Carpenters Pension Trust Fund for Northern California v. Michael Gordon Moxley

Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
12 years 6 months ago

Citation:

Carpenters Pension Trust Fund for Northern California v. Michael Gordon Moxley, aka MGM's Cabinet Installation Services, No. 11-16133 (9th Cir. Aug. 20, 2013)

Tag(s):

Ruling:

The claim under ERISA of a multiemployer pension fund against an individual chapter 7 debtor-employer for amounts due after the debtor withdrew from a multiemployer bargaining agreement is not nondischargeable under 11 U.S.C. § 523(a)(4) as a debt for defalcation while acting in a fiduciary capacity. Even if ERISA imposed on the debtor a fiduciary duty to make contributions required by the plan, his withdrawal liability was a separate statutory obligation, and he had no fiduciary duty to make the withdrawal payment.

Procedural context:

The fund filed an adversary proceeding seeking a determination that the withdrawal liability amount was nondischargeable under 11 U.S.C. § 523(a)(4) as a debt for defalcation while acting in a fiduciary capacity. The fund contended that the debtor was an ERISA fiduciary under 29 U.S.C. § 1002(21)(A) because, by failing to make required withdrawal payments to the fund, the debtor “exercise[d] . . . control respecting . . . disposition of [the fund's] assets.” The bankruptcy court ruled for the debtor, and the district court affirmed. The Ninth Circuit affirmed the ruling for the debtor on the ground that the fund's claim was not a contractual claim for contributions due under the agreement, but instead it was a statutory claim arising from the debtor's withdrawal from the agreement—a claim that does not arise from a fiduciary duty. The Ninth Circuit also rejected the debtor's argument that the bankruptcy court lacked constitutional authority to decide dischargeability in this case.

Facts:

The debtor was an employer and party to a multiemployer bargaining agreement requiring him to contribute to a pension trust fund. When the agreement's term expired, the debtor stopped making payments to the fund but continued doing the same type of work. The fund notified the debtor that, because he was still doing work covered by the agreement, he was subject to withdrawal liability under ERISA, 29 U.S.C. § 1381. The fund sued the debtor for the withdrawal liability, but that action was stayed when the debtor filed his chapter 7 petition.

Judge(s):

Mary M. Schroeder and Consuelo M. Callahan, Circuit Judges, and Sarah S. Vance, Chief District Judge for the Eastern District of Louisiana, sitting by designation. Opinion by Judge Schroeder.

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