Enos v. Union Stone, Inc.

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

-2-
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

-3-
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.

-4-
 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).

-5-
 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.

-6-
 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.

-7-
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

-8-
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).

-9-
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

-10-
 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.

-11-