Opinion ID: 2279836
Heading Depth: 1
Heading Rank: 1

Heading: International Fidelity

Text: Board of Trustees of Operating Engineers, Local 825, had a collective bargaining agreement with J. Gram Construction Co. that required Gram to make contributions, on behalf of the members of Local 825 whom it employed, to various pension, health, and welfare funds established pursuant to the federal Employee Retirement Income Security Act, 29 U.S.C. § 1001 to 1461 (ERISA). Local 825 administered the funds on behalf of its members. Gram hired Local 825 members in connection with various public works projects in which Gram was engaged. Pursuant to the Bond Act, Gram procured surety bonds guaranteeing both performance of the work and the full payment for labor and materials supplied on the jobs. Gram obtained the necessary bonds from International Fidelity Insurance Co. (IFIC). In January 1994, Local 825 audited Gram's books and discovered that Gram had not paid $95,612.53 in contributions owed to the pension fund. The Local demanded payment by Gram of the past contributions. When Gram failed to pay, Local 825 began an action in the Law Division and obtained a default judgment against Gram for the amount owed. In January 1995, Local 825 began this action against IFIC, claiming that IFIC is responsible under the bonds IFIC issued on behalf of Gram to make all payments that Gram failed to make. IFIC filed a motion to dismiss on the basis that ERISA preempts the Bond Act, and prevents a surety from being liable for a contractor's delinquent payment of fringe benefit contributions. The Law Division granted IFIC's motion and dismissed Local 825's complaint. Local 825 appealed. The Appellate Division consolidated the case with the First Indemnity matter. It reversed the Law Division and reinstated Local 825's complaint. 287 N.J. Super. 498, 671 A. 2d 596 (App.Div. 1996). It reasoned that although the trial courts' opinions had been in accord with the weight of authority at the time they were issued, a new group of cases had been decided in the previous year that clarified the reach of ERISA preemption to sureties' liability under bonds issued to a contractor. We granted IFIC's petition for certification. 146 N.J. 67, 679 A. 2d 654 (1996).