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SHEET METAL WORKERS LOCAL UNION NO. 44, v. SCRANTO

July 26, 1994

SHEET METAL WORKERS LOCAL UNION NO. 44,; SHEET METAL WORKERS LOCAL UNION NO. 44 PENSION FUND,; SHEET METAL WORKERS LOCAL UNION NO. 44 WELFARE FUND,; SHEET METAL WORKERS LOCAL UNION NO. 44 ANNUITY FUND, plaintiff
v.
SCRANTON SHEET METAL; MARCO RICHIONE, III; NATIONAL STABILIZATION AGREEMENT FOR THE SHEET METAL INDUSTRY TRUST FUND, defendant; NATIONAL STABILIZATION AGREEMENT FOR THE SHEET METAL INDUSTRY TRUST FUND, cross-claimant v. SCRANTON SHEET METAL, cross-defendant



The opinion of the court was delivered by: WILLIAM W. CALDWELL

 I. Introduction.

 In each of these related actions, defendant, National Stabilization Agreement of the Sheet Metal Industry Trust Fund ("SASMI"), has filed a motion pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the defendant employer's crossclaim against it. We will evaluate the motion under the well established standard. See Labov v. Lalley, 809 F.2d 220 (3d Cir. 1987).

 II. Background.

 The plaintiffs, Sheet Metal Workers Local Union No. 44 (the "Union"), Sheet Metal Workers Local No. 44 Pension Fund, Sheet Metal Workers Local No. 44 Welfare Fund, and Sheet Metal Workers Local No. 44 Annuity Fund, filed these actions against the defendant employers and SASMI to recover delinquent payments due to the Pension Fund, Welfare Fund and Annuity Fund (collectively the "Funds"). The complaints make the same claims although they differ on the amounts owing in each case. Count One is based on the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001-1461, and the Labor Management Relations Act (LMRA). 29 U.S.C. § 185, and seeks recovery against the employer named in each case on the basis of a collective bargaining agreement. Count Three, as determined by our memorandum and order, dated June 29, 1994, is a federal common law claim against SASMI, alleging that SASMI agreed with each defendant employer to pay to the plaintiff Funds the contributions owed by the employers. *fn1"

 The employers answered the complaints and filed crossclaims against SASMI, which also asserted that SASMI had agreed with them to pay the contributions directly to the Funds. Alternatively, they alleged that they were third party beneficiaries of an agreement between the plaintiffs and SASMI by which SASMI agreed to make the contributions. The crossclaims seek contribution or indemnity from SASMI.

 III. Discussion.

 SASMI has first moved to dismiss the crossclaims on the basis that its alleged agreement to pay each employer's contributions is a suretyship which, under the Pennsylvania Statute of Frauds, requires that the agreement be in writing. See 33 P.S. § 3 (Purdon 1967). *fn2" Since the employers do not allege that the agreements were in writing, SASMI contends that the crossclaims must be dismissed.

 We reject this argument for the reasons advanced by the employers. First, we do not believe that the agreement can be considered one of surety. Typically, a surety agrees to fulfill another party's promise only if that party fails to perform. See Reuter v. Citizens & Northern Bank, 410 Pa. Super. 199, 207, 599 A.2d 673, 677 (1991) ("a surety is one who undertakes to pay money or to do any other act in the event that his principal fails therein"). The averments here are that SASMI undertook directly to pay the contributions to the Funds without any precondition that the employers fail to perform.

 Second, if SASMI did make the agreements, it might have done so to advance its own goal of preserving employment for union workers. In this event, the Statute of Frauds would not apply because SASMI would have made the agreement for its own business purpose rather than to benefit the employers. As noted in Biller v. Ziegler, 406 Pa. Super. 1, 8, 593 A.2d 436, 440 (1991), "where the surety-promisor's main purpose is his own primary or business advantage, the gratuitous or sentimental element often present in suretyship is eliminated . . . Thus, there is less need for cautionary or evidentiary formality in the commercial context."

 Finally, the Statute of Frauds requires only "some memorandum or note . . . signed by the party to be charged . . . ." The employers represent that discovery so far has revealed such writings. In these circumstances, we should not grant a motion to dismiss since it is not certain that the employers could not state a claim that would survive a defense based on the Statute of Frauds.

 SASMI next argues that the crossclaims violate Fed. R. Civ. P. 13(b) which states, in pertinent part, as follows:

 
A pleading may state as a crossclaim any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter . . . of the original action . . . Such crossclaim may include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant."

 SASMI asserts that the crossclaims do not arise from the same transaction or occurrence because the plaintiffs' ERISA claim in count I of each complaint is based on the collective bargaining agreement and ...


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