Opinion
No. 75-211
Decided June 16, 1976.
Trusts — Pension plan agreement — Employer contributions "substandard" — Forfeiture of funds not required — Summary judgment — Inappropriate remedy.
APPEAL from the Court of Appeals for Franklin County.
The Ohio Operating Engineers Pension Fund is a trust created in 1964 by agreement between the Labor Relations Division of the Ohio Contractors Association (OCA) and Local Union No. 18 of the International Union of Operating Engineers (IUOE). Contributions are made to the trust by participating employers, based upon the total number of hours worked by employee-beneficiaries. A master collective bargaining agreement, negotiated between the OCA and the IUOE, specifies a standard rate of employer contributions, and mandates periodic revisions in that rate. If the standard contribution is increased, the trustees of the fund are authorized to increase benefits, in accordance with sound actuarial principles. The trust agreement, as written, is predicated upon the payment of the standard contribution by all participating employers.
On July 1, 1967, Cummins Diesel of Northern Ohio and Cummins Diesel of Central Ohio, neither members of the OCA nor bound by the master agreement between the OCA and IUOE, became obligated to make contributions to the pension fund as the result of a collective bargaining agreement entered into between Cummins Diesel and its employees. Initially, the rate of contribution required by that agreement was the standard rate required by the master agreement between the OCA and the IUOE. In a subsequent collective bargaining agreement between Cummins and its employees, however, agreement was not reached requiring Cummins to increase its rate of contribution to match increases in the standard rate which had been mandated by the master agreement between the OCA and IUOE. Cummins' contributions, therefore, became "substandard," and although accepted by the trustees of the pension fund, were not credited to the accounts of those employees for whose benefit said payments were made. The overall pension scheme did not contemplate such a state of affairs, and the trust agreement does not provide any direction for the trustees to meet this contingency.
Eighteen months after the contributions of Cummins became "substandard," the employees of Cummins were first advised that contributions by Cummins were not being credited to employee accounts. The employees were told that only by an increase of their employer-paid contributions of 175 percent would their continued participation in the plan be possible. Since, under the pension plan, the employees were not permitted to contribute in order to bring contributions up to standard, the employees were faced with a situation with no acceptable alternative and voted to terminate their participation in the plan. On February 23, 1972, they filed suit in the Court of Common Pleas of Franklin County, later amended in November 1972, naming as party-defendants the trustees of the pension fund. The employee-plaintiffs sought an accounting, and the return to individual employees of funds contributed by Cummins Diesel for the purpose of providing pension benefits to plaintiffs and their families.
Actually, the vote to terminate participation was of doubtful significance, for Cummins' employees were effectively eliminated from the plan by the trustees prior to that vote.
On March 1, 1974, the defendants filed a motion for summary judgment, pursuant to Civ. R. 56, contending, in part, that the plaintiffs had failed to exhaust remedies provided in the trust agreement and which were prerequisite to suit. On May 10, 1974, the trial court sustained defendants' motion for summary judgment, but gave no reasons therefor.
Civ. R. 56 provides:
"(A) * * *
"(B) A party against whom a claim * * * is asserted * * * may at any time, move with or without supporting affidavits for summary judgment in his favor as to all or any part thereof. * * *
"(C) * * * Summary judgment shall be rendered forthwith if the pleading, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence in the pending case, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. * * * A summary judgment shall not be rendered unless it appears from such evidence or stipulation and only therefrom, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence or stipulation construed most strongly in his favor. * * *"
Upon appeal the Court of Appeals reversed. In its opinion, the court stated, in part:
"The assignments of error relate to the same issues. Therefore, they are considered together. Generally we stress that the record indicates money was paid to trustees by employers, which may belong to employees. In point of fact, that is the issue — to whom does the money belong — to the trustees, or employees? If the money was deducted from the employees, it is rightfully theirs. In any case, they, as plaintiffs, are parties in interest in this action. * * *
"In sum, there are issues as to material facts. The result may well be the same, but appellants are entitled to a hearing."
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Messrs. Gabalac, Houk Sloan, Mrs. Frances W. Houk and Mr. Stephen Gabalac, for appellees.
Messrs. Lane, Alton Horst, Mr. Jack R. Alton, Mr. Jeffrey W. Hutson and Mr. John Palmer, for appellants.
Over $200,000 has been contributed to the Ohio Operating Engineers Pension Fund by Cummins Diesel on behalf of its employees. Pursuant to the summary judgment rendered by the Court of Common Pleas, those employees lose all rights in that fund, and all prospect of receiving the benefits which were contemplated under the original pension plan. This judgment was properly set aside by the Court of Appeals, unless undisputed facts and the applicable agreements require the forfeiture, and preclude the granting of any relief to, the plaintiffs.
We conclude that the plaintiffs have stated a claim upon which relief may be granted. Since the trust agreement provides no direction as to the proper treatment of employer contributions which become substandard by reason of changes in the pension plan, the agreements here neither justify nor require the forfeiture.
The defendants' characterization of the actions of the plaintiff-group as a withdrawal triggering a forfeiture under the terms of the contract is incorrect.
The defendants, in asserting that the plaintiffs lacked standing to sue by reason of their failure to exhaust the administrative grievance procedure in the trust agreement, point to provisions of that agreement providing for arbitration of claims of parties to the contract. However, plaintiffs here do not seek pension benefits; claims to such have not ripened. Neither employer nor employee can point to any part of the agreement which authorizes an arbitrable demand for funds. Nor can the trustee point to provisions which justify use of these funds to provide benefits for other than this group of plaintiffs. Plaintiffs' claims require the application of equitable principles to a trust scheme which is defective as to their entire group. Often, a constructive trust must be fashioned under such circumstances. Before a court can apply trust law, it must have an adequate factual basis for so doing. In such situations, a full development of the facts may serve to clarify the law or help the court determine its application to the case. Thus, one court, in Petition of Bloomfield Steamship Co. (S.D.N.Y. 1969), 298 F. Supp. 1239, 1242, has said:
"* * * Summary judgment, with ever-lurking issues of fact, is always a treacherous shortcut and, in cases like these, too fragile a foundation for so heavy a load. Such relief is always discretionary, and in cases posing complex issues of fact and unsettled questions of law, sound judicial administration dictates that the court withhold judgment until the whole factual structure stands upon a solid foundation of a plenary trial where the proof can be fully developed, questions answered, issues clearly focused and facts definitively found." This is particularly true in trust cases.
The complex factual and legal questions posed by this cause require a clear and careful framing of the issues. This can be accomplished only by a full hearing at the trial level. Clearly the $200,000 plus contributed pursuant to the collective bargaining agreement between these plaintiffs and their employers are trust funds to which the trustees or other contributors to the plan or their employees neither have nor assert any valid claim. Admittedly, the trust, constructed so as to escalate the benefits of those employees covered by the master agreements, does so on an "actuarially sound basis" in accordance with the overall pension plan.
With equal certainty the plaintiffs at this point have no right under the terms of the trust agreement to a distribution of the fund.
The complaint's assertions that the trustees have "wrongfully converted said [trust] funds" and "failed to provide a pension fund," require response from the trustees assuring the court to which the motion for summary judgment is directed that no forfeiture of benefits and funds has occurred merely because the beneficiaries have been collectively rendered unable to obtain compliance with the trust scheme in its altered form. Where, as here, the beneficiaries' broad challenge to the conduct of a trust is met only by the trustees' specific denial that plaintiffs are entitled to the individual refunds sought, summary judgment is inappropriate.
We conclude that the Court of Appeals properly remanded the cause to the trial court for a full determination of the circumstances, for an examination of the agreements and claims of all parties with a view to determining the equities of the situation, and for the application of recognized trust principles to those claims and those instructions. Solutions of trust problems which cannot be resolved by reference to the instruments which define the duties of the trustees must always be so fashioned.
The judgment of the Court of Appeals is affirmed and the cause is remanded to the Court of Common Pleas for further proceedings consistent with this opinion.
Judgment affirmed.
O'NEILL, C.J., HERBERT, CORRIGAN, STERN, CELEBREZZE, W. BROWN and P. BROWN, JJ., concur.