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MARTIN v. PARKHILL PIPELINE

United States District Court, Northern District of Illinois, E.D


September 6, 1973

WILLIAM F. MARTIN ET AL., PLAINTIFFS,
v.
PARKHILL PIPELINE, INC., A CORPORATION, ET AL., DEFENDANTS.

The opinion of the court was delivered by: Bauer, District Judge.

MEMORANDUM OPINION AND ORDER

This cause comes on the motion of certain defendants to dismiss the instant complaint.

This is an action to recover damages for the breach of a collective bargaining agreement.

Jurisdiction is allegedly based on Section 301 of the Labor Management Relation Act, 29 U.S.C. § 185(a).

The plaintiffs are trustees of the Midwest Operating Engineers Welfare Fund and trustees of the Midwest Operating Engineers Pension Trust Fund ("plaintiff trustees"). The plaintiffs are trustees pursuant to the terms and provisions of the Agreement and Declaration of Trust for Pension and Welfare Funds established pursuant to a collective bargaining agreement entered into between International Union of Operating Engineers, Local 150 and certain employer associations, whose members employ members of that union. The trusts are required to be maintained and administered in accordance with the provisions of the Labor-Management Relations Act of 1947, as amended, and other applicable state and federal laws.

The defendant Parkhill Pipeline, Inc. ("Parkhill") is an employer engaged in an industry affecting commerce, which employs or has employed members of the aforesaid union, or other local unions of International Union of Operating Engineers, and has allegedly agreed to be bound by the relevant collective bargaining agreements. The Great American Insurance Company ("Great American") and Natural Gas Pipeline Company of America ("Natural Gas") are also defendants in this action even though they are not parties to the relevant collective bargaining agreement. Great American and Natural Gas have filed the instant motion to dismiss.

The plaintiff, in the complaint, alleges the following facts, inter alia:

  1.  The defendant Parkhill was an employer
      engaged in an industry affecting commerce and
      was signatory to a collective bargaining
      agreement with the International Union of
      Operating Engineers, known as the National
      Pipeline Agreement, under which it was
      required to submit welfare and pension
      contributions, with monthly contribution
      reports, to the plaintiff trustees when said
      employer engaged in work covered by that
      agreement. By virtue of the provisions
      contained in the collective bargaining
      agreements to which defendant is bound, the
      defendant did promise and become obligated to
      make contributions to the funds on behalf of
      its employees for each hour worked or for
      which wages were received. Defendant Parkhill
      has violated the obligations on defendant's
      part, in that defendant has failed to pay to
      Midwest Operating Engineers Welfare Fund and
      Midwest Operating Engineers Pension Trust
      Fund the sum of $4,586.00, determined to be
      due upon the monthly contribution reports
      submitted by the defendant up to and
      including the month of September, 1969,
      together with the additional sum thereon, and
      costs, expenses, and fees incurred by the
      trustees all as in the Agreement and
      Declaration of Trust governing such funds set
      forth.

  2.  On or about April 18, 1969 the defendants
      Parkhill and Natural Gas entered into a
      contract for the performance of certain work
      under the jurisdiction of the International
      Union of Operating Engineers. On or about
      April 27, 1969 the defendant Great American,
      as surety, made, executed and delivered for
      the defendant Parkhill a Labour and Material
      Bond numbered 2-83-19-29, in favor of
      defendant Natural Gas, as the obligee

      thereunder. The obligation of said bond is to
      secure that Parkhill, as principal, make
      payment to all claimants (as described in the
      bond) for all labor and materials used or
      reasonably required for use in the
      performance of the contract entered into
      between the defendants Parkhill and Natural
      Gas. The bond is in the penal sum of
      $2,050,000.00. On or about the 26th day of
      February, 1970 the defendant Great American
      was duly notified of the failure on the part
      of the defendant Parkhill to make payment of
      the required contributions to each of the
      funds administered by plaintiffs.
      Notwithstanding the continued failure and
      refusal of the defendant Parkhill to make
      payment of the required contributions to the
      funds administered by the plaintiffs,
      defendant Great American refused and
      continues to refuse to pay the same to
      plaintiffs, all contrary to and in violation
      of its obligations and undertakings under the
      aforesaid Labour and Material Bond.

  3.  By the express terms of the Labour and
      Material Bond, No. 2-83-19-29, issued by the
      defendant Great American, it names as the
      obligee thereunder, Natural Gas qua trustee,
      for the use and benefit of the claimant
      thereunder. The bond and the trust created
      thereby was duly accepted by the defendant
      Natural Gas. Thus Natural Gas became bound to
      administer and execute the trust created
      thereby in accordance with the terms of the
      aforesaid bond. On or about February 26, 1970
      the defendant Natural Gas was duly notified
      that the defendant Parkhill had failed to make
      payment to the plaintiff of the required
      contributions to the Midwest Operating
      Engineers Welfare Fund and the Midwest
      Operating Engineers Pension Trust Fund, all as
      required by the terms of the collective
      bargaining agreement. On February 10, 1970 the
      defendant Natural Gas was served with notice of
      a tax lien against the defendant Parkhill by
      the Internal Revenue Service. Nevertheless,
      Natural Gas informed the plaintiffs that it had
      retained and had in its possession certain
      funds due to the defendant Parkhill which were
      not paid over because of the failure of
      Parkhill to provide proper proof of payment by
      it. The plaintiffs are without knowledge as to
      whether sums retained by the defendant Natural
      Gas will be sufficient to meet the claim
      asserted by the Internal Revenue Service and
      the amount due them. At all times these
      plaintiffs were led to believe that funds
      retained by the defendant Natural Gas were to
      be for the payment of labor and material as
      required under the contract between Natural Gas
      and Parkhill and accordingly no action would be
      required of plaintiffs under the aforesaid
      Labour and Material Bond issued by the
      defendant Great American. Natural Gas was duly
      notified of the failure of the defendant
      Parkhill to make payment of the required
      contributions to the plaintiffs. Natural Gas
      failed in its duty to act with care and
      diligence to reduce to its possession
      sufficient funds under the aforesaid bond, to
      secure to these plaintiffs the benefit of which
      they were entitled as beneficiaries under said
      bond. At no time has defendant Natural Gas, as
      trustee and obligee under the Labour and
      Material Bond, taken necessary and proper
      action to enforce the liability of the
      defendant Great American, as surety under the
      bond. As a result of its breaches of fiduciary
      duties imposed upon the defendant

      Natural Gas, these plaintiffs may be denied
      their remedies against the defendant Great
      American all to their damage in the amount of
      $4,596.00.

The defendants Natural Gas and Great American in support of their motions to dismiss the complaint contend:

  1.  that this Court lacks subject matter
      jurisdiction over the defendants;

  2.  that the plaintiff has failed to state a
      cause of action against the defendants; and

  3.  that the plaintiffs are not entitled to
      recovery under the instant bond.

The plaintiffs in opposition to the instant motion contend that this Court does have subject matter jurisdiction over the instant controversy and defendants.

It is the opinion of this Court that it lacks subject matter jurisdiction over the defendants Great American and Natural Gas, and the plaintiffs have failed to sufficiently allege facts which give this Court pendent jurisdiction.

  I.  THIS COURT LACKS SUBJECT MATTER JURISDICTION OVER THE
      DEFENDANTS GREAT AMERICAN AND NATURAL GAS.

Plaintiff alleges that jurisdiction is founded upon the existence of questions arising under the Labor-Management Relations Act, as amended, 29 U.S.C. § 185(a). For there to be jurisdiction under 29 U.S.C. § 185(a) the following essential elements must be met: (a) the action must involve a violation of a contract or collective bargaining agreement entered into between an employer and a labor organization and (b) the suit must be between the employer and a labor organization. The defendants Natural Gas and Great American were not parties to the labor agreement plaintiff seeks to enforce by this action. Thus the defendants Great American and Natural Gas are not proper parties to this action pursuant to 29 U.S.C. § 185(a). Baker v. Fleet Maintenance, Inc., 409 F.2d 551 (7th Cir. 1969); United Mine Workers of America, District 222 v. Roncco, 232 F. Supp. 865 (D.Wyo. 1964); Schatte v. International Alliance of Theatrical State Employees, 84 F. Supp. 667 (S.D.Col. 1949). It is clear from the facts in this case that the recovery sought by the plaintiffs from defendants Great American and Natural Gas is in the nature of recovery under the Labour and Material Payment Bond furnished by Great American as surety with Parkhill as principal pursuant to Parkhill's contract with Natural Gas for construction of a pipeline in the State of Illinois.

Accordingly any controversy between defendants Great American and Natural Gas and the plaintiffs would center on the bond and not the collective bargaining agreement between the respective employer Parkhill and the union.

Thus the plaintiffs' contention that this Court has subject matter jurisdiction over its dispute with Natural Gas and Great American is without merit and the defendants' motions to dismiss should be granted.

  II. THE PLAINTIFFS HAVE FAILED TO ALLEGE ANY FACTS WHICH
      WOULD GIVE THIS COURT PENDENT JURISDICTION.

The plaintiffs in their complaint do not even allege that this Court has pendent jurisdiction over defendants Natural Gas and Great American let alone facts which would support such a finding. Some federal courts in cases brought under 29 U.S.C. § 185(a) have found pendent jurisdiction over contracts arising out of the collective bargaining process and a common nucleus of operative facts. Connecticut General Life Insurance Company v. Craton, 405 F.2d 41 (5th Cir. 1968); United Steelworkers v. Mesker Bros. Industries, 457 F.2d 91 (8th Cir. 1972); Upholsterer's International Union v. American Pad and Textile Company, 372 F.2d 427 (6th Cir. 1967); Williams v. Wisconsin Barge Line, Inc., 416 F.2d 28 (7th Cir. 1969).

It is clear to this Court that the plaintiffs have failed to allege any fact which would show that the bond in question was predicated on a collective bargaining agreement or arose out of a common nucleus of operative facts. Further, a cursory reading of the bond indicates that it is simply a material and labor bond securing Natural Gas against any claims or liens that might be asserted for materials used or labor performed in connection with the construction of the pipeline, and was not in any way related to the collective bargaining agreement between the employer Parkhill and the union.

It is apparent that the plaintiffs in the claim against Great American and Natural Gas fail to set forth any fact that would give this Court pendent jurisdiction.

Accordingly it is hereby ordered that the motion of defendants Natural Gas and Great American to dismiss the complaint as to these two defendants is granted.

19730906

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