Court Opinion

ID: 812433
Source: CourtListenerOpinion
Date Created: 2012-11-23 16:14:59+00
Date Added: 2024-06-11T18:00:44.794164
License: Public Domain

United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 11-3746
                        ___________________________

Greater St. Louis Construction Laborers Welfare Fund, an employee benefit plan;
    Brandon Flinn; Raymond Linehan; Pasquale Lopiccolo; Gary Elliott; David
        Gillick; James Moll; Tom Daniels; Jeff Schmidt; Adam Knoebel; Jay
  Schultehenrich; Charles Bean; Norman Merlo, Trustees of the Greater St. Louis
   Construction Laborers Welfare Fund; Construction Laborers Pension Trust of
 Greater St. Louis, an employee benefit plan; Joseph Beetz; Richard McLaughlin;
Jeffrey O’Connell; Don Willey; Gary Elliott; William Luth; Donald Grant; Joseph
  Leritz; Robert Fritz; Jay Schultehenrich, Trustees of the Construction Laborers
  Pension Trust of Greater St. Louis; St. Louis Vacation Fund - Vacation Plan, an
 employee benefit plan; Gary Elliott; Brandon Flinn; Jay Schultehenrich; Norman
  Merlo; William Luth, Trustees of the St. Louis Vacation Fund - Vacation Plan;
 AGC - Eastern Missouri Laborers Joint Training Fund, an employee benefit plan;
Larry Bloomer; Don Willey; Perri Pryor; Gary Elliott; Richard McGuire; Brandon
Flinn; John B. Morgan; Phil Hocher; Robert J. Wesolich; Francis R. Wojehowski;
  Cliff Land; John J. Smith, Sr., Trustees of the AGC-Eastern Missouri Laborers’
Joint Training Fund; Local Union Nos. 42-53-110 Laborers International Union of
                    North America AFL-CIO, labor organizations

                      lllllllllllllllllllll Plaintiffs - Appellees

                                          v.

                    Park-Mark, Inc., a Missouri corporation

                      lllllllllllllllllllll Defendant - Appellant
                                      ____________

                    Appeal from United States District Court
                 for the Eastern District of Missouri - St. Louis
                                 ____________
                          Submitted: September 19, 2012
                            Filed: November 23, 2012
                                 ____________

Before BYE, GRUENDER, and SHEPHERD, Circuit Judges.
                           ____________

SHEPHERD, Circuit Judge.

       The Greater St. Louis Construction Laborers Welfare Fund along with several
other employee benefit funds and their trustees (collectively, “the Funds”), brought
this action to recover delinquent payments from Park-Mark, Inc. under the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001-1461. Park-Mark
contends that it should not be liable for these delinquent payments because it
mistakenly made significant overpayments that require a set-off and a refund. The
district court1 granted summary judgment in favor of the Funds. We affirm.

                                         I.

       Park-Mark is a Missouri corporation that paints stripes on parking lots and
roads in Missouri and Illinois. In October 2001, Park-Mark agreed to be bound by
a collective-bargaining agreement (“CBA”) with the Eastern Missouri Laborers’
District Council and all subsequent CBAs. The CBA required Park-Mark to make
monthly contributions based on the hours worked by covered employees to the
Greater St. Louis Construction Laborers Welfare Funds, the Construction Laborers
Pension Trust of Greater St. Louis, the St. Louis Vacation Fund, and the Eastern
Missouri Joint Training Fund. The Funds are employee welfare benefit plans
organized pursuant to ERISA that provide health insurance coverage and retirement
benefits.

      1
       The Honorable Stephen N. Limbaugh, Jr., United States District Judge for the
Eastern District of Missouri.

                                        -2-
       Park-Mark and the Funds have been involved in litigation for several years
relating to separate disputes. In February 2010, counsel for the Funds notified Park-
Mark that an internal audit revealed that Park-Mark had made overpayments to the
Funds during the period of April 1, 2004, through September 30, 2009. Then, in
November 2010, the Funds’ accounting firm determined that the overpayments
totaled $548,257.39. Park-Mark had made payments to the Funds for hours worked
by its employees that were not performed in the jurisdiction of the CBA. Park-Mark
stopped making payments to the Funds from October 2010 through December 2010
because the Funds did not provide credit for the overpayments.

      As a result, the Funds brought this action for missing payments from
September 1, 2010, forward and untimely contributions made between October 2008
and August 2010, pursuant to 29 U.S.C. § 1132(g)(2). Park-Mark answered the
complaint, asserting as an affirmative defense that a set-off should be applied to any
damages awarded the Funds and that any excess be remitted to Park-Mark. Park-
Mark later amended its answer to include a counterclaim for restitution, specifically
seeking overpayments it had made to the Funds.

       The Funds moved for summary judgment, and the district court granted their
motion. The district court recognized that a federal common-law cause of action
exists for overpayments mistakenly made under ERISA. Applying a variety of
equitable factors to Park-Mark’s set-off defense, the district court held the principles
of equity did not demand a refund, but the court did not address Park-Mark’s
counterclaim for restitution. Park-Mark then moved the district court to reconsider
its order granting summary judgment, arguing the court (1) disposed of Park-Mark’s
counterclaim for restitution without the parties raising the issue and (2) misapplied
the law with respect to Park-Mark’s set-off defense. After the Funds responded, the
district court denied the motion to reconsider, holding Park-Mark failed to file a
formal pleading constituting a counterclaim. Additionally, the district court reasoned

                                          -3-
that even if Park-Mark had raised such a claim, it fully addressed the counterclaim for
restitution by analyzing Park-Mark’s set-off defense. Park-Mark now appeals.

                                           II.

       Park-Mark raises two points on appeal. First, Park-Mark contends that the
district court erred by dismissing its counterclaim when the claim was not raised by
either party. Second, Park-Mark argues that the district court erred by holding that
equity did not favor a set-off or restitution. Considering each point in turn, we review
de novo the district court’s grant of summary judgment. See Hackett v. Standard Ins.
Co., 559 F.3d 825, 829 (8th Cir. 2009).

                                           A.

       First, Park-Mark contends the district court erred by dismissing its
counterclaim for restitution because the counterclaim was not properly before the
district court. A trial court’s determination that a claim is ripe for summary judgment
is reviewed for an abuse of discretion. Crowell v. Campbell Soup Co., 264 F.3d 756,
760 (8th Cir. 2001). Generally, a court “does not abuse its discretion by granting
summary judgment on the record before it if the party opposing summary judgment
seeks neither a continuance nor further discovery.” Id.

      In this case, the district court did not abuse its discretion.2 Park-Mark neither
requested a continuance, nor sought to have the discovery deadline extended. Indeed,

      2
        The district court incorrectly found in its motion for reconsideration that Park-
Mark failed to file any formal pleading which constituted a counterclaim. In fact,
Park-Mark filed an amended answer on April 6, 2012, that included a counterclaim
for restitution. Although the district court’s finding that Park-Mark had not filed a
counterclaim was inaccurate, it does not affect the outcome of the case for the reasons
explained above.

                                          -4-
the discovery deadline had passed when the district court granted summary judgment
in favor of the Funds. Additionally, Park-Mark’s affirmative defense sought a set-off
against any damages recovered by the Funds and also requested that overpayments
in excess of the amount owed to the Funds be remitted to Park-Mark. The legal and
factual analysis for the set-off defense and the counterclaim are the same; each
requires the court to determine if a return of overpayments is permitted and then if it
is equitable. The district court’s analysis of the set-off defense in its order granting
summary judgment would necessarily dispose of Park-Mark’s restitution claim. Park-
Mark does not refute this. Therefore, the issue was fully briefed and presented to the
district court because it involved the same issues as the set-off defense which was the
focus of the district court’s order. As a result, the district court did not abuse its
discretion by holding that its initial order granting summary judgment disposed of
Park-Mark’s claim for restitution.

                                          B.

       Park-Mark argues on appeal that (1) the district court incorrectly dismissed
Park-Mark’s set-off defense and (2) if the district court had reached Park-Mark’s
restitution claim, it would have held Park-Mark was entitled to a refund. Because
each claim requires the same legal and factual analysis, we consider them together.
We must first determine if Park-Mark was entitled to bring a federal common-law
cause of action for a mistaken payment, and if so, whether equity favors a repayment.

       We review a district court’s grant of summary judgment de novo and we will
affirm the grant of summary judgement “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). A party opposing summary judgment must do more than
allege that some factual dispute exists; it must present a genuine issue of material
fact. Quinn v. St. Louis Cnty., 653 F.3d 745, 751 (8th Cir. 2011). A nonmoving
party “must come forward with specific facts showing that there is a genuine issue for

                                          -5-
trial.” Conseco Life Ins. Co. v. Williams, 620 F.3d 902, 910 (8th Cir. 2010) (internal
quotation marks omitted); see also Jaurequi v. Carter Mfg. Co., 173 F.3d 1076, 1085
(8th Cir. 1999) (holding a party opposing summary judgment may not rest on
allegations or denials).

       Park-Mark contends it made overpayments in the amount of $548,257.39,
based on a report prepared by the Funds’s accountants, and the Funds conceded that
overpayments were made for the purposes of the motion for summary judgment.
Under ERISA, contributions made by a mistake of law or fact may be returned
“within 6 months after the plan administrator determines that the contribution was
made by such a mistake.” 29 U.S.C § 1103(c)(2)(A)(ii). This Court has joined other
circuits by holding that “an employer has a federal common law action for restitution
of mistakenly made payments to an ERISA plan.” Young Am., Inc. v. Union Cent.
Life Ins. Co., 101 F.3d 546, 548 (8th Cir. 1996).

       Park-Mark properly asserted the first prerequisite in asserting a federal
common-law claim for restitution by alleging it made a mistake of law or fact in
contributing to the Funds or, at the very least, sufficiently alleged a material dispute
existed. However, the Funds contend that Park-Mark has not sufficiently supported
these allegations with facts to demonstrate that the overpayments were made by a
mistake of fact or law. Michael Solomon, Park-Mark’s president, stated in an
affidavit that the company made the overpayments to the Funds based on the
mistaken belief that it was required to make contributions for all hours worked under
the CBA, including for the hours worked out of the CBA’s jurisdiction. The
Administrative Manager of one of the Funds, Bernard Difani, stated in his second
affidavit that the Funds’ accountants concluded that Park-Mark had made payments
for hours worked outside the jurisdiction of the CBA, and for other work for which
the CBA did not require contributions. Based on the affidavits of Solomon and
Difani, evidence exists that Park-Mark made overpayments under an erroneous legal
or factual understanding.

                                          -6-
      Even though overpayments were made, a refund is not automatic. Rather,
Park-Mark must demonstrate that restitution is equitable. This Court in Young
America held that restitution will be granted if the remedy is “equitable under the
circumstances,” referencing factors developed by the Seventh Circuit. Id. (citing UIU
Severance Pay Trust Fund v. Local Union No. 18-U, 998 F.2d 509, 513 (7th Cir.
1993)). In UIU Severance Fund, the court listed the following non-exclusive factors
for analyzing if restitution is equitable:

      (1) are unauthorized contributions the sort of mistaken payments that
      equity demands be refunded? (2) has the Union delayed bringing this
      action for so long that laches, or some other equitable defense, bars
      recovery? (3) in the same vein, has the Union, by continuing the
      payments for years without apparent question, somehow ratified past
      payments? and (4) since the Fund has agreed that it is not entitled to
      keep the disputed amount in any event, can the Union demonstrate that
      the party from whom it seeks payment would be unjustly enriched if
      recovery were denied?

UIU Severance Fund, 998 F.2d at 513 (internal footnote omitted). Also, a fund’s
policies cannot be arbitrary and capricious, including the decision not to refund
mistakenly made payments. See Young Am., 101 F.3d at 549.3

      3
        Park-Mark contends the district court misapplied the law, arguing that the
standard applied to ERISA claims in other courts supports a refund. See, e.g.,
Whitworth Bros. Storage Co. v. Cent. States Se. & Sw. Areas Pension Fund, 982 F.2d
1006, 1016 (6th Cir. 1993) (“A pension fund’s refusal to refund contributions paid
by mistake is arbitrary unless necessary to the financial soundness of the plan or
justified by some other compelling reason.”). Although a “‘sister circuit’s reasoned
decision deserves great weight and precedential value,’” United States v. Auginash,
266 F.3d 781, 784 (8th Cir. 2001), we decline to expand our holding in Young
America outside of the framework articulated in that case.

                                         -7-
      Applying these equitable factors to this case, we first consider if the
overpayments are the sort of mistaken payments that equity demands refunded.
Restitution is inequitable where a payor “obtained a benefit that he intends to retain
from the payment” made, but now seeks to have the payment returned. Operating
Eng’rs Local 139 Health Benefit Fund v. Gustafson Const. Corp., 258 F.3d 645, 651
(7th Cir. 2001) (citing other cases holding the same). Overpayments may be “tied to
higher pension and welfare benefits for the defendant’s employees.” Id. Insurance
and pension benefits are contingent and deferred, respectively, so although there is
no immediate receipt, an employer may receive an immediate benefit because the
greater pension and welfare benefits reduce the employees’ demands for higher
wages. Id. at 651-52.

      The Funds presented evidence that Park-Mark employees received insurance-
coverage benefits and pension benefits reflecting the greater overpayments made by
Park-Mark. One of the Funds’ administrators, Bernard Difani, stated in his second
affidavit that all of Park-Mark’s CBA contributions, including overpayments,
benefitted Park-Mark’s employees through health insurance coverage and pension
contributions. Additionally, Difani stated that if the overpayments were returned, the
Funds would be required to deduct pension credits from Park-Mark’s employees that
were based on the overpayments.

        After the Funds presented this evidence, Park-Mark did nothing to rehabilitate
its attacked assertions, nor did it offer additional evidence or seek further discovery.
Park-Mark now argues through unsupported hypotheticals that the payments it made
to the Funds did not necessarily constitute a benefit.4 Aside from one e-mail and the

      4
       On appeal and for the first time, Park-Mark argues specific sections of the
CBA raise an issue of material fact that not all overpayments were received as
benefits by its employees. Specifically, Park-Mark contends that section 5.06,
Training and Apprentice, and section 5.07, Site Advancement Fund, indicate that
Park-Mark employees may not have received benefits from the overpayments made

                                          -8-
accountant’s report, the only other evidence that Park-Mark presented to the district
court was the affidavit of its president. Ultimately, Park-Mark presented insufficient
evidence to refute the Funds’ proof that refunding the overpayment would adversely
affect Park-Mark’s employees. See Conseco, 620 F.3d at 910 (holding summary
judgment proper where party failed to provide “some relevant evidence” to dispute
the facts presented).

       The second factor to consider is if an equitable defense exists due to a delay in
bringing the claim. See UIU Severance Fund, 998 F.2d at 513. “Laches applies when
a claimant inexcusably delays in asserting its claim and thereby unduly prejudices the
party against whom the claim ultimately is asserted.” Hubbard Feeds, Inc. v. Animal
Feed Supplement, Inc., 182 F.3d 598, 602 (8th Cir. 1999). Not only have the parties
been involved in ongoing litigation for a period of years, but Park-Mark agrees that
it began making overpayments in 2004. Park-Mark argues that it did not learn of the
overpayments until February 2010 when the mistake was discovered by the Funds’
accountants. This factor still weighs in favor of the Funds, however, because the
CBA outlines when payments should be made by unambiguously defining the scope
of the CBA’s jurisdiction. Park-Mark’s delay in bringing the claim was inexcusable,
and has prejudiced the Funds who are placed in the position of attempting to unwind
six years of payments by trying to calculate whether Park-Mark’s employees truly
received benefits from the payments. See Weniger v. Success Mining Co., 227 F.
548, 557 (8th Cir. 1915) (“[I]gnorance which is the effect of inexcusable negligence
is no excuse for laches . . . .”). Therefore, we conclude this equitable factor favors the
Funds.

to the Funds. Because we do not consider an argument first raised on appeal unless
a “manifest injustice” would result, we decline to address this argument. See
Henning v. Mainstreet Bank, 538 F.3d 975, 979 (8th Cir. 2008) (internal quotation
marks omitted).

                                           -9-
      Third, a refund may be inequitable if a company’s continued, unquestioned
payment over a period of years ratified the previous payments. See id. In UIU
Severance, a business representative for a union increased the contribution levels the
union was making to his benefit plan, and the union argued that these additional
payments were a “rogue act” taken without authorization. Id. at 511. Here, however,
Park-Mark authorized the overpayments for five years. Park-Mark argues that
although the payments were authorized, it overpaid the Funds based on a mistake of
law or fact. Because there is no dispute whether the overpayments were authorized
by Park-Mark, we do not consider if this equitable factor favors Park-Mark or the
Funds.5

       Fourth, equity may favor a repayment if the Funds were unjustly enriched by
Park-Mark. See id. As discussed above, no evidence was presented by Park-Mark
refuting the Funds’ evidence that they were not unjustly enriched. Equity does not
favor a refund where no unjust enrichment occurred. Cf. Dickey v. Royal Banks of
Mo., 111 F.3d 580, 583 (8th Cir. 1997) (“[A] court will force a defendant to disgorge
a windfall if it is equitable to do so.”). Therefore, this factor weighs in favor of the
Funds.

       Finally, Park-Mark contends that the Funds’ actions and, more specifically,
their decision to retain the overpayments are arbitrary and capricious. We disagree.
Based on the evidence in the record, the Funds decided to retain the overpayments
after investigating the matter and determining that refunding the overpayments to
Park-Mark would negatively impact the pension credits Park-Mark’s employees had
accrued. On these facts, we do not find this conduct to be arbitrary and capricious.

      5
        The factors articulated by UIU Severance are not a “complete catalog” of what
a court may consider, nor is any one factor controlling. See UIU Severance, 998 F.3d
at 513. Although we find that the issue of ratification favors neither party, we
ultimately hold that the three remaining equitable factors do not favor restitution.

                                         -10-
Cf. Young Am., 101 F.3d at 549 (holding one-year limit on premium refunds arbitrary
and capricious).

      Based on the above analysis, equity does not favor a refund on these facts. We
conclude the district court properly granted summary judgment in favor of the Funds.

                                        III.

      For these reasons, we affirm the district court.
                      ______________________________

                                       -11-