Agathos v. Starlite Motel

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit

3-31-1995

Agathos v Motel
Precedential or Non-Precedential:

Docket 94-5382

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Recommended Citation
"Agathos v Motel" (1995). 1995 Decisions. Paper 89.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/89

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 UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 94-5382

JOHN AGATHOS; and LEONARD DEMARSICO,
as Trustees of the Local 4-69 Welfare
Fund and the Local 4-69 Pension Fund and
Local 69, Hotel Employees and Restaurant
Employees International Union, by its
President, John Agathos

Appellants

v.

STARLITE MOTEL

On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 89-cv-02429)

Argued: February 17, 1995

BEFORE: STAPLETON and COWEN, Circuit Judges
HUYETT, District Judge*

(Filed March 31, 1995)

Diana L.S. Peters
Gerald M. Feder (argued)
Feder & Associates, P.C.
1350 Connecticut Avenue, N.W.
Suite 600
Washington, D.C. 20036

Counsel for Appellants
John Agathos and Leonard DeMarsico
*Honorable Daniel H. Huyett 3rd, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.

John A. Craner (argued)
Craner, Nelson, Satkin & Scheer
320 Park Avenue
P.O. Box 367
Scotch Plains, NJ 07076

Counsel for Appellee
Starlite Motel

OPINION OF THE COURT

Cowen, Circuit Judge:

John Agathos and Leonard DeMarsico, plaintiff trustees (the

"Trustees") of the jointly administered Local 4-69 Welfare Fund

(the "Welfare Fund") and the Local 4-69 Pension Fund (the

"Pension Fund") appeal from an order of the district court that

granted judgment in favor of defendant Starlite Motel

("Starlite") on claims under a collective bargaining agreement.1

In essence, the Trustees argue that the district court erred in:

(1) determining that the Welfare Fund was not legally entitled to

recover benefits paid to an ineligible employee in reliance on

false statements made by Starlite; (2) concluding that only

current Starlite employees could have colorable claims against

the Pension Fund for benefits; (3) concluding that two current

1
. In the original complaint in this matter, Local 69 (the
"Union") also sought union dues on behalf of Starlite's
unreported employees. The Union is not pursuing its claims in
this appeal.
employees do not have colorable claims for pension benefits; and

(4) concluding that a one year time limit for filing precludes

claims for welfare benefits. Because the district court

correctly determined that the Welfare Fund was not entitled to

recover benefits paid to the ineligible employee, we will affirm

the district court's order in part. Nevertheless, because we

conclude that the district court failed to make factual findings

and conclusions of law sufficient to determine whether the past

and present employees of Starlite have colorable claims for

pension and welfare benefits, we will reverse and remand on the

remaining issues raised by the Trustees.

I.

The Local 4-69 Welfare Fund and the Local 4-69 Pension Fund

(collectively "the Funds") are multiemployer employee benefit

plans that were established in accordance with Section 302(c)(5)

of the Labor-Management Relations Act of 1947 (as amended), and

that are within the purview of the Employee Retirement Income

Security Act of 1974 (as amended) ("ERISA"). Pursuant to ERISA

and the Labor-Management Relations Act, contributions that

employers owe under collective bargaining agreements are pooled

to provide the benefits for all the participants and

beneficiaries of the Funds.

On May 31, 1979, Starlite entered into a collective

bargaining agreement that required it to make contributions to

the Welfare and Pension Funds on behalf of its employees.

Zuzanna Podkowa ("Podkowa") was an employee of Starlite until
June 30, 1986. At that time, she terminated her employment.

After leaving Starlite, Podkowa submitted medical claims to the

Welfare Fund even though she was no longer eligible for such

benefits. The Welfare Fund paid her $11,203.67 in benefits

relying on a false report from Starlite that Podkowa was still

employed.

Because of information disclosed as the result of Podkowa's

claim, the Funds sought an audit of Starlite's books. Starlite

refused the audit and the Funds sued. An audit of Starlite's

records covering the period from January 1, 1984 to December 31,

1990 conducted during discovery demonstrated that Starlite failed

to report a number of employees who were covered by the

collective bargaining agreement. In addition, Starlite failed to

make contributions to the Funds on behalf of these employees.

The contributions due from Starlite totalled $52,665.00 for the

Welfare Fund and $14,756.00 for the Pension Fund.

Without taking further evidence, the district court heard

legal arguments on the above stipulated facts. The court

concluded that the payments made to Podkowa were made as a result

of the failure of the Funds to conduct even the most minimal

policing of Starlite's account, and denied recovery. Agathos v.

Starlite Motel, No. 89-2429, slip op. at 11 (D.N.J. Dec. 20,

1991). Concerning the unreported employees, the district court

concluded that the Funds suffered no damages because the

unreported employees were never covered by the Funds and thus

could not have made any claims for pension or welfare benefits.

Id. at 8-9. An appeal to this Court followed.
 On appeal, we vacated the district court's judgment and

remanded for further proceedings. Agathos v. Starlite Motel, 977

F.2d 1500, 1510 (3d Cir. 1992). We determined that the district

court failed to make clear the precise legal principles it

considered in reaching its decision concerning the benefits paid

to Podkowa. Id. at 1508. Accordingly, we remanded to the

district court for it to decide whether the Funds could meet

their burden of proving either fraud or breach of contract on the

part of Starlite. Id.

With respect to the claims for Welfare and Pension Fund

contribution, we determined that we were unable to discern from

the record which employees, if any, presently could bring a valid

claim for benefits. Id. at 1507. We explained that if the

employees cannot assert such claims, then a judgment for the

Funds would compel Starlite to contribute to plans from which its

employees obtained no benefits in the past and are powerless to

derive any benefits in the future, a result that we described as

a "pure windfall." Id. We therefore directed the district court

to conduct an evidentiary hearing to determine which, if any,

unreported employees currently have colorable claims against the

Funds for benefits. Id. Further, we explicitly placed the

burden of proof on Starlite to demonstrate that particular

employees no longer had colorable claims for benefits if Starlite

wished to avoid making contributions on behalf of those

employees. Id. at 1507-08.

The district court on remand held an evidentiary hearing.

At the hearing, the Trustees of the Welfare Fund admitted into
evidence a written document attesting to the fact that on

December 2, 1992 (after our first decision in this matter), the

Trustees unanimously adopted a resolution to waive the time

limits on submission of medical claims to the Welfare Fund for

individuals for whom contributions should have been made by

Starlite. According to the Trustees, this waiver allows each of

these employees to submit claims for welfare benefits without

regard to any previously imposed time bar.

The district court rendered its decision following this

hearing in a three page order. The court determined that the

Funds had not met their burden of proof in proving fraud or

breach of contract with regard to their claim for monies paid to

Podkowa. According to the court, the Funds had not proven that

they "were justified in relying" on Starlite's misrepresentation

to their detriment and the Funds had not proven that the damages

they sought flowed foreseeably from Starlite's breach. Agathos

v. Starlite Motel, No. 89-2429, slip op. at 3 (D.N.J. May 27,

1994). The court again cited the failure of the Funds to police

the Starlite account as the source of the damages at issue. Id.

With respect to the claims for contribution, the district

court stated that:

[H]aving determined that only two current employees of
Starlite -- Luba Siemienuk and Mieczslaw Zielinski -- were
also employed by Starlite during the period for which
contributions are sought, and it having been represented to
the court that neither employee presently could bring a
valid claim for benefits accruing during the period for
which contributions are now sought, and, indeed, that
neither employee even has a claim for either welfare or
pension benefits and, thus, as a matter of law any judgment
for the Funds under the circumstances would be a pure
 windfall . . . judgment will be entered in favor of
defendant.

Id. at 2-3 (internal quotation marks and citations omitted). The

district court also stated in a footnote that:

There are no medical bills to submit, there are no claims
for pensions because pensions have not vested, and, in any
event, claims must be and were not submitted within one year
from the date the claim was first incurred. Def. Exh. 4, 8.
While, following the Court of Appeals' decision and based on
the "tenor" of that decision, the Funds purported to waive
the time limits for the submission of medical claims during
the period for which contributions were sought (thus
implicitly requiring those contributions to be made in an
attempt to back door both this court and the Court of
Appeals, see Def. Exh. 5), the undisputed fact remains that
only Ms. Siemienuk and Mr. Zielinski continue to work for
Starlite and only they would qualify for benefits if they
had colorable claims, which they do not.

Id. at 2 n.2. Accordingly, the district court entered judgment

in favor of Starlite on May 27, 1994. This appeal followed.

II.

The district court had jurisdiction in this matter by virtue

of Section 502(e)(1) of ERISA, codified at 29 U.S.C. §

1132(e)(1). We exercise jurisdiction in this matter pursuant to

28 U.S.C. § 1291 following the remand that we directed and the

final judgment entered by the district court.

III.

The Trustees argue that the district court erred in denying

the Welfare Fund recovery for the benefits it paid to Podkowa.

According to the Trustees, Starlite committed fraud and breached
its contractual obligations by misrepresenting that Podkowa was a

current employee at the time she made her claim for welfare

benefits. Further, the Trustees assert that the district court

failed to take into account the realities in which multiemployer

plans operate with respect to their abilities to police

employer's accounts. We are unpersuaded by the Trustees'

arguments.

In our previous decision, we outlined the applicable legal

principles for the district court to consider in assessing

whether the Trustees could meet their burden of proving fraud or

breach of contract. Agathos, 977 F.2d at 1508. We explained

that under general principles of tort law, the elements of fraud

are: (1) a material factual misrepresentation; (2) made with

knowledge or belief of its falsity; (3) with the intention that

the other party rely thereon; (4) resulting in justifiable

reliance to that party to his detriment. Id. (citing Restatement

(Second) of Torts §§ 525-26 (1977)). Further, we explained that

for the Funds to recover for breach of the collective bargaining

agreement, the Funds had to show that: (1) Starlite had a

contractual obligation not to make reports or to remit

contributions on behalf of individuals no longer in Starlite's

employ; (2) Starlite breached this obligation; and (3) the

damages sought by the Funds foreseeably flowed from the breach.

Id. at 1509. We directed the district court to make clear the

precise legal principles it considered in reaching its decision.

Id. at 1508.
 Upon remand, the district court did make clear the precise

legal principles it relied upon in denying the Welfare Fund2

recovery for the benefits it paid to Podkowa. With respect to

the fraud claim, the district court found that while the Welfare

Fund proved that Starlite made a material factual

misrepresentation with knowledge of its falsity and with the

intent that the Fund would rely on it, the Fund did not prove

that it was "justified in relying on that misrepresentation"

because the Fund "`failed to engage in even the most minimal

policing of the Starlite account.'" Agathos, No. 89-2429, slip

op. at 3 (D.N.J. May 27, 1994) (quoting Agathos, 977 F.2d at

1508). According to the district court, it was the Welfare

Fund's inaction that caused it to pay money to Podkowa that

otherwise would not have been paid. Id. Because the district

court determined that the Welfare Fund failed to meet its burden

of proof on the element of justifiable reliance, we find that the

court satisfied its obligation to articulate the precise legal

principle under which it denied the Welfare Fund recovery.

Similarly, with respect to the breach of contract claim, the

district court concluded that while the Welfare Fund proved that

Starlite breached its contractual obligation not to make reports

on behalf of individuals no longer in its employ, the Fund did

2
. In its decision concerning the benefits paid to Podkowa, the
district court consistently referred to "the Funds" as the entity
with the dispute and burden of proof. Agathos, No. 89-2429, slip
op. at 3 (D.N.J. May 27, 1994). Since the benefits paid to
Podkowa were paid pursuant to the policies of the Welfare Fund,
it is more precise to refer specifically to that entity rather
than to "the Funds" in general when discussing this claim.
not prove that the damages it sought flowed from that breach

rather than from the Welfare Fund's failure even minimally to

police the Starlite account. Id. Since the district court

determined that the Fund failed to satisfy an essential element

of a breach of contract claim -- that the damages flow

"foreseeably from the breach" -- the court also fulfilled its

obligation to articulate the precise legal principle by which it

denied the Fund recovery on that claim. Accordingly, we will

affirm the district court's decision to deny the Welfare Fund

recovery for benefits paid to Podkowa.

The Trustees assert that the district court failed to take

into account the realities within which multiemployer plans

operate in determining that the Welfare Fund did not adequately

police the Starlite account.3 According to the Trustees, most

multiemployer plans are forced to operate under a self-reporting

system in which the plans must rely on contributing employers to

provide information as to which employees are working at any

given time. While we are sympathetic to the problems such plans

face in obtaining accurate information, we noted in our previous

opinion that there was ample record support for the district

court's finding that the Funds failed to engage in even the most

minimal policing of the Starlite account. Agathos, 977 F.2d at

1508. Under such circumstances, we cannot disagree with the

3
. The Trustees also argue that the district court's ruling is
inconsistent with ERISA and applicable precedent. We find
nothing in the language of ERISA or in the precedents that the
Trustees cite that creates an inconsistency.
district court's conclusion that the damages at issue flowed from

the Welfare Fund's failure to police adequately the Starlite

account, rather than from the misrepresentation by Starlite.

Moreover, we believe that such an argument is an attempt by the

Trustees to relitigate an issue already passed upon by the

district court and implicitly affirmed by our previous decision

in this matter. Accordingly, we are unpersuaded by the Trustees'

arguments and we will uphold the decision of the district court.

IV.

The Trustees' next argument is that the district court erred

by concluding that only current Starlite employees could have

colorable claims against the Pension Fund for benefits.

According to the Trustees, the district court erroneously

interpreted our previous opinion to preclude colorable claims

against Pension Fund benefits by employees who worked for

Starlite in the past. This error, the Trustees argue, improperly

led the district court to limit its evidentiary hearing to a

consideration of only those employees who had both worked for

Starlite during the period for which contribution is sought4 and

who are presently still working for Starlite. The Trustees

assert that the district court erred by failing to consider

4
. The "period for which contribution is sought" is defined by
the audit of Starlite's records conducted during discovery. The
audit covered the period from January 1, 1984 to December 31,
1990. Employees who worked for Starlite during the period for
which contribution is sought, but who are not currently working
for Starlite, are sometimes referred to in this opinion as "past
employees" for purposes of convenience.
employees who had earned credits toward pension vesting for time

worked during the period for which contribution is sought, but

who have now moved on to other employment.

The district court's three page decision in this matter does

not provide an adequate basis to defeat the Trustees' argument.

The district court's opinion states that "having determined that

only two current employees of Starlite . . . were also employed

by Starlite during the period for which contributions were

sought, and it having been represented to the court that neither

employee `presently could bring a valid claim for benefits,'"

any judgment for the Funds "`would be a pure windfall.'"

Agathos, No. 89-2429, slip op. at 2 (D.N.J. May 27, 1994) (citing

Agathos, 977 F.2d at 1507). This statement fuels the Trustees'

argument that the district court limited the evidentiary hearing

to present employees. Even more importantly, however, the

district court simply made no findings concerning whether any

past employees currently have a colorable claim for pension

benefits. Accordingly, we must determine whether the district

court erred by failing to make such findings.

In our previous opinion, we explained that whether employees

presently have a colorable claim for benefits depends on whether

they would be able to submit claims against fully back-dated

coverage once Starlite makes the requested contributions.

Agathos, 977 F.2d at 1508. We further explained that:

An employee has no colorable claim if a plan would not
properly entertain the claim because it is time-barred, the
employee has ceased working for Starlite and therefore no
longer qualifies, or federal labor law precludes recovery.
 If, however, a Fund would be required to honor an employee's
claim, then Starlite must contribute for that employee
regardless of whether he or she in fact has a meritorious
claim.

Id. (emphasis added). Concededly, one possible reading of this

language in our previous opinion is that if an employee has

ceased working for Starlite, the employee no longer has a

colorable claim for any benefits. Such a reading, however, does

not give full effect to all the words in the above-quoted

passage, and is certainly contrary to this Court's intentions.

The key phrase in the quoted passage that defines when an

employee no longer has a colorable claim is, "if the plan would

not properly entertain the claim." Our list of possible

scenarios when the plan might not entertain such claims, such as

when a claim is time-barred, when an employee has ceased working

for Starlite, or when Federal labor law precludes recovery, was

not intended to be applied by mere incantation. This principle

is made clear by our final sentence which states that "if,

however, a Fund would be required to honor an employee's claim,

then Starlite must contribute for that employee regardless of

whether he or she in fact has a meritorious claim."

The error in an interpretation which prevents consideration

of past employees who may have claims for pension5 benefits is
aptly pointed out by the Trustees' argument. As the Trustees
5
. Further supporting our reasoning in this case is the fact
that in the paragraph at issue in our original decision we did
not distinguish between the Pension Fund and the Welfare Fund.
Accordingly, we were not focusing on the intricacies of each
specific Fund's requirements for bringing claims for benefits
based on past employment.
correctly state, there may be employees who worked for Starlite

during the period for which contribution is sought, who are not

presently working for Starlite, but who nevertheless earned

credit toward pension vesting. It is undisputed that under the

terms of the Pension Plan, an employee is required to work for

ten years before the employee's pension vests. It is also

undisputed that if an employee ceases working for Starlite but

obtains covered employment6 with another employer, that

employee's years of service at Starlite will be counted toward

the employee's retirement benefits unless he or she incurs a

break in service that is not cured under the rules of the plan

and/or under ERISA. Thus, there may well be employees who worked

for Starlite in the past, who are not working for Starlite now,

but who moved on to other covered employment. Such employees

would have claims for benefits once they have completed the

requisite number of years of service. Accordingly, an

interpretation of our previous opinion which does not provide for

consideration of these past employees is erroneous.7

6
. "Covered employment" is defined as employment with employers
who: (1) have been accepted for participation in the plan by the
Trustees; (2) have collective bargaining agreements requiring
contributions to be made to the Fund; and (3) have become a party
to the pension trust agreement. Local No. 4-69 Pension Fund of
the Hotel & Restaurant Employees & Bartenders Union; App. at
136(a). Thus, under the plan, an employee is able to move from
one participating employer to another without loss of years
earned toward vesting.
7
. In arguing that the analysis of colorable claims for pension
benefits should not be limited to current employees, the Trustees
referenced past employees who continued in covered employment
after leaving Starlite. We perceive no reason why past employees
 Starlite countered this position at oral argument by

suggesting that all past employees have incurred a break in

service.8 Because the district court made no findings concerning

past employees, we are unable to determine from this record

whether these past employees have incurred a break in service.

We do point out, however, that our previous opinion explicitly

placed the burden on Starlite to prove which, if any, employees

do not have colorable claims against the Pension Fund in order to

avoid making contributions for those employees. If Starlite is

unable to fulfill its burden, it must make the requisite

contributions.9 Accordingly, we will again reverse and remand

this case to the district court for an evidentiary hearing to

determine which, if any, unreported past Starlite employees

currently have colorable claims for benefits. At this hearing,

the district court must focus on the specific reasons why the

past employees do not have a colorable claim for benefits and

must make appropriate findings as to those employees that

Starlite has demonstrated do not have a colorable claim for

benefits.
(..continued)
who worked in covered employment before their tenure with
Starlite could not also have colorable claims for benefits.
8
. A "break in service" is defined by the plan and occurs when
an employee fails to work a requisite number of hours in two
consecutive years in "covered employment." App. at 137a.
9
. Starlite argues that the Trustees have the burden of proving
that its past employees have not incurred a break in service.
Appellee's Brief at 19 n.7. We are puzzled by Starlite's
position since our previous opinion was explicit on the question
of who bears the burden of proof and it makes clear that the
burden falls on Starlite. Agathos, 977 F.2d at 1507-08.
 V.

We next address the Trustees' claim that the district court

erred in determining that the two current employees who also

worked for Starlite during the period for which contribution is

sought do not have colorable claims for pension benefits.

According to the Trustees, the district court confused a

colorable claim with a present claim for vested pension benefits

in evaluating whether Starlite should make contributions on

behalf of these employees. The Trustees once again press their

claim that while these employees have not yet worked enough years

to have vested pensions, they may combine past years of service

with future years of service and therefore they have potential

claims against the Pension Fund.

We review the district court's findings of fact for clear

error. Epstein Family Partnership v. Kmart Corp., 13 F.3d 762,

765-66 (3d Cir. 1994). We exercise plenary review over the

district court's application of the law to those facts. Id. at

766. The district court found that Luba Siemienuk and Mieczslaw

Zielinski, the two current employees who also worked for Starlite

during the period for which contribution is sought, do not have

colorable claims for pension benefits. Agathos, No. 89-24-29,
slip op. at 2 n.2 (D.N.J. May 27, 1994). According to the

district court, there are no claims for pensions because pensions

have not vested. Id.

While we accept the district court's factual conclusion that

no pensions have vested, we are unable to find that this fact is
dispositive of the relevant issue. As the Trustees point out, a

colorable claim for pension benefits does not depend on whether

the employees' pensions have vested. These employees may not yet

have worked the requisite number of years for vesting, but the

pension plan permits them to combine the time they have worked in

the past with additional years worked in the future in order to

complete the requisite number of years (assuming they have

incurred no break in service).10

Once again, Starlite argues in its brief that these two

employees have incurred a break in service. Appellee's Brief at

14. Unfortunately, there is nothing in the district court's

factual findings to support this conclusion. Starlite may be

correct, but sitting as an appellate court we are not in a

position to make findings of fact. See, e.g., Gilgillan v. City

of Philadelphia, 637 F.2d 924, 931 n.6 (3d Cir. 1980), cert.

denied, 451 U.S. 987, 101 S. Ct. 2322 (1981). Accordingly, we

will also reverse and remand on the question of whether Starlite

is liable for contributions to the Pension Fund on behalf of Luba

Siemienuk and Mieczslaw Zielinski. On remand, the district court
10
. These employees would have claims for "credited service."
We have previously held that a claim for credited service does
not give rise to a "colorable claim" to vested benefits. Shawley
v. Bethlehem Steel Corp., 989 F.2d 652, 656 (3d Cir. 1993). In
Shawley, we said "neither plaintiffs' credited service . . . nor
the accrued benefit to which it gives rise is a `vested' benefit
under [a pension plan] that would grant participant status" and
give the employees standing to sue the pension plan under ERISA.
Id. Shawley does not preclude the existence of colorable claims
in this case because the issue here is not whether former
employees may currently sue the Pension Fund, but whether a
future liability is sufficiently likely to justify requiring the
employer to contribute to the Fund.
must make a finding as to whether these employees incurred a

break in service or another deficiency that would prevent them

from having colorable claims for pension benefits. If no such

break in service or other deficiency exists, Starlite must make

the requisite contributions on behalf of these employees.

VI.

The Trustees' final claim is that the district court erred

by concluding that no one who worked for Starlite during the

period for which contribution is sought has a colorable claim for

welfare benefits. According to the Trustees, the district court

erroneously concluded that a one year time bar for submission of

claims against the Welfare Fund could not be waived and barred

all subsequent claims.11 The Trustees assert that they validly

waived the time bar for submission of claims against the Welfare

Fund in order to allow those employees who were covered for

medical benefits, but who never received notice of such coverage,

to submit claims.
11
. Counsel for the Trustees points out in its brief that
according to the Summary Plan Description of the Local 4-69
Welfare Fund, a document inadvertently not offered into evidence
at the evidentiary hearing, the actual time for submitting a
claim for benefits is 90 days from the date on which a loss was
first sustained. Appellants' Brief at 35. The Trustees explain
that the one year time bar derives solely from a letter from the
Fund's former counsel which was admitted into evidence. We are
not inclined to comment on the appropriate time period that
governs such claims given the fact that the Summary Plan
Description was not offered into evidence. Nevertheless, the
difference between the one year and 90 day rules does not appear
relevant to the claim of the appellants that the district court
erred in determining that the Trustees could not waive the time
limitation.
 Our review over questions of law such as the validity of the

waiver is plenary. Epstein, 13 F.3d at 766. The district court

engaged in a two-part analysis on the question of whether

Starlite was liable for Welfare Fund contributions. First, the

district court determined that only two current employees -- Luba

Siemienuk and Mieczslaw Zielinski -- were also employed by

Starlite during the period for which contributions were sought.

Agathos, No. 89-2429, slip op. at 2 (D.N.J. May 27, 1994).

Second, the district court determined that these two employees

did not have medical claims to submit and "in any event, claims

must be and were not submitted within one year from the date the

claim was first incurred." Id. at 2 n.2.

As we explained with respect to the Pension Fund, to the

extent that the district court's opinion interprets our previous

decision to summarily exclude past employees from consideration

of whether these employees have "colorable claims," the district

court erred.12 Thus, the essential issue that remains is whether

all claims against the Welfare Fund for the period in question,

by both past and present Starlite employees, are barred by a time

limitation for filing. The district court determined that the

Trustees' purported waiver of the time for filing requirement was

"an attempt to back door both this court and the Court of

Appeals." Id. We disagree.

On December 2, 1992, the Trustees of the Local 4-69

Welfare Fund held a meeting and adopted a unanimous resolution to

12
. See supra part IV.
waive the time limits for submitting medical claims for those

employees for whom contributions should have been made by

Starlite. App. at 225a-27a. According to the minutes of that

meeting, the purpose of the waiver was to:

permit individuals for whom contributions should have been
made under the collective bargaining agreement to submit
medical bills to the Fund and to have the same paid in
accordance with the then coverages of the Fund.

Id. at 226a. The Trustees assert that because the unreported

employees were never made aware that they had coverage under the

Welfare Fund, they could not have previously submitted claims for

benefits and thus should be permitted to file claims now.

The district court did not analyze whether the Trustees were

authorized to waive the time limitation, it merely concluded that

such a "back door" tactic was inappropriate. After examining the

Trust Agreement, we observe that Article V, § 17 vests in the

Trustees the "full and exclusive authority to determine all

questions of coverage and eligibility, methods of providing or

arranging for benefits and all other related matters." App. at

114a. In addition, Article V, § 9(e) grants the Trustees the

power to "do all acts, whether or not expressly authorized herein

which the Trustees may deem necessary or proper for the

protection of the property held hereunder." App. at 109a. Given

such broad powers, and in light of the Trustees' reasonable

position that unreported plan participants could not have

submitted claims within the original claims period if they had

never been notified that they were entitled to benefits, we
cannot agree that the Trustees have acted improperly in lifting

the time bar.13 Accordingly, we will reverse the district court

in its decision to give the time bar preclusive effect.

On remand, the district court should consider the fact that

our previous decision placed the burden of proof on Starlite to

prove whether or not employees have colorable claims for Welfare

benefits. Agathos, 977 F.2d at 1507-08. Accordingly, the

district court must make findings of fact with respect to all the

past and present employees who worked during the period for which

contribution is sought in order to ascertain whether Starlite has

satisfied its burden of proving that particular employees do not

have colorable claims against the Welfare Fund.14 If Starlite

cannot satisfy its burden as to one or more employees, it must

make contributions to the Welfare Fund on behalf of those

employees.

13
. Our position is also in accord with two of the fundamental
assumptions underlying ERISA, i.e., that trustees of plans: (1)
take steps to identify all participants and beneficiaries, so
that the trustees can make them aware of their status and rights
and (2) act to ensure that a plan receives all funds to which it
is entitled. See Central States, Southeast and Southwest Areas
Pension Fund v. Central Transport Inc., 472 U.S. 559, 571-72, 105
S. Ct. 2833, 2841 (1985).
14
. The Trustees assert that our previous opinion defined a
colorable claim to welfare benefits to be a colorable claim to
coverage during the relevant period. We disagree. We believe
that a colorable claim against the Welfare Fund must be based on
an actual illness or injury during the covered period.
With respect to Siemienuk and Zielinski, the district court
stated that there are "no medical bills to submit," but
ultimately rested its conclusion on the applicability of the time
bar. If the district court is satisfied that Starlite has met
its burden of proof concerning these two present employees
(without regard to the time bar) it should so indicate on remand.
 CONCLUSION

In sum, because the district court correctly concluded that

the Trustees failed to prove the essential elements of fraud or

breach of contract, we will affirm that court's order denying the

Welfare Fund recovery for benefits paid to Ms. Podkowa.

Nevertheless, because the district court erred in not making

findings concerning whether past employees have colorable claims

against the Pension Fund, we will reverse the district court's

order in part and remand for further proceedings. Further,

because the district court confused a colorable claim with a

vested claim for pension benefits, we will also reverse the

district court's order denying the Pension Fund contribution for

two current employees of Starlite and we will remand for further

findings. Finally, because the district court erred in

concluding that the Trustees could not waive the time requirement

for filing claims against the Welfare Fund, we will also reverse

on this issue and remand for further findings consistent with

this opinion.