Bush v. I. & O. A. Slutzky, Inc.

Order affirmed, with costs. Memorandum: Plaintiffs, trustees of a Teamsters Health and Hospital Fund and a Pension and Retirement Fund (Funds), commenced this action to recover a sum which they claim that defendant, a construction company, was required to pay to the Funds pursuant to a collective bargaining agreement (AGC agreement) between the New York Teamsters Council (Locals 65, 182, 294, 317, 398, 506, 529, 648, 649, 687 and 693) and the Associated General Contractors, of which defendant is a member. In support of a motion for summary judgment, plaintiff trustees assert that defendant employed members of Local 445 to work within the territorial jurisdiction of Locals 65, 398 and 693; that defendant contributed to the Local 445 Pension and Welfare Fund rather than to plaintiffs’ Funds; that the AGC agreement requires defendant to contribute to plaintiffs’ Funds for all employees working within their territorial jurisdiction; and that defendant’s reliance on the instructions of an officer and a business agent for locals which are signatories to the agreement was unwarranted because they are not trustees of the Funds. In opposition to the motion, defendant’s vice-president states that he needed to employ drivers of specialized equipment known as concretemobiles and that they were members of Local 445, which is not a part to the AGC agreement; that he asked the union representatives for the locals in whose territory those employees would be working for permission to bring in those drivers; that the representatives consented to such employment and advised him to pay the benefits for those employees directly to their local, which he did; that during an approximately three-year period, those union representatives made many visits to the job site and never objected to defendant’s method of paying those benefits; that he had made a good-faith effort to determine the proper method of paying such benefits and that it would be unfair to require defendant to pay the benefits a second time. In reply, the administrator of the Funds stated that management of the Funds is governed by the Employee Retirement Income Security Act (ERISA; US Code, tit 29, § 1001 et seq.) and that estoppel may not be asserted to defeat the provisions of the statute. Special Term denied plaintiffs’ motion, finding that there is a factual issue as to whether defendant acted reasonably in paying the benefits to the Local 445 Fund rather than to plaintiffs. We agree. Plaintiffs contend that ERISA vests exclusive control over the Funds’ assets in the trustees, that defendant’s action in paying Local 445 constitutes a diversion of Funds’ assets in violation of Federal Law and that estoppel cannot be asserted to defeat the provisions of the Federal statute. The dissenters adopt that position. Subdivision (a) of section 306 of the Multiemployer Pension Plan Amendments Act of 1980 (94 US Stat 1208,1295) which added section 515 to ERISA (US Code, tit 29, § 1145), provides as follows: “Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and 677 conditions of such plan or such agreement.” In Kaiser Steel Corp. v Mullins (455 US 72, 86, 88), the court held that the statute does not preclude an employer from raising a defense to a claim that he has failed to pay pension benefits so long as it relates directly either to the employer’s promise to pay or to the trust fund’s entitlement to the contribution (see, also, Chicago Dist. Council v Dombrowski, 545 F Supp 325). The estoppel defense here is directly related to both and, consequently, may be asserted. Plaintiffs also argue that it was unreasonable for defendant to rely on representations of local union representatives and that those representations constituted an invalid oral modification of the AGC agreement. Both arguments are without merit. The officials who made the representations to defendant were parties to negotiation of the AGC agreement and signed it on behalf of their respective locals. The agreement specifically provides that any questions or disputes arising thereunder shall be negotiated with the union representatives. When defendant inquired as to the method for paying benefits to the Local 445 employees, the representatives advised that payment should be made directly to the Local 445 Fund because that would be the source of benefits for those employees. Defendant’s reliance on that advice seems altogether reasonable but, at the very least, presents a fact question. Although not raised by defendant, we merely note that the AGC agreement requires defendant to contribute to plaintiffs’ Funds only for “all of its employees covered by this Agreement”. Inasmuch as Local 445 is not a signatory, there appears to be a further question as to whether the agreement is applicable to this dispute. All concur, except Hancock, Jr., J. P., and Boomer, J., who dissent and vote to reverse and grant the motion, in the following memorandum.