Gregory Bos v. Board of Trustees
795 F.3d 1006
9th Cir.2015Background
- Gregory Bos, president of Bos Enterprises, Inc. (BEI), signed the Carpenters’ Master Agreement requiring BEI to make monthly contributions to five union trust funds (health, pension, vacation/holiday, training, annuity).
- Trust agreements defined each Fund to include “all contributions required . . . to be made” and similar language; Bos personally controlled BEI’s finances and signed a promissory note guaranteeing unpaid contributions of $359,592.09, later subject of arbitration.
- The Board of Trustees obtained an arbitration award against Bos and BEI for $504,282.59 for unpaid contributions; Bos later filed Chapter 7 bankruptcy and the Board sued to except that debt from discharge under 11 U.S.C. § 523(a)(4).
- Bankruptcy and district courts held Bos was an ERISA fiduciary and that his defalcation made the debt nondischargeable under § 523(a)(4); Bos appealed to the Ninth Circuit.
- The Ninth Circuit considered whether unpaid employer contributions (or related contractual rights) can be "plan assets" such that an employer who controls the money becomes an ERISA fiduciary and thus liable for nondischargeable defalcation.
Issues
| Issue | Plaintiff's Argument (Board) | Defendant's Argument (Bos) | Held |
|---|---|---|---|
| Whether unpaid employer contributions (or related contractual rights) can be "plan assets" under ERISA so that an employer who controls the money is a fiduciary for § 523(a)(4) | Trust docs’ language making the Funds include "all contributions required to be made" turns unpaid contributions (or amounts due) into plan assets; Bos controlled those funds and thus was an ERISA fiduciary whose defalcation is nondischargeable | Unpaid contributions are not plan assets; at most the plan has a contractual claim (a chose in action) and the employer did not control that right before nonpayment, so no fiduciary status under ERISA or § 523(a)(4) | Held for Bos: unpaid contributions (or the plan’s contract claim) are not plan assets giving employer control required for ERISA fiduciary status; § 523(a)(4) nondischargeability does not apply |
Key Cases Cited
- Cline v. Indus. Maint. Eng’g & Contracting Co., 200 F.3d 1223 (9th Cir. 2000) (general rule that unpaid employer contributions are not plan assets)
- Blyler v. Hemmeter (In re Hemmeter), 242 F.3d 1186 (9th Cir. 2001) (fiduciary status must preexist the wrongdoing for § 523(a)(4))
- ITPE Pension Fund v. Hall, 334 F.3d 1011 (11th Cir. 2003) (plan document can convert receivable property into plan assets under certain language)
- Navarre v. Luna (In re Luna), 406 F.3d 1192 (10th Cir. 2005) (unpaid contributions are a contractual claim; employer lacks control over the plan’s collection right and thus not an ERISA fiduciary)
- Board of Trustees v. Bucci (In re Bucci), 493 F.3d 635 (6th Cir. 2007) (declining to treat unpaid contributions as creating fiduciary status for § 523(a)(4))
- Bricklayers & Allied Craftworkers Local 2 v. Moulton Masonry & Constr., LLC, 779 F.3d 182 (2d Cir. 2015) (plan documents can sometimes designate unpaid contributions as plan assets sufficient to establish fiduciary status)
- Carpenters Pension Tr. Fund for N. Cal. v. Moxley, 734 F.3d 864 (9th Cir. 2013) (declining to decide whether plan documents can classify unpaid contributions as plan assets)