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Bricklayers & Allied Craftworkers Local 1 of PA/DE v. Torrado Construction Co., Inc.

United States District Court, E.D. Pennsylvania

May 9, 2018

BRICKLAYERS & ALLIED CRAFTWORKERS LOCAL 1 OF PA/DE, TRUSTEES OF BRICKLAYERS & ALLIED CRAFTWORKERS LOCAL 1 OF PA/DE JOINT APPRENTICES & TRAINING FUND, TRUSTEES OF BRICKLAYERS & ALLIED CRAFTWORKERS LOCAL 1 OF PA/DE ANNUITY FUND, TRUSTEES OF BRICKLAYERS & ALLIED CRAFTWORKERS LOCAL 1 OF PA/DE PENSION FUND, and TRUSTEES OF BRICKLAYERS & TROWEL TRADES INTERNATIONAL PENSION FUND
v.
TORRADO CONSTRUCTION CO., INC. and LUIS TORRADO, Individually & As President of Torrado Construction Co., Inc.

          MEMORANDUM OPINION

          SAVAGE, J.

         This action brought under the Labor Management Relations Act (LMRA) and the Employee Retirement Income Security Act of 1974 (ERISA) arises from the failure of an employer to pay employee benefit contributions to union pension funds required under a collective bargaining agreement. The employer contends that pursuant to a joint check agreement, payment of benefit contributions were to be made by a third party, the general contractor, not the employer. In essence, the employer argues the joint check agreement displaced the CBA, absolving it of liability for the contributions due.

         The CBA, not the joint check agreement, governs the employer's obligation to make benefit contributions to the union pension funds. The joint check agreement, by its own language, does not displace the CBA. Furthermore, as the sole shareholder and officer of Torrado Construction having control over its assets, Luis Torrado is liable for the contributions. Therefore, we shall grant summary judgment in favor of the plaintiffs.

         Background

         On August 20, 2012, the Bricklayers and Allied Craftworkers Local 1 of PA/DE (Local 1) and Torrado Construction Company, Inc., as a member of the Employer Bricklayers Association (EBA), executed a collective bargaining agreement (2012-2016 CBA).[1] Luis Torrado, the president and sole shareholder of Torrado Construction, signed the 2012-2016 CBA on behalf of the company.[2] Torrado Construction agreed to pay benefit contributions to the Local and the International Trust Funds in exchange for Local 1 supplying skilled craft workers to perform work for Torrado Construction.[3] The 2012-2016 CBA required employers to pay benefit contributions deducted from its employees' paychecks for each hour worked by or paid to employees covered by the CBA monthly.[4]

         The 2012-2016 CBA contained an “evergreen clause” that automatically continued the agreement on an annual basis, in the absence of timely written notice of intent to terminate.[5] At no time did either party express a desire to terminate the agreement.

         On May 1, 2016, Local 1 and the EBA, Torrado Construction's designated bargaining agent, negotiated a new CBA (2016-2020 CBA). Torrado Construction paid Local 1 members at new wage rates and was required to contribute to the Funds under the 2016-2020 CBA's terms.[6]

         Several months before the 2016-2020 CBA was executed, on March 11, 2016, Allied Construction Services, the general contractor on the Taller Puertorriqueño project in North Philadelphia, hired Torrado Construction to perform brick and masonry work. Torrado Construction employed bricklayers, members of Local 1, to work on the project. After Torrado fell behind in paying contributions, Torrado Construction and Local 1 signed a joint check agreement with the general contractor, Allied, providing that “payments to the Plaintiff Benefit Funds were to be made by joint check endorsed by [Torrado Construction] but mailed directly by Allied to Plaintiffs.”[7]

         Although Allied sent checks to the plaintiffs for benefit contributions, Torrado Construction concedes that “other contract balances remain unpaid, due and owing” pursuant to the CBA.[8] As to any unpaid contributions owed unrelated to the Taller Puertorriqueño project, the defendants contend, without elaborating, that they are actively paying down “some current balances from the last 3 or less months of work on other projects” included in the plaintiffs' claims.[9] The parties dispute the balance of contributions still outstanding on all jobs, including the Taller Puertorriqueño project, which Torrado characterizes as “the lion's share of unpaid principal balances.”[10]

         An audit covering the period of January 1, 2015 through September 30, 2016 revealed that Torrado Construction had not paid all the required contributions due.[11] To recover unpaid contributions and related charges, Local 1 instituted this action for breach of contract under § 301 of the LMRA and § 315 of ERISA, 29 U.S.C. § 1145, against Torrado Construction and Luis Torrado. It also brought claims against Luis Torrado in his individual capacity for breach of contract under § 301 of the LMRA and breach of fiduciary duty under ERISA, and common law conversion.[12] Moving for summary judgment, the plaintiffs contend that there is no dispute that the defendants failed to make the required contributions, and that Luis Torrado exercised control over fund assets, making him personally liable.[13]

         In response, the defendants argue that they are absolved of their obligation under the 2016-2020 CBA and related agreements because a joint checking agreement shifted the obligation to the general contractor. Luis Torrado argues he is not personally liable because he did not use trust fund assets and did not have control over them. He contends he relinquished any right or control over contributions when he entered the joint check agreement.

         Standard of Review

         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and [that] the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Judgment will be entered against a party who fails to sufficiently establish any element essential to that party's case and who bears the ultimate burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In examining the motion, we must draw all reasonable inferences in the nonmovant's favor. Young v. Martin, 801 F.3d 172, 177 (3d Cir. 2015).

         The initial burden of demonstrating that there are no genuine issues of material fact falls on the moving party. Fed.R.Civ.P. 56(a). Once the moving party has met its burden, the nonmoving party must counter with “ ‘specific facts showing that there is a genuine issue for trial.' ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation omitted). The nonmovant must show more than the “mere existence of a scintilla of evidence” for elements on which she bears the burden of production. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Bare assertions, conclusory allegations or suspicions are not sufficient to defeat summary judgment. Fireman's Ins. Co. v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982). Thus, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.' ” Matsushita, 475 U.S. at 587 (citation omitted).

         Analysis

         The defendants were bound by both the 2012-2016 and 2016-2020 CBAs. First, the evergreen clause in the 2012-2016 CBA automatically continued it.[14] Second, although the defendants did not sign the 2016-2020 CBA, they are still bound by it.[15] As the defendants conceded at oral argument, Torrado Construction's designated bargaining agent, the EBA, entered into the 2016-2020 CBA on behalf of all members.[16]

         Instead of disputing the applicability of the CBAs, the defendants contend that the joint check agreement displaced them. They argue that the joint check agreement relieved them of any liability for the contributions owing for work on the Taller Puertorriqueño project and shifted that liability to the general contractor, Allied Construction.

         The joint check agreement does not relieve the defendants of their obligation to pay the benefit contributions due under the CBAs. It states:

General Contractor [Allied] agrees that it will make all payments for the [Benefits] supplied and delivered by Subcontractor [Torrado Construction] to the Project, only to the extent that such payments are otherwise due and owing under the subcontract between [Allied] and [Torrado Construction] on the Project (the “Subcontract”), by joint check made payable to Creditor [Local 1] and [Torrado Construction] until all payments owed to [Torrado Construction] for [Benefits] under the Subcontract have been paid in full.[17]

         The defendants interpret this agreement to mean that they have “no interest in or claim to the check or funds represented by the check, at any time.”[18] They are correct. The funds belonged to the benefit trust funds, not the defendants. Nevertheless, the defendants remained responsible for remitting the earned benefits.

         Just because the joint check agreement permitted Allied to write a check payable to both Local 1 and Torrado Construction does not shift the defendants' obligation to pay the contributions to Allied. The agreement clearly states: “Nothing in this agreement shall be deemed to constitute a payment guarantee or a contract between [Allied] and [Local 1]. ...


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