Source: https://law.justia.com/cases/california/court-of-appeal/4th/35/59.html
Timestamp: 2019-04-20 12:12:53+00:00

Document:
OPERATING ENGINEERS PENSION TRUST et al., Plaintiffs and Appellants, v. INSURANCE COMPANY OF THE WEST, Defendant and Respondent.
Jett & Laquer and Wayne Jett for Plaintiffs and Appellants.
Potter & Taylor and William R. Potter for Defendant and Respondent.
Plaintiffs and appellants Operating Engineers Pension Trust, Operating Engineers Health and Welfare Fund, Operating Engineers Vacation-Holiday Savings Trust and Operating Engineers Training Trust (the Trusts) appeal a judgment following a grant of summary judgment in favor of defendant and respondent Insurance Company of the West (West).
We conclude the Trusts' third party beneficiary claim (Civ. Code, § 1559) is preempted because it supplements the remedy provided by ERISA. (Carpenters Health & Welfare Tr. F. v. Tri Capital (hereafter Tri Capital) (9th Cir. 1994) 25 F.3d 849, 853-854, cert. den. ___ U.S. ___ [130 L. Ed. 2d 495, 115 S. Ct. 580].) The judgment therefore is affirmed.
The Trusts are express trusts created to receive employer contributions under written collective bargaining agreements among the International Union of Operating Engineers, Local Union No. 12 (the Union) and certain employer associations in the construction industry in Southern California.
West issued various payment and performance bonds in connection with construction projects, both public and private, upon which Wm. Kirchavny [35 Cal. App. 4th 62] Construction, Inc. (Kirchavny) was the general contractor. fn. 1 Kirchavny's collective bargaining agreement with the Union required Kirchavny to make fringe benefit payments to the Trusts based on each hour worked by the employees. Kirchavny failed to make required payments and became insolvent.
On March 31, 1992, the Trusts initiated a complaint against West to collect on the bonds the amounts due, to which West filed a general denial. West pled numerous affirmative defenses, including ERISA preemption.
The Trusts then moved for summary judgment to recover $28,077.39 in unpaid contributions. The Trusts contended they were entitled "to make claims as [third party] beneficiaries of Kirchavny's construction bonds," and the remedy of recovery on the bonds was not preempted by ERISA.
On June 7, 1993, the trial court denied the Trusts' motion and instead, granted summary judgment in favor of West, ruling the claims were preempted by ERISA.
The essence of the Trusts' argument is that their action to recover on the subject payment and performance bonds as third party beneficiaries thereof is not preempted by ERISA.
1. Overview of ERISA preemption.
b. Survey of California state remedies which have been held to be preempted.
To guide us in the determination of whether the Trusts' third party beneficiary claim is preempted by ERISA, we examine case law concerning ERISA preemption of various California remedies.
(1) Mechanic's lien remedy under California Civil Code section 3111 to recover delinquent contributions preempted by ERISA.
(2) California stop notice remedy also preempted.
(3) Action on contractor's bond under California Business and Professions Code section 7071.5 also preempted.
In Tri Capital, which is directly on point, the Ninth Circuit examined whether ERISA preempts an attempt under a third party beneficiary theory to enforce a plan's right to collect delinquent fringe benefit contributions.
In Tri Capital, multiemployer benefit plans brought an action against the construction lender and general contractor, seeking recovery of the subcontractors' unpaid plan contributions. (Tri Capital, supra, 25 F.3d at p. 851.) The subcontract between the general contractor and the subcontractor provided " '[l]abor benefits will be paid under a joint check agreement between [the general contractor, the subcontractor] & the appropriate agency.' " (Id., at p. 854.) The trust funds' complaint alleged a claim under Civil Code section 1559 seeking to enforce the rights of the trust funds as third party beneficiaries of the subcontract.
In sum, ERISA has been held to preempt actions to recover delinquent fringe benefit contributions based on California's mechanic's lien procedure (Civ. Code, § 3111), the stop notice remedy (Civ. Code, §§ 3156 et seq., 3179 et seq.), a licensed contractor's bond (Bus. & Prof. Code, § 7071.5, subd. (d)), and a third party beneficiary theory (Civ. Code, § 1559).
Guided by these ample authorities, we advert to the issue raised by the instant case.
2. Action by the Trusts to collect on payment and performance bonds as third party beneficiaries preempted by ERISA.
 According to the Trusts, they "have sued to enforce private contract claims as third party beneficiaries of payment and performance bonds issued [35 Cal. App. 4th 67] by [West] as a private surety." They contend ERISA preempts state laws, not private contracts, and West should be bound by the private contractual obligations it undertook when it issued the bonds.
The Trusts also argue at length that as enacted in 1974, ERISA afforded no right of action against an employer for recovery of delinquent contributions, that such right did not exist until ERISA was amended in 1980, and Congress could not have intended to preempt state law causes of action when it adopted the preemption provision in 1974, or when it amended ERISA in 1980.
The judgment is affirmed. Each party to bear respective costs on appeal.
Croskey, J., and Kitching, J., concurred.
FN 1. Kirchavny is not a party to this appeal.
FN 2. Civil Code section 3111 provides: "For the purposes of this chapter, an express trust fund established pursuant to a collective bargaining agreement to which payments are required to be made on account of fringe benefits supplemental to a wage agreement for the benefit of a claimant on particular real property shall have a lien on such property in the amount of the supplemental fringe benefit payments owing to it pursuant to the collective bargaining agreement."
FN 4. Civil Code section 1559 states "[a] contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it."

References: v. 
 § 1559
 v. 
 § 3111
 § 7071
 § 1559