Raines et al v. Doran Construction, Inc.

Filing 22

ORDER: (1) The trustees' motion to dismiss [Docket No. 8 ] is GRANTED IN PART and DENIED IN PART. (2) Counts I, II, and III of Doran Construction's counterclaims are DISMISSED WITHOUT PREJUDICE and with leave to replead them within 60 days of the date of this Order. (3) The trustees' answer is due within 21 days of the date of this Order. (Written Opinion) Signed by Judge Joan N. Ericksen on June 8, 2015. (CBC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
John Raines and Tim McGough, as Trustees of
the Carpenters & Joiners Welfare Fund and Twin
City Carpenters Pension Master Trust Fund;
John Raines as Trustee of the Carpenters and
Joiners Apprenticeship and Journeymen Training
Trust Fund, and each of their successors,
Plaintiffs,
v.

Civil No. 15-1193 (JNE/HB)
ORDER

Doran Construction, Inc.,
Defendant.
Trustees of multi-employer, jointly-trusteed fringe benefit plans brought this
action against Doran Construction, Inc., to collect unpaid fringe benefit contributions due
under a collective bargaining agreement. Doran Construction answered and asserted five
counterclaims. Counts I, II, and III of the counterclaims seek the return of payments
made by Doran Construction to the plans; count IV seeks an order that enjoins demands
for money in violation of section 302 of the Labor Management Relations Act; and count
V seeks declarations that Doran Construction “is not and never was subject to any
collective bargaining agreement” and that it “owes no contributions to the Funds under
any collective bargaining agreement.” The trustees moved to dismiss the counterclaims
with prejudice for lack of subject-matter jurisdiction 1 and for failure to state a claim upon

1

“A district court is generally barred from dismissing a case with prejudice if it
concludes subject matter jurisdiction is absent.” Cnty. of Mille Lacs v. Benjamin, 361
F.3d 460, 464 (8th Cir. 2004).
1

which relief can be granted. Doran Construction opposed the motion to dismiss. In their
reply, the trustees withdrew their motion with respect to count V.
The Court rejects the trustees’ argument that counts I, II, III, and IV should be
dismissed for lack of subject-matter jurisdiction. Doran Construction’s claims for return
of payments arise under federal law: “‘[A]n employer has a federal common law action
for restitution of mistakenly made payments to an ERISA plan.’” Greater St. Louis
Constr. Laborers Welfare Fund v. Park-Mark, Inc., 700 F.3d 1130, 1135 (8th Cir. 2012)
(quoting Young Am., Inc. v. Union Cent. Life Ins. Co., 101 F.3d 546, 548 (8th Cir. 1996));
see 28 U.S.C. § 1331 (2012); Illinois v. City of Milwaukee, 406 U.S. 91, 100 (1972)
(concluding that Ҥ 1331 jurisdiction will support claims founded upon federal common
law as well as those of a statutory origin”). A district court has jurisdiction to restrain
violations of section 302 of the Labor Management Relations Act. 29 U.S.C. § 186(e)
(2012); Local 144 Nursing Home Pension Fund v. Demisay, 508 U.S. 581, 588-89
(1993). 2
The trustees moved to dismiss Doran Construction’s claims for return of payments
because Doran Construction failed to sufficiently allege that contributions were made due
to a mistake of fact or law, failed to comply with the process contemplated by 29 U.S.C.
§ 1103(c)(2)(A)(ii) (2012), and failed to timely assert the claims. Subject to certain
exceptions, ERISA’s anti-inurement provision provides that “the assets of a plan shall
2

The trustees understood Doran Construction’s counterclaims to assert that the
trustees or the funds are labor organizations within the meaning of the Labor
Management Relations Act. Doran Construction’s counterclaims appear to rely on the
Act’s restrictions on demands by employees’ representatives for payments from
employers.
2

never inure to the benefit of any employer and shall be held for the exclusive purposes of
providing benefits to participants in the plan and their beneficiaries and defraying
reasonable expenses of administering the plan.” 29 U.S.C. § 1103(c)(1). Nevertheless, if
a contribution or payment “is made by an employer to a multiemployer plan by a mistake
of fact or law,” § 1103(c)(1) “shall not prohibit the return of such contribution or
payment to the employer within 6 months after the plan administrator determines that the
contribution was made by such a mistake.” Id. § 1103(c)(2)(A)(ii).
Under § 1103(c)(2)(A)(ii), the plan administrator initially determines (1) whether
a contribution was made by a mistake of fact or law and (2) if so, whether the
contribution should be returned. U.S. Foodservice, Inc. v. Truck Drivers & Helpers
Local Union No. 355 Health & Welfare Fund, 700 F.3d 743, 747-49 (4th Cir. 2012); see
Park-Mark, 700 F.3d at 1135 (“[A] fund’s policies cannot be arbitrary and capricious,
including the decision not to refund mistakenly made payments.”); Frank L. Ciminelli
Constr. Co. v. Buffalo Laborers Supplemental Unemployment Benefit Fund, 976 F.2d
834, 835 (2d Cir. 1992) (“[W]e have also held that an employer is entitled to repayment if
it shows that the refusal to repay was arbitrary or capricious and ‘the equities favor
restitution.’”). Doran Construction did not submit its claims for return of payments to the
plans’ administrators before it asserted its counterclaims. The plans’ administrators have
not determined whether Doran Construction mistakenly made payments and whether any
mistaken payments should be returned to Doran Construction. Under these
circumstances, the Court concludes that dismissal of counts I, II, and III of Doran
Construction’s counterclaims without prejudice and with leave to replead them after the
3

plans’ administrators make their determinations is appropriate. The Court sets a deadline
60 days from the date of this Order for Doran Construction to replead counts I, II, and III.
If the parties require additional time, they may request it in writing.
The trustees also argued that Doran Construction’s “claims fall outside any
applicable limitations period.” The Court expresses no opinion on this argument. See
Walker v. Barrett, 650 F.3d 1198, 1203 (8th Cir. 2011).
To the extent the trustees raised new grounds in their reply to support their motion
to dismiss, the Court declines to consider the arguments. See D. Minn. LR 7.1(c)(3)(B).
Finally, in the event the Court denied their motion, the trustees asked that their
answer to Doran Construction’s counterclaims be due 21 days after the denial. Having
granted in part and denied in part the trustees’ motion, the Court grants their request.
Based on the files, records, and proceedings herein, and for the reasons stated
above, IT IS ORDERED THAT:
1.

The trustees’ motion to dismiss [Docket No. 8] is GRANTED IN
PART and DENIED IN PART.

2.

Counts I, II, and III of Doran Construction’s counterclaims are
DISMISSED WITHOUT PREJUDICE and with leave to replead
them within 60 days of the date of this Order.

3.

The trustees’ answer is due within 21 days of the date of this Order.

Dated: June 8, 2015
s/Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge

4