CEMENT MASONS' UNION LOCAL NO. 592 PENSION FUND et al v. ALMAND BROTHERS CONCRETE, INC.
MEMORANDUM OPINION. Signed by Chief Judge Jerome B. Simandle on 6/8/2015. (drw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CEMENT MASONS’ UNION LOCAL NO.
592 PENSION FUND, et al.
HONORABLE JEROME B. SIMANDLE
No. 14-cv-5413 (JBS/AMD)
ALMAND BROTHERS CONCRETE, INC.
SIMANDLE, Chief Judge:
This case arises from Defendant’s alleged failure to make
contributions to the Plaintiffs’ funds under the terms of a
collective bargaining agreement, and specifically concerns the
failure of the Defendant to make payments to employee benefit
plans that fall within the ambit of the Employee Retirement
Income Security Act of 1974 (“ERISA”). Plaintiffs are the Cement
Masons’ Union Local No. 592 of Philadelphia (“Union”), Cement
Masons’ Union Local 592 Pension Fund (“Pension Fund”), Cement
Masons’ Union Local 592 Welfare Fund (“Welfare Fund”), Cement
Masons’ Union Local 592 Joint Apprenticeship Training Fund
(“Training Fund”), and Cement Masons’ Union Local 592 Political
Action Committee (“PAC”). Defendant is Almand Brothers Concrete,
Inc., a concrete installation contractor based in Audubon, New
Jersey. Plaintiffs assert ERISA (Count One) and breach of
contract (Count Two) claims in their Amended Complaint. [Docket
Item 4.] Presently before the Court is Defendant’s motion to
dismiss Plaintiff’s Amended Complaint because Plaintiff’s claims
are barred by the statute of limitations. [Docket Item 9]
Because the Court finds that Plaintiffs’ Complaint was
filed within the six year limitations period, the Court will
deny Defendant’s motion to dismiss. The Court finds as follows:
Plaintiffs filed their Complaint on August 28, 2014
[Docket Item 1], and the Amended Complaint on October 21, 2014
[Docket Item 4]. They allege that between January 2005 and
December 2007, Defendant failed to make certain payments to
Plaintiffs’ ERISA Funds, as required under Defendant’s
collective bargaining agreement with the Union and the Funds’
trust agreements, in a sum totaling at least $2,738,574.86. (Am.
Compl. ¶¶ 18-10, 21-22.) Plaintiffs further allege that
Defendant “concealed the underpayments at issue in this
Complaint and resisted and delayed an audit. As a result, the
underpayments were only discovered through due diligence and an
audit in September 2008, whose results were transmitted to
Company on September 17, 2008.” (Am. Compl. ¶ 15.)
Plaintiffs assert an ERISA violation under 29 U.S.C.
§ 11451 in Count One for failure to make contractually-required
29 U.S.C. § 1145 provides:
contributions, and a breach of contract claim in Count Two. (Am.
Compl. ¶¶ 19, 23.) This Court exercises jurisdiction over
Plaintiffs’ ERISA claim under 28 U.S.C. § 1331 and 29 U.S.C.
§ 11322 and exercises supplemental jurisdiction over Plaintiff’s
breach of contract claim pursuant to 28 U.S.C. § 1367.
A motion to dismiss under Fed. R. Civ. P. 12(b)(6) may
be granted only if, accepting all well-pleaded allegations in
the complaint as true and viewing them in the light most
favorable to the plaintiff, a court concludes that plaintiff
failed to set forth sufficient facts to state a claim for relief
that is plausible on its face. Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007); Fleisher v. Standard Ins. Co., 679 F.3d
116, 120 (3d Cir. 2012). “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for
the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). To determine if a complaint meets the pleading standard,
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.
2 29 U.S.C. § 1132(a) provides district courts with exclusive
jurisdiction over civil actions brought by a fiduciary to
enforce certain provisions of ERISA statutes, including 29
U.S.C. § 1145, which is at issue here. (Compl. ¶ 19.)
the Court must strip away conclusory statements and “look for
well-pled factual allegations, assume their veracity, and then
determine whether they plausibly give rise to an entitlement of
relief.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012)
(internal quotation marks omitted).
Defendant seeks to dismiss both claims as time-barred.
Ordinarily, statutes of limitations arguments are raised as
affirmative defenses in the answer to a complaint. See Fed. R.
Civ. P. 8(c).
However, if “the time alleged in the statement of
a claim shows that the cause of action has not been brought
within the statute of limitations,” a statute of limitations
defense may be made in the context of a Rule 12(b)(6) motion.
Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (quoting
Robinson v. Johnson, 313 F.3d 128, 135 (3d Cir. 2002)); see also
Garcia v. Tenafly Gourmet Farms, Inc., No. 11-6828, 2012 WL
715316, at *3 (D.N.J. Mar. 5, 2012) (stating same). A motion to
dismiss under Rule 12(b)(6) on statute of limitations grounds
should be granted “where the complaint facially shows
noncompliance with the limitations period and the affirmative
defense clearly appears on the face of the complaint.” Oshiver
v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.1 (3d
Cir. 1994). If the bar is not apparent on the face of the
complaint, then it may not afford the basis for dismissal.
Schmidt, 770 F.3d at 249.
Here, neither party disputes that New Jersey law
supplies the statute of limitations for the breach of contract
claim and the ERISA claim, see Byrnes v. DeBolt Transfer, Inc.,
741 F.2d 620, 625 (3d Cir. 1984), and that both claims are
subject to a six year statute of limitations period. (Def. Mot.
to Dismiss [Docket Item 9-2] at 3; Pl. Opp’n [Docket Item 12] at
4-5.) In New Jersey, breach of contract claims are subject to a
six year statute of limitations. N.J. Stat. Ann. § 2A:14-1
(“Every action at law . . . for recovery upon a contractual
claim or liability, express or implied . . . shall be commenced
within 6 years next after the cause of such action shall have
accrued.”). The ERISA statute does not specify a limitations
period for claims for recovery of delinquent funds, and courts
in this state have held that such claims are governed by the
state’s six-year limitations period for contract actions.3 See
Kapp v. Trucking Empls. of North Jersey Welfare Fund, Inc. –
Pension Fund, 426 Fed. App’x 126, 129 (3d Cir. 2011) (applying
New Jersey’s six year limitations period governing contract
ERISA provides a statute of limitations for claims alleging a
breach of fiduciary duty. See 29 U.S.C. § 1113 (specifying six
year statute of limitations for breach of fiduciary duty
claims). However, ERISA does not contain a statute of
limitations for non-fiduciary claims, such as the one present in
this case. Romero v. Allstate Corp., 404 F.3d 212, 220 (3d Cir.
2005). Federal courts therefore apply the statute of limitations
from “the forum state claim most analogous to the ERISA claim at
hand” when analyzing the timeliness of non-fiduciary claims.
Romero, 404 F.3d at 220.
actions to ERISA claim for recovery of benefits); Stier v.
Satnick Dev. Corp., 974 F. Supp. 436, 439 (D.N.J. 1997) (“New
Jersey’s six-year statute of limitations applicable to contract
actions applies also to claims under ERISA to recover delinquent
pension contributions.”); Starr v. JCI Data Processing, Inc.,
767 F. Supp. 633, 638 (D.N.J. 1991) (holding that New Jersey’s
six year statute of limitations applies to plaintiff’s breach of
contract and ERISA claims, including claim to recover benefits);
Hotel Emp. and Rest. Emp. Int’l Union Welfare Fund v. Pub of
N.J., 744 F. Supp. 91, 95 (D.N.J. 1990) (action under ERISA for
delinquent pension fund contributions is subject to the six year
statute of limitations period governing contract actions rather
than shorter period for wage disputes). The Court therefore
agrees with the parties that both of Plaintiffs’ claims are
subject to a six year statute of limitations.
The central disputed issue in this motion to dismiss
is when Plaintiffs’ claim accrued. Plaintiffs allege that
Defendant failed to contribute to benefit funds from 2005 to
2007, but that the discovery rule tolled the running of the
statute of limitations until September 2008, when Plaintiffs
discovered the underpayments after a delayed audit. (Pl. Opp’n
at 5-6.) Thus, under the six-year statute of limitations period,
Plaintiffs’ claims did not expire until September 2014, and the
August 2014 Complaint was therefore timely. (Id.) Defendant
argues that Plaintiffs “had the ability to conduct an audit,
which would have revealed Almand Brothers’s alleged
underpayment, at any time,” and Plaintiffs should reasonably
have been aware of the underpayments before September of 2008.
(Def. Reply [Docket Item 13] at 2.) They argue, in other words,
that even if the limitations period was tolled under the
discovery rule, it should have started running again before
September 2008, and Plaintiffs’ claims asserted in their August
28, 2014 Complaint, were therefore time-barred.
As a general rule, the statute of limitations begins
to run when the plaintiff’s cause of action accrues. The
discovery rule, however, functions to delay the beginning of the
statutory limitations period from the date when the alleged
injury occurred to the date when a plaintiff discovered or
should have reasonably discovered that he has been injured. See
Oshiver, 38 F.3d at 1386 (explaining that “the ‘polestar’ of the
discovery rule is not the plaintiff's actual knowledge of
injury, but rather whether the knowledge was known, or through
the exercise of reasonable diligence, knowable to the
plaintiff.” (citing Bohus v. Beloff, 950 F. 2d 919, 925 (3d Cir.
1991))). In other words, under the discovery rule, a cause of
action does not accrue so long as the plaintiff is “reasonably
unaware either that he  has been injured, or that the injury
is due to the fault or neglect of an identifiable individual or
entity”. Mancuso v. Neckles, 747 A.2d 255, 256 (N.J. 2000); see
also Vispisiano v. Ashland Chemical Co., 527 A.2d 66, 71-72
(N.J. 1987). When, however, a plaintiff knows or has reason to
know that he has a cause of action against an identifiable
defendant and voluntarily sleeps on his rights until the normal
period of limitations has expired, “the pertinent considerations
of individual justice as well as the broader considerations of
repose” will coincide to bar his action. Farrell v. Votator Div.
of Chemetron Corp., 299 A.2d 394, 396 (N.J. 1973).
The Court finds application of the discovery rule to
be appropriate in this case. Plaintiffs specifically alleged in
their Complaint that the irregularities in fund payments were
concealed by Defendants and that the irregularities were only
discovered “through due diligence and an audit in September
2008.” (Compl. ¶ 15.) Taking these factual allegations and all
reasonable inferences that can be drawn therefrom as true, as
the Court must, Morse v. Lower Merion Sch. Dist., 132 F.3d 902,
906 (3d Cir. 1997), it is plausible that Plaintiffs could not
reasonably have discovered the underpayments until the audit was
Defendant points out that it was required to submit
monthly remittance reports with the Funds and argues that “if
Plaintiffs had reviewed the monthly remittance reports,” they
would have discovered the delinquent contributions before
September 2008. (Def. Mot. to Dismiss at 4.) At the motion to
dismiss stage, the Court must accept all factual allegations as
true and “construe the complaint in the light most favorable to
the plaintiff.” Argueta v. U.S. Immigration and Customs
Enforcement, 643 F.3d 60, 74 (3d Cir. 2011). Here, nothing in
the Complaint gives rise to an inference that the irregularities
were discoverable through a review of the monthly remittance
reports, and that Plaintiffs chose to ignore those reports. In
fact, Plaintiffs specifically pleaded that Defendant “concealed
the underpayments at issue” from Plaintiffs, which suggests that
the underpayments were not readily apparent to Plaintiffs
without an audit.4 (Compl. ¶ 15.) See Robbins v. Iowa Rd.
Builders Co., 828 F.2d 1348, 1354 (8th Cir. 1987) (noting that
“[g]iven the self-reporting system of employer contributions to
the funds, the trustees may not discover a particular employer
owes delinquent contributions unless and until they conduct an
audit.” (citing Cent. States, Southeast & Southwest Areas
Pension Fund v. Cent. Transp., Inc., 472 U.S. 559 (1985)));
Hotel Emp. and Rest. Emp. Int’l Union Welfare Fund v. Pub of
N.J., 744 F. Supp. 91, 94 (D.N.J. 1990) (stating same).
Plaintiffs also state in their Opposition brief that the
delinquent payments “were not apparent until the audit was
performed.” (See Pl. Opp’n at 6.)
The Third Circuit’s decision in Sheet Metal Workers,
Local 19 v. 2300 Group, Inc., 949 F.2d 1274 (3d Cir. 1991), is
instructive. In that case, the plaintiffs alleged that the
defendant employer was delinquent in making benefit fund
contributions and were not alerted to irregularities in fund
contributions until they subjected the employer to an audit. 949
F.2d at 1278. The defendant argued that the plaintiffs’ claims
were barred by the statute of limitations, and the discovery
rule did not apply because “the plaintiffs possessed the right
to audit records, [and] they possessed the ability to detect the
irregularities alleged in this case long before the statute of
limitations expired.” 949 F.2d at 1282. The Third Circuit
disagreed, holding that the plaintiffs’ failure to audit did not
demonstrate a lack of reasonable diligence because there was no
indication that the defendant’s monthly accounting reports to
the union were inaccurate. Id. at 1283.
Similarly, in Stier v. Satnick Dev. Corp., 974 F.
Supp. 436 (D.N.J. 1997), the plaintiffs filed an action under
ERISA to recover delinquent pension contributions from their
employer, and the defendant argued that a portion of the
plaintiffs’ claims for recovery was barred by the six year
statute of limitations because the delinquent contributions
occurred more than six years before the plaintiffs filed the
action. Id. at 440. However, because the plaintiffs alleged that
the defendant had refused to produce its records for an audit
and had misrepresented to the plaintiffs that its monthly
contributions complied with the CBA, the district court held
that the statute of limitations was tolled. Id. (“By certifying
that its monthly contributions complied with the CBA, Satnick
affirmatively concealed its noncompliance with the CBA. There
appears to be no basis on which the plaintiffs could have
discovered the misstatements from the face of the reports.”)
Taking Plaintiffs’ allegation that the defendants “concealed the
underpayments at issue” as true, it is plausible that the
monthly remittance reports gave no indication of any
irregularities in the benefits funds.
Plaintiffs have also plausibly pleaded that the audit
could not have occurred any earlier. The audit occurred less
than a year after the underpayments allegedly ended in December
2007, which does not suggest undue delay. Moreover, similar to
Stier, Plaintiffs alleged that Defendant “resisted and delayed
an audit.” (Compl. ¶ 15.) Finally, there was nothing suspicious
about Defendants’ monthly reports that would have alerted
Plaintiffs to the need to perform an audit any earlier. Thus, an
inference may be drawn that Plaintiffs could not reasonably have
discovered the irregularities until the audit was performed in
September 2008. Plaintiffs’ failure to conduct an audit before
that time does not demonstrate a lack of reasonable diligence.
Viewing Plaintiffs’ allegations in such light, the Court does
not find that Plaintiffs were dilatory in investigating
Defendant’s alleged failure to contribute to the Funds.
Defendant argues that Sheet Metal Workers and Stier
are not relevant here because “those cases involved explicit
allegations that the defendants certified that their
contribution records were accurate and complete and that the
plaintiffs relied on those certifications.” (Def. Reply at 3.)
The Court is not persuaded by Defendant’s argument. Plaintiffs
need only allege enough facts to give rise to a plausible
inference that they exercised due diligence, and the Court finds
that Plaintiffs have done so here by stating that Defendants
concealed the underpayments and delayed an audit until September
2008. Other courts have found similar allegations sufficient to
toll the running of the statute of limitations. See, e.g., In re
Issuer Plaintiff Initial Pub. Offering Antitrust Litig., No. 007804, 2004 WL 487222, at *5 (S.D.N.Y. Mar. 12, 2004) (allowing a
fraudulent concealment claim to proceed which, inter alia, was
based upon the allegation that “Plaintiffs and the members of
the class had no knowledge of the said antitrust violations, or
of any facts which might have led to the discovery thereof,
until November, 1998 . . . Plaintiffs and the members of the
class could not have discovered the violations at an earlier
date by the exercise of due diligence because of the self12
concealing nature of the conspiracy and because the defendants
employ secrecy and other practices and techniques to avoid
detection . . . .”); In re Rubber Chems. Antitrust Litig., 504
F.Supp.2d 777, 788 (N.D. Cal. 2007) (“Plaintiffs' allegation
that they could not have discovered the alleged conspiracy ‘at
an earlier date by the exercise of reasonable due diligence
because of the deceptive practices and techniques of secrecy
employed by the Defendants and their Co–Conspirators' to conceal
the conspiracy . . . is a sufficient allegation of due diligence
[as linked with the alleged non-discovery of the conspiracy
until October 2002].”).5
Defendant additionally argues that Plaintiffs are not entitled
to invoke the fraudulent concealment doctrine. Similar to the
discovery rule, the fraudulent concealment doctrine tolls the
running of the statute of limitations “until the plaintiff
discovers the cause of action or discovers facts that reasonably
put him on notice of it.” Plain v. Flicker, 645 F. Supp. 898,
902 (D.N.J. 1986). Defendant argues that the fraudulent
concealment doctrine has not been satisfied because that
doctrine requires the plaintiff to allege, under Rule 9(b), the
circumstances of the alleged fraud with sufficient particularity
to place the defendant on notice of the precise misconduct with
which it is charged.” (Def. Reply at 2-3 (citing Fuqua v.
Bristol-Myers Squibb Co., 926 F. Supp. 2d 538, 548 (D.N.J.
2013)).) Because the Court finds that Plaintiffs’ claims were
tolled until September 2008 under the discovery rule, it need
not address whether Plaintiffs have stated enough facts to toll
their claims under the fraudulent concealment tolling doctrine.
See, e.g., In re Magnesium Oxide Antitrust Litig., at *20
(stating that tolling under the fraudulent concealment doctrine
requires allegations of fraudulent concealment to be “pled with
particularity in accordance with Federal Rule of Civil Procedure
9(b).”); In re Mercedes-Benz Anti-Trust Litigation, 157 F. sup.
2d 355, 368 (D.N.J. 2001) (“Fraudulent concealment allegations
[as part of a statute of limitations defense] are, moreover,
Because it is not apparent on the face of the
Complaint that Plaintiffs’ claims are barred by the statute of
limitations, the Court will permit both claims to proceed.
Defendant’s motion to dismiss will be denied without prejudice
to Defendant’s right to assert the statute of limitations as an
affirmative defense at a later stage in the litigation.
In a footnote, Defendant asks the Court in the
alternative to limit discovery to issues related to the statute
of limitations “to prevent the potentially unnecessary
expenditure of funds for merits discovery.” (Def. Reply at 3
n.1.) The Court will deny this request. Federal Rule of Civil
Procedure 26 allows parties to obtain discovery “regarding any
matter, not privileged, which is relevant to the subject matter
involved in the pending action.” The phrase “relevant to the
subject matter involved in the pending action” is “construed
broadly to encompass any matter that bears on, or that
reasonably could lead to other matter that could bear on, any
issue that is or may be in the case.” Oppenheimer Fund, Inc. v.
Sanders, 437 U.S. 340, 351 (1978). Because discovery is designed
to help define and clarify the issues, it is “not limited to
issues raised by the pleadings.” Id. The Court will therefore
subject to the requirement of particular pleading set forth in
Federal Rule of Civil Procedure 9(b).” (citing In re Prudential
Ins. Co. of Am. Sales Practices Litig., 975 F. Supp. 584, 598
decline to confine discovery to issues related to the statute of
limitations. The Court also notes that judicial economy would
not be served by limiting discovery to the issue of statute of
limitations. Piecemeal litigation is disfavored except in the
clearest cases where a threshold issue is likely to be resolved
in a manner that disposes of the case. Should discovery on this
issue result in facts unfavorable for Defendant, the parties
would need to return to court, further discovery would need to
be ordered, and witnesses may need to be re-deposed, all of
which creates additional delay and expense for both parties. See
United States v. Kensington Hosp., 760 F. Supp. 1120, 1129 (E.D.
Pa. 1991) (denying defendant’s request to limit initial
discovery to statute of limitations issues because the question
is bound up with other facts in dispute and should not be
attempted to be separated out for purposes of limiting
The accompanying order will be entered.
June 8, 2015
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
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