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BELLEMEAD DEV. CORP. v. NEW JERSEY STATE COUNCIL O

May 13, 1998

BELLEMEAD DEVELOPMENT CORP., Plaintiff,
v.
NEW JERSEY STATE COUNCIL OF CARPENTERS BENEFIT FUNDS and CARPENTERS LOCAL UNION NO. 455, NEW JERSEY STATE COUNCIL OF CARPENTERS BENEFIT FUNDS and CARPENTERS LOCAL UNION NO. 620, Defendants. NEW JERSEY STATE COUNCIL OF CARPENTERS BENEFIT FUNDS and CARPENTERS LOCAL UNION NO. 455, NEW JERSEY STATE COUNCIL OF CARPENTERS BENEFIT FUNDS and CARPENTERS LOCAL UNION NO. 620, Counterclaimant, Third Party Plaintiff, v. BELLEMEAD DEVELOPMENT CORP., Counterdefendant and VIOLET CONSTRUCTION, ARCHITECTURAL MILLWORK, INC., a.k.a. ARCHITECTURAL MILLWORK OF EMERSON, Third Party Defendants.



The opinion of the court was delivered by: LECHNER

OPINION

 LECHNER, District Judge

 This is an action by plaintiff Bellemead Development Corp. ("Bellemead") against defendants New Jersey State Council of Carpenters Benefits Funds (the "Funds), Carpenters Local Union No. 455 ("Carpenters 455") and Carpenters Local Union No. 620 ("Carpenters 620"). *fn1" The complaint (the "Complaint") seeks a declaration that the construction lien claims filed by the Defendants for fringe benefit contributions are preempted by ERISA. See Complaint at Count One, p. 6 and Count Two, p. 8. The Complaint also requests the Defendants be enjoined from filing such claims against Bellemead in the future, a discharge and release of all construction liens filed by the Defendants for fringe benefit contributions, compensatory and punitive damages, attorneys' fees and costs of suit and such other relief deemed just and equitable. See Complaint at Count One, p. 6 and Count Two, pp. 8-9.

 Jurisdiction is alleged pursuant to 28 U.S.C. § 1331. See Complaint at P 5.

 Presently pending are the motion of Bellemead for summary judgment (the "Bellemead Motion for Summary Judgment") and a cross motion for summary judgment by the Defendants (the "Cross Motion for Summary Judgment"). *fn2" For the reasons set forth below, the Bellemead Motion for Summary Judgment is denied. The Cross-Motion for Summary Judgment is granted.

 Facts

 A. Parties

 Bellemead is a New Jersey corporation with its principal place of business in Roseland, New Jersey. See Counterclaim and Third Party Complaint at P 40. Bellemead is an owner and developer of various parcels of real estate located throughout New Jersey. See Bellemead 12G Statement at P 1; Defendants' 12G Statement at P 1.

 The Funds are operated under and regulated by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. See Counterclaim and Third Party Complaint at P 38. The Funds are jointly administered by labor and management trustees on behalf of its beneficiaries -- the members of the Unions. See Laufenberg Aff. at P 3. The Funds provide medical, hospitalization, dental, pension, annuity and other benefits to carpenters who are members of the Unions and their families. See id. at P 4. The Funds depend upon the receipt of fringe benefit contributions due and owing for carpenters covered by applicable collective bargaining agreements and investment income generated from such contributions to meet their obligations. See id. at P 6; Counterclaim and Third Party Complaint at P 38.

 The Unions are labor organizations as defined by 29 U.S.C. § 152. See Counterclaim and Third Party Complaint at P 39.

 Violet Construction, Inc. ("Violet") and Architectural Millwork of Emerson, a/k/a Architectural Millwork Inc. ("Architectural") (collective the "Subcontractors") performed work on two separate construction projects located on property owned and/or managed by Bellemead. *fn3" See Opposition at 3. Violet was a subcontractor on a Bellemead project located at 20 Waterview Plaza, Parsippany, New Jersey (the "Waterview Project"). See O'Driscoll Aff. at P 6. Architectural was a subcontractor on a Bellemead project located at 30 Independence Drive, Warren, New Jersey (the "Independence Project"). *fn4" See Counterclaim and Third Party Complaint at P 55; Laufenberg Aff. at P 10; Meisler Aff. at P 6; Exh. C to Meisler Aff. Both Violet and Architectural are New Jersey corporations with principal places of business in New Jersey. See Counterclaim and Third Party Complaint at PP 41-42.

 B. Procedural History

 Bellemead filed the Complaint against the Defendants on 15 September 1997 seeking a declaration that the construction lien claims filed by the Defendants were preempted by ERISA and a discharge of such lien claims. See Complaint at Count One, p. 6 and Count Two, pp. 8-9. The Complaint also requested that the Defendants be enjoined from filing future construction lien claims. *fn5" See id.

 On 20 October 1997, the Defendants filed an answer (the "Answer"). *fn6" See Answer. On 7 November 1997, an amended answer (the "Amended Answer"), counterclaim (the "Counterclaim") and third party complaint (the "Third Party Complaint") were filed by the Defendants to enforce their construction lien claims. *fn7" See O'Driscoll Aff. at P 19. The Counterclaim and Third Party Complaint request a judgment against Violet and Bellemead to enforce a construction claim together with interest and costs of suit, attorneys' fees and such other relief as deemed just and appropriate. See Counterclaim and Third Party Complaint at p. 8. No independent basis of jurisdiction is asserted over the Third Party Complaint. See Counterclaim and Third Party Complaint at P 36. The Defendants allege jurisdiction over the Counterclaim and Third Party Complaint exists because "[Bellemead] has initiated suit in this Court challenging the lien claim filed by the [Defendants]." Id.

 C. Background

 1. Contributions Due From Violet

 Violet entered into a contract with Bellemead for the performance of work at the Waterview Project. See Laufenberg Aff. at P 16; Counterclaim and Third Party Complaint at P 44. Violet in turn hired members of Carpenters 620 to work on the Waterview Project. See Counterclaim and Third Party Complaint at P 45.

 Violet is a party to a collective bargaining agreement with Carpenters 620 and the Funds. See Laufenberg Aff. at P 15; Counterclaim and Third Party Complaint at P 46. Pursuant to this agreement, Violet is required to remit fringe benefit contributions to the Funds for each member of Carpenters 620 who performed work for Violet. See Laufenberg Aff. at P 15; Counterclaim and Third Party Complaint at P 47. Also, the collective bargaining agreement states a contractor who is delinquent in payment of fringe benefit contributions is also liable for attorneys' fees incurred in enforcing those payments. See Counterclaim and Third Party Complaint at P 48.

 On or around July 1997, *fn8" Violet was delinquent on fringe benefit contributions due to the Funds for work performed on the Waterview Project. *fn9" See O'Driscoll Aff. at P 6. By letter, dated 11 July 1997 (the "11 July 1997 Letter"), counsel for the Defendants wrote to Joanne Meisler, Esq. ("Meisler"), General Counsel for Bellemead, informing Bellemead of Violet's delinquency and requesting resolvement of this issue "without the necessity of filing a lien claim." See id. ; 11 July 1997 Letter attached as Exh. A to O'Driscoll Aff. The 11 July 1997 Letter indicated the delinquency totaled $ 4,517.16. See O'Driscoll Aff. at P 6; 11 July 1997 Letter attached as Exh. A to O'Driscoll Aff. Violet also failed to pay, pursuant to the collective bargaining agreement, interest on the debt and attorneys' fees in the amount of $ 1,129.29. See Laufenberg Aff. at P 18; Third Party Complaint at P 50.

 By letter, dated 14 July 1997 (the "14 July 1997 Letter"), Meisler indicated the Firm had no legal or statutory authority to file a construction lien claim against Bellemead. See O'Driscoll Aff. at P 7; Meisler Aff. at P 5; 14 July 1997 Letter attached as Exh. B to Meisler Aff. The 14 July 1997 Letter also indicated Bellemead would take action against the Firm in the event that such claims were not released. See Meisler Aff. at P 5; 14 July 1997 Letter attached as Exh. B to Meisler Aff.

 On or about 29 August 1997, as a result of the failure of Violet to pay the Defendants the amounts due, the Defendants filed a construction lien claim with the Clerk of Morris County against the Waterview Project. See Laufenberg Aff. at P 19. In addition to filing the construction lien claim, and in accordance with the terms of the collective bargaining agreement and declarations of trust, the Defendants proceeded to arbitrate a claim against Violet for the amounts due and owing. See id. at P 20; O'Driscoll Aff. at P 10. On 8 September 1997, an arbitration hearing (the "Arbitration") was held. See O'Driscoll Aff. at P 11. Although having received due notice of the Arbitration, a representative from Violet did not appear. See id. at P 11. A default arbitration award was entered mandating payment of the amounts due on the Waterview Project, as well as other projects in which Violet employed members of the Unions. See id.

 Violet did not comply with the Arbitration award. See O'Driscoll Aff. at P 12; Laufenberg Aff. at P 22. The Defendants proceeded to confirm the award in the United States District Court for the District of New Jersey. See O'Driscoll Aff. at P 12; Laufenberg Aff. at P 22. On or about 14 November 1997, an order confirming the Arbitration award against Violet was filed. See O'Driscoll Aff. at P 12; Laufenberg Aff. at P 22. The claim remains unsatisfied. See O'Driscoll Aff. at P 13; Laufenberg Aff. at P 23.

 2. Contributions Due From Architectural

 Architectural is a party to a collective bargaining agreement with Carpenters 455 and the Funds. See Counterclaim and Third Party Complaint at P 57. Bellemead entered into a contract with Architectural for the performance of work on the Independence Project. See id. at P 55. Architectural hired members of Carpenters 455 to work on the Independence Project. See id. at P 56.

 Pursuant to the collective bargaining agreement entered into between Architectural and Carpenters 455, Architectural agreed to remit fringe benefit contributions to the Funds for each member of Carpenters 455 employed on the Independence Project. See Counterclaim and Third Party Complaint at P 58. Architectural failed to remit payment to the Funds for the work performed by members of Carpenters 455. See id. at P 60. The amount of delinquent fringe benefit contributions due and owing on the Independence Project was $ 4,285.84. See id. at P 61. Pursuant to the collective bargaining agreement, Architectural was also liable for attorneys' fees of $ 1,071.46. See id.

 On or about 1 August 1997, as a result of the failure of Architectural to remit fringe benefit contributions to the Funds, the Defendants filed a construction lien claim with the Clerk of Somerset County against the Independence Project in accordance with the Construction Lien Law. See Laufenberg Aff. at P 11.

 On or about 17 November 1997, Architectural satisfied its delinquency to the Defendants. See Laufenberg Aff. at P 12. As indicated, Architectural has been dismissed as a third party defendant in the instant matter. See id.

 Bellemead has entered into agreements to sell certain assets, including properties upon which the Defendants have filed the construction liens. See Complaint PP 20, 27; Meisler Aff. at P 9.

 Discussion

 A. Subject Matter Jurisdiction

 Jurisdiction over ERISA preemption claims exists pursuant to 28 U.S.C. § 1331. A plaintiff, "in order ... to secure the relief sought ... will be obliged to establish both the correctness and the applicability to [its] case of a proposition of Federal law," thereby establishing subject matter jurisdiction. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983). Additionally, "[a] plaintiff who seeks injunctive relief from state regulation on the ground that such regulation is preempted by a Federal statute which by virtue of the Supremacy Clause of the Constitution, must prevail, thus presents a Federal question which the Federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve." Keystone Chapter, Associated Builders and Contractors, Inc. v. Foley, 37 F.3d 945, 953 (3d Cir. 1994) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14, 77 L. Ed. 2d 490, 103 S. Ct. 2890 (1983)), cert. denied, 514 U.S. 1032, 131 L. Ed. 2d 244, 115 S. Ct. 1393 (1995); see Alltel Tenn., Inc. v. Tennessee Public Serv. Com'n, 913 F.2d 305, 308 (6th Cir. 1990) (subject matter exists over action wherein party seeks declaratory and injunctive relief from state ...


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