Court Opinion

ID: 1003978
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:34:22.808655+00
Date Added: 2024-06-11T15:12:03.374161
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

SECURITY WORKERS HEALTHAND
WELFARE FUND; RUTH ROUSE,
Trustee of the Fund; EUGENE
HARTMAN, Trustee of the Fund;
MYRA MCCOY, Trustee of the Fund;
GREG STROUSE, Trustee of the Fund,
Plaintiffs-Appellants,
                                                               No. 00-1538
v.

MID-ATLANTIC SECURITY SERVICES,
INCORPORATED, d/b/a Areawide
Services, Limited; WACKENHUT
SERVICES, INCORPORATED,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Charles B. Day, Magistrate Judge.
(CA-96-2203-WMN)

Argued: January 24, 2001

Decided: March 28, 2001

Before WILKINS and MICHAEL, Circuit Judges, and
Claude M. HILTON, Chief United States District Judge for
the Eastern District of Virginia, sitting by designation.

_________________________________________________________________

Reversed and remanded by unpublished per curiam opinion.

_________________________________________________________________
COUNSEL

ARGUED: Marc Alan Tenenbaum, SLEVIN & HART, P.C., Wash-
ington, D.C., for Appellants. Jeffrey Peabody Ayres, VENABLE,
BAETJER & HOWARD, L.L.P., Towson, Maryland, for Appellees.
ON BRIEF: Marc H. Rifkind, SLEVIN & HART, P.C., Washington,
D.C., for Appellants. Joseph D. Gebhardt, JOSEPH D. GEBHARDT,
P.C., Washington, D.C., for Appellee Mid-Atlantic.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

This case involves the interpretation of a provision in an ERISA
trust agreement that holds a delinquent employer liable to the trustees
of its employees' benefit fund for all reasonable costs incurred in the
collection of a delinquent account. A magistrate judge interpreted this
provision as excluding the fees of an auditor. Finding this interpreta-
tion to be in error, we reverse and remand.

Security Workers Health and Welfare Fund, a joint labor manage-
ment employee benefit fund, provides health and related benefits to
security guards under the Employee Retirement Income Security Act,
29 U.S.C. § 1001 et seq. The Fund was one of the insurance options
for security guards employed by Mid-Atlantic Security Services
(which operated under the name "Areawide Services Limited") pursu-
ant to a collective bargaining agreement between Areawide and the
United Union of Security Guards. The collective bargaining agree-
ment required Areawide to contribute to the Fund based on the num-
ber of guards who elected to participate in the Fund's benefit
program. The agreement also required Areawide to provide monthly
reports to the Fund detailing the number of participating employees
and the hours they worked. On July 17, 1996, the Fund brought suit

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in the United States District Court for the District of Maryland after
Areawide failed to make the requisite contributions to the Fund and
failed to submit a monthly report. At around the same time period,
Areawide was purchased by Wackenhut Services.

Areawide did not file a timely answer to the complaint and the dis-
trict court entered judgment by default against Areawide. However,
the default judgment was later vacated. The parties eventually settled
as to the amount of principal that was due the Fund. The district court
entered partial judgment in the Fund's favor for that stipulated
amount ($32,000). The matter went forward, however, as to the issues
of interest, liquidated damages, attorneys' fees, audit fees, and collec-
tion costs. The Fund filed a motion for summary judgment which a
magistrate judge, assigned to hear the case upon the consent of all of
the parties, granted in part. The magistrate judge awarded $58,634.37
in interest, liquidated damages, attorneys' fees, and other costs; this
amount was in addition to the $32,000 judgment that the parties
agreed to for satisfaction of the principal amount owed to the Fund.
The magistrate judge reduced the Fund's request for attorneys' fees
by 50%, denied altogether the Fund's request for auditor fees, and
reduced the amount of taxable costs by $97.14.

At issue in this appeal is the magistrate judge's denial of the fees
for the Fund's auditor, Patrick R. Reid, in the amount of $24,521.25.
Reid had reviewed Areawide's employment records to determine how
much was owed the Fund. Reid was given the documents in question
only after the Fund had obtained an order to compel. Reid also
reviewed documents from Wackenhut. Reid's rate was $90 per hour
for his work and $45 per hour for his assistants' time. The magistrate
judge ruled that Mr. Reid was not utilized by the Fund as an auditor
but as an expert witness. The magistrate judge held that because Reid
was assisting with trial preparation as an expert, the Fund was not
entitled to reimbursement of his fee.

Because this Court is being asked to review the magistrate judge's
ruling on a motion for summary judgment, the matter is reviewed de
novo. See Canada Life Assurance Co. v. Estate of Lebowitz, 185 F.3d
231, 235 (4th Cir. 1999).

Resolution of this issue begins and ends with the interpretation of
a clause in the Fund's Trust Agreement, which Areawide agreed to

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be bound by in its collective bargaining agreement with the union.
Article IX, Section 6 of the Trust Agreement provides in pertinent
part, "[I]n the event that the Trustees place the account in the hands
of legal counsel for collection, the delinquent employer shall be liable
for reasonable attorney fees (with a minimum of $100) and for all rea-
sonable costs incurred in the collection process, including court fees,
audit fees, etc."

Reid's fees are included as "costs incurred in the collection pro-
cess." "Audit fees" are specifically listed in the clause as an example
of a collection cost. Areawide argues that Reid was really performing
the services of an expert witness and that he was performing tasks
more accurately characterized as litigation support. The magistrate
judge agreed, finding that Reid was hired for purposes of litigation.
Even if this finding is correct, the clause in the agreement clearly con-
templates litigation-related expenses. For example, the agreement lists
"court fees" as a recoverable collection cost. Court fees would only
be applicable if the Fund pursued litigation to collect a delinquent
account. There is no requirement, as the magistrate judge found, that
the information uncovered by the auditor be obtained in the ordinary
course of employment, rather than after being retained by counsel.
There is no question that Reid was performing an audit in that he
reviewed Areawide and Wackenhut's employment records to deter-
mine how much was owed the Fund. The fact that this task was per-
formed while this matter was in litigation--rather than as part of a
preventative, routine audit--is irrelevant under the plain language of
the agreement in question.

Because the Court concludes that the contract unambiguously
resolves this issue in favor of the Fund, it is not necessary to address
the Fund's further argument that ERISA itself provides for the award
of audit fees. This case is remanded for the consideration of audit fees
consistent with this opinion.

REVERSED AND REMANDED

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