaintiff trustees, but vacated the judgment

and remanded the case for further proceedings as it applied to the Contractors

Association. 

On appeal, St. Paul raises three arguments: (1) the district court lacked

subject matter jurisdiction because the parties were not completely diverse; (2)

the type of claim plaintiffs asserted was not covered by the bond; and (3) ERISA

preempts plaintiffs’ claims. 
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II. DISCUSSION

A. Jurisdiction 

St. Paul challenges both the basis on which the district court determined

plaintiffs’ citizenship for diversity purposes and the court’s decision that the

nondiverse trustee was not an indispensable party under Fed. R. Civ. P. 19 and

could be dismissed to preserve diversity under Rule 21. The first issue goes to

subject matter jurisdiction, and we review the district court’s determination de

novo. See FDIC v. Hulsey, 22 F.3d 1472, 1479 (10th Cir. 1994). The other

issues--whether a party is indispensable and whether a dispensable party may be

dismissed to maintain diversity--depend on the district court’s careful exercise of

discretion, and we review the court’s determinations on those issues for abuse of

discretion. See Rishell v. Jane Phillips Episcopal Mem’l Med. Ctr., 94 F.3d 1407,

1410-11 (10th Cir. 1996) (indispensability under Rule 19(b)), cert. denied, 117

S. Ct. 1427 (1997); Jett v. Phillips & Assocs., 439 F.2d 987, 989 (10th Cir. 1971)

(dismissal under Rule 21). 

St. Paul contends that ERISA plans are unincorporated associations rather

than trusts. Because the citizenship of unincorporated associations is based on

the citizenship of all association members, see, e.g., Tuck v. United Servs. Auto.

Ass’n, 859 F.2d 842, 844-45 (10th Cir. 1988), and plaintiffs have not even
-9-

attempted to show that all plan participants are diverse from it, St. Paul contends

that the complete diversity required for jurisdiction under § 1332 did not exist. 

In Navarro, the case on which the district court relied, the Court addressed

an argument somewhat similar to St. Paul’s--that a trust, in that case, a business

trust, was actually an unincorporated association and that its citizenship should be

based on the citizenship of its shareholders rather than its trustees. See 446 U.S.

at 461-62. The Court began its discussion by recognizing that 

[e]arly in its history, this Court established that the “citizens” upon

whose diversity a plaintiff grounds jurisdiction must be real and

substantial parties to the controversy. Thus, a federal court must

disregard nominal or formal parties and rest jurisdiction only upon

the citizenship of real parties to the controversy.

id. at 460-61 (citations omitted). The Court then noted that a trust may resemble

an association or even a corporation, but stated that the trust at issue “is an

express trust, and the question is whether its trustees are real parties to this

controversy for purposes of a federal court’s diversity jurisdiction.” Id. at 462. 

The Court concluded that 

a trustee is a real party to the controversy for purposes of diversity

jurisdiction when he possesses certain customary powers to hold,

manage, and dispose of assets for the benefit of others. The trustees

in this case have such powers. At all relevant times, [the trust]

operated under a declaration of trust that authorized the trustees to

take legal title to trust assets, to invest those assets for the benefit of

the shareholders, and to sue and be sued in their capacity as trustees. 

[The trustees] filed this lawsuit in that capacity. . . . [The trust’s

beneficial shareholders] can neither control the disposition of this
2 St. Paul does not challenge the trustees’ capacity to bring this action. 

See Rule 17(a) (trustee of express trust “may sue in that person’s own name

without joining the party for whose benefit the action is brought”); see also

Navarro, 446 U.S. at 463 n.9 (noting “‘rough symmetry’ between the ‘real party in

interest’ standard of Rule 17(a) and the rule that diversity jurisdiction depends

upon the citizenship of real parties to the controversy”).

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action nor intervene in the affairs of the trust except in the most

extraordinary situations.

We conclude that these respondents are active trustees whose

control over the assets held in their names is real and substantial. 

That the trust may depart from conventional forms in other respects

has no bearing on this determination. . . . [The trustees] have legal

title; they manage the assets; they control the litigation. In short,

they are the real parties to the controversy.

Id. at 464-65 (footnotes omitted). 

We agree with the district court that Navarro controls this case, and we find

St. Paul’s efforts to distinguish Navarro unpersuasive.2 As in Navarro, the

trustees brought suit in their own name in their capacities as trustees of an express

trust. St. Paul contends that ERISA plans are not trusts because “[t]rusts are

entities typically created under state law[, but] ERISA plans are governed by a

complex set of federal statutes.” Appellant’s Br. at 8. Regardless of what law

applies, we cannot see how it can seriously be argued that an employee benefit

plan under ERISA is not an express trust. Compare, e.g., Restatement (Second)

Trusts § 2 (defining express trust generally as a “fiduciary relationship with

respect to property”), with 29 U.S.C. §§ 1101-1114 (describing fiduciary
-11-

responsibilities with respect to ERISA plans including, inter alia, requirements

that named fiduciaries have authority to manage and control plans (§ 1102(a)(1))

and that with limited exception all plan assets be held in trust (§ 1103(a))). 

Moreover, there is no question--indeed, St. Paul does not even attempt to argue to

the contrary--that the trustees here possess the “customary powers to hold,

manage, and dispose of assets for the benefit of others,” Navarro, 446 U.S. at

464. St. Paul also argues that the fact that 29 U.S.C. § 1132(a) allows plan

participants and the plan itself as well as the trustees to initiate suits somehow

means that ERISA plans cannot be trusts. We cannot see how the power of

participants or the plans themselves to initiate civil actions in limited

circumstances can deprive an ERISA plan of its status as a trust. 

St. Paul cites three post-Navarro cases in which courts have considered

ERISA plans as unincorporated associations for diversity purposes. See Laborers

Local 938 Joint Health & Welfare Trust Fund v. B.R. Starnes Co., 827 F.2d 1454

(11th Cir. 1987); Xaros v. U.S. Fidelity & Guar. Co., 820 F.2d 1176 (11th Cir.

1987); Recreation Servs., Inc. Defined Benefit Plan v. Utah Mortgage Co., 735

F. Supp. 856 (N.D. Ill. 1990). We find these cases distinguishable or

unpersuasive. In Xaros, in which the plaintiffs were apparently plan trustees, the

court concluded that the “trust funds appear to be voluntary unincorporated

associations,” and noted that the funds did not “allege[] facts negativing their
3 Few decisions address the citizenship of ERISA plans for diversity

purposes. Most cases seem to note their status as express trusts and move on. 

See, e.g., Central States, S.E. & S.W. Areas Pension Fund v. Art Pape Transfer,

Inc. 79 F.3d 651, 653 (7th Cir. 1996) (“The record in this case does not reveal the

citizenship of the Fund’s trustees, and therefore it does not support adjudication

under the diversity jurisdiction.”); Trustees of Colo. Pipe Indus. Pension Trust v.

Howard Elec. & Mechanical, Inc., 909 F.2d 1379, 1380-81 (10th Cir. 1990) (“The

Colorado Pipe Industry Pension Fund (the [ERISA] fund) is an express trust

established to provide retirement benefits for employees in the plumbing and

pipefitting industry in the State of Colorado.”); Prescription Plan Serv. Corp. v.

Franco, 552 F.2d 493, 496 n.1 (2d Cir. 1977) (noting that parties agreed

citizenship of trustees determines citizenship of plan for diversity purposes); see

also NYSA-ILA GAI Fund v. Poggi, 617 F. Supp. 847, 849-50 (S.D.N.Y.)

(holding that under Navarro, citizenship of ERISA plan based on citizenship of

trustees), reaff’d as amended on reconsideration, 624 F. Supp. 443 (S.D.N.Y.

1985).

-12-

existence as voluntary unincorporated associations.” 820 F.2d at 1181 (emphasis

added). Significantly, the court did not cite Navarro, did not explain why the

funds were not trusts, and declined to consider, without explanation, the argument

that “diversity may be properly alleged by naming the trustees as representatives

of the employee benefit plans.” See id. at 1182. The other two cases simply

followed Xaros without analysis. See Laborers Local 938, 827 F.2d at 1457;

Recreation Servs., 735 F. Supp. at 859. In addition, the plaintiffs in these two

cases were the ERISA plans themselves, not the trustees. Because these cases

failed to address the diversity issue under Navarro where the trustees bring suit in

their own name on behalf of the ERISA plans, we decline to follow them.3
4

In Carden, the Court seemed to acknowledge that the analyses in

Navarro and Carden appear at odds: “The resolutions we have reached above can

validly be characterized as technical, precedent-bound, and unresponsive to policy

considerations raised by the changing realities of business organization. But, as

must be evident from our earlier discussion, that has been the character of our

jurisprudence in this field . . . .” 494 U.S. at 196.

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St. Paul also contends that this case is controlled not by Navarro but by

Carden v. Arkoma Assocs., 494 U.S. 185 (1990), which addressed the citizenship

of a limited partnership for diversity purposes. The Court “reject[ed] the

contention that to determine, for diversity purposes, the citizenship of an artificial

entity, the court may consult the citizenship of less than all of the entity’s

members. We adhere to our oft-repeated rule that diversity jurisdiction in a suit

by or against the entity depends on the citizenship of ‘all the members.’” Id. at

195 (citation omitted). Carden, however, distinguished Navarro by stating that it

“did not involve the question whether a party that is an artificial entity other than

a corporation can be considered a ‘citizen’ of a State, but the quite separate

question whether parties that were undoubted ‘citizens’ (viz., natural persons)

were the real parties to the controversy.” Id. at 191. Were the ERISA plans here

the named plaintiffs, St. Paul’s reliance on Carden might be justified. That is not

the situation. The trustees are the named plaintiffs, and we find this case

indistinguishable from Navarro.

4
5 Unfortunately, the district court did not fully explain in its brief oral

order on this matter why it concluded Trustee Wallner was not indispensable

(continued...)

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We thus conclude that the district court correctly looked to the citizenship

of the trustees for diversity purposes here. All of the trustees here are diverse

from St. Paul save one--John Wallner, a trustee of the Bricklayers and Allied

Craftsmen International Health Fund and the Bricklayers and Trowel Trades

International Pension Fund. The question now is whether the district court was

correct in dismissing Wallner under Rule 21 to preserve diversity.

“[I]t is well-settled that Rule 21 invests district courts with authority to

allow a dispensable nondiverse party to be dropped at any time [to preserve

diversity jurisdiction], even after judgment has been rendered.” Newman-Green,

Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832 (1989); see also Tuck, 859 F.2d at

845. Rule 21 allows the court to dismiss parties “on such terms as are just,” thus

granting considerable discretion to the district court. See Jett, 439 F.2d at

989-90; Moore’s Federal Practice § 21.02[4] (3d ed. 1997). That discretion is

circumscribed, however, by Rule 19(b) because the court cannot proceed without

indispensable parties. See Newman-Green, 490 U.S. at 832; Jett, 439 F.2d at 990. 

Whether a party is indispensable, considering the factors required under Rule

19(b), is a matter left to the district court’s discretion. See Navajo Tribe of

Indians v. New Mexico, 809 F.2d 1455, 1471 (10th Cir. 1987).5
5

(...continued)

under Rule 19(b), why in “equity and good conscience” the case could proceed

without him, or why it was “just” to dismiss Trustee Wallner under Rule 21. This

court is always concerned that reviewing a district court’s exercise of discretion

on a complex matter with an inadequate record runs the risk of having this court

exercise that discretion in the first instance, something we are not empowered to

do. In this instance, however, we conclude that the record is marginally sufficient

to allow this court to review the district court’s exercise of discretion in these

matters. 

6 We express no opinion on this issue as it might apply to cases in

(continued...)

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St. Paul contends that if the citizenship of the ERISA plans is determined

by the citizenship of the trustees, then all of the trustees must be considered at all

times, relying on the Court’s statement in Carden that “[w]e have never held that

an artificial entity, suing or being sued in its own name, can invoke the diversity

jurisdiction of the federal courts based on the citizenship of some but not all of its

members,” 494 U.S. at 192. Because all of the trustees were not diverse at the

outset of the litigation, St. Paul contends the district court was prohibited from

dismissing the nondiverse trustee to preserve diversity. Otherwise, trusts could

forum shop by selectively choosing which of its trustees to name as plaintiffs in a

particular action. Alternatively, it argues that Trustee Wallner must be considered

indispensable because there would be nothing to stop him from filing a state court

action if the other trustees do not prevail in this case. 

Again, we find Carden inapposite because this case does not involve an

artificial entity “suing or being sued in its own name.”6 We also reject St. Paul’s
6

(...continued)

which the party is the ERISA plan or trust fund itself.

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argument that all trustees must be indispensable under Rule 19(b) and that a

trustee is therefore not susceptible to dismissal under Rule 21. St. Paul cites no

authority supporting what would amount to a categorical, technical rule that all

trustees are always indispensable parties; the only case addressing a similar

situation of which we are aware is to the contrary. See Prescription Plan Serv.

Corp. v. Franco, 552 F.2d 493, 497 (2d Cir. 1977) (affirming dismissal of two

ERISA plan trustees to preserve diversity under Rule 21 where interests of

trustees remaining in case were identical to dismissed trustees). Such a rule

would be inconsistent with the pragmatic considerations that guide the analysis

under Rule 19(b). See HB General Corp. v. Manchester Partners, L.P., 95 F.3d

1185, 1191 (3d Cir. 1996) (“In contrast to Carden’s jurisdictional rule, which the

Supreme Court acknowledged to be technical, precedent-bound, and unresponsive

to policy considerations, whether a person is indispensable depends on pragmatic

considerations.”) (quotations and citations omitted); Curley v. Brignoli, Curley &

Roberts Assocs., 915 F.2d 81, 88-92 (2d Cir. 1990). Instead of being based on

application of categorical rules, “[t]he decision whether to dismiss (i.e., the

decision whether the person missing is ‘indispensable’) must be based on factors

varying with the different cases, some such factors being substantive, some
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procedural, some compelling by themselves, and some subject to balancing

against opposing interests.” Provident Tradesmens Bank & Trust Co. v.

Patterson, 390 U.S. 102, 118-19 (1968). 

St. Paul’s concern with abusive forum shopping can be addressed through

the analysis of indispensability. See id. at 111 (noting that Rule 19(b) takes into

account “interest of the courts and the public in complete, consistent, and

efficient settlement of controversies”); Prescription Plan Serv., 552 F.2d at 497

n.5 (noting that representative parties should not be manipulated to obtain

diversity jurisdiction). The analysis and equities may differ somewhat depending

on whether the issue arises early in the litigation under a Rule 12(b)(7) motion,

for example, or later under a Rule 21 motion. Possible forum shopping may be

more critical early in the litigation while judicial economy may take on greater

importance if the question does not arise until later in the litigation. But the

ultimate concerns of the district court in either situation are “whether in equity

and good conscience the action should proceed among the parties before it, the

absent person being thus regarded as indispensable,” Rule 19(b), and whether

dismissal of a dispensable party is “just,” Rule 21. And these turn on pragmatic

rather than technical considerations. 
-18-

As the party seeking dismissal for inability to join an allegedly

indispensable party, St. Paul has the burden of persuasion. See Rishell, 94 F.3d at

1411. To determine whether a party is indispensable, a court must consider

first, to what extent a judgment rendered in the person’s absence

might be prejudicial to the person or those already parties; second,

the extent to which, by protective provisions in the judgment, by the

shaping of relief, or other measures, the prejudice can be lessened or

avoided; third, whether a judgment rendered in the person’s absence

will be adequate; fourth, whether the plaintiff will have an adequate

remedy if the action is dismissed for nonjoinder.

Rule 19(b). St. Paul addresses only the first of these factors, contending that it

could be prejudiced by Wallner filing a separate state court action should the

trustees fail to prevail in this action. This contention, however, fails to consider

the res judicata effect of a judgment against the other trustees, since all trustees

would be suing in their representative capacities and almost certainly be found to

be in privity with each other. Moreover, under the second factor, the court could

avoid any possible prejudice by fashioning relief to require the party trustees to

bind the trust, and consequently the other trustee, to the judgment rendered in this

case. The third factor, which includes public and judicial interests in complete

and efficient resolution of disputes, see Provident Tradesmens Bank, 390 U.S. at

111, also favors a finding of dispensability. The fact of Trustee Wallner’s

nondiversity and the issue of whether or not he was indispensable did not arise

until two years after plaintiffs filed their complaint. The district court concluded
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that plaintiffs were not guilty of any “shenanigans” in picking and choosing the

named plaintiffs in an attempt to manipulate federal court jurisdiction, see

Appellants’ Br., Ex. B at 4-5, and St. Paul does not argue to the contrary. The

fourth factor, the availability of an alternate forum if the action is dismissed,

which we presume would be the situation here, is not a sufficient reason by itself

for dismissing an action for nonjoinder. See Rishell, 94 F.3d at 1413. 

We therefore conclude that the district court did not abuse its discretion in

dismissing Wallner as dispensable to preserve diversity and hold that the court

had subject matter jurisdiction.

B. Colorado Public Works Act

St. Paul issued the bond to Wilkinson pursuant to the Colorado Public

Works Act, Colo. Rev. Stat. §§ 38-26-101 to 107. That act requires that a

contractor on a public works construction project shall execute a penal bond with

good and sufficient surety

conditioned that such contractor shall at all times promptly make

payments of all amounts lawfully due to all persons supplying or

furnishing him or his subcontractors with labor, materials, rental

machinery, tools, or equipment used or performed in the prosecution

of the work provided for in such contract . . . . Subcontractors,

materialmen, mechanics, suppliers of rental equipment, and others

may have a right of action for amounts lawfully due them from the

contractor or subcontractor directly against the principal and surety

of such bond.
7 The parties’ arguments assume that the scope of the bond is governed

by this statute. We proceed from that assumption.

-20-

Colo. Rev. Stat. § 38-26-105(1).7

 St. Paul contends that this statute does not

cover the fringe benefit contributions for which plaintiffs seek recovery here

because those contributions do not directly relate to any labor actually supplied or

furnished to Wilkinson, but instead are simply damages for breach of the

Colorado CBA.

In concluding that the contributions were covered by the statute, the district

court relied on Trustees of Colo. Carpenters & Millwrights Health Benefit Trust

Fund v. Pinkard Constr. Co., 604 P.2d 683 (Colo. 1979). In Pinkard, the trustees

sought recovery under a bond issued pursuant to the statute for fringe benefit

contributions payable for work actually performed by the contractor’s employees

on a public works project. The defendants contended that the statute covered only

amounts payable directly to the workers, not those payable to the trust funds. 

Relying on a Supreme Court case interpreting the analogous federal Miller Act,

see United States ex rel. Sherman v. Carter, 353 U.S. 210 (1957), the court held

that the amounts were “‘payments . . . lawfully due’” under collective bargaining

agreements. “Each one of these benefits was agreed to be paid by the

subcontractors in exchange for the work done by the construction workers. Until

these were paid into the trust funds, the compensation to the workers was not
-21-

fully paid.” Pinkard, 604 P.2d at 685. The district court here concluded that it

does not matter that the contributions plaintiffs are seeking are not for the

workers who actually did the work and cannot be considered part of their

compensation.

We review the district court’s interpretation of state law de novo, Salve

Regina College v. Russell, 499 U.S. 225, 231 (1991), and we think it does matter

that the contributions in question are not compensation for work actually

performed. The statute covers the claims of “all persons supplying or furnishing

[the contractor] with labor.” § 38-26-105(1). We see no indication that it covers

the claims of all persons who may have been entitled to supply or furnish the

contractor with labor, whether or not they had a contractual right to do so. 

Wilkinson obviously breached the Colorado CBA by not hiring workers covered

by that agreement. However, the fact is that those workers did not actually supply

or furnish anything to Wilkinson. Thus, despite plaintiffs’ protestations to the

contrary, all they have is a simple derivative breach of contract claim against

Wilkinson. 

Colorado courts have not yet addressed whether § 38-26-105 covers breach

of contract damages, but the general rule is that such damages, including lost
8

In a broad sense, the unpaid contributions here are similar to lost

profits. They are amounts the ERISA plans would have “earned” had Wilkinson

complied with the Colorado CBA.

-22-

profits,8

 are not recoverable under public works bond statutes. See, e.g., Lucas v.

Western Cas. & Sur. Co., 176 F.2d 506, 508 (10th Cir. 1949) (interpreting

Oklahoma public works bond statute); L.P. Friestedt Co. v. U.S. Fireproofing Co.

125 F.2d 1010, 1012 (10th Cir. 1942) (interpreting federal Heard Act, predecessor

to Miller Act); United States ex rel. Mobile Premix Concrete, Inc. v. Santa Fe

Eng’rs, Inc., 515 F. Supp. 512, 516 (D. Colo. 1981) (interpreting Miller Act); see

also Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., 687 A.2d 506, 517

(Conn. 1997) (noting that its research disclosed no jurisdiction allowing recovery

of unearned profits under Miller Act; “[T]he language and purpose of the [Miller

Act], requiring payment for work performed or materials supplied, preclude such
9 The Colorado Supreme Court has relied on both the Miller Act and

other states’ public works bond acts in interpreting analogous provisions in the

Colorado act. See Pinkard, 604 P.2d at 685; Western Metal Lath v. Acoustical &

Constr. Supply, Inc., 851 P.2d 875, 878 & n.3 (Colo. 1993). Moreover, plaintiffs

have not cited any authority holding that breach of contract damages are

recoverable under these types of bonds. They cite cases such as Trustees of

Teamsters Constr. Workers Local No. 13, Health & Welfare Trust Fund v. Hawg

N Action, Inc., 651 F.2d 1384, 1386-87 (10th Cir. 1981), which stands for the

proposition that the trustees could recover--directly against the contractor--for

contributions due under a collective bargaining agreement even though the

nonunion workers on whose efforts the contributions were based would not

ultimately benefit from the contributions. That holding is consistent with our

holding in the appeal of the Wilkinson case, but it has no bearing on the distinct

issue of whether the bond statute covers the contributions in this case. 

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recovery.”).9

 We therefore conclude that § 36-26-105(1) does not cover the

breach of contract damages plaintiffs seek in this case.

III. CONCLUSION

We conclude that the district court erred in holding that the damages

plaintiffs seek are covered under § 38-26-105 and recoverable under the bond

St. Paul issued to Wilkinson. We therefore do not need to address St. Paul’s

ERISA preemption argument. The judgment of the district court is REVERSED.