Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Jahnke v. RJ Ryan Construction, Inc.

United States District Court, D. Minnesota

September 16, 2014

FRED JAHNKE and RODGER KRETMAN, as Trustees of the IBEW Local No. 292 Health Care Plan; the Electrical Workers Local No. 292 Pension Fund; the Electrical Workers Local No. 292 Annuity & 401(k) Fund; the Electrical Workers Local No. 292 Vacation & Holiday Fund; and as Trustees of the Minneapolis Electrical Industry Board/JATC/LMCC, and each of their successors, Plaintiffs,
v.
R.J. RYAN CONSTRUCTION, INC., Third-Party Defendant. and ECS PROJECT MANAGEMENT, INC., d/b/a ECS Electric, Third-Party Plaintiff,

Benjamin Robert Garbe and Amanda R. Cefalu, ANDERSON, HELGEN, DAVIS & NISSEN, LLC, 333 South Seventh Street, Suite 310, Minneapolis, MN 55402, for plaintiffs.

Phillip James Addis, LAW OFFICES OF PHILLIP JAMES ADDIS LLC, 504 Main Street, Suite 200, La Crosse, WI 54602; Stephen A. DiTullio and Theresa M. Movroydis, DEWITT ROSS & STEVENS SC, Two East Mifflin Street, Suite 600, Madison, WI 53703; and Gregory P. Pittman, GALEN W. PITTMAN, S.C., 300 North Second Street, Suite 210, La Crosse, WI 54602, for third-party plaintiff.

Aaron A. Dean, BEST & FLANAGAN LLP, 225 South Sixth Street, Suite 4000, Minneapolis, MN 55402, for third-party defendant.

MEMORANDUM OPINION AND ORDER

JOHN R. TUNHEIM, District Judge.

This action was originally brought by Plaintiffs Fred Jahnke and Rodger Kretman in their capacities as trustees of various fringe and retirement benefit funds held by an electrical workers union on behalf of its members. Plaintiffs alleged that Defendant ECS Project Management, Inc. ("ECS"), which employed members of the union on its job sites, failed to remit payments to these funds as required by a collective bargaining agreement. ECS then brought a third-party complaint against R.J. Ryan Construction, Inc. ("RJ Ryan"), alleging that on a project where RJ Ryan was the general contractor, ECS submitted draw requests for the payment of fringe benefits for workers on the project, including members of the union, and that RJ Ryan refused to remit those funds to ECS.

Prior to the filing of ECS' third-party complaint, ECS and RJ Ryan were sued in state court by another entity that subcontracted with ECS on the project where RJ Ryan was the general contractor. In the state court litigation ECS and RJ Ryan asserted crossclaims against each other bringing claims related to, among other issues, each party's alleged failure to pay amounts due and owing related to the project.

RJ Ryan brings a motion for judgment on the pleadings, arguing that ECS' thirdparty complaint must be dismissed for lack of subject matter jurisdiction. In the alternative, RJ Ryan argues that even if the Court has jurisdiction, it should decline to exercise such jurisdiction in favor of the state action under a number of abstention doctrines. RJ Ryan also seeks to recover attorneys' fees incurred in defending against this federal litigation. After RJ Ryan filed its motion, ECS and the Plaintiffs settled the claims in the original complaint. ECS then filed a motion for voluntary dismissal of its third-party complaint. RJ Ryan opposes the voluntary dismissal, arguing that the thirdparty complaint should not be voluntarily dismissed unless the Court awards RJ Ryan its attorneys' fees and costs incurred in defending against ECS' claims.

The Court concludes that it may exercise supplemental jurisdiction over the thirdparty complaint, so it will deny RJ Ryan's motion for judgment on the pleadings to the extent it seeks dismissal on that basis. But the Court will grant ECS' motion for voluntary dismissal, because it concludes that voluntary dismissal was sought for a proper purpose, preserves judicial resources at this stage in the proceedings, and will not prejudice RJ Ryan. Finally, the Court will deny RJ Ryan's request for attorneys' fees, as it finds that the facts do not demonstrate conduct on the part of ECS that warrants such a sanction.

BACKGROUND

I. FEDERAL LAWSUIT

A. The Complaint

On April 25, 2013, Plaintiffs commenced this action against ECS in their capacity as trustees of various fringe and retirement benefit funds ("the Funds") of the IBEW Local No. 292 and Electrical Workers Local No. 292 union. ( See Compl. ¶¶ 1-6, Apr. 25, 2013, Docket No. 1.) The complaint brought claims under various provisions of the Employee Retirement Income Security Act ("ERISA") based on ECS's failure to remit contributions to the Funds in violation of a collective bargaining agreement. ( Id. ¶¶ 10-26.) Specifically, the complaint alleged that ECS, a company that performs electronic contracting work and employs individuals covered by the collective bargaining agreement, breached that agreement "by failing to timely submit the fringe contributions due and owing for the months of February and March 2013." ( Id. ¶¶ 7, 14.) The complaint alleged that for those two months "Defendant has submitted the payroll reports and fringe benefit contribution reports for this period [and] [t]he reports reflect that Defendant owes Plaintiffs $72, 478.21 for fringe benefit contributions owed for February 2013 and $8, 479.69 in fringe benefit contributions for March 2013." ( Id. ¶ 14; see also id. ¶ 16.)

B. Third-Party Complaint

ECS answered Plaintiffs' complaint, admitting that it submitted the referenced payroll and fringe benefit contribution reports and "to not paying the full contributions set forth in said report, " but maintaining that it was "uncertain as to the amounts still due and owing." (Answer & Third-Party Compl. ("Third-Party Compl.") ¶ 14, Sept. 17, 2013, Docket No. 22; see also id. ¶ 16.)

ECS also brought a third-party complaint against RJ Ryan.[1] In that complaint ECS alleges that it had entered into a contract with RJ Ryan pursuant to which ECS was to provide materials to a construction project in Scott County, Minnesota, referred to as the "SanMar" project. ( Id. ¶ 35.) ECS alleges that at the time RJ Ryan entered into this contract it "was aware that ECS would be using electricians through IBEW 292 for labor on the project." ( Id. ¶ 36.) ECS alleges that, pursuant to the contract, it submitted to RJ Ryan "Draw Requests" for the payment of wages, taxes, and fringe benefits for all workers on the SanMar project, including members of IBEW 292. ( Id. ¶¶ 37-38.) ECS alleges that "[n]o funds have been paid to ECS or members of IBEW 292, by RJ Ryan, for any wages, taxes or fringe benefits, since January of 2013 for amounts from 2012." ( Id. ¶ 40.) Although RJ Ryan has received the Draw Requests, ECS alleges that RJ Ryan has not submitted funds to either the Plaintiffs in this federal lawsuit or to ECS. ( Id. ¶¶ 41-43.) ECS alleges that it "has suffered damages for the failure to release those funds in that it is being sued by the [Plaintiffs] for these funds and further in that it has paid all net wages due to members of the IBEW 292, without reimbursement by RJ Ryan, in an amount to be determined by this Court." ( Id. ¶ 44.)

RJ Ryan answered the third-party complaint denying the allegations that it had failed to properly release funds to ECS. (Answer ¶ 6, Oct. 18, 2013, Docket No. 33.) RJ Ryan also asserted as affirmative defenses, among others, that the third-party complaint "alleges damages caused by third parties over whom Third-Party Defendant RJRyan has no control, " and that "[t]here is no common liability between RJRyan and ECS for Plaintiffs' alleged damages, so ECS's Third-Party Complaint for contribution and indemnity is barred." ( Id. ¶¶ 10, 12.) RJ Ryan also brought a counterclaim against ECS alleging generally that it "has been defrauded by ECS and its principal, Tom Helgeson, as they diverted more than $500, 000 of project funds paid by RJRyan to ECS for work performed on the SanMar project" and that "RJRyan has no liability for paying ECS' fringe benefits and any other amounts owed by ECS to Plaintiff, yet ECS' conduct has thrust RJRyan into litigation with third parties, so ECS is liable for RJRyan's damages, including legal fees and costs." ( Id. at 3-4.)

II. STATE COURT ACTION

In June 2013, Viking Electric Supply, Inc. ("Viking"), a company that furnished ECS with electrical supplies on the SanMar project, filed a mechanics' lien action in Minnesota state district court in Scott County naming ECS and RJ Ryan, among others, as defendants. (First Aff. of Phillip J. Addis, Ex. A ¶ 9, [2] Dec. 6, 2013, Docket No. 59.) ECS and RJ Ryan were served with Viking's amended complaint on August 6, 2013. ( Id., Ex. A at 1.) In its amended complaint Viking alleged a number of claims including breach of contract by ECS in failing to pay Viking for electrical supplies ( id., Ex. A ¶¶ 8-14) and theft by RJ Ryan in failing to pay Viking out of funds held in trust ( id., Ex. A ¶¶ 48-54). Viking also sought to foreclose its mechanics' lien on the SanMar project ( id., Ex. A ¶¶ 19-25) and brought a claim to recover a payment bond posted by RJ Ryan as general contractor on the SanMar project ( id., Ex. A ¶¶ 26-41).

A. RJ Ryan's Answer, Cross-Claim and Counterclaim

On August 26, 2013, RJ Ryan filed an answer and counterclaim against Viking, and also brought a cross-claim against ECS. (First Aff. of Aaron A. Dean, Ex. 1, Nov. 18, 2013, Docket No. 48.) In the cross-claim, RJ Ryan brought claims for breach of contract, breach of warranties, negligence, violation of Minnesota's prompt payment statute, violation of Minnesota's statute governing trust funds, and defense and indemnity. ( Id., Ex. 1 at 12-16.) The cross-claims arose out of the allegation that ECS failed to pay its lower-tier subcontractors and suppliers on the SanMar project, which resulted in Viking's filing of a mechanics' lien against the SanMar project and RJ Ryan's payment bond. ( See id., Ex. 1 ¶¶ 6-13, 21.)

B. ECS' Answer and Cross-Claim

On September 13, 2013, ECS filed an answer in the state court action to Viking's amended complaint and RJ Ryan's cross-claim. (First Dean Aff., Ex. 2 at 35-44.) ECS also brought its own cross-claim against RJ Ryan alleging breach of contract, negligence, tortious interference with a contract, violation of Minnesota's prompt payment statute, and conversion. ( Id., Ex. 2 at 45-49.) In the cross-claim ECS alleged that "RJ Ryan has failed to release when due direct or indirect payments to IBEW for wages and benefits, etc." and "[d]ue to the actions of RJ Ryan, ECS ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.