Building Industry Electrical Contractors Association v. Tek

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

THE BUILDING INDUSTRY ELECTRICAL RAND

CONTRACTORS ASSOCIATION (“BIECA”) pov 0765 Nee eM

AND BUILDING INDUSTRY FUND, ING., “Cv- (NGG) (RML)

Plaintiffs,

-against-

PATRIOT ELECTRIC CORP., AND MICHAEL

TEK, INDIVIDUALLY,

Defendants.

NICHOLAS G, GARAUFIS, United States District Judge.

Plaintiffs Building Industry Electrical Contractors Association

(“BIECA”) and Building Industry Fund, Inc. (“BiF”) bring this ac-

tion against Defendants Patriot Electric Corp. (“Patriot”) and

Michael Tek. (See generally Compl. (Dkt. 1).) Plaintiffs allege that

Patriot and Michael Tek violated the Labor Management Rela-

tions Act (“LMRA”) and state contract law by failing to make

payments to Plaintiff BIF pursuant to their obligations under a

collective bargaining agreement (the “CBA”) between Plaintiff

BIECA (on behalf of employers including Defendant Patriot) and

non-party United Electrical Workers of America IUJAT, Local 363

(the “Union”). (Compl. 4 12, 62-95.) Now before the court is

Defendants’ fully briefed motion to dismiss pursuant to Federal

Rules of Civil Procedure 12(b)(1) and 12(b)(6). (See Not. of Mot.

(Dkt. 9); Mot. (Dkt. 12); Opp. (Dkt. 14); Reply (Dkt. 15).)

For the reasons set forth below, the motion to dismiss is

GRANTED in part and DENIED in part. The court GRANTS De-

fendants’ motion to dismiss Plaintiff BIECA’s claims in their

entirety and DENIES Defendant’s motion to dismiss Plaintiff BIF’s

LMRA claim. The court further DISMISSES Plaintiff BIF’s state

contract law claims on consent.

I. BACKGROUND!

A. Factual History

On December 1, 2019, BIECA, a multi-employer association

which serves as a bargaining unit for electrical contractors in the

New York City area, entered into a Collective Bargaining Agree-

ment with the United Electrical Workers of America IUJAT, Local

363. (Compl. {4 1, 8-13, 27.) Defendant Patriot, an electrical

contracting company, was a BIECA member and Defendant Mi-

chael Tek is Patriot’s owner and Chief Executive Officer. (Compl.

"5, 9.) The relevant CBA, in effect from December 1, 2019

through November 30, 2022, (id. 4 27), set forth the terms of the

relationship between the employers on whose behalf BIECA ne-

gotiated the contract and the Union. (Compl. § 33; see also Ex. A

to the Compl. (Dkt. 1-1) (“CBA Exhibit”).)?

These terms included the formation and administration of sev-

eral funds, which included an ERISA Annuity Plan, an ERISA

Retirement Plan, and an ERISA healthcare plan. (Compl. { 15.)

According to Plaintiffs, the CBA provided that BIECA would

“sponsor” and “operat[e]” these plans “as a service to the mem-

ber employees.” (Ud. {| 15, 17.) However, BIECA’s role in

administering these plans is not stated in the CBA itself. (See gen-

erally CBA Exhibit, Art. 25.).

1 The following facts are, unless otherwise noted, taken from the Com-

plaint and, for the purposes of this motion to dismiss, assumed to be true.

See Ark. Pub. Emps. Ret. Sys. v. Bristol-Myers Squibb Co., 28 F.4th 343, 349

(2d Cir, 2022).

2 In addition to the Complaint, the court considers the CBA as well as the

Memorandum of Understanding attached to the Complaint. (See Ex. A to

the Compl. (Dkt. 1-1) (“CBA Exhibit”); Ex. B to the Compl. (Dkt. 1-2)

(“Memorandum of Understanding”).) See Sira v. Morton, 380 F.3d 57, 67

(2d Cir. 2004) (“A complaint is deemed to include any written instrument

attached to it as an exhibit, materials incorporated in it by reference, and

documents that, although not incorporated by reference, are integral to the

complaint.”) (citations omitted).

In addition to the ERISA plans, the CBA outlines the employers’

obligations to pay into the Building Industry Fund (“BIF”). (See

generally CBA Exhibit, Art. 26.) Services and functions reviewed

in the CBA are practically handled by Plaintiff BIF to which

“BIECA delegates all operational matters.” (Compl. {4 19-24, 35-

40.) BIECA itself has “no employees, no income or financial deal-

ings” of its own. Gd. { 18).

The BIF was created by the employers and is managed by trustees

appointed by the employers. (CBA Exhibit, Art. 26(D).) The

stated purpose of the CBA is:

[T]o promote the business and welfare of the electrical

industry, to make known the jurisdiction of said Industry;

to promote the programs of education, training, admin-

istration of collective bargaining agreements, research

and the services performed by the EMPLOYERS; to stabi-

lize and improve EMPLOYER-UNION relations; to

provide, promote, support and improve the training and

employment opportunities of electrical workers employed

by the EMPLOYERS; to disseminate to general contrac-

tors, architects, engineers and owners information about

the kind, quality and merits of the work performed by the

EMPLOYER; to avoid grievances and jurisdictional dis-

putes; and generally to promote and improve in all lawful

ways the interests and welfare of the Industry.

CBA Exhibit, Art. 26(C).

According to the Complaint, the BIF also “administer[s] the spon-

sorship of the various ERISA programs required of the CBA” on

BIECA’s behalf, and “provides various services to covered em-

ployees,” including some that “would usually be provided by a

union.” (id. 21-22.) It also handles day-to-day “CBA contract

negotiation, member employer support, member employee ben-

efit assistance, oversight and administration of professional

services including legal, accounting, and audit.” Gd. 135.) BIECA

oversees the operations of BIF to ensure the requirements of the

CBA are being met. Ud. { 24.)

BIF is funded under Article 26 of the CBA which requires BIECA

member employers to make payments into the fund “based on

work hours of their covered employees with certain limitations

on maximum payments.” (Id. 4 36; see also CBA Exhibit, Art.

26.)3 Pursuant to the Memorandum of Understanding between

the Union and BIECA dated October 15, 2019, the maximum

amount due from any BIECA employer to BIF is capped at

$75,000 per annum ($6,250 monthly). (id. 39.) Plaintiff alleges

that this provision concerning the funding of BIF also effectively

funds BIECA, allowing both Plaintiffs to provide employee mem-

bers services and ensure that the requirements of the CBA are

being met. (Id. {4 23-24, 36.)

Plaintiff alleges that as a member of BIECA, Defendant Patriot

was bound by the CBA, (Id. (32), and that for eight years, Patriot

made payments to BIF according to the terms of a predecessor to

the CBA at issue. (Id. | 25-27.) However, beginning in January

2020, Patriot ceased making payments after BIECA and the Un-

ion entered into a new agreement in December 2019 even

though the relevant terms under the CBA remained the same and

BIECA and BIF continued to provide services to Patriot and its

employees. (id. {| 25-27, 48-50.) As of December 1, 2022, Pa-

tricot owed BIECA and BIF in the principal amount of

$218,750.00, plus interest. Ud. 9152, 54-55.)

3 Article 26(B) of the CBA requires each employer (including defendant

Patriot) to contribute 4.5% of its gross wages for prevailing rate work (and

a set burden for non-prevailing work) to the Building Industry Fund

(“BIE”), with a minimum of $200.00 per month. (Compl. © 38.)

B. Additional Facts for Consideration with Regard to

the 12(b)(1) Motion‘

Alongside its Motion, Defendants submitted an affidavit from De-

fendant Michael Tek, Chief Executive Officer, President and

owner of Defendant Patriot Electric Corp. (See Aff. of Michael Tek

(“Tek Aff.”) (Dkt. 10); Compl. 75.) In the affidavit, Mr. Tek states

that he is “not aware of BIECA and/or BIF performing any func-

tions or services whatsoever for the benefit of the employees of

Patriot,” (Tek Aff. 18), and that while Patriot “was a member of

BIECA, the sole service BIECA performed was to engage in nego-

tiations for a collective bargaining agreement on behalf of its

member employers,” (id. { 5). Mr. Tek also disputes that BIECA

had a role in the administration of the ERISA funds, arguing that

the Dickinson Group, LLC—not BIECA or BIF—helped to admin-

ister the ERISA funds as the funds’ third-party administrator. (id.

9-12.) Lastly, Mr. Tek states that he “do[es] not know that

[he] personally negotiated” the CBA or recall any negotiations in

which an increase in contributions to BIF was discussed, (id. 4]

14-15), and that he did not personally sign the CBA or Memo-

randum of Understanding. Ud. { 17.)

In response, Plaintiffs provide their own affidavit by Pat Bel-

lantoni, Director of the BIF and President of BIECA. (See Aff. of

Pat Bellantoni (“Bellantoni Aff.”) (Dkt. 13).) Mr. Bellantoni states

that BIECA delegates all operational matters to BIF to perform

BIECA’s necessary functions and that BIECA oversees BIF’s oper-

ations to ensure the requirements of the CBA are being met. (id.

"{ 15, 19.) Mr. Bellantoni also states that BIECA sponsors and

administers the employee ERISA plans set forth in the CBA and

provides “substantial programs and assistance to covered em-

ployees including, training, medical programs, assistance with

4 Additional facts are considered outside the pleading for the purpose of

Defendant’s motion to dismiss for lack of subject matter jurisdiction. See

Katz v. Donna Karan Co., L.L.C., 872 F.3d 114, 119 (2d Cir. 2017).

benefit administration,” and others. (Bellantoni Aff. {{ 7-13.)

Lastly, Bellantoni states that Michael Tek “was directly and per-

sonally involved in the negotiation of the CBA and was personally

present and an active participant in the 2019 negotiations of the

CBA as a member of BIECA and on behalf of BIECA.” Ud. 4 25.) .

Cc. Procedural History

The operative Complaint is the third filed before this court relat-

ing to this matter. Plaintiff Building Industry Fund, Inc. first filed

an action against Defendants on February 17, 2022. See Building

Industry Fund, Inc. v. Patriot Electric Corp et al, No, 22-CV-888

(NGG) (“BIF Litigation”). Defendants then filed a motion to dis-

miss that was fully briefed on June 17, 2022. See BIF Litigation,

Notice of Mot. (Dkt. 14). While that motion was pending, Plain-

tiff Building Industry Electrical Contractors Association filed a

nearly identical complaint alleging the same claims against the

same Defendants. Compare Building Industry Electrical Contrac-

tors Association v. Patriot Electric Corp et al, No. 22-CV-4209

(NGG) (“BIEGA Litigation”), Dkt. 1; with BIF Litigation, Dkt. 1.

At a pre-motion conference on Defendants’ motion in BIECA Lit-

igation on November 22, 2022, this court granted Plaintiffs’

motion to withdraw both complaints and directed the Plaintiffs

to file a new complaint that included both and BIECA as

plaintiffs in the action. BIECA Litigation, Min. Entry dated No-

vember 22, 2022. Plaintiffs did so, filing the operative Complaint

on December 16, 2022 in the instant case. (See generally Compl.)

Defendants then filed the fully briefed motion to dismiss the op-

erative Complaint on March 22, 2023. (See Not. of Mot.; Mot.;

Opp.; Reply.) In their motion, Defendants argue that the court

should dismiss Plaintiffs’ claims under Rule 12(b)(1) for lack of

subject matter jurisdiction or, alternatively, under Rule 12(b)(6)

.

for failure to state a claim. (See generally Not. of Mot.; Mot.)° The

court now considers Defendants’ motion.

Il. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 12(b)(1), a district court

must dismiss a case when it “lacks the statutory or constitutional

power to adjudicate it.” Makarova v. United States, 201 F.3d 110,

113 (2d Cir. 2000), In reviewing a motion to dismiss under Rule

12(b)(1), the court must accept all material factual allegations in

the complaint as true, see Shipping Fin. Servs. Corp. v. Drakos, 140

F.3d 129, 131 (2d Cir, 1998), but should not draw “argumenta-

tive inferences favorable to the party asserting jurisdiction.” Add.

Mut. Ins. Co. v. Balfour Maclaine Int'l Ltd., 968 F.2d 196, 198 (2d

Cir. 1992) (citing Norton v. Larney, 266 U.S. 511, 515 (1925)).

The non-moving party bears the burden of showing, by a prepon-

derance of the evidence, that the court has subject matter

jurisdiction over its claims. See id. The court may refer to evi-

dence outside the pleadings when defendants challenge the

factual underpinnings of plaintiffs’ claim for subject matter juris-

diction. See Makarova, 201 F.3d at 113 (citing Kamen v. American

Tel. & Tel. Co., 791 F. 2d 1006, 1011 (2d Cir. 1986)).

Defendants also seek dismissal for failure to state a claim pursu-

ant to Federal Rule of Civil Procedure 12(b) (6). When the court

reviews a motion to dismiss pursuant to Rule 12(b) (6), the court

accepts as true all allegations of facts made by the plaintiff and

draws all reasonable inferences in the plaintiffs favor. See ATSI

5 Defendants’ Notice of Motion stated that Defendants were moving pur-

suant to Rules 12(b}(1) and 120b)(6), (see Not. of Mot). In their

memorandum of law supporting their motion, however, they only refer to

Rule 12(b)(6), (see generally Mot. at 5), But certain of the grounds for dis-

missal alleged are jurisdictional in nature and the court will therefore

construe those portions of the pleading as a motion to dismiss the Com-

plaint under Federal Rule of Procedure 12(b) (1).

Comms., Inc. v. Shaar Fund, Ltd,, 493 F.3d 87, 98 (2d Cir. 2007).°

While a court generally looks only to the allegations in the com-

plaint in deciding a Rule 12(b)(6) motion, Perez v, Westchester

Foreign Autos, Inc., No. 11-CV-6091, 2013 WL 749497, at *5

(S.D.N.Y. Feb. 28, 2013) (citing Roth v. Jennings, 489 F.3d 499,

509 (2d Cir. 2007)), the court may also consider materials at-

tached to the complaint or incorporated by reference, Sira v.

Morton, 380 F.3d 57, 67 (2d Cir. 2004). A court will dismiss a

complaint for failure to state a claim if it does not “contain suffi-

cient factual matter, accepted as true, to ‘state a claim to relief

that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007)).

Iik. DISCUSSION

A. Jurisdiction Over Plaintiffs’ LMRA Claims

1. Overview of Section 301(a) of the LMRA

Under § 301 (a) of the Labor Management Relations Act:

Suits for violation of contracts between an employer and

- alabor organization representing employees in an indus-

try affecting commerce as defined in this chapter, or

between any such labor organizations, may be brought in

any district court of the United States having jurisdiction of

the parties, without respect to the amount in controversy or

without regard to the citizenship of the parties.

29 U.S.C. § 185(a) (emphasis added}.

The word “between” in Section 301(a) qualifies the word “con-

tracts” and not “suits.” See Smith v. Evening News Ass’n, 371 U.S.

195, 200 (1962). The statute thus effectively grants federal

© When quoting cases, unless otherwise noted, all citations and internal

quotation marks are omitted, and all alterations are adopted.

courts jurisdiction to hear suits for violations of contracts be-

tween employers and unions even when an “employer” or a

“labor organization” are not the parties to the suit. See Shea v.

McCarthy, 953 F.2d 29, 31 (ad Cir. 1992); Painting & Decorating

Contractors Ass’n of Sacramento, Inc. v. Painters & Decorators Jotnt

Comm. of E. Bay Ctys., Inc., 707 F.2d 1067, 1070-72 (9th Cir.

1983) (“Section 301 jurisdiction is not dependent upon the par-

ties to the suit but rather the nature or subject matter of the

action. Jurisdiction exists as long as the suit is for violation of a

contract between a union and employer even if neither party is a

union or an employer.”). For the purposes of Section 301 of the

LMRA, “employers” include multi-employer associations such as

BIECA. See Metro Ass’n of Plumbing-Heating-Cooling Contractors

y. Minnesota Mech. Contractors Ass’n, No. 01-CV-1368 (JRT),

2002 WL 459073, at *4 n.3 (D. Minn. Mar. 18, 2002) (citing 29

U.S.C. § 152(2); Associated Shoe Indus. of Se. Mass., Inc., 81 NLRB

224, 227 (1949)).

This case involves a dispute that arises from an alleged violation

of the CBA, a contract between BIECA and the Union. (Compl. 4

12; CBA Exhibit.) Because the dispute arises from the CBA and

the CBA was entered into by employers and a union, this court

has jurisdiction under the language of the statute.

Defendants dispute jurisdiction, however, arguing that Plaintiffs

may not bring federal claims under the LMRA because they do

not have standing. (Mot. at 6-11.) Defendants first argue that

there is not standing because “for this Court to have jurisdiction

under 29 U.S.C. § 185(a), the dispute must be either between an

7 A “labor organization” under the act is defined as “any organization of

any kind, or any agency or employee representation committee or plan, in

which employees participate and which exists for the purpose, in whole or

in part, of dealing with employers concerning grievances, labor disputes,

wages, rates of pay, hours of employment, or conditions of work.” 29

ULS.C, §:152(5).

employer and a labor organization or between two labor organi-

zations.” (Mot. at 6.) As discussed, however, this misreads the

statute. The focus under Section 130 of the LMRA, 29 U.S.C. §

185{a), is on whether the contract is between an employer and a

labor organization or between two labor organizations, not on

whether the sutt is between such entities. See Smith, 371 U.S. at

200. This argument therefore fails.

2. Statutory or Prudential Standing Under the LMRA

Defendants next argue that Plaintiffs do not have standing be-

cause they do not fall within the “zone of interests” of the LMRA

and therefore do not have “statutory standing.” (Mot. at 6, 8-11.)

To support this, Defendants cite Ferrera v. Quadrozzi Equip. Leas-

ing Corp., a case from within this district that reviewed and

rejected claims by an “industry advancement fund” because it

was not a “core part[y]” to the LMRA, (See Mot. at 9; Reply at 3

(citing Ferrera v. Quadrozzi Equip. Leasing Corp., No, 11-CV-

5183, 2013 WL 3226755, at *6 (E.D.N.Y. June 25, 2013)).) A

brief review of the statute and recent case law considering the

“statutory standing” and “Zone of interests” analysis relied upon

by Ferrera shows why this argument also fails.

The statute under which Plaintiffs claim jurisdiction, 29 U.S.C. §

185(a), was adopted as part of the Labor Management Relations

Act of 1947 “to promote industrial peace through the collective

bargaining process by assuring the enforceability by federal

courts of collective bargaining agreements between employers

and labor unions.” District 2 Marine Engineers Beneficial Ass’n-As-

sociated Maritime Officers, AFL-CIO v. Grand Bassa Tankers, Inc.,

663 F.2d 392 (2d Cir, 1981) (collecting cases). Placing jurisdic-

tion in federal courts to enforce such agreements served several

purposes, including: to ensure that contracts negotiated between

unions and employers would be honored, id.; to ensure uniform

federal law fashioned from a national labor policy, Textile Work-

ers Union v. Lincoln Mills, 353 U.S. 448, 457-58 (1957); and out

10

of a concern that many state courts would not provide adequate

relief because of local rules or decisions inhibiting suits by or

against labor organizations. Seymour v. Schneckloth, 368 U.S.

351, 358 (1962). Ultimately, federal jurisdiction would ensure

“accountability, consistency, conformity and stability” in the law

that governed collective bargaining agreements. See Shea, 953

F.2d at 31.

Since the enactment of this statute, the overwhelming majority

of suits brought under 29 U.S.C, § 185(a) are between employers

and unions seeking enforcement of collective bargaining agree-

ments related to the employer’s employees. District 2, 663 F.2d

at 397, However, the statute extends jurisdiction beyond these

traditional suits. See id. For instance, union members may bring

suits individually against their employer under the LMRA for vi-

olation of collective bargaining agreements despite not being

individual signatories to the agreement. Smith, 371 U.S, at 200-

O1. Individuals may even bring suits against their own union for

violation of a “union constitution” that governs a parent union

and its local chapters because the governing document may be

considered a “contract between labor organizations.” See Shea,

953 F.2d at 30-31 (citing Wooddell v. Intl Bhd. of Elec. Workers,

Loc. 71, 502 U.S, 93, 101 (1991)).

But despite the breadth of the statute, see Smith, 371 U.S, at 199

(rejecting a more restrictive interpretation of the statute), some

courts have found that Section 130 of the LMRA does not extend

federal jurisdiction to certain suits even when they arise from col-

lective bargaining agreements. In Ferrara v. Quadrozzi Equip.

Leasing Corp., for instance, the court considered standing for an

“industry advancement fund” that was established “pursuant to

a series of collective bargaining agreements” to “benefit the gen-

eral welfare of the ready-mix concrete industry.” 2013 WL

11

3226755, at *1, 5.8 The court found that such a fund was not a

“core part[y]” to the agreement, distinguishing the fund from

employers, unions and “employee benefit funds” established

principally to benefit employees and their families. Id. at “6. Ac-

cording to the court, industry advancement funds (unlike

employers, unions and employee benefit funds) “do not fall

within the zone of interests protected by § 301 of the LMRA.” Id.

Therefore the plaintiff did not have “statutory standing” and the

court dismissed the complaint. Id. at *3-6 (citing Bennett v. Spear,

520 U.S. 154, 162 (1997)).

Statutory or “prudential” standing, as distinct from constitutional

standing, refers to “judicially self-imposed limits on the exercise

of federal jurisdiction” that are “founded in concern about the

proper—and properly limited—role of the courts in a democratic

society.” Bennett, 520 U.S. at 162. Central to a consideration of

statutory standing was whether the plaintiffs “grievance” fell

within the “zone of interests protected or regulated by the statu-

tory provision or constitutional guarantee invoked in the suit.”

Id,

This concept of standing shifted a year after Ferrara was decided,

however, with the Supreme Court’s decision in Lexmark Intl, Inc.

v. Static Control Components, Inc., 572 U.S. 118, 127 (2014). In

Lexmark, the Court held that when considering whether the

plaintiff comes within the “zone of interests” of a given statute,

the focus should not be on a judicial determination of “prudential

principles” as it was in Ferrara, see 2013 WI. 3226755, at *5, but

instead on “whether a legislatively conferred cause of action en-

compasses a particular plaintiffs claim.” Lexmark, 572 U.S. at

8 Both Plaintiffs and Defendants cite to Ferrara in their briefs, arguing that

it supports their reading of the statute. (See Mot. at 9, 11; Opp. at 10; Reply

at 3.)

12

127. This analysis is to be undertaken using “traditional princi-

ples of statutory interpretation” to determine whether the

plaintiff has a cause of action under the statute. Id. at 128.

Turing back to Section 301 of the LMRA. This statute creates a

cause of action for parties asserting “violations of contracts be-

tween an employer and a labor organization.” Trustees of New

York City Dist. Council of Carpenters Pension Fund, Welfare Fund,

Annuity Fund, & Apprenticeship, Journeyman Retraining, Educ. &

Indus. Fund v. Showtime on the Piers, LLC, No. 19-CV-7755 (VEC),

2020 WL 2749572, at *6 (S.D.N.Y. May 26, 2020) (citing 29

U.S.C. § 185(a)); see also Wooddell, 502 U.S. at 101. By its lan-

guage, this includes third-party beneficiaries of a contract

between a union and an employer if the collective bargaining

agreement creates rights stated in and affected by the alleged vi-

olation of said agreement. Cunningham v. Loc. 30, Int'l Union of

Operating Engineers, 234 F. Supp. 2d 383, 394 (S.D.N.Y. 2002)

(citing Wooddell, 502 U.S. at 101); see also 20 Williston on Con-

tracts § 55:59 (4th ed. 2023) (“A nonsignatory may acquire

standing to bring an action to enforce a collective bargaining

agreement if that individual, whether or not an employee, is a

third party beneficiary of the contract.”).

This broader reading of the statute serves at least one of the stat-

ute’s key purposes: avoiding the possibility that individual

contract terms might be interpreted differently in federal and

state courts, which could lead to inconsistency and disrupt the

negotiation and administration of collective bargaining agree-

ments. Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 103

(1962). Conferring federal jurisdiction on disputes other than

those between employers and unions—when those disputes arise

from a contract between these entities and require interpretation

of the terms of this contract—allows consistency, uniformity, and

stability in labor law in the same way that it would when the

parties to the contract bring a claim. Gf. Wooddell, 502 U.S. at

13

102 (“If suit by an employee to enforce an interunion contract is

not authorized by § 301 and the employee is remitted to state

court and to state law, it is plain that the same contract terms

might be given different meanings based solely on the identity of

the party.”)?

Regardless of the policy considerations, whether the statute falls

within the “zone of interests” such that the court has jurisdiction

over the suit is based on the text. See Lexmark, 572 U.S, at 127.

And the text of Section 130(a) of the LMRA, 29 U.S.C. § 185(a),

grants a cause of action to parties for violations of collective bar-

gaining agreements, even when they are not parties to the

agreement. Painting & Decorating Contractors Ass’n of Sacra-

mento, 707 F.2d at 1070-72 (“All that is required for jurisdiction

to be proper under § 301(a) is that the suit be based on an al-

leged breach of contract between an employer and a labor

organization and that the resolution of the lawsuit be focused

upon and governed by the terms of the contract.”).'° Nothing in

the text indicates a different result for an “industry advancement

fund” that is a third-party beneficiary to the contract.

9 For similar reasons, Section 301 may even confer jurisdiction even to par-

ties who do not have rights created by a collective bargaining agreement

but where the claims are “substantially dependent on analysis of a collec-

tive-bargaining agreement.” Allis-Chalmers Corp. v. Lueck, 471 U.S. 202,

209, 220 (1985); see also Caterpillar Inc. v. Williams, 482 U.S. 386, 394

(1987).

10 Defendants cite Metro Ass’n of Plumbing-Heating-Cooling Contractors,

2002, WL 459073, to argue that the LMRA does not apply to lawsuits be-

tween employers. (See Mot. at 8.) However, the agreement at issue in that

case—which was between two employer associations—telated to an agree-

ment to transfer funds between employer associations that was not stated

in a collective bargaining agreement with a union, but was instead “a pri-

vate agreement that only tangentially relate[d] to a collective bargaining

agreement.” Id. at *1, 4 (citing Allis-Chalmers Corp. v. Lueck, 471 U.S. 202,

211 (1985)). Thus, this case is distinguishable from cases such as this one

which arise directly from a collective bargaining agreement.

14

3. Application to BIF’s LMRA Claims

Turning to the present case, after concluding that third-party

beneficiaries, including industry advancement funds, can bring

suits under 29 U.S.C. § 185(a), the analysis of whether Plaintiffs

have standing is fairly straightforward.

Plaintiff BIECA is an employer under the LMRA and entered into

a collective bargaining agreement with the United Electrical

Workers of America IUJAT, Local 363. (See Compl. § 9-12.) Un-

der the CBA, employers (including the Defendant) must make

contributions to Plaintiff BIF which will then, among other

things, promote the industry and stabilize and improve em-

ployer-union relations. (CBA Exhibit, Art. 26; see also Compl.

9, 12.) This explicit requirement to contribute to BIF makes it an

intended third-party beneficiary to the contract. See IBS Ketel,

Ltd. v. Hanil Bank, Korea, No. 98-CV-3507 (DC), 1999 WL

639696, at *1-2 (S.D.N.Y. Aug. 23, 1999); see also Muhlrad v.

Mitchell, No. 96-CV-3568 (DLC), 1997 WL 182614, at *5

(S.D.N.Y. Apr. 14, 1997) (citing Restatement (Second) of Con-

tracts § 302(1) (1981))." As a third-party beneficiary, BIF may

bring a claim to enforce its rights under the contract. See

Muhlrad, 1997 WL 182614, at *5.

Therefore, the court has jurisdiction to hear BIF’s LMRA claims

and the motion to dismiss BIF’s LMRA claims is therefore DE-

NIED.

11 The court applies New York law to make this determination because ap-

plying state law principles to determine whether BIF is a third-party

beneficiary would not be “inconsistent with federal labor policy.” M & G

Polymers USA, LLC v. Tackett, 574 U.S. 427, 435 (2015) (citing Textile

Workers, 353 U.S. at 456-457 (1957)); see also Mason Tenders Dist. Council

Welfare Fund vy. Thomsen Const. Co., 301 F.3d 50, 53 (2d Cir. 2002).

15

4. Application to BIECA’s LMRA Claims

Defendants argue that BIECA’s claims should separately be dis-

missed from this suit because their injury is too indirect since the

allegedly delinquent payments from Patriot are owed to BIF un-

der the contract and not BIECA. (Mot. at 12.)

BIECA’s LMRA claim is based on the same allegation as BIF’s—

that Patriot breached the contract by not making payments to BIF

pursuant to Article 26 of the CBA. (Compl. {{ 62-65.) Plaintiff

alleges that BIECA is harmed by these payments because BIECA

“delegates all operational matters to the BIF.” (Compl. "1 19, 65;

see also Opp. at 14.) However, Article 26 of the CBA does not

name BIECA as a recipient of these funds, even indirectly, or dis-

cuss any ongoing relationship between BIF and BIECA. (See

generally CBA Exhibit, Art. 26.) Any such agreement between BIF

and BIECA concerning the flow of funds is therefore at best tan-

gential to the CBA and does not arise from the contract between

BIECA and the Union. See Allis-Chalmers Corp. v. Lueck, 471 U.S.

202, 211 (1985) (“[N]ot every dispute . . . tangentially involving

a provision of a collective-bargaining agreement, is pre-empted

by § 301[.]”) Thus, BIECA’s allegations are insufficient to state a

claim under the LMRA.

Plaintiff also alleges that BIECA sponsors the ERISA funds which

should separately give it standing. (See Opp. at 7.) However, this

argument also fails. Plaintiffs’ allegation that BIECA “sponsors”

and “administers” the various benefit programs with BIP,

(Compl. {4 21-23, 34-35), could allow BIECA to bring suit to re-

cover contribution to the ERISA funds as a_ third-party

beneficiary. See Cement & Concrete Workers Dist. Council Welfare

Fund, Pension Fund, Legal Servs. Fund & Annuity Fund v. Lollo, 35

F.3d 29, 31, 34 (2d Cir. 1994) (allowing administrators of union

ERISA funds to bring an action for delinquent contributions to

the funds in violation of a collective bargaining agreement under

16

the LMRA). However, BIECA’s LMRA claim is not focused on con-

tributions to ERISA funds and is instead solely focused on

delinquent payments to the Building Industry Fund. (Compl. “"

64, 68.) Because Plaintiff does not allege that there is a violation

of the CBA due to delinquent payments to ERISA funds, Plaintiff

cannot claim jurisdiction based on their status as an administra-

tor of these funds.

In sum, the court finds that Plaintiff BIECA’s LMRA claim fails.

The court therefore GRANTS Defendants’ motion to dismiss

BIECA’s LMRA claim.

B. Preemption of BIF’s State Law Claims

Defendants move to dismiss Plaintiffs’ contractual and quasi-con-

tractual claims—for breach of the CBA, unjust enrichment, and

breach of the duty of good faith and fair dealing—as preempted

by the LMRA and based on the existence of an express agreement

in the form of the CBA. (Mot. at 14-15.) In their response, Plain-

tiffs agree that if the court found that the Complaint states a

claim under the LMRA then these claims should be dismissed as

preempted. (Opp. at 14-15.) Because the court found that Plain-

tiff BIF may bring a claim under the LMRA, 29 U.S.C. § 185{a),

the court dismisses BIF’s state law claims on consent.

C. BIECA’s State Law Claims

While BIF’s state law claims are preempted, BIECA’s are not. See

supra. To the extent that these claims arise from Patriot’s failure

to pay into the BIF under the terms of the BIF, the court would

have supplemental jurisdiction over these claims as relating to

the same “case or controversy” as the federal claim. 28 U.S.C. §

1367. However, to the extent that BIECA’s state law claims arise

from the failure to pay into the BIF pursuant to the CBA, the

claims also fail.

Plaintiff BIECA brings claims for breach of contract, unjust en-

richment and a breach of the duty of good faith and fair

17

dealing. (Compl. 76-95.) The latter two claims—for (1)

breach of the duty of good faith and fair dealing and (2) unjust

enrichment—are both based on the failure to pay into the BIF,

an express term of the CBA and the basis for the breach of

contract claim. (See Compl. {9 77, 79, 82-83, 87-88.) Plaintiffs

quasi-contract claims are therefore duplicative of their breach

of contract claim and must be dismissed. See Harris v. Provi-

dent Life & Acc. Ins. Co., 310 F.3d 73, 80 (2d Cir. 2002) (“Under

New York law, parties to an express contract are bound by an

implied duty of good faith, but breach of that duty is merely a

breach of the underlying contract.”); Hudson Neurosurgery,

PLLC vy. UMR, Inc., No. 20-CV-9642. (KMK), 2022 WL 902107, at

*5 (S.D.N.Y. Mar. 28, 2022) (“[A]n unjust enrichment claim is

not available where it simply duplicates, or replaces, a conven-

tional contract or tort claim.”); Goldberg v. Pace Univ., 535 F.

Supp. 3d 180, 198 (S.D.N.Y. 2021) (“Under New York law, a

plaintiff may not recover under quasi-contract claims such as un-

just enrichment where an enforceable contract governs the same

subject matter.”); ICD Holdings S.A. v. Frankel, 976 F. Supp.

234, 243-44 (S.D.N.Y. 1997) (“A claim for breach of the im-

plied covenant will be dismissed as redundant where the

conduct allegedly violating the implied covenant is also the

predicate for breach of covenant of an express provision of the

underlying contract.”).

The breach of contract claim focuses on Patriot’s failure to

make payments to BIF under the express terms of the CBA.

(See Compl. 77.) As discussed, BIF was the stated recipient

of these funds under Article 26 of the CBA, but Plaintiffs allege

they were also harmed by Patriot’s non-payment. (See Compl.

{| 36-37, 45.) However, nowhere in the CBA does it state that

the employers agree to make payments to BIECA (either di-

rectly or indirectly through payments to the BIF) or otherwise

indicate that BIECA provides the services alleged in the Com-

plaint in return for such payments. (See generally CBA Exhibit,

18

Art. 26). Thus, while BIECA may be harmed by a lack of pay-

ment into the fund, BIECA is at best an incidental beneficiary

of the relevant payments under the CBA, rather than an “in-

tended beneficiary.” See Muhirad, 1997 WL 182614, at *5

(“Under the Restatement, a party is a third party beneficiary if

it is an ‘intended’ beneficiary as opposed to an ‘incidental’ ben-

eficiary.”) (citing Restatement (Second) of Contracts § 302(1)

(1981)). As such, BIECA’s breach of contract claim alleging Pa-

triot did not meet its obligation to pay into the Building

Industry Fund must be dismissed. See Kennedy v. City of New

York, No. 94-CV-2886 (MBM), 1996 WL 711505, at *2

(S.D.N.Y. Dec. 10, 1996).

Defendants’ motion to dismiss BIECA’s state law contract

claims is therefore GRANTED.

D. Personal Liability Against Defendant Tek

Lastly, the court considers whether BIF may hold Defendant Mi-

chael Tek personally liable for BIF’s remaining LMRA claim. (ee

Compl. { 67-75; Opp. at 17.)

The CBA includes a provision stating that individuals are person-

ally liable for failing to pay into the BIF. Specifically, Article 26

(F)(b) states that:

It is expressly understood and agreed that the Officers, di-

rectors, stockholders and partners (if applicable) shall be,

and remain personally liable, severally and jointly, for

payment of all contributions to the BUILDING INDUSTRY

FUND by their respective EMPLOYERS, as hereunder re-

quired in the same manner and with the same force and

effect as if they had each executed this Agreement as in-

dividual Employers.

Defendant Michael Tek is the CEO and owner of Defendant Pa-

ttiot and would therefore be covered by the plain text of this

provision. (See Compl. {"{ 5, 72-75.) However, the presence of a

19

personal liability clause is not dispositive on issues of individual

liability of a corporation’s owner or officer. See Mason Tenders,

301 F.3d at 54. Even when such a clause exists, there must still

be “clear and explicit evidence of an individual defendant’s intent

to add personal liability to the liability of the entity.” Bricklayers

Ins. & Welfare Fund v. Topline Const., Inc., No. 03-CV-0487 (NGG)

(MDG), 2006 WL 3337509, at *3 (E.D.NLY. Sept. 6, 2006) (citing

Mason Tenders, 301 F.3d at 53).

Courts considering whether a plaintiff may hold an individual

defendant personally liable for claims brought under the LMRA

have applied state law. See Mason Tenders, 301 F.3d at 54. Under

New York law, individual liability is found “only in rare cases”

where there is “overwhelming evidence of the signatory’s inten-

tion to assume personal liability.” Id. at 53. Factors considered in

determining such intent include “the contract’s length, the loca-

tion of the liability provision relative to the signature line, the

presence of the name of the signatory in the contract itself, the

nature of the negotiations leading to the contract, and the signa-

tory’s role in the corporation.” Id. “[T]he New York Court of

Appeals has observed that “where individual responsibility is de-

manded the nearly universal practice is that the officer signs

twice—once as an officer and again as an individual.” Id. at 54

(citing Salzman Sign Co. v. Beck, 10 N.Y.2d 63, 67 (1961)). A

provision assigning personal liability is also generally prominent

and directly above the signature line. See Cement & Concrete

Workers Dist. Council Welfare Fund, , 35 F.3d at 35; Sullivan v.

Marble Unique Corp., No. 10-CV-3582 (NGG) (LB), 2011 WL

5401987, at *9 (E.D.N.Y. Aug. 30, 2011), report and recommen-

dation adopted, No. 10-CV-3582 (NGG) (LB), 2011 WL 5402898

(E.D.N.Y. Nov. 4, 2011). Thus, while two signature lines are not

required, the absence of a signature line relating to individual

liability on the signing officer weighs heavily against the party

asserting personal liability. Id.

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Here, Plaintiffs do not allege that Defendant Tek signed a sepa-

rate signature line acknowledging his personal liability. (See

generally Opp. at 16-17.) This strongly weighs against finding

that Defendant Tek clearly and explicitly made himself person-

ally liable for Defendant Patriot’s obligations. Mason Tenders, 301

F.3d at 54. Plaintiffs do allege, however, that Tek “personally ne-

gotiated” the clause to hold individual officers personally liable

under Article 26CF) (6). (Compl. "{ 72-75.)

Despite the heavy burden to demonstrate personal liability in the

absence of a separate signature line, dismissal of the personal li-

ability claim is premature at this time. Plaintiffs allege that Mr.

Tek “personally negotiated” this provision, (Compl. {| 72-75),

making this case unlike others where plaintiffs did not ade-

quately allege or demonstrate personal liability, supporting

dismissal, See, e.g., Mason Tenders, 301 F.3d at 53 (“It is undis-

puted that there were no negotiations with respect to any part of

the agreement.”); Bricklayers Ins. & Welfare, 2006 WL 3337509,

at *3 (“Other than reliance on this contract clause, plaintiffs pro-

vide no evidence of [the individual defendant's] intent to assume

personal liability. For example, plaintiffs make no allegations re-

garding the negotiations that led to execution of the CBA.”);

Sullivan, 2011 WL 5401987, at *9 (“Plaintiffs’ failure to allege or

produce any evidence of the nature of the negotiations related to

the personal liability provision weighs heavily against finding in-

tent to assume personal liability.”).

Defendants dispute this allegation, providing an affidavit from

Mr. Tek where he states that although he was present for nego-

tiating sessions for the CBA, he “was not present for any

discussion of a personal guarantee of payments to BIF.” (Tek Aff.

™ 15-16.) Plaintiff responds with an affidavit from Pat Bel-

lantoni, Director of the BIF and President of BIECA, stating that

Tek was “directly and personally involved in the negotiation of

21

the CBA.” (Bellantoni Aff. 25.)!* Unlike the CBA itself, how-

ever, the affidavits were not incorporated into the Complaint by

reference and the statements therein are disputed. (See generally

Opp. at 16-17; Reply at 8-10.) The affidavits would therefore be

more properly considered on summary judgment. See Kamholtz

v. Yates Cnty., 350 F. App’x 589, 592 (2d Cir. 2009) (summary

order); see also ATSI Comms., Inc., 493 F.3d at 98 (noting that a

court accepts all factual allegations in the complaint and draws

all reasonable inferences in the plaintiffs favor).

In sum, although Plaintiffs face a high hurdle to demonstrate that

this is one of those “rare cases in which there is the requisite over-

whelming evidence of the signatory’s intention to assume

personal liability,” Sullivan, 2011 WL 5401987, at *9, the court

finds that it is premature to dismiss the claim at this early stage.

Defendants’ motion to dismiss Plaintiff BIF’s LMRA claim against

Defendant Tek is therefore DENIED.

12 Notably, while the Complaint notes that Mr. Tek specifically negotiated

the personal liability clause, this is absent in the Bellantoni Affidavit. (Com-

pare Compl. “i 72-75; Bellantoni Aff. € 25.)

13 The court notes that because Section 130(a) of the LMRA, 29 U.S.C. §

185(a), both confers jurisdiction and forms the basis of Plaintiffs’ claims,

there is some overlap in the court’s consideration of Defendants’ motions

to dismiss due to lack of jurisdiction and failure to state a claim. See Textile

Workers, 353 U.S. at 451 (noting that the statute is both jurisdictional and

provides the source of substantive law). This is relevant as to whether it

would be proper to consider the affidavits at this stage. See Carter v. Héalth-

Port Techs,, LLC, 822 F.3d 47, 57 (2d Cir. 2016) (noting that Defendants

may make a fact-based challenge to a plaintiffs assertion of subject matter

jurisdiction). Here, the question of the intent to accept personal liability is

more properly considered as focusing on Plaintiffs ability to state a claim

under 29 U.S.C. § 185(a) rather than the court’s jurisdiction for this dis-

pute. The court therefore finds that the personal liability question is more

properly considered pursuant to Defendants’ Rule 12(b)(6) motion.

22

IV. CONCLUSION

For the foregoing reasons, the court GRANTS in part and DENIES

in part Defendants’ motion to dismiss Plaintiffs’ claims. Specifi-

cally, the court GRANTS Defendants’ motion to dismiss Plaintiff

BIECA’s claims in their entirety and DENIES Defendant’s motion

to dismiss Plaintiff BIF’s LMRA claim. The court further DIS-

MISSES Plaintiff BIF’s state contract law claims on consent.

SO ORDERED.

Dated: Brooklyn, New York

January 2, 2024

s/Nicholas G. Garautfis

NICHOLAS G. GARAUFIS

United States District Judge

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