Court Opinion

ID: 1018442
Source: CourtListenerOpinion
Date Created: 2013-07-04 22:20:18.045778+00
Date Added: 2024-06-11T09:52:12.171255
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                              No. 05-1352

WILLIAM L. CRADDOCK; JOHN W. DARLINGTON, JR.;
HARRY L. MARCUM; JAMES C. ROBINSON; DENNIS
BEARD,

                                              Plaintiffs - Appellees,

           and

LANDMARK CORPORATION,

                                                            Plaintiff,

           versus

APOGEE COAL COMPANY,

                                               Defendant - Appellant,

           and

TRUSTEES OF THE UNITED MINE WORKERS HEALTH &
RETIREMENT FUNDS; UNITED MINE WORKERS OF
AMERICA 1993 BENEFIT PLAN; MICHAEL H. HOLLAND;
MARTY D. HUDSON; ELLIOT A. SEGAL; A. FRANK
DUNHAM, Trustees of the UMWA 1993 Benefit
Plan,

                                                           Defendants.

Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston. Joseph Robert Goodwin,
District Judge. (CA-01-1009-2)

Argued:   November 30, 2005                 Decided:   February 9, 2006
Before WILKINS, Chief Judge, and LUTTIG and WILLIAMS, Circuit
Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Albert F. Sebok, JACKSON KELLY, P.L.L.C., Charleston, West
Virginia, for Appellant.    Bradley James Pyles, PYLES, HAVILAND,
TURNER & SMITH, L.L.P., Logan, West Virginia; Charles Peter Groppe,
MORGAN, LEWIS & BOCKIUS, L.L.P., Washington, D.C., for Appellees.
ON BRIEF: John Philip Melick, Brian J. Moore, JACKSON KELLY,
P.L.L.C., Charleston, West Virginia, for Appellant.      Stanley F.
Lechner, MORGAN, LEWIS & BOCKIUS, L.L.P., Washington, D.C.; John R.
Mooney, Douglas L. Parker, MOONEY, GREEN, BAKER & SAINDON, P.C.,
Washington, D.C., for Appellee UMWA 1993 Benefit Plan.

Unpublished opinions are not binding precedent in this circuit.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

                               -2-
PER CURIAM:

     This    appeal       arises   from    a    dispute    over    liability     for

plaintiffs’ retirement health benefits.                 The district court held

that defendant-appellant Apogee Coal Company is liable for the

benefits    under     a    contract       it    entered    into    with     Landmark

Corporation, plaintiffs’ previous employer.                For the reasons that

follow, we affirm.

                                          I.

     The    original       plaintiff       in    this     action   was      Landmark

Corporation, a coal company that has ceased business operations and

declared bankruptcy.         In 1993, Landmark agreed to do reclamation

work for Apogee Coal Company, and the two companies entered into a

contract that provided that Landmark would hire workers from a

panel of laid-off Apogee employees.              During contract negotiations,

an issue arose regarding liability for the post-employment benefits

of the laid-off Apogee employees hired by Landmark.                       This issue

arose because the National Bituminous Coal Wage Agreement of 1993

(“NBCWA”), a collective-bargaining agreement to which both Landmark

and Apogee are signatories, requires an employee’s last signatory

employer    to   provide     the   employee’s      lifetime    health      benefits.

Seeking to avoid the liabilities it would incur under NBCWA by

virtue of becoming the last signatory employer of the laid-off

                                          -3-
Apogee employees, Landmark negotiated the following provision,

which became section 16.5 of the contract:

     Post Employment Liabilities.     [Apogee] agrees to be
     responsible for post-employment liabilities for the first
     20 employees hired by [Landmark] for the purpose of
     performing reclamation work under this Agreement.

J.A. 36.

     When employees covered by this provision began to retire,

there was a dispute between Apogee and Landmark as to whether

Apogee had assumed responsibility for retirement health benefits

when it agreed to be responsible for “post-employment liabilities.”

Apogee claimed it had not, and Landmark brought suit in a West

Virginia court.     The West Virginia court ruled for Landmark,

concluding that the contract language was “clear and unambiguous in

its meaning, namely that [Apogee] is responsible for the retirement

and health care benefits” of the covered employees.     Id. at 88.

The court issued a permanent injunction ordering Apogee to pay all

of Landmark’s post-employment liabilities to the covered employees,

including its liability for retirement health benefits. Id. at 89.

     Until early 2000, Landmark provided retirement health benefits

to the covered employees and submitted invoices for reimbursement

to Apogee.   In March 2000, however, when Landmark ceased business

operations and filed for bankruptcy, it ceased providing benefits

to the employees.   Apogee, which had stopped receiving invoices,

thereafter refused to provide benefits to the employees.

                                -4-
      In 2001, plaintiffs in this action -- employees covered by the

contract -- moved to intervene in the West Virginia action in order

to enforce the court’s permanent injunction.          The court granted

plaintiffs’ motion to intervene, whereupon Apogee removed the case

to federal court.     Plaintiffs then filed a motion to remand the

case to state court.         The district court denied the motion to

remand, concluding that there was federal question jurisdiction

because plaintiffs’ claim was preempted by federal labor law.           Id.

at   116.   The   district    court   then   substituted   plaintiffs   for

Landmark as the real parties in interest and dismissed Landmark

from the case.    Id. at 121-22.

      Shortly thereafter, the district court sua sponte joined the

United Mine Workers of America 1993 Benefit Plan (“the Plan”) as a

necessary party (under NBCWA, the Plan is required to provide

benefits to employees whose employer ceases all business operations

and is unable to pay).        Id. at 124-26.    The district court then

ordered plaintiffs to file a new complaint setting forth their

causes of action against both Apogee and the Plan.            Id. at 124.

Plaintiffs filed a complaint asserting their state-law contract

claim against Apogee and their alternative claim for relief against

the Plan under federal law.      R. 39.

                                      -5-
     Upon conclusion of an arbitration between plaintiffs and the

Plan,1 the parties filed cross-motions for summary judgment, with

plaintiffs and the Plan asserting that Apogee is responsible for

the benefits and Apogee asserting that the Plan is.        The district

court concluded that Apogee was liable for the benefits pursuant to

its contract with Landmark. It thus granted plaintiffs’ motion for

summary judgment, denied Apogee’s motion for summary judgment, and

ordered   Apogee   to   provide   plaintiffs   with   retirement   health

benefits.   Id. at 250.    Apogee noted a timely appeal.

                                   II.

     We review the district court’s grant of plaintiffs’ motion for

summary judgment de novo.    United States v. Ringley, 985 F.2d 185,

186 (4th Cir. 1993).      Summary judgment is appropriate only where

there is no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law.       Id.    Apogee argues that

the district court committed errors of law in applying the doctrine

of res judicata, in concluding that plaintiffs have standing to

     1
      The arbitrator found that the Plan was required to provide
benefits to plaintiffs pursuant to NBCWA because Landmark had
ceased all mining operations and was unable to pay. J.A. 138-39.
However, the arbitrator resolved only the dispute between
plaintiffs and the Plan under NBCWA, not the dispute between
plaintiffs and Apogee under the commercial contract.             He
specifically noted that if at some future time a court found that
Apogee was responsible for the benefits under its commercial
contract with Landmark, then the Plan’s obligations would be offset
by the amount that Apogee was required to pay. Id. at 138.

                                   -6-
enforce the contract, and in not holding plaintiffs’ suit preempted

by federal labor and employment law.              We consider each of these

arguments in turn.

                                       A.

     The district court concluded that the doctrine of res judicata

barred it from reconsidering the issue -- decided by the state

court -- of whether Apogee agreed by contract to be responsible for

Landmark’s    obligation    to   pay        plaintiffs’   retirement    health

benefits.    J.A. 245.   Apogee argues that this was error because res

judicata applies only where the parties in the two suits are the

same, and here they are not: Landmark was the plaintiff in the

original    case;   plaintiffs   here       are   employees   covered   by   the

contract.    Plaintiffs respond that res judicata applies because

they are privies of Landmark and that even if res judicata does not

apply, the district court was nonetheless barred from reconsidering

the issue by the doctrine of collateral estoppel.

     We do not find it necessary to resolve these arguments.                 Even

if neither res judicata nor collateral estoppel prevented us from

reconsidering the state court’s interpretation of the contract, we

would reach the same conclusion as the state court.              The contract

language clearly and unambiguously states that Apogee agrees to pay

Landmark’s post-employment liabilities to the covered employees,

and there is no indication that Landmark’s liability for retirement

                                   -7-
health benefits -- a post-employment liability -- is excluded. The

contract plainly requires Apogee to pay Landmark’s liabilities for

plaintiffs’ retirement health benefits.

     To   conclude   that   the   contract   requires   Apogee   to   pay

Landmark’s liabilities for plaintiffs’ retirement health benefits

is not, however, to resolve the current dispute between plaintiffs

and Apogee.    The key issue in this dispute -- which was not

addressed by the state court -- is whether Landmark’s obligation

under NBCWA to provide plaintiffs with retirement health benefits

survives its bankruptcy. If Landmark’s bankruptcy extinguished its

obligations under NBCWA, then Apogee would have no obligation to

plaintiffs for retirement health benefits because Apogee is liable

only to the extent that Landmark is liable for those benefits.

     Again, we do not find it necessary to resolve the issue

whether Landmark’s obligation under NBCWA to provide plaintiffs

with retirement health benefits survives its bankruptcy.          Apogee

conceded below that it does.      See J.A. 249 (“Both plaintiffs and

the Plan argue at length that Landmark is obliged to plaintiffs and

its other retirees ‘for life,’ and that this obligation survives

notwithstanding Landmark’s cessation of business and inability to

pay. Apogee acknowledges that Landmark has such an obligation.”).2

     2
      The district court similarly did not find it necessary to
address this issue. It simply noted that Apogee’s concession was
consistent with its resolution of the same issue in a previous
case, District 17, United Mine Workers of America v. Brunty
Trucking Co., 269 F. Supp. 2d 702 (S.D. W. Va. 2003). See J.A. 250

                                   -8-
Because      Apogee   acknowledges     that      Landmark    has    a    continuing

obligation to provide plaintiffs with retirement health benefits,

and because Apogee agreed by contract to pay Landmark’s liabilities

for plaintiffs’ retirement health benefits, it follows that Apogee

is liable under the contract for plaintiffs’ retirement health

benefits.

                                          B.

       Apogee     next    argues   that    the    district     court      erred   in

determining that plaintiffs have standing to enforce the contract

as creditor-beneficiaries of the contract.                  Under West Virginia

law, a person is a creditor-beneficiary of a contract “if no

intention to make a gift appears from the terms of the promise, and

performance of the promise will satisfy an actual [or supposed] or

asserted duty of the promisee to the beneficiary.”                  Pettus v. Olga

Coal Co., 72 S.E.2d 881, 884 (W. Va. 1952).             Here, no intention to

make a gift appears in the contract, and performance of the promise

(Apogee’s       payment    of   Landmark’s     post-employment          liabilities)

satisfies a duty of the promisee to the beneficiary (Landmark’s

duty    to    provide     retirement   health      benefits    to       plaintiffs).

Plaintiffs are therefore creditor-beneficiaries of the contract,

and creditor-beneficiaries can maintain a suit in equity to enforce

(“[A]s I discussed in Brunty, a coal operator’s obligations to
former employees under the 1993 NBCWA do not end merely because the
operator ceases business activities.”).

                                       -9-
a contract in West Virginia.       See Hartmann v. Windsor Hotel Co., 52

S.E.2d 48, 48 (W. Va. 1949).           The district court did not err in

concluding that plaintiffs have standing to enforce the contract as

creditor-beneficiaries of the contract.

                                       C.

      Finally, Apogee argues that plaintiffs’ state-law suit to

enforce the contract is preempted by the Labor Management Relations

Act (“LMRA”) and by the Employee Retirement Income Security Act

(“ERISA”).     We conclude that Apogee’s preemption arguments are

without merit.

      Apogee first argues that section 301 of the LMRA preempts

plaintiffs’ contract claim because the claim’s resolution “depends

substantially      upon   the    analysis     of    a   collective-bargaining

agreement’s terms.”       See Davis v. Bell Atlantic-West Virginia,

Inc., 110 F.3d 245, 247 (4th Cir. 1997).                 This is so, Apogee

contends, because the extent of Landmark’s, and therefore Apogee’s,

liability for plaintiffs’ retirement health benefits depends upon

the   proper    construction      of    NBCWA,      a   collective-bargaining

agreement.     However, because both parties agree that NBCWA imposes

a lifelong obligation on Landmark regardless of its bankruptcy, we

do not need to analyze NBCWA to resolve this suit.                  Plaintiffs’

claim is thus not preempted by section 301.                   See Livadas v.

Bradshaw,    512   U.S.   107,   124    (1994)     (“[W]hen   the   meaning   of

                                       -10-
[collective-bargaining agreement] terms is not the subject of

dispute, the bare fact that a collective-bargaining agreement will

be consulted in the course of state-law litigation plainly does not

require the claim to be extinguished.”).

     Apogee next argues that because the practical effect of

enforcing the contract will be that Apogee will add plaintiffs to

its ERISA-covered benefit plan, plaintiffs’ suit is preempted by

ERISA.   See 29 U.S.C. § 1144(a) (stating that ERISA preempts “any

and all State laws insofar as they may now or hereafter relate to

any employee benefit plan” covered by ERISA). To determine whether

a state law “relates to” an ERISA-covered plan, and is therefore

preempted by ERISA, the Supreme Court has stated that courts “must

go beyond the unhelpful text [of § 1144(a)] and the frustrating

difficulty of defining its key term, and look instead to the

objectives of the ERISA statute as a guide to the scope of the

state law that Congress understood would survive.”    New York State

Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,

514 U.S. 645, 656 (1995).   The Court has explained that Congress’

intent in preempting state law was “to avoid a multiplicity of

regulation in order to permit the nationally uniform administration

of employee benefit plans.”    Id. at 657.      Plaintiffs’ contract

claim does not implicate this concern.        Enforcing the contract

between Apogee and Landmark will not create a multiplicity of

regulation   that   would   frustrate   the     nationally   uniform

                               -11-
administration of employee benefit plans. Accordingly, we conclude

that Apogee’s ERISA preemption claim, like its LMRA preemption

claim, is without merit.3    Cf. Operating Eng’rs Health and Welfare

Trust Fund v. JWJ Contracting Co., 135 F.3d 671, 679 (9th Cir.

1998) (concluding that a contract transferring the obligation for

employment benefits from an employer to an insurance company was

not preempted by ERISA because the contract did “not expand the

remedies   provided   or    contemplated   by   ERISA,”   but   “merely

substitute[d] obligors”).

                              CONCLUSION

     For the foregoing reasons, the judgment of the district court

is affirmed.

                                                                AFFIRMED

     3
      The fact that neither the LMRA nor ERISA preempts plaintiffs’
claim means that there was no federal question jurisdiction over
this case at the time it was removed, and plaintiffs’ motion for
remand should thus have been granted. However, after the motion to
remand was denied, plaintiffs filed a new complaint.        The new
complaint raises federal questions because it asserts claims under
a collective-bargaining agreement against the Plan. Plaintiffs’
state-law claim against Apogee is properly supplemental to their
federal-law claim against the Plan. See 28 U.S.C. § 1367(a).

                                 -12-