OPERATING ENGINEERS LOCAL 324 HEALTH CARE PLAN, et al., Plaintiffs-Appellants,
G& W CONSTRUCTION COMPANY; GARY NOLLAR, Defendants-Appellees
[Copyrighted Material Omitted]
Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:11-cv-10494--Victoria A. Roberts, District Judge.
Robert A. Farr, Jr.,
ROBERT A. FARR PLLC, Novi, Michigan, for Appellants.
Neil J. Juliar, CONLIN, MCKENNEY ... PHILBRICK, P.C., Ann Arbor, Michigan, for Appellees.
Before: MOORE, KETHLEDGE, and STRANCH, Circuit Judges.
JANE B. STRANCH, Circuit Judge.
Nine multi-employer pension and welfare fringe benefit trust funds (the Funds) sued G& W Construction Company (G& W) and its president, Gary Nollar, to recover delinquent fringe-benefit payments under a contract between G& W and Operating Engineers Local 324 (the Union). The defendants raised affirmative defenses of laches, estoppel, and waiver based on alleged conduct of the Union and the Funds. The Funds moved to strike the affirmative defenses, arguing that § 515 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1145, bars equitable defenses. The district court denied the motion to strike, but certified the case for interlocutory appeal under 28 U.S.C. § 1292(b), and we granted
the Funds' petition to appeal. For the reasons stated below, we AFFIRM in part and REVERSE in part the district court's denial of the motion to strike, and we REMAND the case to the district court for further proceedings.
In February 2011, the Funds filed a complaint under the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a), and ERISA, 29 U.S.C. § § 1132(a)(3), 1132(g)(2) & 1145, to collect delinquent fringe-benefit contributions from G& W. R. 1. The Funds alleged that G& W conducts business in Michigan in the building and construction industry.
Count I of the complaint alleged that G& W breached the collective bargaining agreements and trust agreements by failing to make monthly contributions to the Funds on behalf of its employees who were represented by the Union and that G& W refused to submit its records for audit. Copies of the referenced agreements were not attached to the complaint. Count II alleged that Nollar, as owner, shareholder, and officer of G& W, breached his fiduciary duties by failing to remit fringe-benefit contributions to the Funds as they were due in the period " from January 2007" and that Nollar refused to submit G& W's records for audit. Count II sought to hold Nollar personally liable to the Funds, jointly and severally with G& W, for the unpaid contributions. Count III alleged that Nollar breached his fiduciary duty under the Michigan Building Contract Fund Act, Mich. Comp. Laws § 570.151. The Funds sought declaratory relief, an audit for the period " from January 2007," payment for all amounts the audit showed due and owing to the Funds under the agreements, prejudgment interest, costs, and attorney's fees. The defendants filed an answer raising five affirmative defenses.
The Funds then moved for summary judgment on the issue of liability but did not supply the district court with evidence necessary to resolve the issues. Consequently, the court denied the motion for summary judgment.
Within days the defendants filed an amended answer with leave of court adding affirmative defenses, including the statute of limitations and laches. The defendants also alleged waiver and estoppel:
[Plaintiffs] are estopped from obtaining the relief sought in this case, or have waived their right to such relief, based on the actions of the [Union] and Plaintiffs' own actions. The Union at all times [led] Defendants to believe that fringe benefit payments were due only for union members. In past audits Plaintiffs never sought fringe benefits for non-union members and affirmed Defendants' understanding that fringe benefits were not payable for nonmembers. Defendants relied upon the acts and omissions of the Union and Plaintiffs by bidding and accepting work on the reasonable understanding that Union wages and benefits did not apply to non-members.
R. 21, Page ID 259-60 (emphasis added).
Three weeks later, the Funds filed a motion under Federal Rule of Civil Procedure 12(f)(2) to strike the affirmative defenses of laches, estoppel, and waiver as insufficient defenses on the ground that ERISA § 515 does not permit equitable defenses to a collection action. Even assuming that ERISA § 515 permits equitable
defenses, the Funds argued that the defendants could not show reasonable reliance and asserted that a laches defense would not be appropriate where the matter is governed by a six-year contract statute of limitations ...