Trustees of Plumbers & Steamfitters Local 21 Annuity Fund v Hartford Fire Ins. Co.
Annotate this CaseDecided on November 15, 2005
Supreme Court, Westchester County
Trustees of Plumbers and Steamfitters Local 21 Annuity Fund; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 WELFARE FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 PENSION FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 VACATION FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 EDUCATION AND TRAINING FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 INTERNATIONAL TRAINING FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LABOR MANAGEMENT COOPERATION COMMITTEE; TRUSTEES OF PLUMBERS AND STEAMFITTERS ADMINISTRATION FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS INTERNATIONAL TRAINING FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS PAC FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 INDUSTRY FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 NATIONAL PENSION FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 BENEFIT FUND; TRUSTEES OF PLUMBERS AND STEAMFITTERS LOCAL 21 BENEFIT FUNDS f/k/a PLUMBERS AND STEAMFITTERS LOCAL NO. 201 BENEFIT FUNDS a/k/a THE WELFARE, PENSION, VACATION AND EDUCATION FUNDS OF LOCAL 201 AND THE INDUSTRY PROMOTION FUND OF THE MECHANICAL CONTRACTORS ASSOCIATION OF DUTCHESS COUNTY INC. AND PLUMBERS, STEAMFITTERS AND APPRENTICES LOCAL UNION 21, Plaintiffs,
against
Hartford Fire Insurance Company, and HARTFORD FINANCIAL SERVICES GROUP, INC., THE HARTFORD, CT a/k/a HARTFORD FIRE INSURANCE COMPANY, Defendants.
842/05
BARNES, IACCARINO VIRGINIA
AMBINDER & SHEPHERD, PLLC
Attorneys for Plaintiffs
3 Surrey Lane Hempstead, New York 11550
LAMBERT & WEISS
Attorneys for Defendants
61 Broadway, Suite 2020
New York, New York 10006
BARNES, IACCARINO VIRGINIA
AMBINDER & SHEPHERD, PLLC
3 Surrey Lane
Hempstead, New York 11550
LAMBERT & WEISS
61 Broadway, Suite 2020
New York, New York 10006
Kenneth W. Rudolph, J.
Upon the foregoing papers, it is ORDERED that the motion by defendants, Hartford Fire Insurance Company, Hartford Financial Services Group, Inc., and The Hartford, CT a/k/a Hartford Fire Insurance Company, ("Hartford") for an order, pursuant to CPLR 3212, granting defendants summary judgment dismissing the first cause of action of plaintiffs' complaint and the cross motion of plaintiffs for an order, pursuant to CPLR 3212 granting plaintiffs partial summary [*2]judgment on the issue that plaintiffs are a claimant under Hartford's payment bond ("Payment Bond"), are decided as follows.
Plaintiffs, the trustees of various benefit funds ("Funds") and the Plumbers, Steamfitters and Apprentices Local Union No. 21 ("Union"), bring this action to recover fringe benefit contributions alleged to be due and owing in connection with various construction projects.
The first cause of action of plaintiffs' amended complaint, alleges that the plaintiffs are entitled to fringe benefit contributions, including "welfare, annuity and educational benefit contributions", due and owing by an entity known as Heritage Plumbing & Heating, Inc. ("Heritage") in connection with a construction project known as the Woodlands Senior Housing Project ("Project"). Plaintiffs allege the contributions are due and owing under a Collective Bargaining Agreement ("Collective Bargaining Agreement") which was executed between the
Plumbing and Mechanical Contractors Association of The Hudson Valley, Inc. ("Association") and the union. The plaintiffs contend that Heritage was a member of the association and is therefore bound by the collective bargaining agreement.
The plaintiffs seek recovery against Hartford on a payment bond ("payment bond") and a performance bond ("performance bond") which Hartford, as surety, issued in connection with the project. Each bond names Heritage as "contractor" and "principal" and also names Klewin Building Co., Inc. ("Klewin") as owner. The payment bond and performance bond were executed in connection with a subcontract (the "subcontract") in which Heritage subcontracted to perform plumbing work at the project. This subcontract was executed on March 7, 2003 in connection with a prime contract for construction dated September 30, 2002 between Klewin and Ardsley Housing Associates, LLC, as owner.
The Hartford contends that none of the plaintiffs [*3]are claimants as defined under the payment and performance bonds executed by Hartford and plaintiffs have no right of recovery under either of these bonds as a matter of law.
It is well established that summary judgment is a drastic remedy and should only be granted if there are no material and triable issues of fact. Sillman v. Twentieth Century Fox Film Corp., 3 NY2d 395. In evaluating a motion for summary judgment, a court should not determine credibility but whether there exists such issues. S. J. Capelin Assoc. v. Globe Manufacturing Corp., 34 NY2d 338. When reviewing a motion the papers must be scrutinized carefully in the light most favorable to the party opposing the motion. Robinson v. Strong Memorial Hosp., 98 AD2d 976. The party moving for summary judgment has the burden initially of coming forward with admissible evidence to support the motion so as to warrant the Court's directing judgment in movant's favor as a matter of law; the burden then shifts to the opposing party to demonstrate, by admissible evidence, the existence of a factual issues requiring a trial of the action. See, Friends of Animals, Inc. v. Associated Fur Manufacturers, Inc., 46 NY2d 1065, 1067. Alvarez v. City of New York, 68 NY2d 320; Zuckerman v. City of New York, 49 NY2d 557.
The Court notes the following provisions of the subject payment bond: The parties are Heritage, contractor/principal, Hartford, surety and Klewin, owner. The amount of the bond dated March 7, 2003 is $2,560,000. covering the Woodlands' project.
Under the terms of the Payment Bond the contractor and surety jointly and severally, bind themselves, their heirs, executors, administrators, successors and assigns to the owner to pay for labor, materials and equipment furnished for use in the performance of the construction contract, which is incorporated therein by reference. With respect to claimants, this obligation shall be null and void if the contractor promptly makes payment, directly or indirectly, for all sums due.
The Payment Bond defines a claimant on the bond as follows: [*4] 15.1 Claimant: An individual or entity having a direct contract with the contractor or with a subcontractor of the contractor to furnish labor, materials or equipment for use in the performance of the contract. The intent of this bond shall be to include without limitation in the terms "labor, materials or equipment"....
The Performance Bond is dated March 7, 2003; the parties are Heritage, Hartford and Klewin, supra, in the amount of $2,560,000. for the Woodlands' project. The performance bond provides in pertinent part: The contractor and surety, jointly and severally, bind themselves, their heirs, executors, administrators, successors and assigns to the owner for the performance of the construction contract, which is incorporated herein by reference.
In opposition to Hartfords' motion and in support of their cross motion, the attorney for plaintiffs initially acknowledge that plaintiffs seek to be claimants only under the payment bond and not the performance bond. The attorney cites an uncollected default judgment in the sum of $352,889.58 dated September 10, 2004 in the U.S. District Court, Southern District of New York, Index No. 04CV4562(CLB) obtained by plaintiffs against Heritage for fringe benefits owed by Heritage in connection with the Woodlands' project. Plaintiffs contend that pursuant to the subcontract, Heritage agreed to perform plumbing work on the project; since plaintiffs had a direct contract with Heritage to furnish labor, plaintiffs have an indisputable claim under the terms of the payment bond.
Plaintiffs' contentions are further supported by the affidavit of funds administrator, Paul Viviano ("Viviano"), who avers that Heritage failed to pay contributions for medical, pension and other fringe benefits in the minimum about of $287,875.07 to plaintiffs in accord with the terms of a collective bargaining agreement between the union and the Association of which Heritage is a member. [*5]
Viviano notes the September 10, 2004 Federal Court judgment supra, against Heritage in the sum of $352,889.58, which plaintiffs have been unable to collect and contends that plaintiffs are empowered to bring the instant lawsuit to collect the monies owed their members.
UNION TRUSTEES STANDING TO SUE
Plaintiffs cite United States v. Carter, 353 U.S. 210 (1957) as well settled law for the contention that plaintiff benefit fund trustees have standing to sue on a bond for their fund's beneficiaries. The Supreme Court rejected the argument that funds do not have standing to sue because the Union Trust did not provide the labor and materials covered by the bond.
The Supreme Court in Carter, supra, at p. 220 found that Union Trustees, as representatives of their funds' beneficiaries, have standing to sue on a payment bond for their funds beneficiaries. [The] trustees' relationship to the employees, as established by the master labor agreements and the trust agreement, is closely analogous to that of an assignment. The master labor agreements not only created [the principal's] obligation to make the specified contributions, but simultaneously created the right of the trustees to collect those contributions on behalf of the employees. The trust agreement gave the trustees the exclusive right to enforce payment. The trustees stand in the shoes of the employees and are entitled to enforce their rights."
The District Court, in reviewing Carter in the matter of Mountbatten Surety Co., Inc. v. Kips Bay Cinemas, Inc., et al., 2000 WL 1752916 (@*7)(S.D.NY) decided [*6] "The Supreme Court recognized that if only the individual beneficiaries had standing to sue, laborers would have no meaningful way to recover funds to which they were entitled because each individual case would be too small to warrant pursuit. ... the Court found the "the trustees of the fund have an even better right to sue on the bond than does the usual assignee since they are not seeking to recover on their own account. The trustees are are claiming recovery for the sole benefit of the beneficiaries of the fund and those beneficiaries are the very ones who have performed the labor." Id. At 219.
It is important to note that the case before this Court is based upon a common law bond and Carter was based upon a statutory bond (Miller Act 40 U.S.C.A. §270 et seq.). The Appellate Court in Martin v. Casey, 5 AD2d 185, 190 aff'd 8 NY2d 728, reviewed the distinction in an analogous case. Justice Breitel,
writing for a unanimous court addressed the issues on appeal as follows:
"The issue in this case is whether a contractor's payment bond securing the payment of wages and compensation of workmen includes in its protective coverage contributions due from the [*7]employer to union welfare funds." ....."A subsidiary question is whether the trustees of the union welfare funds are the proper parties entitled to sue on such bond to recover unpaid employer contributions."
The Court answered both questions in the affirmative and further decided "On the analysis made here it is thus quite immaterial that the bond in the Carter case was a statutory bond while the bond in this case is a common-law bond."
As a matter of law, plaintiffs, as Trustees of the Union Welfare Funds, have standing to sue on the Payment Bond.
UNION TRUSTEES AS CLAIMANTS
Hartford argues that plaintiffs are not "Claimants" as defined in the payment bond, supra. Hartford relies, in part, on Iron Workers District Council of Western New York and Vicinity Welfare and Pension Funds v. D. R. Chamberlain Corporation, et al., 175 Misc 2d 1011. Iron Workers contrary to Carter and Martin concluded that A "claimant" is restricted to one in direct privity with the subcontractor. The security extends to "labor and material" only, "in performance of the contract..." There is no statutory incentive available in this case to expand the terms as there is under the Miller Act, our State Finance Law or even Business Corporation Law § 630. [*8]Without statutory authority, the common law bond must be taken at face value. Thus, since the Union provided no labor in performance of the contract its claim against the surety must fail."
Hartford further argues that plaintiffs are not "claimants" as defined in the payment bond, supra. Hartford relies, in part, on Tri-State Employment Services, Inc. v. Mountbatten Surety Company, Inc., 99 NY2d 476. Plaintiff in Tri-State was a professional employer organization ("PEO") that funded the contractors' payroll. The Court of Appeals concluded @ 486 that ... "a PEO's sole or primary role as a provider of administrative and human resources services, and as a payroll financier gives rise to a presumption that the PEO does not provide labor to a contractor for the purpose of a payment bond claim". Tri-State is inapplicable to the case at bar. The Union Trustees and the employees of the contractor are joined at the hip. There is no presumption that the Union does not provide labor. "The Trustees stand in the shoes of the employees and are entitled to enforce their rights" (Carter @220, supra) under the Collective Bargaining Agreement.
The issue remains whether the definition of claimant (§15.1 supra) as "an individual ... having a direct contract with the contractor .... to furnish labor" is inclusive of wages and union benefits as may have been contracted for in the Collective Bargaining Agreement with the contractor. This Court concludes in the affirmative.
Pursuant to the Collective Bargaining Agreement, the contractor's obligation to pay wages and benefits to the Union Trustees occurs simultaneously with the performance of labor. Thus the unambiguous meaning of the term "labor" under the facts of this case are inclusive of both wages and union benefits.
The contractor, the Surety and the Trustees are all deemed to be aware of their respective obligations (see, United States vs. Hartford, 809 F. Supp 523). [*9]
This Court concludes as a matter of law that the Union Trustees are claimants as defined in the Surety Payment Bond.
The defendants' motion for summary judgment dismissing the first cause of action is denied. Plaintiff's cross motion for partial summary judgment is granted to the extent that the Court finds plaintiffs qualify as claimants under the Payment Bond issued by the defendants.
The attorneys are directed to attend a preliminary conference at the Commercial Division on November 29, 2005 at 10:30 A.M.
The foregoing constitutes the Decision and Order of this Court.
Dated: White Plains, New York
November 15, 2005
E N T E R,
HON. KENNETH W. RUDOLPH
Justice of the Supreme Court
TO:
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