Opinion ID: 540395
Heading Depth: 3
Heading Rank: 2

Heading: The Trustees' Claim Was Barred By Laches

Text: 25 The defense of laches is available in a suit to collect a claim for withdrawal liability. See ILGWU Nat'l Retirement Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879, 887 (2d Cir.1988); Central States Pension Fund v. Lloyd L. Sztanyo Trust, 693 F.Supp. 531, 541 (E.D.Mich.1988); Jaspan v. Certified Indus., Inc., 645 F.Supp. 998, 1007 (E.D.N.Y.1985); cf. Trustees of Wyo. Laborers Health & Welfare Plan v. Morgen & Oswood Constr. Co., 850 F.2d 613, 624 (10th Cir.1988); Trustees of Colo. Statewide Iron Workers Fund v. A & P Steel, Inc., 812 F.2d 1518, 1528 (10th Cir.1987) (both considering a laches defense to a claim under ERISA for delinquent contributions to pension funds). But see Robbins v. Pepsi-Cola Metro. Bottling Co., 636 F.Supp. 641, 681 n. 6 (N.D.Ill.1986); Combs v. Western Coal Corp., 611 F.Supp. 917, 920 (D.D.C.1985). 4 The defense is available whether or not the amount assessed has become due and owing. See Jaspan v. Certified Indus., Inc., 645 F.Supp. at 1005. Laches is just as applicable to a delay in re initiating litigation as it is to a delay in initiating litigation. See Restatement (Second) of Judgments Sec. 20 comment n (1982); cf. In re Whitney-Forbes, Inc., 770 F.2d 692, 698 (7th Cir.1985); Coleman v. Block, 663 F.Supp. 1315, 1329 (D.N.D.1987), vacated as moot, 864 F.2d 604 (8th Cir.1988). 26 After the district court terminated without prejudice the Trustees' counterclaim for withdrawal liability, the Trustees got the bankruptcy court to lift the automatic stay on May 13, 1986. However, it was not until January 29, 1988--over twenty months later--that the Trustees moved to reopen the district court litigation. The district court held that the claim had become barred by laches: 27 [D]espite the issuance of the order granting relief from stay, thereby permitting the [T]rustees to prosecute their counterclaim in this civil action, the [T]rustees' former legal counsel decided to proceed through the proof of claim filed in the bankruptcy proceedings and then neglected to prosecute that claim in a timely manner. Current counsel for the [T]rustees then discovered that ... a bond had been posted in this civil action to secure payment of withdrawal liability.... Accordingly, the [T]rustees seek to recover on that bond.... [T]he failure of the [T]rustees to prosecute the counterclaim here for more than 20 months after receiving the order granting relief from stay is inexcusable and would cause substantial detriment to the plaintiff by proceeding with the litigation of the counterclaim. 28 R. Vol. I, Tab 20 at 3. 29 Laches consists of two elements: (1) inexcusable delay in instituting a suit; and (2) resulting prejudice to defendant from such delay. Brunswick Corp. v. Spinit Reel Co., 832 F.2d 513, 523 (10th Cir.1987). We will not disturb a finding of laches unless the district court abused its discretion. Id. 30 The Trustees claim that, rather than sleeping on their rights, their counsel spent the twenty-month interval trying to work out an amicable settlement. Generally, a delay caused by settlement negotiations is not unreasonable. See, e.g., Stone v. Williams, 873 F.2d 620, 625 (2d Cir.1989); Mogavero v. McLucas, 543 F.2d 1081, 1083 (4th Cir.1976). Unfortunately for the Trustees, this argument appears to be an afterthought. No evidence in the record supports it. 5 We agree with the district court's conclusion that the Trustees have not justified their failure to act. 31 When the plaintiff's conduct is unjustified, the defendant's need to show prejudice eases. Stone v. Williams, 873 F.2d at 625; see Gull Airborne Instruments, Inc. v. Weinberger, 694 F.2d 838, 893 (D.C.Cir.1982). Centric need not show that the delay hindered its defense of the Trustees' claim; prejudice also can flow from outside conditions (in this case, arrangements to liquidate) arising during the hiatus. See, e.g., Lingenfelter v. Keystone Consol. Indus., Inc., 691 F.2d 339, 342 (7th Cir.1982); Independent Bankers Ass'n v. Heimann, 627 F.2d 486, 488 (D.C.Cir.1980). The same prejudice to Centric that the bankruptcy court found under the first Magouirk factor also accrued to Centric from the Trustee's languor in the district court. Further litigation of the Trustees' claim would force Centric to revise its plan of liquidation, and would both delay and reduce the ultimate payments to the secured creditors. We cannot say that the district court's conclusion that Centric was prejudiced was an abuse of its discretion.