by Bentz's failure to sign the renewal assent in 1994, or, in the alternative, by Bentz's March 1996 letter to the Funds. We find Defendant's argument to be without merit for two reasons. First, Bentz's actions did not constitute termination of the CBA according to its explicit terms. Second, the Third Circuit only recognizes three distinct defenses to actions by benefit funds for employer contributions, and contract termination is not among them. See Agathos v. Starlite Motel, 977 F.2d 1500, 1505 (3d Cir. 1992).
1. Defendant's Attempted Termination of the CBA
Defendant failed to terminate the CBA. The CBA contained an "Evergreen Clause" which stated that renewal was automatic barring "written notice duly given to the other party..." CBA at 44. Defendant cites no case law to suggest that Bentz's failure to sign the renewal assent form constitutes proper termination merely because Bentz intended so. Furthermore, Bentz sent the March 1994 letter to the Funds, not the Union, even though the CBA required written notice to the other "party." The Funds were not a party to the CBA. See generally Lewis v. Benedict Coal Corp., 361 U.S. 459, 4 L. Ed. 2d 442, 80 S. Ct. 489 (1960) (holding that absent specific language to the contrary, benefit funds are separate from union signatories to CBA's and that employers' obligations to funds are separate from obligations to unions under CBA's).
Courts consistently conclude that contracts with "Evergreen Clauses" requiring written notice are not terminated absent compliance with the terms of the contract. See, e.g., Local 257, Int'l Bhd. of Elec. Workers v. Grimm, 786 F.2d 342, 345-46 (8th Cir. 1986) (holding that noncompliance with terms of agreement did not terminate agreement, failure to comply with date requirement in termination procedure rendered termination ineffective, and letter between non-party and party could not terminate agreement); Central States, Southeast, and Southwest Areas Pension Fund v. Gerber Truck Service, Inc., 854 F.2d 1074, 1079-80 (7th Cir. 1988) (holding that oral termination was invalid where CBA called for written termination and that termination was effected only when written notice was given to the funds and the union according to the specific date requirements of the CBA); In re Baldanza Bakery, Inc., 149 B.R. 370, 371 (Bankr. D. N.J. 1992) (stating that CBA which included "Evergreen Clause" and required written notice to terminate did not terminate absent such written notice). Having failed to comply with the explicit requirements set forth in the CBA, Defendant's efforts to terminate the agreement were ineffective.
2. Alleging Contract Termination as a Defense
The Funds in this case are third-party beneficiaries to the CBA between the Union and A & B, and Section 515 of ERISA, 29 U.S.C. § 1145 (1988), limits the defenses available to a defendant employer against third-party beneficiary benefit funds seeking contributions. See Agathos, 977 F.2d at 1505. The Third Circuit recognizes only three defenses that an employer may assert against employee benefit funds seeking contributions: (1) The fund contributions themselves are illegal; (2) The collective bargaining agreement is void ab initio ; (3) The employees have decertified the union as its bargaining representative. See id.3
Here, Defendant does not maintain that the contributions are illegal or that its employees have decertified the union. Defendant instead based its defense upon an alleged contract termination. The defense of termination, though, is one of voidability of the contract, not that the contract is void ab initio. See id. Although Defendant does not address this issue of limited defenses, it is instructive to examine the differences between a contract's being void ab initio, "such as where there is fraud in the execution of the agreement" and a contract's being voidable, "as in the case of fraudulent inducement." Id. While the former is a valid defense in a case such as this, the latter is not. See id. Fraud in the execution arises when a party enters an agreement "with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms." Connors v. Fawn Mining Corp., 30 F.3d 483, 490 (3d Cir. 1994). In our case no such situation exists; in fact, Defendant's claim here is that it terminated any valid agreement that may have existed. Clearly, Defendant is not claiming a defense of fraud in the execution of the contract where it claims that it terminated the CBA. Third Circuit law prevents Defendant from claiming termination of the contract in the alternative to its failed claim that Eileen Nicastro lacked authority to sign the CBA. See also Carpenters Health & Welfare Trust v. Bla-Delco Constr., Inc., 8 F.3d 1365, 1369 (9th Cir. 1993) (holding that contract termination is defense that contract is voidable, not void, and that such defense is not available against third-party beneficiary benefit fund under § 515 of ERISA). Defendant, therefore, may not allege termination of the CBA as a defense in this action.
For the foregoing reasons, the Court grants Plaintiffs' Motion for Partial Summary Judgment as to the issue of Defendant's liability for benefit fund contributions.
AND NOW, this 28th day of August, 1997, upon consideration of Plaintiffs' Motion for Partial Summary Judgment and the Defendant's response thereto, it is hereby ORDERED that the Plaintiffs' Motion is GRANTED.
BY THE COURT:
J. CURTIS JOYNER, J.