Michiana Area Electrical Workers Health & Welfare Fund et al v. TGB Unlimited Inc
OPINION AND ORDER: The Court GRANTS the Plaintiffs' Motion for Summary Judgment 35 and DENIES the Defendants' Motion for Summary Judgment 37 . However, because the issues of damages, costs, contractor's bond, and attorney's f ees remain ambiguous, the Court ORDERS that the Clerk withhold entry of judgment in the case until these issues are fully resolved. The Plaintiffs are directed to file any motion and brief regarding the same, consistent with this opinion, within 10 days of the date of this Opinion and Order. The Defendants have 10 days thereafter in which to file any response brief. The Plaintiffs will have 7 days thereafter to file any necessary reply brief. The Court will take the matter under advisement after briefing is complete. Signed by Chief Judge Theresa L Springmann on 9/28/2017. (jss)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
TRUSTEES OF THE MICHIANA AREA
ELECTRICAL WORKERS HEALTH AND
TRUSTEES OF THE MICHIANA AREA
ELECTRICAL WORKERS PENSION FUND,
MICHIANA AREA WORKERS MONEY
TGB UNLIMITED INC. d/b/a S/T
BANCROFT ELECTRIC and
WEST BEND MUTUAL INSURANCE
CAUSE NO.: 2:15-CV-446-TLS
OPINION AND ORDER
This matter is before the Court on the Motions for Summary Judgment [ECF Nos. 35, 37]
filed by the Plaintiffs, Trustees of the Michiana Area Electrical Works Health and Welfare Fund,
Trustees of the Michiana Area Electrical Workers Pension Fund, and the Michiana Area Workers
Money Purchase Plan (the “Trustees” and the “Funds”), and the Defendants, TGB Unlimited
(“TGB”) d/b/a S /T Bancroft Electric (“Bancroft Electric”) and West Bend Mutual Insurance
Company (“West Bend”). The Plaintiffs are seeking unpaid contributions by TGB to the Funds,
under the Employment Retirement Income Security Act (ERISA), as well as a judgment against
West Bend as a surety of Bancroft Electric’s contractor’s bond. Both Motions were filed on
January 27, 2017. This matter is now fully briefed and ripe for ruling.
The Plaintiffs are Trustees of the Funds. They filed this lawsuit against the Defendants
under section 502(a)(3), (e)(1), and (f) of ERISA, 29 U.S.C. §§ 1132(a)(3), (e)(1) and (f),
seeking unpaid fund contributions from TGB. In 2007, TGB entered into a business relationship
with the Funds and the International Brotherhood of Electrical Workers Local 153 (“Local 153”),
in which TGB would use Local 153 labor and in return, among other obligations, pay
contributions to the Funds. Local 153 and the Funds maintained their relationship until 2015,
after a series of events involving former Local 153 members Doug and Cody Curl resigning their
union membership for another union. The Curls resigned their memberships in October and
December 2014. They continued to work for TGB, but TGB stopped paying contributions on
their behalf. And during this time, TGB continued to employ a Local 153 member and continued
to pay contributions for him.
In March 2015, the Trustees sent a letter to TGB through the Northern Indiana Chapter of
the National Electrical Contractors Association (“N.E.C.A.”), a not-for-profit association
representing electrical contractors in labor issues, extending a grace period for late payment of
contributions. (Grace period letter, ECF No. 36-18.) On March 20, 2015, Local 153 filed a
grievance relating to TGB’s failure to pay contributions. TGB countered by filing an NLRB RM
petition on March 25, 2015. (NLRB RM 1, ECF No. 36-25.) In the petition, TGB asserted that
Local 153 was a recognized bargaining agent, and that “United Construction Workers Local 10,
CLA” claimed recognition. Id. Thereafter, Local 153 disclaimed interest in representing TGB
employees in an April 2, 2015 letter, which ended the grievance and RM petition. Upon the
termination of the contractual relationship, Local 153 requested that the auditor for the Fund’s
third-party administrator, TIC International Corporation (“TIC”), conduct an exit audit. TIC
calculated contributions on behalf of the Curls from October 2014 through the effective date of
Local 153’s letter disclaiming interest in 2015. Bancroft disputed the audit results, claiming that
the Curl’s resignation from Local 153 relieved TGB of the obligation to pay contributions.
The following summarizes the relevant agreements between the parties, the accounting of
the liability, damages alleged, and liability over a contractor’s bond.
Local 153 and TGB first entered into a contractual relationship in 2007. Among other
documents, the parties entered into an Assent of Participation Agreement. The Assent of
Participation Agreement is signed by the employer and designates the Funds to accept
contributions on behalf of Local 153 employees. Under the Assent of Participation Agreement,
the employer’s obligation to pay contributions continues unless each of the Funds’ board of
trustees receives notice of termination of the Assent of Participation Agreement or until a related
Collective Bargaining Agreement (“CBA”) is nullified between the employer and Local 153.
There are two CBAs of significance in this matter. The first had an effective date of June
6, 2011, and expired on June 3, 2012. (2011–12 CBA, ECF No. 36-23,) The second had an
effective date of March 1, 2012, and expired on May 31, 2015. (2012–15 CBA, ECF No. 36-24.)
The validity of this last CBA is disputed here because neither party has produced a signed copy.
TGB also entered into various trust agreements with the Funds: The Agreement and
Declaration of Trust for the Michiana Area Electrical Workers Health & Welfare Fund [ECF
No. 36-20], the Agreement and Declaration of Trust for the Annuity Fund/Money Purchase Plan
[ECF No. 36-21], and the Declaration of Trust of the Michiana Area Electrical Workers Pension
Fund [ECF No. 36-22] (the “Trust Agreements”). The Trust Agreements are the governing
documents for the administration of the Funds.
Lastly, the parties also signed the Collection Policy of the Michiana Area Electrical
Workers Health & Welfare, Pension and Annuity Benefit Funds (the “Collection Policy”) [ECF
No. 11]. The Collection Policy was created by all three of the Funds, and provides, among other
things, an audit procedure and billing procedure.
Collection of Payments and Payroll Audit
Collections for the Funds are carried out by the N.E.C.A. As part of its collection process,
the N.E.C.A accepts employer payroll reports of hours worked by employees. The employer
payroll reports provided to the N.E.C.A office reflect Fund contributions required to be made
under the Local 153 Inside Agreement, a subsection of the CBA. 1 TGB paid some contributions
owed under the 2012–15 CBA for January, February, March, and the beginning of April 2015, as
well as for 2013 and 2014. It paid all contributions required for 2012. TGB also made payments
under the 2011–2012 CBA for the first two months of 2012.
Local 153 sent a disclaimer of interest letter dated April 2, 2015, to end TGB’s obligation
to pay contributions to the Funds. Mike Compton, Chief Officer of Local 153, also contacted
TIC, informing it of the union’s disclaimer of interest and requesting it perform an exit audit.
TIC, in turn, conducted an audit (the “Audit Report”) [ECF No. 36-18]. When TIC
reviewed the payroll records at TGB’s place of business for the audit period of 2014–2015, it
noted that all of the work that the employer recorded was for work under the Inside Agreement
of the CBA. TIC’s audit results are reflected in a revised billing letter with attached discrepancy
information and audit report for the period of January 2014 through April 2015. TIC identified
differences in amounts paid and amounts owed in the report. It noted that starting in October and
December of 2014, two employees that Bancroft had previously paid contributions for under the
The Inside Agreement is part of the 2012–15 CBA. (2012–15 CBA §§ 5.01–5.16.)
CBA (Doug and Cody Curl) had continued to work for the contractor, but no contributions were
paid in that period. Even though employees may drop their affiliation and, thus, no longer must
pay union dues, the employer is still required to pay the contributions under the terms of the
Upon receipt of the audit, Ty Bancroft disputed the results and asked whether TIC
followed the standard audit process. (Steven Homer Dep. 41, ECF No. 36-4.)
The Trustees seek contributions owed as listed in the Audit Report, liquidated damages
under the Collection Policy, the cost of the payroll audit, and attorney’s fees. 2 TIC has
established the amounts claimed by the Plaintiffs for contributions owed as listed in the Audit
Report, totaling $36,164.40. (Audit Report 1.) In addition to contributions due to the Funds,
under the Collection Policy, the Trustees are entitled to interest and liquidated damages, if
successful. (2012–15 CBA § 9.04.) The Plaintiffs may also claim costs of the payroll audit under
the Collection Policy when delinquencies are more than $1,000.00. (Collection Policy 4, ECF
No. 36-11.) The cost of the audit was $514.30. (Cost of Audit Email 1, ECF No.36-17 )
As part of TGB’s obligations under the agreements, Local 153 requires a contractor’s
bond (the “Contractor’s Bond”). TGB maintains its Contractor’s Bond with West Bend. TGB’s
Contractor’s Bond requirement goes back to its consent to be bound by the Assent of
Participation Agreement. The Contractor’s Bond’s priority is to pay wages owed and then fund
The Trustees note that if they are successful in this action, Doug and Cody Curl will receive
contributions from a money purchase plan with direct access to those funds. Contributions paid would
allow healthcare eligibility to be restored for the relevant months in 2014 and 2015 so that any claims
would be paid. Because the Curls have vesting pensions, they are eligible for pension benefits too.
contributions for the worker’s benefit. TGB’s Contractor’s Bond with West Bend has an
“evergreen clause” that automatically renews annually. 3 If West Bend pays a claim on the
Contractor’s Bond, TGB must repay West Bend the amount it paid plus attorney fees and costs
A representative of West Bend investigated the bond claim by leaving a message with a
Local 153 representative and speaking with Ty Bancroft. Bancroft told the representative that
TGB was looking to break ties with Local 153 and that their employees were leaving the union.
TGB did not want West Bend to pay out the bond proceeds at that time. The representative
corresponded with Bancroft in follow-up emails, confirming that West Bend would not pay bond
proceeds because of the ongoing dispute. It is West Bend’s policy not to pay bond proceeds if the
principal advises it has a dispute against the claim.
STANDARD OF REVIEW
Summary judgment is warranted when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). Summary judgment is the moment in litigation where the non-moving party is
required to marshal and present the court with evidence on which a reasonable jury could rely to
find in his favor. Goodman v. Nat’l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). A
court’s role in deciding a motion for summary judgment “is not to sift through the evidence,
pondering the nuances and inconsistencies, and decide whom to believe. A court has one task
and one task only: to decide, based on the evidence of record, whether there is any material
dispute of fact that requires a trial.” Waldridge v. Am. Heochst Corp., 24 F.3d 918, 920 (7th Cir.
The bond amount was twice reduced through a rider. The effect of the bond reduction is that
TGB pays less premium for the financial guaranty.
1994). Although a bare contention that an issue of material fact exists is insufficient to create a
factual dispute, a court must construe all facts in a light most favorable to the nonmoving party,
view all reasonable inferences in that party’s favor, see Bellaver v. Quanex Corp., 200 F.3d 485,
491–92 (7th Cir. 2000), and avoid “the temptation to decide which party’s version of the facts is
more likely true,” Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003).
In 1980, Congress made amendments to ERISA because “delinquencies of employers in
making required contributions are . . . a serious problem for many multiemployer plans[.]” Cent.
States, Se. & Sw. Areas Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d 1148 (7th Cir. 1989).
“Sound national pension policy demands that employers who enter into agreements providing for
pension contributions not be permitted to repudiate their pension promises.” Id. As a result,
ERISA requires employers to make contributions on behalf of the employees covered by a CBA
and requires employers to adhere to the contract terms. Cent. States, Se. & Sw. Areas Pension
Fund v. Hartlage Truck Serv. Inc., 991 F.2d 1357, 1360 (7th Cir. 1993). Benefit funds may be
considered third-party beneficiaries of a collective bargaining agreement or other agreement.
Robbins v. Lynch, 836 F.2d 330, 333 (7th Cir. 1988). Funds have an independent statutory right
under § 1145 to enforce employer contributions under a CBA. Gerber Truck Service, Inc., 870
F.2d at 1152–56. Furthermore, benefit plans must be able to rely on the contribution promises of
employers because plans must pay out to beneficiaries whether or not employers live up to their
obligations. Id. at 1151.
TGB’s Obligation to Contribute to the Funds
TGB signed an Assent of Participation Agreement in 2007, in which it agreed to accept
and be bound by the corresponding agreements with Local 153 and the Trustees. In the April 2,
2015 letter, Local 153 notified TGB that it disclaimed interest in continuing to represent TGB’s
employees. The Trustees argue that this notification terminated TGB’s obligation to pay
contributions to the Funds; no termination event occurred before it. Several months before Local
153’s disclaimer of interest, in October and December 2014, two TGB employees, Doug and
Cody Curl, resigned their Local 153 membership. But TGB continued to employ the Curls after
it ceased paying Fund contributions for them as it also continued to employ another Local 153
member and also paid Fund contributions for him.
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 conditions of such plan or such agreement.
29 U.S.C. § 1145. The Assent of Participation Agreement states:
[C]ontributions shall commence forthwith, if they have not already
commenced, and shall continue for a period provided in this and in
such agreements, including all amendments, supplements,
modifications, extensions, renewals, or successor agreements
thereto, and shall continue thereafter until the Board of Trustees of
the Welfare Fund and/or the Board of Trustees of the Pension Fund
and/or the Board of Trustees of the Annuity Fund shall each have
received from this Employer written notice of termination of this
Assent of Participation or until the collective bargaining agreement
is nullified between the Employer and the Union.
(Assent of Participation Agreement 2–3, ECF No. 36-10.) Thus, under the terms of the Assent of
Participation Agreement, only two events relieve TGB of the obligation to pay contributions: (1)
a written notice of termination of the Assent of Participation Agreement by TGB or (2)
nullification of the CBA by the parties.
The Defendants first argue that there were “no agreements binding TGB to make
contributions.” (Def.’s Mem. for Summ. J. 6, ECF No. 38.) But it is undisputed that TGB signed
the 2007 Assent of Participation Agreement and the Trust Agreements, and it is also undisputed
that TGB did not send a written notice of termination of the Assent of Participation Agreement.
Indeed, there were agreements binding TGB to make contributions to the Funds.
That means the only way for TGB to be relieved of liability earlier than April 2, 2015, the
date upon which the Plaintiffs terminated the relationship, is for the Court to find that TGB was
not bound by the 2012–15 CBA. The Defendants contend that the 2012–15 CBA is not valid
because neither party has produced a signed copy. The Defendants argue that when the 2011–12
CBA expired, TGB was relieved of liability. The Trustees argue, in turn, that the 2012–15 CBA
with Local 153 was nullified only when Local 153 disclaimed interest in representing TGB’s
employees in the April 2, 2015 letter and that whether the parties have produced a signed copy of
this CBA is irrelevant because TGB’s conduct manifested its intent to be bound by the 2012–15
CBA’s terms. Just as it is undisputed that TGB signed the Assent of Participation Agreement in
2007, it is also undisputed that it made contributions to the Funds through 2015, during the
operative period of the 2012–15 CBA.
Whether the parties have proffered a signed version of the 2012–15 CBA is not
dispositive as to whether it was operative during that period. TGB’s conduct belies its argument
that it was not bound. It is a “well-established principle that a collective bargaining agreement is
not dependent on the reduction to writing of the parties’ intention to be bound, rather all that is
required is conduct manifesting an intention to abide and be bound by the terms of an
agreement.” Bricklayers Local 21 of Ill. Apprenticeship and Training Program v. Banner
Restoration, Inc., 385 F.3d 761 (7th Cir. 2004) (quoting Gariup v. Birchler Ceiling & Interior
Co., 777 F.2d 370, 373 (7th Cir. 1985) and Capitol-Husting Co. v. NLRB, 671 F.2d 237, 243 (7th
Cir. 1982)) (quotation marks omitted).
TGB followed the provisions of the CBA by paying contributions to the Funds from 2012
through 2014 on its three electricians and continued paying contributions for one of them, Ron
Edinburgh, until April 2015. The totality of TGB’s conduct unambiguously shows its intent to be
bound by the provisions of the CBA.
The Defendant’s second argument that the CBA was nullified before the April 2, 2015
letter is that Doug and Cody Curl’s resignation letters were “directions to stop making”
contributions. (Def.’s Mem. for Summ. J. 8.) And that “to act otherwise would have put TGB in
the untenable position of going against the instructions of its employees and risk action being
taken by a new employee or by the new Union for the employees possibly engaging in unfair
labor practice.” (Id.) But TGB does not cite to any legal authority for this argument. The letters
are not a request that the employer should stop paying contributions on their behalf. The only
way to cease contributions is by the method set forth in the Assent of Participation Agreement.
An employer is still liable to the benefit funds it contributes to until a termination event occurs.
See Gerber Truck Service, Inc., 870 F.2d at 1152–56. And here, Local 153’s April 2, 2015
disclaimer of interest is the action that terminated TGB’s obligation to pay. Contributions
accruing before that date, reflected in the payroll audit, must be paid by TGB to the Funds.
The Defendants also argue that the Trustees “allege a violation only of the Trust
Agreement related to the Pension Fund, and not of the other two Trust Agreements. . . .” (Def.’s
Mem. for Summ. J. 7–8.) TGB argues that this would limit the Plaintiffs “to recovering for any
delinquent contributions to the Pension Fund only.” (Id.) Assuming the technical thrust of the
Defendants’ argument, the Trustees do, in fact, allege that TGB failed to contribute to the other
funds as well. The Complaint references the payroll audit, which includes the alleged
deficiencies of all of the Funds. And the Complaint also includes in the Plaintiff’s request for
relief, “all amounts owed pursuant to the audit report.” (Compl. ¶ B; ECF No. 1.) It is undisputed
that the payroll audit provided to TGB includes deficiencies in payments to all the Funds.
Additionally, all three Trust Agreements were provided in discovery to counsel for TGB. The
Plaintiffs have asserted that their claims are for all amounts owed for all the Funds.
Adherence to Collection Policy
The Defendants next argue that TGB is relieved of liability because the Trustees did not
strictly comply with the Collection Policy. (Def.’s Mot. for Summ. J. 6–7, ECF No. 38.) The
Defendants argue that the Trustees failed to comply with the Collection Policy by billing TGB
for the audit deficiency amount fifty-one days after the audit instead of thirty; failing to provide
an exit interview or other “opportunity to discuss the audit results as prescribed”; and not
affording TGB “a complete appeal or allow TGB to dispute the audit results.” (Id. at 9.) The
Defendants argue that these failures “[s]imply put, . . . did not afford TGB its right to challenge
the audit results and have a review of its dispute. Because the Plaintiffs did not follow the dispute
process, they are precluded from collecting any amounts they allege are due.” (Id.) In support,
the Defendants cite Levit v. Ingersoll Rand Financial Corporation (In Re Deprizio), 874 F.2d
1186, 1193 (7th Cir. 1989), for the proposition that the terms of the plan documents and CBAs
are to be “strictly enforced.” “Exactitude works both ways. Just as pension and welfare plans get
no less than the agreements provide, so they get no more.” Id. at 1193.
The Defendants are correct that Levit stands for the proposition that the Court must
strictly enforce the terms of the various agreements between the parties, including the Collection
Policy. But the Defendants are incorrect about the remedy. The Defendants’ liability is not
abated merely because the Trustees allegedly committed the above violations of the Collection
Policy. The Defendants have not cited which terms of the Collection Policy, the Assent of
Participation Agreement, the Trust Agreements, or the CBAs that characterize these violations as
a material breach, for which the contractual remedy constitutes the relief the Defendants seek.
Furthermore, the record reflects many communications between the Funds and TGB over
the audit. For instance, Ty Bancroft provided to TIC, at the completion of the Audit Report, the
Curls’ CLA Union cards, with which he wanted to dispute the audit results. This argument also
relies on the letter from Cody Curl asking TGB to stop making contributions. But as discussed
above, the letter did not effectuate a termination event that would initiate an audit. That
termination event was the disclaimer of interest that occurred when the Trustees sent the April 2,
Also importantly, the Defendants do not present an argument about how the audit was
deficient. The Defendants merely argue that the audit was not conducted in the exact method set
forth in the Collection Policy and that because of that violation, they are relieved of liability.
Accordingly, the Court, upon review of the record, finds that any alleged violation of the
Collection Policy asserted by the Defendants is not material to the agreements between the
parties as to void or abate TGB’s liability.
Bond, Calculation of Damages, and Attorney’s Fees Award
Under the Payroll Audit, TGB failed to pay the required contributions into the Funds
from October 2014 through April 2015. (Audit Report 1.) The Audit Report determined that
TGB failed to pay $11,638.40 to all of the Funds from October through November of 2014 and
that it failed to pay $21,021.49 to all funds for January through March of 2015. The total
contributions claimed are $36,164.40. Id.
Under 29 U.S.C. § 1132 (g)(1) and (2), a multiemployer plan that is awarded a judgment
under § 515 is entitled to (1) delinquent contributions; (2) interest at the rate specified in the
plan; (3) the greater of interest (again) or liquidated damages of up to 20% as specified in the
plan; (4) reasonable attorney’s fees and costs; and (5) other legal or equitable relief that the court
deems appropriate. “ERISA provides for a mandatory award of reasonable attorney’s fees when
a plan fiduciary prevails in an action to collect delinquent contributions.” Laborers’ Pension
Fund v. Blackmore Sewer Const., Inc., 298 F.3d 600, 608 (7th Cir. 2002) (quoting Moriarty v.
Svec, 233 F.3d 955, 963 (7th Cir. 2000)). Also, a multiemployer plan may recover audit costs
under § 1132(g)(2)(E). Moriarity ex. rel. Local Union No. 727 v. Svec, 429 F.3d. 710, 721 (7th
The total amount of liquidated damages is $7,232.88 (20% of $36,164.40, the
contributions amount listed in the Audit Report). The payroll audit cost is $514.30. Interest
continues to accrue. Accordingly, the Court finds TGB liable for the amounts owed less the
proceeds from the Contractor’s Bond.
Trustees of benefit funds have standing to sue the surety for unpaid contributions. United
States v. Carter, 353 U.S. 210, 220 (1957). West Bend has not paid bond proceeds to the Funds
per its policy regarding ongoing disputes. Accordingly, the Court holds Defendant West Bend
Mutual liable for the amount of the bond, $6,500.00.
For the foregoing reasons, the Court GRANTS the Plaintiffs’ Motion for Summary
Judgment [ECF No. 35] and DENIES the Defendants’ Motion for Summary Judgment [ECF
No. 37]. However, because the issues of damages, costs, contractor’s bond, and attorney’s fees
remain ambiguous, the Court ORDERS that the Clerk withhold entry of judgment in the case
until these issues are fully resolved. The Plaintiffs are directed to file any motion and brief
regarding the same, consistent with this opinion, within ten (10) days of the date of this Opinion
and Order. The Defendants have ten (10) days thereafter in which to file any response brief. The
Plaintiffs will have seven (7) days thereafter to file any necessary reply brief. The Court will take
the matter under advisement after briefing is complete.
SO ORDERED on September 28, 2017
s/ Theresa L. Springmann
CHIEF JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT
FORT WAYNE DIVISION
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