Trust Fund for every hour worked by bargaining unit employees up to 175 hours per month for
each employee. (R. 21-1, Def.’s Counterstatement { 8.) The parties disagree on the rate at which
Defendant was required to make such contributions. Defendant states that the rate was $1.67 per
hour at the start of the Agreement’s period of applicability, but the Plaintiffs advocate a rate of
$2.27 per hour at times and $2.38 per hour at other times. (Jd. J] 8, 11; R 19-1, Def.’s Resp. to
Pls.’ Statement of Undisputed Facts { 7; R. 16-1, Pls.’ Statement of Undisputed Facts J 7, Tab

4.) The Agreement provides for the reopening of negotiations for wage rates for the contract year
of June 1, 2003 to May 31, 2004, and for the possibility of an increase in pension contribution
and health and welfare contribution rates. (R. 21-1, Def.’s Counterstatement q 9.) No such
negotiations occurred. (Jd.) The Agreement also calls for liquidated damages and interest in
case ofa breach. (R. 16-1, Pls.’ Statement of Undisputed Facts 5.)

Defendant also contracted to pay $3.98 per hour to the Chicago District Council of
Carpenters Health and Welfare Trust Fund for the first 175 hours worked by each bargaining unit
employee per month. (R. 21-1, Def.’s Counterstatement { 12.) Additionally, the Agreement
provides for a possible increase of up to $0.25 per hour to the Health and Welfare Fund
contribution rate. (/d. J 13.)

Under the Agreement and Memorandum, the Plaintiffs and the Union were to provide
health and major medical insurance coverage for bargaining unit employees. (Id. { 14.)

C. Performance

Defendant submitted reports to the Plaintiffs for the months of June 2001 through May
2003 for hours worked by its union employees. (R. 16-1, Pls.’ Statement of Undisputed Facts J

6.) Though Defendant submitted reports for these months, it did not submit the proper


false statement reasonably and detrimentally relied upon by an unwitting plaintiff.” Coker, 165
F.3d at 585. Here, Defendant asserts that Plaintiffs’ diversion of contributions from the Health
and Welfare Fund to the Pension Fund estopps Plaintiffs from asserting that Defendant has a
continuing obligation to make payments. (R. 18-1, Def.’s Memo. in Opp. to Pls.’ Mot. for Summ.
J. pp. 9-10). Defendant does not allege any written misrepresentation by the Funds or the Union.
Accordingly, Defendant fails to present evidence that would meet the elements of the estoppel
defense, and fails to show that a genuine issue of material fact exists with regard to its obligation
to make health and welfare contributions.

Stanfred’s contract breach and estoppel defenses fail to overcome Plaintiffs’ motion for
summary judgment. Accordingly, the Court proceeds to the question of Defendant's failure to
report and contribute,

Il. Unpaid Pension Fund Contributions

Defendant entered into a contract to pay fringe benefit contributions according to rates
established by the Agreement and the accompanying Memorandum. Plaintiffs state that
Defendant owes $173,384.40 in unpaid fringe benefit contributions, (R. 16-1, Pls.’ Statement of
Undisputed Facts 7), according to calculations based on the Agreement. Plaintiffs base their
calculations, in part, on a rate of contribution to the Pension Trust Fund of $2.27 and sometimes
$2.38. (Id. Tab 4, Ex. C.) Aside from the defenses already discussed, Defendant does not dispute
that it did not make the relevant contributions. Defendant contends, however, that it owes much

less because the contractual contribution rate is $1.67 per hour. (R. 21-1, Def.’s Counterstatement

178, 10.)


It is undisputed that Defendant failed to make all of its payments owed to Plaintiff.
Defendant argues that summary judgment is not appropriate, however, because Plaintiffs
breached their contract with Defendant and therefore they may not seek unpaid contributions.
Defendant also contends that equitable estoppel prevents Plaintiffs from seeking unpaid
contributions. Finally, Defendant contests the amount of contribution required by its contract
with Plaintiffs. For the following reasons, the Court finds that Plaintiffs are entitled to partial
summary judgment.

I. Unpaid Health and Welfare Contributions

A. Breach of Contract

Defendant claims that Plaintiffs breached contractual obligations they owed to Stanfred
by diverting payments from the Health and Welfare Fund to the Pension Fund. As a result of this
breach, Defendant argues that Plaintiffs may not recover contributions. Defendant contends that
the diversion amounts to breach of contract because Keith Burke, as President of Stanfred, is
‘solely responsible for making decisions concerning payment to the Union and to the Plaintiffs
and he did not authorize the Union, the Plaintiffs, or any of their agents to divert the Pension
Fund payments. (R. 18-1, Def.’s Memo. in Opp. to Pls.’ Mot. for Summ. J. p.8; R. 21-1, Def.’s
Counterstatement {J 22-24.) Defendant does not, however, point to evidence of an actual
obligation the Funds breached by allegedly diverting payment from the Health and Welfare Fund
to the Pension Fund. Stanfred points to a paragraph in Keith Burke’s affidavit that says nothing
about the Plaintiffs’ obligations. (R. 21-1, Def.’s Counterstatement { 14; R. 21-2, Aff. of Keith
Burke 7.) The Court discovered related statements in paragraph 11 of Defendant’s affidavit,

where Mr. Burke simply states “[i]n return for the monthly contributions, the Union and Trust


accompanying payments. (Jd.) During that time, however, Defendant did make two payments to
the Health and Welfare Trust Fund — $12,230.54 in April 2002 and $12,294.22 in June 2002.
QR. 21-1, Def.’s Counterstatement {Wl 15, 16.) Since June 2003, Defendant has submitted neither
reports nor payments. (R. 16-1, Pls. Statement of Undisputed Facts J 10.)

in the spring of 2002, Plaintiffs issued Blue Cross/Blue Shield health and welfare
insurance cards for April, May, and June of 2002 to Defendant’s employees, (R. 21-1, Def.’s
Counterstatement 17.) After Defendant made the April and June payments to the Pension
Fund, Keith Burke maintains that the Union and Trust Funds had terminated Health and Welfare
coverage for Defendant’s employees, even though Plaintiffs had issued new coverage cards. (Id.
728.) At some point during the Spring of 2002, health and welfare claims submitted by Stanfred
employees were denied. (Jd. {{] 17-19.) Mr. Burke called the Plaintiffs, and an individual
named Derek Iwiniak allegedly told Burke that the Health and Welfare covetage was cancelled

because Defendant’s payments had been diverted to the Pension Fund. (id. { 20.)

ANALYSIS

Plaintiffs claim that Defendant Stanfred is liable for failure to make proper fringe benefit
payments owed to Plaintiffs under the agreements. (R. 1-1, Pls’ Compl. Count I ff 1-12.) In
addition to past due benefit payments, Plaintiffs also claim that Defendant is liable for interest,
liquidated damages, and costs in accordance with 29 U.S.C. § 1132(g)(2)(B), (C), and (D). (a.
VW 10-12.) Finally, Plaintiffs’ complaint alleges that Defendant is liable for failure to submit
reports for the months of September 2002 to the present. (Jd. Count II {9 1-14.) Plaintiffs have
Since altered their position, and now state that Defendant has failed to submit reports only from

June 2003 to the present. (R. 16-1, Pls.’ Statement of Undisputed Facts § 10.)


Congress enacted Section 515 of ERISA to simplify the collection process for ERISA plans
seeking delinquent contributions. Cent. States, S.E. & S.W. Areas Pension Fund v. Gerber Truck
Serv., Inc., 870 F.2d 1148, 1152 (7 Cir. 1989). Applying Section 515, the Seventh Circuit has
held that ERISA pension and welfare funds are like holders in due course in commercial law,
“entitled to enforce the writing without regard to understandings or defenses applicable to the
original parties.” Jd. at 1149. This means that, in general, an employer sued by ERISA pension
and welfare funds for delinquent contributions cannot assert against the funds most defenses it has
against the Union. Id.; Robbins, 836 F.2d at 333-34. This rule does not, however, preclude an
employer from asserting against pension and welfare funds any defense it may have against the
funds themselves. Laborers’ Pension Fund v. Litgen Concrete Cutting & Coring Co., 128 F.R.D.
96, 98 n.2 (N.D. Ill. 1989) (noting that Gerber Truck does not prevent employer from raising “as a
defense against the Funds any of their actions which amount to . . . estoppel”(emphasis added)).
Courts are, however, reluctant to apply the estoppel doctrine in ERISA cases. Black v. TIC
Investment Corp., 900 F.2d 112, 115 (7" Cir. 1990). The Seventh Circuit has explained that the
rule requiring that plan modifications be in writing, 29 U.S.C. § 1102(a)(1), and the required
procedures for amending plans, 29 U.S.C. § 1102(b)(3), make estoppel a difficult claim to assert
in the ERISA context. Coker v. Trans World Airlines, Inc., 165 F.3d 579, 585 (7" Cir. 1999). In
ERISA actions, the estoppel cause of action has four elements: “(1) a knowing misrepresentation;
(2) made in writing; (3) with reasonable reliance on that misrepresentation by the plaintiff; (4) to
[plaintiff s) detriment.” Jd. at 585. Courts have also applied these elements to estoppel as an
affirmative defense. E.g., Irs. of Will County Local 174 Carperters Pension Trust Fund v. F.V.E.

& Assocs., Inc., 2001 WL 1298803, at *2 (N.D. Ill. Oct 24, 2001). “A claim will not lie for every


* Minute Orde Form (06/97)

United States District Court, Northern District of Illinois

(11)

ramest heise ois | Amy J. St. Eve Stig ede te
CASE NUMBER 02 C 8735 DATE 3/16/2004
CASE Chicago District Council of Carpent vs. Stanfred Laminating Company, Inc.
TITLE
[ln the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: ofthe motion being presented.)
DOCKET ENTRY:
q) QO Filed motion of [ use listing in “Motion” box above.]
(2) a Brief in support of motion due.
(3) Oo Answer brief to motion due__. Reply to answer briefdue__.
(4) a Ruling/Hearing on setfor_ at
(5) a Status hearing[held/continued to] (set for/re-set for]on___—ssetfor__—__at.
(6) o Pretrial conference[held/continued to] [set for/re-set for}on__—_ssetfor__——at__
(7) im) Trial[set for/re-set for]on__at
(8) im) [Bench/Jury trial] [Hearing] held/continued to___at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OlLocal Rule 41.1. COFRCP41(a\(1) [) FRCP41(a)(2).
ao «=f [Other docket entry] | Enter Memorandum Opinion and Order. Plaintiffs’ motion for summary

judgment is granted in part and denied in part.

(ina\h |

Hi | [For further detail see order attached to the original minute order.]

No notices required, advised in open court.
No notices required.

Notices mailed by judge's staff.
Notified counsel by telephone.
Docketing to mail notices.
Mail AO 450 form.

Copy to judge/magistrate judge. MAR 17 2004
So cd SI anes dasa mailed notice
courtroom ze bod ee
Tad deputy’s
initials
““Date/tinte rectived in ; 7
‘central Clerk's Office ‘ailing deputy initiate



provisions noted here. Plaintiffs have not responded to Defendant's explanation of the
contribution rate and have not even argued that Defendant’s reading is unreasonable.? Therefore,
a genuine issue of material fact exists with respect to the contribution rate. The Court therefore
denies Plaintiffs’ motion for summary judgment with regard to the amount of unpaid Pension
Fund contributions and the amount of interest and liquidated damages arising from them.
IYI. Unpaid Health and Welfare Contributions

Defendant asserts that it made two contributions to the union employees’ Health and
Welfare Fund. Defendant does not claim to have made any other payments to this fund. Because
the Court has rejected Defendant’s asserted defenses, Defendant is liable for unpaid Health and
Welfare Fund Contributions. Plaintiffs’ motion is granted with respect to these contributions —
minus the April and June 2002 payments — and Plaintiff is ordered to submit a revised
calculation detailing the contribution deficiencies.
IV. Failure to Submit Monthly Contribution Reports

Defendant admits that it did not submit monthly contribution reports from June 2003 to
the present. (R. 19-1, Def.’s Resp. to Pls.’ Statement of Undisputed Facts 10.) As the Court has
already rejected Defendant’s asserted defenses, Plaintiff is entitled to summary judgment that

Defendant improperly withheld monthly contribution reports from June 2003 to the present.

3 Plaintiffs filed a Motion for Leave to File a Reply Brief and Response to Additional
Facts Instanter on October 24, 2003. The Court granted Plaintiffs’ motion on October 29.
Nevertheless, Plaintiffs did not attach or subsequently file a reply brief in connection with their
summary judgment motion.

11


When courts examine a contract in the ERISA context, they apply federal common law
tules of interpretation. Cent. States, S.E. & S.W. Areas Pension Fund v. Kroger Co., 73 F.3d 727,
731 (7 Cir. 1996). These federal common law rules instruct the Court to interpret the Agreement
and Memorandum “in an ordinary and popular sense” as a person of “average intelligence and
experience” would. Phillips v. Lincoln Nat’l Life Ins. Co., 978 F.2d 302, 308 (7" Cir. 1992)
(internal quotations omitted). If an agreement is ambiguous, the trier of fact must resolve
questions of interpretation. Kroger, 73 F.3d at 732. In the ERISA context, a contract is
ambiguous if it is “susceptible to more than one reasonable interpretation.” Jd. “When parties
suggest different, yet reasonable interpretations of a contract, the contract is ambiguous.” Jd.

Here, the opposing parties have suggested different, yet reasonable interpretations of the
Agreement and Memorandum. Plaintiffs’ position that the contribution rate is $2.27 finds support
in section 8.1 of the Agreement, which states “(t]he Employer shall pay into the Chicago District
Council of Carpenters Milimen Pension Fund $2.27 per hour...” (R. 16-1, Pls.’ Statement of
Undisputed Facts Tab 2 p. 6.) The Memorandum further supports this position with its statement
“{iJncorporate Union Pension of $2.27 per hour . . . effective 07-01-01.” (/d.) On the other hand,
Defendant’s position that the contribution rate is $1.67 is also supported by the Agreement.
Specifically, a note included in the Agreement states that “[t]he Employer has agreed to pay $1.67
per hour increase for each employee covered by this agreement into the Chicago and Northeast
Illinois District Council of Carpenters Millmen Pension Fund effective July 1, 2001.” (¢d. p. 2.)
The Memorandum further complicates the issue with its inclusion of the statement “[s]top 60
cents IRA effective 06-01-01.” (Id. p. 15.) The Memorandum rate of $2.27 minus 60 cents would

equal $1.67, but the contract does not explain with any clarity the relationship among the various

10


Funds had a contractual obligation to provide health and major medical insurance . . . under the
agreement and memorandum.” (R. 21-2, Aff. of Keith Burke J 11.) Paragraph 11 of the affidavit
in turn sends the Court to paragraphs 3 and 7 of the Agreement. (/d.) These paragraphs do not
contain any language explaining the Health and Welfare Plan’s obligations. (R. 21-3, Dep. of
Keith Burke Ex. 1 Agreement ff 3, 7.)

Furthermore, pension and welfare trusts are not parties to collective bargaining agreements
and trust agreements between employers and unions. Rather, they are third party beneficiaries.
See Robbins v. Lynch, 836 F.2d 330, 333 (7" Cir. 1988) (pension or welfare trust is third party
beneficiary of collective bargaining agreement). In this case, neither the Pension Fund nor the
Health and Welfare Fund signed the Agreement or Memorandum. (R. 16-1, Pls.’ Statement of
Undisputed Facts Tab 2.) Accordingly, this Court will not make assumptions as to the existence
or nature of any contractual obligations Plaintiffs may owe to Stanfred.

A party opposing a motion for summary judgment must present more than a “mere
scintilla of evidence” to support its position. See Anderson, 477 U.S. at 252, 106 S. Ct. at 2512.
Stanfred has failed to provide more than a mere scintilla of evidence to support its claimed
contract breach defense, and therefore has failed to raise a genuine issue of material fact on this
issue.

B. Equitable Estoppel

Defendant next argues that Plaintiffs may not collect delinquent contributions because of
the equitable doctrine of estoppel. Defendant correctly recognizes that employers who are
obligated to make contribution payments to a pension or welfare fund pursuant to a collective

bargaining agreement generally cannot assert contractual or equitable affirmative defenses.


has been doing business as Stanfred Laminating Company. (/d. 9 3-4.)? Stanfred conducts a
countertop fabrication business and is an employer party to a collective bargaining agreement
with the Union. (/d. 5; R. 16-1, Pls.’ Statement of Undisputed Facts {ff 2-3.) Keith Burke
serves as Stanfred’s president. (R. 21-1, Def.’s Counterstatement 2.)
II. Obligations under the Collective Bargaining Agreement

A. Entering the Agreement

On or about June 1, 2001, Defendant executed two written documents with the Union.
. 21-1, Def.’s Counterstatement {J 6-7.) One document was the “Agreement between Stanfred
Laminating Company and Chicago and Northeast District Council of Carpenters Local 1027”
(“Agreement”). (/d. 6.) Earl E. Oliver signed this document as President of the Union, and
Keith Burke signed as President of Stanfred. (/d.) The other document, signed at the same time,
was the “Stanfred Laminating Memorandum of Understanding” (“Memorandum”). (/d.) Bill
Casey signed this document as Vice President of the Union, and Burke signed as President of
Stanfred. (/d.)

B. Obligations Created by the Agreement

The Agreement binds Defendant to pay fringe benefit contributions to Plaintiffs on a
monthly basis according to the rates set forth in the Agreement. (R. 16-1, Pls.’ Statement of
Undisputed Facts 3.) The Agreement requires Defendant to make fringe benefit contributions
for each hour worked by its carpenter employees, and requires Defendant to make these payments

each month. (/d. {{ 4-5.) Defendant had an obligation to pay a certain amount to the Pension

? The Court will refer to Suke, Inc. and Stanfred Laminating Company collectively as
“Stanfred.”



248, 106 S. Ct. 2505, 2510, 91 L. Ed.2d 202 (1986). The party seeking summary judgment has
the burden of establishing the lack of any genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986). Summary
judgment is inappropriate “if the evidence is such that a reasonable jury could return a verdict for
the nonmoving party.” Anderson, 477 U.S. at 248, 106 S. Ct. at 2505. The Court “considers the
evidentiary record in the light most favorable to the non-moving party, and draws all reasonable
inferences in his favor.” Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7" Cir. 2002).
BACKGROUND

Plaintiffs bring this action under ERISA Section 502 and Section 301 of the Taft-Hartley
Act. This Court has subject matter jurisdiction under 28 U.S.C. § 1331 because of questions
arising under these two statutes. (R. 16-1, Pls.’ Statement of Undisputed Facts  1.)!
I. The Parties

Plaintiffs Chicago District Council of Carpenters Millmen Pension Fund, et al. are a
group of pension and welfare plans that receive contributions from numerous employers pursuant
to collective bargaining agreements between employers and the Chicago and Northeast Ilinois
District Council of Carpenters (“Union”). (R. 16-1, Pls.’ Statement of Undisputed Facts { 2.)

Defendant Suke, Inc. is an Indiana corporation that was incorporated in 2001 for the
purpose of buying the assets of Stanfred Laminating Company. (R. 21-1, Def.’s

Counterstatement { 1.) Suke purchased the assets of Stanfred in May 2001, and since that time

' Plaintiffs have not strictly adhered to Local Rule 56.1. The Local Rules require the
party moving for summary judgment to provide “all facts supporting venue and jurisdiction in
this Court.” Local Rule 56.1(a)(3)(B). Plaintiffs’ Local Rule 56.1(a)(3) statement fails to set
forth showing that this dispute meets these requirements. Nevertheless, jurisdiction and venue
are proper and Defendant has not objected to this deficiency.

2



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
CHICAGO DISTRICT COUNCIL OF )
CARPENTERS MILLMEN PENSION FUND, et al., )
) No. 02 C 8735
Plaintiffs, )
)
v. )
)
STANFRED LAMINATING COMPANY, INC., )
)
Defendant. )
MAR i 7 2004
MEMORANDUM OPINION
AMY J. ST. EVE, District Judge: ft nO 4
Saeco a4 2 Beech

Plaintiffs brought suit against Defendant under Section 502 of the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1132 (2000), and Section 301 of the Taft-Hartley
Act, 29 U.S.C. § 185 (2000), alleging that Defendant violated its obligations under the applicable
agreements by failing to submit monthly employee benefit reports and by failing to pay monthly
fringe benefit contributions. Plaintiffs move for summary judgment. For the reasons stated
herein, the Court grants Plaintiffs’ motion in part.

LEGAL STANDARDS

Summary judgment is proper when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c). A genuine issue of triable fact exists only if “the evidence
is such that a reasonable jury could return a verdict for the nonmoving party.” Pugh v. City of

Attica, 259 F.3d 619, 625 (7" Cir. 2001) (quoting Anderson v, Liberty Lobby, Inc., 477 U.S. 242,

7



CONCLUSION
Accordingly, the Court grants Plaintiffs’ motion for summary judgment in part. The Court
grants summary judgment in favor of Plaintiff on the matter of Defendant’s failure to submit
monthly contribution reports for the months of June 2003 to the present. The Court also grants
summary judgment on unpaid Health and Welfare contributions, but orders Plaintiff to submit a
detailed list of such deficiencies. Due to ambiguity in the Agreement and Memorandum,
however, the Court denies summary judgment on the question of the amount due in unpaid

Pension Fund contributions plus interest and liquidated damages.

Dated: March 16, 2004 ENTERED

iL [ia

Amy St. EVe
United States District Court Judge

12