                                                                                                                           Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-22-1994

Connors, et al. v. Fawn Mining Corp.
Precedential or Non-Precedential:

Docket 93-3304




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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT


                          N0. 93-3301


    JOSEPH P. CONNORS, SR.; DONALD E. PIERCE; WILLIAM MILLER;
  THOMAS H. SAGGAU; PAUL R. DEAN, as Trustee of the United Mine
Workers of America 1950 Pension Trust 1950 Benefit Plan and Trust
       1974 Pension Trust, and 1974 Benefit Plan and Trust
                                v.

                    FAWN MINING CORPORATION,
                         a corporation,

                               v.

      DISTRICT 5, UNITED MINE WORKERS OF AMERICA, AFL-CIO;
 INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, AFL-CIO,

                     Third Party Defendants

                    FAWN MINING CORPORATION,

                            Appellant



         On Appeal From the United States District Court
            For the Western District of Pennsylvania
                 (D.C. Civil Action No. 92-00305)


                    Argued January 10, 1994

       BEFORE: STAPLETON, COWEN and ALITO, Circuit Judges

                  (Opinion Filed July 25, 1994)




                         Michael J. Healey (Argued)
                         Healey, Davidson & Hornack
                         Fifth Floor
                         Law & Finance Building
                         Pittsburgh, PA 15219



                               1
                               Attorneys for Appellees
                               International Union, UMWA and
                               District 5, UMWA
                        Ralph A. Finizio
                        Houston Harbaugh
                        Two Chatham Center
                        12th Floor
                        Pittsburgh, PA 15219

                               and

                        David W. Allen, General Counsel
                        Margaret M. Topps, Deputy
                        General Counsel
                        Larry D. Newsome (Argued)
                        Assistant General Counsel
                        Kenneth M. Johnson
                        UMWA Health and Retirement Funds
                        Office of the General Counsel
                        4455 Connecticut Avenue, N.W.
                        Washington, DC 20008

                               Attorneys for Appellees
                               Joseph P. Connors, et al.

                        Allan L. Fluke (Argued)
                        Thomas E. Weiers, Jr.
                        Rich, Fluke, Tishman & Rich
                        220 Two Chatham Center
                        Pittsburgh, PA l5219

                               Attorneys for Appellant
                               Fawn Mining Corporation




                      OPINION OF THE COURT




STAPLETON, Circuit Judge:


          The trustees of the United Mine Workers of America 1950

Pension Benefit Plan and Trust ("the 1950 Plan"), and the United



                               2
Mine Workers of America 1974 Pension Benefit Plan and Trust ("the

1974 Plan") (collectively, "the Plans"),0 claim that Fawn Mining

Corporation ("Fawn Mining") failed to fulfill its obligations

under the 1988 National Bituminous Coal Wage Agreement ("Wage

Agreement")0 when it failed to contribute to the 1950 Plan for

its employees for the period of May 24, 1990, through April 30,

1991.0   The trustees initiated this action pursuant to section

301 of the Labor Management Relations Act, 29 U.S.C. § 185, and

section 502(e) of the Employee Retirement Income Security Act of

1974 ("ERISA"), 29 U.S.C. § 1132(e), to collect these allegedly

delinquent contributions.   Fawn Mining responded by filing a

third-party complaint against District 5, United Mine Workers of

America, AFL-CIO ("District 5"), and the United Mine Workers of

America International, AFL-CIO ("International") (collectively,

"the UMW"), alleging that it was not contractually obligated to

0
 The Plans were established through collective bargaining between
the United Mine Workers of America and the employers in the
bituminous coal industry and have been maintained under
successive National Bituminous Coal Wage Agreements.
0
 Article XX(d) of the Wage Agreement provides that:

           During the life of this Agreement . . . each
           signatory Employer engaged in the production
           of coal shall contribute to the Trusts . . .
           the amounts specified below based on cents
           per ton on each ton . . . of bituminous coal
           produced by such Employer for use or for
           sale, and, in addition, each signatory
           Employer . . . shall contribute to the Trusts
           . . . the amounts specified below based on
           cents per hours worked by each of the
           Employer's Employees who perform classified
           work under this Agreement.
0
 The plaintiff calculates this sum as $344,785.90, to which it
also seeks to add "double interest" and costs and attorney's fees
pursuant to 29 U.S.C. § 1132(g)(2).


                                 3
contribute to the 1950 Plan because the UMW had agreed to exempt

Fawn Mining from the portion of the Wage Agreement that required

contribution to this plan.    Fawn Mining further claimed that if

it were responsible for contributions to the 1950 Plan, it would

be entitled to indemnification from the UMW.

            Following discovery, all parties filed motions for

summary judgment.    A magistrate considered these motions and

prepared a report and recommendation.      The magistrate found that

even assuming that the UMW agreed to waive Fawn Mining's

contractual obligations regarding the 1950 Plan, this agreement

would not be binding on the trustees of the benefit plan.      With

regard to the union's liability to Fawn Mining, the magistrate

concluded that there was no basis for requiring the UMW to

indemnify Fawn Mining.    Thus, the magistrate judge recommended

that the court grant both the Plans' and the UMW's motions for

summary judgment, and deny Fawn Mining's motion for summary

judgment.    The district court adopted the magistrate judge's

report and recommendation as the opinion of the court.      Fawn

Mining now appeals.



                                  I.

            BethEnergy Mines, Inc. and Bethlehem Steel Corporation

(collectively, "BethEnergy") intended to terminate operations at

their Saxonburg, Pennsylvania coal mine facility and permanently

lay-off all employees who worked at this site.       Those employees

were represented by District 5.       When District 5 learned of the

planned closing, it began to actively solicit prospective buyers


                                  4
of the mine so that operations could continue and the jobs of its

members could be saved.   Donald Redman ("Redman"), president of

District 5, contacted principals of the CLI Corporation ("CLI")

in January, 1990, to ask if CLI was interested in purchasing the

mine.   CLI expressed interest in arranging for Fawn Mining, one

of its subsidiaries, to purchase the mining assets from

BethEnergy.

          After some investigation, however, Fawn Mining

representatives concluded that it would not be profitable for it

to purchase the mine if it would be bound by the terms of the

Wage Agreement, which BethEnergy and District 5 had previously

signed.   This created a problem, however, because Article I of

the Wage Agreement stated that:
          [E]ach employer promises that its operations
          covered by this Agreement shall not be sold,
          conveyed, or otherwise transferred or
          assigned to any successor without first
          securing the agreement of the successor to
          assume the Employer's obligations under this
          Agreement.

          Fawn Mining thus knew that BethEnergy would not sell it

the mining operation unless it either agreed to assume the terms

of the Wage Agreement or gained concessions from the UMW

regarding the requirements of that agreement.0   As a result, Fawn

Mining representatives had numerous discussions with Redman

regarding the Wage Agreement.   These discussions focused on the

possibility of exempting Fawn Mining from the provision of the

0
Because other subsidiaries of CLI had signed the 1988 Wage
Agreement, CLI was well aware of the language of Article I
prohibiting employers from selling their assets to successors
that did not agree to abide by the agreement.


                                5
Wage Agreement that required employer contributions to the 1950

Plan.   Redman, who stated at his deposition that his biggest

concern was keeping the mine open and his members employed,

admitted to having lengthy discussions with Fawn Mining regarding

the possibility of granting Fawn Mining an exemption from

participating in the 1950 Plan.

          Redman told representatives of Fawn Mining that other

companies that had purchased struggling mining operations were

granted exemptions by the UMW from some of the terms of the 1988

Wage Agreement, including the term requiring contribution to the

1950 Plan.   Redman stated, either explicitly or implicitly, that

he favored granting Fawn Mining an exemption from the requirement

that it contribute to the 1950 Plan at some time down the road if

it would keep the mine open and UMW members employed.   Fawn

Mining representatives knew, however, that Redman alone did not

have the authority to grant such an exemption.

          The parties disagree about what exactly happened next.

According to Fawn Mining representatives, Redman told them that

he had spoken to the International President, and that the

president had given him the authority to grant Fawn Mining an

exemption from the 1950 Plan.   Fawn Mining representatives

further testified that Redman promised them that if Fawn Mining

purchased BethEnergy's assets, it would be immediately exempt

from contributing to the 1950 Plan.   In other words, the

collective bargaining agreement between Fawn Mining and the UMW

would be identical to the Wage Agreement, except that it would

not include a provision requiring contribution to the 1950 Plan.


                                  6
            Redman, however, remembered the negotiations somewhat

differently.   According to him, he made it clear to Fawn Mining

representatives that he had no authority to grant an exemption

from the 1950 Plan.   Furthermore, he claimed that he promised

only that he would seek the exemption from International

President Trumpka after Fawn Mining had operated the mine for one

year.   Redman stated that he told Fawn Mining representatives he

wanted to wait a year before granting the exemption because if

operations continued for at least that much time, it would be

clear that Fawn Mining was serious about turning the mining

operations into a profitable business, and that it was possible

to do so.   At that point, if it would help save the mine for the

long term, Redman would seek the exemption.

            While these negotiations between Fawn Mining and the

UMW were taking place, BethEnergy issued a "WARN" notice

announcing that it would close the mine on May 25, 1990 unless a

purchaser who had a collective bargaining agreement with the UMW

was found by that time.   Representatives of the UMW knew that

once the mine was shut down, it would be even more difficult to

find a purchaser and re-start operations.     So, on May 24, 1990,

the day before the purchase deadline imposed by BethEnergy, Fawn

Mining Vice President Robert Irey ("Irey") and CLI Chief

Financial Officer William Stein ("Stein") met with Redman at the

District 5 office to reaffirm understandings reached in the prior

negotiations covering the mining operation.

            At the end of this meeting, Redman and Irey both signed

a single sheet of paper confirming their agreement.    This paper


                                 7
was a copy of the last page of the 1988 Wage Agreement, which is

the page that employers and local unions sign to indicate that

they are consenting to becoming parties to that agreement.      At

the time Redman and Irey signed this page, however, it was not

attached to any other document.       According to Irey and Stein,

when Irey signed this page, they and Redman had an understanding

that they were signing a commitment to be obligated by the terms

and conditions of the 1988 Wage Agreement, but with the promised

exemption from the 1950 Plan.   Furthermore, Irey and Stein

claimed that all parties agreed that the signature page would be

sent to International President Trumpka for his signature.      Then,

the signature page would be attached to a document identical to

the Wage Agreement except for the 1950 Plan exemption, and a copy

would be sent to Fawn Mining.   Redman, however, denied that any

such agreement existed when he and Irey signed the signature

page.   He stated that at the time of signing, he believed that

Fawn Mining was signing onto the entire Wage Agreement, including

the provision requiring contribution to the 1950 Plan, and that

the only understanding between the parties was that Redman would

seek the exemption in one year if it would increase the longevity

of the mine.

           One day later, on May 25, 1990, Fawn Mining signed an

Asset Purchase Agreement for the acquisition of the mine from

BethEnergy.    Article 3.1.5 of this Asset Purchase Agreement

stated that Fawn Mining would assume all of BethEnergy's

obligations and liabilities under the Wage Agreement, and it

acknowledged that it had copies of this agreement.       The Asset

                                  8
Purchase Agreement did not mention any exemption from the 1950

Plan.   BethEnergy sent a letter to the UMW on June 4, 1990

announcing the sale of the mine to Fawn Mining, and stating that

Fawn Mining had agreed to accept BethEnergy's obligations under

the Wage Agreement.   This letter also did not mention a waiver of

any of the agreement's provisions.

           Once Fawn Mining took over operations it began to make

remittances to the 1974 Plan, as required by the Wage Agreement.

It did not, however, make any contributions to the 1950 Plan.    In

August of 1990, the Plans informed Fawn Mining that they still

had not received a signed copy of the agreement reached between

it and District 5, and requested that they be sent one.   Fawn

Mining responded to the Plans' request by sending them a file it

kept of information regarding the contract and a copy of the

signature page signed by representatives from District 5 and Fawn

Mining.

           In October 1990, Fawn Mining began to receive notices

from the 1950 Plan that contributions were owed.0   However, Fawn

Mining did not respond to any of the Plans' notices.   In fact, it

did not inform the Plans that it believed it was exempt from

contributing to the 1950 Plan until April 1992, when it sent the

Plans a memorandum.   According to Fawn Mining representatives

Irey and David Chedgy (CLI's President), the reason for this

delay was that during this time they were attempting to obtain

from Redman a copy of the agreement showing that the 1950 Plan

0
Fawn Mining received from the Plans two delinquency notices in
October 1990, one in December 1990, and one in January 1992.

                                9
provision had been excluded, but that Redman was brushing them

off, stating simply that, "its coming."

          On December 28, 1990, CLI sent Redman a letter

regarding the written exemption, which stated, in part:
               With regard to the economics of the
          operation, you will recall that before the
          deal was cut with Bethlehem, the question of
          payments to the UMWA Health and Retirement
          Funds was discussed with you and we were
          assured, verbally, that we would not have to
          make any contribution to the "50's" Fund. We
          recently received a demand from the UMWA
          Health and Retirement Fund Administrators for
          payment of overdue contributions to this fund
          of $163,734 for the period June 1, 1990 to
          October 31, 1990. . . .

               . . . We believe it   is fair to say that,
          if we had not been given   your assurance that
          we would not have to pay   into this fund, we
          would not have proceeded   with the deal.

               With the [bleak economic] situation we
          are now facing, it is even more important to
          obtain clarification of the position. We
          feel that it is absolutely essential that a
          written amendment to the original agreement,
          similarly dated, specifically exempting Fawn
          from payments into the "50's" Fund, be drawn
          up and signed by authorized UMWA officials.

App. 781-82.

          Due to excessive losses, Fawn Mining ceased operations

at the mine in February, 1991, just ten months after it purchased

the mining assets from BethEnergy.    On February 14, 1992, the

Plans initiated this action seeking delinquent contributions and

other statutory remedies.

          In his Report and Recommendation, the magistrate judge

pointed to case law holding that written contractual obligations

in collective bargaining agreements control over alleged oral


                               10
modifications.   See Central States S.E. & S.W. Areas Pension Fund

v. Gerber Truck Serv., Inc., 870 F.2d 1148 (7th Cir. 1989) (en

banc); Trustees of Laborers Local Union #800 Health and Welfare

Trust Fund v. Pump House, Inc., 821 F.2d 566 (11th Cir. 1987);

Southwest Adm'rs, Inc. v. Rozay's Transfer, 791 F.2d 769 (9th

Cir. 1986), cert. denied, 479 U.S. 1065 (1987).    Further, as

evidence of Fawn Mining's agreement to assume all of the

obligations in the Wage Agreement, the magistrate judge pointed

to its Asset Purchase Agreement with BethEnergy and to the fact

that Fawn Mining was aware of the Wage Agreement's requirement

that signatory employers such as BethEnergy could transfer the

mine only to parties who agreed to abide by the same collective

bargaining agreement.

           The magistrate went on to say that even if there was a

local undisclosed side agreement between the UMW and Fawn Mining

to waive the 1950 Plan obligations, this type of agreement would

be irrelevant and not binding on the Plans, because they were not

a party to the side agreement.    The magistrate judge, citing

Lewis v. Benedict Coal, 361 U.S. 459 (1960), stated that the only

potential impact of this side agreement would be on the liability

of the UMW to Fawn Mining.   However, since he found no legal

basis for Fawn Mining's indemnity claim, the magistrate judge

recommended that the UMW's motion for summary judgment be

granted.



                                 II.



                                 11
          We exercise plenary review over the district court's

decision to grant appellees' motions for summary judgment.0

Public Interest Research of N.J. v. Powell Duffryn Terminals,

Inc., 913 F.2d 64, 76 (3d Cir. 1990) ("In reviewing a grant of

summary judgment, we apply the same test as the district court

should have used initially.") (citing Erie Telecommunications,

Inc. v. City of Erie, 853 F.2d 1084, 1093 (3d Cir. 1988)), cert.

denied, 111 S. Ct. 1018 (1991).

          Under the Federal Rules of Civil Procedure, a court may

grant a motion for summary judgment only if there is no genuine

issue of material fact and the moving party is subject to

judgment as a matter of law.   Fed. R. Civ. P. 56(c).   A dispute

is genuine "if the evidence is such that a reasonable jury could

return a verdict for the nonmoving party."   Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986).   A fact is material when

it "might affect the outcome of the suit under the governing

law."   Id.   Any dispute over a fact which is irrelevant or

unnecessary will not preclude a grant of summary judgment.       Id.

          The moving party has the initial burden of informing

the court of the basis for a motion of summary judgment and

pointing out those parts of the record which he or she believes

demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).     If the


0
The district court had jurisdiction over this action pursuant to
§ 301 of the Labor Management Relations Act, 29 U.S.C.
§ 185(c), and also under § 502(e) of ERISA, 29 U.S.C. § 1132(e).
We have jurisdiction to review this final judgment of the
district court pursuant to 28 U.S.C. § 1291.


                                  12
moving party can satisfy his or her initial burden, the nonmoving

party "'may not rest upon the mere allegations or denials of his

[or her] pleadings, but his [or her] response . . .     must set

forth specific facts showing that there is a genuine issue for

trial.'"   Gans v. Mundy, 762 F.2d 338, 341 (3d Cir.) (quoting

Fed. R. Civ. P. 56(e)), cert. denied, 474 U.S. 1010 (1985).

However, all reasonable inferences that can be drawn from the

record must be viewed in the light most favorable to the party

opposing the motion.   Sorba v. Pennsylvania Drilling Co., Inc.,

821 F.2d 200, 202-03 (3d Cir. 1987), cert. denied, 484 U.S. 1019

(1988).



                               III.

           Fawn Mining's defense to the Plans' motion for summary

judgment was that it had been affirmatively led by the UMW to

believe that the agreement it was signing did not require it to

contribute to the 1950 Plan at any time.     In other words, Fawn

Mining claimed that the UMW had fraudulently obtained the

agreement under which the contributions sought were allegedly

due.   The district court rejected this defense, however, because

it felt that the Plans were not bound by any undisclosed "side

agreements" that may have existed between Fawn Mining and the

UMW.   Apparently, the court believed that Fawn Mining's defense

to the Plans' summary judgment motion lacked merit regardless of

whether the UMW committed fraud.     For the reasons that we set

forth below, however, we believe that the answers to the



                                13
questions of whether the UMW committed fraud, and, if so, what

type of fraud, are highly relevant here.

             The Plans are third-party beneficiaries of the Wage

Agreement.    Agathos v. Starlite Motel, 977 F.2d 1500, 1505 (3d

Cir. 1992) (citing Southwest Adm'rs, Inc. v. Rozay's Transfer,

791 F.2d 769, 773 (9th Cir. 1986), cert. denied, 479 U.S. 1065

(1987)).     "The rights of third-party beneficiaries typically are

subject to any defenses that the promisor could assert in a suit

by the promisee."     Id. (citing John D. Calamari & Joseph M.

Perillo, The Law of Contracts § 17-10 (3d ed. 1987)).     However,

third-party beneficiaries are subject to a more limited number of

defenses when the contract at issue is a collective bargaining

agreement.    Agathos, 977 F.2d at 1505.   For example, the Supreme

Court has held that "the parties to a collective bargaining

agreement must express their meaning in unequivocal words before

they can be said to have agreed that the union's breaches of its

promises should give rise to a defense against the duty assumed

by an employer to contribute to a welfare fund."     Lewis v.

Benedict Coal Corp., 361 U.S. 459, 470-71 (1960), cited in

Agathos, 977 F.2d at 1505.
           Moreover, section 515 of ERISA, 29 U.S.C. § 1145,

speaks to the recoverability of contributions from an employer in

the position of Fawn Mining. Section 515 states:
          Every employer who is obligated to make
          contributions to a multi-employer plan under
          the terms of the plan or under the terms of a
          collectively bargained agreement shall, to
          the extent not inconsistent with law, make
          such contributions in accordance with the



                                  14
           terms and conditions of such plan or
           agreement.

           The courts have interpreted section 515 as severely

limiting the defenses available to an employer who has signed an

agreement which commits it to make contributions to a benefit

fund.   Agathos v. Starlite Motel, 977 F.2d 1500 (3d Cir. 1992).0
Our review of the case law in the Agathos case, for example,

revealed that "an employer may not assert defects in the

formation of the collective bargaining agreement, such as . . .

fraud in the inducement or oral promises to disregard the text of

the agreement."   Id. at 1505 (citations omitted).   Indeed, we

concluded that the cases recognized only three defenses.    One of

those defenses, however, is possibly relevant here.    Claims for

contributions delinquent under the terms of a collective

bargaining agreement can be defeated if it is shown that "the

collective bargaining agreement is void ab initio, as where there

is fraud in the execution, and not merely voidable, as in the

case of fraudulent inducement."    Id.

           Accordingly, the crucial issue in this case is whether

the defense that Fawn Mining has asserted is one of fraud in the

inducement or fraud in the execution.    If we decide that the

claim is one of fraud in the inducement, we must affirm the

decision of the district court to grant the Plans' motion for

summary judgment, as this is an invalid defense for an employer

0
See also, Rozay's Transfer, 791 F.2d at 773 ("In recognition of
the fact that millions of workers depend upon employee benefit
trust funds for their retirement security, Congress and the
courts have acted to simplify trust fund collection actions by
restricting the availability of contract defenses, which make
collection actions unnecessarily cumbersome and costly.").

                                  15
to use in response to a benefit plan's claim for delinquent

contributions.   However, if we find that Fawn Mining has asserted

a claim of fraud in the execution, and, furthermore, that there

exists a genuine issue of material fact as to whether the UMW

committed such fraud, we must reverse the summary judgment in

favor of the Plans.

          As stated by the Court of Appeals for the Ninth

Circuit, the distinction between fraud in the inducement and

fraud in the execution is that, "[t]he former induces a party to

assent to something he otherwise would not have; the latter

induces a party to believe the nature of his act is something

entirely different than it actually is."    Rozay's Transfer, 791

F.2d at 774 (citing 12 Walter H.E. Jaeger, Williston on Contracts

§ 1488, at 332 (3d ed. 1970)).    The court went on to explain

that, "'[f]raud in the execution' arises when a party executes an

agreement 'with neither knowledge nor reasonable opportunity to

obtain knowledge of its character or its essential terms.' . . .

Fraud in the execution results in the agreement being void ab

initio, whereas fraud in the inducement makes the transaction

merely voidable."     Id. (quoting U.C.C. § 3-305(2)(c)) (other
citations omitted).

          On several prior occasions, courts have been required

to apply this distinction in order to determine whether an

employer's asserted defense to a benefit fund's claim for

delinquent contributions was valid.    In Agathos v. Starlite
Motel, 977 F.2d 1500, 1505 (3d Cir. 1992), for example, the

employer argued before us that he was not responsible for


                                  16
payments to a benefit fund as the fund had claimed, because even

though the collective bargaining agreement specified that all

employees would be included in the benefit fund, the employer and

the union had orally agreed that only two of the employees would

be covered.   This court held that this defense was one of fraud

in the inducement rather than fraud in the execution, and,

therefore, that it was an invalid defense under the

circumstances.   According to the court, "[t]o prevail on a

defense of fraud in the execution, a party must show 'excusable

ignorance of the contents of the writing signed.'"    Id. at 1505-

06 (citing Rozay's Transfer, 791 F.2d at 774 (quoting U.C.C. § 3-

305 cmt. 7); Calamari & Perillo, supra, § 9-22 (party claiming

fraud in the execution must show that he "signed an instrument

that is radically different from that which [he] is led to

believe that he is signing")).   The court concluded that in the

case before it, the employer made no such showing because it did

"not argue that it thought the collective bargaining agreement it

signed was a different document[,] [n]or did [it] contend that

the Union misrepresented the nature of the document it was asked

to sign."   Id. at 1506.
            In Central States, Southeast and Southwest Areas

Pension Fund v. Gerber Truck Service, Inc., 870 F.2d 1148 (7th

Cir. 1989) (en banc), the Court of Appeals for the Seventh

Circuit was faced with a virtually identical situation and

reached the same conclusion.   According to the benefit fund, the

employer had made contributions for only three of his employees

rather than all of them.    The employer's defense was that

                                 17
although the collective bargaining agreement stated that all

employees would be included in the benefit fund, it and the union

had orally agreed that only three specific employees would

participate in the fund.   The court held that the employer was

liable for benefit fund contributions for all of his employees,

as stated in the contract.   In so holding, the court rejected the

employer's defense because it found it to be one of fraud in the

inducement, which is an invalid defense to a claim for

contributions by a benefit fund.     Id. at 1153 ("If the employer

simply points to a defect in its formation--such as fraud in the

inducement, oral promises to disregard the text, or the lack of

majority support for the union and the consequent ineffectiveness

of the pact under labor law--it must still keep its promise to

the pension plans.").

          As yet another example, in Rozay's Transfer, a benefit

fund had filed a claim against the employer for delinquent

contributions that had accrued after the previous collective

bargaining agreement had expired but before a new agreement had

been reached.   The employer's defense was that the union had

promised it that the benefit fund would waive these contribution

requirements, and that it had signed the collective bargaining

agreement under the belief that this waiver had been approved.

The benefit fund had rejected the union's request for such a

waiver, however, and the union had failed to convey this

rejection to the employer.   The court held that the employer's

defense was one of fraud in the inducement, and not one of fraud

in the execution.   Specifically, the court stated that:

                                18
               Rozay's Transfer cannot persuasively
          contend that fraud in the execution is
          presented on the facts of this case. Rozay
          acknowledged at trial that he was fully aware
          that the document he signed was a collective
          bargaining agreement and that the agreement
          was effective as of [the day that the
          original agreement expired], thus obligating
          the payment of contributions to the trust
          fund for the disputed period.

               To maintain a defense of fraud in the
          execution, Rozay's Transfer would have to
          establish "excusable ignorance of the terms
          of the contents of the writing signed." See
          Uniform Commercial Code § 3-305 comment 7.
          But there simply was no confusion as to the
          actual contents of the agreement. Instead
          the misrepresentation concerned whether the
          express provisions of the agreement would in
          fact be enforced--an example of fraud in the
          inducement, as the district court found.

791 F.2d at 774-75.   The Rozay's Transfer court rejected the

employer's defense, citing Southern California Retail Clerks

Union and Food Employers Joint Pension Trust Fund v. Bjorklund,

728 F.2d 1262, 1266 (9th Cir. 1984), for the proposition that "a

claim that a promise to make contributions was fraudulently

induced is not a legitimate defense to a trust fund's action to

recover delinquent contributions."   Rozay's Transfer, 791 F.2d at

775.

          The court in Rozay's Transfer distinguished its facts

from those of a prior Ninth Circuit case, Operating Engineers

Pension Trust v. Gilliam, 737 F.2d 1501, 1503 (9th Cir. 1984). In

Gilliam, an employer claimed that he had signed a document which

the union had told him was an application to become a union

member as an owner-operator.   In actuality, however, the document

was a collective bargaining agreement covering all of his


                                19
employees, which required him to make contributions to a trust

fund on their behalf.     The trust fund later filed a claim against

the employer for delinquent contributions due under the

agreement.     The court held that the employer "was not obligated

to make such payments as he had reasonably relied on the union's

representation that he was signing a document of a wholly

different nature."    791 F.2d at 774 (citing Gilliam, 737 F.2d at

1504-05).     The Rozay's Transfer court said that the key

distinction between its facts and the facts of Gilliam was that

the employer in Gilliam had asserted the valid defense of fraud

in the execution, while the employer in Rozay's Transfer had

asserted the invalid defense of fraud in the inducement.

             With these cases in mind, we turn to the facts at hand.

As pointed out by Fawn Mining, on the day that the signature page

was signed embodying the existence of an agreement between the

parties, there was significant time pressure on both sides due to

the fact that the mine was set to close the next day.        The only

document that the parties physically had before them was a

signature page of a standard Wage Agreement.     Although no

document was attached to this page at the time, Fawn Mining

claims that both sides intended the signing of this page to

symbolize their agreement to all terms of the Wage Agreement

other than the 1950 Plan provision and that both contemplated

that this page, when formally executed by an appropriate official

of the International, would be appended to a copy of the Wage

Agreement with the 1950 Plan provision deleted.     According to

Stein:

                                  20
          [There was a] need to sign the agreement
          because of the impending closing on the asset
          purchase agreement the next day. Mr. Irey
          was very hesitant to sign that agreement
          because it did not -- we had no written . . .
          documentation of our waiver from the '50's
          funds. Mr. Redman assured him that that had
          been approved by Mr. Trumpka and it would be
          forthcoming with the signed agreement by Mr.
          Trumpka.
App. 609-10.

           Unlike the employers in the fraudulent inducement

cases, Fawn Mining does not claim there was an oral modification

of a written collective bargaining agreement it had signed.

According to Fawn Mining, it did not knowingly enter into an

agreement to contribute to the 1950's Fund with the expectancy

that the agreement would not be enforced or the obligation later

waived.    Rather, Fawn Mining and Redman signed the unattached

signature page the day before Fawn Mining's closing with

BethEnergy to permit the transfer of the mine assets and to avoid

mine closure.   The parties' agreement and understanding at the

time the page was signed was that there was no contractual

obligation on the part of Fawn Mining to contribute to the 1950

Benefit Fund.

           We hold that Fawn Mining is asserting a defense of

fraud in the execution, which, if proven, would be a valid

defense to the Plans' claim.   Fawn Mining's defense is equivalent

to a claim of "excusable ignorance of the contents of the writing

signed."   Furthermore, because both Fawn Mining and the UMW admit

that the 1950 Plan provision was an important issue to both

parties, if Fawn Mining was in fact led to believe that it was

signing an agreement that did not include this provision, an


                                 21
agreement that did contain this provision would be "radically

different" from one which did not require contribution to the

plan.   Therefore, Fawn Mining's defense falls within the

definition of fraud in the execution that this court laid out in

Agathos.    Additionally, we believe that the facts of this case

more closely resemble those of Gilliam than they do those of

Gerber or Rozay's Transfer because here Fawn Mining is claiming

that it was misled as to what the actual language of the contract

would be.    It is not asserting that it signed a contract, the

terms of which were as it intended them to be, but did so only

because it was misled about the existence of a side agreement.

             If an employer reviews a document reflecting the

agreements reached in collective bargaining and the union

surreptitiously substitutes a materially different contract

document before both sides execute it, we think it clear that

there has been a fraud in the execution of the contract and that

the agreement reflected in the executed document is void ab

initio and unenforceable by the union.    The employer has never

manifested an assent to the terms of the alleged contract, and

the written document purporting to evidence the agreement has

been obtained by fraud.

            We believe the situation before us is not materially

different.    Under the facts here alleged by Fawn Mining, the

Plans are suing on what purports to be a written contract.      The

employer has never manifested assent to the terms contained in

that contract, however, and the document itself has been procured

by fraud.    In our view, the fact that the union allegedly

                                  22
substituted the body of the contract document after the execution

of the signature page, rather than before, does not convert this

suit from a fraud in the execution case into a fraud in the

inducement one.

          Because Fawn Mining is asserting a fraud in the

execution defense and because the conflicting deposition

testimony raises genuine issues of material fact regarding this

defense (i.e. whether the UMW actually did lead Fawn Mining to

believe that the 1950 Plan provision would not be included in the

language of the agreement), we will reverse the summary judgment

in favor of the Plans.0

          The UMW argues that even if we find that Fawn Mining's

defense is valid in theory because the parties intended this

agreement to exclude the 1950 Plan provision, we must still

reject it because any evidence of such an intent would be

0
It is true, as the district court stressed, that the Asset
Purchase Agreement specifically committed Fawn Mining to assume
all obligations of the Wage Agreement, and that Fawn Mining
failed promptly to notify the Plans that the collective
bargaining agreement it had signed with the UMW did not include
the 1950 Plan provision. While these two facts provide a basis
for an inference adverse to Fawn Mining, they would not preclude
a trier of fact from accepting the version of the facts reflected
in the depositions of Irey and Stein. Even though Fawn Mining
obligated itself to BethEnergy to assume all of its obligations
under the 1988 Wage Agreement, including that to the 1950 Plan,
Fawn Mining could well have negotiated with the UMW with the view
that a concession by it regarding the 1950 Plan would render
insignificant its commitment to BethEnergy concerning that Plan.
Moreover, the fact that Fawn Mining contributed to the 1974 Plan,
which was the other plan specified in the Wage Agreement,
evidences that Fawn Mining was not trying to shirk all
obligations to contribute to a welfare or pension fund, thereby
providing some support for Fawn Mining's claim that it was led to
believe from the start that the 1950 Plan provision was excluded
from its agreement with the UMW.


                               23
inadmissible under the parol evidence rule.   For support, it

cites Wilkes Barre Printing Pressman and Assistants' Union, No.

137 I.P.P. & A.E. v. Great Northern Press, 522 F.Supp. 106, 109

(M.D. Pa. 1981), which held that, "[o]nce the existence of a

binding contract has been established, [parol evidence to

challenge the stated terms of a collective bargaining agreement]

will be disallowed as part of a general policy to protect workers

from collusive oral agreements between management and the union

leadership."   The UMW also points to Lewis v. Seanor Coal, 382

F.2d 437, 441-45 (3d Cir. 1967), cert. denied, 390 U.S. 947

(1968), which held that parol evidence of oral modifications to

written contractual terms is inadmissible.

           The UMW's parol evidence argument is unpersuasive.

While the parol evidence rule generally prohibits the admission

of evidence that contradicts the terms of an integrated,

unambiguous writing, the "rule does not apply to evidence

introduced to show that a contract was void or voidable." Coleman

v. Holecek, 542 F.2d 532, 535 (10th Cir. 1976). Therefore,

"events antecedent to the making of a contract which negate

mutuality of assent, such as duress or fraud, or demonstrate a

condition to be fulfilled before the obligations of the contract

are to vest, may also be the subject of parol evidence."     4

Walter H.E. Jaeger, Williston on Contracts § 631, at 950 (3d ed.
1961).   In the case at hand, Fawn Mining has tendered evidence

which it claims would show the existence of fraud in the




                                24
execution, thereby making the contract void.   Such evidence is

not prohibited by the parol evidence rule.0

                                IV.

            Finally, we turn to Fawn Mining's claim for indemnity

from the UMW.   Paragraph 23 of Fawn Mining's Third Party

Complaint against the UMW alleges as follows:
               23. Any liability of Fawn Mining to
          Plaintiffs for contributions allegedly due to
          the 1950 Benefit Plan, which is denied, is
          the result of the UMW and District 5's
          negligent or fraudulent representations which
          induced Fawn Mining to purchase the
          BethEnergy mine assets under the assumption
          and agreement that Fawn Mining would not be
          required to contribute or to otherwise
          participate in the 1950 Benefit Plan.

0
Contrary to the UMW's assertion, the general rule that a signer

of an instrument is bound by its terms regardless of whether the

signer read the instrument is inapplicable here. This is so

because Fawn Mining is claiming that the UMW led it to believe

that the parties were signing an instrument which was completely

different from that which the UMW claims Fawn Mining signed.     See

Gilliam, 737 F.2d at 1504 ("We recognize that a party who signs a

written agreement generally is bound by its terms, even though he

neither reads it nor considers the legal consequences of signing

it.   This proposition, however, is qualified by the principle

that he who signs a document reasonably believing it is something

quite different than it is cannot be bound to the terms of the

document.   For example, one who signs a promissory note

reasonably believing he only gave his autograph is not liable on

the note." (citations omitted)).

                                 25
App. 77.

           While Fawn Mining asserts a fraud in the execution

defense to the Plans' claim against it for contribution, it here

alleges, in the alternative, fraud in the inducement of its asset

purchase contract with BethEnergy as a basis for an indemnity

claim against the UMW in the event it is held liable to the

Plans.   As we have indicated, there is a material dispute of fact

as to precisely what role the UMW played in the negotiations

leading to Fawn Mining's acquisition of the mine facility.    Based

on the current record, we believe a trier of fact could choose

not to credit Fawn Mining's contentions with respect to the

significance of the signing of the unattached signature page and

could still conclude that it was induced to sign the Asset

Purchase Agreement by the UMW representation that contributions

to the 1950 Plan would be waived.     In that event, it seems to us

that Fawn Mining could be held liable to the Plans and, at the

same time, could be entitled to indemnity from the UMW for the

contributions it would have to pay.    Accordingly, we conclude

that summary judgment for the UMW on the Third Party Complaint

was inappropriate.



                            V.

           For these reasons, we will reverse the district court's

summary judgments in favor of the Plans and the UMW and remand

for further proceedings consistent with this opinion.




                                 26
