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Carpenters Pension Trust Fund for Northern California v. Moxley

United States Court of Appeals, Ninth Circuit

August 20, 2013

CARPENTERS PENSION TRUST FUND FOR NORTHERN CALIFORNIA, Appellant,
v.
Michael Gordon MOXLEY, aka MGM's Cabinet Installation Services, Appellee.

Argued and Submitted June 13, 2013.

Page 865

Christian L. Raisner (argued), Emily P. Rich, Roberta D. Perkins, Weinberg, Roger & Rosenfeld, Alameda, CA, for Appellant.

Wayne A. Silver (argued), Sunnyvale, CA; R. Kenneth Bauer, Law Offices of R. Kenneth Bauer, Walnut Creek, CA, for Appellee.

Appeal from the United States District Court for the Northern District of California, Richard Seeborg, District Judge, Presiding. D.C. No. 3:10-cv-00756-RS.

Before: MARY M. SCHROEDER and CONSUELO M. CALLAHAN, Circuit Judges, and SARAH S. VANCE, Chief District Judge.[*]

OPINION

SCHROEDER, Circuit Judge:

INTRODUCTION

When contractors in the construction industry stop working under the terms of a collective bargaining agreement, but continue in business, they cannot simply stop making payments to the pension fund administered under that agreement. Pursuant to the Employee Retirement Income Security Act (" ERISA" ), they are liable to the fund in the amount determined necessary to ensure payment of benefits to employees whose rights have vested. 29 U.S.C. §§ 1381, 1391. The issue in this appeal is whether that " withdrawal liability" is dischargeable in bankruptcy. The answer requires some analysis of possible differences between withdrawal liability and liability for delinquent contributions, but we ultimately agree with the result reached by both the bankruptcy court and the district court that the debt is dischargeable. The pension fund cannot establish that the debtor is a fiduciary with

Page 866

respect to money it owes as withdrawal liability.

BACKGROUND

The debtor is Michael G. Moxley, who did business as MGM's Cabinet Installation Service. In 1999 he became a signatory to the multiemployer bargaining agreement entitled " The 46 Northern California Counties Carpenter's Master Agreement of Northern California," (the " Agreement" ). He was required under the Agreement to make contributions to the Carpenters Pension Trust Fund for Northern California (the " Fund" ). When the Agreement expired in June 2004, he was no longer a signatory to a collective bargaining agreement. He stopped making payments to the Fund, but continued doing carpentry work in the Bay Area.

In March of 2005 the Fund notified Moxley that because he was still doing work covered by the Agreement, he was subject to withdrawal liability pursuant to 29 U.S.C. § 1381. That amount had been determined to be $172,045 and for purposes of this appeal is not disputed. The Fund filed suit in United States District Court for the Northern District of California, but proceedings there were stayed when Moxley filed for bankruptcy.

In the bankruptcy court, Moxley sought a discharge of his debt to the Fund, and the Fund filed a complaint under 11 U.S.C. § 523(c) to prevent discharge. The Fund sought to establish that the debt qualified as one created via defalcation by a fiduciary under § 523(a)(4). It provides that a bankruptcy discharge " does not discharge an individual debtor from any debt ... for fraud or defalcation while acting in a fiduciary capacity...." Id.

The Fund's position was that because it is a trust fund, and those who administer, own, or control assets of a trust fund are fiduciaries, Moxley was a fiduciary for funds in his control representing the amount of withdrawal liability that he should pay to the Fund. In order to prevent the discharge, the Fund therefore had to establish both that Moxley was acting in a fiduciary capacity with respect to the money he had not paid to the Fund, and that the failure to pay constituted " defalcation" within the meaning of the Code. We need not reach the issue of defalcation, because we determine Moxley was not a fiduciary.

In trying to establish that Moxley was a fiduciary under the Bankruptcy Code, the Fund faces a number of hurdles, the first, of course, is having to show that Moxley was a fiduciary of the Fund pursuant to ERISA. Fiduciaries under ERISA are defined as entities who manage a plan, give investment advice to a plan, or control ...


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