Enos v. Union Stone, Inc. , 732 F.3d 45 ( 2013 )

United States Court of Appeals
For the First Circuit
No. 12-2480
PAUL ENOS,
Chairman of the Rhode Island Bricklayers Benefit Funds,
Plaintiff, Appellee,
v.
UNION STONE, INC.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Mary M. Lisi, U.S. District Judge]
Before
Lynch, Chief Judge,
Torruella, Circuit Judge,
and Stearns,* District Judge.
Andrew J. Tine with whom Law Offices of Andrew J. Tine was on
brief for appellant.
Karl J. Gross with whom O'Reilly, Grosso & Gross, P.C. was on
brief for appellee.
October 15, 2013
*
Of the District of Massachusetts, sitting by designation.
STEARNS, District Judge. This is an appeal of a final
judgment awarding the Rhode Island Bricklayers Benefit Funds ("the
Funds" or "the Rhode Island Funds") fringe benefit contributions
that Union Stone, Inc. failed to make for work performed in
Massachusetts and Connecticut by members of the International Union
of Bricklayers and Allied Craftworkers Local #1 Rhode Island ("the
Union" or "the Rhode Island Bricklayers Union"). Finding no merit
in Union Stone's arguments on appeal, we affirm.
I. Background
Union Stone is a party to a collective bargaining
agreement ("CBA") with the Rhode Island Bricklayers Union. Under
the terms of the CBA, Union Stone is required to make benefit
contributions to the Union members' pension funds. When Union
Stone employs member bricklayers on out-of-state jobs, typically in
Massachusetts and Connecticut, it is obligated to make the benefit
payments to affiliate pension funds in those states. The affiliate
funds then transfer the payments to the Rhode Island Funds for the
members' account. Union Stone is also obligated by the CBA to
maintain books and records substantiating the payments.
Paul Enos, the Chairman of the Trustees of the Rhode
Island Funds, sued Union Stone in the Rhode Island District Court
pursuant to the Employment Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. § 1132, and the Labor Management Relations
Act, id. § 185, alleging that Union Stone had failed to pay the
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full amount due for work performed by Union members in
Massachusetts and Connecticut. The district court entered partial
summary judgment for the Funds, awarding the contributions that
were agreed to be owing for members' labor in Massachusetts.
Because there were disputes about the amount owed for work
performed in Connecticut, the court set a bench trial for June 7,
2012.
On the morning of trial, Union Stone's counsel presented
the Funds' attorney with copies of checks made out to the
Connecticut funds in an amount that ostensibly covered the
outstanding contributions owed to the Union's Rhode Island members.
Union Stone did not, however, provide copies of the remittance
reports, which would have allowed the Funds to compare the amounts
tendered with the contributions being sought. Perhaps naively, the
attorney for the Funds informed the court that the checks
"resolve[d] that . . . portion of the judgment [the Funds] were
seeking as to the Connecticut funds," thus obviating the need for
a trial. Only afterwards did the Funds realize that the bulk of
the payments to the Connecticut funds were in satisfaction of
contributions owed by Union Stone to Connecticut bricklayers, and
not to the Union's Rhode Island members.
Believing that he had been deliberately misled, Enos
repaired to the district court, alleging that Union Stone's
"misrepresent[ation]" of the nature of its payment to the
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Connecticut funds was "nothing more than a ruse against the Court."
Union Stone responded with a Rule 11 motion denying the accusation
and seeking sanctions. Chief Judge Lisi determined that the June
7 morning-of-trial exchange between counsel had resulted in a
"miscommunication" and denied the Rule 11 motion as
"ill-conceived."
The court then scheduled a second bench trial to resolve
the dispute over the amounts owed by Union Stone for labor
performed by Rhode Island bricklayers in Connecticut. Following
the trial, the court entered judgment in favor of the Funds,
awarding the unpaid contributions, interest, and attorneys' fees.
Union Stone then brought this appeal.
II. Discussion
Union Stone argues that the district court erred in: (i)
refusing to enforce the June 7 exchange as an oral settlement
agreement between the parties; (ii) admitting evidence that was not
properly disclosed under Rule 26; (iii) declining to impose Rule 11
sanctions; and (iv) awarding interest and attorneys' fees.
A. Settlement Agreement
Union Stone points first to counsel's statement on the
record that the payments to the Connecticut funds "resolve[d] [the
remainder of] the judgment [sought]" as evidence that a settlement
agreement had been reached, and argues that the district court
erred in not enforcing it by dismissing the case. We disagree.
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A settlement agreement is a species of contract. NBA
Props., Inc. v. Gold, 895 F.2d 30, 33 (1st Cir. 1990). This court
reviews for clear error a trial court's determination of whether an
enforceable contract has been formed. See Adelson v. Hananel, 652
F.3d 75, 85 (1st Cir. 2011). Where, as here, the underlying action
is brought pursuant to a federal statute, whether a settlement
agreement is enforceable is a question of federal law. See Quint
v. A.E. Staley Mfg. Co., 246 F.3d 11, 14 (1st Cir. 2001). The
load-bearing element of a contract is the mutual assent of the
parties to the essential terms of the agreement, the so-called
"meeting of the minds." See ITT Corp. v. LTX Corp., 926 F.2d 1258,
1260 n.1, 1265 n.7 (1st Cir. 1991). Under First Circuit law, as
elsewhere, where there is no meeting of the minds between the
parties because of a mistake of fact, no contract is formed, and
the imperfect agreement is voidable at the election of the party
adversely affected. 13 S. Williston, Contracts § 1535 (1970).
Moreover, "[a] mistake by one party with knowledge thereof by the
other is equivalent to a mutual mistake; a party should not be
benefitted by a mistake he knew the other had made." Hashway v.
Ciba-Geigy Corp., 755 F.2d 209, 211 (1st Cir. 1985); see also
O'Rourke v. Jason Inc., 978 F. Supp. 41, 48 (D. Mass. 1997)
(applying the doctrine of unilateral mistake to a settlement
agreement).
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The district court specifically found the June 7 exchange
between counsel regarding the Connecticut payments to have
engendered a "miscommunication," that is, a mistaken understanding
on the part of the lawyer for the Funds. This finding is not
clearly erroneous. It is evident from the record that the Funds'
attorney erroneously assumed that the Union Stone checks he had
been given represented the payment of the sums owed to the Rhode
Island bricklayers for their work in Connecticut. There is no hint
whatsoever in the record that the Funds were willing to accept, in
settlement of that obligation, the payment of an altogether
different debt. It was explicit from the history of the
litigation — specifically from the entry of partial summary
judgment resolving the claim for contributions for labor performed
by Union members in Massachusetts — that the Funds expected an
additional payment for work done by the Rhode Island bricklayers in
Connecticut. There was no error in the district court's refusal to
enforce the purported June 7 settlement agreement.
B. Evidentiary Rulings
In the district court proceedings, Union Stone
unsuccessfully objected to the admission of certain evidence on the
ground that it was tainted by violations of the discovery rules.
On appeal, Union Stone contends that these violations were
sufficiently egregious to compel vacating the judgment. We
disagree.
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We review evidentiary rulings for abuse of discretion.
United States v. Tetioukhine, 725 F.3d 1, 6 (1st Cir. 2013). Union
Stone complains that the Funds failed to comply with Fed. R. Civ.
P. 26 in that: (i) "new" evidence was not timely disclosed before
the originally scheduled trial; (ii) affidavits reporting the
results of an "expert" audit determining the amount of Union
Stone's outstanding obligations were not timely produced; and (iii)
the identities of the "expert" witnesses who analyzed the audit
were never specifically revealed.
On our review of the record, we find nothing that rises
to a violation of Rule 26: (i) the evidence identified by Union
Stone as "new" was either admitted to by Union Stone in prior
proceedings or originated from Union Stone itself; (ii) the
allegedly "expert" audit was nothing more than an arithmetic
calculation of Union Stone's outstanding Connecticut payments; and
(iii) the Union's financial witnesses (Enos and Charles Raso, the
Assistant Administrator of the Funds) did not testify as "experts,"
but simply explained from personal knowledge how the math had been
done. As the district court noted, resolution of the case required
nothing more complicated than "review[ing] . . . Union Stone
payroll records, identifying who the workers were, . . .
[a]nd . . . apply[ing] the mathematical formula that is set forth
in the CBA[]." The district court's evidentiary rulings do not
warrant vacating the judgment.
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C. Sanctions
Union Stone next argues that the district court erred in
denying its motion for Rule 11 sanctions. We disagree.
We review for abuse of discretion a district court's
disposition of a Rule 11 motion. CQ Int'l Co., Inc. v. Rochem
Int'l, Inc., USA, 659 F.3d 53, 59 (1st Cir. 2011). While this
standard always entails "considerable latitude," Lichtenstein v.
Consol. Servs. Grp., Inc., 173 F.3d 17, 22 (1st Cir. 1999), a
district court's decision to deny rather than to impose sanctions
"is accorded extraordinary deference," id. (internal quotation
marks omitted).
"[Federal] Rule [of Civil Procedure] 11 imposes a duty on
attorneys to certify that they have conducted a reasonable inquiry
and have determined that any papers filed with the court are well
grounded in fact, legally tenable, and not interposed for any
improper purpose." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384,
393 (1990); see also Fed. R. Civ. P. 11(b). Here, the genesis of
Union Stone's Rule 11 motion is relevant. In litigating the
eventual award of attorneys' fees, Union Stone moved to strike one
of the Funds' affidavits. In their opposition to the motion to
strike, the Funds asserted that by representing to counsel and to
the court that the checks paid to the Connecticut funds were in
satisfaction of "the obligations sought by the Plaintiffs in this
action," Union Stone had made "a material misrepresentation in an
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effort to avoid pending trial which Plaintiff was prepared to
proceed on that day." It was to the accusation of a deliberate
misrepresentation that Union Stone's counsel took umbrage,
prompting the Rule 11 motion and the counter-accusation that the
Funds' counsel "was simply motivated to undo [the] settlement
reported to the Court on June 7, 2012."
The record of the aborted June 7 trial is ambiguous and
more suggestive — as the district court found — of a
miscommunication between counsel than of a deliberate attempt by
Union Stone's counsel to mislead the court. But we cannot fault
the Funds for an "improper motive" in vigorously pursuing what they
rightly believed their members were due. Under the circumstances,
the district court clearly acted within its discretion in deeming
Union Stone's Rule 11 motion "ill-conceived."
D. Interest and Attorneys' Fees
Union Stone finally argues that the district court erred
in awarding the Funds interest and attorneys' fees. We disagree.
With respect to interest, "[i]n ERISA cases the district
court may grant prejudgment interest in its discretion to
prevailing fiduciaries, beneficiaries, or plan participants. This
judicial discretion encompasses . . . the . . . rate to be used in
calculating interest." Cottrill v. Sparrow, Johnson & Ursillo,
Inc., 100 F.3d 220, 223 (1st Cir. 1996), abrogated on other grounds
by Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010).
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This court reviews a district court's taxing of prejudgment
interest "only for abuse of discretion." Janeiro v. Urological
Surgery Prof'l Ass'n, 457 F.3d 130, 145 (1st Cir. 2006). While
Union Stone complains that the district court did not explain how
it arrived at the amount of interest awarded, it is apparent from
the record that the amount was extrapolated from the rate
stipulated in the CBA and recommended by the Funds. The district
court did not abuse its broad discretion by selecting an interest
rate set out in the parties' own agreement.
With respect to attorneys' fees, Union Stone suggests
that the district court failed to recognize that the decision to
award them was discretionary. The suggestion is misguided. ERISA
provides for a mandatory award of attorneys' fees against an
employer who defaults on making benefit fund contributions. 29
U.S.C. § 1132(g)(2)(D) ("In any action under this subchapter by a
fiduciary for or on behalf of a plan to enforce section 1145 of
this title in which a judgment in favor of the plan is awarded, the
court shall award the plan . . . reasonable attorney's
fees . . . ." (emphasis added)). In addition, the CBA itself
stipulates that defaulting employers will pay all attorneys' fees
involved in the Funds' efforts to collect any deficiency. The
district court did not err in awarding fees.1
1
Union Stone's alternative argument — that it should not be
liable for "self-incurred" fees arising after the Funds repudiated
the June 7 settlement agreement — does not survive the district
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III. Conclusion
For the foregoing reasons, the judgment is affirmed.
court's determination that the June 7 exchange did not give rise to
an enforceable agreement between the parties.
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